In a recent judgment, the High Court of Delhi, presided over by Justice Jyoti Singh, ruled in the case of SMAAASH LEISURE LTD. v. AMBIENCE COMMERCIAL DEVELOPERS PVT. LTD. and held that a statement made by a party’s counsel, withdrawing objections to a unilateral arbitrator appointment, does not constitute the ‘express agreement’ mandated by Section 12(5) of the Arbitration and Conciliation Act (A&C Act).
The case involved a lease agreement between SMAAASH LEISURE LTD. and AMBIENCE COMMERCIAL DEVELOPERS for premises in Ambience Mall, New Delhi. The petitioner terminated the lease in 2020, leading to a dispute resolution mechanism invocation by the respondent. Despite objections, the respondent unilaterally appointed an arbitrator.
The Court emphasized the ineligibility of the arbitrator as a fundamental issue, rendering any award by such an arbitrator non-est. The petitioner’s challenge under Section 34 of the Arbitration and Conciliation Act included arguments against the unilateral appointment, breach of party autonomy, and the requirement for express written agreement under Section 12(5).
Rejecting the respondent’s waiver argument, the Court clarified that participation in proceedings doesn’t replace the need for a written express agreement.
Additionally, the Court criticized the narrow panel selection, deeming it invalid. Conclusively, the Court set aside the award due to arbitrator ineligibility, allowing the parties to readdress their claims before a new tribunal. This decision underscores the importance of adhering to statutory procedures in arbitrator appointments and highlights the court’s commitment to upholding the integrity of arbitration proceedings.
