Express Written Waiver as the Sole Cure for Section 12(5) Ineligibility: Unilateral Appointment Void and Challengeable Even Under Section 34

I. Introduction

The Supreme Court of India in BHADRA INTERNATIONAL (INDIA) PVT. LTD. v. AIRPORTS AUTHORITY OF INDIA (05-01-2026) addresses a recurring structural problem in Indian arbitration: unilateral control over the appointment of a sole arbitrator by one party, especially in public-private contracts. The dispute arose under two License Agreement(s) dated 29.11.2010 for ground handling services at airports, where Clause 78 vested the power to appoint a sole arbitrator in the Chairman, Airports Authority of India.

After disputes emerged in 2015, the appellants invoked arbitration by notice dated 27.11.2015 (post the 2015 amendment’s commencement), a sole arbitrator was appointed, and ultimately a “Nil” award dated 30.07.2018 was passed rejecting claims and counterclaims. The appellants later challenged the award under Section 34 and sought to add a ground that the appointment was invalid due to unilateral appointment and Section 12(5) ineligibility. The Delhi High Court rejected the challenge, reasoning that consent/waiver could be inferred from conduct and from the procedural order recording “no objection”.

The Supreme Court reverses this approach and lays down a strict rule: Section 12(5) ineligibility can be cured only by an “express agreement in writing” after disputes arise—never by implication, participation, pleadings, procedural orders, or Section 29A extensions.

II. Summary of the Judgment

• Unilateral appointment by an ineligible appointing authority is void ab initio: the Chairman of AAI was “wholly ineligible” under the Seventh Schedule and therefore could not appoint a sole arbitrator; the appointment and award are null.
• Section 21 notice is not consent to appointment: invoking arbitration sets the process in motion; it does not amount to agreeing to a future unilateral appointment.
• No waiver without “express agreement in writing”: “no objection” in a procedural order, filing of statement of claim, participation, or joint applications under Section 29A do not satisfy the proviso to Section 12(5).
• Challenge may be raised even for the first time under Section 34: an award by an ineligible arbitrator is non-est and conflicts with public policy/fundamental policy of Indian law; jurisdictional nullities can be raised at any stage.
• Contrary High Court decisions are overruled: “all the High Court decisions taking a contrary view to the present judgment would stand overruled.”
• Relief: the impugned judgment is set aside; awards dated 30.07.2018 are set aside; parties may initiate fresh arbitration in accordance with law.

III. Detailed Analysis

A. Precedents Cited and Their Influence

1. TRF Ltd. v. Energo Engineering Projects Ltd.

The Court builds on TRF Ltd. v. Energo Engineering Projects Ltd. to reaffirm the principle that once an individual is statutorily ineligible to act as an arbitrator, that person also cannot nominate/appoint another arbitrator. The judgment adopts TRF’s structural logic: if the appointing person is disqualified due to interest/relationship (Seventh Schedule), the appointment power collapses with it.

2. Bharat Broadband Network Ltd. v. United Telecoms Ltd.

Bharat Broadband Network Ltd. v. United Telecoms Ltd. is the judgment’s anchor for two propositions:

• Section 12(5) is about de jure inability (rooted in law) and triggers Section 14(1)(a) consequences (automatic termination of mandate).
• The proviso requires an “express agreement in writing”, which cannot be inferred from conduct; pleadings and participation are insufficient. The Court explicitly borrows Bharat Broadband’s use of Section 9 of the Contract Act (express vs implied promises) to interpret “express” as “in words” and not by conduct.

3. Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd.

Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd. is applied to the “second category” problem: even if the ineligible official is not named as arbitrator but only empowered to appoint a sole arbitrator, the unilateral appointment remains invalid because exclusivity in appointment enables a party with interest to “chart the course” of dispute resolution. The Court treats this as directly governing the AAI clause where only the Chairman could appoint.

4. Central Organization for Railway Electrification v. ECI SPIR SMO MCML (JV) A Joint Venture Company (“CORE II”)

Central Organization for Railway Electrification v. ECI SPIR SMO MCML (JV) A Joint Venture Company is relied upon in three ways:

• To distinguish obligations of parties to constitute a neutral tribunal from the arbitrator’s duty of impartiality.
• To reaffirm that bias and unilateral control offend public policy, nemo judex, and (in public-private contracts) Article 14.
• To explain the rationale for post-dispute express waiver: parties may sometimes need specialized arbitrators, but waiver must be conscious and express.

