Supreme Court Holds That Unilateral Appointment of Sole Arbitrator Is Void Ab Initio and Cannot Be Saved by Implied Consent or Participation

Case Name: Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India
Citation: 2026 INSC 6
Date of Judgment/Order: 05 January 2026
Bench: Justice J.B. Pardiwala and Justice K.V. Viswanathan

Held: The Supreme Court held that where an arbitration clause vests exclusive power in one party to appoint a sole arbitrator, such appointment is rendered void ab initio by operation of Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996, and the arbitrator so appointed is de jure ineligible to act, unless the parties, after disputes have arisen, waive the ineligibility by an express agreement in writing.

Summary: The appeals arose from dismissal of objections under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, challenging arbitral awards passed by a sole arbitrator appointed by the Chairman of the Airports Authority of India pursuant to a license agreement executed in 2010. Although the appellants had invoked arbitration and participated in proceedings without objection, Section 12(5) was introduced before commencement of arbitration. The Supreme Court undertook an exhaustive analysis of party autonomy, equal treatment of parties, neutrality in arbitral appointments, and the statutory scheme of Sections 12, 14, and 18 of the Act. Relying on TRF Ltd., Bharat Broadband, and Perkins Eastman, the Court held that once the appointing authority itself becomes ineligible by operation of law, it loses the power to appoint any arbitrator, and neither participation in proceedings nor recording of “no objection” in procedural orders constitutes the “express agreement in writing” required to waive ineligibility.

Decision: The appeals were allowed, the judgments of the Delhi High Court under Sections 34 and 37 were set aside, the unilateral appointment of the sole arbitrator and the arbitral awards were declared void and unsustainable in law, and the parties were left at liberty to pursue resolution of their disputes in accordance with law by a validly constituted arbitral tribunal, with all pending applications disposed of.