In short. A unilateral appointment is when only one side to the contract picks the arbitrator. Usually it's the other side's managing director, CEO or some nominated officer naming a sole arbitrator. Indian courts won't accept it. Someone with a stake in the dispute can't choose who decides it (Perkins Eastman, 2019), and in 2024 the Constitution Bench in CORE v ECI-SPIC linked the rule to equal treatment of the parties. An award by that arbitrator can be set aside. The one way out is a written waiver signed after the dispute arose.
Is this your situation?
- A letter arrives saying the other side's managing director has appointed a sole arbitrator for your dispute. Nobody asked you.
- You dig out the contract and find the clause. Disputes go to an arbitrator nominated by the company, the lender or the department.
- They've sent a short list of names, all drawn up by them, and asked you to pick your arbitrator from it.
- You've already sat through a few hearings before an arbitrator the other side chose, and you're wondering if it's too late to object.
- An award has come against you from an arbitrator the lender appointed. You may not even have known the arbitration was going on.
- Your company's own contracts carry a company-appoints-arbitrator clause, and someone has just told you they may not work any more.
What a unilateral appointment looks like
A unilateral appointment is one that only one party to the dispute makes, without the other agreeing to it. You've probably seen the clause. It reads something like: all disputes shall be referred to a sole arbitrator to be appointed by the Managing Director of the Company. Some versions give the power to a chairman, a chief engineer, a general manager, a lender's authorised officer or a head of department. A few go further still. They name the officer himself as the arbitrator.
For decades these clauses were standard in government works contracts, PSU purchase orders, loan and hire-purchase agreements, franchise agreements and builder-buyer agreements. Whoever had the bargaining power wrote the contract. And the contract let them pick the judge. The other side signed because it had no real choice, and mostly didn't think about arbitration until a dispute turned up.
Indian law has turned firmly against them. After the 2015 amendment to the Arbitration and Conciliation Act, 1996 and a run of Supreme Court decisions, a unilateral appointment by a party with an interest in the outcome is invalid. The arbitrator has no jurisdiction. Any award he makes can be set aside, unless the other side gave a valid written waiver.
The provisions that make it invalid
Section 12(1) and the Sixth Schedule
Anyone approached to act as arbitrator has to disclose in writing anything likely to raise justifiable doubts about independence or impartiality, in the form set out in the Sixth Schedule. The grounds that raise such doubts are listed in the Fifth Schedule.
Section 12(5) and the Seventh Schedule
Notwithstanding any prior agreement, a person whose relationship with the parties, counsel or the subject matter falls in any Seventh Schedule category can't be appointed as arbitrator. The categories cover an employee, consultant or adviser of a party, a manager or director of a party, and anyone with a past or present business relationship with a party.
Proviso to Section 12(5)
The parties can waive this ineligibility. But only after disputes have arisen, and only by an express agreement in writing.
Section 14
An arbitrator's mandate ends if he becomes de jure unable to perform his functions, and a party can ask the court to decide whether it has ended. An arbitrator who's ineligible under Section 12(5) is de jure unable to act.
Section 18
The parties must be treated with equality, and each must get a full opportunity to present its case. Since CORE (2024), that covers how the tribunal is appointed, not just how the hearing is run.
Sections 11 and 34
Section 11 lets the court appoint an arbitrator when the agreed procedure fails or is invalid. Under Section 34 a party can challenge an award, including one made by a tribunal that was improperly constituted or had no jurisdiction.
From TRF to Perkins Eastman: how the law got here
It begins with the 2015 amendment, in force from 23 October 2015, which added Section 12(5) and the Seventh Schedule. Before that, Indian courts generally upheld clauses making one party's employee the arbitrator. The reasoning was that the other side had agreed with its eyes open. Section 12(5) opens with the words notwithstanding any prior agreement to the contrary. That was Parliament saying a signature on the contract is no longer enough.
Then came TRF Ltd v. Energo Engineering Projects (2017). The clause there made the buyer's Managing Director the arbitrator, or let him nominate someone else, and the Supreme Court held that once the Managing Director was himself ineligible under Section 12(5), he couldn't nominate anyone either. If you can't be the arbitrator, you can't choose the arbitrator. Plain logic, and it moved the law forward.
