Court Emphasizes Mandatory Written Waiver Under Section 12(5) of Arbitration and Conciliation Act, 1996
In a significant ruling, the Delhi High Court has declared an arbitral award rendered by a unilaterally appointed arbitrator as null and unenforceable, reaffirming the necessity of express written waiver as mandated by Section 12(5) of the Arbitration and Conciliation Act, 1996. The judgment, delivered by Justice Harish Vaidyanathan Shankar, dismissed the execution petition filed by M/s Gowra Petrochem Pvt. Ltd. against M/s Alfa Chem and others, citing the lack of mutual consent in the arbitrator's appointment process.
The case hinged on the enforceability of an arbitral award dated May 20, 2019, which was challenged on the grounds of unilateral appointment of the arbitrator without an express waiver from the parties involved. The court emphasized that such an award is vitiated by a jurisdictional defect and is null and void, rendering it unenforceable under Section 36 of the Arbitration and Conciliation Act.
Justice Shankar noted that the executing court has the jurisdiction to refuse enforcement of an award with inherent jurisdictional defects, even in the absence of a challenge under Section 34. The ruling aligns with the precedent set by the Division Bench of the Delhi High Court in the case of Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi, which held that awards from unilaterally appointed arbitrators are nullities and cannot be enforced.
The court also referenced the Supreme Court's decision in Electrosteel Steel Ltd. v. Ispat Carrier (P) Ltd., underscoring that execution courts retain the power to assess the executability of awards based on jurisdictional validity, independent of any Section 34 proceedings.
This judgment reinforces the statutory requirement for express written waiver post-dispute for the appointment of arbitrators, highlighting that implied waivers or conduct are insufficient to cure jurisdictional defects. Legal experts suggest that this ruling serves as a cautionary precedent for parties engaging in arbitration, ensuring that appointments are conducted with mutual consent to avoid unenforceable awards.
Bottom line:-
An arbitral award rendered by a unilaterally appointed arbitrator, in the absence of an express waiver under Section 12(5) of the Arbitration and Conciliation Act, 1996, is a nullity and unenforceable in law. The executing court retains jurisdiction to refuse enforcement of such an award even if no challenge under Section 34 of the Act has been initiated.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 12(5), 34, 36; Order XXI of the Code of Civil Procedure, 1908
M/s Gowra Petrochem Pvt. Ltd. v. M/s Alfa Chem, (Delhi) : Law Finder Doc id # 2903425
