Even appointing party can challenge a unilaterally appointed arbitrator: Delhi High Court

The evolution of arbitration law in India has been marked by a consistent judicial effort to align the arbitral process with principles of fairness, neutrality, and party equality. A recent decision of the Delhi High Court in Engineering Projects India Ltd. v. Allied Construction (O.M.P. (COMM) 515/2018, decided on 25 March 2026) serves as a reaffirmation of these principles, particularly in the context of unilateral appointment of arbitrators.

The judgment revisits the legal position emerging from the amended Section 12(5) of the Arbitration and Conciliation Act, 1996 (“the Act”), read with the Seventh Schedule, and the Supreme Court’s judgment of Bhadra International (India) Pvt. Ltd. v. Airports Authority of India.

It underscores a critical doctrinal position: an arbitral award rendered by an ineligible arbitrator is a nullity in the eyes of law.

In the judgment, the disputes arose out of a construction contract awarded by Engineering Projects India Limited (EPIL) to Allied Construction. The governing agreement incorporated an arbitration clause that empowered the Chairman and Managing Director (CMD) of EPIL to act as the sole arbitrator or to appoint a nominee arbitrator.

Upon disputes arising, the CMD unilaterally appointed an arbitrator. The arbitral proceedings culminated in an award in favour of the respondent contractor. Aggrieved, EPIL invoked Section 34 of the Act, challenging the award.

Advocate Sonal Kumar Singh, representing EPIL, argued that the arbitral award deserves to be set aside on the ground that the constitution of the arbitral tribunal was itself in violation of the amended Section 12(5) read with Seventh Schedule of the Act.

The Court was primarily concerned with the following legal questions:

1. Whether a unilateral appointment of an arbitrator by an interested party is valid under Section 12(5)?

2. Whether the appointing party itself challenge such appointment?

3. Whether such an objection can be raised for the first time at the stage of challenge under Section 34?

A. Unilateral appointment held void ab initio

The Court categorically held that a unilateral appointment by a person who is himself ineligible under Section 12(5) is void ab initio. The ineligibility extends not only to acting as an arbitrator but also to the power of appointment.

This reasoning is anchored in the principle that arbitration must reflect equality in the constitution of the tribunal, as embodied in Section 18 of the Act. A unilateral mechanism, by its very nature, undermines this equality.

B. No estoppel against the appointing party

A notable aspect of the judgment is the Court’s clear recognition that even the party which appointed the arbitrator is not precluded from challenging such appointment. The Court held that the absence of an express agreement in writing between the parties to waive the applicability of Section 12(5) is determinative. The mere fact that EPIL itself appointed the arbitrator does not amount to a valid waiver of the statutory ineligibility. Consequently, the appointing party cannot be estopped from raising a jurisdictional challenge, as such ineligibility goes to the root of the tribunal’s authority and cannot be cured by conduct. The relevant extract is as below:

“The waiver under proviso to Section 12(5) of the Act has to be express and in writing. There is no express waiver in writing by the parties to waive the applicability of Section 12(5) of the Act. In absence of an express agreement in writing between the parties, the CMD cannot make a unilateral appointment of the sole arbitrator. Moreover, the waiver has to be by both the parties. The conduct of EPIL in appointing an arbitrator is not sufficient to wriggle out of the rigours of Section 12(5) of the Act.”

C. Challenge to jurisdiction can be raised at any stage

Another important aspect addressed was whether such a challenge could be raised for the first time in a Section 34 petition. The Court answered in the affirmative, holding that, an objection to inherent lack of jurisdiction can be raised at any stage, including post-award proceedings.

D. Retrospective application of law and reaffirmation of the doctrine of nullity

The Court rejected the respondent’s contention that the arbitral award predated the Supreme Court’s decision in Bhadra International and, therefore, ought not to be invalidated on that basis. The Court reiterated the settled principle that the law laid down by the Supreme Court is always the law and shall not operate prospectively. Accordingly, the principles laid down in Bhadra International were held to be fully applicable to the present case.

In this backdrop, the most significant contribution of the judgment lies in its reaffirmation of the doctrine of nullity. The Court held that,

“The unilateral appointment made by the CMD without compliance with the proviso to Section 12(5) of the Act is in violation of Section 12(5) read with Seventh Schedule of the Act. The appointment is void ab initio consequently rendering the impugned award a nullity.”

This judgment of the Delhi High Court is a clear application of the principles laid down by the Supreme Court in Bhadra International (India) Pvt. Ltd. v. Airports Authority of India (2026). AKS Partners having represented the Airports Authority of India in Bhadra, the present ruling reflects how those principles are now being consistently implemented. The decision reinforces that ineligibility under Section 12(5) goes to the root of the arbitral tribunal’s jurisdiction and is not a mere procedural irregularity. Significantly, the Court has clarified that even the appointing party is not estopped from challenging a unilateral appointment in the absence of an express written waiver post-dispute. From a practical standpoint, this ruling further weakens the viability of unilateral appointment clauses, particularly in government and infrastructure contracts. It reaffirms that the courts will closely scrutinize the constitution of tribunals and will not hesitate to set aside awards where the process is fundamentally in contravention of the principles of neutrality.

About the authors: Sonal Kumar Singh is the Managing Partner of AKS Partners. Ratik Sharma is an Associate Partner, Parth Sindhwani and Yashvardhan Singh Gohil are Associates at the Firm.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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