Supreme Court: If Ineligible To Be Appointed As Arbitrator, You Can't Nominate

Introduction

Recently, the Hon'ble Supreme Court of India (Supreme Court) in the case of TRF Ltd. v Energo Engineering Projects Ltd¹ has held that once an arbitrator becomes ineligible to be appointed as an arbitrator by operation of law, he also loses his power to nominate another as an arbitrator, irrespective of the fact that such other person is an independent person i.e. he / she does not have any financial or other relationship with the person appointing him.

Factual Background

TRF Ltd (the Appellant) had entered into a purchase order for purchasing certain products from Energo Engineering Projects Ltd (the Respondent) (the Purchase Order). In order to secure the performance under the Purchase Order, the Appellant submitted an advance bank guarantee and a performance bank guarantee to the Respondent.