Arbitrations By Unilaterally Appointed Arbitrators: In Jeopardy?

The Arbitration and Conciliation Act 1996 ('A&C Act') was amended by the Arbitration and Conciliation (Amendment) Act 2015 ('Amendment Act'). Apart from other changes, the Amendment Act amended §12 of the A&C Act and introduced the 5^th, 6^th, and 7^th Schedule with the objective of securing the impartiality of arbitrators and improving the legitimacy of the arbitration process in India.

Following the Amendment Act, a question arose in the matter of TRF Limited v Energo Projects Limited¹ as to whether the arbitration clause, in a contract, which contemplates any disputes being referred to arbitration before the Managing Director ('MD') of a party to the arbitration or any other arbitrator appointed by such MD, falls foul of §12 of the Amendment Act. The Supreme Court of India ('SC'), ruled that if the person, in this case the MD, himself becomes ineligible to act as an arbitrator as per §12(5), then he would also be ineligible to appoint an arbitrator.