- Introduction
Unilateral arbitrator appointment clauses where one party alone selects the sole or the presiding arbitrator are under close scrutiny in India. Various High Courts and different benches of the Supreme Court have taken divergent stances, over the years. The Delhi High Court’s recent decision in M/s Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi[1](“Mahavir Prasad Gupta”) continues this trend, placing party autonomy and, above all, impartiality at the centre. The case provides a fresh perspective at how these clauses are treated and what that means for drafting and ongoing disputes.
Against this backdrop, this article assesses the legality of such clauses and focuses on three practical questions. Firstly, whether a party that has taken active part in the proceedings is estopped from raising objection to a unilateral appointment. Secondly, what amounts to a valid waiver post-dispute under the proviso to Section 12(5) of the Arbitration and Conciliation Act, 1996 (“Act”). Thirdly, at what stage of the proceedings can such objections be raised. At last, it also briefly sets out India’s approach alongside other jurisdictions to show where the legal position is heading globally.
- Legality of Unilateral Appointment Clauses in India
In Central Organisation for Railway Electrification v. M/s ECI SPIC SMO MCML (JV)[2](“CORE-II”), the Constitutional Bench of the Supreme Court, on a reference from a three-judge bench in Union of India v. Tantia Constructions Limited[3] (2021), delivered a landmark ruling. The court held that such clauses raise legitimate concerns regarding the independence and neutrality of arbitral tribunals.
While clarifying questions arising from its earlier rulings in Perkins Eastman Architects DPC v. HSCC (India) Limited[4] (“Perkins Eastman”) andTRF Limited v. Energo Engineering Projects Limited[5](“TRF”), the Supreme Court analysed three important provisions of the Act relevant in this regard. Section 11 pertaining to appointment of arbitrators; Section 12 providing grounds for challenge to arbitrators; and Section 18 emphasing on equal treatment of parties in order to address the question of validity of unilateral appointment clauses.
The majority judgment in this case advanced the principle of equal treatment as provided for in Section 18 of the Act which the parties need to adhere while appointing arbitrators. Appointing arbitrators unilaterally tends to tilt the scales in favour of the appointing party, thereby weakening this principle as observed by the court. The majority then went on to observe that presence of these clauses in public-private contracts entered into by government entities also infringes upon the non-arbitrariness standard enshrined under Article 14 of the Indian Constitution.
Contrary to the majority opinion, the dissenting judges (including Justice Narasimha) opined that since the Act does not expressly prohibit such appointments, all unilateral appointment clauses cannot be deemed as void. If the arbitrator’s appointment is not otherwise conflicting with Section 12(5) and the Seventh Schedule of the Act, such appointment should be considered valid, regardless of it being a unilateral appointment. At last, since equal treatment principle under Section 18 conforms to arbitrator’s obligations, it cannot be imposed and transgressed as a general equality principle providing parties equal opportunity to determine the tribunal.
The Supreme Court in this landmark judgment sought to balance party autonomy with arbitral impartiality. Section 12(5) and its proviso requiring express waiver act as sufficient safeguards against unilateral appointments, negating the need for a blanket prohibition. Furthermore, while the majority found the clauses contrary to equality, it left unresolved whether they are void ab initio or voidable. This question later went on to be addressed by the Delhi High Court in the cases dealt below.
In Telecommunication Consultants India Limited v. Shivaa Trading[6](“Telecommunication Consultants”), the Delhi High Court took a stance similar to that of the Supreme Courtholding that a unilaterally appointed arbitrator passing an award can be challenged on the ground of lack of jurisdiction and invalidity of appointment. Reliance was placed on Bharat Broadband Network Limited v. United Telecoms Limited[7]to note that these contentions can be raised even by the party who has made such an appointment. Additionally, the court did not shy away from holding that any decision taken by such unilaterally appointed arbitrator is void ab initio.
The very next year, the Delhi High Court in Mahavir Prasad Gupta dealt with a case revolving around a dispute arising from a road strengthening contract where the Govt. of NCT of Delhi withheld Mahavir Prasad Gupta’s final bill citing deficient thickness, though a Third-Party Quality Audit (“TPQA”) by IIT Roorkee and PWD officials found the work within permissible limits. The Sole arbitrator, appointed unilaterally by the Govt. of NCT of Delhi, upheld the TPQA report and rendered the award in favour of Mahavir Prasad. But the award was later set aside by the learned District Judge under Section 34 on the ground that it violated Section 12(5) and the Seventh Schedule of the Act. This impugned order was challenged and appealed under Section 37 of the Act. The appeal raised multiple questions, one out of which pertained to whether an award by a unilaterally appointed arbitrator is per se bad and a nullity.
This court while addressing the question held that “unilateral appointment of an arbitrator by one of the parties to the dispute is impermissible and invalid being contrary to the scheme of the Act…an award rendered by an ineligible arbitrator would be unenforceable” and is considered to be “against public policy of India.”
Subsequently, on the aspect of whether such arbitral proceedings, having an arbitrator appointed unilaterally, will be considered void or voidable, the court relied on its earlier decision in Telecommunication Consultants and opined that “a unilateral appointment of the sole arbitrator or the presiding arbitrator by a party to the arbitrations seated in India is strictly prohibited and considered as null and void since its very inception.”
[1]Mahavir Prasad Gupta & Sons v. State (NCT of Delhi), 2025 SCC OnLine Del 4241
[2]Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), (2025) 4 SCC 641
[3]Union of India v. Tantia Constructions Ltd., (2023) 12 SCC 330
[4] Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760
[5]TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377
[6]Telecommunication Consultants India Ltd. v. Shivaa Trading, 2024 SCC OnLine Del 2937
[7]Bharat Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755