LexM/S. VOESTALPINE SCHIENEN GMBH versus DELHI METRO RAIL CORPORATION LTD.
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A B c D E F G [2017] 1 S.C.R. 798 MIS. VOESTALPINE SCHIENEN GMBH V. DELHI METRO RA!L CORPORATION LTD. (Arbitration Petition (Civil) No. 50of2016) FEBRUARY I 0, 2017 [A. K. SIKRI AND R. K. AGRAWAL, JJ.] Arbitration and Conciliation Act, 1996 - ss. 12(as amended), JI (6), (8) - Arbitration clause providing for appointment of arbitrators from a panel of arbitrators prepared by public sector company-Delhi Metro Rail Corporation (DMRC) - Challenge to, on the ground that panel of arbitrator violates s. 12 - Held: Section 12 was amended with the objective to induce neutrality of arbitrators, viz. their independence and impartiality - Independence and impartiality of the arbitrator are the hallmarks of any arbitration proceedings - Rule against bias is one of the fundamental principles of natural justice - When arbitrator is appointed in terms of contract and by the parties to the contract, he is independent of the parties - Non-independence and non-impartiality of such arbitrator would render him ineligible to conduct the arbitration - On facts, not a fit case for exercising the jurisdiction to appoint and constitute the arbitral tribunal - As per the amended provision, employees or ex- employees or in any way related to the DMRC would be ineligible to act as an arbitrators - No such case made out by the petitioner - Though choice was given by DMRC to the opposite party to choose an arbitrator but the choice is limited from the panel prepared by DMRC - Thus, it is imperative to have a much broad based panel, so that there is no misapprehension that principle of impartiality and independence would be discarded - DMRC to prepare a broad based panel. Dismissing the arbitration petition, the Court HELD: 1.1 Independence and impartiality of the arbitrator are the hallmarks of any arbitration proceedings. Rule against bias is one of the fundamental principles of natural justice which applied to all judicial and quasi judicial proceedings. It is for this reason that notwithstanding the fact that relationship between H . the parties to the arbitration and the arbitrators themselves are 798 MIS. VOESTALPINE SCHIENEN GMBH v. DELHI METRO RAIL CORPORATION LTD. contractual iu nature and the source of an arbitrator's appointment is deduced from the agreement entered into between the parties, notwithstanding the same non-independence and non-impartiality of such arbitrator (though contractually agreed upon) would render him ineligible to conduct the arbitration. The genesis behind this rational is that even when an arbitrator is appointed in terms of contract and by the parties to the contract, he is independent of the parties. Functions and duties require him to rise above the partisan interest of the parties and not to act in, or so as to further, the particular interest of either parties. After all, the arbitrator has adjudicatory role to perform and, therefore, he must be independent of parties as well as impartial. [Para 19) [824-C-E) 1.2 Independence and impartiality are two different concepts. An arbitrator may be independent and yet, lack impartiality, or vice versa. Impartiality, as is well accepted, is a more subjective concept as compared to independence. Independence, which is more an objective concept, may, thus, be more straightforwardly ascertained by the parties at the outset of the arbitration proceedings in light of the circumstances disclosed by the arbitrator, while partiality will more likely surface during the arbitration proceedings. [Para 21) [825-B) 1.3 Various contingencies mentioned in the Seventh Schedule render a person i1,1eligible to act as an arbitrator. Entry No. 1 provides 'that where the arbitrator is an employee, consultant, advisor or has any other past or present business relationship with the party, would not act as an arbitrator. The amended .provision puts an embargo on a person to act as an arbitrator, who is the employee of the party to the dispute. It also deprives a person to act as an arbitrator if he had been the consultant or the advisor or had any past or present busine~. relationship with DMRC. N<> such case is made out by the petitioner. [Para 23) (825-E-P; 826-A) 1.4 Section 12 of the Arbitration and Conciliation Act, 1996 has been amended by the Amendmcni Act, 2015 with the objective to induce neutrality of arbitrators, viz., their independence and impartiality. The amended provision is enacted to identify
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