Applying the decision of the Supreme Court in CORE (cited below), a single-judge bench of the Delhi High Court has upheld a clause that limited the choice of selection of the sole arbitrator from a panel of three names. The court ruled that the passages in Voestalpine (cited below) about broad-based panel were just suggestions.
Decisions on the appointment of arbitrators are quite interesting because a lot has happened in the last four years. Before discussing the Update, a bit of a context first to understand Voestalpine and CORE.
For a lengthier discussion on the concept and the 2019 cases and more, you can see Chapter 1 of our Yearbook 2019 here.
A. The context
The 2015 amendments disqualify an employee, consultant, advisor, or someone who has any other past or current business relationship.  See Section 12 (5) and the Seventh Schedule of the ACA. Also, see the Fifth Schedule. Show More
The February 2017 Voestalpine case began the post-2015 “jurisprudence” on independence and impartiality. Coincidentally, the respondent Delhi Metro Rail Corporation ("DMRC") was also a party respondent in that case.  Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation Limited, (2017) 4 SCC 665. Show More
DMRC’s contract had several standard terms. It also maintained a panel of “serving or retired engineers of government departments or public sector undertakings.” In case of a dispute, DMRC would forward to the other party a list of five names. The other party had to select its arbitrator from that list; DMRC would choose one, and the two would choose the third. This mechanism was challenged.
Some of the court’s observations and conclusions were:-
Voestalpine has been followed in many cases. See, for example, our Update on a case here.
The 2017 TRF case  TRF Limited v. Energo Engineering Limited, (2017) 8 SCC 377, 3-judge bench, Supreme Court of India. Show More disqualified an employee from even appointing an arbitrator. It was a case of a sole arbitrator. The 2019 Perkins case  Perkins Eastman Architects DPC and another v. HSCC (India) Ltd., 2019 SCC OnLine SC 1517, 2-judge bench, Supreme Court of India. Show More extended the TRF principle. The Supreme Court ruled that a party (or any official of the party) or anyone interested in the dispute cannot unilaterally appoint a sole arbitrator. The CORE case—also in 2019—distinguished TRF and Perkins. The case involved a three-member tribunal. CORE had sent a panel of four names to the other party. CORE’s General Manager had the right to participate in the appointment of a three-member tribunal.  Central Organisation For Railways Electrification v. ECI-SPIC-SMO-MCML (JV), 2019 SCC OnLine SC 1635. The clause had several categories that applied depending on whether Section 12 (5) ACA had been waived, and also the value of the claim. The Railways had to send a panel of names to the contractor. The contractor had to choose at least two names, from which one was to be appointed by the General Manager, Railways as the contractor’s nominee. The General Manager was to appoint the remaining two from the panel or outside it, including the presiding arbitrator. Show More
One of Perkins’ reasoning was that where both parties have a right to appoint, whatever advantage a party may derive by nominating an arbitrator of its choice would get counterbalanced by equal power with the other party. But, where only one party had a right to appoint a sole arbitrator, like in Perkins, the choice will always have an element of exclusivity (and hence bad in law).
This counterbalancing principle was applied to refuse the application of Perkins, saying that since the power was counter-balanced, the General Manager could make the nomination.
To know more about the decision and reasoning in CORE, read our Update here.
