Unilateral Appointment of Sole Arbitrator Without Express Written Consent Is Void Ab Initio and Vitiates Award

The Petitioner (Wiretel) was sub-contracted by the Respondent (Annu Infra) for optical fiber cable work related to a BSNL tender via a Letter of Intent dated 26.03.2015.

Clause 23 of the General Conditions of Order empowered the Respondent company to unilaterally appoint a sole arbitrator in case of disputes.

Following disputes over site handover delays, the Petitioner issued a Section 21 notice on 30.10.2019, and the Respondent unilaterally appointed an arbitrator on 27.11.2019.

The proceedings resulted in an arbitral award dated 30.09.2022, which the Petitioner challenged under Section 34 of the Arbitration and Conciliation Act, 1996.

1. Whether the unilateral appointment of the sole arbitrator by the Respondent is in violation of Section 12(5) of the Arbitration and Conciliation Act, 1996.

2. Whether a party can challenge the unilateral appointment of an arbitrator for the first time in an application under Section 34, and whether participation in proceedings constitutes a waiver of such objection.

Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996, which renders any person whose relationship with the parties falls under the specified categories ineligible to be an arbitrator.

The Supreme Court precedent in Bhadra International (India) Pvt. Ltd. v. Airports Authority of India (2026), establishing that unilateral appointments are ex-facie invalid and that waiver under the proviso to Section 12(5) requires an "express agreement in writing" after the dispute has arisen.

Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi (2025), holding that awards by unilaterally appointed arbitrators are a nullity and against public policy.

The Court observed that Clause 23 of the GCO allowed the Respondent to unilaterally nominate the arbitrator, a practice prohibited by the amended Section 12(5) as it denies equal treatment in the constitution of the tribunal.

The Respondent’s argument—that the Petitioner failed to plead this issue in the original Section 34 petition and had participated in the arbitration—was rejected based on Bhadra International, which clarified that a lack of inherent jurisdiction goes to the root of the matter and can be raised at any stage.

The Court emphasized that "express agreement in writing" is a mandatory prerequisite for waiver; mere participation or filing a statement of claim does not constitute an "unequivocal expression" of consent to an ineligible arbitrator.

Since no such written agreement existed between both parties to waive the statutory rigors of Section 12(5), the appointment was void from its inception.

The Court answered the primary issue in the affirmative, stating that the appointment violated Section 12(5) of the Act.

Consequently, the petition was allowed, and the arbitral award dated 30.09.2022 was set aside.