Holding

Unilateral appointment clauses that give one party predominant control over the composition of an arbitral tribunal are void as they breach the equality principle, the nemo judex rule, and Article 14, and the law is applied prospectively to three‑member tribunals.

Summary

The Supreme Court examined whether arbitration clauses that allow one party, especially a government entity, to unilaterally appoint a sole arbitrator or control the composition of a three‑member tribunal are valid. It held that such unilateral appointment provisions create a real risk of bias, violate the principle of equal treatment of parties under Section 18 of the Arbitration Act, and are arbitrary under Article 14 of the Constitution. The Court emphasized that the equality principle applies at every stage of arbitration, including the appointment of arbitrators, and that the nemo judex rule is part of Indian public policy. While unilateral appointments are permissible only if the appointed arbitrator is not ineligible under Section 12(5) and the parties have expressly waived the rule after a dispute arises, clauses that force the other party to choose from a curated panel are invalid. The decision applies prospectively to future three‑member tribunal appointments.

Issues considered

Whether an appointment process that allows a party with an interest in the dispute to unilaterally appoint a sole arbitrator or curate a panel of arbitrators and require the other party to select its arbitrator from that panel is valid.
The applicability of the principle of equal treatment of parties at the stage of arbitrator appointment.
Whether such unilateral appointment clauses in public‑private contracts violate Article 14 of the Constitution.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(2), s. 11(6), s. 11(8), s. 12(1), s. 12(5), s. 13, s. 14, s. 15, s. 16, s. 18, s. 34(2)(a)(v), s. 4, s. 5
Code of Civil Procedure, 1908s. 36
Indian Contract Act, 1872s. 16, s. 2, s. 23, s. 28

Headnote

Issue for Consideration a) Whether an appointment process which allows a party who has an interest in the dispute to unilaterally appoint a sole arbitrator, or arbitrators and mandate that the other party select their arbitrator from the panel is valid in law; b) Whether the principle of equal treatment of parties applies at the stage of the appointment of arbitrators; and c) Whether an appointment process in a public-private contract which allows a

Subjects

Unilateral appointment of arbitratorsNemo judexDoctrine of biasParty autonomyArbitration agreementEquality in arbitral proceedingsArticle 14 of the ConstitutionPublic policySection 12(5) of the Arbitration ActSection 18 of the Arbitration ActProspective overruling

Judgment

[2024] 11 S.C.R. 2173 : 2024 INSC 857

Central Organisation for Railway Electrification
v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company
(Civil Appeal No(s). 9486-9487 of 2019)
08 November 2024
[Dr Dhananjaya Y Chandrachud,* CJI, Hrishikesh Roy,*
Pamidighantam Sri Narasimha,* J.B. Pardiwala and
Manoj Misra, JJ.]

Issue for Consideration
a) Whether an appointment process which allows a party who has
an interest in the dispute to unilaterally appoint a sole arbitrator,
or curate a panel of arbitrators and mandate that the other party
select their arbitrator from the panel is valid in law; b) Whether the
principle of equal treatment of parties applies at the stage of the
appointment of arbitrators; and c) Whether an appointment process
in a public-private contract which allows a government entity to
unilaterally appoint a sole arbitrator or majority of the arbitrators
of the arbitral tribunal is violative of Article 14 of the Constitution.

Headnotes†
Arbitration and Conciliation Act, 1996 – Unilateral appointment
clauses in a public-private contract:
Held: [Per Dhananjaya Y Chandrachud, CJI for himself and
J.B. Pardiwala and Manoj Misra, JJ.] The possibility of bias is
real in situations where an arbitration clause allows a government
company to unilaterally appoint a sole arbitrator or control the
majority of the arbitrators – Since the government has control
over the arbitral tribunal, it can chart the course of the arbitration
proceedings to the prejudice of the other party – Resultantly,
unilateral appointment clauses fail to provide an effective substitute
for judicial proceedings in India – Further, a unilateral appointment
clause is inherently exclusionary and violates the principle of
equal treatment of parties and procedural equality – Unilateral
appointment clauses in a public-private contract fail to provide
the minimum level of integrity required in authorities performing
quasi-judicial functions such as arbitral tribunals – Therefore, a

* Author
2174 [2024] 11 S.C.R.

