The Single Bench of the Delhi High Court in the case of Overnite Express Limited vs Delhi Metro Rail Corporation consisting of Justice Neena Bansal Krishna expounded that procedure of forwarding a panel of names to the other contracting party to choose its nominee Arbitrator is not a valid procedure. It was also observed that autonomy to choose the arbitrator is not unbridled and must be tested on the anvil of neutrality and impartiality of the Arbitrator sought to be appointed by the parties.
Facts
Four license Agreements were executed for licensing of commercial space/ area on “as is where is” basis between the respondent and the petitioner. When certain issues arose, the petitioner issued a notice of invocation of arbitration which was duly served upon the respondent. Since, the claim was above ₹50 lakhs, the petitioner nominated its nominee Arbitrator. The respondent requested the petitioner to submit its Claim so that further action could be taken in terms of the Arbitration Clause. The respondent, however, failed to nominate its Arbitrator and did not consent to appointment of a Sole Arbitrator. Instead, they forwarded letters suggesting a panel of five Arbitrators, from which an option was given to the petitioner to choose any one Arbitrator. So, a petition u/s 11 of the Arbitration & Conciliation Act, 1996 (“the Act”) was filed for appointment of the Arbitrator.
Contentions Made
Petitioner: The respondent restricted the choice to nominate Arbitrator from the panel as suggested by it, which is contrary to the provisions of the Arbitration Act. It was also contended that the mechanism as suggested by respondent, is one sided and gives unfair advantage to DMRC which is contrary to the principles of natural justice.
Respondent: On receipt of Notice of Invocation, the respondent provided a panel of five Arbitrators to nominate any one as an Arbitrator for constitution of Arbitral Tribunal, but the petitioner failed to do so. It was also contended that in terms of the Arbitration Clause as provided in the License Agreement, was valid and binding and the Sole Arbitrator as claimed by the petitioner, cannot be appointed.
Observations of the Court
The Bench observed the principle that the autonomy of the parties to mutually agree on the procedure to be followed for dispute resolution and appointment of Arbitrator is to be respected. In this context reliance was placed on Union of India vs. Parmar Construction Company.
It was also observed that the Court must refrain from appointment of an Arbitrator by ignoring the admitted procedure as agreed by the parties.
Relying on Voestalpine Schienen GMBH vs. DMRC, it was noted that:
“Even when an arbitrator is appointed in terms of contract and by the parties to the contract, he is independent of the parties… After all, the arbitrator has adjudicatory role to perform and, therefore, he must be independent of parties as well as impartial.”
The learned Counsel for the respondent had relied upon the Iworld Business Solutions Private Limited vs. Delhi Metro Rail Corporation Limited wherein similar panel of five Members who were all retired District Judges was considered and it was held that considering that they were all retired Addl. District Judges/ District Judges, their impartiality and neutrality could not be questioned and the panel was held to be valid for nomination of any one as an Arbitrator, by the petitioner. Regarding this, it was further observed that such procedure of forwarding a panel of names to the other contracting party to choose its nominee Arbitrator was no longer a valid procedure.
Judgment
The Bench, acknowledging the existence of a valid Arbitration Agreement between the parties and arbitrable disputes which arose therefrom, appointed a Sole Arbitrator to conduct the arbitration under the aegis of Delhi International Arbitration Centre.
Case: Overnite Express Limited vs Delhi Metro Rail Corporation
Citation: ARB.P. 18/2020
Bench: Justice Neena Bansal Krishna
Decided on: 22nd August 2022
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