The Allahabad High Court in the case Gepdec Infratech Limited Thru Authorized Representative vs U.P. Power Transmission Corporation Ltd. Thru Superintending Engineer Lucknow observed and has held that the allegation under Item No. 24 of the Fifth Schedule of the Arbitration and Conciliation Act, 1996 does not automatically disqualify the arbitrator without disclosing any specific relationship between the arbitrator and the party. The Item No.24 of the Fifth Schedule states that doubts about an arbitrator’s independence or impartiality can arise if they currently serve or have served as an arbitrator in another arbitration on a related issue which involves one of the parties or an affiliate of one of the parties within the past three years.
Facts of the Case:
The Allahabad High Court, High Court in an order, suggested by the Former judge of this court, Justice V.C. Gupta as an arbitrator to resolve the dispute between the parties.
Justice V.C. Gupta, in compliance with this order, conveyed his consent through a letter in accordance with the law.
The Respondent in the case approached the High Court and contended that the proposed arbitrator, Justice V.C. Gupta, is currently engaged in arbitrating a case between the Respondent, U.P. Power Transmission Corporation Ltd., and SEW Infrastructure Ltd. thus, the said appointment was made by the High Court through an order in Civil Misc. Arbitration Application.
Further, the respondent argued that as per Item 24 of the Fifth Schedule of the Arbitration and Conciliation Act, 1996, Arbitration Act, the appointment of Justice V.C. Gupta may lead to justifiable doubts about his independence or impartiality.
The Appellant stated that the argument put forth by the Respondent was misconceived and untenable.
It was also argued before the court that there was no evidence to suggest that the proposed arbitrator has any connection or affiliation with either of the parties involved in this case or the other arbitration.
Observations Made By District Commission:
The High Court in the case observed and has noted that Section 11 delineates the procedure for arbitrator appointments, particularly Sub-sections (6) and (8), underscoring the High Court’s role when parties fail to agree on an appointment.
It has been emphasized under Sub-section (8) that the necessity for the arbitral institution, before appointing an arbitrator, to seek written disclosure from the prospective arbitrator in accordance with Section 12(1) and the court is mandated to consider qualifications agreed upon by the parties, the contents of the disclosure, and other factors ensuring the appointment of an independent and impartial arbitrator.
The court stated that Section 12 of the Act requires the proposed arbitrator to disclose in writing any circumstances affecting their independence and impartiality as outlined in the Fifth Schedule. The Grounds for challenge under Section 12(3) include circumstances giving rise to justifiable doubts about independence or impartiality, or the arbitrator lacking the agreed qualifications and the Fifth Schedule provides specific grounds for doubting arbitrators’ independence or impartiality.
It has been stated under Item No.24 of the Fifth Schedule that doubts about an arbitrator’s independence or impartiality can arise if they currently serve or have served as an arbitrator in another arbitration on a related issue involving one of the parties or an affiliate of one of the parties within the past three years.
The High Court also clarified that while this can be a ground for doubt, it is not conclusive and must be considered in the context of the specific circumstances.
Therefore, the Items No.15 and 16 specify that an arbitrator can be considered related to the dispute if they provided legal advice or expert opinion to a party or an affiliate of one of the parties, or if they have previous involvement in the case.
The High Court in the case considered the objection raised by the respondent based on Item No.24, held that it was misconceived and untenable.
The court noted that the Respondent didn’t present any concrete circumstances that would suggest the proposed arbitrator’s involvement in another arbitration related to the respondent corporation or any affiliation.
However, the objection was raised by the Respondent solely relied on Item No.24 of the Fifth Schedule, wherein it asserted the arbitrator’s disqualification without disclosing any specific relationship between the arbitrator and the respondent corporation, other than his role in a separate arbitration.
The High Court in the case observed and has highlighted the need to harmoniously interpret Item No.16 along with Items 22 and 24, asserting that disqualifications are not automatic, and a showing of independence and impartiality in previous appointments can override potential disqualification.
The court dismissed the Respondent’s objection, wherein stating that Item No.16, which pertains to previous involvement in an advisory or other capacity in the dispute, should not be read as including previous involvements as an arbitrator.
The High Court appointed Justice V.C. Gupta as the arbitrator to decide the dispute between the parties.
The counsel, Advocate Vishnu Pratap Singh and Awaneesh Yadav appeared for the Petitioner.
The counsel, Advocate Puneet Chandra represented the respondent.