Delhi HC Refuses To Enforce Foreign Award In Favour Of MSA Global Over Arbitrator's Non-Disclosure Of Prior Association

The Delhi High Court has refused to enforce a foreign award in favour of MSA Global LLC (Oman) against Engineering Projects (India) Limited. It held that the arbitrator's failure to disclose a prior arbitral association with the MSA's Chairman gave rise to justifiable doubts as to his independence.

The Court said this non-disclosure deprived the respondent of the opportunity to assess and challenge such impartiality. It therefore rendered the award contrary to the public policy of India under Section 48(2)(b) of the Arbitration and Conciliation Act, 1996.

Justice Jasmeet Singh observed, “Thus, the statutory scheme governing arbitration makes it abundantly clear that impartiality and independence of the Arbitrator constitute a golden thread that runs through the entire arbitral framework. Any circumstance which undermines this neutrality strikes at the very legitimacy of the adjudicatory process."

He added, “Even a slight infraction in this regard has the potential to erode party confidence in the arbitral process and may consequently vitiate the fairness of the proceedings and precisely why this idea was codified under Section 12 of the Act which mandates that an Arbitrator discloses any circumstances likely to give rise to justifiable doubts as to his or her independence or impartiality."

Emphasising that Section 12 uses the word “shall disclose”, the court held that the obligation is mandatory. It leaves no scope for an arbitrator to decide unilaterally what is disclosure-worthy.

“The statutory scheme does not permit the Arbitrator to assume the role of a judge in his own cause by determining whether a particular fact warrants disclosure. Such an approach would defeat the very purpose of the concept of disclosure, which is to enable the parties to make an informed assessment of the Arbitrator's independence and impartiality”, the court said.

The dispute arose from a subcontract dated September 21, 2015. Under this, MSA Global was engaged by Engineering Projects (India) Limited for a border surveillance project in Oman valued at USD 120,330,627.

Delays in execution led to disputes between the parties. Arbitration was invoked on April 12, 2023 under the ICC Rules.

A tribunal was constituted with Andre Yeap SC as one of the arbitrators. He declared in April 2023 that he had “nothing to disclose”.

A partial award dated June 19, 2024, later corrected on October 9, 2024, directed payments to MSA Global.

The matter came before the Court when MSA Global sought enforcement of the award. Engineering Projects (India) Limited opposed enforcement under Section 48.

It argued that Yeap had failed to disclose his prior involvement as a co-arbitrator in proceedings connected with the claimant's Chairman, Manbhupinder Singh Atwal. According to it, this deprived the company of the opportunity to assess and challenge the arbitrator's independence.

MSA Global argued that similar objections had already been rejected by the ICC Court and the Singapore High Court. It also contended that disclosure under the Fifth Schedule is generally tied to relationships within the preceding three years.

It pointed out that the prior association in question was older than that period. It further submitted that the arbitrator claimed to have become aware of the connection only at a later stage.

Rejecting these submissions, the court held that the duty of disclosure is broad, mandatory, and continuing. It is not confined to a fixed time period or number of prior engagements.

“The disclosure required to be made by Mr. Yeap was couched in the widest possible terms and was not confined to any specific time period prior to the present appointment, nor was it limited to a minimum number of prior engagements. The obligation was thus a continuing and broad duty of disclosure intended to ensure complete transparency and to enable the parties to assess any circumstance that could reasonably give rise to doubts regarding the Arbitrator's independence or impartiality”, the court said.

The court also held that its jurisdiction under Section 48 is independent. A party cannot be precluded from raising a contention at the enforcement stage merely because it was not accepted earlier by the arbitral institution or the courts at the seat.

It noted that the requirement of disclosure operates at a stage prior to any assessment of actual bias. A failure to disclose deprives the opposing party of the opportunity to make an informed decision on whether to challenge the arbitrator.

“It is in this context that the requirement of disclosure assumes an entirely independent footing and is not contingent upon any other consideration of bias or its likelihood. If this initial step of disclosure is not undertaken, the aggrieved party is deprived of the opportunity to assess the existence or likelihood of bias. The cart cannot be put before the horse”, the court held.

While reiterating that enforcement of foreign awards should not be refused lightly, the Court held that this case fell within the narrow and exceptional category where non-disclosure undermined the fairness and integrity of the arbitral process.

Accordingly, the court allowed the objections. It refused enforcement of the award.

For Petitioner (MSA Global LLC): Advocates Akhil Sibal, Kirat Singh Nagra, Kartik Yadav, Pranav Vyas, Sumedha Chadha.

For Respondent (Engineering Projects (India) Limited): Advocates Sandeep Sethi, Ajit Warrier, Angad Kochhar, Himanshu Setia, Vedari Kashyap.