The Supreme Court recently considered whether the chief justice of a high court or any person or institution designated by the chief justice, while exercising power under section 11(6) of the Arbitration and Conciliation Act, 1996, is bound to nominate an arbitrator as specified in the agreement for arbitration.
In Union of India v Besco Ltd, the designated judge in the high court took the view that the government had lost the mandate to appoint an arbitrator since it failed to appoint the arbitrator within the permitted time, and hence nominated an independent arbitrator.
In appeal, the government contended that the designated judge, exercising the power under section 11(6) of the act, is bound to nominate a person as stipulated in the arbitration agreement. Counsel for Besco contended that once the right of a party to nominate an arbitrator is forfeited, the chief justice or the designated judge under section 11(6) is free to nominate any qualified person as arbitrator and is not bound to nominate the arbitrator as specified in the agreement.
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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or bhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
