Arbitration's Success Lies in the Right Choice of Arbitrator: CJI Sanjiv Khanna Highlights Key to Resolving Disputes

The Supreme Court of India underscored the pivotal role of arbitrators in arbitration proceedings, emphasizing the criticality of selecting the right arbitrator to minimize complexities in disputes. Chief Justice of India (CJI) Sanjiv Khanna highlighted this during the hearing of an arbitration-related matter on January 17, 2025.

While deliberating on the issue, CJI Khanna remarked, "Arbitration is always arbitrator-centric. Normally, if you make the right choice of arbitrator...we tend to underestimate the importance of this decision. If you introspect, you'll realize it provides a lot of answers."

During the proceedings, Solicitor General Tushar Mehta, representing the Roads and Building Department—the petitioner in the matter—responded by stating, "The government does not have a level playing field; I'll leave it at that."

Disagreeing with this assertion, CJI Khanna pointed to the evolution of arbitration over time. He elaborated on how arbitration has developed into a robust adjudicatory mechanism and reiterated the significance of appointing a competent arbitrator. According to him, a well-chosen arbitrator can address and resolve numerous potential issues effectively.

He elaborated, "I don't think so. Let me put it this way—when we joined the Bar, arbitration was not very popular among senior advocates. At that time, the biggest arbitrations were related to the railways and (inaudible institutions)...most of them were handled by in-house arbitrators. Arbitration is essentially a one-stop adjudication process. Hence, the choice of arbitrator is extremely important. Making the right choice can resolve a significant number of problems."

Background of the Case

The bench comprising CJI Sanjiv Khanna and Justices Sanjay Kumar and KV Viswanathan was hearing the Roads and Building Department's challenge to a Gujarat High Court order appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. Ultimately, the Supreme Court dismissed the challenge.

The Gujarat High Court had ruled on a commercial dispute between the Roads and Building Department, Government of Gujarat, and M/S Intercontinental Consultant and Technocrats Pvt Ltd. The High Court observed that the parties had failed to mutually agree on an arbitrator and dismissed the objections raised by the State Government regarding the dispute's nature and the arbitrator's appointment under Section 11.

Recent Developments in Arbitration Law

The Supreme Court also reiterated its recent Constitutional Bench ruling, which emphasized the principle of equal treatment of parties throughout arbitration proceedings, including the appointment of arbitrators. The Court declared unilateral appointment clauses in public-private contracts unconstitutional, as they violate Article 14 of the Indian Constitution.

The case reflects the judiciary's commitment to ensuring fairness and balance in arbitration proceedings while highlighting the growing importance of appointing skilled and impartial arbitrators.

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