Yet another pro-arbitration approach taken by the Hon’ble Supreme Court of India.
This SLP was filed challenging an order passed by the Hon’ble High Court of Bombay, whereby the Hon’ble High Court while adjudicating an application filed by the Respondent under Section 14 and 15 of the Arbitration and Conciliation Act, 1996 (‘Act’) (‘Application’), terminated the mandate of the arbitrator appointed by the parties in accordance with the arbitration agreement between them.
The main ground taken by the Respondent (then Applicant and Claimant in the arbitration) in its Application under Sections 14 and 15 of the Act was that there was loss of confidence in the arbitrator as he had directed the Respondent to pay arbitrator’s fee for the hearings on which adjournment was sought by the Respondent and that such order was in the nature of costs. Pertinently, Respondent had refused to pay the arbitrator’s fee for hearings on which it sought adjournment. Owing to such refusal on part of Respondent, the arbitrator suspended the arbitral proceeding qua the Respondent and with further direction that the proceeding would revive upon payment of his fee.
This ground of loss of confidence was accepted by the Hon’ble High Court. Resultantly, the arbitrator’s mandate was terminated and a substitute arbitrator was appointed by the Hon’ble High Court. However, the said appointment was contrary to arbitration agreement between the parties, as under the arbitration agreement the Petitioner (the Respondent in the arbitration) was given the power to appoint an independent arbitrator.
Challenging the said termination and consequent substitution by the Hon’ble High Court, Senior Advocate Shyam Divan & Sameer Jain, Founder & Managing Partner – PSL Advocates & Solicitors argued on behalf of the Petitioner. While not going into the merits of the dispute between the parties, the Hon’ble Supreme Court disposed of the SLP and appointed a new arbitrator in terms of the arbitration agreement between the parties, which was nominated by the Petitioner. The Hon’ble Supreme Court also directed that all the allegations/observations including observation of loss of confidence made against the arbitrator appointed by the Petitioner at first instance, stand expunged from the impugned order of the Hon’ble High Court. It is noteworthy to mention that the Hon’ble Supreme Court also directed that the question of law involved in the matter is left open and the impugned order of the Hon’ble High Court would not be treated as precedent in any other matter.
The view taken by the Hon’ble Supreme Court, once again showcases the pro-arbitration approach of India as the Hon’ble Court treated party autonomy as paramount. Thus, it would be interesting to see how the courts in India now deal with allegations of loss of confidence against the arbitrator.
The matter was filed by PSL – Advocates & Solicitors and Probus Legal, Mumbai.
Read the order here:
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