Calcutta High Court Rules: Party’s Right to Choose An Arbitrator Irrevocable Once Surrendered to Court U/S 11(6) of the Arbitration,1966.

In case of Srei Equipment Finance Limited v. Seirra Infraventure Private Limited, 2023
where the ruling with significant implications for arbitration proceedings in India, the
Calcutta High Court has clarified that a party’s right to choose an arbitrator cannot be revived
once it is surrendered to the court under Section 11(6) of the Arbitration and Conciliation
Act, 1996.

The ruling, delivered by a division bench of the Calcutta High Court, addressed a contentious
issue related to the appointment of arbitrators in arbitration proceedings. Section 11 of the
Arbitration and Conciliation Act deals with the appointment of arbitrators, and subsection (6)
of the same provides a mechanism for parties to approach the court if they fail to agree on the
appointment of an arbitrator or arbitrators.

In the case before the court, the parties had initially attempted to appoint arbitrators through
mutual agreement. However, the process reached an impasse, and they were unable to reach a
consensus. As a result, one of the parties invoked Section 11(6) of the Arbitration Act,
seeking the court’s intervention to appoint an arbitrator.

During the court proceedings, the party seeking the appointment of an arbitrator expressed a
desire to withdraw the application under Section 11(6) and revert to the original intention of
appointing an arbitrator through mutual agreement. The central issue before the court was
whether the party’s right to choose an arbitrator could be revived after having surrendered it
to the court.

After a careful examination of the relevant legal provisions and considering the arguments
presented by both parties, the division bench of the Calcutta High Court held that once a
party chooses to approach the court under Section 11(6) for the appointment of an arbitrator,
they effectively surrender their right to unilaterally appoint an arbitrator. The court
emphasized that the intention behind Section 11(6) is to provide a judicial mechanism for
resolving deadlock situations in the appointment process. Allowing parties to revive their
right to choose an arbitrator after invoking this provision would defeat the purpose of
providing a court-assisted appointment mechanism.

The court’s ruling clarifies an important procedural aspect of arbitration proceedings and sets
a precedent for similar cases in the future. It emphasizes the significance of parties engaging
in good faith efforts to appoint arbitrators through mutual agreement to promote the
efficiency and autonomy of the arbitration process. Once a party resorts to court intervention
under Section 11(6), the court’s authority to appoint an arbitrator takes precedence over any
previous attempts at bilateral appointment.

This landmark decision by the Calcutta High Court is likely to influence arbitration practice
in India, encouraging parties to diligently pursue consensual arbitrator appointments while
underscoring the importance of timely and effective court intervention in cases of deadlock.
As with any legal ruling, parties engaging in arbitration proceedings are advised to seek
professional legal counsel to understand the full implications of the decision and its potential
impact on their specific cases.

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