Case Note & Summary
The dispute arose from a Purchase Order issued by Bharat Electronics Limited (BEL) to Bipromasz Bipron Trading SA for the supply of GYRO Units. The petitioner sought the appointment of an independent arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, after the respondent insisted that disputes be referred to its Chairman-cum-Managing Director or his nominee, as per the arbitration clause in the Purchase Order. The petitioner claimed that the respondent's actions in halting supplies and rejecting units were arbitrary and illegal, leading to the current arbitration petition. The respondent countered that the arbitration clause explicitly named its Chairman as the arbitrator, thus the petition was not maintainable. The court analyzed the communication of the appointment of the arbitrator and the implications of impartiality, ultimately deciding that the Chairman's involvement could lead to perceived bias, warranting the appointment of an independent arbitrator. The court emphasized that an order takes effect only upon communication to the affected party, and thus the petition was deemed maintainable despite the respondent's claims of prior appointment of an arbitrator. The court directed that an independent arbitrator be appointed to resolve the disputes.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Impartiality Requirement - Arbitration and Conciliation Act, 1996, Section 11 - The court held that the appointment of the Chairman-cum-Managing Director as arbitrator was inappropriate due to concerns of impartiality, necessitating the appointment of an independent arbitrator instead (Paras 22-40).
Issue of Consideration
Whether the disputes should be referred to the Chairman-cum-Managing Director or an independent arbitrator.
Final Decision
The court held that the appointment of the Chairman-cum-Managing Director as arbitrator was inappropriate due to concerns of impartiality, necessitating the appointment of an independent arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Law Points
- Arbitration agreement
- Sole arbitrator appointment
- Impartiality in arbitration
- Communication of orders
- Section 11 Arbitration and Conciliation Act
- 1996
