Unilateral Arbitrator Appointment Without Express Written Waiver Renders Arbitral Proceedings and Resultant Award Void Ab Initio.

The Petitioner (PWD, Delhi) challenged an Arbitral Award dated 14.10.2023 rendered by a Sole Arbitrator, Mr. Kamlesh Kumar, which directed the Petitioner to pay approximately Rs. 2.5 Crore plus interest to the Respondent

The Respondent construction company had written to the Chief Engineer of PWD regarding disputes, and the Chief Engineer, exercising powers under Clause 25 of the General Conditions of Contract (GCC), unilaterally appointed the Arbitrator via a letter dated 22.04.2022

The Respondent contended the appointment was consensual because they had suggested a list of names from which the Chief Engineer selected the Arbitrator

1. Whether the unilateral appointment of the Sole Arbitrator by the Chief Engineer of the Petitioner department was void ab initio under Section 12(5) of the Arbitration and Conciliation Act, 1996

2. Whether the Respondent's participation in the selection process or the suggestion of a list of names constituted an "express agreement in writing" to waive the ineligibility of the Arbitrator under the proviso to Section 12(5)

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

Supreme Court precedents in TRF Ltd. v. Energo Engg. Projects Ltd. and Bharat Broadband Network Ltd. v. United Telecoms Ltd., which establish that unilateral appointments by an interested party are legally unsustainable

Principles from the Constitution Bench in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) (2025), holding that the principle of equal treatment applies to the appointment stage and that unilateral appointment clauses in public-private contracts violate Article 14 of the Constitution

Bhadra International (India) Pvt. Ltd. v. Airports Authority of India (2026), affirming that waiver of Section 12(5) must be an "express agreement in writing" and cannot be inferred by conduct or procedural participation

The Court reasoned that the Arbitrator’s appointment flowed solely from the Chief Engineer of the PWD (an interested party) under Clause 25(ii) of the GCC. This mechanism constitutes a unilateral appointment, which is prohibited as it strikes at the root of independence and impartiality

The Court rejected the Respondent's argument that suggesting a list of names made the appointment "consensual". It clarified that under the proviso to Section 12(5), a valid waiver requires an "express agreement in writing" executed after disputes have arisen. The Respondent’s internal correspondence suggesting names preceded the actual appointment and did not constitute an informed, explicit relinquishment of statutory safeguards

Consequently, the Tribunal was improperly constituted, rendering the proceedings void ab initio regardless of the merits of the case

The Court allowed the Petition and set aside the Impugned Award dated 14.10.2023. It further ordered the release of the deposited Award amount, along with accrued interest, back to the Petitioner within four weeks. The parties were granted liberty to pursue legal remedies in accordance with the law