Delhi High Court Refuses To Enforce Unchallenged Arbitral Award Passed By Unilaterally Appointed Arbitrator

The Delhi High Court has refused to enforce an arbitral award, holding that the absence of a challenge to the award under Arbitration Act does not automatically make it enforceable if it is void for lack of jurisdiction.

Justice Harish Vaidyanathan Shankar passed the ruling.

“In the present case, the position regarding unilateral appointment of the learned Sole Arbitrator is not even disputed by the Decree Holder. Equally undisputed is the absence of any express waiver in writing, as contemplated under the proviso to Section 12(5) of the A&C Act. Once the very constitution of the Arbitral Tribunal stands vitiated by reason of such unilateral appointment, the resultant Arbitral Award cannot be regarded as a legally enforceable adjudication in the eyes of law," the Court observed.

The court held that objections relating to patent nullity and inherent lack of jurisdiction can still be examined at the enforcement stage.

The ruling came while dismissing an execution petition filed by M/s Gowra Petrochem Pvt. Ltd. seeking enforcement of an arbitral award passed in its favour against Alfa Chem and others.

Gowra Petrochem argued that since no challenge had been mounted against the award, it had attained finality and could not be questioned at the execution stage. The judgment debtors countered that the award was a nullity because the arbitrator had been appointed unilaterally.

Rejecting the contention, the Court said, “It is a settled principle of law that enforcement cannot be permitted in respect of an instrument, decree, determination, or adjudicatory outcome which is ex facie void ab initio or constitutes a nullity in the eyes of law. A determination suffering from an inherent lack of jurisdiction strikes at the very root of the adjudicatory process and consequently cannot be sanctified merely on account of lapse of time or failure of a party to institute an independent challenge thereto.”

The court noted that Gowra Petrochem had admitted the unilateral appointment and the absence of any express written waiver between the parties after the disputes arose.

Holding that the defect went to the root of the arbitral tribunal's jurisdiction, the Court declared the award “non est” and incapable of enforcement, and dismissed the execution petition.

For Petitioner (Gowra Petrochem Pvt. Ltd.): Advocates Abhishek Singh, J. Amal Anand, Elvin Joshy, Shivani Kalra, K.V. Vibu Prasad and Akshat Mishra.

For Respondent (Alfa Chem & Ors.): Advocates Shraddha Bhargava, Princy Sharma, Rajiv Dalal, Shresth Kausik, Bhaskar and Dipti Singh Arya; with Senior Advocate Uttam Dutt.