In the case of Hala Kamel Zabal v Arya Trading Ltd & Ors, the dispute arose from a shareholders’ agreement between the parties, which contained an arbitration clause specifying that the arbitrator would be appointed by the Chief Justice of Delhi High Court. Subsequently, a dispute led to arbitration, and an arbitrator was appointed accordingly.
Aggrieved by the arbitral award, the petitioners challenged it under Section 34 of the Arbitration and Conciliation Act (A&C Act), contending that since the arbitration was an International Commercial Arbitration, only the Supreme Court had the authority to appoint an arbitrator under Section 11(6) of the A&C Act. The respondents countered that the petitioners had failed to object at the appropriate stage and had participated in the arbitration proceedings fully, thereby waiving their right to challenge the appointment.
The Hon’ble Delhi High Court acknowledged that the appointment of the arbitrator was inconsistent with Section 11(6) of the A&C Act, which mandates that arbitrators in ICA are to be appointed by the Supreme Court. However, the court held that this procedural irregularity did not render the arbitral award invalid. The court relied on the case of Narayan Prasad Lohia v. Nikunj Kumar Lohia,[1] which held that objections to the composition of an arbitral tribunal must be raised at the outset, within the statutorily stipulated time before the tribunal itself. Since the petitioners did not raise any objections during arbitration and actively participated in the proceedings, they had effectively waived their right to contest the appointment post-award.
Furthermore, the court pointed out that the arbitration clause in the shareholders agreement explicitly provided for appointment of the arbitrator by the Chief Justice of the Delhi High Court. Since the appointment was as per the aforementioned clause, the petitioners could not argue that the award violated their agreement.
The ruling underscores the judiciary’s commitment to upholding arbitration’s finality and preventing post-award challenges from derailing enforcement. By reaffirming that procedural objections must be raised at the outset, the judgment discourages parties from using technical irregularities as an afterthought to delay compliance.