0% found this document useful (0 votes)
8 views15 pages

J 2024 SCC OnLine Blog OpEd 119 21010324124 Studentslsheduin 20250414 090839 1 15

The document discusses the complexities and inconsistencies in the judicial approach to the unilateral appointment of arbitrators, highlighting key Supreme Court cases such as Perkins and TRF that address the validity of such appointments. It emphasizes the need for clarity in the law regarding the qualifications and potential biases of appointing authorities, as well as recent conflicting judgments, particularly the CORE case, which has led to further scrutiny and referral to a larger bench. The article calls for a consistent legal framework to ensure fair arbitration processes.

Uploaded by

sheepsandlions
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
8 views15 pages

J 2024 SCC OnLine Blog OpEd 119 21010324124 Studentslsheduin 20250414 090839 1 15

The document discusses the complexities and inconsistencies in the judicial approach to the unilateral appointment of arbitrators, highlighting key Supreme Court cases such as Perkins and TRF that address the validity of such appointments. It emphasizes the need for clarity in the law regarding the qualifications and potential biases of appointing authorities, as well as recent conflicting judgments, particularly the CORE case, which has led to further scrutiny and referral to a larger bench. The article calls for a consistent legal framework to ensure fair arbitration processes.

Uploaded by

sheepsandlions
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 15

SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.

Page 1 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.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

2024 SCC OnLine Blog OpEd 119

Unilateral Appointment of an Arbitrator: The Lack of Clarity in


the Judicial Approach and the Way Forward

UNILATERAL APPOINTMENT OF AN ARBITRATOR: THE LACK OF CLARITY IN


THE JUDICIAL APPROACH AND THE WAY FORWARD
by
Shalaka Patil and Surbhi Shah††

The issue of the validity of the appointment of a unilaterally


appointed arbitrator has continued to remain a vexed question of law
and has been the subject of numerous decisions of the Supreme Court
and various High Courts in recent times.
Considering the complexity of the judicial terrain on the unilateral
appointment of an arbitrator, an analysis of judicial precedent does not
reveal straightforward answers on what would constitute a “unilateral”
appointment, as there are many variations and nuances that arise and
that depend on the nature of the appointment process and what in fact
qualifies as “unilateral”.
This article traces the evolution of the judicial approach on unilateral
appointment of arbitrators as well as the prevailing position of the
Supreme Court on this issue. The aim is to highlight the inconsistencies
in the jurisprudence, especially the recent cases, and emphasise on the
need for clarity and consistency in the law, as well as discuss the
approach that can be adopted by courts to determine if an appointment
process is indeed an unfair one.
In the landmark case of Perkins Eastman Architects DPC v. HSCC
(India) Ltd.1 (Perkins), the Supreme Court held that a clause that
enables an official (like the Managing Director) of a company to appoint
an arbitrator would be invalid if the official himself was disqualified
from being an arbitrator as per the criteria of ineligibility provided in
2
Section 12(5) of the Act read with the Seventh Schedule. As per the
dispute resolution clause in Perkins3, it was only the Managing Director
of the respondent who had the power to appoint a sole arbitrator.
The decision in Perkins4, followed the decision in TRF Ltd. v. Energo
5
Engg. Projects Ltd. (TRF), in which case the dispute resolution clause
mandated that the sole arbitrator could either be the Managing Director
of the respondent or his nominee. The three-Judge Bench of the
Supreme Court in TRF6 decided that it would not be permissible to
allow the Managing Director who was statutorily ineligible to be an
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 2 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.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

