The Rights of the Deceased: Moral Rights Incidental to Copyright Law
- Vanshika Agrawal
- 2024-04-25
Contents hide
2 Perkins Eastman Architects DPC & Anr v. HSCC (India) Ltd
3 Shawarma Gadodia vs. Tata Capital Finance Services Ltd
4 Proddatur Cable TV Digi Services v. SITI Cable Network Limited
The usage of unilateral arbitrator appointments is neither new nor an uncommon occurrence in arbitration agreements. The sole arbitrator clause in the contract gives one party the unequal right to designate the arbitrator. In India, unlike some countries where the clause is deem invalid on the grounds of morality, the appointment of a sole arbitrator is govern by the Indian Arbitration & Conciliation Act, 1996. Over the years, this is see to have affect the neutrality and fairness of arbitrators.
The 2019 judgment of the Supreme Court in Perkins Eastman Architects DPC & Anr v. HSCC (India) Ltd[1] has created an uproar in the subject of appointment of sole arbitrators as it has given teeth to the observations made by the Law Commission in its 246th report[2]. The report had stressed the need to have independent, impartial, and fair judges throughout the arbitral process[3]. While the amendments to the Act made no mention of appointing authority of the party in a dispute, the abovementioned judgment has held that a person who has an interest in the outcome or
decision of the dispute must not have the power to appoint a sole arbitrator.
In the case of Perkins Eastman (supra), the dispute arose out of an arbitration clause that provide for the sole arbitrator to be appoint by the chief managing director of HSCC (India) Ltd (Respondent). The Supreme Court, while examining Section 11 of the Arbitration Act, gave two occurrences under the Indian context where unilateral appointments take place. The first one is the circumstance, where the Managing Director is name as an arbitrator, and the second, being the situation where
the Managing Director has the right to appoint any other person of his choice/nominee as an arbitrator.
The Apex Court while placing reliance in the case of TRF Limited[4], held that “where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course of the arbitration and therefore the person who has an interest in the outcome or decision of the dispute must not have the power to appoint the sole arbitrator”[5]. It is significant to note that this judgment has given wider scope to claim justifiable doubts as to independence, impartiality, and
ineligibility of arbitrators. The Perkins Eastman case (supra) brought forth the question of the effectiveness of pre-existing unilateral arbitration agreements and proceedings.
In the case of Sawarmal Gadodia vs. Tata Capital Finance Services Ltd[1], a petition was filed before the Bombay High Court pertaining to the appointment of an arbitrator in violation of section 12 and Schedule VI under the amended Arbitration Act. It was held that by hiring the same arbitrator as the sole arbitrator by a party for more than two arbitrations in a period of three years, there seem to be
circumstances, which are likely to give rise to justifiable doubts as to your independence or impartiality as an arbitrator.
The Delhi High Court in the case of Proddatur Cable TV Digi Services v. SITI Cable Network Limited[2] held that the eligibility of a company, acting through its Board of Directors, in unilaterally appointing a sole arbitrator is in tandem with the law laid down in the Perkins case. Hon’ble Justice Jyoti Singh has opined that although the underlying principle in the arbitration is party autonomy, virtues
such as fairness, transparency, and impartiality are of equal significance.
Therefore, the company acting through its Board of Directors would suffer ineligibility under Section 12(5) read with Schedule 7 of the Act. It is pertinent to note that
the Delhi High Court has clarified the issue of applicability of the judgment on ongoing proceedings. The Hon’ble Court reiterated the law laid down in the cases of Bharat Broadband Network Limited. v. United Telecoms Limited [3] and TRF Limited (supra) which maintains that the ineligibility of an arbitrator under Section 12(5) would have retrospective application.
So, in the current legal scenario, the best option when continuing with unilateral arbitral agreements is to get
an express agreement in writing giving consent to the arbitrator
by both parties or waiving the applicability of Section 12(5) subsequent to the dispute having arisen between parties.
The Supreme Court, in the case of Bharat Broadband (supra), maintains that it is necessary to ensure that both parties are aware of the ineligibility of arbitrators and
still choose to continue with the appointment of arbitrators out of one’s own volition. It is also ideal for the parties to attest that
they have full conviction and confidence in the arbitrators’ ability to be impartial and independent. The lack of Unilateral Arbitrator Appointments such express agreement or waiver would require the arbitrator to terminate his/her mandate.
By means of such drastic change in the immunity of unilateral arbitration contracts, the importance of standard form contracts with
such arbitral clauses used by companies is, without doubt, going to deteriorate. If we are to follow the legislative intent of the Act by appointing
Unilateral Arbitrator Appointments as per the principles of natural justice and the judgments of these courts, the way forward for Indian arbitration looks
promising in the domestic as well as the international forum.
[1] Perkins Eastman Architecture DPC and Anr V. HSCC (India) Ltd , 2019 SCC Online SC 1517
[2] Amendments to the Arbitration and Conciliation Act 1996, Report No. 246, Law Commission of India, August 2014.
[3] Id pg. 28
[4] Trf Ltd Energo Engineering Projects Ltd., (2017) 8 SCC 377.
[5] Supra note 1, page 24, para 16
[6] ARBP/562/2019
[7] Proddatur Cable TV Digi Services v. SITI Cable Network Limited order dated 20-01-2020, in O.M.P (T) 109 / 2019 in IA 17896/2019.
[8] 2019 5 SCC 755
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