In a significant judgment in arbitration law, the Delhi High Court has held that an order of the arbitral tribunal refusing permission to produce additional documents will not constitute an 'interim award'.
Therefore, such an order cannot be challenged under Section 34 of the Arbitration and Conciliation Act, 1996, held the judgment authored by Justice Sanjeev Narula in the case ONGC Petro Additions Limited (OPaL) v. Tecnimont S.P.A and Another.
In the arbitration proceedings between OPal and Technimont SPA, the former had filed an application under Section 19 of the Act to produce new documents and a witness statement relating to its counterclaim. The tribunal rejected OPaL's application. OPal has challenged the impugned order of the Tribunal before the High Court under Section 34 of the Act.
Appearing for OpaL, Senior Advocate Dr. A M Singhvi pointed out that the 'arbitral award' included an 'interim award' as per Section 2(1)(c). Since the order denying application for additional evidence has affected 'valuable rights' of the party, it amounted to an 'interim award', advanced Dr Singhvi. Reliance was made on the judgment of Delhi High Court in Cinevistaas Ltd. v. M/s Prasar Bharti, where it was observed that "If a valuable right is lost, it would be an interlocutory judgement. If the order is routine in nature, it would not constitute a "judgement."
The appellant also relied upon the judgment of the Supreme Court in Indian Farmers Fertilizer Cooperative Limited v. Bhadra Products (2018) 2 SCC 534 and argued that the Supreme Court while dealing with a similar situation has held that any decision which finally decides an issue is an interim award.
On the other hand, Mr. Ritin Rai, Senior Counsel for Tecnimont argued that impugned order does not decide or consider any of the claims or counter-claims and is thus demonstratively not an award or an "interim award". He further argued that the question of evidence did not affect "valuable rights" of the parties as the same was sought to be presented after the cross examination. He placed reliance on the Delhi HC decision in Rhiti Sports Management Pvt Ltd vs Power Play Sports and Events Ltd, which had settled an identical issue .
Rejecting the arguments of the appellant, the Court held that in the present case the impugned order does not decide or finally dispose of any issue. The Court concluded that the impugned order was merely a procedural order rejecting the inclusion of additional documents. Such an order cannot be termed as an interim award.
"The Arbitral Tribunal while passing such procedural order may determine certain valuable rights of the parties. However, it does not mean that such determination renders an order to be an award within the meaning of Section 2 (1) (c) of the Act. The determination of a valuable right in any legal proceedings would not necessarily result in an immediate actionable right. In order to ascertain whether an order is an interim award or partial award, the two most important factors that would weigh upon the Court are the concept of "finality" and "issue". If the nature of the order is "final" in a sense that it conclusively decides an issue in the arbitration proceedings, the order would qualify to be an interim award. This is not the situation in the present case. The impugned order only rejects OPaL‟s application for placing additional documents on record. It does not decide an issue or the subject matter of adjudication between the parties. The arbitral tribunal has only decided the question as to whether the Petitioner would be permitted to file additional documents at a later stage. The order impugned though conclusively determines the application, however, it cannot be said that the subject matter of arbitration and the rights of the parties in respect thereof have been finally determined", observed the Court.
It added :
"For an order to qualify as an "award", the test of finality is undoubtedly essential, but that does not mean that any final view of the Arbitral Tribunal would come within the ambit of an "award".
The Cinevistaa case was distinguished by noting that the arbitrator there had rejected raising of additional claims on the ground of limitation. Since the preliminary issue of limitation conclusively determined the case as regards the additional claims, it was treated as an 'interim award'.
The precedent Indian Farmers Fertilizers Corporation Ltd was also dealing with preliminary issue of limitation, and was distinguished.
The court further stated, "the role of the Court is to interpret the law and apply it to the facts of the case. If the Act does not permit a challenge at this stage, the Court would not take upon itself the burden to adopt an approach that is perceived to be a rational one. The Court has the bounden duty to apply the law as it exists and not interpret it merely because it appears to be a more satisfactory view. I cannot create an opening, if the door is tightly shut."
Even if it is assumed that the impugned order was an 'interim award', grounds for interference under Section 34 were not made out in the case, observed the Court.
The facts of the case lead to an inevitable conclusion that OPaL has miserably delayed the filing of the document for reasons attributable to no one but OPaL. The Court concluded that "the upshot of the above discussion is that OPaL is a victim of its own follies. OPaL has not acted swiftly and has exhibited casual attitude that the Court cannot countenance. Therefore, there is no ground to interfere under section 34 of the Act, even if the Court were to assume for the sake of arguments that the order qualifies [t]he test of an "interim award"