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unilateral appointment clause is against the principle of arbitration,
that is, impartial resolution of disputes between parties – It also
violates the nemo judex rule which constitutes the public policy of
India in the context of arbitration – Therefore, unilateral appointment
clauses in public-private contracts are violative of Article 14 of the
Constitution for being arbitrary in addition to being violative of the
equality principle under the Arbitration Act. [Paras 162, 163] –
[Per Pamidighantam Sri Narasimha, J. (dissenting)] One
cannot, as an advance ruling, give a declaration that all arbitration
clauses enabling unilateral appointments are null and void at
this stage – A priori declaration that arbitration agreements that
prescribe unilateral appointment procedures are invalid can lead
to many problems in the day-to-day working of arbitral remedies –
Particularly for institutions involving multiple transactions such as
insurance claims, credit card defaults, etc. involving large number
of cases but each claim may be of small sum – Our declaration of
law substantially covers domestic arbitration, it will not be confined
to high and international commercial arbitration – There could
also be situations where the unilateral constitution of the panel of
arbitrators could have credible members with respect to which no
one can have an objection – Rather than declaring that all such
agreements are void, it would be better to strengthen the remedial
mechanisms available under the Act. [Paras 54.4 and 54.5] – [Per
Hrishikesh Roy, J. (dissenting)] All unilateral appointments must
not be declared void by way of a declaration of this Court – The
2015 Amendment in s.12(5) itself provides for a specific waiver
i.e. (a) an express consent in writing and (b) the consent must be
obtained after the dispute has arisen – Therefore, it is abundantly
clear that an agreement between the parties (provided it satisfies
the specific waiver requirements u/s.12(5)) can effectively cure
any concerns about impartiality or independence in such cases –
Adequate safeguards are provided within the Arbitration Act to
ensure a level playing field – A search within the provisions of
the Arbitration Act should first be made – The obligations of fair
treatment should be grounded in the Arbitration Act rather than in
the principles of Constitutional or administrative law – The choice
of the parties in the agreement should not be disregarded without
compelling reasons, through judicial intervention especially when
the Arbitration Act provides clear remedies u/ss.12, 13, 14, and
15 of the Arbitration Act – It is only when there is a complete lack
of consensus between the parties that the Court’s interference
u/s.11 could be justified. [Paras 41, 42]
[2024] 11 S.C.R. 2175

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

Arbitration and Conciliation Act, 1996 – Whether the principle
of equal treatment of parties applies at the stage of the
appointment of arbitrators:
Held: [Per Dhananjaya Y Chandrachud, CJI for himself
and J.B. Pardiwala and Manoj Misra, JJ.] Independence and
impartiality of arbitral proceedings and equality of parties are
concomitant principles – The independence and impartiality of
arbitral proceedings can be effectively enforced only if the parties
can participate equally at all stages of an arbitral process –
Therefore, the principle of equal treatment of parties applies
at all stages of arbitral proceedings, including the stage of the
appointment of arbitrators. [Para 75] – [Per Pamidighantam Sri
Narasimha, J. (concurring)] The text and the context of Section
18 as is evident from the scheme of the Act eschews application
of Section 18 at the time of appointment – This is clear through
two factors: first, through the placement of Section 18 in Chapter
V, on ‘Conduct of arbitral proceedings’, which comes after Chapter
III on ‘Composition of arbitral tribunal’; and second, through the
wording of Section 18, which makes it clear that the obligation
to treat the parties with equality is on the arbitral tribunal, rather
than the parties to the arbitration agreement – The later portion of
Section 18, which mandates that “each party shall be given a full
opportunity to present his case”, further fortifies this view. [Para
54.3] – [Per Hrishikesh Roy, J. (concurring)] The principle of
equality u/s.18 of the Arbitration and Conciliation Act,1996 applies
at all stages of the proceedings including the stage of appointment
of arbitrators – The Arbitration Act does not provide special or
different treatment to government or government undertakings
involved in arbitration. [Para 2]

