In Brief
Vedanta Ltd contracted with a Chinese company to construct a co-generation power plant under four EPC contracts containing arbitration clauses governed by Indian law. After termination, disputes arose regarding interest payable on outstanding amounts. The arbitral tribunal awarded interest at 9% for 120 days post-award and 15% thereafter. Vedanta challenged the interest rate before the Supreme Court. The Court held that the 15% post-120-day rate was excessive, unjustified, and effectively penalized the statutory right to challenge awards under Section 34. The Court modified the award: maintaining 9% interest on INR components but changing EUR interest to LIBOR + 3 percentage points, reflecting contemporary international rates and currency-appropriate benchmarks."
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