Unilateral Appointment From a Party-Curated Arbitrator Panel is Void Ab Initio Absent Express Written Waiver

The Petitioner (AAI) awarded a tender to the Respondent for the construction of Central Air Traffic Flow Management offices in New Delhi via a contract dated 20.01.2016

Following a dispute, the Respondent invoked Clause 25 of the contract, which provided for a Dispute Resolution Committee (DRC) and subsequent arbitration by a sole arbitrator appointed by AAI

After the DRC rejected the claims, the Respondent invoked arbitration on 25.10.2021

The Petitioner proposed three names from its curated panel, and the Respondent consented to one name on 12.11.2021

An award was passed on 15.03.2023

The Petitioner subsequently challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996, alleging the unilateral appointment violated Section 12(5)

1. Whether the appointment of an arbitrator from a panel curated exclusively by one party (AAI) violates Section 12(5) and the principle of equal treatment under Section 18 of the Act

2. Whether the Respondent's consent to select an arbitrator from the Petitioner’s proposed panel constitutes an "express agreement in writing" to waive ineligibility under the proviso to Section 12(5)

3. Whether a party that unilaterally appointed an arbitrator is legally permitted to challenge the validity of that appointment in Section 34 proceedings

The court primarily applied Section 12(5) of the Arbitration and Conciliation Act, 1996, which stipulates that any person whose relationship with the parties falls within the Seventh Schedule is ineligible to be an arbitrator

It relied on Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, which held that unilateral appointments are ex facie invalid and that any waiver under the proviso to Section 12(5) must be an "express agreement in writing" rather than implied conduct

The court further applied the principle of equal treatment under Section 18, citing Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), which establishes that forcing a party to choose from a curated panel restricted by the other party is invalid

Finally, it followed Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi, affirming that an award by an ineligible arbitrator is a nullity and can be challenged even by the appointing party

The court reasoned that since AAI curated the panel and mandated the Respondent to select a nominee from it, the Respondent was effectively excluded from the appointment process, violating the principle of equal treatment under Section 18

Regarding the waiver, the court observed that the communication dated 09.11.2021 and 12.11.2021—wherein the Respondent merely picked a name from the Petitioner's list—did not constitute an "express waiver" as contemplated by the proviso to Section 12(5)

The court emphasized that such a waiver must be a conscious, written manifestation of intent made after the dispute has arisen

Furthermore, the court rejected the argument that AAI could not challenge its own appointment, holding that an ineligible appointment is void ab initio and goes to the root of the tribunal's jurisdiction, rendering the resulting award a nullity regardless of which party initiated the appointment

It held that in the absence of a valid express waiver in writing, the arbitrator lacked inherent jurisdiction

Consequently, the court set aside the arbitral award dated 15.03.2023 and the subsequent order dated 19.04.2023 as nullities

The petition under Section 34 was allowed