arbitrator himself, to nominate an arbitrator. The statutory ineligibility


in question was on account of Section 12(5) of the Act which when read
7
together with Entry 1 of the Seventh Schedule , disqualified a person
from being appointed if they were to be an employee, consultant,
advisor or if he had any other past or present business relationship with
a party.8
9 10
The decision in Perkins extended the rationale of TRF to cases
where the Managing Director of one of the parties is not to act as an
arbitrator himself but only to appoint another arbitrator.
11
Perkins held at para 20 :
20. If, in the first category of cases, the Managing Director was
found incompetent, it was because of the interest that he would be
said to be having in the outcome or result of the dispute. The
element of invalidity would thus be directly relatable to and arise
from the interest that he would be having in such outcome or
decision. If that be the test, similar invalidity would always arise and
spring even in the second category of cases. If the interest that he
has in the outcome of the dispute, is taken to be the basis for the
possibility of bias, it will always be present irrespective of whether
the matter stands under the first or the second category of cases.
(emphasis added)
The focus in Perkins12 rightly was on bias of an arbitrator, and such
bias permeating any decision of appointment by the appointing
authority of a nominee arbitrator. It did not matter if such authority
was not itself an arbitrator, but merely had the right to appoint. This is
13 14 15
the logical extension in Perkins of the holding in TRF , since in TRF
the basis for the ineligibility was not the possibility of bias in appointing
a nominee but the fact that the party who itself is ineligible under the
Seventh Schedule loses the power to nominate someone else, upon
incurring this ineligibility.16 As the Court in TRF17 framed it:“once the
18
infrastructure collapses, the superstructure is bound to collapse”.
To further emphasise the necessity of having the dual qualities of
19
independence and impartiality in an arbitrator, Perkins also cited the
Single Judge Bench decision of the Supreme Court in Voestalpine
Schienen GmbH v. DMRC Ltd.20 (Voestalpine). In Voestalpine21, the
contract between the parties i.e. the contractor (the petitioner) and the
governmental entity (the respondent) contained an arbitration clause
which gave the contractor the right to select its nominee arbitrator from
a panel of five arbitrators that the respondent would select from a
larger panel. The respondent itself would also choose an arbitrator from
the same five-member panel, and the two nominee arbitrators would
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 3 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.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

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.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

A 2021 judgment of the Supreme Court in a matter being heard by a


three-Judge Bench i.e. in Union of India v. Tantia Constructions Ltd.
(Tantia)44 expressed a prima facie disagreement with the judgment in
45
CORE . The Supreme Court was of the opinion that once the
appointing authority is disqualified from referring the matter to
arbitration, it would not then follow that appointments made by the
authority may still be valid depending upon the facts of the case.
Accordingly, the three-Judge Bench of the Supreme Court in Tantia46
referred the matter to a larger Bench to look into the correctness of
47
CORE .
48
In JSW Steel Ltd. v. South Western Railway (JSW) as well, a three-
Judge Bench of the Supreme Court also expressed its disagreement
with the view taken in CORE49. In JSW50, not only was the arbitrator
51
appointed in accordance with CORE , but an award had also been
passed. Accordingly, the Court directed the matter to be referred to a
larger Bench and this matter is now tagged with CORE52.
These matters were eventually heard in proceedings before a five-
Judge Constitution Bench of the Supreme Court and arguments have
concluded. The Court has reserved orders as on have been reserved on
30-8-2024.
Analysis of decisions post-CORE: An incorrect differentiation of
CORE
53
Post the decision in CORE , a number of decisions of various High
Courts have either differed from the approach in CORE54 and have
55
distinguished it or have expressly not relied upon CORE because the
same is being considered by a Constitution Bench of the Supreme Court
and is pending adjudication.
In the Delhi High Court, the position on unilateral appointment of an
arbitrator has been considered in several recent decisions i.e. in Margo
Networks (P) Ltd. v. Railtel Corpn. of India Ltd.56 (Margo Networks),
57
Taleda Square (P) Ltd. v. Rail Land Development Authority (Taleda
Square) and the most recent decision being the judgment in Sri
Ganesh Engg. Works v. Northern Railway58 (Sri Ganesh).
In all three judgments the facts are similar, and the arbitration
clauses in question consist of a clause which (i) firstly, entitles one
party (the non-governmental entity) to select two arbitrators from the
panel of five (or more) offered by the respondent (the governmental
entity); (ii) secondly, empowers the respondent to select one out of the
two as one of the arbitrators; and (iii) thirdly, allows the respondent to
nominate the other two arbitrators.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 6 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.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

