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ARTICLE · 02 JUNE 2020

Don't Re-Invent The Wheel!: Infrastructure Arbitration Award Set Aside Because It Used An Unknown Formula For Quantification Of Damages

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The Award granted M/s SMS Limited (Claimant) compensation amounting to approximately INR 1.73 Crores, as against its aggregate claim of approximately 89 crores.

IndiaLitigation, Mediation & Arbitration
Raj Panchmatia
Raj Panchmatia
Manavendra Mishra
Manavendra Mishra
Rajeswari Mukherjee
Rajeswari Mukherjee
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The Delhi High Court (Court) passed an order dated 11 May 2020, in the matter of M/s SMS Ltd v Konkan Railway Corporation Ltd (O.M.P. (COMM) 279/2017), wherein it set aside an arbitral award (Award) pertaining to a dispute regarding the construction of a railway line in Jammu and Kashmir (Railway Project). The Award granted M/s SMS Limited (Claimant) compensation amounting to approximately INR 1.73 Crores, as against its aggregate claim of approximately 89 crores. The Court set the Award aside on the grounds that: (a) the Claimant was not at fault for the non-performance and consequent termination of the rate contract between itself and Konkan Railway Corporation Limited (Respondent); and (b) the compensation awarded was egregiously low. It further held that application of the 'notional proportional loss' formula by the arbitral tribunal was perverse.

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