Former employee able to act as arbitrator

The Supreme Court recently held that the Arbitration and Conciliation Act, 1996, does not disqualify a former employee from acting as an arbitrator provided there are no doubts about his independence and impartiality. The court observed that even after the 2015 amendment, the position remains the same, as entry 1 in the fifth schedule of the Act does not include “past/former employees.”

In Government of Haryana, PWD Haryana v M/s G F Toll Road Pvt Ltd & Ors, the works contract between the Government of Haryana (appellant) and M/s G F Toll Road Pvt. Ltd. (respondent) contained a dispute resolution clause, where disputes were to be referred to an arbitral tribunal of three members with the appellant and respondent each entitled to nominate an arbitrator. The presiding arbitrator would be appointed as per the Indian Council of Arbitration (ICA) rules and the arbitration would also be governed by such rules.

When disputes emerged, the respondent sent a notice to the ICA in May 2015, invoking arbitration and nominated its arbitrator. The appellant then nominated their arbitrator who was a retired engineer in chief. However, the ICA and respondent both objected to the appointment of the appellant’s nominee arbitrator, as he had previously worked for the appellant.