Perkins Eastman Architects v. HSCC (India) Ltd (2019) went a step further. Here HSCC's Chief General Manager had the power to appoint a sole arbitrator, though he wasn't to be the arbitrator himself. Same result, said the Supreme Court. No person or authority with an interest in the outcome can hold the power to appoint a sole arbitrator, because whoever appoints shapes how the arbitration goes. The Court then appointed an independent sole arbitrator itself. When lawyers object to a company-appoints-arbitrator clause, Perkins Eastman is usually the first case they cite.
Two more decisions fill in the gaps. In Voestalpine Schienen v. Delhi Metro Rail Corporation (2017), the Supreme Court said a panel offered to the other side has to be broad-based. A handful of one party's retired officers won't do. In Bharat Broadband Network v. United Telecoms (2019), it held that Section 12(5) ineligibility goes to the root of jurisdiction. Waiver needs an express written agreement made after the dispute arises, and filing your statement of claim before the ineligible arbitrator isn't a waiver.
What the Constitution Bench decided in CORE v ECI-SPIC
The case that settled the wider question is Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV). A five-judge Constitution Bench decided it on 8 November 2024. Back in 2019, a three-judge bench in the same case had upheld a Railways clause. Under it, the Railways prepared a panel of serving or retired officers, the contractor had to pick its nominee from that panel, and the General Manager picked the remaining arbitrators. By majority, the Constitution Bench overruled it.
Several things the majority said matter to anyone who signs or enforces contracts. Equal treatment under Section 18 applies at every stage, including when the tribunal is put together. A clause letting one party appoint a sole arbitrator on its own is exclusive, and it raises justifiable doubts about the arbitrator's independence. So does a clause forcing the other party to choose its arbitrator from a panel the first party has curated. In public-private contracts, unilateral appointment clauses also fall foul of Article 14 of the Constitution, because they're arbitrary. And the Bench confirmed that parties can still waive Section 12(5) by an express written agreement after disputes arise.
On timing, the Court made its ruling prospective. It applies to arbitrator appointments made after the date of the judgment, so tribunals already in place (especially three-member tribunals formed under the old Railways-type clauses) weren't thrown into doubt. That doesn't bring back anything TRF or Perkins Eastman had already struck down. A sole arbitrator picked by one interested party was invalid before CORE. Still is.
Where does that leave things after CORE v ECI-SPIC? Roughly here. A unilateral appointment of a sole arbitrator by an interested party is invalid. A curated panel the other side is forced to choose from is invalid for appointments after 8 November 2024. An appointment process that gives both sides an equal say, or that leaves the choice to a neutral institution or the court, is fine.
Does taking part in the arbitration count as waiver?
No. This is where a lot of parties go wrong. The proviso to Section 12(5) needs an express agreement in writing, made after the disputes have arisen. The Supreme Court applied that strictly in Bhadra International (India) Pvt Ltd v. Airports Authority of India, decided on 5 January 2026. The claimants there had themselves asked the Airports Authority to appoint an arbitrator, and then they filed claims, attended hearings, raised no objection at the first hearing, and even joined an application to extend the arbitrator's mandate. None of it counted. The Court held there was no express written waiver, and conduct and acquiescence can't stand in for one. The awards by the ineligible arbitrator couldn't survive, and the parties were left free to begin a fresh arbitration.
That cuts both ways in practice. If you're on the receiving end of a unilateral appointment, you haven't lost the objection just because you turned up and argued. If you made the appointment, an award in your favour is fragile unless you got a proper written waiver. On Bhadra's reasoning, a line in the first procedural order saying the parties have no objection to the arbitrator won't do.
Still, don't sit on it. Object early. Every month you take part without objecting, both sides spend more time and money on an award that might be thrown out. And it gets harder to explain your silence to a court that's deciding costs or interim relief.
Why the law takes the appointer's interest so seriously
An arbitrator's decision is final. No appeal on facts. And a court's power to interfere with an award under Section 34 is narrow. That finality only works because the tribunal is meant to be independent. If one side alone picks the person who decides, the other side is effectively arguing before a judge chosen by its opponent. And it has almost no way to fix a wrong decision afterwards.
Nobody's saying every officer-nominated arbitrator was dishonest. Many of them were retired engineers or officers who sat through long hearings, read every page and did the job fairly. The trouble is structural. An arbitrator who owes his next appointment to one party has a reason, conscious or not, to keep that party happy. Section 12(5) and the Seventh Schedule remove that risk by rule. The alternative would be asking the weaker party to prove actual bias after the event. That's close to impossible.
So pointing to the arbitrator's personal integrity won't rescue an unequal clause. Courts look at how the appointment was made. Not at the character of whoever got chosen.
