In large-scale public infrastructure projects, government agencies and contractors frequently execute separate, parallel contracts for contiguous project packages. To ensure commercial predictability and avoid conflicting findings on identical boilerplate terms, parties intentionally appoint common arbitrators across related project disputes. However, in a judgment delivered on Aug. 14th 2026 by the Division Bench of the High Court of Delhi in Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India1 reveals what happens when this institutional strategy breaks down and establishes that unreasoned, contradictory findings by common tribunals breach the fundamental public policy of Indian law.
The dispute stemmed from two major highway construction contracts awarded by NHAI to Ssangyong: Package C-5 and Package C-6. In both projects, an identical operational dispute emerged surrounding a document styled as a “Payment Certificate” issued during execution. NHAI asserted that the certified figures were overstated and contained substantial mathematical errors, seeking to adjust the amounts. To maintain consistency and structural coherence, two common arbitrators- A.K. Yadav and Ashok Khurana, were appointed to serve on both three-member arbitral tribunals tasked with adjudicating the parallel package disputes.
The High Court confronted a critical question of arbitration law:
Can a tribunal containing common arbitrators adopt diametrically opposite interpretations of an identical contract clause across parallel disputes between the same parties without providing any written rationale, or does such an unreasoned departure invalidate the award under Section 34 of the Arbitration and Conciliation Act, 1996?
Counsel for the contractor contended that the arbitral tribunal possessed exclusive jurisdiction to interpret contract terms, and that its construction of the Payment Certificate fell within the protected ambit of a “plausible view.” The contractor argued that under the strict standard of minimal judicial intervention, courts exercising Section 34 or Section 37 jurisdiction cannot re-appreciate evidence or substitute their own interpretation for that of the tribunal.
Counsel for NHAI demonstrated that the common arbitrators performed an unexplained 180-degree flip-flop. In the Package C-5 arbitration, the common tribunal member held that the Payment Certificate was merely an Interim Payment Certificate, permitting NHAI to contest certified sums and rectify overpayments. Conversely, in the Package C-6 arbitration, involving an identical standard-form clause; the same arbitrator ruled that the exact same form of certificate constituted a final, unchallengeable statement. The tribunal refused to even evaluate NHAI’s substantive defenses against the $163+ crore certificate on the procedural ground that NHAI had not filed a formal independent counter-claim. Crucially, the award contained no reasoning explaining why the tribunal departed from its prior construction.
The High Court ruled squarely in favor of NHAI, dismissing the contractor’s Section 37 appeal and affirming the Single Judge’s order setting aside the award.
Refusal to Adjudicate Core Defenses & The Limits of “Plausible View”:
Evaluating the challenge against the Supreme Court standard in NHAI v. Progressive-MVR (JV) and Associate Builders, the Division Bench held that while courts must defer to a tribunal’s reasonable construction of a contract2, the “plausible view” doctrine cannot serve as a protective shield for arbitrary, unreasoned contradictions3.
The Court emphasized that parties select common arbitrators in multi-package infrastructure projects specifically to secure consistency, coherence, and predictability. When common arbitrators adopt opposite interpretations of identical contractual machinery without offering a single line of written rationale, the resulting award suffers from patent perversity. Furthermore, the tribunal’s technical refusal to evaluate NHAI’s substantive challenges to the certified amounts after decades of performance and over 50 procedural hearings amounted to a total refusal to adjudicate core defenses, violating the principles of natural justice (audi alteram partem).
Conclusion:
The Delhi High Court’s ruling in Ssangyong Engineering reinforces the duty of consistency in commercial arbitration. While judicial review under Section 34 remains restricted, the judgment confirms that unreasoned self-contradictions by common tribunals shock the judicial conscience and undermine the rule of law.
For commercial litigators, arbitration practitioners, and infrastructure sector entities, the decision offers a powerful precedent under Section 37. It confirms that where common tribunals produce contradictory rulings across identical project packages without providing a written, logical distinction, the resulting awards are fundamentally vulnerable to being set aside for patent illegality and public policy violations.
Citations
Expositor(s): Adv. Vatsala Pandit
