Introduction
Arbitration is an ever-evolving arena. The Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) ("Arbitration Amendment Act, 2015") had introduced substantial changes to the provisions of the Arbitration and Conciliation Act, 1996 ("Arbitration Act, 1996"). Many vexed questions regarding interpretation of several provisions of the Arbitration Amendment Act, 2015 have arisen, some of which have subsequently been settled and/or clarified by various judgments of the High Courts and the
This paper endeavors to analyse firstly, the degree of fairness which the parties are required to adopt with regard to the procedure for appointment of arbitrators in government contracts in light of the current legal scenario established by Indian courts. Secondly, whether the current norms established by the courts for appointment of arbitrators in government contracts can be regarded as cogent? And lastly, understanding the duty incumbent upon the courts to create a conducive environment for arbitration of disputes arising out of government contracts.
The Journey thus Far
As far as the present legal scenario regarding appointment of arbitrators in government contracts are concerned, it will be interesting to note the development of precedents. The
The
The aforesaid principle established by
However, a situation where both parties to an arbitration agreement are provided with the option to nominate their respective arbitrators, the same would be treated differently. The rationale behind the same is that, an advantage which one party may derive by nominating an arbitrator of its choice would get counter-balanced with the equal power provided to the other party. The court drew the distinction with respect to cases where only one party has a right to appoint a sole arbitrator and stated that such choices will always have an element of exclusivity in determining or charting the course for dispute resolution and thus, a person who has an interest in the outcome or decision of the dispute, must not have the power to appoint a sole arbitrator.
It is to be noted that
A Snapshot of Other Jurisdictions
The jurisprudence in foreign jurisdictions is also not significantly different when it comes to ensuring equality of opportunity of parties in constituting the arbitral tribunal. The principle of equality of parties or the principle of equal treatment in the designation of parties was first enunciated by the French
The aforesaid prevailing rule of law is also manifest from the decisions rendered by
Establishing a New Norm pertaining to Appointment of Arbitrators
The
In this matter, the procedure for constitution of the arbitral tribunal came up for consideration by the court. The procedure envisaged that upon invocation of the arbitration clause, the respondent shall forward names of five persons from the panel of arbitrators maintained by the respondent. Thereafter, both the petitioner and the respondent, will have to choose its nominee arbitrator from the said panel. Two such chosen arbitrators will, thereafter, choose the third arbitrator from the said panel, to act as the presiding arbitrator. This procedure of constitution of the arbitral tribunal was not acceptable to the petitioner owing to the fact that the panel prepared by the respondent comprised of serving or retired engineers of the respondent company and government departments or public sector undertakings and they purportedly did not qualify as independent arbitrators in the light of the ineligibility norms provided under Section 12(5) read with Seventh Schedule to the Arbitration Act, 1996.
The
It is however, pertinent to mention, that although the DMRC case (supra) discussed the issue of constructive bias with regard to a situation where a party is given the exclusive power to create a panel of arbitrators, the Supreme Court failed to lay down any specific guideline to address it and anticipated that the rule of creating a 'broad based panel' established by it, would sufficiently address any controversy that may arise in connection to it. Whether or not such rule clarifies the position or confuses it has been analysed in the following portion on this paper.
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Footnotes
1. (2017) 8 SCC 377. Decided on
2. Arbitration Application Nos. 32, 34 and 35 of 2019. Decided on
3. O.M.P. (T) (COMM.) 109 of 2019. Decided on
4. ASA Bulletin 10(2) (1992), 295. Decided on
5. Id. at 297.
6. Murray v. United Food & Commercial Workers Int'l Union, 289 F.3d 297, 303 (4th Cir. 2002); Hooters of Am., Inc. v. Phillips, 173 F.3d 933 (4th Cir. 1999).
7. Arbitration Petition (Civil) No. 50 of 2016. Decided on
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