Court can deviate from agreed terms while appointing arbitrator in exceptional circumstances #indianlaws

Even if the arbitration agreement specifically provides for any particular qualification(s) of an arbitrator the same would not denude the power of the Court acting under Section 11(6), in an appropriate case to depart therefrom.

While exercising powers under Section 11 of the Arbitration and Conciliation Act, 1996 (Act) the ‘classical notion’ suggest that Court must appoint the arbitrator as per the agreement between the Parties. However, whether is it permissible for Court to deviate from the above notion? The answer was in affirmative. The Court can travel beyond the above notion in exceptional circumstances.

In the present case relevant clauses of the Contract did not prescribe any specific qualification of the arbitrators who were to be appointed under the agreement except that they should be railway officers.

It was observed that even if the arbitration agreement specifically provides for any particular qualification(s) of an arbitrator the same would not denude the power of the Court acting under Section 11(6), in an appropriate case to depart therefrom.

In the present case, the award in respect of disputes and differences arising out of the contract was yet to be passed even after two decades of the contractor making claim. The arbitration proceedings to resolve the disputes and differences arising out of one contract had not even commenced while in the other it has still been completed even after the expiry of nearly two decades.

The Court held that such situation is distressing and hence the power of the Court under the Act has to be exercised to effectuate the remedy provided thereunder and to facilitate the mechanism contemplated therein. The Court therefore upheld the judgment of the High Court by which a retired judge was appointed as the Arbitrator and stated in a situation where the procedure and process under the Act has been rendered futile, the power of the Court to depart from the agreed terms of appointment of arbitrators must be acknowledged.

[North Eastern Railway & Ors. vs. Tripple Engineering Works]

(SC 13.08.2014)