Consensus Ad Idem Is The Very “Raison D’être” Of Any Arbitral Appointment; Arbitral Atmosphere Is Changing Day By Day: Delhi HC
The Delhi High Court dismissed the Appeals preferred against the Order of the Single Judge by which an objection was dismissed.
The Delhi High Court remarked that the arbitral atmosphere is changing day by day and consensus ad idem is the very raison d’être of any arbitral appointment.
The Court remarked thus in Appeals preferred against the Order of the Single Judge by which an objection was dismissed.
A Division Bench of Justice C. Hari Shankar and Justice Ajay Digpaul observed, “The arbitral atmosphere is changing day by day. The prevailing philosophy of the day, so far as arbitration is concerned, is to foster arbitration and maximize resolution of disputes by the arbitral process. Courts are now advisedly cautious while dealing with technical objections to arbitral awards, and it is only when the objection is ex facie fatal, that an arbitral ward ordinarily should be jettisoned. … Consensus ad idem is the very raison d’être of any arbitral appointment.”
Senior Advocate Ashish Mohan appeared for the Appellants while Advocate Sonal Kumar Singh appeared for the Respondent.
Facts of the Case
The contract between the Appellants and the Respondent i.e., Airports Authority of India (AAI) envisaged arbitration of disputes by a Sole Arbitrator to be appointed by AAI. In terms thereof, the Appellants wrote to the AAI, calling on to appoint a Sole Arbitrator. A retired Judge of the Supreme Court was appointed as an Arbitrator before whom the parties submitted that they had no objection to his arbitrating on the disputes. An arbitral award was passed and the unsuccessful Appellant challenged the same under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act).
No dispute regarding the legality of the appointment of the Arbitrator was raised in the Section 34 Petition, however, during the arguments before the Single Judge, a preliminary submission was advanced by the Appellant that the award was entirely vitiated as the appointment of the Arbitrator was unilateral and therefore, vitiated under Section 12(5) of A&C Act. As the Single Judge dismissed such an objection, the Appeal was filed by the Appellant.
Reasoning
The High Court after hearing the arguments from both sides, noted, “Still less should the Court be inclined to interfere when, in as a case such as this, a party acquiesced to the arbitration proceedings without raising a finger with respect to the authority, jurisdiction or competence of the learned Arbitrator and after suffering an adverse award, belatedly seeks to raise a challenge to the jurisdiction of the Arbitrator to arbitrate.”
The Court further noted that the Section 34 Petition, as originally filed by the Appellants, never included any challenge to the jurisdiction of the Arbitrator, to arbitrate on the disputes between the parties.
“It was only thereafter that, belatedly, IA 1842/2022 was filed to amend OMP (Comm) 415/2018 and introduce a challenge to the jurisdiction of the learned Arbitrator, terming his appointment as unilateral”, it added.
The Court said that the challenge to the jurisdiction of the Arbitrator on the grounds that his appointment was unilateral is a belated afterthought of the Appellants, even after the Section 34 Petition was filed.
“There can be no doubt about the fact that if as the law applies, the Arbitrator was incompetent to arbitrate, he cannot be regarded as competent merely on account of acquiescence by the appellants. At the same time, while examining whether in fact the arbitral award is liable to be set aside wholesale on the ground that the appointment of the learned Arbitrator was itself illegal, the Court has to keep in mind all the facts in the backdrop of the prevailing philosophy of fostering arbitration as a preferred mode of dispute resolution”, it also enunciated.
The Court was of the view that the appointment of the Arbitrator was not unilateral at all, as AAI proceeded to appoint the Arbitrator only on the Appellant requesting AAI to do so, in writing and there was, therefore, written consent, on the part of the Appellant, to the appointment of the Arbitrator by AAI.
“Even in the Section 34 petition which was filed by the respondent before this Court, challenging the arbitral award, no objection, to the jurisdiction of the learned Arbitrator, on the ground that his appointment was unilateral, was raised. Clearly, therefore, even at that stage, the appellants had no inherent objection to the competence of the learned Arbitrator to have arbitrated on the disputes”, it said.
The Court took note of the fact that till the filing of Application, to amend the Petition, the Appellants never raised a whisper regarding the competence of the Arbitrator to arbitrate and this case is, therefore, unique in that respect, and cannot be equated with cases in which, at one stage or the other, an objection to the appointment of the Arbitrator was voiced.
“We must be aware that the proscription under Section 12(5) of the 1996 Act is not absolute. It is subject to the proviso thereto, which envisages conscious waiver of Section 12(5)”, it emphasised.
The Court, therefore, concluded that if the Appellants are to be permitted to wish away the arbitral award which is not palatable to the Appellants, it would do complete disservice to the entire arbitral institution and that such a decision would erode, to a substantial degree, the faith of the public in the very institution of arbitration.
Accordingly, the High Court dismissed the Appeals and sustained the Single Judge’s Order.
Cause Title- Bhadra International India Pvt. Ltd. and Ors. v. Airports Authority of India (Neutral Citation: 2025:DHC:841-DB)
Appearance:
Appellants: Senior Advocate Ashish Mohan and Advocate Akshit Mago.
Respondent: Advocates Sonal Kumar Singh, Sukanya Lal, Shivang Singh, Shivani Chaudhary, and Anmol Adhrit.
