Karnataka High Court Rejects Challenge to SIAC Jurisdictional Award

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 13.11.2026

Karnataka High Court Rejects Challenge to SIAC Jurisdictional Award

The Karnataka High Court has dismissed Velankani Information Systems Private Limited’s appeal challenging the jurisdictional foundation of a SIAC arbitration, finding no substantiated institutional bias and holding that the sole arbitrator’s appointment complied with the parties’ agreement and the applicable SIAC Rules.

Background: A hotel-management dispute

Velankani Information Systems entered into a management agreement in November 2009 with InterContinental Hotels Group entities for the operation and management of its hotel. The agreement required disputes to be discussed amicably first and, if unresolved, referred to arbitration under the Arbitration and Conciliation Act, 1996 and the SIAC Rules. Bangalore was stipulated as the place of arbitration, with a sole arbitrator to be appointed by mutual agreement or, failing that, by the Chairman of SIAC.

Disputes later arose over management fees, licence fees, system-fund contributions and other charges. After the hotel’s access to the reservation system was suspended in December 2017, Velankani terminated the agreement in January 2018. The hotel-group entities commenced SIAC arbitration.

The challenge to the arbitrator’s appointment

Velankani objected to SIAC’s role in appointing the arbitrator. It argued that counsel representing the hotel-group entities was on SIAC’s panel of arbitrators, creating institutional bias. SIAC initially informed the parties that its Chairman could not proceed with the appointment because of a conflict and invited them to vary the agreement to permit an appointment by the President of the SIAC Court.

Velankani declined to vary the clause. It maintained that, once SIAC had communicated that neither its Chairman nor President could appoint, SIAC had exhausted its authority and could not revisit that position. It also contended that only the Chairman, not the President or Vice President, could appoint under the contractual wording.

In December 2018, the Vice President of the SIAC Court appointed a sole arbitrator under the SIAC Rules. The arbitrator subsequently rejected the jurisdictional objections in a partial award dated June 12, 2019.

What the arbitral tribunal decided

The sole arbitrator held that SIAC as an institution was not conflicted or disqualified. The earlier communications concerning the Chairman’s inability to act did not prevent SIAC from making an appointment through the relevant authority under its rules. The tribunal also found that SIAC had not become functus officio, meaning it had not lost authority to act.

On the merits, the final award found that Velankani had materially breached the management agreement by failing to pay sums due and by terminating the agreement. It ordered payment of outstanding contractual amounts, USD 100,000 as incentive compensation, INR 14,02,96,782 for loss of profit, and 12% annual interest from January 10, 2018 until payment. Velankani’s counterclaims were dismissed, and it was ordered to bear arbitration costs and reimburse specified legal costs.

High Court’s reasoning

The Court upheld the earlier decision of the Single Judge and rejected the appeal. Its central findings were:

• SIAC acted under the parties’ agreed procedure. The parties had expressly selected SIAC and incorporated its rules into their arbitration clause. Under those rules, the Vice President falls within the definition of “President” and could make the appointment.
• No impermissible review occurred. The Court treated the communications about the Chairman’s conflict as administrative correspondence, not a final judicial or quasi-judicial determination that barred SIAC from proceeding.
• No evidence of institutional bias was established. The presence of the respondents’ counsel on SIAC’s panel of more than 500 arbitrators, and another counsel’s later appointment to the SIAC Court, did not show that SIAC or the appointed arbitrator was biased.
• The relevant inquiry was actual or justifiable doubt concerning the arbitrator. The Court noted that there was no allegation of a disclosable relationship, personal bias or interest involving the sole arbitrator and either party or counsel.
• The tribunal’s composition matched the agreement and SIAC Rules. Because the appointment was made within the agreed framework, the challenge under Section 34(2)(a)(v) of the Arbitration Act did not succeed.

Why the ruling matters

The judgment reinforces that institutional arbitration clauses will generally be given effect according to the incorporated institutional rules. A party challenging an appointment on neutrality grounds must demonstrate concrete and objectively justifiable doubts about the decision-maker or arbitrator; a remote institutional connection involving counsel is not enough.

It also distinguishes an arbitral institution’s contractual appointment function from a court-led appointment under Section 11 of the Arbitration and Conciliation Act. SIAC’s appointment did not decide the parties’ substantive rights, and jurisdiction remained open for determination by the arbitral tribunal.

Outcome

The Division Bench dismissed Commercial Appeal No. 455 of 2024 on November 6, 2026. The Court found no basis to interfere with the Single Judge’s order upholding the partial award on jurisdiction, leaving the arbitral appointment intact.

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Source: Karnataka High Court

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