SIAC Not Disqualified From Appointing Arbitrator Merely Because Party's Counsel Is On Its Panel: Karnataka HC

The Karnataka High Court has held that a party's counsel being on the Singapore International Arbitration Centre's (SIAC) panel of arbitrators or another counsel subsequently joining its court does not establish institutional bias or disqualify SIAC from appointing an arbitrator.

The relevant test is whether the appointed arbitrator has a disclosable connection with a party or its counsel.

A Division Bench of Justices Anu Sivaraman and T.P. Vivekananda dismissed Velankani Information Systems Pvt Ltd.'s appeal against the Single Judge's September 13, 2024 order rejecting its challenge to the jurisdictional award dated June 12, 2019 and directed that its challenge to the final arbitral award be considered on merits.

"The fact that the respondents' counsel was an arbitrator included in the panel of arbitrators of the SIAC or that another counsel had later been appointed to the SIAC Court cannot be reasons to state that the SIAC, as an Institution, is rendered conflicted and disabled to appoint an arbitrator. The real test to be applied would be whether the Arbitrator has a disclosable connection with a party or its counsel. There are no allegations as to any bias or interest of the arbitrator.", the Court said. 

The dispute arose from a Management Agreement dated November 26, 2009 between Velankani and Inter Continental Hotels Group entities for management of a hotel. After disputes over contractual payments, the respondents suspended the hotel's reservation system access on December 15, 2017, and Velankani terminated the agreement on January 10, 2018. The respondents invoked SIAC arbitration in January 2018.

The arbitrator was appointed on December 17, 2018 and rejected Velankani's jurisdictional objections in a partial award dated June 12, 2019. A final award followed on December 28, 2020. Velankani challenged the awards under Section 34 of the Arbitration and Conciliation Act but the Single Judge rejected its jurisdictional challenge on September 13, 2024.

The Bench held that the SIAC Chairman's inability to appoint an arbitrator due to a conflict did not prevent the institution from referring the appointment to its President under Rule 10.2 of the SIAC Rules, 2016. The President's appointment did not amount to a review of the earlier communication.

Distinguishing the judgment in SBP & Co. v. Patel Engineering Ltd., the Court held that SIAC exercised an appointment power conferred by the parties' agreement and did not perform a judicial function under Section 11(6) of the Arbitration Act.

It further observed that no personal bias or disclosable connection involving the appointed arbitrator had been established.

Finding no institutional bias or ground to interfere with the Single Judge's order, the Bench dismissed the appeal.

For the Appellant: Senior Advocate Basava Prabhu S. Patil, Advocate AjayKumar M

For the Respondents: Senior Advocate Dhyan Chinnappa, Advocate Ajay J. Nandalike