By its judgment passed on February 10, 2017, SC has held in Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd.,[1] that ex-Government employees could be appointed as arbitrators, under the amended Arbitration and Conciliation Act, 1996 (‘Arbitration Act’), in disputes arising out of a Government contract, and that such appointment does not run foul of the conflict of interest guidelines listed in the Seventh Schedule of the Arbitration Act.Facts of the caseUnder the contract awarded to Voestalpine Schienen GmbH (‘Voestalpine’), Voestalpine was required to nominate an arbitrator from a panel of arbitrators selected by Delhi Metro Rail Corporation Ltd. (‘DMRC’). After disputes arose, DMRC furnished the names of five arbitrators, who were retired engineers of various Government departments or public sector undertakings (‘PSUs’), including the Indian Railways. Voestalpine challenged the selection of the panel of arbitrators on the basis that the DMRC nomination was disqualified by Section 12 of the Arbitration Act, read with Entry 1 of the Seventh Schedule of the Arbitration Act, which prohibits a person from acting as an arbitrator if he is/has been an employee, consultant or advisor with one of the parties to the arbitration.Decision of the SCSC held that the selection of retired engineers of Government departments or PSUs did not violate Section 12(5) of the Arbitration Act simply because the person (sought to be appointed as an arbitrator) is a retired officer of a Government or other statutory corporation or PSUs. If such person had no connection with the DMRC, then that person would not be treated as ineligible under Section 12(5) of the Arbitration Act. The judgment effectively rejects the proposition that all Government entities and PSUs are to be seen as one composite entity for purposes of conflict of interest in choice of arbitrators. Therefore, in disputes arising out of Government contracts, private parties will not be entitled to object to the process of nomination of arbitrators by the Government entity, so long as such nominees are not/were not directly employed with the particular Government entity that is party to the relevant dispute.[1]     2017 SCC OnLine SC 172.