Arbitrability of breach and delay issues upheld; finality clause did not exclude claims, escalation, or counter-claim rejection.

A contractual clause making an authority's decision final only on quantification of compensation, liquidated damages or excess cost does not exclude arbitration on antecedent questions of breach, responsibility for delay or validity of termination; those issues remained arbitrable, and the award on claims 1, 3 and 11 was therefore sustainable. Claims 2, 4, 6, 7, 8 and 9 were separately decided, so they could not be set aside merely because the counter-claims were remitted, and the award on those claims stood. Escalation under the contract was not barred where the contractor was not responsible for delay and termination was wrongful, so claim 5 was valid. The rejection of counter-claims 1 to 4 was upheld.

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Issues: (i) Whether claims 1, 3 and 11 were excluded from arbitration as excepted matters; (ii) Whether claims 2, 4, 6, 7, 8 and 9 could be set aside merely because the counter-claims were remitted; (iii) Whether claim 5 for escalation was barred by the contract; (iv) Whether rejection of counter-claims 1 to 4 was liable to be interfered with.

Issue (i): Whether claims 1, 3 and 11 were excluded from arbitration as excepted matters.

Analysis: The contractual clauses made final only the quantification of compensation, liquidated damages, or excess cost in specified situations. They did not make final the foundational questions whether the contractor or the employer was responsible for delay, whether there was breach, or whether termination was valid. Those questions remained arbitrable. Once the arbitrator found that the employer was responsible for delay and the contractor was not in breach, the clauses conferring finality on departmental decisions on quantification did not exclude the claims from arbitration.

Conclusion: The claims were not excepted matters and the award on claims 1, 3 and 11 was sustainable.

Issue (ii): Whether claims 2, 4, 6, 7, 8 and 9 could be set aside merely because the counter-claims were remitted.

Analysis: The arbitral award had dealt with these claims separately and distinctly. Even if some other parts of the award were vulnerable, the court was required to segregate the unaffected portions and uphold them. The High Court did not find any independent infirmity in these claims and set them aside only as a consequence of its interference with the counter-claims.

Conclusion: The setting aside of claims 2, 4, 6, 7, 8 and 9 was unjustified and the award on those claims stood.

Issue (iii): Whether claim 5 for escalation was barred by the contract.

Analysis: Escalation under the contract was payable for work done during the stipulated period and during a valid extension without action under the compensation clause. Since the arbitrator found that the contractor was not responsible for delay and the termination was wrongful, the contractor was entitled to extension without penalty and consequently to escalation for the extended period. The award did not violate the contractual bar relied upon.

Conclusion: Claim 5 was not barred and the award of escalation was valid.

Issue (iv): Whether rejection of counter-claims 1 to 4 was liable to be interfered with.

Analysis: The counter-claims depended upon the premise that the contractor was in breach and responsible for delay. That premise had been rejected on evidence by the arbitrator. Once breach and liability were held to be arbitrable and were decided against the employer, the claims for excess completion cost, liquidated damages, consequential escalation, and arbitration costs could not survive.

Conclusion: The rejection of the counter-claims was correct and required no interference.

Final Conclusion: The arbitral award was restored in substance and the High Court's interference with the award was wholly unsustainable.

Ratio Decidendi: A contractual clause making an authority's decision final only on quantification does not oust arbitration on the antecedent questions of breach, responsibility for delay, or validity of termination; where claims are independently decided, unaffected portions of an award must be upheld.

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