Delhi High Court: Tribunal's Decision To Not Implead A Party To Arbitration Is Not An Interim Award

Delhi High Court: Tribunal's Decision To Not Implead A Party To Arbitration Is Not An Interim Award

Justice Prateek Jalan of the Delhi High Court has ruled that the arbitral tribunal's decision to deny the inclusion of a party in the arbitral proceedings does not qualify as an 'Interim Award.' Consequently, such a decision cannot be directly contested under Section 34 of the Act while the arbitration proceedings are ongoing.

The parties executed a concession agreement on 15.07.2011. Subsequently, the respondent also concluded a State Support Agreement (SSA) with the State of Gujarat. A dispute emerged between the parties, which was then referred to a three-member arbitral tribunal.

Before the arbitral tribunal, the petitioner filed an application under Order I Rule 10 of the Civil Procedure Code (CPC) seeking to join the State of Gujarat as a party to the arbitration proceedings. However, the tribunal, through its order dated 01.08.2022, dismissed the application, stating that it lacked jurisdiction to rule on the impleadment of a non-signatory.

Dissatisfied with this decision, the petitioner contested the order under Section 34 of the Arbitration and Conciliation Act.

The respondent raised objections to the petition's admissibility, stating that the arbitral tribunal's decision to deny impleading a party does not qualify as an interim award eligible for direct challenge under Section 34 of the Act.

The tribunal appropriately dismissed the application as there is no contractual relationship between the state and the petitioner, given that the state is not a party to the concession agreement and the petitioner is not a party to the state support agreement, resulting in a lack of privity between the parties.

The petitioner countered by arguing that the tribunal's order effectively relieves the State of Gujarat of its responsibilities regarding the dispute, resembling a definitive and substantive decision, thereby classifying it as an interim award.

The Court noted that neither the State of Gujarat is a party to the concession agreement nor is the petitioner a party to the State Support Agreement.

The Court cited the decision of a coordinate bench in NHAI v. Lucknow Sitapur Expressway, where it was held that the tribunal's order regarding the impleadment of a party does not qualify as an interim award.

The Court ruled that an order can be considered an interim award only if it addresses the merits of the claims or definitively resolves a dispute between the parties. It emphasized that even if a party is not impleaded, it does not deprive the petitioner of the remedies available under the concession agreement.

The Court determined that the application seeking the impleadment of a third party is not a matter that would be incorporated into the final award. Consequently, the Court dismissed the petition, deeming it as not maintainable.