Kerala HC: Party to arbitration agreement or nominated person cannot be appointed as arbitrator
The Kerala High Court has stated that a party to an arbitration agreement or person nominated by it cannot be appointed as an arbitraot, even if the agreement expressly allows for the same. Justice Devan Ramachandran of the Kerala High Court held that the Supreme Court's decision in TRF limited v. Engineering Projects Ltd. would stand. In that decision, it was observed that Section 12(5) of the Arbitration and Conciliation Act, 1996 implies that neither a party to the disputes nor a person nominated by it can be appointed as an Arbitrator. The case arose a petition by a private limited company, under Section 11(6) of the Act praying that the Court appoints a sole Arbitrator, to adjudicate and decide certain disputes which warranted resolution. The respondents argued that the petition in fact fell under Section 11(5) and was not maintainable.
The court analyzed both subclauses and decided that a conjoined reading of Sections 11(2), 11(5), and 11(6) limpidly reveals that Section 11(5) would become attracted only in the cases where an agreement as to the procedure for appointment of an Arbitrator, as referred to in Section 11(2), between the parties has failed. It further observed clause 27 of the arbitration agreement, where the parties had agreed on a procedure for appointing an Arbitrator, After taking into consideration the exact clauses of the agreement and the language of sections 11(5) and 11(6), the Court felt it was unable to agree with the respondent's contentions. The Arbitration Request was allowed and a sole Arbitrator was appointed to resolve the dispute between the parties.