Summary
A managing director designated as sole arbitrator who became statutorily ineligible could not nominate another arbitrator in his place. The nominee’s personal independence or standing did not cure the nominator’s lack of authority. The independent agreement to arbitrate survived, requiring fresh court consideration of appointment.
Issues
- Whether a statutorily ineligible named sole arbitrator retained authority to nominate a substitute.
- Whether the invalid appointment could be examined under Section 11 and whether the arbitration agreement survived.
Provisions considered
- Section 12(5) and Seventh Schedule, Arbitration and Conciliation Act, 1996The managing director’s statutory ineligibility removed both his capacity to act as named sole arbitrator and the derivative nomination power. (¶¶ 10–14, 52–57)
- Section 11(6) and 11(8), Arbitration and Conciliation Act, 1996An ex facie invalid appointment could be examined; the High Court’s cryptic purported independent appointment did not cure the defect. (¶¶ 17–46, 58)
Held
- The issue was the managing director’s authority, not the nominee’s objectivity or respectability. Once his identity as eligible named sole arbitrator was lost, the power to nominate someone in his place was also extinguished. (¶ 53–57)
- The Court distinguished this clause from an arrangement in which each party appoints its own arbitrator. The judgment did not hold that party nomination in every bilateral tribunal arrangement was forbidden. (¶ 53)
- Clause 33(c)’s general agreement to arbitrate was independent of clause 33(d)’s defective appointment mechanism. Arbitration therefore survived, allowing the court to make an appropriate fresh appointment. (¶¶ 52, 58–59)
Result
Appeals allowed; appointment orders set aside and matters remanded to the High Court for fresh consideration of arbitrator appointment. No costs.