Due Process for Appointment of an Umpire in Arbitration
ARBITRATION
In Civil Revision No. 168 of 2024, the Civil Aviation Authority of Pakistan (CAA) challenged an order dated 26.04.2024 by the Civil Judge of Islamabad. The order allowed an application by the Joint Venture of Lagan Construction Limited, Technical Associates Pakistan (Pvt.) Limited, and Habib Construction Services (Pvt.) Limited (LTH JV) under Section 8 of the Arbitration Act, 1940 (the 1940 Act), appointing Justice (Retired) Abdul Shakoor Paracha as the umpire following the recusal of Justice (Retired) Tassaduq Hussain Jillani.
Key Issues:
Umpire Appointment Process: The primary legal issue was whether the Civil Court had the jurisdiction to appoint a new umpire following Justice Jillani's recusal, considering the contractual and statutory provisions.
Compliance with Section 8 of the 1940 Act: Whether LTH JV fulfilled the necessary conditions under Section 8 of the 1940 Act, particularly the requirement of issuing a written notice to the arbitrators before seeking court intervention.
Validity of Recusal and Appointment: The reasonableness and timing of the request for Justice Jillani’s recusal and the subsequent appointment of a new umpire.
Case Law: In Union of India vs. Prafulla Kumar (AIR 1979 SC 1457), adherence to the arbitration agreement's terms for appointing arbitrators is emphasized. Keshavsinh Dwarkadas Kapadia vs. Indian Engineering Company (AIR 1972 SC 1538) discussed the court's role in appointing an umpire when the original appointee refuses to act. Union of India vs. Raghunath Singh & Co. (AIR 1980 SC 103) clarified the circumstances under which a court could appoint an umpire under Section 8(1)(b).
Court’s Analysis:
Recusal of Justice Jillani: The court acknowledged that Justice Jillani recused himself from the arbitration due to apprehensions of bias expressed by LTH JV. His recusal created a vacancy that needed to be filled.
Requirements of Section 8(1)(b): The court highlighted that LTH JV did not issue the necessary notice to the arbitrators to appoint a new umpire within fifteen days of Justice Jillani’s recusal. Instead, LTH JV directly sought court intervention, which did not comply with the statutory requirements.
Jurisdictional Authority: The court reiterated that the appointment of an umpire should first be attempted through the mechanisms agreed upon in the contract (Clause 67.5) and only then through the court if those mechanisms fail.
Conclusion: The Islamabad High Court allowed the civil revision petition filed by CAA, setting aside the Civil Judge’s order dated 26.04.2024. The court concluded that the conditions for filing an application under Section 8 of the 1940 Act were not satisfied, thus the Civil Court lacked jurisdiction to appoint Justice Paracha as the umpire. LTH JV was directed to first seek the appointment of a new umpire through the arbitrators and, if unsuccessful, follow the statutory notice procedure under Section 8(1)(b) before seeking court intervention.
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