Allahabad HC rules on jurisdiction challenges in arbitration

NEW DELHI

The Allahabad High Court, in the case between Purvanchal Vidyut Vitaran Nigam Ltd. (Puvvnl) vs. M/S Prabha Mvomni, has held that if an objection to the jurisdiction of an arbitrator has been rejected by the Arbitral Tribunal, the correct course of action for the aggrieved party is to challenge the final award, not to file an application under Section 11 of the Arbitration and Conciliation Act, 1996.
Justice Ashwani Kumar Mishra, presiding over the case, elucidated that bypassing the statutory route and directly invoking the jurisdiction of the High Court under Section 11 of the Act, when the Tribunal has already made its stance clear, is an improper circumvention of the established process.
In this case’s specifics, the Opposite Party had appointed an arbitrator and asked the Applicant to appoint one too. When the Applicant failed to respond, the Opposite Party assumed the role of the sole arbitrator. The Applicant raised objections to this move, but the arbitrator dismissed them and proceeded.
The Opposite Party’s counsel contended that the Section 11 application was inadmissible. They argued that since the arbitrator had already addressed the objection, the Applicant should instead challenge the award as per the Act. Contrarily, the Applicant’s counsel argued that the Opposite Party’s appointment of a sole arbitrator was inconsistent with the Act’s guidelines.
The court, upon review, emphasised the provisions of Section 16 of the Arbitration and Conciliation Act, 1996, which deals with challenges to the competence of an Arbitral Tribunal. The court found that the Applicant never claimed that the arbitrator was ineligible under Section 12(5) in combination with the Act’s 7th Schedule. As a result, the court determined that the Section 11(6) application for appointing an arbitrator was baseless, and the Applicant should have sought to challenge the award according to the Act.