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Walter Bau AG (Legal Successor of Dyckerhoff & Widmann A.G.) v. Municipal Corporation of Greater Mumbai

Arbitration Petition · Neutral citation not assigned (Arbitration Petition No. 35 of 2014)Decided 20 Jan 2015
Arbitration Petition No. 35 of 2014
Justice Ranjan Gogoi

Background

The petitioner (legal successor to the original contractor on a Mumbai city-tunnel sewage rehabilitation works contract) invoked the arbitration clause in its contract with the Municipal Corporation of Greater Mumbai after disputes arose, and nominated its own arbitrator. When the Corporation did not respond within the agreed 30 days, the petitioner approached the International Centre for Alternative Dispute Resolution (ICADR), which asked the Corporation to pick an arbitrator from a panel of three names it supplied. Instead, the Corporation appointed a retired judge of its own choosing, outside that panel, prompting the petitioner to move the Supreme Court under Section 11(6) for appointment of an arbitrator.

Decision Breakdown

The Court held that the Corporation's appointment of its arbitrator was "non-est" (legally a nullity) because it bypassed the agreed procedure requiring selection from the ICADR-supplied panel, rather than any person of the Corporation's choice. The Court distinguished this case from precedents (Antrix, Pricol) where parties had used an alternative agreed procedure or had already submitted to the arbitrator's jurisdiction: neither applied here. Since the appointment did not satisfy the agreed procedure, it did not bar the Court's Section 11(6) jurisdiction, and a defective appointment made before the court application could not be treated as a fait accompli.

Lesson Learnt

When a contract specifies a particular procedure for appointing an arbitrator (such as choosing from a panel supplied by a nominated body), a party cannot sidestep that procedure and appoint someone of its own choosing, doing so renders the appointment invalid and the matter can still be taken to court.

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

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