The recent case of Arjun Mall Retail Holdings Pvt. Ltd & Ors. Vs. Gunocen Inc. reported as 2024:DHC:495-DB before the Hon’ble Delhi High Court sheds light on the intricacies surrounding unilateral arbitrator appointments and the subsequent challenges under Sections 34 and 37 of the Arbitration & Conciliation Act.

The dispute in the case arose from a loan transaction between the appellants, who intended to run a hotel, and the respondent. Despite a Memorandum of Understanding (MOU) outlining repayment terms, the appellants defaulted on payments, leading to legal notices and arbitration proceedings initiated by the respondent.

Findings:

The High Court underscored the restricted extent of intervention permitted under Section 34, referencing pertinent legal precedents. Additionally, the High Court highlighted the significance of the appellants' delayed objection to the arbitrator's appointment, considering it detrimental to their case.

The Court upheld the award, ruling that the appellant’s objections came too late in the process.

Implications:

The case underscores the importance of timely and substantive responses in arbitration proceedings. Parties must engage actively and raise objections promptly to avoid waiving their rights to challenge later. The ruling also highlights the need for careful consideration of procedural aspects, such as arbitrator appointments, to avoid procedural pitfalls that could jeopardize the outcome of arbitration.

Conclusion:

The High Court dismissed the appeal and upheld the arbitral award. In the absence of timely objections, challenges to arbitrator appointments post-award are unlikely to succeed. Parties should diligently adhere to procedural requirements and engage meaningfully in arbitration proceedings to safeguard their interests effectively.

The ruling reaffirms the principle of limited judicial involvement in arbitration and underscores the need for parties to follow procedural and substantive requirements. This analysis provides valuable insights into India's judicial stance on arbitration, offering guidance on navigating arbitral procedures and addressing challenges effectively.