Bombay HC Clarifies Divide – Institutional Arbitration Vs. Unilateral Appointment
The issue of institutional arbitration not suffering from the vice of unilateral appointment is otherwise no more res integra and is covered by several decisions of various High Courts.
The Arbitral Award of Bharat Merchants Chamber arose of the printed Clause 4 on the Invoice and the dispute on non-payment of dues of goods as per the invoices
Clause 4 on the Invoice provided for 4. In case any dispute arise regarding this transaction the matter shall have to refer to arbitration of Bharat Merchant’s Chamber Mumbai under their arbitration rule, Any legal proceeding arising out of these arbitration agreement shall be filled in Mumbai court only to the exclusion of all other courts.
The clause provides for dispute resolution through institutional arbitration.
The issue of institutional arbitration not suffering from the vice of unilateral appointment is otherwise no more res integra and is covered by several decisions of various High Courts.
The petitioner never objected to the said clause in the invoices and also in any of the correspondences
The respondent supplied the fabrics to the respondent. However, the petitioner found fault with quality and pricing of the goods. The respondent was requested to exchange defective goods.
In this context, the petitioner filed letter as “say to Bharat Merchants Chamber but did not question its jurisdiction to conduct arbitration. However, the petitioner failed to appear before the Arbitral Tribunal.
The Bharat Merchants’ Chamber issued two letters to the petitioner to nominate his Arbitrator. The copy of panel of Arbitrators was also furnished to the petitioner. Thereafter, one more notice was given to the petitioner.
Thereafter, the BMC nominated the Arbitrator on behalf of the petitioner. Even the appointment of the Presiding Arbitrator was made by the Institute.
By the Award dated 21.7.20222, the Arbitral Tribunal of Bharat Merchants Chamber directed the petitioner to pay Rs.11,44,880/- with 18% interest the respondent.
Judgment dated 8.1.2026 of the High Court of Bombay in Arbitration Petition No.267 of 2024 of Jalaram Fabrics Vs. Nisarg Textiles Pvt Ltd.
When an institution is approached for arbitration, it is the institution itself that nominates the arbitrator in accordance with its established rules. Neither party holds the prerogative to choose the arbitrator. The apex court in Sanjeev Kumar (supra), in paragraph 39, affirmed that an arbitrator can be appointed directly by the parties, without court intervention, or by an institution specified in the arbitration agreement. In the absence of consensus regarding the arbitrator’s appointment, or if the designated institution fails to fulfill its function, the party seeking arbitration is entitled to file an application under Section 11 of the Act for the appointment of arbitrators.