Arbitration and Conciliation Act, 1996 – Application of Principle
of Equal Treatment of Parties – Appoitment of Arbitrators:
Held: [Per Dhananjaya Y Chandrachud, CJI for himself and J.B.
Pardiwala and Manoj Misra, JJ.] The principle of equal treatment
of parties applies at all stages of arbitration proceedings, including
the stage of appointment of arbitrators. [Para 169(a)]

Arbitration and Conciliation Act, 1996 – Does Arbitration Act
prohibit PSUs from empanelling potential arbitrators:
Held: [Per Dhananjaya Y Chandrachud, CJI for himself and
J.B. Pardiwala and Manoj Misra, JJ.] The Arbitration Act does
2176 [2024] 11 S.C.R.

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not prohibit PSUs from empanelling potential arbitrators – However,
an arbitration clause cannot mandate the other party to select its
arbitrator from the panel curated by PSUs. [Para 169(b)]

Arbitration and Conciliation Act, 1996 – Unilateral clause in
the appointment of arbitrators:
Held: [Per Dhananjaya Y Chandrachud, CJI for himself and
J.B. Pardiwala and Manoj Misra, JJ.] A clause that allows one
party to unilaterally appoint a sole arbitrator gives rise to justifiable
doubts as to the independence and impartiality of the arbitrator –
Further, such a unilateral clause is exclusive and hinders equal
participation of the other party in the appointment process of
arbitrators. [Para 169(c)]

Arbitration and Conciliation Act, 1996 – Mandating the other
party to select its arbitrator from a curated panel of potential
arbitrators is against the principle of equal treatment of parties:
Held: [Per Dhananjaya Y Chandrachud, CJI for himself and
J.B. Pardiwala and Manoj Misra, JJ.] In the appointment of
a three-member panel, mandating the other party to select its
arbitrator from a curated panel of potential arbitrators is against the
principle of equal treatment of parties – In this situation, there is no
effective counterbalance because parties do not participate equally
in the process of appointing arbitrators – The process of appointing
arbitrators in Central Organisation for Railway Electrification v.
ECI-SPIC-SMOMCML (JV) A Joint Venture Company [2019] 16
SCR 1234 is unequal and prejudiced in favour of the Railways.
[Para 169(d)]

Constitution of India – Art. 14 – Arbitration and Conciliation
Act, 1996 – Whether unilateral appointment clauses in
public-private contracts are violative of Article 14 of the
Constitution:
Held: [Per Dhananjaya Y Chandrachud, CJI for himself and
J.B. Pardiwala and Manoj Misra, JJ.] Unilateral appointment
clauses in public-private contracts are violative of Article 14 of the
Constitution. [Para 169(e)]

Arbitration and Conciliation Act, 1996 – Arbitration and
Conciliation (Amendment) Act 2015 – s. 12(5) – Application of
s.12(5) where the parties seek to waive the allegation of bias
against an arbitrator appointed unilaterally by one of the parties:
[2024] 11 S.C.R. 2177

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

Held: [Per Dhananjaya Y Chandrachud, CJI for himself and
J.B. Pardiwala and Manoj Misra, JJ.] The principle of express
waiver contained under the proviso to Section 12(5) also applies
to situations where the parties seek to waive the allegation of bias
against an arbitrator appointed unilaterally by one of the parties –
After the disputes have arisen, the parties can determine whether
there is a necessity to waive the nemo judex rule. [Para 169(f)]

Arbitration and Conciliation Act, 1996 – The present judgment
applies prospectively and to three-member tribunals:
Held: [Per Dhananjaya Y Chandrachud, CJI for himself and
J.B. Pardiwala and Manoj Misra, JJ.] The law laid down in the
present reference will apply prospectively to arbitrator appointments
to be made after the date of this judgment – This direction applies
to three-member tribunals. [Para 169(g)]

Arbitration and Conciliation Act, 1996 – Two independent yet
interdependent principles:
Held: [Per Pamidighantam Sri Narasimha, J.] Dispute
resolution through arbitration encompasses two independent yet
interdependent principles: contractual freedom as party autonomy
and statutory obligation as duty to constitute an independent arbitral
tribunal. [Para 56(I)]

