Waiver of pre-arbitral objection preserves arbitration when contractual dispute board procedure becomes unworkable.

A joint venture that was the contracting and disputing party was held entitled to maintain the appeal, and firm-like procedural objections were treated as inapplicable. On the pre-arbitral dispute mechanism, the court noted that the contractual Disputes Adjudication Board procedure could not be strictly completed because the stipulated replacement process was unworkable. The respondent received notice, did not propose a replacement, and later appointed an arbitrator under the arbitration clause; that conduct was treated as a waiver of any objection to arbitral jurisdiction. The tribunal's majority view that the reference was non-maintainable was found perverse and patently illegal, and the arbitration was directed to continue on merits.

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Issues: (i) whether the joint venture appellant was entitled to maintain the appeal; (ii) whether non-compliance with the Disputes Adjudication Board procedure barred arbitration and whether the respondent had waived the objection to jurisdiction.

Issue (i): whether the joint venture appellant was entitled to maintain the appeal.

Analysis: The arbitration agreement and the contract were entered into by the joint venture, and the same entity invoked arbitration in the proceedings below. The objection based on firm-like procedural requirements was held inapplicable, and the joint venture's status as the contracting and disputing party was sufficient to sustain the appeal.

Conclusion: The appeal was maintainable at the instance of the joint venture appellant.

Issue (ii): whether non-compliance with the Disputes Adjudication Board procedure barred arbitration and whether the respondent had waived the objection to jurisdiction.

Analysis: The contractual mechanism contemplated prior reference to the Disputes Adjudication Board, but the record showed that no appointing body or named official existed to complete the replacement process in the manner contemplated by the clause. The appellant sought continuation of the sole member, the respondent received that communication but did not respond, did not propose a replacement, and later itself appointed an arbitrator under the arbitration clause. That conduct was treated as a conscious invocation of arbitration and a waiver of the objection to bypassing the Disputes Adjudication Board. The majority view of the arbitral tribunal, holding the reference non-maintainable, was found to suffer from patent illegality and perversity.

Conclusion: The pre-arbitral objection could not defeat the arbitration, and the arbitral tribunal's majority decision was set aside.

Final Conclusion: The appeal was allowed, the arbitral tribunal was directed to decide the dispute on merits, and the arbitration proceedings were to continue for adjudication of the parties' claims.

Ratio Decidendi: Where the contractual pre-arbitral mechanism cannot be strictly complied with because the stipulated appointment procedure is unworkable, and the opposite party by its conduct invokes arbitration without insisting on that mechanism, the objection to arbitral jurisdiction is waived and cannot defeat the reference.

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