Incorporation by reference in sub-contracts failed where only the escalation clause governed the rate claim.

A sub-contractual claim for revised rates failed because the principal contract terms were not shown to be incorporated into the appellant's own contract with the respondent. The governing contract contained only an escalation clause, so the claim had to be tested solely by that clause and not by terms said to operate in an earlier contract chain. An arbitral award based on contractual terms not applicable to the parties was treated as a jurisdictional error and could be interfered with without reappraising evidence. The claimant was therefore confined to the amount admissible under the escalation clause, and the award was unsustainable to the extent challenged.

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Issues: Whether the appellant could claim revised rates on the footing that the terms of the principal contract between the employer and the intermediate contractor stood incorporated into the sub-contract between the appellant and the respondent, or whether the appellant was confined to the escalation clause contained in its own contract.

Analysis: The sub-contract between the appellant and the respondent did not contain any back-to-back stipulation incorporating the principal contract terms as between HSCL and the respondent. The revised-rate arrangement relied upon by the appellant existed only in the earlier contract chain and flowed from a specific understanding between those parties. In the appellant's own contract, the relevant provision was the escalation clause, and the claim had to be tested only on that basis. An arbitral award that proceeds on contractual terms not applicable to the parties before the arbitrator commits a jurisdictional error and is liable to be interfered with; this does not amount to impermissible reappraisal of evidence.

Conclusion: The claim for revised rates based on incorporation of the principal contract terms failed, and the appellant was entitled only to the amount admissible under the escalation clause. The award was therefore not sustainable to the extent challenged by the respondent, and the appeal was dismissed.

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