Arbitrator Can't Grant Relief Contrary To Terms Of Contract: Rajasthan High Court Sets Aside Award Of Compensation For Delay

Rajasthan HC Sets Aside Arbitration Award for Illegality: The Rajasthan High Court has set aside an arbitration award that granted compensation contrary to the specific terms of the underlying contract. The court reiterated a fundamental principle of arbitration law: arbitrators cannot award 'patently illegal' relief, such as compound interest, if it was not explicitly agreed upon in the contract between the parties. This decision reinforces the notion that an arbitrator's authority is derived from the contract, and they cannot rewrite or go beyond its stipulations. The ruling underscores the importance of contractual sanctity in arbitration proceedings and serves as a check against awards that deviate significantly from established legal and contractual norms.