Arbitration and Conciliation Act, 1996 – Arbitration agreement –
Party Autonomy:
Held: [Per Pamidighantam Sri Narasimha, J.] Party autonomy
in making of an arbitration agreement is an essential feature of
arbitration – It commences with choosing the members of the
arbitral tribunal, extends to the procedure that would apply for
its conduct, and concludes with the method by which an award
could be challenged before a court – It is thus a brooding and
guiding spirit of arbitration – Party autonomy is sufficiently
incorporated in the Arbitration Act, along with a restraint on
judicial intervention. [Para 56(II)]

Arbitration and Conciliation Act, 1996 – Contract Act, 1872 –
s.23 – Statutory incorporation of duties of the parties to the
arbitration agreement:
Held: [Per Pamidighantam Sri Narasimha, J.] The moment
parties choose arbitration over ordinary civil proceedings for dispute
2178 [2024] 11 S.C.R.

Supreme Court Reports

resolution, their duty to establish an independent and impartial
tribunal arises – The substitution of arbitration in place of civil courts
as an exception under Section 28 of the Contract Act is only for a
forum and not for contracting out of the most essential feature of a
dispute resolution, i.e., independence and impartiality must exist in
every forum – This essential feature is the inviolable public policy
consideration under Section 23 of the Contract Act from which
the parties cannot opt out – Arbitration agreements which are not
compliant of this public policy consideration are void under Section
23 of the Contract Act – Thus, there is a statutory incorporation
of duties of the parties to the arbitration agreement. [Para 56(III)]

Arbitration and Conciliation Act, 1996 – When an arbitration
agreement is not enabling constitution of an independent and
impartial tribunal:
Held: [Per Pamidighantam Sri Narasimha, J.] If an arbitration
agreement is considered by the court as not enabling constitution
of an independent and impartial tribunal, any submission that the
said agreement is a binding contract, or it is in exercise of party
autonomy is not tenable as such an agreement will be against
public policy and as such not an enforceable contract. [Para 56(IV)]

Arbitration and Conciliation Act, 1996 – Contract Act, 1872 –
Statutory incorporation of duties – Necessity to apply public
law principles:
Held: [Per Pamidighantam Sri Narasimha, J.] In view of the
statutory incorporation of these duties, it is not necessary to apply
public law principles evolved in constitutional and administrative
laws – Sourcing these duty obligations from Contract Act and
Arbitration Act is important to maintain the integrity of the party
autonomy and restraint of judicial institutions. [Para 56(V)]

Arbitration and Conciliation Act, 1996 – Duty of the Court:
Held: [Per Pamidighantam Sri Narasimha, J.] The power to
ensure that the arbitration agreement is compliant of the public policy
requirement of establishing an independent and impartial tribunal
is always of the Court – This principle is recognised and statutorily
incorporated in the Contract Act and the Arbitration Act – It is the
duty of the court to ensure that the arbitration agreement inspires
confidence and it will enable establishment of an independent and
impartial arbitral tribunal. [Para 56(VI)]
[2024] 11 S.C.R. 2179

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

Arbitration and Conciliation Act, 1996 – Maintaining a panel
of arbitrators:
Held: [Per Pamidighantam Sri Narasimha, J.] Neither public policy
considerations under the Contract Act or the Arbitration Act restrain
the parties to the arbitration from maintaining a panel of arbitrators
in any manner – However, arbitration agreements enabling one of
the parties to unilaterally constitute arbitral tribunal do not inspire
confidence of independence and may violate the public policy
requirement of constituting an independent and impartial tribunal –
The court will, therefore, scrutinise the agreement and hold them
to be invalid if it considers it appropriate. [Para 56(VII)]

