Delhi High Court Affirms No Embargo To Appointment Of An Arbitrator In Multiple Cases Under A&C Act

In this case, the stand of Respondent was that since the disputes between the parties arising out of same contract are being adjudicated by the existing Arbitral Tribunal (AT) in which the nominee arbitrator was a member, the new disputes be also referred to the same AT. The Petitioner objected to the reference of new disputes to the AT as well as the appointment of nominee Arbitrator.

On the challenge to the appointment of its nominee arbitrator by the Respondent being hit by Entry No.22 of the Fifth Schedule of the Arbitration Act and hence, non-est and bad in the eyes of law, the Respondent relied on the observations of the Supreme Court in the case of HRD Corporation (Marcus Oil and Chemical Division) Vs. Gail (India) Limited, (2018) 12 SCC 471. In this case, the Supreme Court has made a distinction between the persons who become 'ineligible' to be appointed as Arbitrator under the Seventh Schedule of A&C Act and persons whose appointment gives rise to justifiable doubts as to their independence or impartiality under Fifth Schedule of A&C Act.

The High Court referred to HRD Corpn. (Supra) and held that it is manifestly clear that there is no embargo in appointment of an Arbitrator in more than two cases as stipulated in Entry 22 of Fifth Schedule of A&C Act. The High Court held "No doubt such enactments have been brought in force to ensure independence and impartiality of an Arbitrator, however, at the same time such provisions do not incapacitate the Court in arriving at just decision in the facts of a particular case."

On the aspect of invocation of third reference by the Petitioner arising out of the same Concession Agreement, reference was made by the Respondent to the judgment of Coordinate Bench of Delhi High Court in Gammon India Ltd. and Another Vs. National Highways Authority of India 2020 SCC OnLine Del 659 where the Delhi High Court dealt on the aspect of multiple invocations/ references/ Arbitral Tribunals between the same parties and in respect of the same contract, and held that "If such a Tribunal has already been constituted, an endeavour can be made by the arbitral institution or the High Court under Section 11, to refer the matter to the same Tribunal or a single Tribunal in order to avoid conflicting and irreconcilable findings.". The High Court relied upon the aforesaid proposition and held that though multiple arbitrations are permissible, it would be completely contrary to public policy to permit parties to raise claims as per their own convenience. The High Court observed that the petitioner failed to show any justification for invoking the third arbitration within less than a month of constitution of the second Arbitral Tribunal.

Thus, the High Court rejected the challenge under Section 11 of the Act and directed the disputes to be referred to the existing Arbitral Tribunal to expedite speedy resolution of disputes. The said judgment again reaffirms the approach of the Courts to interpret the Act in furtherance of the objective of the Arbitration & Conciliation Act.