Mere Participation Of Party In Arbitration Proceedings Cannot Be A Waiver Under Section 12(5) of A&C Act: Delhi High Court

Mere Participation Of Party In Arbitration Proceedings Cannot Be A Waiver Under Section 12(5) of A&C Act: Delhi High Court

The bench cited the judgments in the previous cases to resolve the issue

The Delhi High Court has held that mere participation of an entity in arbitration proceedings cannot be considered a waiver under Section 12(5) of the Arbitration and Conciliation (A&C) Act, 1996.

The bench of Justice Manoj Kumar Ohri held that applying under Section 29(A) did not amount to an express waiver in writing of the right to challenge the arbitrator's ineligibility under Section 12(5).

The decision clarified that mere participation in arbitral proceedings, without an overt act indicating awareness and conscious waiver of the right to object, did not suffice.

The petitioner had filed petitions under Section 34 of the A&C Act. It sought to set aside two final arbitral awards delivered by the same arbitrator for different projects related to the construction of flats in Dehradun and Meerut. Since disputes arose between the parties, it led to arbitration.

The petitioner challenged the awards primarily on the grounds of the arbitrator's de jure ineligibility, citing Section 12(5) of the Act. It argued that participation in arbitral proceedings did not waive the right to challenge an inherently ineligible arbitrator.

On the other hand, the respondent contended that an implicit waiver could occur through the petitioner's active steps, such as filing a Section 29(A) application for an extension of the arbitrator's mandate. It opposed the petitioner's reliance on certain judgments, including the present one, stating that filing an application under Section 29(A) amounted to a waiver.

The Court focused on whether the petitioner's continued participation and Section 29(A) application precluded it from challenging the arbitrator's de jure eligibility since the arbitrator was unilaterally appointed by the respondent. The clauses in the agreement did not involve the petitioner in the appointment process.

The bench referred to various judgments, including the Perkins Eastman Architects DPC vs. HSCC (India) Ltd case, to establish that an inherently ineligible arbitrator could not appoint another arbitrator. It cited the Larson & Toubro Ltd. vs. HLL Lifecare case stating that filing a Section 29(A) application did not constitute an express waiver in writing,

Thus, while rejecting the respondent's argument and distinguishing the case law, the judge ruled that the petitioner's objections were not waived, allowing the petitions, and setting aside the awards.