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ARTICLE · 10 MARCH 2023

The Hudson Formula For Calculating Overheads Upheld

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In a recent development, the Hon'ble High Court of Bombay upheld the Hudson Formula for calculating overheads in construction contracts.

IndiaLitigation, Mediation & Arbitration
Vishesh Kulkarni
Vishesh Kulkarni
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In a recent development, the Hon'ble High Court of Bombay ("High Court") upheld the Hudson Formula for calculating overheads in construction contracts.1

Facts

The arbitration proceeding was undertaken in light of the dispute pertaining to the project of construction of roads. As per the agreement, the respondent was required to complete the work in 30 months, starting from December 01, 1990. The work was delayed and the Petitioners extended the completion time. The disputes arose regarding the amounts due and payable to the Respondent for the work done during the extended time.

The Arbitral Tribunal ("Tribunal") passed the impugned award on March 29, 2002 wherein one arbitrator dissented while the majority (two) partly upheld the Respondent's claims. The Petitioners filed the petition under Section 342 of the Arbitration and Conciliation Act, 1996, ("the Act") to challenge the impugned award.

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