Independent Panel Of Arbitrators Not Curated By Either Party Cannot Be Challenged On Grounds Of Impartiality: Delhi High Court

The Delhi High Court bench of Justice Jasmeet Singh has held that when the panel of arbitrators from which appointments are to be made is broad-based, comprising retired Supreme Court Judges and other eminent officials, and is independent, not controlled by any party, the other party cannot refuse to abide by the institutional rules it has consciously agreed to, on the ground that the panel is not impartial. The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“ Arbitration Act”), seeking directions for the appointment of the petitioner's nominee Arbitrator, Mr. Subhas I. Patel, outside the panel of Arbitrators maintained by the Society for Affordable Redressal of Disputes (“SAROD”). The Respondent objected to the petitioner's nomination stating that as per the Agreement and Rule 11.4 of the SAROD Arbitration Rules, the Arbitrators must be chosen from the panel maintained by SAROD and the Arbitrator had to be invoked through SAROD under Rule 4. In reply, the Petitioner submitted that it was not bound to nominate an Arbitrator from the SAROD Panel as it was not a primary member. It relied on the Delhi High Court's judgment in Rani Constructions. The Petitioner submitted that the petitioner is not a member of SAROD and therefore cannot be compelled either to obtain membership or to restrict its choice of arbitrator to the SAROD empanelled list. Such compulsion would amount to an impermissible fetter on the freedom of choice guaranteed under the Agreement as well as the Act. Per contra, the Respondent submitted that Clause 38.3 of the Agreement expressly provides that arbitration shall be conducted in accordance with the SAROD Arbitration Rules, or such other rules as may be mutually agreed between the parties. Rule 11.4 of the SAROD Arbitration Rules mandates that the appointment of an Arbitrator, including a Presiding Arbitrator, must be from the panel maintained by SAROD. It was further argued that the petitioner is estopped by the terms of the Agreement from seeking to vary or depart from the contractual stipulations to which it had expressly agreed at the time of execution. The court observed that through a circular amendment in the SAROD Rules, it was provided that obtaining membership is not a mandatory precondition for invoking arbitration under its Rules. Non-members are equally entitled to initiate arbitration and participate in proceedings under the SAROD framework. Thus, the very mischief that was sought to be addressed in Rani Constructions (supra) has been remedied. It further observed that the principles laid down in CORE II are not applicable to the facts of the present case as the contractor's choice in CORE II was restricted to two names from a list of Railway Officers while the General Manager retained an exclusive control to appoint other arbitrators giving one party dominant control. This clause was struck down by the Supreme Court. In contrast, the Appointment of Arbitrators under SAROD or ICA is made under independent rules from a neutral panel. It further observed that unlike CORE, the panel of arbitrators under SAROD is not curated by the Respondent but the panel comprises former Judges, retired Bureaucrats, Government Secretaries, statutory body Chairpersons, senior engineers, and other eminent professionals. The panel is broad based and independent which rules out conflict of interest with the NHAI and ensures impartiality. It held that “in the present case, as per the list of empaneled Arbitrators, the SAROD panel comprises of as many as 92 arbitrators drawn from diverse backgrounds, including former Supreme Court judges, former High Court judges across several States, retired Secretaries to the Government of India, Members of statutory bodies such as the NHRC, senior engineers, financial experts, and other professionals of high repute.” Ti further observed that the list placed on record by the respondent clearly demonstrates that the panel is not limited to NHAI officials or any single category, but instead includes individuals of considerable standing across multiple disciplines. The court held that once the petitioner has agreed to arbitration under SAROD Rules, it must adhere to the appointment procedure in its entirety. Party autonomy does not extend to selectively applying institutional rules while discarding others.Accordingly, the argument that the SAROD panel is not broad-based is rejected. Accordingly, the present petition was rejected. Case Title: M/s. KNR Tirumala Infra Pvt. Ltd. versus National Highways Authority of IndiaCitation: 2025 LiveLaw (Del) 1068 Case Number: ARB. P. NO. 1733 OF 2024 Judgment Date: 29/08/2025 Click Here To Read/Download The Order

Independent Panel Of Arbitrators Not Curated By Either Party Cannot Be Challenged On Grounds Of Impartiality: Delhi High Court

Mohd Malik Chauhan

Tags