Arbitration Cases Weekly Round-Up: 10 July To 16 July 2023

Can Ineligible Person Appoint Arbitrator? Supreme Court Defers Hearing As Centre Is Considering Reforms To Arbitration & Conciliation Act

Case Title: Central Organisation for Railway Electrification vs. M/s ECI SPIC SMO MCML (JV)

A Constitution Bench of the Supreme Court on Wednesday decided to defer for two months the hearing of a reference which raises the issue whether a person, who is ineligible to be appointed as an arbitrator, can appoint an arbitrator. The matter was listed before a bench comprising Chief Justice of India DY Chandrachud, Justice Hrishikesh Roy, Justice PS Narasimha, Justice Pankaj Mithal, and Justice Manoj Misra.

High Courts:

Delhi High Court:

“Counter-Balancing” Not Achieved When 2/3rd Members Of The Arbitral Tribunal To Be Appointed By One Party: Delhi High Court

Case Title: Margo Networks Pvt Ltd & Anr vs. Railtel Corporation of India Ltd

The Delhi High Court has ruled that where a party is required to appoint an arbitrator from a panel made by the other contracting parties, it is mandatory for the panel to be sufficiently broad based, in conformity with the principle laid down by the top court in Voestalpine Schienen Gmbh vs. Delhi Metro Rail Corporation Ltd, (2017) 4 SCC 665.

The bench remarked that the “counter balancing”, as contemplated in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd, 2019 SCC Online SC 1517, cannot be said to be achieved in a situation where one of the parties has a right to choose one arbitrator from a panel whereas 2/3rd of the members of the arbitral tribunal are appointed by the other party.

Court Under Section 29A Of The A&C Act Would Not Consider Issue Regarding Fees Of Arbitral Tribunal: Delhi High Court

Case Title: Anay Kumar Gupta vs. Jagmeet Singh Bhatia

The High Court of Delhi has held that the Court exercising power under Section 29A of the A&C Act, which provides for extension of time to conclude arbitral proceedings, is only concerned with the issue as to whether the arbitrator has acted with expedition in the matter and would not consider any issue regarding the conduct of the arbitration or the fees of the arbitral tribunal as they are not relevant for the purpose of the said Section.

The bench of Justice Sachin Datta reaffirmed that the only ground for removal of the arbitrator under Section 29A is that the arbitrator failed to proceed expeditiously in the adjudication process and the same cannot be extended to removal of the arbitrator on the ground of any issue with the arbitrator qua the fees fixed by him.

Well-Reasoned Interim Order Of Arbitral Tribunal, Courts Should Not Interfere Under Section 37 Of The A&C Act: Delhi High Court

Case Title: GLS foils products Pvt. Ltd vs. FWS Turnit Logistic Park LLP

The High Court of Delhi has held that the Court under Section 37 of the A&C Act should not interfere with a reasoned order of the tribunal granting interim relief based on thorough examination of the matter.

The bench of Justice Sachin Datta reiterated that as long as the arbitral tribunal has granted the interim relief to protect and preserve the subject matter of arbitration and balances the equities between the parties on consideration of prima facie case, balance of convenience and irreparable damage, the Court should not interfere with such orders as Section 37 is not strictly like an appeal process. It held that the interference would only be permissible when the order is palpably arbitrary or unconscionable.

Meghalaya High Court:

Order Of Executing Court Staying Execution Of Award Under O 21, R 26 CPC Is Within Jurisdiction: Meghalaya High Court

Case Title: M/s Hindustan Construction Co. Ltd. vs. North Eastern Electric Power Corporation Ltd. (NEEPCO)

The Meghalaya High Court has ruled that there is no specific provision in the Arbitration and Conciliation Act, 1996 (A&C Act) as regard execution or stay of an arbitral award. Therefore, the order passed by the Executing Court who stayed the execution of the award by resorting to Order XXI Rule 26 of the Code of Civil Procedure, 1908 (CPC), was within its jurisdiction, the court held.

The bench of Justice W. Diengdoh observed that the Executing Court had passed the order to enable the award debtor to approach the concerned court for seeking stay of the execution after its appeal under Section 37 of A&C Act was dismissed. The Executing Court thus found that sufficient cause, as per Order XXI Rule 26 CPC, had been shown.

Upholding the order of the Executing Court, the court remarked that the Executing Court committed no jurisdictional error in passing the said order.