What if the arbitrator one side appointed has no link to it?
That's exactly the Perkins Eastman situation. Same answer. If the person who made the appointment had an interest in the dispute, the appointment is invalid. The arbitrator could be a retired judge with no connection to either side and still have no jurisdiction, because the defect is in how he was chosen. After 2017, plenty of lenders and companies rewrote their clauses so that the managing director appoints an outside advocate or retired judge instead of an employee. It fixes nothing.
Neutral appointers are another matter. If whoever appoints has no stake in the outcome, there's no problem, and an arbitration institution like the Delhi International Arbitration Centre can appoint without any difficulty at all. So can a professional body named in the contract that has no interest in the dispute, or the court under Section 11. Our sister site explains how DIAC appoints arbitrators, one of the neutral routes most often used in Delhi.
The other side has appointed an arbitrator on its own. What now?
Object in writing straight away, to the other party and to the arbitrator. Say plainly that the appointment is invalid under Section 12(5) read with the Seventh Schedule and the decisions in Perkins Eastman and CORE, that you don't consent, and that you don't waive the objection. Don't sign anything that could be read as an express waiver without advice. That includes a joint memo, or a consent to extend the mandate.
Then go to court. If the arbitration hasn't really started, a petition under Section 11 asking the court to appoint an independent arbitrator is usually the cleanest course, since the agreed procedure can't validly work. The Delhi High Court often refers these matters to the Delhi International Arbitration Centre for appointment. Our sister site has a note on Section 11 references to DIAC, and our own guide covers when you can approach the court under Section 11. Keep in mind that a Section 11 petition has its own limitation. Ordinarily it's three years from the failure of the appointment process.
If the arbitrator has already entered on the reference, apply to the court under Section 14 for a declaration that his mandate has ended because he's de jure unable to act. You can raise the objection before the arbitrator under Section 16 as well. Frankly, an arbitrator asked to rule on his own appointment rarely finds he has no jurisdiction. Our note on objecting to an arbitrator who isn't independent explains how a Seventh Schedule ineligibility differs from the Fifth Schedule doubts, which have to be raised within 15 days under Section 13.
When a client brings Advocate B.K. Singh a notice appointing an arbitrator, the arbitrator's name isn't the first thing he checks. He looks at who signed the appointment letter. And under which clause. If it's an officer of the other side using a contractual power, the objection is usually available whatever the arbitrator's background. The reply goes out within days. Not weeks.
Responding to a unilateral appointment, step by step
Read the clause and the appointment letter side by side
Work out who appointed the arbitrator, under which clause, and whether that person or authority is a party or an officer of one. Write down the date the letter reached you.
Object in writing, without delay
Write to the other party and the arbitrator. Say the appointment is invalid under Section 12(5) and the Seventh Schedule, that you don't consent and that you don't waive. Keep proof of delivery.
Offer a neutral route
Suggest two or three independent names, or appointment through an institution. It shows the court you were ready to arbitrate on fair terms.
File under Section 11 or Section 14
If the other side says no, petition the High Court under Section 11 for an appointment. If the arbitrator has already started acting, go under Section 14. Ask for the proceedings before the ineligible arbitrator to be stayed or treated as having no effect.
If the arbitrator carries on regardless
Put your objection in writing at every stage. Avoid anything that could be called an express written waiver, and keep the point alive for a Section 34 challenge.
If an award is made
Challenge it under Section 34 within three months of receipt (plus up to 30 days on sufficient cause), and ask for a stay of enforcement under Section 36. An award by an ineligible arbitrator is treated as made without jurisdiction.
An award has already been passed. What can you do?
Challenge it under Section 34. Courts in Delhi and elsewhere have set aside award after award made by arbitrators that one interested party appointed. After Bhadra International, the Supreme Court has confirmed that such an award is a nullity, even where the objection was first raised in the Section 34 petition. The usual limit of three months plus 30 days applies. Don't let it slip while you weigh things up. Our guide to a Section 34 challenge walks through the procedure.
Ask for a stay as well. A strong Section 12(5) point can persuade a court to cut the deposit, or even drop it, because the defect shows on the face of the record. It's still discretionary, though. Read our guide on getting enforcement of an award stayed, and plan for security in case the court wants it.