B.The Iworld case
B1. DMRC had to send a panel of three names
The arbitration clause in the agreement between DMRC and Iworld provided that a dispute of a value under INR 5000000 (fifty lakhs) was to go before a sole arbitrator; those above had to go to a three-member tribunal. Though the initial part of the arbitration clause said that any dispute “shall be referred to Arbitrator(s) appointed by Director, DMRC,” the mechanism of appointment was via a panel as follows:
B2. Iworld applied to the court for the appointment and asserted that the mechanism in the agreement was unenforceable
A dispute arose of a value of below fifty lakhs INR (sole arbitrator). Iworld sent a notice of arbitration also nominating a lawyer as the arbitrator. Iworld asserted that the arbitration clause giving a right to DMRC to nominate the sole arbitrator was illegal and unenforceable in view of the decisions in Bharat Broadband, Bharat Broadband Network Limited v. United Telecoms Limited, (2019) 5 SCC 755. Show More Perkins and Proddatur.  Proddatur Cable TV Digi Services v. SITI Cable Network Limited, 2020 SCC OnLine Del 350. A decision of the Delhi High Court by Jyoti Singh J. She ruled that a party-appointed sole arbitrator was ineligible in view of the Perkins decision. She also distinguished CORE on the ground that it concerned a three-member tribunal where both parties had a level playing field in the matter of appointment. Show More In response to the notice, DMRC sent a panel of three names—all former Additional District and Sessions Judges, thus not any DMRC employees (serving ones, or even retired). Iworld applied for the appointment of an arbitrator by the court.  The judgment does not note what the application was for. It can be deduced from the operative part of the decision of the court, and also an intermediate order of 25 November 2020 available on the Delhi High Court’s website. Show More It is not explicitly clear what Iworld’s challenge was, or in what fashion the argument proceeded in the court. It appears that the application was premised on the Perkins decision.  Noted in the order of 25 November 2020. Show More Its argument apparently was “DMRC could not be allowed to nominate arbitrator.s. When DMRC pointed to CORE, Iworld responded by relying on Voestalpine.  See para 7 of the decision. In other words, the argument appears to be that DMRC could not limit Iworld’s choice to three arbitrators. Show More
C. The court’s decision
Harishankar J dismissed the petition.
C1. The CORE decision applies
First, he noted in detail what the CORE decision was. He reproduced paragraphs 24-27 from CORE  The paragraph numbering is from the version of the judgment available on the Supreme Court’s website here. Paragraphs 23 to 27 of CORE discuss the question if retired railways employees were eligible for appointment as arbitrators under Section 12 (5) read with Schedule VII ACA. Show More the effect of which was that retired employees could act as arbitrators and there was no problem if the arbitrators were chosen from a panel of retired employees. He also “additionally” reproduced paragraphs 37 and 38 of CORE,  Supreme Court website’s version, see fn above. Show More the effect of which is that (i) selection of parties’ arbitrators from a panel of names made by one party was okay; and (ii) if the agreement specifically provided for the appointment of arbitrators from out of a panel, the appointment should be in terms of the agreement.  CORE considered both categories of serving and retired employees. The former category in cases where Section 12 (5) ACA had been waived, and the latter when there was no waiver. Show More
C2. CORE trumps Voestalpine
Second, he noted that in view of CORE, Iworld turned to the decision in Voestalpine. But he said that Iworld could not— “as such, on the face of it” — rely on Voestalpine “which would derogate from the law laid down in [CORE]” because Voestalpine was a decision by a 2-judge bench, while CORE by a 3-judge bench that had also considered Voestalpine.
C3. Applicability of Voestalpine—its observations about broad-based panel were suggestions and reference to a large panel (of 31 names) observations. Anyway, the observations support DMRC
Third, he discussed the applicability of Voestalpine in particular 27 . Iworld, Para 27 (“As already noted above, DMRC has now forwarded the list of all 31 persons on its panel thereby giving a very wide choice to the petitioner to nominate its arbitrator. They are not the employees or ex-employees or in any way related to DMRC. In any case, the persons who are ultimately picked up as arbitrators will have to disclose their interest in terms of amended provisions of Section 12 of the Act. We, therefore, do not find it to be a fit case for exercising our jurisdiction to appoint and constitute the Arbitral Tribunal”). Show More which Iworld had cited. It is not made clear in the judgment what exact argument was made. This creates some problems in giving a proper explanation or context to the reader. In effect, it was said that:
Then, lastly, he said that “the issue stands squarely covered by [CORE],” and that the impartiality of the suggested names was not in doubt and directed Iworld to select one name as the sole arbitrator.