The Supreme Court on May 05, 2022 in the matter of Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation held that the power of the arbitral tribunal to award interest is subject to an agreement between the parties to the contrary and the tribunal cannot award interest, if the parties have agreed otherwise.

In this case, the parties entered into a Concession Agreement wherein the respondent was to carry out certain civil works. A dispute arose between the parties which were referred to arbitration. The arbitrator partly allowed the claims of the appellant. The appellant filed for the execution of the award and sought future interest on the entire amount of the sum awarded by the arbitrator. The executing court rejected the contention of the appellant on the ground that the arbitrator allowed future interest only on the principal amount. Aggrieved by the order of the executing court rejecting its claim for future interest on the amount of interest awarded, the appellant preferred an appeal before the Supreme Court.

The Court reiterated that the arbitrator is empowered to allow future interest on the pendente lite interest. The Court held that the sum of the award would include both the principal amount and the interest component for the purpose of future interest. However, this power of the arbitrator is subject to an agreement between the parties.

The Court distinguished this case from the judgement in Hyder Consulting v. Governor, State of Orissa, (2015) 2 SCC 189, on the ground that in that case, the parties did not have an agreement, therefore, the court had no occasion to consider the effect of the words ‘unless otherwise agreed by the parties’ on the power of the arbitrator.

The Court further held that the power vested in the arbitrator is discretionary. The arbitrator can allow interest on any part of the claim. It further held that the tribunal can award interest for any period between the date on which the cause of action arose and the date on which the award is made or it may not award any interest at all. It further held that the arbitrator is well within its power to award any rate of interest as it deems reasonable.

The Court finally held that party-autonomy is the cornerstone of the A&C Act and the discretion available with the arbitrator would cease to have effect, if the parties have exercised their autonomy under Section 31(7)(a) of the A &C Act.