Section 11 of the Arbitration and Conciliation Act, 1996 talks about the appointment of arbitrators and the rules to be followed while appointment of arbitrators. Section 11 also states that whoever is interested or affected by the decision of the arbitrators cam appoint arbitrators. As far as the issue of right to select arbitrator unilaterally is concerned, it has been answered by court in several cases. One such case Perkins Eastman Architects DCP and Edifice Consultant Pvt. Ltd. vs. HSSCC Ltd (2019).
In this case dispute arose between Perkins Eastman ltd. And HSSC ltd related to the contract of architectural planning and development and the contract included the clause that power of appointment of arbitrator is given solely to the respondent. Respondent unilaterally appointed sole arbitrator. Appointment of sole arbitrator and clause given in the agreement related to unequivocal power of respondent to appoint arbitrator was challenged in the Supreme Court of India. Deciding the issue of appointment of arbitrator court said that while appointing an arbitrator it is to be kept in mind that person appointing arbitrator should itself competent to make such appointment. If the person appointing arbitrator or any third party as an arbitrator is ineligible to act as an arbitrator then the person appointed by him in his place also becomes ineligible to be appointed as an arbitrator. Court also stared the case of TRF, where similar issue arose and court said that the manager, who was given the power of appointing third party as an arbitrator, was ineligible to do so, the third part appointed by him as arbitrator also automatically becomes ineligible to be appointed as an arbitrator.
As far as issue of unilateral power of respondent to appoint arbitrator is concerned court said that the clause is unfair and unjust in itself, the fact that other party agreed to this clause is of no importance and court invalidates such an appointment .In the present case court decided in the favor of appellant and replaced the sole arbitrator appointed by respondent.
Subsequently, in Central Organisation for Railway Electrification (CORE) vs. ECI-SPIC-SMO-MCML (2019), the court held that the tribunal was to compromise three serving or retired railway officers, where one arbitrator would be chosen by contractor from a panel of railway officers prepared by CORE’s general manager who also had the right to appoint other two arbitrators, including the presiding arbitrator. The Contractor argued applying the decision of TRF Ltd. case And Perkins case, CORE’s general manager could not appoint the arbitrators as he was himself ineligible to serve as an arbitrator (section 12 (5) of the Act). The Supreme Court distinguished these two decisions on the basis that the right / role of CORE’s general manager in appointing the tribunal was counterbalanced by the contractor’s right to select its nominee from the panel of retired Railway Officers prepared by CORE’s general manager.
But finally in the case Proddatur Cable TV Digi Services vs. Siti Cable Network court applied the principle laid own in the case of TRF and Perkins and held that one party cannot takeaway the right of other party and exercise his right on his behalf. Again the similar issue was answered by Delhi High Court in 2020 in the case of Arvind Kumar Jain vs. Union of India and invalidated the right of respondent to force appellant to waive his right to nominate or appoint arbitrator.
So from these series of cases decide by court in the time span of two years gives us the view that no clause can give the unilateral right to one party to appoint an arbitrator and deprive other party to exercise his right.