Ssangyong Engineering & Construction Co. Ltd.

Vs.
National Highways Authority of India (NHAI)
By Anshuman Das & Tejaswani Khurana

•The decision of the Supreme Court of India in

Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of
India
(NHAI), has led to three notable developments:
• it clarifies the scope of the “public policy” ground for setting aside an award as
amended by the Arbitration and Conciliation (Amendment) Act 2015,
• affirms the prospective applicability of the 2015 Act and
• adopts a peculiar approach towards recognition of minority decisions.
FACTS

• The dispute arose out of a contract between the parties for construction of a four-lane bypass on a
National Highway in the State of Madhya Pradesh. The appellant, Ssangyong Engineering, was to be
compensated under the contract for inflation in prices of components to be used in construction of
the highway. The agreed method of compensation for inflated prices was the Wholesale Price Index
(“WPI”) following 1993 – 1994 as the base year. However, National Highways Authority of India
(“NHAI”) subsequently issued a circular revising the WPI to follow 2004 – 2005 as the base year for
calculating the inflated cost, which was disputed by Ssangyong. The parties referred this dispute to a
three-member arbitral tribunal. The majority award upheld the revision of WPI as being within the
terms of the contract. The minority decision opined otherwise and held that the revision was de
hors the contract. Aggrieved by the majority finding, Ssangyong unsuccessfully challenged the award
as being against public policy before Delhi High Court, and consequently sought remedy from the SC
in appeal.
ISSUES

• Whether majority award had created new contract for parties by

applying unilateral circular and was liable to be set aside?
• Applicability of the 2015 amendment to the Arbitration and Conciliation
Act, 1996.
• Applicability and scope of appeal against an arbitral award under
Section 34 of the Arbitration and Conciliation Act, 1996.
RULES & CASES

• RULE-
• Section 34 of the Arbitration and Conciliation Act, 1996.
• Article 142 of the Constitution of India.

• CASE-
• Board of Control for Cricket in India v. Kochi Cricket (P.) Ltd. and
Ors., (2018) 6 SCC 287
RATIO & ANALYSIS

• Applicability of the A&C Act amendment of 2015: Since the present appeal was filed
after the amendment came into force, it held that the amended s.34 would be
applicable in the present instance.
• Appeal under Section 34(2)(a)(iii) of the A&C Act (Inability of a Party to Present its
Case): The Appellant thus would not have had a chance to present its case as it was
not allowed to comment on the applicability or interpretation of those Guidelines, and
hence this was an instance where a party was unable to present its case.
• Appeal under Section 34(2)(b)(ii) of the A&C Act (Arbitral Award in Conflict with
Public Policy): On the second ground of appeal under s.34(2)(b)(ii), the Supreme Court
noted that the parameters of challenge under this section is that "substantively or
procedurally, some fundamental principle of justice which has been breached, and
which shocks the conscience of the Court".
OPINIO • Mischaracterization of s. 34 of the
A&C Act

N • Aim of reducing judicial

interference.