Delhi High Court rules invoking Arbitration Act under a certain process

Delhi High Court rules invoking Arbitration Act under a certain process

It can be raised only if the procedure for appointment of the presiding arbitrator has failed

The Delhi High Court has held that the jurisdiction of the court under Section 11(6) of the Arbitration and Conciliation Act, 1996, can be invoked only once the procedure for appointment of the presiding arbitrator provided in the contract has been exhausted and has failed.

Justice Suresh Kumar Kait said that if the parties enter into an agreement with open eyes, the court could not ignore it and invoke the exercise of powers. The case is distinguishable, as the parties have not nominated any of the arbitrators, who could appoint the presiding officer to complete the arbitral tribunal.

The petitions were filed by companies incorporated under the provisions of the Companies Act, 1956 and are a subsidiary of M/s IRB Infrastructure Developers Limited.

The respondents were a statutory body constituted under the National Highways Authority of India (NHAI) Act, 1988 and another that was incorporated under Societies Registration Act (SRA), 1860 formed by NHAI along with the National Highways Builders Federation (NHBF) for settlement of disputes through arbitration.

The petition claimed that even though Article 2(h) of the Memorandum of Association of Society for Affordable Redressal of Disputes-Ports (SAROD-P) formulated the selection/appointment of a panel of arbitrators, no action had been taken.

Moreover, NHBF had informed the president of SAROD-P of its inability to fulfil the aspirations of members of NHBF. It had stated that future disputes might have to be settled under ad hoc arbitration under the Arbitration and Conciliation Act, 1996.

To this, the respondents submitted that while all disputes were settled between NHAI and the petitioners, the latter had agreed not to raise any claims under the Concession Agreements. The respondents also stated that the allegations raised against SAROD-P were totally baseless, as the Society has a specific 'eligibility criteria', depending on the qualification and experience for empanelment. And the current panel came from varied fields and backgrounds.

The court directed that under Section 11(6) of the Act seeking the appointment of a sole arbitrator was not maintainable and stands dismissed. It directed the parties to nominate one arbitrator each from the panel of SAROD-P (having 89 arbitrators). The two arbitrators would then appoint the third arbitrator.