NEW DELHI: In an important ruling on arbitration proceedings involving govt-run public sector undertakings, the Supreme Court on Monday ruled that PSUs cannot unilaterally appoint a sole arbitrator to decide their disputes with contractors nor can they ask opposite sides to choose from a curated panel of arbitrators. A five-judge bench comprising CJI D Y Chandrachud, and Justices Hrishikesh Roy, P S Narasimha, J B Pardiwala and Manoj Misra said, "The principle of equal treatment of parties applies at all stages of arbitration proceedings, including the stage of appointment of arbitrators." Writing the majority opinion, the CJI said, "A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator.
Further, such a unilateral clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators." Referring to contracts/agreements between PSUs and others providing for appointment of sole arbitrator by the concerned PSU or mandating other party to choose from a curated panel of arbitrators, the apex court bench said, "The Arbitration Act does not prohibit PSUs from empanelling potential arbitrators. However, an arbitration clause cannot mandate the other party to select its arbitrator from the panel curated by PSUs.
" "Unilateral appointment clauses in public-private contracts are violative of Article 14 of the Constitution," the CJI said w.