There can be no appointment of arbitrator without the consent of the next party: The High Court of Delhi

A single party cannot unilaterally appoint an Arbitrator without the consent of the other party, as this would defeat the purpose of an unbiased decree to settle the dispute between the parties. This was held in the judgement passed by a bench of the High Court of Delhi consisting of Mr Justice Suresh Kumar Kait in the case of M/s Sital Dass Jewelers v Asian Hotels (North) Ltd. [Arb. P. 661/2021] 

The petitioner, M/s Sital Dass Jewelers had a licence agreement with the respondent, Asian Hotels (North) Ltd. which was renewable every five years at the option of the petitioner for leasing of space in the respondent’s shopping arcade in New Delhi. An additional space of 273 sq. ft. was granted to the petitioner in the same shopping arcade adjacent to the space already in the petitioner’s possession vide supplementary agreement which was meant to be read along with the original licence agreement dated 1September 1982. The petitioners pointed out that the shopping arcade was around 40 years old and the infrastructure was in urgent need of repair as it was no longer financially profitable for them to run their shops in the respondent’s arcade. The two parties began to have disputes over various issues like the need for renovating the building and the functioning of the petitioner’s shops.

It was pointed out that in the agreement dated 1st September 1982, an arbitration clause was included although it was not specified as to who was to be appointed as the arbitrator. The petitioner’s counsel called for the appointment of Retired Justice N.K. Mody as the sole arbitrator to settle the dispute between the parties. The respondent, on the other hand, refused to concur with the petitioner’s demands and as a result, the present petition was brought before the High Court of Delhi. The arbitration clause in the agreement read that “That in case of any dispute, difference, between the company and you, with regard to any matter including interpretation of this agreement and the clarification thereof, the same shall be referred to the joint arbitration of the Chairman of the Company or any person appointed by the Chairman and the arbitrator appointed by you, whose decision shall be final and binding between the parties and shall not be questioned in any court of law.”

The High Court concluded that “Petitioners have invoked arbitration vide notice dated 23.03.2021. The arbitration agreement between the parties and invocation of arbitration are not disputed by the respondents. Hence, these petitions deserve to be allowed. However, contention of petitioners to appoint Arbitrator of their choice 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 petition was accordingly disposed of.

Click here to view the judgement.

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