Court Intervention Inadmissible Where Arbitral Interpretation of Force Majeure Clauses is Factually Derived and Plausible

The Appellant, a construction firm, was awarded a project for 140 dwelling units on 27.12.2011

Shortly after commencement, local residents obstructed the work, leading the Appellant to seek termination due to "hostile attitude" and "encumbered land"

Although the Respondent cleared legal hurdles and the Madras High Court vacated a status quo order on 03.12.2012, the Appellant refused to resume work, citing continued apprehension of attacks.

Consequently, the Respondent terminated the contract and forfeited the security deposit and performance bank guarantee

The Appellant challenged the Arbitral Award (dated 23.12.2014) under Section 34 of the Act, which was dismissed by the Single Judge on 24.03.2026

The Appellant then filed this appeal under Section 37.

1. Whether the obstruction by local residents and the court-ordered stay qualified as an "event" under the Force Majeure clause (Clause 6.2.25) to justify the Appellant's termination of the contract?

2. Whether the unilateral appointment of the Arbitrator rendered the proceedings invalid under the 2015 Amendment to the Arbitration and Conciliation Act?

The Court applied Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996 regarding the limited scope of judicial interference with arbitral awards

It relied on the principle that the interpretation of a contract belongs to the domain of the Arbitrator unless the view is perverse or shocks the conscience of the Court

Regarding the 2015 Amendment (Section 12(5)), the Court cited Board of Control for Cricket in India v. Kochi Cricket Private Limited, establishing that the amendment is prospective and does not invalidate unilateral appointments made prior to 23.10.2015

The Court observed that Clause 6.2.25 specifically listed events like war, hostility, and acts of public enemies as Force Majeure

The Arbitrator found that the local residents' actions were mere "nuisance" to protect a playground, not "hostility" or "public enmity"

Furthermore, the Arbitrator and the Single Judge reasoned that even if hostility existed, it lasted only 40 days; the subsequent 50-day court stay did not fall under the defined Force Majeure categories, thus failing to meet the 90-day threshold required for termination

The Court affirmed that the Arbitrator’s literal construction of the contract was a plausible view

Regarding the unilateral appointment, the Court noted the Arbitrator was appointed in 2013, well before the 2015 Amendment, rendering the Appellant’s challenge on this ground legally untenable

The Court answered that the Force Majeure clause was not attracted as the conditions were not met and the court-stay period was not an "event" under the contract

It further held that the 2015 amendment regarding unilateral appointments did not apply retrospectively to a 2013 appointment

The order of the Single Judge upholding the award was maintained