Arbitrator cannot be appointed unilaterally by one party: Delhi High Court

The Delhi High Court recently reiterated that no party to an arbitration can be allowed to unilaterally appoint an arbitrator as the same shall defeat the purpose of unbiased adjudication of dispute between the parties (Sivanssh Infrastructure Development Pvt. Ltd. v. Army Welfare Housing Organization). .The judgment was delivered by single-judge Justice Suresh Kumar Kait in an arbitration petition by a construction company seeking appointment of sole arbitrator under the Arbitration and Conciliation Act 1996..The petitioner-company had made the winning bid for development of a residential complex invited by the respondent society. Originally, the petitioner was scheduled to complete the work by December 27, 2018 but due to certain delays on the part of the respondent, the same was completed only by May 31, 2019.Additionally, certain other dipsutes arose between the parties for which the petitioner invoked arbitration and suggested names of three persons to the respondent for the appointment as a sole arbitrator.However, respondents instead of choosing one from the list of petitioners sent list of four different names for the same. After petitioner conveyed their inability to accept the same to the respondent, the respondent society unilaterally appointed a sole arbitrator.The petitioner has approached the Delhi High Court challenigng the same and seeking fresh appointment of a sole arbitrator..The Court placed reliance on the Supreme Court decision in Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd. 2019 SCC Online SC 1517, in which the top Court had observed as follows:"But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint of a sole arbitrator."The High Court, therefore, held that no party can be permitted to unilaterally appoint an arbitrator since the same will defeat the purpose of unbiased adjudication."Unilateral appointment of Arbitrator by the respondent is rejected, as no party can be permitted to unilaterally appoint an arbitrator, as the same would defeat the purpose of unbiased adjudication of dispute between the parties," the judgment said.Additionally, the Court proceeded to appointed retired judge Justice BD Ahmed as the sole arbitrator to adjudicate the dispute between the parties. The Court also directed that the arbitration be conducted under the Delhi International Arbitration Centre (DIAC).With regard to the fees of the arbitrator, the Court stated that the same shall be in accordance with the Schedule of Fees prescribed under the Delhi International Arbitration Centre (Administrative Cost and Arbitrators Fees) Rules, 2018..Advocates Navin Kumar, Rashmeet Kaur and Priya Goyal appeared for the petitioner. Advocates AK Tewari and Tushar Upreti appeared for the respondent..[Read Judgment]