J 2024 SCC OnLine Blog OpEd 119 21010324124 Studentslsheduin 20250414 090839 1 15
J 2024 SCC OnLine Blog OpEd 119 21010324124 Studentslsheduin 20250414 090839 1 15
choose the third arbitrator from the same list who would act as the
presiding arbitrator.
Voestalpine contested this because it argued that the five-member
panel consisted of serving or retired engineers of government
departments or public sector undertakings which would be contrary to
Section 12(5) of the Act, read with Entry 1 of Seventh Schedule to the
22
Act.
However, the Court held as follows:
1. Simply because the nominee arbitrator concerned is a retired
officer who retired from the Government or other statutory
corporation or public sector undertaking (PSU) and had no
connection with Delhi Metro Rail Corpn. (DMRC) (the respondent),
he should not be treated as ineligible to act as an arbitrator
merely on the ground of bias or possibility of bias. Had this been
the intention of the legislature, the Seventh Schedule would have
covered such persons as well. The very reason for empanelling
these persons was to ensure that technical aspects of the dispute
are suitably resolved by utilising their expertise.23
2. The respondent was entitled to pick 5 arbitrators from a list of 31
options and forward their names to the petitioner to select one out
of the 5 as its nominee arbitrator. The respondent would also
nominate its arbitrator from the same list, and the two arbitrators
appointed would also select the third arbitrator from the same 5-
member list. This would have the result of giving the petitioner no
real choice in choosing its nominee, as it is quite possible that the
respondent would have picked its own favourites to the 5-member
list. Therefore, the Court deemed it fit to change the appointment
procedure to let parties nominate any person from the entire
panel of 31 arbitrators, and similarly permit the nominee
arbitrators as well to nominate the third arbitrator from this
24
broader panel.
3. The Court also noted that in any event, there was an additional
safeguard of the arbitrators ultimately chosen having to disclose
25
their interests as per Section 12 of the Act.
26
Voestalpine therefore, is in a sense on a different footing from
27
TRF and Perkins28 since in Voestalpine29 the broader list of 31
arbitrators (that was eventually provided to the petitioner) had retired
employees of the Government including retired employees of the Indian
Railways but no current employees or ex-employees of either of the
parties.
Subsequently, in 2020, a three-Judge Bench of the Supreme Court
in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 4 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
30 31
MCML (JV) (CORE), varied from the approach taken in TRF and
32
Perkins .
In this case, the arbitration clause stipulated that the appellant
(CORE) would provide a list of 4 arbitrators to the respondent. Out of
this list, the contractor (respondent) would suggest to the General
Manager, Railways at least two names for its nominee. The General
Manager would appoint at least one out of them as the contractor's
nominee and would simultaneously appoint the remaining two
arbitrators from the panel or from outside the panel and then indicate
the “Presiding Officer” from amongst the three arbitrators. On the
aspect of whether the General Manager, Railways would be eligible to
nominate an arbitrator, considering his own (potential) ineligibility, the
Court held that this principle would not be applicable since there was
an adequate counterbalancing in this case by letting the respondent
select two arbitrators (out of 4 selected by the appellant) from which
the appellant would pick one arbitrator.33
However, this reasoning does not appear to be adequate because it
is not clear what the role of an adequately counterbalanced
appointment clause is in a situation where the General Manager himself
is ineligible. The Court fails to analyse this issue from the perspective of
a (potential) loss of authority of the nominating arbitrator and instead
relies on TRF34 to state that if there is adequate counterbalancing the
35
authority of the nominating entity of one party cannot be questioned.
Therefore, CORE36 conflates the two issues, one being on ineligibility to
appoint an arbitrator when the appointing authority is itself ineligible to
be an arbitrator, and two, whether the appointment is unilateral in
nature i.e. if there is adequate counterbalancing.
37 38
While CORE cites Voestalpine for the holding that retired railway
officers would not be ineligible from being appointed as arbitrators due
to their technical expertise, it does not follow the direction in
Voestalpine39 that the panel of arbitrators ought to be broad-based in
order to give the other side adequate choice of selecting its nominee
40 41
arbitrator. In fact, CORE is contrary to Voestalpine because in the
latter the Court clearly expressed its opinion that it would amount to a
lack of any real choice to the petitioner to select its arbitrator when
such selection was to happen from a narrow panel of 5 arbitrators
chosen by the respondent.
