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CS Professional · Arbitration, Mediation and Conciliation · Arbitration: Introduction, Agreements and its Institutions

Ravi Exports Pvt Ltd and Sunrise Foods Pvt Ltd, both Indian companies, are in an arbitration seated in India under an institution's rules. The agreement has no clause allowing the tribunal to decide as amiable compositeur. The tribunal proposes to decide on what it thinks is fair. Which statement is correct?

The tribunal cannot decide on fairness alone. Section 28(2) permits ex aequo et bono or amiable compositeur decisions only where the parties have expressly authorised them, and none was given. It must apply Indian substantive law and, under section 28(3), consider the contract terms and trade usages.

  1. APermitted, since institutional tribunals may always decide in fairness
  2. BPermitted if the institution's council approves
  3. CNot permitted, because ex aequo et bono or amiable compositeur decisions require the parties' express authorisationCorrect
  4. DPermitted, provided the award also notes the trade usages

Explanation

Section 28(2) allows the tribunal to decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it. Here there is none, and as a domestic arbitration, section 28(1)(a) requires the substantive law in force in India. Section 28(3) separately requires the terms of the contract and trade usages to be considered in all cases.

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