High Court's Appointment of Arbitrator Deemed Invalid; Supreme Court Affirms Jurisdiction Exclusively Lies with Chief Justice of India
In a significant ruling, the Madhya Pradesh High Court's decision to appoint an arbitrator in an international commercial arbitration case has been declared invalid. The case involved M/s Ssangyong Engineering and Construction Company Ltd., a Korean company, and M/s S.B. Engineering Associates, an Indian partnership firm. The dispute arose from a sub-contracting agreement related to a highway construction project.
The core issue revolved around the jurisdiction of the Madhya Pradesh High Court to appoint an arbitrator in what was classified as an "International Commercial Arbitration" under Section 2(1)(f) of the Arbitration and Conciliation Act, 1996. The High Court's designate had appointed a sole arbitrator, Justice P.C. Naik (Retd.), but the Supreme Court has now clarified that such appointments fall exclusively under the purview of the Chief Justice of India or their designate.
The Supreme Court highlighted that the High Court's appointment was void ab initio, meaning it was invalid from the outset. This invalidity extended to the entire arbitration proceedings and subsequent award, rendering them unenforceable. The court emphasized that the jurisdictional provisions are mandatory and non-derogable, and any award passed by a tribunal without jurisdiction is a nullity.
The ruling underscores the non-waivable nature of jurisdictional objections, asserting that parties cannot confer jurisdiction through consent or participation in proceedings. The decision also reaffirms the mandatory nature of the arbitration act's provisions, which cannot be waived even if objections are not raised at earlier stages.
The judgment serves as a critical reminder of the strict adherence required to jurisdictional mandates in international commercial arbitration, reinforcing the exclusive role of the Supreme Court in such matters.
Bottom Line:
High Court of Madhya Pradesh lacks jurisdiction to appoint an arbitrator in disputes classified as International Commercial Arbitration under Section 2(1)(f) of the Arbitration and Conciliation Act, 1996. Such appointments are exclusively under the jurisdiction of the Chief Justice of India or his designate.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 2(1)(f), 11(6), 11(9), 11(12), 4, 37, 34
