Person Ineligible To Act As Arbitrator U/s 12(5) Cannot Appoint Another Arbitrator For Determining The Dispute: Himachal Pradesh High Court

The Himachal Pradesh High Court on Monday ruled that any person who becomes ineligible to act as an Arbitrator in terms of Section 12(5) of the Arbitration and Conciliation Act cannot appoint/nominate another Arbitrator for determining the dispute.Section 12(5) provides that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject-matter of the dispute falls under any of the categories specified in the Seventh Schedule, shall be ineligible to be appointed as an arbitrator. "Any appointment of other person nominated by such person as an Arbitrator for determining the dispute arising under the arbitration agreement is void ab initio. The proceedings so conducted will be non est. The awards passed by such person, if any, are also void," it said.The observations were made by Justice Jyotsna Rewal Dua while hearing three petitions challenging the orders passed by District Judge dismissing petitioners' applications under Section 36 of the Act for enforcement of arbitral awards were dismissed.The petitioner submitted that Clause 36 of the agreement between the parties provided reference of dispute to the Managing Director of State Forest Development Corporation. The agreement came into force prior to amendment of the Act whereby Sub-section 5 was inserted in Section 12 and hence Section 12(5) of the Act, could not be applied in the instant case, it was argued.The Court rejected this argument stating that any prior agreement executed by the parties contrary to the mandate of Section 12(5) gets "wiped out" by the non-obstante clause in the provision. "The learned District Judge did not commit any error in dismissing the execution applications filed by the petitioner, seeking enforcement of the void awards", the bench concluded while dismissing the plea.Case Title: Divisional Manager, H.P. State Forest Development Corporation Ltd Vs Prem LalCitation: 2023 LiveLaw (HP) 8Click Here To Read/Download Order

Person Ineligible To Act As Arbitrator U/s 12(5) Cannot Appoint Another Arbitrator For Determining The Dispute: Himachal Pradesh High Court

Basit Makhdoomi

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