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D. Y. CHANDRACHUD, J. B. PARDIWALA, MANOJ MISRA, HRISHIKESH ROY, PAMIDIGHANTAM SRI NARASIMHA
Central Organisation for Railway Electrification – Appellant
Versus
ECI SPIC SMO MCML (JV) A Joint Venture Company – Respondent
If the panel of arbitrators is mutually chosen by both parties, the appointment of a nominee from that panel is valid and binding, subject to the nominee's eligibility under Section 12(5) read with the Seventh Schedule. (!) (!) (!) (!)
Such mutual agreement on a panel aligns with party autonomy under Section 11(2), allowing parties to agree on an appointment procedure, provided it ensures independence and impartiality. (!) (!) (!) The nominee must disclose circumstances under Section 12(1) per the Sixth Schedule, and parties can challenge under Section 12(3) or Section 13 if justifiable doubts arise. (!) (!) (!)
Ineligibility under Section 12(5) (e.g., current employee relationship per Seventh Schedule Entry 1) automatically voids the appointment, unless expressly waived post-dispute in writing. (!) (!) (!) Courts under Section 11(8) confirm eligibility via disclosures, prioritizing agreed qualifications while securing impartiality. (!) (!) (!)
This differs from unilateral panels, where lack of equal participation may violate Section 18 equality. Mutual panels provide counter-balance, upholding the procedure unless specific ineligibility exists. (!) (!) (!) (!)
JUDGMENT :
DHANANJAYA Y. CHANDRACHUD, CJI.
| Table of Contents | |
| A. | Background |
| i. Background to the reference | |
| ii. The reference | |
| B. | Issues |
| C. | Submissions |
| D. | Principles underpinning the Arbitration Act |
| i. Party autonomy | |
| ii. Mandatory provisions | |
| iii. Appointment of arbitrators | |
| iv. Independence and impartiality of arbitrators | |
| v. Equality in the arbitral proceedings | |
| vi. Public-private arbitration | |
| E. | The principle of equality applies at the stage of appointment of arbitrators |
| i. Arbitration as a quasi-judicial function | |
| ii. Equality applies at the stage of appointment of arbitrators | |
| F. | Nemo judex rule and the doctrine of bias |
| i. Principles of natural justice | |
| ii. Doctrine of bias | |
| iii. Test of real likelihood of bias | |
| a. Automatic disqualification | |
| b. Real likelihood of bias | |
| iv. Indian approach to the bias test | |
| v. Bias and doctrine of necessity in the context of the Arbitration Act | |
| vi. Unilateral appointment of arbitrators is violative of the equality clause under Section 18 | |
| G. | Public-private contracts and public policy |
| i. Unconscionability under the Contract Act | |
The principle of equal treatment of parties applies at all stages of arbitration, including the appointment of arbitrators, and unilateral appointment clauses violate public policy and the Arbitratio....
(1) Arbitral tribunal is preferred first authority to determine and decide all questions of non arbitrability – Court should and need only look into one aspect, existence of an arbitration agreement ....
An arbitration clause mandating appointment from a biased source is invalid; courts can appoint an independent arbitrator to ensure impartiality.
A unilateral appointment of an arbitrator by one party contravenes Section 12(5) of the Arbitration and Conciliation Act, rendering the arbitral award void ab initio and against public policy.
The court emphasized the necessity for impartiality in arbitration, ruling that automatic appointments of arbitrators undermined the arbitration clause, rendering the award invalid.
A valid arbitration agreement exists even if appointment procedures are unenforceable; courts should minimize intervention and uphold party autonomy in arbitration processes.
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