Arbitrator appointment in international arbitration: nationality is only a relevant factor, and preliminary objections may be left to the arbitrator.

In an international commercial arbitration, preliminary objections at the stage of appointment, including questions about original agreements, section 8 compliance, authority of the signatory and the continued existence of the arbitration clause, were not finally decided by the Court and were left to the arbitrator. The Court also held that section 11(9) of the Arbitration and Conciliation Act, 1996 is not mandatory: nationality is a relevant factor when appointing an arbitrator, but it is not an absolute disqualification, and an arbitrator of the nationality of one party may be appointed where appropriate. The appointment application was allowed and the dispute was referred to a sole arbitrator.

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Issues: (i) Whether the preliminary objections raised by the respondent at the stage of appointment of an arbitrator were to be decided by the Court or referred to the arbitrator; (ii) whether section 11(9) of the Arbitration and Conciliation Act, 1996 made it mandatory to appoint an arbitrator of nationality other than that of either party in an international commercial arbitration.

Issue (i): Whether the preliminary objections raised by the respondent at the stage of appointment of an arbitrator were to be decided by the Court or referred to the arbitrator.

Analysis: The objections concerned production of the original agreements, compliance with section 8, authority of the signatory, and the contention that the arbitration clause had ceased to exist after termination. In view of the then prevailing view that the Chief Justice or his nominee performs an administrative function under the Act, such preliminary matters were not to be finally adjudicated at the appointment stage.

Conclusion: The preliminary objections were not decided at that stage and were referred to the arbitrator.

Issue (ii): Whether section 11(9) of the Arbitration and Conciliation Act, 1996 made it mandatory to appoint an arbitrator of nationality other than that of either party in an international commercial arbitration.

Analysis: The provision uses the expression "may" and is modelled on the UNCITRAL approach, where nationality is a relevant factor but not an inflexible mandate. The Court held that the nationality of the arbitrator is a matter to be kept in view, but it does not by itself disqualify a person who belongs to the nationality of one party, especially where no objection is raised.

Conclusion: Section 11(9) is not mandatory, and an arbitrator of the nationality of one of the parties may be appointed.

Final Conclusion: The application for appointment of an arbitrator was allowed and the dispute was directed to be referred to a sole arbitrator appointed by the Court.

Ratio Decidendi: Under the Arbitration and Conciliation Act, 1996, nationality is only a relevant consideration in appointing an arbitrator for an international commercial arbitration, and the Court need not treat it as an absolute disqualification or convert the permissive language of the statute into a mandatory rule.

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