What is the position of an arbitral award passed by an ineligible arbitrator during the time when his eligibility was under challenge before the court?

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Shubham Budhiraja[1]

 

Mr. A & Developer-B enters into a builder buyer agreement containing an arbitration clause giving unilateral power to the Managing Director of the developer company to appoint an arbitrator. Dispute arose, B appointed C as arbitrator who later recused himself. Thereafter, B appointed D as arbitrator. Mr. A filed an objection challenging the appointment which was rejected by the arbitrator. Mr. A filed section 11(6) petition seeking appointment of arbitrator relying upon TRF Judgment but Delhi High Court dismissed it holding that MD can nominate it. The appeal filed before Hon’ble apex court was withdrawn with liberty to file review. Meantime Perkins' Judgment settled the law. The Delhi High Court in review jurisdiction set aside the earlier order and the matter came up for fresh hearing on section 11(6) petition. While this petition was pending, the arbitration proceedings were completed and the award was passed. The Delhi High Court held that the award passed, even though there was no stay of arbitration proceedings, is not binding because the very appointment was non est in law. The passing of the award cannot make right the wrongful appointment of the arbitrator, and it cannot render the remedy of the Petitioner under Section 11(6) of the Act to be non-est.[2]

 

(I)                 In absence of stay, the intervening fact of making of arbitral award would not affect the maintainability of the present proceedings, particularly when the unilateral appointment of the arbitrator is ex-facie contrary to law.

 

(II)               The passing of the award cannot make right the wrongful appointment of the arbitrator, and it cannot render the remedy of the Petitioner under Section 11(6) of the Act to be non-est.


[1] Advocate, Delhi High Court [LLB, ACS, BCOM(H)], Budhirajalawchambers@gmail.com,  +011-45059142

[2] ARB.P. 133/2019, Delhi High Court, Judgment dated 31/08/2022

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