CS Professional · Arbitration, Mediation and Conciliation · Commercial Transactions

Verma Exports and Iyer Logistics, parties to a domestic arbitration, expressly authorise the tribunal in their agreement to decide ex aequo et bono. The contract also contains a detailed demurrage clause and the port follows a known trade usage on demurrage computation. What is the tribunal's position?

The tribunal must still take into account both the contract terms and the applicable trade usages. Even where parties expressly authorise it to decide ex aequo et bono, the duty to consider the contract and trade usages applies in all cases under Section 28(3).

1. AIt may disregard the contract terms entirely because of the authorisation
2. BIt may disregard only the trade usage
3. CIt must still take into account the contract terms and applicable trade usages while making the awardCorrect
4. DIt must apply the contract terms but may ignore trade usage