Unilateral appointment of arbitrators is statutorily barred; independent arbitrator appointed under Section 11(6).

The Applicant, an Engineering, Procurement, and Construction (EPC) company, was awarded a tender by the Respondent (SECR) for the electrification of a railway line via a Letter of Acceptance dated 27.03.2017

A dispute arose regarding the calculation of price variation for iron and steel items under Clause 46A.7 of the Special Conditions of Contract

The Applicant contended that the IEEMA Index for Blooms and Billets was the applicable standard, citing a previous arbitral award and Commercial Court order involving the same parties and identical contractual terms

Despite the Applicant’s demand for payment and subsequent notice for arbitration dated 27.08.2025, the Respondent failed to appoint an arbitrator or reach a consensus

The Applicant moved the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, challenging the validity of the unilateral appointment procedure under Clause 64(3) of the contract

Whether an independent Sole Arbitrator should be appointed under Section 11(6) of the Arbitration and Conciliation Act, 1996, in light of the failure of the parties to reach a consensus and the statutory bar on unilateral appointments

Section 11(6) of the Arbitration and Conciliation Act, 1996, which empowers the High Court to appoint an arbitrator when a party fails to act as required under the appointment procedure

Section 12(5) read with the Seventh Schedule of the Act, which renders individuals with certain relationships to the parties ineligible to act as arbitrators, effectively barring unilateral appointments by an interested party

The principle established in Central Organization for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) (2024) regarding the unconstitutionality of unilateral appointment clauses in public-private contracts

The Court observed that there was no dispute regarding the existence of the arbitration clause within the contract agreement

The Applicant demonstrated that the Respondent had ignored the notice invoking arbitration and that the contractual provision for unilateral appointment (Clause 64(3)) was legally untenable under the amended Section 12(5) of the Act

During the proceedings, the Respondent’s counsel did not oppose the request for a court-appointed arbitrator

Consequently, the Court facilitated a consensus between the parties regarding the choice of the arbitrator

The Court determined that since the parties agreed upon a specific retired High Court judge to resolve the dispute, the statutory requirements for the court to intervene and ensure a fair appointment were met

By consensus of the parties, the Court appointed Hon’ble Mr. Justice Deepak Kumar Tiwari, a retired Judge of the High Court of Chhattisgarh, as the Sole Arbitrator

The Registry was directed to communicate the order to the appointed arbitrator, and the remuneration was left to be settled by mutual consent of the parties