2005 (11) TMI 520 - SC - Indian Laws

Summary

Issues:
- Application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of a sole arbitrator.
- Dispute over the nationality of the sole arbitrator based on the nationalities of the parties.
- Interpretation of Section 11(9) of the Arbitration and Conciliation Act regarding the appointment of a sole arbitrator in international commercial arbitration.

Analysis:
1. The application before the Supreme Court was for the appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The petitioner, a company from the Netherlands, and the respondent, an Indian company, had entered into an agreement containing an arbitration clause. The agreement specified England (UK) as the venue for arbitration and English as the language for proceedings.

2. The main issue arose from the disagreement between the parties on the nationality of the sole arbitrator to be appointed. The petitioner requested the appointment of an arbitrator with a neutral nationality, neither Dutch nor Indian, citing Section 11(9) of the Act. Section 11(9) allows for the appointment of an arbitrator of a nationality other than those of the parties in international commercial arbitration.

3. The Court analyzed the provision of Section 11(9) and emphasized the discretionary nature of the word "may" in the statute. The Court clarified that while the provision allows for the appointment of a neutral arbitrator, it is not mandatory. Referring to previous judgments, the Court highlighted that the use of "may" does not impose an obligation to appoint a sole arbitrator with a neutral nationality.

4. Based on the legal interpretation and precedents, the Court exercised its discretion and appointed Mr. Justice S.N. Variava, a retired Judge of the Court, as the sole arbitrator in the case. The Court clarified that the appointment of an arbitrator with a neutral nationality was not obligatory under Section 11(9) and proceeded with the appointment. The Court also directed the arbitrator to determine the remuneration and other costs, considering the arbitration venue in England (UK).

5. The judgment concluded by disposing of the petition and instructing the Registry to forward a copy of the order to the appointed arbitrator promptly. The Court's decision clarified the discretionary nature of appointing a sole arbitrator with a neutral nationality in international commercial arbitration, highlighting the importance of legal interpretation and precedent in such matters.