Supreme Court Rules Against Unilateral Appointment of Arbitrators by PSUs

ENA Sectors 2024-11-08 17:48:12 New Delhi, Nov 8 (KNN) On Friday, the Supreme Court of India ruled that Public Sector Undertakings (PSUs) cannot unilaterally appoint arbitrators fr0m their curated panels for disputes with private contractors. The Constitution Bench, led by Chief Justice DY Chandrachud, emphasised the principle of equal treatment for both parties in arbitration proceedings. The case arose fr0m disputes in which PSUs were allowed to select arbitrators fr0m their own panels. The Court ruled that while PSUs may maintain such panels, they cannot compel the opposing party to choose an arbitrator fr0m that list. This ruling aims to ensure fairness and impartiality in the arbitration process. The majority judgment highlighted several key points. First, the Court affirmed that equal treatment applies throughout arbitration, including the appointment of arbitrators. A clause allowing one party to unilaterally appoint an arbitrator raises concerns about impartiality and violates Article 14 of the Constitution, which guarantees equality before the law. The Court also ruled that in a three-member arbitration panel, mandating one party to choose fr0mthe other partys curated panel undermines equal participation. The judgment clarified that these principles would apply prospectively, affecting future arbitrator appointments in three-member tribunals. In a dissenting opinion, Justice Hrishikesh Roy argued that unilateral appointments should not be invalidated, emphasizing party autonomy and the eligibility of arbitrators under Schedule 7 of the Arbitration Act. This ruling stems fr0m earlier cases, including TRF Ltd. v. Energo Engineering Projects (2017), where the Court had ruled against the appointment of ineligible arbitrators, sparking ongoing legal debates. The decision is expected to promote fairness and transparency in arbitration, particularly in public-private contracts involving PSUs. (KNN Bureau) 39855 https://knnindia.co.in/news/newsdetails/sectors/supreme-court-rules-against-unilateral-appointment-of-arbitrators-by-psus 2024-11-08 17:48:12 knnindia.co.in Supreme Court Rules Against Unilateral Appointment of Arbitrators by PSUs