5. Dharma Prathishthanam v. Madhok Construction (P) Ltd.

The Court uses Dharma Prathishthanam v. Madhok Construction (P) Ltd. to show continuity: even pre-amendment, unilateral appointment without consent was “wholly unknown to law” and void, though participation could historically create estoppel. The 2015 amendment, however, tightens the regime by requiring express written waiver for Section 12(5) ineligibility.

6. Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. & Ors.

Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. & Ors. is cited to fix the applicability of the Amendment Act, 2015: arbitral proceedings commenced when notice under Section 21 was received (27.11.2015), hence Section 12(5) applies.

7. HRD Corpn v. GAIL (India) Ltd. and Chennai Metro Rail Ltd. v. Transtonnelstroy Afcons (JV)

HRD Corpn v. GAIL (India) Ltd. supplies the doctrinal split: Fifth Schedule issues are challenged under Section 13; Seventh Schedule ineligibility triggers Section 14 (de jure inability). Chennai Metro Rail Ltd. v. Transtonnelstroy Afcons (JV) reinforces that a party may go directly under Section 14 in Seventh Schedule cases.

8. Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd. and Man Industries (India) Ltd. v. Indian Oil Corporation Ltd.

These authorities are used to reject the argument that Section 29A extensions amount to Section 12(5) waiver. Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd. is invoked for the nuanced position: Section 29A may reflect consent for Section 4 deemed waiver, but cannot substitute the statutory requirement of express written waiver under Section 12(5). Man Industries (India) Ltd. v. Indian Oil Corporation Ltd. is consistent with that view.

9. Govind Singh v. Satya Group Pvt. Ltd.

This is relied upon to negate “continued participation” as waiver: even participation without objection cannot create a waiver under Section 12(5) absent an express agreement in writing.

10. CORE II extract on public policy and bias; collateral-jurisdiction line of cases

The Court strengthens Section 34 permissibility by analogizing to jurisdictional nullities: Hira Lal Patni v. Kali Nath, Hindustan Zinc Ltd. v. Ajmer Vidyut Vitran Nigam Ltd., Kiran Singh v. Chaman Paswan, and Bhim Bahadur v. Vikram Singh are cited to show that inherent lack of jurisdiction can be raised at any stage, including collateral proceedings. The Court then ties this to arbitration: absent valid consent and statutory compliance, the tribunal lacks authority; its award is non-est.

11. Other cited High Court decisions on “express agreement” arguments

The respondent’s reliance on McLeod Russel India Ltd. & Ors. v. Aditya Birla Finance Ltd. & Ors. and Anuj Kumar v. Franchise India Brands Ltd. is effectively rejected by the Court’s categorical holding that conduct/pleadings/procedural orders are insufficient. The Supreme Court’s ruling also expressly overrules contrary High Court views.

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B. Legal Reasoning

1. Section 18 (Equal Treatment) extends to appointment procedure

The Court treats Section 18’s “equal treatment of parties” as governing not only conduct during arbitration but also equal participation in constitution of the tribunal. This frames unilateral appointment as structurally suspect because it creates asymmetry at the threshold and undermines neutrality, even before merits are heard.

2. Party autonomy is not unbridled; mandatory safeguards prevail

While Section 11(2) permits parties to agree on appointment procedure, the Court holds that autonomy operates within the Act’s mandatory constraints. If the agreed mechanism conflicts with Section 12(5), it is overridden (“notwithstanding any prior agreement”).

3. Section 12(5) is triggered by Seventh Schedule relationships, not merely by “unilateral” form

The Court clarifies an important conceptual point: Section 12(5) does not prohibit unilateral appointment as a standalone category; it prohibits appointment where Seventh Schedule ineligibility exists. Yet, applying Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd., unilateral appointment by a party interested in outcome is precisely the kind of arrangement that typically attracts the regime, especially in “sole arbitrator” clauses giving one party exclusivity.

4. Chairman of AAI is “wholly ineligible” and therefore cannot appoint

The Court holds that Items 1, 2, 5, 12, and 13 of the Seventh Schedule “clearly attach” to the Chairman of AAI. Once the appointing authority is ineligible, it follows (TRF/Perkins logic) that appointment made by that authority is ex facie invalid.

5. “Express agreement in writing” is a heightened statutory threshold; it excludes implied waiver

The judgment’s core doctrinal move is to separate:

• Deemed waiver by conduct under Section 4, from
• Express waiver under the proviso to Section 12(5).

