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CS Professional · Arbitration, Mediation and Conciliation · Commercial Transactions

Two Indian companies, Ganga Steels Pvt Ltd and Narmada Forgings Ltd, have an arbitration seated in Pune. Their contract is silent on authority to decide ex aequo et bono. The tribunal wants to decide the dispute purely on fairness rather than on legal rules. Under section 28, what is the position?

The tribunal cannot decide on fairness alone unless the parties have expressly authorised it. Section 28(2) permits ex aequo et bono or amiable compositeur decisions only on express authority. In a domestic arbitration seated in India, the tribunal must otherwise apply Indian substantive law.

  1. AIt may do so, as fairness is implied in every arbitration
  2. BIt may do so only if the parties have expressly authorised itCorrect
  3. CIt may do so if both parties are Indian companies
  4. DIt may do so if the tribunal considers it appropriate in the circumstances

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. Also, in a domestic arbitration seated in India, section 28(1)(a) requires the substantive law in force in India. Silence in the contract therefore means no such power.

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