Be clear about what winning means here. Setting aside an award by an ineligible arbitrator doesn't decide the underlying dispute. The claimant can usually start again before a properly appointed tribunal. At that point limitation can turn into a real problem for the claimant, which is one reason claimants, and respondents too, should want the appointment right from day one. Our note on how limitation applies to arbitration claims explains how time is counted.
Why so many loan and NBFC awards get set aside
A big share of the unilateral appointment cases in Indian courts today come out of loan, hire-purchase and equipment finance agreements. The standard form says the lender, or its authorised officer, will appoint a sole arbitrator. So the lender picks someone off its own list, the borrower often doesn't appear, and nobody on the borrower's side even opens the envelope. Within months there's an ex parte award, then execution, and then the accounts or the vehicles are attached.
These awards are fragile. If you're a borrower and one has reached you, get advice quickly on a Section 34 challenge and a stay. Don't assume you have to pay just because nobody challenged it earlier. It all turns on dates. When did the award actually reach you? Has limitation run? Has execution already been ordered?
Lenders, for their part, are moving to institutional arbitration, online dispute resolution platforms or court appointment to avoid the risk. A lender still using a lender-appoints clause is building up a pile of awards that may not survive challenge. Advocate B.K. Singh's practical advice to lenders, and to any company issuing standard-form contracts, is straightforward. Once a dispute arises, send a short written proposal of three independent names and get the borrower's agreement in writing. A waiver signed after the dispute arises is valid even where the original clause isn't.
Which appointment methods still work after Perkins Eastman and CORE?
| Appointment method | Position as of October 2026 | Comment |
|---|---|---|
| An officer of one party is the arbitrator himself | Invalid | He's ineligible under Section 12(5) and the Seventh Schedule (TRF, 2017) |
| An officer of one party appoints a sole arbitrator | Invalid | An interested party can't appoint a sole arbitrator (Perkins Eastman, 2019) |
| The other side has to pick its nominee from one party's curated panel | Invalid for appointments after 8 November 2024 | Goes against equal treatment (CORE, 2024) |
| Each side nominates one, and the two nominees choose the presiding arbitrator | Valid | The standard three-member method in Section 11(3) |
| Sole arbitrator by mutual agreement, and if that fails, by the court | Valid | Section 11(5) and 11(6) are the fallback |
| Appointment by an arbitral institution named in the contract | Valid | The institution has no interest in the dispute |
| Unilateral appointment accepted through an express written waiver after the dispute | Valid | Proviso to Section 12(5). Conduct alone won't do (Bhadra International, 2026) |
Time limits and costs of objecting
| Step | Time limit or usual time | What it will cost |
|---|---|---|
| Written objection to the appointment | As soon as the appointment letter arrives | Just the lawyer's drafting time |
| Challenge on Fifth Schedule grounds under Section 13 | 15 days from when you learn the facts | Usually decided by the tribunal. No court fee at this stage |
| Section 11 petition in the High Court | Ordinarily within 3 years of the appointment process failing. Hearings often take a few months | Court fee under the High Court's schedule, plus DIAC or other institutional fees if the matter is referred |
| Section 14 petition to end the mandate | As soon as you know of the ineligibility. A few months to decide | Court fee and counsel fees for the petition |
| Section 34 challenge to an award | 3 months from receipt, plus up to 30 days. A decision often takes one to three years | Court fee under state law, and a deposit or bank guarantee if you want a stay |
| Fresh arbitration after the award is set aside | Subject to limitation. The new tribunal works to the Section 29A timelines | Arbitrator and administrative fees all over again. Check the institution's current schedule |
Papers to pull together
- The whole contract, general conditions included, and any annexure that has the arbitration clause
- The notice invoking arbitration, and the letter appointing the arbitrator
- The arbitrator's Section 12(1) disclosure, if he gave one
- Every letter and email about the appointment, especially anything you signed or sent after the dispute started
- Procedural orders and the order sheet, if the arbitration is already under way
- Proof of when any award reached you
- Any execution petition, attachment order or recovery notice based on the award
- A board resolution or authority letter for whoever will sign petitions for your company
An invented example: a Ghaziabad civil contractor and a public housing body
This one is made up. A Ghaziabad civil contractor builds two blocks of flats for a state housing corporation. The contract, signed in 2019, says all disputes go to a sole arbitrator appointed by the corporation's Managing Director. A dispute comes up over final bills and escalation, worth about Rs 1.6 crore. In 2025 the contractor sends a notice invoking arbitration. The Managing Director answers by appointing a retired district judge as sole arbitrator.
