In case of Overnite Express Ltd v. DMRC the Delhi High court observed that one party cannot make a list of selected arbitrators and send it to the other party and ask to select the names from the list. This would lead to partiality.
The Court took a different stance in its decision in World Business Solutions v. DMRC, wherein a similar panel of five members who were all retired District Judges were taken into consideration. It was held that because they were all retired District Judges and Additional District Judges, their impartiality and neutrality could not be questioned, and the panel was held to be legitimate for the nomination of any individual as an arbitrator.
The parties entered into four license agreements dated 25.04.2019, under which the respondent granted the petitioner a license to a small number of commercial spaces. The state and location of the licensed premises gave rise to a disagreement between the parties.
In light of this, the petitioner issued the notice of arbitration and provided the lone arbitrator's name. The respondent disagreed with the petitioner's suggestion, saying that in light of the parties' agreement, the petitioner can select its arbitrator from a panel of five arbitrators that the respondent will select.
The petitioner was of the view of appointing sole arbitrators because of the contentions that:
- The provisions in the agreement for the appointment of arbitrators are unlawful because the arbitrator's independence and impartiality are compromised by the respondent's exclusive authority to select arbitrators for the petitioner to select from.
Being an interested party, the respondent is unable to select or create a small panel of arbitrators and limit the petitioner's ability to select only from that panel.
The clause between the parties violates the natural fairness principle since it is one-sided and gives the respondent an unfair advantage when choosing the arbitrator.
The respondent was against it because according to the arbitration agreement between the parties, the arbitrator/s must be chosen from a list of five names provided by the respondent from its panel of arbitrators, hence the petitioner's contention that there cannot be just one arbitrator is untrue.
The Court determined that it is against the principle of arbitral impartiality to provide one party the authority to arbitrarily select names from a panel of arbitrators and then convey those names to the other side for its arbitrator selection.
The court used Voestelpine v. DMRC as authority to conclude that such a unilateral exercise of power raises questions independent of the qualifications of the arbitrators chosen, who in this case happen to be retired district judges.
The Court took a different stance in its decision in World Business Solutions v. DMRC, wherein a similar panel of five members who were all retired District Judges was taken into consideration. It was held that because they were all retired District Judges and Additional District Judges, their impartiality and neutrality could not be questioned, and the panel was held to be legitimate for the nomination of any individual as an arbitrator.
As a result, the Court approved the petition and chose a neutral arbitrator.