SC: Participating & acquiescing in entire arbitration estops party from challenging arbitrator’s competence

Today, i.e. on 23rdJanuary 2019, the Hon’ble Supreme Court, in the matter of Rajasthan Small Industries Corporation Limited v. M/s Ganesh Containers Movers Syndicate pronounced that a party is estopped from challenging the competence of the arbitrator if it has participated in the entire arbitration proceedings and acquiesced in the proceedings.

The Hon’ble Supreme Court observed that:

When the parties have consciously agreed that the disputes or differences shall be referred to a specific person for sole arbitration and subsequent to that when the parties have participated in the arbitral proceedings before such appointed arbitrator for quite some time, a party cannot turn round and seek for appointment of an independent arbitrator. (This inference has been drawn on the basis of Para 20)

When a party has participated in the proceedings before the arbitral tribunal for quite some time and has also expressed faith in the sole arbitrator, then challenging the appointment of the sole arbitrator is not justified. (This inference has been drawn on the basis of Para 21)

After having participated in the entire arbitration proceedings and acquiesced in the proceedings, a party is estopped from challenging the competence of the arbitrator. (Para 22)

Mere neglect of an arbitrator to act or delay in passing the award by itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the parties.  (Para 31)

Section 11(6) of the Arbitration and Conciliation Act, 1996 comes into play only when there is failure on the part of the party concerned to appoint an arbitrator in terms of the arbitration agreement. (Para 34)

In exercise of power under Article 142 of the Constitution of India, it is open to the court to mould the relief by safeguarding the interest of parties. The paramount consideration in such cases should be to ensure that there is no injustice caused. (Para 37)

Copy of judgement:Judgement_23-Jan-2019

-Tushar Kaushik

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