Its first instinct is to go along. The retired judge has a good name, and fighting over the appointment feels like wasted time. On advice, though, it writes back within a week. It declines the appointment under Section 12(5), cites Perkins Eastman and the Constitution Bench in CORE, and proposes three names, or failing that, appointment through DIAC. The corporation says nothing.
So the contractor files a Section 11 petition in the High Court that has jurisdiction over the seat. On facts like these, the court would be expected to hold that the Managing Director couldn't appoint a sole arbitrator on his own, and to appoint an independent arbitrator, with fees fixed under the applicable schedule. The arbitration then runs before a tribunal whose award neither side can later attack on this ground.
Suppose instead the contractor had gone ahead before the retired judge and won. The corporation could have challenged the award as one made by an ineligible arbitrator, and after Bhadra International its own taking part in the hearings wouldn't have counted as waiver. A few months on the Section 11 petition buys an award that holds.
What companies with old clauses should do now
- Go through your standard forms. Purchase orders, dealer agreements, loan agreements and work orders drafted before 2019 often still have a managing-director-appoints clause. Swap it for an institutional or mutual appointment clause.
- Don't lean on the old clause once a dispute starts. Put independent names forward in writing and try to agree. If that doesn't work, go to court under Section 11 instead of appointing someone yourself.
- If you want the old route, take a proper waiver. A short written agreement, signed after the dispute arose, expressly waiving Section 12(5), is valid. Turning up at hearings isn't.
- Look at what's pending. If an arbitrator in a live matter was appointed unilaterally, decide now whether to get a written waiver or reconstitute the tribunal, before more money goes in.
- Name a neutral appointing authority in new contracts. Our note on drafting an arbitration clause that works for Indian contracts has usable wording, and our list of common arbitration clause mistakes covers the other traps.
What to do this week
If the other side has just appointed an arbitrator, send a written objection and a proposal for a neutral appointment before the first hearing. Already in the arbitration? Then check whether anything you've signed could be read as an express written waiver, and decide whether to file under Section 14 now. If there's an award, work out the Section 34 deadline today. Not next week.
If you'd like your contract, the appointment letter or an award checked for a Section 12(5) problem, or want to keep up with how courts are applying CORE and Bhadra, send your papers to Advocate B.K. Singh's team through the contact page.
Frequently asked questions
Is a clause saying the company will appoint the arbitrator void?
The appointment power in it can't be validly used by an interested party. The rest of the arbitration agreement usually survives, though. You can still arbitrate, with the arbitrator chosen by agreement, by an institution or by the court under Section 11.
Can I accept an arbitrator the other side chose, if I trust that person?
Yes. The proviso to Section 12(5) allows waiver by an express written agreement made after the dispute has arisen. Make it a clear, signed document. A line in the hearing record isn't enough.
Does CORE v ECI-SPIC apply to my older arbitration?
The Constitution Bench applied its ruling on curated panels and three-member tribunals to appointments made after 8 November 2024. The older rule that an interested party can't appoint a sole arbitrator, from TRF and Perkins Eastman, already applied before that date.
Is a retired employee of the other party ineligible as arbitrator?
Past or present employment and business links with a party come within the Seventh Schedule categories, and courts look closely at the facts. In Voestalpine (2017), the Supreme Court said a retired government officer isn't automatically disqualified just for having served the government. The appointment still has to come through a fair process.
What if I never appeared before the arbitrator?
Staying away doesn't make the appointment valid. You can still challenge the award under Section 34 within time, and the ineligibility ground is still open to you.
Can the arbitrator himself decide that his appointment is invalid?
He can rule on his own jurisdiction under Section 16. In practice arbitrators rarely rule against their own appointment, so most parties go to court under Section 11 or Section 14.
Is a three-member tribunal where we each appoint one arbitrator valid?
Yes, so long as each side chooses freely and the presiding arbitrator is picked by the two nominees or a neutral authority. The problem only comes up when one side controls the choice.
Does Section 12(5) apply to MSME Facilitation Council arbitrations?
The Council acts as arbitrator by statute under Section 18 of the MSMED Act, so the question of one party appointing the arbitrator doesn't come up the same way. Complaints about how a Council conducted itself go into a Section 34 challenge.
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M. More than twenty years in practice before the Supreme Court, the Delhi High Court, district and commercial courts in Delhi NCR, and tribunals.
This guide explains the law in general terms and is not legal advice. For advice on your own papers, contact the team.