S.11 Arbitration Act | Interested Party Cannot Appoint An Arbitrator To Decide Disputes Between Parties: Calcutta HC

The Calcutta High Court on Tuesday while adjudicating upon an application under Section 11 of the Arbitration and Conciliation Act, 1996 (Act) held that it a settled law that neither an interested party can be appointed as an arbitrator nor can the said interested party appoint an arbitrator to decide the disputes between the parties.

Justice Shekhar B. Saraf observed, 

".. a sole arbitrator is required to be appointed as per the parties and under such circumstances the law is very clear that it is the Court that is to decide the sole arbitrator. The persons that have been nominated by the respondent cannot be accepted and this Court without going into the merits of the persons so nominated, should appoint an independent sole arbitrator."

Reliance was also placed on a host of Supreme Court judgments in TRF Limited v. Energo Engineering Projects Ltd, Perkins Eastman Architects v. HSCC (India) Limited and Central Organisation for Railways Electrification v. ECI-SPIC-SMO- MCML (JV) A Joint Venture Company to rule, 

"..it is clear that neither an interested party can be appointed as an arbitrator nor can the said interested party appoint an arbitrator to decide the disputes between the parties."

Accordingly, the Court appointed senior advocate Pradip Kumar Ghosh as an Arbitrator in the instant dispute. 

The Court however specified that the appointment is subject to submission of declaration by the Arbitrator in terms of Section 12(1) in the form prescribed in the Sixth Schedule of the Act before the Registrar, Original Side of this Court within 4 from the date of the order. 

In the instant case, the parties had agreed to the appointment of a sole arbitrator by the Chairman of SBSTC under the provisions of the Arbitration & Conciliation Act, 1996 as per the arbitration agreement. In a notice issued by the petitioner under Section 21 of the Act, the petitioner had submitted that the arbitrator is required to be decided by the Court as the Supreme Court has held that an interested party cannot nominate an arbitrator.

Subsequent to the Section 21 notice, the respondent had given a choice of three advocates of the High Court to be chosen by the petitioner for appointment as sole arbitrator. The petitioner not being agreeable to the same subsequently  filed a Section 11 application for appointment of an independent arbitrator to be decided by the Court.

Case Title: New Eureka Travels Club v. South Bengal State Transport Corporation 

Case Citation: 2022 LiveLaw (Cal) 200

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