MD Cannot Unilaterally Appoint Sole Arbitrator After Parties Fail To Mutually Agree

The Delhi High Court held that an arbitration clause allowing the Managing Director of a company to unilaterally appoint a sole arbitrator, after parties fail to mutually agree, violates the Supreme Court’s decision.

The Court emphasised that such clauses create a conflict of interest and are legally unsustainable.

The Court stressed that arbitrator appointments must meet the standards of neutrality and comply with statutory safeguards under the Arbitration and Conciliation Act to ensure an impartial adjudication process.