Fairness in Arbitration Proceedings and Awards

The Lahore High Court reviewed two appeals arising from the same arbitration award concerning a contract for constructing a bridge over River Chenab, Shahbazpur, Gujrat. The appellants, Punjab Highway Department, contested the arbitration award granted to Sh. Abdur Razzaq & Company (Private) Limited, which was made a rule of the court by the learned Civil Judge, Lahore, on 27.07.2013.

Key Issues:

Misconduct and Due Process: The appellants alleged that the arbitrators conducted the proceedings improperly, failed to provide a fair hearing, and did not include the authorized representative of the department during site inspections, thus violating due process.

Validity and Reasoning of the Award: The appellants argued that the award lacked a well-reasoned basis and was granted without sufficient evidence. They contended that the award's conclusions were legally untenable and contradicted the contractual provisions.

Modification of Award: The contractor contested the Civil Judge's modification of the award concerning the adjustment and reimbursement of excess mobilization advance, arguing that the modification exceeded the court’s jurisdiction.

Legal Analysis:

Scope of Judicial Review: The court emphasized that, under Sections 17 and 30 of the Arbitration Act, 1940, it must ensure no cause exists to remit or set aside the award. The judicial review of an arbitration award involves examining whether the arbitrators misconducted the proceedings or the award was legally invalid.

Duty of the Court: Citing precedents such as A. Qutubuddin Khan v. Chec Millwala Dredging Co. (Private) Limited (2014 SCMR 1268) and Karachi Dock Labour Board v. Messers Quality Builders Limited (PLD 2016 SC 121), the court noted its obligation to scrutinize the validity and legality of the award even if objections were not timely filed or were absent.

Requirement for Detailed Reasons: Referring to Section 26-A of the Arbitration Act, the court reiterated that an award must provide detailed reasons to enable judicial review. The absence of such reasons justifies remitting the award for reconsideration.

Court’s Conclusion: The Lahore High Court found that the learned Civil Judge did not adequately consider the legal objections to the award, specifically failing to evaluate whether the award had a sufficient evidentiary basis. The trial court's assumption that it could not review the merits of the award was incorrect, and the modification of the award without proper judicial scrutiny was deemed inappropriate.

The judgment underscores the court's duty to ensure fairness and legal soundness in arbitration proceedings and awards. The appeal by Punjab Highway Department was accepted and the impugned order was set aside. The case was remanded to the Civil Judge for fresh consideration, with directions to frame proper issues, allow evidence, and apply the relevant legal principles.

Contact Us:

For expert legal assistance in arbitration, contract disputes, and judicial reviews, contact AUJ LAWYERS LLP. Our experienced team in Lahore provides comprehensive legal services to protect your rights and ensure justice. For further legal assistance or queries regarding this case, please feel free to contact us.

We are here to help

Talk to our lawyers today. We tailor our services around your legal needs so that we can reach the desired outcome together.