Supreme Court: Slams Singapore Arbitrator due to non-disclosure.

The recent judgment in the matter of EPIL vs. MSA has brought to the forefront the issue of Conflict of Interest, Judicial Review, and the role of arbitration in resolving disputes, highlighting the need for transparency and fairness in the appointment of arbitrators. The Delhi High Court’s decision to restrain the arbitration proceedings due to the non-disclosure of a potential conflict of interest by one of the arbitrators has significant implications for the future of arbitration in India, particularly in cases where the integrity of the arbitration process is called into question.

Case Details

• Court Name: Delhi High Court
• Bench/Judges: Not specified
• Case Title: EPIL vs. MSA
• Date of Judgment: 2025

Legal Reasoning & Statutory Context

The case involves a dispute between EPIL and MSA, with MSA nominating Yeap, a Senior Counsel from Singapore, as its co-arbitrator in November 2018. However, Yeap failed to disclose his earlier involvement in a separate matter involving Manbhupinder Singh Atwal, the Managing Director, Chairman, and Promoter of MSA Global LLC Oman. This non-disclosure was only brought to light when EPIL moved the International Court of Arbitration of the International Chamber of Commerce (ICC Court) against Yeap’s appointment. The ICC Court found Yeap’s non-disclosure to be "regrettable" but permitted the arbitration proceedings to continue. However, the Delhi High Court intervened and restrained the arbitration from proceeding further, citing the circumstances as warranting judicial intervention. This decision is significant, as it highlights the importance of transparency and disclosure in arbitration proceedings. The Delhi High Court’s decision is likely based on the principles of natural justice and the need to ensure that arbitration proceedings are fair and impartial. Section 12 of the Arbitration and Conciliation Act, 1996, deals with the disclosure of interests by arbitrators and the grounds for challenge. Section 12(1) states that an arbitrator shall disclose in writing any circumstances which are likely to give rise to justifiable doubts as to his independence or impartiality. The failure of Yeap to disclose his earlier involvement in the separate matter involving Atwal is a clear breach of this provision. Furthermore, Section 13 of the Act deals with the challenge to the appointment of an arbitrator. Section 13(1) states that a party may challenge the appointment of an arbitrator on the grounds that the arbitrator is not independent or impartial. In this case, EPIL’s challenge to Yeap’s appointment is based on his failure to disclose his earlier involvement in the separate matter, which is a legitimate ground for challenge under Section 13. The Delhi High Court’s decision to restrain the arbitration proceedings is also consistent with the principles of judicial review. Judicial review is a mechanism by which the courts can review the decisions of administrative bodies, including arbitration tribunals. Section 34 of the Arbitration and Conciliation Act, 1996, deals with the application for setting aside an arbitral award. Section 34(2)(a)(iv) states that an arbitral award may be set aside if the composition of the arbitral tribunal was not in accordance with the agreement of the parties or the law of the country where the arbitration took place. In this case, the Delhi High Court’s decision to restrain the arbitration proceedings is based on the ground that the composition of the arbitral tribunal was not in accordance with the law of the country, as Yeap’s appointment was tainted by his failure to disclose his earlier involvement in the separate matter.

Impact on Litigants & Practical Takeaways

The Delhi High Court’s decision in this case has significant implications for litigants and arbitration proceedings in India. The decision highlights the importance of transparency and disclosure in arbitration proceedings and the need for arbitrators to disclose any potential conflicts of interest. The decision also underscores the role of judicial review in ensuring that arbitration proceedings are fair and impartial. For litigants, the decision means that they must be vigilant in ensuring that arbitration proceedings are conducted in a fair and transparent manner. They must also be aware of the provisions of the Arbitration and Conciliation Act, 1996, particularly Section 12 and Section 13, which deal with the disclosure of interests by arbitrators and the grounds for challenge. To comply with the provisions of the Act, litigants should ensure that they disclose all relevant information about the arbitrators and the arbitration proceedings. They should also be aware of the principles of judicial review and the grounds on which an arbitral award can be challenged. In practical terms, litigants should take the following steps: (1) conduct thorough background checks on potential arbitrators to ensure that they are independent and impartial; (2) ensure that all relevant information about the arbitrators and the arbitration proceedings is disclosed; (3) be aware of the provisions of the Arbitration and Conciliation Act, 1996, particularly Section 12 and Section 13; and (4) seek judicial review if they believe that the arbitration proceedings are not being conducted in a fair and transparent manner. By taking these steps, litigants can ensure that arbitration proceedings are conducted in a fair and transparent manner and that the integrity of the arbitration process is maintained.

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