case title: Glock-Asia Pacific v Union of India, dated 19.05.2023

The judgment came in a petition filed by Glock-Asia Pacific Limited against the Union regarding the appointment of an arbitrator to a dispute regarding a tender.

Glock had appealed against an arbitration clause in the agreement which enabled the Home Secretary to appoint an officer in the Ministry of Law to be the sole arbitrator.

Justice Narasimha, who authored the judgment, said the clause was a clear violation of Section 12(5) of the Arbitration Act.

The provision mandates that any person with prior or existing relationship with any of the parties to the arbitration in the capacity of an employee, consultant, advisor or any other past or present business relationship, would be ineligible to be appointed as arbitrator.

Additional Solicitor General Aishwarya Bhati, for the Union government, contended that the party to the contract with Glock was none other than the President of India, and this was a “clear point of distinction” from other cases.

Ms. Bhati also contended that once a party enters into an agreement for the appointment of a person as an arbitrator, it cannot simply opt-out of the arbitration clause. She had contended that the power to nominate an officer in the Ministry of law was not in conflict with Section 12(5) of the Act.

Courts Sequitur:

“We are of the clear opinion that a contract entered into in the name of the President of India, cannot and will not create an immunity against the application of any statutory prescription imposing conditions on parties to an agreement, when the government chooses to enter into a contract,” as decided by a Bench of chief justice of India and Justice P.S. Narasimha.