Unilateral Appointment of Arbitrator by Interested Party Vitiates Arbitral Process in Absence of post-dispute Express Written Waiver

The Petitioner (PWD) challenged an Arbitral Award dated 25.10.2023, as corrected on 13.11.2023, rendered by a Sole Arbitrator.

The Arbitrator had been appointed unilaterally by the Chief Engineer (Projects), PWD, acting under Clause 25 of the General Conditions of Contract (GCC).

The Petitioner contended that this unilateral appointment mechanism violated the mandatory provisions of the Arbitration and Conciliation Act, rendering the award void ab initio.

The Respondent opposed the petition, arguing that the Petitioner waived its right to object by participating in the proceedings without raising contemporaneous objections.

1. Whether the unilateral appointment of the Sole Arbitrator by an interested party (the Petitioner’s Chief Engineer) was legally sustainable under the Act.

2. Whether the Petitioner’s participation in the arbitral proceedings without objection constituted a valid waiver of the ineligibility under Section 12(5) of the Act.

Section 12(5) of the Arbitration and Conciliation Act, 1996, which renders any person falling under the Seventh Schedule ineligible to be appointed as an arbitrator unless the parties waive the applicability by an "express agreement in writing" subsequent to disputes having arisen.

The Supreme Court’s decisions in TRF Ltd. v. Energo Engg. Projects Ltd. and Bharat Broadband Network Ltd. v. United Telecoms Ltd., which establish that an ineligible person cannot appoint another arbitrator.

The principles from Bhadra International (India) Pvt. Ltd. v. Airports Authority of India (2026) regarding the necessity of a "conscious and unequivocal" written waiver.

The Constitution Bench ruling in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) (2025) regarding the principle of equal treatment in appointments.

The court found that the Arbitrator’s appointment traces its origin entirely to the Petitioner’s designated authority under Clause 25(ii) of the GCC.

Applying Bhadra International, the court reasoned that the "express agreement in writing" required by the proviso to Section 12(5) must be a deliberate, post-dispute act and cannot be inferred from conduct, procedural participation, or "procedural happenstance".

The court noted that no such express written agreement existed between the parties.

Consequently, the unilateral appointment by the Chief Engineer—who represents an interested party—vitiated the entire arbitral process from its inception.

The court emphasized that neutrality is not a mere formality but a substantive guarantee of fairness that goes to the root of the tribunal's jurisdiction.

The Arbitral Award was set aside accordingly.

The court directed the release of the deposited award amount with accrued interest to the Petitioner, while clarifying that parties may seek other legal remedies for their underlying disputes.