Arbitration and Conciliation Act, 1996 – No two agreements
are the same and it is necessary for the court to examine the
text and context of the agreement:
Held: [Per Pamidighantam Sri Narasimha, J.] The occasion
for the court to examine the constitution of the independent and
impartial tribunal under the arbitration clause will arise when one
of the parties makes an application under Sections 11, 14 or 34 –
It is not permissible for the court to give an advance declaration
that all such agreements which enable one of the parties to
unilaterally constitute the arbitral tribunal would be void per se –
No two agreements are the same and it is necessary for the court
to examine the text and context of the agreement. [Para 56(VIII)]

Arbitration and Conciliation Act, 1996 – Test of establishment
of an independent and impartial tribunal:
Held: [Per Pamidighantam Sri Narasimha, J.] All applications
pending before the courts challenging the unilateral appointment
clauses will be disposed of applying the test as to whether such
a clause enables establishment of an independent and impartial
tribunal. [Para 56(IX)]

Arbitration and Conciliation Act, 1996 – s.18 – Applicability of:
Held: [Per Hrishikesh Roy, J.] Section 18 applies to all stages of
arbitration including the stage of appointment of an arbitrator – The
Arbitration Act does not provide for any special treatment to the
government irrespective of whether the arbitration is by or against
the government. [Para 43(a)]
2180 [2024] 11 S.C.R.

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Arbitration and Conciliation Act, 1996 – Unilateral appointment
of Arbitrators is permissible as per the legislative scheme:
Held: [Per Hrishikesh Roy, J.] Unilateral appointment of Arbitrators
is permissible as per the legislative scheme of the Arbitration
Act – There is a distinction between ‘ineligibility’ and ‘unilateral’
appointment of arbitrators – As long as an arbitrator nominated
by a party is eligible under the Seventh Schedule of the Act, the
appointment (unilateral or otherwise), should permissible – It is only
in cases of a complete lack of consensus that the court should
exercise its power under Section 11(6) of the Arbitration Act to
appoint an independent and impartial arbitrator as per Section
11(8) read with Section 12 and 18 of the Arbitration Act – At the
appointment stage, the scope of judicial intervention is otherwise
extremely narrow. [Para 43(b)]

Arbitration and Conciliation Act, 1996 – Independence and
impartiality of the arbitrator – Examination of:
Held: [Per Hrishikesh Roy, J.] The independence and impartiality
of the arbitrator must be examined within the statutory framework
of the Arbitration Act, particularly Section 18 read with section
12(5) – Public Law constitutional principles should not be imported
to arbitration proceedings particularly at the threshold stage of
Section 11. [Para 43(c)]

Case Law Cited

In the Judgment of Dr Dhananjaya Y Chandrachud, CJI, J.B.
Pardiwala and Manoj Misra, JJ.
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[2024] 11 S.C.R. 2181

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

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2182 [2024] 11 S.C.R.

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[2024] 11 S.C.R. 2183

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M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

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SCR 575 : (1974) 2 SCC 472; Indian Bank v. Blue Jaggers Estates
Ltd. (2010) 8 SCC 129; ICOMM Tele Ltd. v. Punjab State Water
Supply and Sewerage Board [2019] 2 SCR 984 : (2019) 4 SCC
401; Food Corporation of India v. Kamdhenu Cattle Feed Industries
[1992] Supp. 2 SCR 322 : (1993) 1 SCC 71; Tata Cellular v. Union
of India [1994] Supp. 2 SCR 122 : (1994) 6 SCC 651; Mahabir
Auto Stores v. Indian Oil Corporation [1990] 1 SCR 818 : (1990)
3 SCC 752; Air India Ltd. v. Cochin International Airport Ltd.
[2000] 1 SCR 505 : (2000) 2 SCC 617; Booz Allen & Hamilton
Inc. v. SBI Home Finance Ltd. [2011] 7 SCR 310 : (2011) 5 SCC
532; A Ayyasamy v. A Paramasivam [2016] 11 SCR 521 : (2016)
10 SCC 386; Ssangyong Engg. & Construction Co. Ltd. v. NHAI
[2019] 7 SCR 522 : (2019) 15 SCC 131; NHAI v. P Nagaraju
[2022] 8 SCR 1070 : (2022) 15 SCC 1; MMTC v. Vedanta Ltd.
[2019] 3 SCR 1023 : (2019) 4 SCC 163; Avitel Post Studioz Ltd. v.
HSBC PI Holdings (Mauritius) Ltd. [2024] 3 SCR 971 : (2024) 7
2184 [2024] 11 S.C.R.