42
The judgment in CORE has received a lot of criticism for upending
the established position of law, muddying the waters, and resulting in a
situation where two three-Judge Bench decisions of the Supreme Court
(the other one being TRF43) have ruled differently on the same issue.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 5 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
59
In Margo Networks , when a dispute arose between the parties, the
respondent directed the petitioner to act in strict conformity with the
arbitration clause which provided for appointment of a 3-member
Arbitral Tribunal in the following manner:
(i) The Railway (respondent) would send a panel of more than 3
(three) names to the petitioner who would be asked to suggest at
least two names out of the panel for appointment of its nominee.
(ii) The Railway would appoint at least one out of them as the
petitioner's nominee.
(iii) The Railway would also simultaneously appoint the balance
number of arbitrators either from the panel or from outside the
panel, duly indicating the presiding arbitrator from amongst the
three arbitrators so appointed.
The respondent offered a panel of 10 persons to the petitioner, each
of them being former employees of either the Railways or RailTel out of
which the petitioner was to select at least two members for the
selection of its nominee.
60
Following the principles laid down in Voestalpine on the
requirement of having broad-based panels, the Court found that since
all the members of the panel were ex-employees of the
Railways/RailTel, such a panel would be restrictive and manifestly not
“broad-based” and therefore, the arbitration clause would not be valid.
61
However, on the aspect of the ruling in CORE , the Court in Margo
62 63
Networks decided that CORE did not consider the following two
fundamental issues:
(i) When appointment of arbitrator(s) is to be made out of a panel
prepared by one of the parties, whether the panel is required to
64
be “broad-based” as per Voestalpine ; and
(ii) whether counterbalancing is achieved in a situation here where
one of the parties has a right to choose an arbitrator from a panel
whereas the remaining (2 out of 3) members of the Arbitral
Tribunal are appointed by the other party?
While the first issue was indeed not considered by the ruling in
CORE65, it is not comprehensible how the Court in Margo Networks66
67 68
(and later in Taleda Square as well) decides that CORE did not
consider counterbalancing.
In CORE69, the factual situation and appointment procedure (as also
70
described above), was quite similar to that of Margo Networks and in
71
fact the judgment in CORE states:
37. … the right of the General Manager in formation of the Arbitral
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 7 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
the High Court had the opportunity to consider whether the Arbitral
Tribunal should be appointed as per Clause 64(3)(a)(ii) of the General
Conditions of Contract (which provides for three names of Gazetted
Railway Officers for constituting the Arbitral Tribunal).
The Court held against the respondent due to the unilateral nature of
Clause 64(3)(a)(ii), and due to CORE93 being referred to a larger Bench
of the Supreme Court. Therefore, the High Court here as well,
proceeded de hors the contract, and appointed two former Judges of
the High Court as two of the arbitrators, and a senior advocate as the
presiding arbitrator.
On waiver under Section 12(5) — Whether participation in the
arbitration would amount to waiver, and the “persona
designata” understanding of unilateral appointment
On a slightly different aspect under the larger umbrella of the law on
unilateral appointment of arbitrators, an interesting issue arose on
waiver under Section 12(5) of the Act. The proviso to this sub-section
permits parties to waive the applicability of the sub-section by an
express agreement in writing after disputes have arisen between the
parties. Therefore, parties can choose to waive the conditions specified
in the Seventh Schedule that would make an arbitrator ineligible by
mutual consent after the dispute has arisen between the parties.
94
In McLeod Russel (India) Ltd. v. Aditya Birla Finance Ltd. (McLeod
Russel), the Calcutta High Court was faced with the question of
whether the participation by a party in an arbitration would amount to a
waiver under Section 12(5) of the Act when the arbitration clause
provided for a unilateral appointment of the arbitrator by only one of
the parties.
