Schedule V circumstances do not automatically disqualify the arbitrator: High Court of Delhi
The Delhi High Court has ruled that, unlike Schedule VII, the events listed under the Vth Schedule do not automatically disqualify an arbitrator from serving as a neutral arbitrator; rather, this disqualification must be proven. This was seen in the case of BHARAT FOUNDRY AND ENGINEERING WORKS & ORS. Vs. INTEC CAPITAL LIMITED & ANR (CM APPL. 5407/2022) and the case was presided over by HON’BLE MR. JUSTICE MANOJ KUMAR OHRI.
FACTS OF THE CASE
The appellant had received loans from the respondent, a financial non-bank. The respondent appointed the arbitrator to resolve the dispute resulting from two loan agreements after the appellant failed to return the loan in full. The identical arbitration issue resulting from two further loan agreements was also referred to by the respondent. The appellant was served but failed to show up before the tribunal, therefore ex-parte proceedings were conducted.
In both arbitrations, the respondent was given an ex-parte award by the arbitrator. The appellant contested the award under Section 34 of the A&C Act after feeling wronged by it. The Court, however, overruled its protest. Following that, the appellant appealed the lower court’s ruling under Section 37 of the A&C Act.
JUDGEMENT
The Court ruled that until a firm basis is established for questioning the independence and impartiality of the arbitrator, the Award cannot be set aside just because an arbitrator has been appointed in more than two arbitral procedures between the parties or their affiliates.
The Court cited the Supreme Court’s ruling in HRD Corporation (Marcus Oil and Chemical Division) v. GAIL (India) Limited, (2018) 12 SCC 471 to hold that an arbitrator’s appointment in more than two arbitrations in the previous three years does not automatically disqualify him from serving as an arbitrator unless it can be proven through supporting evidence that the arbitrator’s impartiality was compromised.
Hence, the court dismissed the plea.
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JUDGEMENT REVIEWED BY ABHINAV SHUKLA.