Test of Prejudice Irrelevant When Tribunal Is Constituted Without Consent of Joint-Venture Partner: Madras High Court Sets Aside Arbitral Award.
The Madras High Court has set aside an arbitral award on the ground that the tribunal was constituted without obtaining the consent of a joint-venture partner, meaning it lacked jurisdiction. Justice N. Anand Venkatesh held that the tribunal’s appointment could not be validated simply because the opposing party did not show prejudice.
The dispute concerned a joint venture between Nilakantan & Brothers Constructions Pvt. Ltd. (the petitioner) and Chokkaiyan Karthikeyan & Co. for executing a contract awarded by the Chennai Port Trust. The petitioner argued that the arbitration tribunal was constituted without his consent as another partner in the joint venture, undermining the arbitration agreement and tribunal’s jurisdiction.
The Court stated that the tribunal did not examine this fundamental issue and observed that the “test of prejudice” is irrelevant when the very constitution of the tribunal is in question. When consent of one of the partners is missing, the tribunal’s jurisdiction itself becomes invalid.
Justice Venkatesh further emphasized that when the constitution of the Arbitral Tribunal is not done with proper consent, the entire process stands vitiated irrespective of whether the petitioner suffered prejudice or not.
On that basis, the Madras High Court set aside the arbitral award.