On the facts of the case, the Court held that because of the
petitioner's extensive participation in the arbitration, which was not a
one-off or a mindless entry into the arbitrator's jurisdiction, the
petitioners made a conscious and deliberate decision to stay on and live
with the arbitration agreement that provided for such a unilateral
appointment. The pleadings filed by the petitioner at various stages of
the arbitration proceeding would amount to an “express agreement in
writing” as contemplated in the proviso to Section 12(5) of the Act, and
Section 12(5) was not fact neutral or context indifferent. Where a party
had continuously, repeatedly and unequivocally accepted the
arbitrator's appointment, the same could not be wiped out or nullified
by a mere application for termination of the arbitrator's mandate.
The second issue was whether a unilateral appointment clause itself
95
would be valid, and the Court differentiated Perkins on inter alia two
important aspects:
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 9 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
96 97
1. The ratio in Perkins and TRF is that a person disqualified from
being an arbitrator cannot delegate his position to another.
However, in McLeod Russel98, the arbitration clause provided for a
sole arbitrator to be appointed by one of the parties directly, and
there was no named/designated arbitrator or “persona designata”.
Therefore, “unilateral appointments” being impermissible in law
must be read to mean a unilateral appointment made by a person
who himself is disqualified to act as an arbitrator under the
Seventh Schedule and not each and every unilateral appointment
made by one of the parties to the arbitration.
2. In Perkins99, there was no question of waiver i.e. on facts, in
100
Perkins , the issue of waiving the ineligibility of an arbitrator by
an agreement in writing never arose.
Therefore, in McLeod Russel101, the Court distinguished a “persona
designata” appointment and an appointment by the party itself, holding
that only the former would fall within impermissible appointments
because they were unilateral in nature. However, the Court does not
explain how the same issue of ineligibility would not arise even in a
situation where simply the party was appointing an arbitrator (instead
of a “persona designata” making the appointment). Usually, in a clause
which allows a party to appoint an arbitrator, it is an
official/officer/director of the party who makes the appointment. It is
unclear why the two situations would be different when the same issue
of ineligibility could arise in both cases.
Ultimately, the Calcutta High Court held that the ineligibility of the
arbitrator due to the unilateral appointment was regularised on account
of the waiver by the petitioner.
The way forward in the law on unilateral appointments
102
While the law on the correctness of the holding in CORE awaits
clarity by the Supreme Court, it is important to consider the
impracticality of having any sort of strict and defined test of what would
amount to an adequate amount of “counterbalance” in any arbitration
clause. On this issue, courts have considered whether both parties have
an adequate amount of say in the appointment, and whether a
selection from a pre-decided panel would amount to having enough
choice in the selection of an arbitrator. Often it may also be the case
that there is an imbalance in the bargaining power and ability to
negotiate between both the parties, which often results in an
imbalanced and unilateral appointment.
Even in a scenario where the respondent entity provides a large pool
of arbitrators from which the petitioner may choose its nominees, it is
possible that out of the large pool most may have expertise in a specific
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 10 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
††
Associate, Trilegal.
1
(2020) 20 SCC 760.
2
Arbitration and Conciliation Act, 1996, S. 12(5).
3
(2020) 20 SCC 760.
4
(2020) 20 SCC 760.
5
(2017) 8 SCC 377.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 11 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
6
(2017) 8 SCC 377.
7
Arbitration and Conciliation Act, 1996, Sch. 7 Entry 1.
8
While the Seventh Schedule of the Act prescribes the various circumstances that would
make an arbitrator ineligible, the Fifth Schedule provides the grounds that give rise to
justifiable doubts as to the independence or impartiality of the arbitrator.
9
(2020) 20 SCC 760.
10
(2017) 8 SCC 377.
11
Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760, 778-779.
12
(2020) 20 SCC 760.
13
(2020) 20 SCC 760.
14
(2017) 8 SCC 377.
15
(2017) 8 SCC 377.
16
TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377,
50. … We are neither concerned with the disclosure nor the objectivity nor the
impartiality nor any such other circumstance … but merely whether the Managing
Director, after becoming ineligible by operation of law is he still eligible to nominate an
arbitrator. (Mark as RI1)
17
(2017) 8 SCC 377.
18
(2017) 8 SCC 377, para 54.
19
(2020) 20 SCC 760.
