When a defect in the jurisdiction of the arbitrator exists, the award can be challenged at any stage.  

In the matter of Telecommunication consultants India Ltd vs Shivaa Trading O.M.P. (Comm) 311/2022 decided by the Hon’ble High Court of Delhi on 09.04.2024

FACTS: The petitioner and the respondent entered into a Memorandum of Understanding (MOU) for construction of roads. The MOU was subsequently terminated by the petitioner on 31.01.2013. The petitioner later invoked arbitration proceedings as per the MOU. Thereafter a sole arbitrator was appointed by the petitioner and subsequently an Arbitral Award dated 17.12.2021 was passed, this award was challenged in the present Arbitration Petition by the petitioner. The principal contention of challenge was that the appointment of the Ld. Sole arbitrator was void ab – initio as per section 12(5) of the Arbitration & Conciliation Act, 1996.

ISSUE: Whether a challenge under section 34 of the Arbitration & Conciliation Act, 1996 on grounds of defective jurisdiction be made at a later stage?

ANALYSIS: The Hon’ble High Court of Delhi relied upon the judgment of the Hon’ble Supreme Court of India in Bharat Broadband Network Ltd. Vs United Telecom Limited (2019) 5 SCC 755 wherein the Hon’ble Supreme Court held that when an appointment of an arbitrator is hit by section 12(5) of the Arbitration & Conciliation Act, 1996, then the appointment would be void. It further held that as per section 12(5) an express agreement in writing will be required for waiver to the objection to the appointment of arbitrator, and deemed waiver is inapplicable.

The Court held that in the present case no express waiver was provided by the parties as mandated under section 12(5) of the Arbitration & Conciliation Act, 1996. Therefore, a case where the appointment of the arbitrator itself is void ab-initio then the entire arbitral proceedings are void, hence a challenge to such an award can be made at any stage. The Court accordingly allowed the petition and set aside the Arbitral Award.

DJ-09-2024