Decided on 26.11.2019, CASE REFERENCE : Perkins Eastman Architects DPC & Anr. versus HSCC (India) Ltd.
Issue before the Court
The issue before the Hon’ble Supreme Court was as to whether an arbitration clause authorising one of the parties to the contract to appoint the “Sole Arbitrator” for adjudication of disputes, would be valid in law or not. Another issue, inter alia, before the court was as to what would be the consequence of a situation where the party so authorised to appoint the Sole Arbitrator under the contract, has failed to do so within a period of 30 days (or within the time period, if so, provided in the agreement) from the date of receipt of notice.
The Bench of Justices Uday Umesh Lalit and Indu Malhotra of the Supreme Court of India finally settled the issue regarding the unilateral appointment of Arbitrators. In Perkins Eastman Architects DPC & Anr. versus HSCC (India) Ltd., Arbitration Application No. 32 of 2019, the Supreme Court while dealing with an application under Section 11(6) read with Section 11(12)(a) of the Arbitration Act has held that a person who has an interest in the outcome or decision of the disputes must not have the power to appoint a sole arbitrator.
Para 22. Independence and impartiality are two different concepts. An arbitrator may be independent and yet, lack impartiality, or vice versa. Impartiality, as is well accepted, is a more subjective concept as compared to independence. Independence, which is more an objective concept, may, thus, be more straightforwardly ascertained by the parties at the outset of the arbitration proceedings in light of the circumstances disclosed by the arbitrator, while partiality will more likely surface during the arbitration proceedings.