Tribunal is counterbalanced by the respondent's power to choose


any two from out of the four names and the General Manager shall
appoint at least one out of them as the contractor's nominee.
72
Therefore, CORE clearly decides that the General Manager's right in
appointing two out of three members to the Arbitral Tribunal is
adequately counterbalanced.
Similarly, in Taleda Square73 as well, on appointment procedure that
74
is near identical to the procedure in Margo Networks , the Court held
that such a clause did not meet the test of “counterbalancing” as:
(i) the power to appoint 2 out of 3 arbitrators was with the
respondent; and
(ii) even the petitioner's option to choose its nominee from a list of
only five persons shows that the panel being offered by the
respondent was not sufficiently broad-based.
The Court in Taleda Square75 also employed the same erroneous
76 77
reasoning as in Margo Networks to differentiate from CORE , despite
78
the fact that CORE did indeed decide on the counter-balancing issue
with similar facts.
Similarly, in Sri Ganesh79 as well wherein the appointment procedure
80 81
was near identical to both Margo Networks and Taleda Square , the
Court placed reliance on these judgments as well as Voestalpine82 to
hold that such clauses would compromise the independence and
impartiality of the appointed Arbitral Tribunal.
While all the three judgments of Margo Networks83, Taleda Square84
85 86
and Sri Ganesh , differentiate from CORE , it is evident that such
differentiation is on flawed and erroneous grounds.
In all of these cases, the Delhi High Court has proceeded to appoint
an independent Arbitral Tribunal, de hors the terms of the contract to
adjudicate the dispute between the parties. Therefore, largely and
87
generally, the Delhi High Court has not followed CORE despite its
operation not having been stayed by the Supreme Court, and has
instead preferred the approach of Perkins88 and Voestalpine89. This is
clearly an attempt by the Court to better balance the competing
interests of party autonomy (in appointing an arbitrator of choice) and
maintaining impartiality of the Arbitral Tribunal in the face of the
90
judgment in CORE .
A similar approach has also been adopted by the Calcutta High
Court. For instance, in the latest (2024) case of RKD Niraj JV v. Union
of India91, in a Section 1192 petition for appointment of an arbitrator,
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 8 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.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

area or may be related in some manner to the respondent, which would


once again leave the petitioner with no real choice and would not in fact
counterbalance the situation. Therefore, it may be desirable for the
Court to not lay down any overtly prescriptive standard or bright-line
test to determine the appropriate amount of counterbalance in any
arbitration clause and instead provide broad guidelines which would
only supplement a fact-based inquiry that would be dependent upon
the circumstances of the case and factual considerations of
independence and impartiality.
Therefore, the principle of balancing of both parties' ability to choose
its arbitrator should be at the centre of any court's decision.
Simultaneously, courts have carved an exception for retired ex-
employees of the Government (which is often one of the parties) and
held them as not being disqualified on the basis of their technical
expertise and relevant domain-related experience that would not be
possible for anyone from another field to possess. Therefore, while
courts should take into account whether the arbitrator possesses such
technical knowledge, the panel for selection should be adequately broad
-based and varied so that parties have the choice to select from
multiple arbitrators with different backgrounds, skill sets and
experience.
Ultimately, courts should also consider the statutory safeguard
encapsulated in the proviso to Section 12(5) of the Act allowing parties
to waive the applicability of Section 12(5) and by extension the
applicability of the Seventh Schedule by an express agreement in
writing. The Act clearly favours party autonomy in this manner by
giving primacy to the parties' intentions, permitting waiver of
ineligibility after disputes have arisen. Therefore, if an arbitrator were to
be ineligible under Section 12(5), and parties were to waive such
ineligibility, this would obviate the need for filing an application under
Section 11 of the Act.
———

Partner, Dispute Resolution at Trilegal.

††
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.

You might also like