Appointment Of Arbitrators By Indian Government Owned Entities: Dos And Don'ts

Indian public sector undertaking (PSUs) account for a large part of India's GDP. Naturally, therefore, PSUs are parties to many Indian disputes (whether in courts or arbitration). When it comes to arbitrations involving PSUs in particular, one of the most contentious issues has been appointment of arbitrators. Historically, PSUs have appointed arbitrators with whom they have an existing relationship (for example, PSUs would typically appoint their current or former employees as arbitrators).

Indian courts and academics have been critical of this practice as it has the effect of undermining the neutrality of the arbitration process. Indeed, it was one of the issues discussed by the Law Commission in its Report No. 246 on Amendments to the Arbitration and Conciliation Act, 1996 (the Act). Pursuant to Law Commission's recommendations, the conflict of interest provisions of the Act were substantially amended in 2015. Most importantly, two new schedules were added to the