International Commercial Arbitration and arbitrator neutrality: unilateral appointment by an interested party was set aside.

A dispute qualifies as an International Commercial Arbitration where the lead consortium member is an entity with a New York registered office, bringing the matter within the Supreme Court's Section 11 jurisdiction under the Arbitration and Conciliation Act, 1996. Where the respondent's Chairman and Managing Director alone holds the power to appoint the sole arbitrator, that unilateral mechanism creates justifiable doubts as to independence and impartiality because an interested party should not control the appointment. The Court therefore set aside the respondent's appointment and appointed an independent sole arbitrator.

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Issues: (i) whether the dispute fell within the definition of an International Commercial Arbitration so as to attract the Court's jurisdiction under Section 11; and (ii) whether the appointment of the sole arbitrator by the respondent's Chairman and Managing Director was invalid for want of independence and impartiality, warranting appointment of an independent arbitrator by the Court.

Issue (i): whether the dispute fell within the definition of an International Commercial Arbitration so as to attract the Court's jurisdiction under Section 11.

Analysis: The consortium had designated the first applicant as the lead member, and the first applicant was an architectural firm having its registered office in New York. The Court treated the lead member as the relevant constituent for the purpose of the arbitration agreement and applied the statutory definition of International Commercial Arbitration under the Arbitration and Conciliation Act, 1996. On that basis, the contractual dispute satisfied the jurisdictional requirement for a Section 11 application before the Supreme Court.

Conclusion: The arbitration was held to be an International Commercial Arbitration, and the Court's jurisdiction under Section 11 was attracted.

Issue (ii): whether the appointment of the sole arbitrator by the respondent's Chairman and Managing Director was invalid for want of independence and impartiality, warranting appointment of an independent arbitrator by the Court.

Analysis: The dispute resolution clause vested the appointing power in the respondent's Chairman and Managing Director alone. The Court applied the principle that a person having an interest in the outcome of the dispute should not control the appointment of a sole arbitrator. Relying on the statutory scheme governing neutrality of arbitrators and the settled rule that an ineligible or interested authority cannot retain exclusive control over appointment, the Court held that the unilateral appointment mechanism created justifiable doubts as to independence and impartiality. The delayed appointment letter issued by the respondent was therefore not accepted as a valid bar to the Court's power under Section 11.

Conclusion: The respondent's appointment of the sole arbitrator was annulled and the Court appointed an independent sole arbitrator.

Final Conclusion: The applications were allowed, the respondent's appointment was set aside, and the disputes were directed to arbitration before an independent sole arbitrator appointed by the Court.

Ratio Decidendi: Where the contractual appointing authority is itself interested in the outcome of the dispute and exercises exclusive power to appoint a sole arbitrator, the appointment is impermissible and the Court may appoint an independent arbitrator under Section 11.

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