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CS Professional · Arbitration, Mediation and Conciliation · International Law of Arbitration

In a Pune-seated arbitration between two Indian companies, Mehra Foods and Lakshmi Agro, the clause says nothing about equity. The sole arbitrator proposes to decide on what he thinks is fair, setting aside the contract terms, as amiable compositeur. Which statement is correct under section 28?

He may decide as amiable compositeur only if the parties have expressly authorised it. Section 28(2) requires express authorisation, and section 28(3) requires the tribunal in all cases to take into account the contract terms and trade usages applicable to the transaction.

  1. AHe may do so, since the seat is in India
  2. BHe may do so only if the parties have expressly authorised it, and even then must consider the contract terms and trade usagesCorrect
  3. CHe may do so if one party consents during the hearing without any written authority
  4. DHe may do so because section 28(3) leaves the choice to the tribunal

Explanation

Section 28(2) allows ex aequo et bono or amiable compositeur decisions only if the parties expressly authorised the tribunal. Section 28(3) requires the tribunal in all cases to take into account the contract terms and trade usages. Option D misreads section 28(3), which does not give the tribunal this choice.

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