Case: – Smaaash Leisure Ltd v/s Ambience Commercial Developers Pvt. Ltd.; O.M.P. (COMM) 180/2022
In the recent ruling of the High Court of Delhi, the case revolved around the arbitration clause in the lease agreements between the parties. The clause stipulated that the lessor shall propose three names of arbitrators to the lessee, who shall then choose from the three names proposed. However, the Petitioner contested the narrowness of the panel and the unilateral appointment of the sole arbitrator by the Respondent, leading to a legal dispute.
The Judgment of the Hon’ble Court emphasized the principle that a party cannot be compelled to appoint an arbitrator from a narrow panel consisting of only three persons. The Court highlighted that such a restricted panel does not align with the spirit of impartiality and independence essential for the arbitration process, while citing the observations made by the Supreme Court in Voestalpine Schienen GmBH, the judgment stressed the need for a broad-based panel to instill confidence in the parties involved.
Furthermore, the judgment also addressed the issue of waiver of rights by conduct in the context of arbitrator appointment. It underscored that participation in arbitral proceedings does not automatically imply a waiver of the right to object to the ineligibility of the arbitrator. The Court referred to the decision in Larsen and Toubro Limited, emphasizing the requirement of an express agreement in writing to waive the applicability of Section 12(5) of the 1996 Act.

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

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