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MIAL Case: Supreme Court issues notice in a dispute over the appointment of an Arbitrator in a multi-party arbitration agreement

Bar & Bench

Opposing the decision of MIAL to appoint Justice Mukul Mudgal on behalf of all the respondents in an arbitration between GVK (Claimant) and MIAL, Airport Company of South Africa (ACSA), Airports Authority of India (all respondents), moved the Supreme Court for the appointment of an independent arbitrator. (ASCA Global Limited vs GVK Airport Holdings Ltd. and Ors)

ACSA has argued that MIAL had no authority to appoint an arbitrator (Justice Mukul Mudgal in this case) on behalf of ACSA, AAI and itself.

The Supreme Court issued notice in the case on June 5.

MIAL was set up as a joint venture for the purpose of running the Mumbai Airport and was set up in 2006. GVK Airport Holdings is the majority shareholder in this venture with a holding of 50.5% while the Airport Authority of India holds a 26.5% stake. Bidvest Mauritius and the ACSA have a holding of 13.5% and 10% respectively in this joint venture.

Bidvest and ACSA both sought to exit the venture be selling their shares to a third party buyer. However, this move was opposed by GVK that contended that it reserved the right of first refusal in this exit deal.

GVK invoked arbitration over the issue with Bidvest and as regards ACSA, a settlement had been arrived at. GVK and ACSA were deliberating on a Share Purchase Agreement, however, GVK gave an arbitration notice to ACSA under the Shareholders Agreement.

The former Chief Justice of India, Justice Dipak Misra had been appointed as the arbitrator by GVK, while MIAL appointed Justice Mukul Mudgal on behalf of all the respondents. The two nominated arbitrators have appointed Justice Anil Dave as the president arbitrator.

MIAL’s appointment was not acceptable and agreeable to ACSA and AAI both on the ground that it was made in collusion with GVK, its majority shareholder.

This brought the dispute to the Supreme Court where ACSA has prayed the Court to appoint an independent arbitrator on account of lack of consensus.

On June 5, the Bench of CJI SA Bobde with justices AS Bopanna and Hrishikesh Roy issued notice in the case and fixed the next date of hearing on July 8.

AS Bopanna, CJI SA Bobde, Hrishikesh roy
AS Bopanna, CJI SA Bobde, Hrishikesh roy

This is the first case where an arbitrator is to be appointed in a multi-party arbitration agreement with more than one Respondent.

ACSA was represented by Senior Advocate Gourab Banerji and Advocate Jayant Mehta, instructed by NPS Chawla, Kaustubh Prakash, and Sakshi Singh of Vaish Associates as well as Advocates Mohit Pandey and Ishita Mishra.

MIAL was represented by Senior Advocate Harish Salve, and GVK was represented by Senior Advocate Gaurav Pachnanda.

Read Order

ACSA v GVK.pdf
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