Failure to nominate arbitrator...forfeits the right to appoint one - Supreme Court

The Supreme Court last week held that if a party to an arbitration agreement failed to appoint an arbitrator despite the demand of the opposite party, it forfeited the right to appoint one. After an application is made to the Chief Justice for appointment of an arbitrator the inactive party cannot come up with his nominee, the court stated in the judgment, Deep Trading Company vs Indian Oil Corporation. In this case, the corporation granted dealership of its oil products to the former firm. Later, the corporation suspended its supplies alleging violation of the terms. The firm wanted arbitration on the dispute. At first, the corporation did not respond. But when the dealer moved the Allahabad Chief Justice under the Arbitration and Conciliation Act, the corporation named one of its executives as arbitrator. The Chief Justice, therefore, did not appoint an arbitrator. The dealer moved the Supreme Court. It stated that the corporation had failed to act as required under the procedure agreed upon by the parties and despite the demand by the dealer to appoint the arbitrator, the corporation did not make appointment until the application was made under the Act by the dealer. Under such circumstances, the corporation has forfeited its right of appointment of an arbitrator. The Chief Justice should have appointed an arbitrator. Therefore, the Supreme Court remanded the matter to the high court Chief Justice.