Delhi HC: Sundra Rajoo Arbitrator Conflict Challenges ICC Award

• Mozambican and Indian companies are challenging an ICC arbitral award in the Delhi High Court.
• The challenge alleges that presiding arbitrator Professor Sundra Rajoo failed to disclose material appointments and past criminal proceedings.
• The disputed partial award, issued on May 5, included an Indian shareholder (TCL) in an arbitration despite it being a non-signatory to the contract.
• Senior advocates argued the case reflects an institutional failure by the ICC and highlighted alleged bias from the arbitrator.
• Justice Sachin Datta of the Delhi High Court has issued notices and scheduled further hearings for October.

The allegations against Professor Sundra Rajoo — specifically, the non-disclosure of material appointments and past criminal proceedings — directly challenge the integrity and perceived neutrality of the arbitral process.

Mozambican entity Black Gold Resources Private Limitada (BGR) and its Indian shareholder, Trident Chemphar Limited (TCL), have initiated proceedings before the Delhi High Court. Their petition seeks to overturn a partial award issued by an International Chamber of Commerce (ICC) arbitral tribunal. The core of their challenge revolves around the tribunal's decision to include TCL in the arbitration, despite the company not being a signatory to the original Mozambican coal mining contract that sparked the dispute.

The arbitral tribunal, which delivered its split verdict on May 5 of this year, was presided over by Professor Sundra Rajoo. He, along with co-arbitrator former Supreme Court Justice L Nageswara Rao, who has since recused from the proceedings, ruled 2:1 in favor of bringing TCL into the proceedings. However, the third co-arbitrator, DK Singh, dissented from this decision. BGR and TCL contend that Professor Rajoo, as the presiding arbitrator, failed to disclose crucial information regarding both material appointments he held and past criminal proceedings against him, forming the basis of their challenge.

The Delhi High Court has begun its examination of the challenge, with Justice Sachin Datta presiding over the initial hearing. During these proceedings, notices were issued to Minas De Benga Limitada (MDB), the opposing party in the arbitration, and the matter has been scheduled for further hearing in October. The petitioners' legal teams presented compelling arguments regarding the alleged impropriety.

Senior Advocate Abhimanyu Mahajan, representing TCL, characterized the situation as indicative of an institutional failure on the part of the ICC itself. Concurrently, Senior Advocate Amit Sibal, appearing for BGR, underscored the alleged bias exhibited by the tribunal's president, Professor Rajoo. Sibal further asserted that the arbitral tribunal had rejected their submissions without proper engagement. However, in light of Justice L Nageswara Rao's recusal, the tribunal is effectively not functioning, adding another layer to their claims of procedural unfairness stemming from the non-disclosure.

At the heart of this legal dispute lies the fundamental principle of arbitrator impartiality, a cornerstone of international commercial arbitration. The allegations against Professor Sundra Rajoo — specifically, the non-disclosure of material appointments and past criminal proceedings — directly challenge the integrity and perceived neutrality of the arbitral process. Such disclosures are generally considered essential to ensure that all parties have full confidence in the arbitrator's ability to render an unbiased decision.

This case highlights the stringent requirements for arbitrators to reveal any potential conflicts of interest, a standard crucial for maintaining the legitimacy of awards. The failure to disclose such information can provide significant grounds for challenging an arbitral award, as it directly impacts the fairness and due process afforded to the parties. The Delhi High Court's engagement with these specific allegations underscores India's judicial commitment to upholding these international arbitration standards.

The ongoing proceedings in the Delhi High Court carry substantial implications for the landscape of international commercial arbitration, particularly concerning challenges to ICC awards in India. Should the court find merit in the allegations of non-disclosure and bias against arbitrator Sundra Rajoo, it could reinforce the critical importance of rigorous due diligence when appointing arbitrators. This case serves as a stark reminder that even partial awards, especially those concerning jurisdiction over non-signatories, are subject to judicial review if procedural fairness is compromised.

Furthermore, the arguments raised about "ICC institutional failure" suggest a broader concern about the oversight mechanisms within arbitral institutions to prevent such conflicts. This challenge could encourage greater scrutiny of arbitrator appointments and disclosure practices across the board, potentially influencing how arbitral institutions manage their panels and how parties approach arbitrator selection and conflict checks in future international disputes. It underscores a potential avenue for challenging adverse awards where arbitrator non-disclosure is evident.

This case highlights the critical importance for lawyers to conduct thorough due diligence on appointed arbitrators and to be aware of the grounds for challenging arbitral awards based on non-disclosure of conflicts of interest, particularly in international commercial arbitration. It underscores a potential avenue for challenging adverse awards.

Source: Facts sourced from recent legal reporting.