From Perkins To Bhadra: Has The Supreme Court Finally Settled The Law On Unilateral Appointment Of Arbitrators?

Introduction

Unilateral appointments are not consistent with the basic tenet of arbitration i.e., mutual confidence in the arbitrator.¹

Over the past decade, Indian courts and legislature have taken several steps towards strengthening the institution of arbitration and eliminate situations that can cast doubt on independence of an arbitrator. One such major step has been to eliminate unilateral arbitrator appointments and stricter provisions to ensure arbitrator neutrality, brought about by the 2015 Amendments² to Arbitration and Conciliation Act, 1996³ ("1996 Act"). The 2015 Amendments mark a watershed moment, introducing Section 12(5) into the 1996 Act. This provision, read with relevant Seventh Schedule, renders any person with a certain relationship to the parties, counsel, or subject matter statutorily ineligible to be an arbitrator.

The rulings of the Supreme Court in TRF⁴ and Perkins⁵ addressed relatively broader scenarios. However, they left open a far more complex and consequential question i.e., what is the legal status of an arbitral award rendered by a unilaterally appointed arbitrator where no objection was raised during the arbitral proceedings? More specifically:

1. Can the illegality of unilateral appointment be raised for the first time in a challenge under Section 34 of the 1996 Act?
2. Can the very party that invoked the arbitration subsequently invoke the ground of unilateral appointment to assail the award?

These questions have engaged judicial attention over the past few years, often producing divergent approaches across fora. The recent judgment of Supreme Court in Bhadra International (India) Pvt. Ltd. & Ors. vs. Airports Authority of India serves as a powerful culmination of a long judicial journey, cementing the principle that unilateral appointments are not merely improper, but a jurisdictional nullity, voidab initio.

Findings of Section 34 and 37 Courts

The dispute arose from two licence agreements dated 29.11.2010 between a consortium led by Bhadra International (India) Pvt. Ltd. ("Bhadra International") and the Airports Authority of India ("AAI") for ground handling services at Indian airports. Clause 78 of the agreements provided for arbitration by a sole arbitrator to be appointed exclusively by the Chairman of AAI, expressly stipulating that it would be no objection if the arbitrator was an AAI employee or had dealt with the subject matter in an official capacity.

On 27.11.2015, Bhadra International invoked arbitration and requested AAI to appoint an arbitrator in terms of Clause 78. Acting thereunder, the Chairman of AAI unilaterally appointed a sole arbitrator. The arbitration continued for over two years, during which the mandate was extended twice by consent under Section 29A of the Act, culminating in a 'nil' award dated 30.07.2018.

The objection to the unilateral appointment was raised for the first time at the Section 34 stage, by way of an amendment application, on the ground that the appointment was invalid under Section 12(5) read with the Seventh Schedule of the 1996 Act. The Single Judge rejected this challenge, holding that the appointment was contractually compliant, that the appellants had themselves invoked arbitration, and that their participation without protest amounted to waiver. This view was affirmed by the Division Bench under Section 37, leading Bhadra International to approach the Supreme Court.

Findings of Supreme Court

The Supreme Court after hearing the parties, resolved the dispute through three broad issues. Here is a bird's eye view of Supreme Court's reasoning:

1. Whether the sole arbitrator appointed in the present case, be said to have been rendered ineligible by virtue of Section 12 (5) of the 1996 Act?
   
   The Supreme Court held that the appointment mechanism under Clause 78 of the licence agreement was ex facie invalid after the 2015 Amendments. The Chairman of AAI, being a person falling within the prohibited relationships under the Seventh Schedule, was statutorily ineligible to act as an arbitrator. Applying the principles laid down in TRF⁶ and Perkins⁷, the Court held that an ineligible person is equally disqualified from appointing or nominating an arbitrator. Once the appointing authority itself is tainted by ineligibility, the appointment collapses at the threshold.
   
   The Supreme Court while arriving at the aforesaid findings also placed reliance upon Section 18 of the 1996 Act which guarantees equal treatment to both parties which extends to equal participation by both parties in constitution of the arbitral tribunal⁸.
   
   Crucially, the Supreme Court rejected the High Court's reasoning that the appointment ceased to be "unilateral" merely because it was triggered by the appellants' notice invoking arbitration. A Section 21 notice, the Court clarified, does not amount to consent to a one-sided appointment mechanism, nor does it legitimise an appointment made by a statutorily ineligible authority.⁹
2. Whether the parties could be said to have waived the applicability of Section 12 (5) of the 1996 Act, by way of their conduct, either expressed or implied?
   
