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Limits of arbitrator's powers

The Supreme Court has ruled that an arbitrator cannot give an award on issues which have been excepted in the contract. In this case, Harsha Constuctions vs Union of India, the agreement contained an arbitration clause which gave a list of items which should not be referred to arbitration. They should be decided by the chief engineer. However, when disputes arose over extra payment for additional work done on the project, the arbitrator gave an award on all issues. The firm moved the Andhra Pradesh High Court which dismissed the petition. The Supreme Court dismissed the contractor's appeal stating that the terms of the contract should be strictly followed and "there cannot be a presumption or a conclusion that the parties had agreed to refer the issue to the arbitrator."

 Article referred: http://www.business-standard.com/article/opinion/land-acquisition-quashed-under-new-law-114091400695_1.html

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