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Interpretation of Price Adjustment Clause

Fox & Mandal Interpretation of Price Adjustment Clause

Taisei Corporation


West Bengal State Electricity Distribution Co. Ltd

DATE OF JUDGEMENT :  January 14, 2015


The appeal challenges a ruling issued by Sri D.C. Kar, Additional District Judge of the 11th Court in Alipore. The judgment relates to a disagreement between the appellants and the respondents, West Bengal State Electricity Distribution Company Ltd. The dispute revolves around price adjustments within a contract concerning the development of a power project. Here are the salient details of the case and the judgment:

The dispute centered on interpreting a price adjustment formula in Clause 17 of the contract. It hinged on whether the “P” adjustment factor should be applied to the total estimated work value encompassing both INR and JPY payments, or separately to these currencies. Appellants argued for total value application, while respondents sought separate treatment for each currency with no foreign currency adjustments. The case progressed through a Dispute Review Board and an Arbitral Tribunal under the contract’s arbitration clause. The Tribunal analyzed the contract, formula, and arguments, concluding that the formula in Clause 17 should cover the entire work value involving both currencies. It emphasized the mathematical design of the formula for dual currencies and rejected separate applications. The Tribunal ruled for appellants, granting desired relief, interest, and costs. Respondents challenged this before the Ld. Addl. District Judge, who misinterpreted the core dispute and tried changing the formula’s interpretation—constituting a jurisdictional error by imposing his view. The High Court overturned this decision in favour of Taisei Corporation, represented by Fox & Mandal after assessing facts, upholding the Tribunal’s award, and refusing to stay its judgment due to convenience.

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