Preserving Equity, Ensuring Fairness Across the Arbitration Journey (Photo Credit: File photo)
New Delhi :
May 2,2024 ……By Mr. Rohit Gandhi, Advocate, New Delhi
In a recent landmark ruling, the Delhi High Court, in the case of Margo Networks Pvt Ltd & Anr. v. Railtel Corporation of India Ltd ("Margo v. Railtel"), wielded its authority under Section 11 of the Arbitration and Conciliation Act, 1996 ("Act") to underscore the pivotal significance of appointing arbitrators in an impartial and unbiased manner, devoid of any partiality towards either party involved.
The crux of the case revolved around the arbitration clause embedded within a Request for Proposal ("RFP"), wherein the petitioner was granted the liberty to nominate one arbitrator from a panel provided by Indian Railways. Conversely, the respondent retained the authority to appoint the remaining arbitrators and designate the Presiding Arbitrator. Margo contested this mechanism, alleging it to be one-sided and in contravention of legal principles.
The Court embarked on a meticulous analysis, drawing insights from various legal precedents, notably the case of Central Organization for Railway Electrification v. ECI (JV) which distinguished the
CORE judgment, accentuating the necessity for a more expansive pool of arbitrators transcending solely retired railway or RailTel personnel.
Underpinning the Requirement of Broad-Based Panels, the Court leaned on the wisdom gleaned from Voestalpine Schienen Gmbh v. Delhi Metro Rail Corporation Ltd., wherein it underscored the imperative of constituting diverse panels encompassing professionals from multifarious sectors, rather than being confined to government functionaries. The panel in the present case exclusively comprised ex-Railway and RailTel employees, thereby failing to satisfy this imperative criterion.
Further buttressing its stance, the Court invoked the precedent set forth in Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd., emphasizing the necessity of maintaining a counter-balanced approach in arbitrator appointments. However, the Court highlighted the deficiency in upholding the counter-balance principle in cases where one party exercises dominance in appointing the majority of arbitrators, as glaringly evident in Margo v. Railtel.
Considering the insightful perspective of Mr. Rohit Gandhi, a practicing advocate in New Delhi and former associate partner at Shardul Amarchand Mangaldas, New Delhi it was opined that armed with these compelling findings, the Delhi High Court invoked its authority under Section 11 of the Act. It enlisted the services of two former Supreme Court judges as arbitrators to safeguard the sanctity of fairness throughout the arbitration process. These appointed arbitrators were entrusted with the solemn duty of jointly selecting the third arbitrator, who would also oversee the arbitration proceedings. Mr. Rajat Malhotra further elaborated that he had been appointed as a mediator/conciliator by one of the entities of Aditya Birla group to oversee the convening of a meeting for creditors. However, one of the creditors objected, citing it as a violation of the arbitration agreement previously executed between the parties and accordingly, parties invoked section 11 of the Act.
In a resolute denouement, the Court's decision resoundingly echoes the imperatives of upholding party equality through the prism of impartial arbitrator selection, thereby fortifying the edifice of fairness in arbitration proceedings. The said judicial pronouncement seamlessly aligns with antecedent rulings, which have consistently championed the cause of independence and neutrality in arbitrator appointments. It reaffirms India's unwavering commitment to buttressing its legal framework with robust safeguards against the pernicious encroachment of biased adjudication, thereby mirroring the loftiest standards espoused by international arbitration conventions.
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