Whether principles of contra proferentem are applicable to commercial contract?

The arbitral tribunal has also considered the submission of the respondent about the alleged ambiguity in the contract and has applied the principles of "contra proferentem." The arbitral tribunal has held that there were ambiguities in the contract and thus the principle of "contra proferentem" stood attracted. It was not the case of the respondent that there were ambiguities in the contract nor there was any such averment in any of the pleadings of the respondent that the principle of "contra proferentem" were attracted to the facts of this case. The case of the respondent, on the other hand, was that it was not the responsibility of the respondent to bear the costs of repairs. Be that as it may, the principle of "contra proferentem" does not apply to a commercial contract which is executed by and between the parties with open eyes. The respondent never alleged any ambiguity in the contract at any point of time at the time of execution of the contract documents nor at any point of time later during the execution of the work. The respondent also did not seek any clarification about any provisions of the contract from the petitioner before execution of the contract nor sought any addendum to the contract on that ground or otherwise.
81. It has been held by the Supreme Court in the case of Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran, reported in MANU/SC/0327/2012 : (2012) 5 SCC 306 that the principle of "contra proferentem" does not apply to the commercial contract. The findings of the arbitral tribunal is thus ex facie perverse and the impugned award thereby applying the principle of "contra proferentem" to a commercial contract shows patent illegality and is in violation of the principles of law laid down by the Supreme Court in the case of Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran (supra).

IN THE HIGH COURT OF BOMBAY

Arbitration Petition No. 549 of 2013

Decided On: 09.06.2017

 Oil and Natural Gas Corporation Ltd. Vs. Interocean Shipping (India) Pvt. Ltd.

Hon'ble Judges/Coram:

R.D. Dhanuka, J.

Citation: 2017(5) Bom CR 8.
Read Full judgment here: Click here

Print Page