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Hyundai Corporation v. Oil and Natural Gas Corp. Ltd.

Civil Appeal · 2017 INSC 702Decided 3 Aug 2017
Civil Appeal No. 3161 of 2006
Justice Rohinton Fali Nariman · Justice Sanjay Kishan Kaul

Background

This order sends the case back; it does not decide the dispute. Hyundai Corporation and ONGC were in arbitration over an indemnification clause in a contract for construction of an offshore oil platform. An Umpire's award, confirmed by the High Court, was under challenge.

Decision Breakdown

This is not a final decision on the dispute. The Court held that the Umpire had wrongly decided an issue outside the scope of what was referred to him, an issue the Court considered already concluded in the appellant's favour under a different clause. It set aside the award and the High Court's judgment confirming it. It appointed Justice Aftab Alam as the new Umpire to decide whether Clause 13.2.8 of the contract overrides Clause 17.3, which determines whether the appellant must indemnify its sub-contractor for an income-tax demand. By consent, the Umpire was to report directly to the Supreme Court.

Lesson Learnt

An arbitral award that decides an issue outside what was referred can be set aside. There is no final ruling yet on who bears the tax liability under the contract's indemnity clauses.

Official source (sci.gov.in)View Judgment (PDF)

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