An arbitration clause which authorises Secretary, Ministry of Home Affairs, whose relationship with Union of India is that of an employee, to nominate an officer of the Ministry of Law & Justice to act as a Sole Arbitrator, clearly falls within the expressly ineligible category provided in Paragraph 1 of Schedule-VII, r.w. Section 12(5) of the Arbitration and Conciliation Act, 1996 – M/s Glock Asia-Pacific Ltd. Vs. Union of India – Supreme Court
In this case, the Arbitration clause enables the Secretary, Ministry of Home Affairs, to appoint an arbitrator for the resolution of disputes arising out of this contract. Hon’ble Supreme Court held that (i) a contract entered into in the name of the President of India, cannot and will not create an immunity against the application of any statutory prescription imposing conditions on parties to an agreement, when the Government chooses to enter into a contract (ii) the arbitration clause which authorises the Secretary, Ministry of Home Affairs, whose relationship with Union of India is that of an employee, to nominate an officer of the Ministry of Law and Justice to act as a Sole Arbitrator, clearly falls within the expressly ineligible category provided in Paragraph 1 of Schedule VII, read with Section 12(5) of the Arbitration and Conciliation Act, 1996. (iii) Perkins Eastman Architects DPC case applies to cases of unilateral appointment of Sole Arbitrators whereas in Central Organisation for Railway Electrification case, the GM was required to appoint at least one out of the selected officers as the contractor’s nominee arbitrator(s), and unilaterally appoint the remaining arbitrators as well as the presiding officer to the tribunal.
