From Perkins To Bhadra: The Rule Of Protection Against Unilateral Appointments

The Supreme Court’s decision in Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, 2026 INSC 6 finally settles the long-standing debate around unilateral appointment of arbitrators. For practitioners, the judgment is significant not because it introduces new law, but because it decisively closes the escape routes that were frequently relied upon to defend such appointments. The Court makes it clear that neutrality in arbitration begins at the stage of appointment, and not after proceedings have commenced.

The dispute arose from licence agreements which allowed the Chairman of the Airports Authority of India (AAI) to appoint a sole arbitrator. After disputes arose, the Chairman exercised this power and the arbitration proceeded without objection. The tribunal ultimately rendered a nil award. It was only at the Section 34 stage that the claimant challenged the award, contending that the arbitrator was unilaterally appointed by a person who was himself ineligible under Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996.

Both the Single Judge and the Division Bench of the High Court rejected this challenge, holding that the claimant had consented to the appointment and waived its objections by participating in the proceedings. However, the Supreme Court disagreed and set aside this approach.

The Court held that the Chairman of AAI was clearly hit by multiple entries of the Seventh Schedule, being part of the management and having a controlling influence over one of the parties. Once this statutory ineligibility attached, the Chairman was legally barred not only from acting as an arbitrator, but also from appointing or nominating any other person as arbitrator.

The Court reiterated the settled position laid down in TRF Ltd. v. Energo Engg. Projects Ltd. (2017) 8 SCC 377 and Perkins Eastman Architects DPC v. HSCC (India) Ltd.  (2020) 20 SCC 760, making it clear that an authority which is itself disqualified from acting as an arbitrator cannot be permitted to appoint or nominate another in its place. The Court clarified that once the Chairman, Managing Director, or any similar office bearer becomes ineligible under Section 12(5) read with the Seventh Schedule, the power of appointment embedded in the arbitration clause stands completely extinguished. Such a person cannot play any role in constituting the arbitral tribunal. Consequently, any appointment made pursuant to such unilateral power is legally void from the very inception and incapable of conferring jurisdiction on the arbitral tribunal.

Importantly, the Court rejected the argument that the appointment was consensual merely because it was made pursuant to a notice invoking arbitration. A Section 21 notice, the Court clarified, only triggers the arbitration agreement; it does not amount to consent to an otherwise illegal appointment mechanism. Asking the counterparty to appoint an arbitrator in terms of the contract cannot override a statutory bar introduced by Section 12(5).

Equally significant is the Court’s treatment of waiver. The proviso to Section 12(5) permits waiver of ineligibility only through an “express agreement in writing” entered into after disputes have arisen. The Court made it clear that this requirement is strict and cannot be diluted. Recording “no objection” in a procedural order, filing a statement of claim, seeking extensions of time under Section 29A, or continued participation in the proceedings do not constitute a valid waiver. Waiver cannot be inferred from conduct, silence, or procedural compliance; it must be conscious, explicit, and recorded in writing.

The judgment also draws a clear line between allegations of bias and statutory ineligibility. While bias under the Fifth Schedule must be raised before the tribunal within the prescribed time, ineligibility under the Seventh Schedule goes to the very jurisdiction of the tribunal. An arbitrator who is ineligible under Section 12(5) suffers from a de jure incapacity to act, rendering the mandate legally non-existent.

Crucially for practitioners, the Court held that an objection based on Section 12(5) can be raised at any stage, including for the first time in proceedings under Section 34. Since the defect arises from an inherent lack of jurisdiction, courts cannot refuse to examine it on the ground of delay, acquiescence, or participation in the arbitration.

The practical implications of Bhadra are far-reaching. Unilateral appointment clauses, particularly common in government and PSU contracts, are no longer defensible unless followed by a clear, post-dispute written waiver. Awards rendered by tribunals constituted through such mechanisms are exposed to challenge, even at the enforcement stage. The judgment reinforces that party autonomy in arbitration is not absolute and must yield to statutory guarantees of neutrality and equality.

In effect, Bhadra ensures that the principles laid down in Perkins do not remain merely theoretical. The Supreme Court has now made it clear that neutrality cannot be compromised at the appointment stage, and statutory safeguards under Section 12(5) cannot be bypassed by consent, conduct, or convenience. For arbitration practitioners, the message is unambiguous: if the appointment is illegal, everything that follows is vulnerable.

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