Supreme Court Upholds Arbitral Clause Providing For An Employee Arbitrator

• Appointment of employee as an Arbitrator is not invalid and unenforceable in arbitrations invoked prior to October 23, 2015;
• The terms of the arbitration agreement ought to be adhered to and/or given effect to as closely as possible;
• No automatic intervention by the Chief Justice of High Court for appointment of an arbitrator, without establishing cause.

Introduction

The Supreme Court of India ("Court") in its recent ruling, Aravalli Power Company Ltd. ("Appellant") v. Era Infra Engineering Ltd., ("Respondent"),¹ clarified that the provisions of the Arbitration and Conciliation (Amendment) Act, 2015 ("Amendment Act") pertaining to arbitral appointments and challenge to such appointments would not be applicable to arbitrations invoked prior to October 23, 2015. The Court held that the employee named as an arbitrator in the arbitration clause should be given effect to in the absence of any justifiable apprehension of independence and impartiality.