On 23.01.2018, the Supreme Court of India delivered a judgement in the case of Indian Farmers Fertilizers Co-operative Ltd. v. Bhadra Products. The decision is significant because it clarifies the difference between an Interim Award on limitation and a decision on a challenge to the tribunal's jurisdiction. Both these determinations have different legal consequences. An Interim Award (partial award) dismissing an objection on limitation is an Interim Award which can be challenged under Section 34 of the Arbitration and Conciliation Act, 1996 soon after it is issued, while a determination dismissing jurisdictional objections can be challenged only after the award is passed [S. 16(6)]. This presentation (11 slides) provides a descriptive overview of the judgement and critically evaluates the judgement.

1. Badrinath Srinivasan, LL.M., A.I.I.I., M.C.I. Arb.
http://in.linkedin.com/pub/badrinath-srinivasan/13/604/916
www.practicalacademic.blogspot.in
http://ssrn.com/author=665603
(25.01.2018)

2.  Decided on 23.01.2018 in Supreme Court of
India
 Judgement by RF Nariman, J. for RF Nariman
& Navin Sinha, JJ.
 Two Important questions were considered
◦ whether an award on the issue of limitation can first
be said to be an interim award?
◦ whether a decision on a point of limitation would go
to jurisdiction and, therefore, be covered by Section
16 of the Act?
 Link to the judgement

3.  Agreement for supply of 800 Metric Tons of
goods (defoamers) for production of chemicals
between Indian Farmers Fertilizers Co-op. Ltd.
(IFFC) and Bhadra Products (Bhadra)
 Disputes arose and Bhadra issued a legal notice
in September 2012 claiming about Rs. 6 crores.
 IFFC disputed the same.
 Bhadra invoked arbitration in October 2014 and a
retired judge of the Supreme Court was
appointed as arbitrator.

4.  In arbitration proceedings, limitation was
raised as an issue.
 Both parties agreed to take up the same as
preliminary issue and to be decided on basis
of documents alone.
 Arbitrator decided the same as a “First Partial
Award” in favour of Bhadra that the claims
were not time barred.
 IFFC challenged the same under Section 34
and failed before the District and the High
Courts.

5.  Arguments for IFFC
◦ Award was an “Interim Award” and was amenable to
challenge
◦ National Thermal Power Corpn. Ltd. v. Siemens
Atkeingesellschaft, (2007) 4 SCC 451 recognised
challenge of such Interim Awards
◦ Since point of limitation was finally decided by the
parties, the same could be challenged.
 Arguments for Bhadra
◦ Ruling on limitation was ruling on jurisdiction under
Sections 16 and 37
◦ Hence, such a decision is an order and cannot be
challenged until after final award is passed

6.  Section 2(c) states an arbitral award would
include an interim award. Section 31(6) allows
the tribunal to make an interim award on any
matter with respect to which it can make a
final award.
 As per S. 31(6), Tribunal has the power to
determine whether to make an interim award.
 But by delivering award in a piecemeal
fashion, tribunal could consider whether the
final outcome will be delayed and parties will
have to pay increased costs.

7.  English law under S. 47 of the Arbitration Act,
1996 does not use the expression “Interim”
or “Partial” but empower tribunal to bifurcate.
 A tribunal could bifurcate under the 1940
Act: Satwant Singh Sodhi v. State of Punjab
(1999) 3 SCC 487
 Such a power exists even under the 1996 Act:
McDermott International Inc. v. Burn Standard
Co. Ltd. (2006) 11 SCC 181- interim/ partial
awards are final awards in respect of issues
they adjudicate upon.

8.  On facts, the determination by the tribunal on
limitation is an Interim award amenable to
challenge under S. 34.
 Unlike in administrative law sphere or under
other laws, limitation is not a jurisdictional
question for the purposes of arbitration law.
 Limitation is a question on merits of the
dispute, as has been held in National Thermal
Power Corpn. Ltd. v. Siemens
Atkeingesellschaft, (2007) 4 SCC 451

9. The Court also held:
“Having said this, we are of the view that
Parliament may consider amending Section 34
of the Act so as to consolidate all interim
awards together with the final arbitral award, so
that one challenge under Section 34 can be
made after delivery of the final arbitral award.
Piecemeal challenges like piecemeal awards
lead to unnecessary delay and additional
expense.”

10.  Important decision on bifurcation- offers advice
on when adjudication of a dispute could be
bifurcated.
 The ruling clarifies the long confusing difference
between Interim/ Partial Awards, Jurisdictional
Objections, and Procedural Orders.
 This is consistent with the international practice
of bifurcation, delivering partial awards, and
issuing procedural orders (which are not interim
awards).

11.  The court’s suggestion for the Parliament to amend S
34 to consolidate all Interim/ Partial Awards into final
awards for the purpose of challenge may not be
altogether right for two reasons:
◦ A party may wish to challenge an Interim/ Partial Award, say,
on limitation, but not the Final Award.
◦ Postponing challenges to after delivering final award may not
put an end to early resolution of the dispute as a whole. By
the time the tribunal comes up with the final award, the
challenge to a Partial/ Interim award could very well be
decided.
 But S. 34(3)(on limitation) could be amended to save
limitation for challenge of Interim/ Partial award till
Final Award is issued.
*****