No single party can be permitted to unilaterally appoint arbitrator: Delhi High Court

The Delhi High Court has reiterated that unilateral appointment of an arbitrator by a party is impermissible in law and such appointment has to be made with the consensus of the parties involved or by the Court [Envirad Projects Private Limited v. NTPC Limited]..Justice Suresh Kumar Kait dismissed the unilateral arbitral clause imposed by the National Thermal Power Corporation Limited (NTPC) against the petitioner-company, by virtue of which the appointment of the sole arbitrator was its behest. Relying on the Supreme Court decision in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd. and its decision in Proddatur Cable TV Digi Services Vs. Citi Cable Network Limited, the Court noted that "the arbitrator either has to be appointed with the consensus of the parties or by this Court". The single-judge was hearing a petition moved by Envirad Projects Private Limited under Section 11(6) of the Arbitration and Conciliation Act against NTPC, seeking appointment of a sole arbitrator to adjudicate the disputes inter-se the parties.In the instant case, a dispute arose between the parties with the petitioner serving a notice dated December 27, 2021, upon the respondent-company, seeking the appointment of an arbitrator as per the terms and provisions of clause 56 of the general conditions of contract.It was the stand of the respondent-company that as per clauses 56 and 57 of the agreement between the parties, "the disputes shall be referred to the sole arbitration of the General Manager of NTPC limited, and if General Manager is unable or unwilling to act, to the sole arbitration of some other person appointed by the Chairman and Managing Director, NTPC Limited, willing to act as such Arbitrator.”.At the outset, the High Court relied upon the Supreme Court's decision in Perkins Eastman Architects DPC and Another v. HSCC (India) Limited 2019 SCC Online SC 1517, in which it was held that "no single party can be permitted to unilaterally appoint the arbitrator, as it would defeat the purpose of unbiased adjudication of dispute between the parties."The High Court thus noted that the arbitrator either has to be appointed with the consensus of the parties or by the Court.Consequently, the Court has appointed Justice (Retd.) SK Katriar as the sole arbitrator to adjudicate the dispute between the parties.The Court directed the appointed arbitrator to ensure compliance with Section 12 of Arbitration and Conciliation Act before commencing the arbitration. The Court also said that the fee of the arbitrator shall be governed by the Fourth Schedule of the Arbitration and Conciliation Act.Advocates Brijesh Kumar Goel, Rajeev Kumar and Ankit Gupta appeared for the petitioner.Advocates Adarsh Tripathi, Vikram S Baid and Ajitesh Garg appeared for the respondent.In October last year, the Delhi High Court had observed 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..[Read Judgment]