LexM/S. ETHIOPIAN AIRLINES versus M/S. STIC TRAVELS (P) LTD.
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A MIS. ETHIOPIAN AIRLINES v. MIS. STIC TRA VEyS (P) LTD. JULYII,2001 B [A.P. MISRA AND DORAISWAMY RAJU, JJ.] Arbitration Act, 1940-S. I 0(1) and (2) Arbitration-Arbitral Tribunal-Third Arbitrator-Status of-Whether C a Chairman or only an umpire-Arbitration agreement stipulating appointment of one Arbitrator each by parties-Nominee Arbitrators lo apf)Oint the third Arbitrator to dct as Chairman-Intention of parties clear that the dispute to be resolved by thi;ee Arbitrators-High Court holding that the appointment of third Arbitratjor would fall under sub-section (2) who D would continue to act as Chairman-Held, justified. Arbitration-Ar6iitral Tribunal consisting of one nominee Arbitrator of each party-Nominee Arbitrators to appoint third Arbitrator as Chairman- Death of one of the nomi1~ee Arbitrator-Appointment of fresh nominee l Arbitrator-Held, would not give fres~ right to parties to appoint a fresh E Chairman. Interpretation of statutes Arbitration statute-Interpretation of-Held, if there are two possible interpretations, 1the one which leans to satisfj, the desired agreement between F the parties should be accepted. -.< Appellant-Airlines appointed respondent as its General Sales Agent . under certain agreemen_t. Subsequently, the appointment of respondent was terminated which led to a dispute between the· parties. The dispute was r~ferred to Arbitration. The Arbitration agreement provided that in the event of dispute G over appointment of sole Arbitrator, the Arbitral Tribunal would consist of three Arbitrators, one each to be appointed by parties and the two Arbitrat~rs so nominated would appoint the third A1·bitratm· who would act as Chairman. Accordingly, both the parties nominated one Arbitrator each and those two nominee Arbitrators appointed the third Arbitrator.~ppellant's nominee died H and a fresh Arbitrator was appointed who later resigned. Again a fresh ' 882 - 1;T1JIOPl/\N /\IRLINES v. STIC TR/\ Vl~LS (P) LTD. ·ss3 nominee of appellant was appointed as Arbitrator. Thereupon, counsel for the A appellant wrote a letter for fresh appointment of the third Arbitrator vi::.. Chairman. Dispute arose between the parties regarding the status of,third Arbitrator. According to the appellant, the appointment of third Arbitrator would fall under sub-section (1) of section IO of the Arbitration Act,'1940 and he would only be an umpire who could not partic\pate in the arbitration B proceedings. However, High Court rejecting the said contention held that appointment of third Arbitrator would fall under sub-section (2) of Section I 0 of the Act and the third Arbitrator would continue to function as Chairman. Hence the present appeal. On behalf of the appellant it was contended that in view of the relevant C arbitration clause in the agreement and the language of Section 10(1) of!he Act stipulating that when a reference was to three Arbitrators, one to be appointed by each party and the third by the two appointed Arbitrators, then the third Arbitrator so appointed would be deemed to be an umpire and not a third Arbitrator. On behalf of the respondent it was contended that in order to find out in D which of the two fields, viz., of sub-section (1) or (2) of Section 10 the case would fall the clear intent of the parties as incorporated in the arbitration clause had to be read and in the instant case the intention of the parties was very clear that the dispute was to be resolved by the three Arbitrators and the third Arbitrator would act as Chairman, and thus, the case would not fall E under sub-section (1) but would fall under sub-section (2); that the appellant acquiesced by presenting itself before the three members Tribunal on a large number of dates for a period of three years and hence was stopped from raising any dispute regarding validity to constitution of Arbitral Tribunal. Dismissing the appeal, the Court HELD: 1.1. High Court was justified in holding that the appointment of the third Arbitrator would fall under sub-section (2) of Section JO of the Arbitration Act, 1940 and would continue as Chairman of the Arbitral Tribunal. 1899-A; 887-BI 1.2. The field ofoperatioh of both sub-sections (1) and (2) of Section 10 of the Act are separate and exclusive. Sub-section (1) is applicable in a case: F G (a) where an arbitration agreement provides that a reference is to the three arbitrators; (b) one to be appointed by each party and the thir
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