De Jure ineligibility of Arbitral Tribunal after 2015: SCI Clarifies

Post the TRF decision [TRF Ltd. v. EnergoEngineering Projects Ltd., (2017) 8 SCC 377] of the Supreme Court, there was a doubt as regards the appropriate forum to approach in case of appointment of an arbitrator whose appointment is void at the inception owing to the reason that the proposed arbitrator fell within one of the items in Schedule VII. The Supreme Court has now clarified in the decision of Bharat Broadband Network Ltd. v. United Telecoms Ltd. that since the appointment of such an arbitrator falls foul of Section 12(5), the appropriate forum to challenge such an appointment is not before the arbitrator but before the court under Section 14(2). 

The court was of the view that when such a person is appointed, his mandate terminates automatically (Para 17). The Supreme Court further clarified that two questions are to be decided in a petition under Section 14(2) in the above facts: (1) whether the appointee comes within the purview of Schedule VII; (2) if so, whether there has been a waiver?

The court also distinguished between waiver in terms of Section 4 and Section 12(5). The court stated that the threshold for waiver in Section 12(5) is much higher than Section 4 in that 12(5) required that the waiver should be through an express written agreement. The court also held that the 12(5) threshold is much higher than the "writing" requirement for an arbitration agreement as provided in Section 7 of the Act.

Do read the interesting decision. It compensates for the lack of depth in the TRF decision, where the Supreme Court missed the bus by not citing or analysing the international arbitration jurisprudence regarding the role of appointing authorities and non-conflation of the role of appointing authority and arbitral tribunal.