Mr. Shyamal Mukherjee vs. Pricewaterhouse Coopers Services LLP - (High Court of Karnataka) (04 Jun 2024)

Appointment of arbitrator can be challenged only in circumstances that give rise to justifiable doubt as to his independence or impartiality

MANU/KA/1596/2024

Arbitration

Present Petition is filed under Section 11(5) of the Arbitration and Conciliation Act, 1996, ('the Act, 1996') seeking appointment of a sole Arbitrator in terms of the arbitration clause contained in the LLP Agreement dated 21st March, 2017. The issue therefore is, whether an Arbitrator who is considering another dispute between the same or one of the parties is barred from trying a dispute in the light of Entry 24 of the Fifth Schedule of the Act, 1996?

Grounds for challenging appointment of an Arbitrator are provided in sub-section (3) of Section 12. Such appointment can be challenged only if circumstances exist that give rise to justifiable doubt as to his independence or impartiality. If the relationship of the Arbitrator with the parties or Counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule of the Act, such person shall be ineligible to be appointed as an Arbitrator, in terms of sub-section (5) of Section 12. It is not the case of the Respondent that, the person sought to be appointed as Arbitrator incurs any of the disqualification under the Seventh Schedule.

The Hon'ble Apex Court in HRD Corporation(Marcus Oil And Chemical Division) Vs. Gail (India) Limited (Formerly Gas Authority of India Limited) and PanipatJalandar NH-1 Tollway Private Limited Vs. National Highways Authority of India has held that, the disqualification contained in Entry 22 and 24 are not absolute, if he/she is able to show that he/she was independent and impartial on the earlier two occasions.

It is therefore clear that as an Arbitrator, if a person has decided a dispute earlier or has been appointed as an Arbitrator on two or more occasions by one of the parties or an affiliate of one of the parties, that by itself is not a bar for his appointment as an Arbitrator subsequently, if it is possible for such Arbitrator to show that he was independent and impartial on the earlier occasion. Therefore, it is too farfetched to contend that a person serving as an Arbitrator in a dispute involving the petitioner and affiliate of the Respondent herein is barred from being appointed as an Arbitrator in the present case.

Entry 24 will not apply as a rule for declining appointment of Hon'ble Justice M.S.Sanklecha to adjudicate the dispute between the petitioner and the Respondent, which is admittedly an affiliate of Pricewaterhouse Coopers Pvt. Limited (Company). Petition allowed.

Tags : APPOINTMENT ARBITRATOR INDEPENDENCE