   The Supreme Court answered this issue in the negative. It reiterated that waiver under the proviso to Section 12(5) of the 1996 Act must be by an "express agreement in writing" entered into after disputes have arisen. Mere conduct, such as participating in proceedings, filing statement of claim, not objecting to jurisdiction, or seeking extensions of mandate under Section 29A of the 1996 Act, cannot constitute waiver.¹⁰ Effectively, the Supreme Court has clarified that the conduct of the parties is inconsequential and does not constitute a valid waiver under the proviso to Section 12(5) of the 1996 Act.
   
   The Supreme Court has also specifically rejected the contention that recording of "no objection" in the first procedural order amounts to an express written waiver. Such recording, according to the Supreme Court, falls far short of the conscious, bilateral, and written waiver mandated by the statute. The judgment clarifies that the legislative threshold for waiver was intentionally set high, and courts cannot dilute it by importing principles of implied consent or acquiescence.¹¹
3. Whether a party could have raised an objection to the appointment of the sole arbitrator for the first time in a section 34 objections?
   
   An arbitrator appointed in violation of Section 12(5) of the 1996 Act is de jure ineligible, rendering the proceedings and the award void ab initio. Such a defect is not procedural but jurisdictional, and therefore can be raised at any stage, including for the first time in proceedings under Section 34. Pertinently, because the defect is jurisdictional and goes to the root of the matter, the objection can be raised at any stage of the proceedings, including for the first time in a Section 34 objections.
   
   The Court clarified that principles of waiver, estoppel, or delay cannot be used to validate an arbitral process that is fundamentally non-est in law. Once ineligibility is established, the award cannot be saved by invoking party conduct or procedural participation.

While resolving the above issues, the Court at several instances relies upon various other precedents by Supreme Court and other High Courts that reject unilateral appointments. One such landmark precedent is Bharat Broadband¹² where Supreme Court specifically allowed the challenge to appointment of an arbitrator by the party appointing the arbitrator. Infact, even Delhi High Court has itself been following a similar line of reasoning and decisions to set aside awards in several similarly placed disputes where in fact the party raising this issue was the party responsible for unilateral appointment of arbitrator.¹³

Conclusion

While the Court does not expressly label the ground of interference under Section 34 of the 1996 Act, its reasoning leads inexorably to the conclusion that an award rendered by a tribunal lacking inherent jurisdiction is liable to be set aside as being in conflict with the public policy of India under Section 34(2)(b)(ii) of the 1996 Act. The Court reiterates that public policy is not to be construed narrowly, and encompasses adherence to the fundamental policy of Indian law and the most basic notions of justice and fairness¹⁴, drawing sustenance from the Constitution Bench decision in CORE II¹⁵

Footnotes

1. Bhadra International (India) Pvt. Ltd. & Ors. vs. Airports Authority of India, CIVIL APPEAL NOS. 37-38 of 2026, ¶ 58

2. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)

3. The Arbitration and Conciliation (Amendment) Act, No. 3 of 2016 (India)

4. TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377

5. Perkins Eastman Architects DPC v. HSCC (India)., (2020) 20 SCC 760

6. ¶ 52

7. ¶¶ 54 and 68

8. ¶ 34

9. ¶ 70

10. ¶¶ 77–84

11. ¶ 84

12. Bharat Broadband Network Ltd. v. United Telecoms Ltd. (2019) 5 SCC 755, ¶¶ 22 & 23

13. Govind Singh vs. Satya Group Pvt. Ltd. 2023 SCC Online Del 37,¶¶18, 19, 21, 23, 25; Man Industries (India) Ltd. vs. Indian Oil Corporation Ltd. 2023 SCC OnLine Del 3537, ¶¶22 – 27; Smaash Leisure Ltd. vs Ambience Commercial Developers Pvt. Ltd. 2023 SCC Online DEL 8322, ¶¶34 – 38 & 40; TCIL vs. Shiva Trading 2024 SCC OnLine Del 2937, ¶¶23, 24, 26, 27, 29, 30.

14. ¶¶ 32–35, 58–60

15. Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), (2025) 4 SCC 641, ¶¶ 22 & 23

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