Case Note & Summary
This case involved an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 by Glock Asia - Pacific Ltd. for the appointment of a Sole Arbitrator following a dispute with the Union of India regarding a contract for supplying Glock pistols. The Ministry of Home Affairs had issued a tender for the supply of 31,756 pistols, which was accepted, and the applicant fulfilled its contractual obligations by delivering the goods and receiving payment. However, upon the applicant's notification that the performance bank guarantee would not be extended, the respondent invoked the guarantee, leading to the arbitration notice issued by the applicant. The respondent contested the nomination of the arbitrator, citing a clause in the tender conditions that required arbitration to be conducted by an officer appointed by the Secretary of the Ministry of Home Affairs. The applicant argued that this clause was contrary to Section 12(5) of the Act, which prohibits the appointment of arbitrators with conflicts of interest. The court analyzed the submissions, referencing previous judgments and the statutory provisions, ultimately concluding that the appointment of a government employee as an arbitrator in this context was invalid due to the inherent conflict of interest. The court appointed a former judge of the Supreme Court as the Sole Arbitrator to ensure impartiality in the arbitration process.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Conflict of Interest - Section 12(5) Arbitration and Conciliation Act, 1996 - The court held that the appointment of an arbitrator who is an employee of the party to the dispute violates the provisions of Section 12(5) which prohibits such appointments to ensure impartiality. The arbitration clause allowing the Secretary of the Ministry of Home Affairs to appoint an officer from the Ministry of Law was deemed invalid due to this conflict (Paras 19-22).
Issue of Consideration
Whether the appointment of a Sole Arbitrator by the Union of India, as per the arbitration clause, is valid under Section 12(5) of the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court allowed the application under Section 11(6) of the Arbitration and Conciliation Act, 1996 and appointed Ms. Justice Indu Malhotra as the Sole Arbitrator to adjudicate the disputes arising under the Conditions of Tender.
Law Points
- Arbitration
- Sole Arbitrator Appointment
- Conflict of Interest
- Section 11
- Section 12(5)
- Arbitration and Conciliation Act
- 1996
