Neutral presiding arbitrator in international arbitration may be appointed by court to secure impartiality and tribunal constitution.

In an international commercial arbitration, the appointing court must give effect to the arbitration agreement while ensuring an independent and impartial tribunal under Section 11 of the Arbitration and Conciliation Act, 1996. Nationality is not a mandatory disqualification for the third or presiding arbitrator, and Article 33.6 of the contract did not bar appointment of a foreign national. However, in line with the UNCITRAL Model Law and Rules, a neutral nationality may be preferred to preserve the appearance of neutrality. As the party-appointed arbitrators failed to agree, the Court itself appointed a neutral presiding arbitrator and completed the tribunal.

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Issues: Whether, in the facts of the arbitration agreement and the parties' commercial relationship, the third arbitrator had to be appointed from a neutral nationality and whether the Court should itself appoint the presiding arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Analysis: The arbitration arose out of an international commercial arrangement and the dispute concerned all constituents of the contractor, not merely the Indian operator. The Court held that Article 33.6 of the contract did not bar appointment of a foreign national as the third arbitrator. Section 11 of the Arbitration and Conciliation Act, 1996, read with the UNCITRAL Model Law and UNCITRAL Rules, required due regard to qualifications and to securing an independent and impartial tribunal. While nationality was not mandatory or decisive, the accepted practice in international arbitration favoured a presiding arbitrator of neutral nationality to preserve the appearance of neutrality. As the two party-appointed arbitrators had failed to agree, the Court found it appropriate to appoint the third arbitrator itself.

Conclusion: The petitioners succeeded on the question of constitution of the tribunal, and the Court appointed a neutral third arbitrator as Chairman of the Arbitral Tribunal.

Final Conclusion: The arbitral tribunal was completed by judicial appointment of a neutral presiding arbitrator, and the arbitration petition was allowed.

Ratio Decidendi: In an international commercial arbitration, the appointing court must give effect to the arbitration agreement and, while nationality is not a mandatory disqualification, may appoint a third or presiding arbitrator of neutral nationality to secure an independent and impartial tribunal.

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