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Huawei Technologies Co. Ltd. v. Sterlite Technologies Ltd.

Arbitration Petition · Neutral citation not assigned (Arbitration Petition No. 27 of 2015)Decided 4 Sept 2015
Arbitration Petition No. 27 of 2015
Justice Ranjan Gogoi

Background

Huawei Technologies had supplied equipment to Sterlite Technologies under a 2007 Supply Contract for an MTNL broadband network project and claimed about USD 13.39 million remained unpaid. When Sterlite did not respond to a legal notice, Huawei invoked the contract's arbitration clause and appointed a former High Court judge as sole arbitrator, but Sterlite objected to the appointment and the arbitrator recused himself. Huawei then went to the Supreme Court under Section 11(6) of the Arbitration Act asking the Court itself to appoint a new sole arbitrator.

Decision Breakdown

The Court held that under Section 15(2) of the Act, when an arbitrator's mandate ends (here, by recusal), a substitute arbitrator must be appointed by following the same procedure that applied to the original appointment: in this case, the contract's requirement that the parties name an arbitrator "by mutual consent." Since Huawei had gone straight to the Supreme Court without first attempting to agree on a new arbitrator with Sterlite, the Court found the Section 11(6) application premature. It declined to appoint an arbitrator itself and disposed of the petition, leaving Huawei free to first seek a mutually-agreed arbitrator and only approach the Court again if that failed.

Lesson Learnt

Before running to court for an arbitrator appointment, parties must first genuinely attempt to follow the agreed contractual procedure (such as appointment by mutual consent), skipping that step, even after an earlier arbitrator recuses, will get an application thrown out as premature.

Official source (sci.gov.in)View Judgment (PDF)

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