High Court Appoints Sole Arbitrator in Dispute Involving Public Sector Undertaking

The Calcutta High Court intervened in a contract dispute between Zillion and Bharat Heavy Electricals Limited to appoint a sole arbitrator, ruling that unilateral appointment is impermissible. In reaching this determination, the court factored in ongoing settlement negotiations, the applicable limitation periods, and the specific exclusion of the corporate insolvency resolution process moratorium period. Arbitration law requires impartiality and independence in the appointment of arbitrators, prohibiting unilateral selections by one contracting party, particularly public sector undertakings.

When commercial disputes arise, statutory frameworks govern the limitation timelines and the exclusion of periods during which insolvency moratoriums apply. Previously, unilateral appointment clauses were common in commercial agreements, but judicial interventions now mandate independent dispute resolution mechanisms. Parties engaged in commercial contracts with public sector undertakings should review arbitration clauses for unilateral appointment provisions and ensure timely filings.

Practitioners must track judicial interpretations regarding limitation periods and moratorium exclusions during dispute resolution. Bottom line: Review your commercial contracts immediately to eliminate unilateral arbitrator appointment clauses and avoid costly procedural challenges.