TRF Limited v Energo Engineering Projects Limited

Facts

• TRF Ltd. (employer) and Energo Engineering (contractor) had a contract with an arbitration clause
• The clause empowered the Managing Director of TRF to appoint a sole arbitrator
• Disputes arose; TRF's MD nominated a retired judge as the sole arbitrator
• Energo objected: the MD is an employee/officer of TRF (a party); under S.12(5) read with the Seventh Schedule, the MD is ineligible to be an arbitrator
• The question: if the MD is ineligible to BE the arbitrator, can he NOMINATE someone else?

Issue

1. Whether a person who is disqualified from being appointed as an arbitrator under S.12(5) read with the Seventh Schedule can exercise the power to nominate another person as arbitrator.

Held

• The Managing Director of a party is per se ineligible to be appointed as arbitrator under S.12(5) (employee of a party: Seventh Schedule).
• If a person is ineligible to be appointed, they cannot nominate another person. The power to nominate is derived from the power to be appointed. Once the source (eligibility) is extinguished, the derivative (nomination power) also dies.
• The nominated arbitrator's appointment is invalid; the court should appoint an independent arbitrator under S.11(6).

Ratio Decidendi

The power to nominate an arbitrator is derivative of the nominator's own eligibility. An ineligible person's nomination power stands extinguished. This prevents indirect circumvention of S.12(5) safeguards by allowing an interested party-employee to handpick a nominally independent arbitrator.