A party interested in the dispute cannot unilaterally appoint the sole arbitrator.

The Petitioner’s contract for construction and associated works in government schools contained an arbitration clause (Clause 25 of the GCC) providing for appointment of a sole arbitrator by the Chief Engineer, CPWD, or designated senior CPWD officials.

After the Petitioner’s claims were rejected, it invoked arbitration on 20 August 2024. The Respondent did not appoint an arbitrator. In the Section 11(6) petition, the Respondent accepted that an arbitration agreement existed and that the disputes could be referred, but maintained that appointment should follow Clause 25.

The Petitioner challenged the clause’s unilateral appointment mechanism.

1. Whether the Court’s inquiry under Section 11 of the Arbitration and Conciliation Act, 1996, was confined to a prima facie examination of the existence of an arbitration agreement.

2. Whether Clause 25 was enforceable insofar as it authorised officials of the Respondent to appoint the sole arbitrator, or whether that appointment power had to be severed.

Under Section 11 of the Arbitration and Conciliation Act, 1996, the referral court’s inquiry is confined to a prima facie examination of the existence of an arbitration agreement; deeper or contested questions are generally for the arbitral tribunal under Section 16 (SBI General Insurance Co. Ltd. v. Krish Spinning).

Under TRF Ltd. v. Energo Engineering Projects Ltd. and Perkins Eastman Architects DPC v. HSCC (India) Ltd., a person ineligible to act as arbitrator cannot appoint another arbitrator, and a party interested in the dispute cannot unilaterally control the appointment.

The Court also relied on Bharat Broadband Network Ltd. v. United Telecoms Ltd., Proddatur Cable TV Digi Services v. Siti Cable Network Ltd., Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV), and Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd. for the principles that unilateral appointment undermines impartiality and equality of the parties, and that the invalid appointment mechanism may be severed while preserving the parties’ agreement to arbitrate.

Section 12 of the 1996 Act requires the appointed arbitrator to make the prescribed disclosure.

The Respondent did not dispute the existence of the arbitration agreement; the central dispute concerned only the appointment mechanism.

Applying Perkins and the related authorities, the Court held that the Respondent’s designated officials could not appoint the sole arbitrator because unilateral appointment by a party interested in the outcome compromises impartiality and procedural equality.

Following its earlier decision concerning the same Clause 25, and the severability principle in Hindustan Construction Co., the Court treated the appointment power as void and unenforceable while preserving the parties’ substantive agreement to arbitrate.

It therefore appointed an independent arbitrator.

The arbitrator was directed to make a disclosure under Section 12 of the 1996 Act.

The Court left all merits and contentions open and permitted the Respondent to bring any counterclaim before the arbitrator.