Supreme Court Reports

SCC 197; Vidya Drolia v. Durga Trading Corporation [2020] 11
SCR 1001 : (2021) 2 SCC 1; Eurasian Equipment & Chemicals
Ltd. v. State of West Bengal [1975] 2 SCR 674 : (1975) 1 SCC
70; Ramana Dayaram Shetty v. International Airport Authority of
India [1979] 3 SCR 1014 : (1979) 3 SCC 489; LIC v. Consumer
Education & Research Centre [1995] Supp. 1 SCR 349 : (1995)
5 SCC 482; Somaiya Organics (India) Ltd. v. State of UP [2001]
3 SCR 33 : (2001) 5 SCC 519; Belsund Sugar Co. Ltd. v. State
of Bihar [1999] Supp. 1 SCR 146 : (1999) 9 SCC 620; Sarwan
Kumar v. Madan Lal Aggarwal [2003] 1 SCR 918 : (2003) 4 SCC
147; Bhatia International v. Bulk Trading S A [2002] 2 SCR 411 :
(2002) 4 SCC 105 – referred to.
R v. Bow Street Metropolitan Stipendiary Magistrate, ex parte
Pinochet Ugarte (No. 2) [1999] UKHL 1; Dimes v. The Proprietors
of the Grand Junction Canal (1852) 3 HLC 759; Locabail (UK)
Ltd. v. Bayfield Properties Ltd [1999] EWCA Civ 3004; Dimes v.
Grand Junction Canal (1852) 3 HL Cas 759; R v. Sussex Justices
[1924] 1 KB 256; R v. Barnsley Licencing Justices (1960) 2 Q.B.
187; Metropolitan Properties Company v. Lannon [1968] EWCA
Civ 5; Regina v. Gough [1993] UKHL 1; Webb v. The Queen,
(1994) 181 CLR 41; re Medicaments and Related Classes of
Goods (No. 2) [2001] 1 WLR 700; Porter v. Magill [2002] 2 AC
357; Lawal v. Northern Spirit Limited [2003] UKHL 25; Helow v.
Secretary of State [2008] UKHL 62; Johnson v Johnson (2000)
201 CLR 488; Haliburton Company v. Chubb Bermuda Insurance
Ltd. [2020] UKSC 48; Perry v. Thomas 482 US 483; Doctor’s
Associates Inc v. Casarotto 517 US 681; Hume v. United States 132
US 406; Williams v. Walker-Thomas Furniture Co. 350 F.2d 445;
Hooters of Am. Inc. v. Phillips 173 F.3d 933; Board of Education
of Berkely County v. W Harley Miller Inc 236 S.E.2d 439; Ditto v.
Remax Preferred Props 861 P.2d 1000, 1004; Harold Allen’s Mobile
Home Factory Outlet Inc v. Butler 825 So.2d 779, 783; Graham v.
Scissor Tail Inc 28 Cal 3d 807; Rosenberg v. Merrill Lynch, Pierce,
Fenner & Smith Inc 995 F.Supp 190, 208; McMullen v. Meijer 355
F.3d 485, 493; K/S Norjarl A/S v. Hyundai Heavy Industries Co.
Ltd. [1992] QB 863; The King v. Sussex Justices [1924] 1 KB 256;
Nicholas v. Cyprus Application No. 63246/10; Morice v. France,
Application No. 29369/10; Micallef v. Malta Application No.
17056/06; Koulis v. Cyprus, Application No. 48781/12; Jivraj v.
Hashwani [2011] UKSC 40; Janson v. Driefontein Consolidated
Mines, Limited [1902] 2 AC 484; – referred to.
[2024] 11 S.C.R. 2185

