In the attached judgment the issue which fell for consideration before the Hon’ble Delhi High Court was whether the challenge to the jurisdiction of the arbitrator could lie in a section 34 application filed under the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), where such challenge was raised for the first time during the Section 34 application stage. The Court also dealt with the distinction between grounds specified in Schedule V and Schedule VII for disqualification of an arbitrator.
Facts in brief
The instant litigation was in pursuance of a section 34 petition under the Arbitration Act impugning an ex parte arbitral award passed against the petitioners.
The contention taken by the petitioners before the Hon’ble Delhi High Court for setting aside the arbitral award was that the arbitrator has been appointed for more than 2 (two) proceedings by the respondents within the last 3 (three) years and is hence in violation of para 22 of the Fifth Schedule of the Arbitration Act.
Judgment and Analysis
It was held by the Hon’ble Delhi High Court that, “the argument urged on behalf of the petitioners with reference to para 22 of the Fifth Schedule is without any merit for two reasons. The first reason is that any objection under Section 16 of the Arbitration and Conciliation Act with respect to lack of jurisdiction of the arbitration tribunal has to be taken up at the very first instance in the arbitration proceedings. If no such objection is taken in the arbitration proceedings, then after passing of an award, such an objection cannot be taken.”
Further, “Another reason for holding that the petitioners are not entitled to succeed in the objection raised by placing reliance upon para 22 of the Fifth Schedule of the Act is because para 22 of the Fifth Schedule is only a directory or persuading provision and not a mandatory or absolute provision.”
It was also observed that, “the mere fact that the Ld. Arbitrator has done more than two arbitration proceedings for a person as an arbitrator, merely because of such fact without anything more, will not lead to the court holding that the Award be set aside on the ground of lack of 'impartiality or independence' of the arbitrator.”
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