Unilateral appointment of an arbitrator is void ab initio regardless of a party's participation or conduct.

The Petitioner, Airports Authority of India (AAI), awarded a contract to the Respondent for civil works at Adampur Airport, Punjab, via a Letter of Acceptance dated 15.06.2018.

Following delays in completion, the Respondent raised monetary claims for deductions and damages.

Per Clause 25 of the agreement, seeking a decision from the Dispute Resolution Committee (DRC) was a prerequisite for arbitration.

After the DRC process, the Petitioner (AAI) unilaterally appointed a sole arbitrator on 21.06.2024 who subsequently passed an award in favor of the Respondent for ₹2,76,57,596 on 13.10.2025.

The Petitioner then filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the award on the grounds that its own appointment of the arbitrator was legally invalid.

1. Whether the unilateral appointment of a sole arbitrator by one party is legally valid under Section 12(5) of the Arbitration and Conciliation Act

2. Whether the Petitioner's act of appointing the arbitrator and participating in proceedings constitutes a waiver of the right to challenge the arbitrator's eligibility

3. Whether an award passed by an ineligible arbitrator is a nullity that can be challenged for the first time at the Section 34 stage by the party who made the appointment

Section 12(5) of the Arbitration and Conciliation Act, 1996, which renders any person falling under the Seventh Schedule ineligible to be an arbitrator unless such ineligibility is waived via an "express agreement in writing".

The Supreme Court ruling in Bhadra International (India) Pvt. Ltd. v. AAI (2026), which held that the principle of equal treatment requires both parties to have an equal say in the constitution of the tribunal.

Division Bench ruling in Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi (2025), establishing that a unilateral appointment is void ab initio and an award rendered by such a tribunal is a nullity against public policy.

Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) regarding the invalidity of curating a restricted panel for the other party’s selection.

The Court reasoned that under the amended Act, an official of a party to a dispute lacks the authority to either act as an arbitrator or unilaterally nominate one.

It found that Clause 25 of the agreement, which allowed AAI’s Member (Planning) to appoint the arbitrator, violated the mandate of equal participation.

The Court emphasized that a "waiver" under the proviso to Section 12(5) must be a conscious, express written agreement made after the dispute has arisen; it cannot be inferred from conduct, participation in proceedings, or the mere act of making the appointment.

Applying Mahavir Prasad Gupta, the Court noted that even though the Petitioner was the party that made the appointment, it was not estopped from challenging it because the arbitrator's lack of inherent jurisdiction went to the root of the matter, making the entire proceeding a nullity.

The unilateral appointment of the arbitrator was void ab initio for violating Section 12(5) read with the Seventh Schedule.

In the absence of an express written waiver, the tribunal lacked jurisdiction, rendering the award a nullity.

Consequently, the Court allowed the petition and set aside the arbitral award dated 13.10.2025.