20
(2017) 4 SCC 665.
21
(2017) 4 SCC 665.
22
Arbitration and Conciliation Act, 1996, Sch. 7 Entry 1: The arbitrator is an employee,
consultant, advisor or has any other past or present business relationship with a party.
23
(2017) 4 SCC 665, para 25.
24
(2017) 4 SCC 665, para 27.
25
(2017) 4 SCC 665, para 26.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 12 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
26
(2017) 4 SCC 665.
27
(2017) 8 SCC 377.
28
(2020) 20 SCC 760.
29
(2017) 4 SCC 665.
30
(2020) 14 SCC 712.
31
(2017) 8 SCC 377.
32
(2020) 20 SCC 760.
33
CORE, (2020) 14 SCC 712, para 36.
34
(2017) 8 SCC 377.
35
TRF, (2017) 8 SCC 377, para 50.
36
(2020) 14 SCC 712.
37
(2020) 14 SCC 712
38
(2017) 4 SCC 665.
39
(2017) 4 SCC 665.
40
(2020) 14 SCC 712.
41
(2017) 4 SCC 665.
42
(2020) 14 SCC 712.
43
(2017) 8 SCC 377.
44
(2023) 12 SCC 330.
45
(2020) 14 SCC 712.
46
(2023) 12 SCC 330.
47
(2020) 14 SCC 712.
48
2022 SCC OnLine SC 1973.
49
(2020) 14 SCC 712.
50
2022 SCC OnLine SC 1973.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 13 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
51
(2020) 14 SCC 712
52
(2020) 14 SCC 712.
53
(2020) 14 SCC 712.
54
(2020) 14 SCC 712.
55
(2020) 14 SCC 712.
56
2023 SCC OnLine Del 3906.
57
2023 SCC OnLine Del 6321.
58
2023 SCC OnLine Del 7574.
59
2023 SCC OnLine Del 3906.
60
(2017) 4 SCC 665.
61
(2020) 14 SCC 712.
62
2023 SCC OnLine Del 3906.
63
(2020) 14 SCC 712.
64
(2017) 4 SCC 665.
65
(2020) 14 SCC 712.
66
2023 SCC OnLine Del 3906.
67
2023 SCC OnLine Del 6321.
68
(2020) 14 SCC 712.
69
(2020) 14 SCC 712.
70
2023 SCC OnLine Del 3906.
71
(2020) 14 SCC 712.
72
(2020) 14 SCC 712.
73
2023 SCC OnLine Del 6321.
74
2023 SCC OnLine Del 3906.
75
2023 SCC OnLine Del 6321.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 14 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
76
2023 SCC OnLine Del 3906.
77
(2020) 14 SCC 712.
78
(2020) 14 SCC 712.
79
2023 SCC OnLine Del 7574.
80
2023 SCC OnLine Del 3906.
81
2023 SCC OnLine Del 6321.
82
(2017) 4 SCC 665.
83
2023 SCC OnLine Del 3906.
84
2023 SCC OnLine Del 6321.
85
2023 SCC OnLine Del 7574.
86
(2020) 14 SCC 712.
87
(2020) 14 SCC 712.
88
(2020) 20 SCC 760.
89
(2017) 4 SCC 665.
90
(2020) 14 SCC 712.
91
2024 SCC OnLine Cal 4027.
92
Arbitration and Conciliation Act, 1996, S. 11.
93
(2020) 14 SCC 712.
94
2023 SCC OnLine Cal 330.
95
(2020) 20 SCC 760.
96
(2020) 20 SCC 760.
97
(2017) 8 SCC 377.
98
2023 SCC OnLine Cal 330.
99
(2020) 20 SCC 760.
100
(2020) 20 SCC 760.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 15 Monday, April 14, 2025
Printed For: Saranya Garnepdy, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
101
2023 SCC OnLine Cal 330.
102
(2020) 14 SCC 712.
Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/
regulation/ circular/ notification is being circulated on the condition and understanding that the publisher would not be
liable in any manner by reason of any mistake or omission or for any action taken or omitted to be taken or advice
rendered or accepted on the basis of this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/ notification. All
disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The authenticity of
this text must be verified from the original source.