The Judicial Stance On Contractual Bars And Pendente Lite Interest In Arbitration

In the realm of commercial disputes, debates pertaining to awarding of interest remains constant. For every business that deals with contracts, clauses pertaining to ‘No Interest' are meticulously drafted to avoid financial liabilities that may arise in future. However, the real test of the clause begins when the claim is before an arbitral tribunal. Recently, the Supreme Court in Oil and Natural Gas Corporation Ltd. v. G & T Beckfield Drilling Services Pvt. Ltd.¹analysed Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”)² to understand the question of whether an arbitral tribunal possesses the power to grant pendente lite interest, when dealing with cases where the contractual clauses disallow the grant of such interest. The analysis of the Court demonstrates that the precise language of the contract is the determinative factor to assess the power of the arbitral tribunal and that the arbitral tribunal cannot override the contract