Because the proviso uses the words “express” and “in writing”, the Court holds that waiver cannot be pieced together from: (i) invocation notice, (ii) procedural order recording “no objection”, (iii) statement of claim, (iv) participation, (v) Section 29A extensions. This prevents “procedural happenstance” from stripping a party of a structural statutory protection.

6. De jure inability: Section 12(5) ineligibility terminates mandate under Section 14

Building on HRD Corpn v. GAIL (India) Ltd. and Bharat Broadband Network Ltd. v. United Telecoms Ltd., the Court explains that Section 12(5) ineligibility is a legal incapacity that goes to the root; it yields de jure inability under Section 14(1)(a). Consequently, parties need not use Section 13 (challenge before tribunal) in Seventh Schedule cases.

7. Challenge is available at any stage, including under Section 34

The Court recognizes the practical distinction: before award, one may seek termination/substitution under Sections 14/15; after award, substitution is impossible, so the remedy shifts to Section 34. The Court links this to public policy/fundamental policy of Indian law (supported by CORE II’s articulation that bias offends public policy and “most basic notions of morality and justice”). It further analogizes to civil jurisprudence: lack of inherent jurisdiction can be raised whenever the decision is relied upon.

8. System-facing guidance: arbitrators should insist on written waiver

Notably, the Court places a procedural responsibility on arbitrators: at the first hearing, they should insist on a written waiver agreement where Section 12(5) risk exists, and if a party does not appear, withdraw rather than proceed ex parte. This is designed to prevent future nullification and wasted proceedings.

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C. Impact of the Judgment

• Hardening of the waiver standard: The decision eliminates ambiguity across jurisdictions by holding that only a post-dispute express written waiver can cure Section 12(5) ineligibility, and it overrules contrary High Court approaches.
• Public sector and concession/license contracts: Clauses giving unilateral appointment power to an official of the public authority (e.g., Chairman/MD) are substantially unusable post-dispute unless cured by an express written waiver. Public bodies must redesign appointment mechanisms (e.g., neutral institutional appointment, mutual selection, court appointment under Section 11 where applicable).
• Section 34 litigation posture: Parties can raise Section 12(5) ineligibility even if not raised earlier, increasing the risk that awards will be set aside if appointment architectures are non-compliant.
• Arbitrator due diligence: The Court’s directions effectively push arbitrators to conduct an early-stage “valid constitution” audit, including ensuring that any waiver is documented properly, reducing later enforceability failures.
• Drafting and transaction costs: Contract drafters must treat “sole arbitrator appointed by one party’s official” clauses as litigation accelerants; neutral appointment procedures are now the safer default.

IV. Complex Concepts Simplified

• Section 12(5) ineligibility: A statutory disqualification—if an arbitrator (or the appointing authority, by TRF/Perkins logic) has certain relationships/interests listed in the Seventh Schedule, the appointment is legally forbidden unless cured by the proviso.
• Seventh Schedule: A list of serious conflict categories (e.g., employee/manager/controller of a party) that make an arbitrator ineligible. It is a subset of the Fifth Schedule (which deals with “justifiable doubts”).
• De jure inability (Section 14): Legal incapacity “as a matter of law”. If Section 12(5) applies, the arbitrator’s mandate is treated as terminated in law.
• Waiver under proviso to Section 12(5): Not “silence” or “participation”; it requires a clear post-dispute written agreement expressly waiving the disqualification.
• Public policy / fundamental policy of Indian law (Section 34): Includes compliance with binding law and basic fairness; bias and unilateral control can violate it, making an award vulnerable even at the setting-aside stage.
• Nemo judex rule: No one should be a judge in their own cause; unilateral control over appointment creates an apprehension of bias even absent proof of actual bias.

V. Conclusion

This decision decisively strengthens the integrity of arbitral appointment processes in India. It holds that where Section 12(5) ineligibility is triggered, the appointment is void ab initio; the defect cannot be cured by participation, pleadings, “no objection” minutes, or Section 29A extensions. Only an express agreement in writing executed after disputes arise can waive the bar. The Court further confirms that such jurisdictional invalidity can be raised even under Section 34 and that awards rendered by ineligible tribunals are non-est.

The broader significance lies in the message to public bodies and repeat players: neutrality must exist not only in adjudication but also in the forum-selection mechanism. The ruling pushes Indian arbitration closer to a rule-of-law model where enforceability depends on structurally fair constitution of tribunals, and where statutory safeguards cannot be diluted by inference.