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Court has the power to appoint new arbitrator once the arbitral award is set aside- Calcutta HC

The Calcutta High Court recently dealt with a question of law regarding appointment of new arbitrator, when the arbitral award passed by the previous one had been challenged and both the parties’ desire give their assent.

The bench held that if the challenged arbitral award is set aside, the parties’ can exercise their autonomy and appoint a different arbitrator and the same is protected under the Arbitration and Conciliation Act, 1996.

In the instant case, the petitioner (award-debtor) alleged that it was not granted an opportunity to address the arbitrator. The award holder, on the other hand, denied the allegation of petitioner and stated that latter did participate in all the proceedings.

The bench observed that even though petitioner participated in all the proceedings, the “perception of bias” need to be addressed.

The bench set aside the arbitral award by relying on Section 12(1)(a) of the Act and stated that arbitrator did not disclose in writing his relationship with either of the parties and thus was not impartial and independent.

The bench observed that Section 43(4) of the Act provides that all options should be kept open in order to redress the grievances of parties’ involved. The bench also referred to Section 89 of Civil Procedure Code which encourages the court of law to participate in the formulation of settlement terms.

The bench highlighted the power of the court, stated that their power cannot be not curtailed and can mould the relief so as to provide suitable remedy to the parties’. However, the relief so moulded should not be repugnant to the law.

The bench, therefore, set aside the arbitral award and appointed a new arbitrator with the assent of the parties.

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