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Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd., (2017) 4 SCC 665


  • Whether the Panel of Arbitrators by DMRC is in violation of Section 12(5) of the Arbitration and Conciliation Act 1996?


  • Section 12(5) of the Arbitration and Conciliation Act 1996 holds that a person would be rendered ineligible to be appointed arbitrator or part of an Arbitral Tribunal if he/she stands to hold a relationship with either of the disputing parties.


  • The Respondents (DMRC) awarded a contract to the Plaintiffs (Voestalpine) for the supply of rails. The General Contract contained an arbitration clause which stated that particular procedure which was to be followed for the constitution of the Arbitral Tribunal in case of a dispute between the contracting parties.
  • The Arbitration clause specifically stated that the Respondents would forward five names to the Petitioners and they would have to choose its nominee arbitrator from the said panel. On forwarding the names, the Petitioners did not accept the same and argued that the panel is contrary to Section 12(5) of the Act.
  • The Respondents then filed a suit for the appointment of an independent arbitrator or tribunal. The same was heard before the Supreme Court of India.


  • The Supreme Court held that the selection of retired engineers or PSU’s did not violation Section 12(5) of the Arbitration Act, and the Court rejected the contention that government entities and PSU’s were a conflict of interest in being arbitrators or part of the Arbitral Tribunal.
  • The Court stated, forming an important precedent, that in disputes in relation to Government Contracts, private parties would not be able to object the process of nomination of Arbitrators by the Government entity, unless they were absolutely able to prove a conflict of interest.