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TMI Blog2002 (10) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... oint deliberation of the two. It is clearly spelled out from the correspondence between the two arbitrators reproduced hereinabove that the two arbitrators had agreed on principle that the third arbitrator shall be of a nationality different from the one to which either of the parties belongs. - ARBITRATION PETITION NO. NIL OF 2002 AND D. NO. 3059 OF 2002 - - - Dated:- 1-10-2002 - R.C. LAHOTI, J. G.L. Sanghi, Raj Kumar Mehta, Ms. M. Sarada and Suman Kukreti for the Petitioner. P. Chidambaram, Ms. Pallavi S. Shroff and T. Srinivasa Murthy for the Respondent. ORDER 1. This is a petition under section 11(6) and section 14 of the Arbitration and Conciliation Act, 1996 ( the Act ) filed on 11-2-2002. The principal relief sought for in the petition is : appoint the third and presiding arbitrator to constitute the arbitral tribunal to adjudicate upon the disputes and differences between the parties. 2. Let it be stated at the very outset that a conjoint petition under section 11(6) and section 14 would not lie for the simple reason that the petition under section 11(6) is to be heard and decided by the Chief Justice or any person or institution design ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents vide their fax dated 27-12-2001 nominated Mr. Donald F. Donovan, resident of New York as their arbitrator in the proposed arbitration proceedings. 5. On 18-1-2002, Mr. Donovan informed the parties that on behalf of Mr. Verma and himself he was acknowledging the respective appointments of the two as arbitrators and that the two were conferring on the appointment of a third arbitrator. The communication stated inter alia - We have agreed that the third Arbitrator should be a national of neither India nor the United States. 6. On 23-1-2002, Mr. Donald Francis Donovan sent a fax message to both the parties which is reproduced hereunder: "By telecopy and international courier M/s Amarchand MangaldasCompany Secretary Suresh A. Shroff Co.Grid Corporation of Orissa Ltd. 13, Abul Fazal RoadJanpath, Bhubaneswar - 751 022 Bengali MarketIndia New Delhi - 110 001 India Grid Corporation of Orissa Limited v. AES Corporation Dear Representatives : Pursuant to our authority under section 11(3) of the Arbitration and Conciliation Act, 1996, Mr. Verma and I hereby appoint David A.R. Williams, Q.C., of New Zealand as the presiding arbitrator in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presiding arbitrator, clause 28 (including its sub-clauses) of the shareholders agreement between GRIDCO, AES and others dated 31-8-1999, I wish to reconsider my agreeing with you that Mr. David A.R. Williams be the presiding arbitrator in this arbitration case. Since the shareholders agreement is subject to the jurisdiction of the appropriate court(s) in Orissa, and the place of arbitration is Bhubaneswar, I request that you agree to the appointment of a retired Judge of the High Court of Judicature, Orissa or of the Supreme Court of India. We may discuss further and finalise the name of a presiding arbitrator from amongst the retired Judges in India. This is no reflection on the credentials of Mr. Williams for whom I have the highest regards and to whom I tender an apology through you. Yours truly, Sd/- K.B. Verma January 24, 2002" 9. Mr. Donovan declined the request of Mr. Verma for reconsidering the appointment of Mr. Williams. In his response dated 25-1-2002 to Mr. Verma, Mr. Donovan stated inter alia I do not believe that we either can or should reconsider our appointment of Mr. Williams. You and I agreed at the outset, and reiterated throughout the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, (K.B. Verma)" 13. On 1-2-2002, the petitioners appointed Justice S.C. Mohapatra, retired Judge of High Court of Orissa and Allahabad and former Chairman of Orissa Administrative Tribunal as their Arbitrator in place of Mr. Verma, in view of his having withdrawn from arbitration. On 1-2-2002, Justice S.C. Mohapatra addressed a communication to Mr. Donovan requesting him to agree for the appointment of a former Judge of Supreme Court of India (named in the letter) to be the third arbitrator. It is also stated that if Mr. Donovan was not agreeable then the petitioners would move the Chief Justice of India under section 11 for appointment of a third arbitrator. Copy of the communication was endorsed to Mr. Williams also. 14. Mr. Williams, the third arbitrator, has in his fax message dated 5-2-2002, addressed to both the parties and the two arbitrators, stated that he was not agreeable to the suggestion of withdrawing himself as presiding arbitrator. He has assigned reasons in support of his resolution based on the provisions of the Act and practice in international commercial arbitration. He has firmly stated that an arbitral tribunal consisting of himself as presiding ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. The law nowhere contemplates such appointment being necessarily in writing. The requirement of the law is that there should be an appointment and the appointment should be by the two appointed arbitrators. Shri G.L. Sanghi, the learned senior counsel for the petitioners placed reliance on the law as stated in Halsbury s Laws of England (Fourth Edition, Volume 2 vide para 570). The statement of law there is : the appointment of umpire by the arbitrators is a judicial act; they must, therefore, meet and exercise the power together. This statement of law in Halsbury is based on two decided cases namely, Re Hopper [1867] LR 2 QB 367, Re Lord Lord [1855] 5 E B 404. Reliance was also placed on Keshavsinh Dwarkadas Kapadia v. Indian Engg. Co. 1971 (2) SCC 706. Dealing with the case of appointment of an umpire under the Arbitration Act, 1940 this Court has observed by reference to certain English cases : "The appointment of an umpire by two arbitrators means that the arbitrators are to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case ( supra ) was adversely commented upon. Lord Denning held that the time has come when business convenience requires laying down a different rule. When an agreement or award or another document is to be done by two or three, generally the drafts can be exchanged and it would be enough if the final document is signed by all. It is quite unnecessary for them all to meet together to sign it though each signed it at a different time or place from the others. Karr L.J. in his speech noticed some arbitral rules, particularly of the International Chamber of Commerce and held that where arbitrators were in different countries and took many important decisions by correspondence or by telephone, it would be in the interest of all parties for saving costs that coincidence in time and place of the arbitrators for the purely formal purposes of signing the award is not insisted on as essential. 22. Shri P. Chidambaram, the learned senior counsel appearing for the respondents urged that the submission of the petitioners proceeds on wrong premises inasmuch as the appointment of third arbitrator by the two arbitrators cannot be said to be a judicial Act. The learned counsel referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther of the parties belongs. They had also agreed upon the appointment of Mr. Williams. The communication of such appointment though made by Mr. Donovan is on behalf of himself and Mr. Verma. The correctness of such consultation having preceded the appointment is not doubted in the correspondence and has also not been disputed by the learned senior counsel for the petitioners during the course of hearing. Mr. Verma s protest to appointment of Mr. Williams was based on re-consideration of the issue, that is, on second thoughts. The practice adopted by the two arbitrators is consistent with the practice of International Commercial Arbitration and conducive to the convenience of the parties and also saves them from avoidable expenditure. When an effective consultation can be achieved by resort to electronic media and remote conferencing it is not necessary that the two persons required to act in consultation with each other must necessarily sit together at one place unless it is the requirement of law or of the ruling contract between the parties. The appointment need not necessarily be by a writing signed by the two arbitrators; it satisfies the requirement of law if the appointmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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