Person Interested In Outcome Of Decision Of The Dispute Must Not Have Power To Appoint Sole Arbitrator: SC [Read Judgment]

A person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator, the Supreme Court has reiterated in a judgment delivered on Tuesday.In Perkins Eastman Architects DPC vs. HSCC Ltd., Clause 24 of the Agreement empowered the Chairman and Managing Director of the company to make the appointment of a sole arbitrator and said. In Perkins Eastman Architects DPC vs. HSCC Ltd., Clause 24 of the Agreement empowered the Chairman and Managing Director of the company to make the appointment of a sole arbitrator and said Clause also stipulates that no person other than a person appointed by such Chairman and Managing Director of the respondent would act as an arbitrator. The bench of Justice Uday Umesh Lalit and Justice Indu Malhotra noted that in TRF Limited vs.Energo Engineering Projects Limited, the Court had examined a Clause which nominated the Managing Director himself to be the sole arbitrator and also empowered said Managing Director to nominate another person to act. Paragraph 50 of the decision shows that this Court was concerned with the issue, "whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator" The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator.