Summary
Acceptance of the letter of award did not activate the arbitration clause in the unsigned draft project agreement under this bidding framework. The schedule treated the letter of award as an intermediate bidding step and reserved bidding disputes to Delhi courts until execution of the agreement. Provisions allowing termination and security forfeiture did not establish otherwise. The order appointing arbitrators was set aside.
Issues
- Whether acceptance of the letter of award incorporated the draft agreement’s arbitration clause despite the bidding-process jurisdiction clause.
Held
- The disclaimer, schedule and execution requirements made the letter of award part of a bidding process ending with the signed agreement. The materially identical framework in PSA Mumbai governed the case. (¶¶ 10–12, 16–18)
- References to termination after issue of the letter of award concerned disqualification and forfeiture of bid security at different stages. They did not establish activation of the ultimate agreement’s arbitration provision. (¶ 13–15)
- Clause 6.1 assigned disputes arising in the bidding process to Delhi courts. A standard-form arbitration clause in a draft agreement could not override that allocation before the agreement was executed, including at the letter-of-award acceptance stage. (¶ 17–18)
- The High Court’s appointment order could not stand on incorporation of an arbitration clause where the necessary agreement had not come into operation. (¶¶ 12, 18–19)
Result
Appeal allowed; High Court judgment appointing arbitrators set aside. Disputes at the letter-of-award acceptance stage under this framework lay before Delhi courts, not arbitration.