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

In the Judgment of Pamidighantam Sri Narasimha, J.
Vidya Drolia v. Durga Trading Corporation [2020] 11 SCR 1001 :
(2021) 2 SCC 1; M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd. [2024]
3 SCR 73 : (2024) 5 SCC 313; SBI General Insurance Co Ltd v.
Krish Spinning [2024] 7 SCR 840 : 2024 SCC OnLine SC 1754;
Centrotrade Minerals & Metals Inc v. Hindustan Copper Ltd. [2006]
Supp. 2 SCR 146 : (2006) 11 SCC 245; Union of India v. Uttar
Pradesh Bridge Corporation Limited (2015) 2 SCC 52; Bharat
Aluminium Co. v. Kaiser Aluminium Technical Services Inc. [2016] 1
SCR 364 : (2016) 4 SCC 126; Cox and Kings v. SAP India Pvt Ltd
[2023] 15 SCR 621 : (2024) 4 SCC 1; Indian Financial Association
of Seventh Day Adventists v. M.A. Unneerikutty [2006] Supp. 3
SCR 762 : (2006) 6 SCC 351; Gherulal Parekh v. Mahadeodas
Maiya (1959) Supp 2 SCR 406; Central Inland Water Transport
Corpn Ltd v. Brojo Nath Ganguly [1986] 2 SCR 278 : (1986) 3
SCC 156; Rattan Chand Hira Chand v. Askar Nawaz Jung [1991]
1 SCR 327 : (1991) 3 SCC 67; Assistant General Manager v.
Radhey Shyam Pandey [2020] 4 SCR 814 : (2020) 6 SCC 438;
P. Rathinam v. Union of India [1994] 3 SCR 673 : (1994) 3 SCC
394; Central Inland Water Transport v. Brojo Nath Ganguly [1986]
2 SCR 278 : (1986) 3 SCC 156; S.K. Jain v. State of Haryana
[2009] 2 SCR 1080 : (2009) 4 SCC 357; ICOMM Tele Limited v.
Punjab State Water Supply and Sewerage Board [2019] 2 SCR
984 : (2019) 4 SCC 401; HRD Corporation (Marcus Oil and
Chemical Division) v. GAIL (India) Ltd. [2017] 11 SCR 857 : (2018)
12 SCC 471; Chennai Metro Rail Ltd v. Transtonnelstroy Afcons
(JV) [2023] 14 SCR 995 : (2024) 6 SCC 211; Bharat Broadband
Network Limited v. United Telecoms Limited [2019] 6 SCR 97 :
(2019) 5 SCC 755; Indian Oil Corporation v. Raja Transport Pvt Ltd
[2009] 13 SCR 510 : (2009) 8 SCC 520; North Eastern Railway v.
Tripple Engineering Works [2014] 6 SCR 1143 : (2014) 9 SCC 288;
Northern Railway Administration, Ministry of Railway, New Delhi v.
Patel Engineering Company [2008] 12 SCR 216 : (2008) 10 SCC
240; Ace Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corpn.
Ltd. [2007] 4 SCR 777 : (2007) 5 SCC 304; Denel (Proprietary)
Limited v. Bharat Electronics Limited [2010] 6 SCR 784 : (2010)
6 SCC 394; Bipromasz Bipron Trading SA v. Bharat Electronics
Ltd. [2012] 5 SCR 743 : (2012) 6 SCC 384; Denel (Proprietary)
Limited v. Ministry of Defence [2012] 2 SCR 897 : (2012) 2 SCC
2186 [2024] 11 S.C.R.

Supreme Court Reports

759; Delhi Transport Corporation v. DTC Mazdoor Congress [1990]
Supp. 1 SCR 142 : (1991) Supp. 1 SCC 600; Bidi Supply Co v.
Union of India [1956] 1 SCR 267; Haryana Space Application
Centre v. Pan India Consultants Private Limited [2021] 1 SCR
282 : (2021) 3 SCC 103; Voestalpine Schienen GMBH v. Delhi
Metro Rail Corporation [2017] 1 SCR 798 : (2017) 4 SCC 665;
TRF Limited v. Energo Engineering Projects Limited [2017] 7 SCR
409 : (2017) 8 SCC 377; Perkins Eastman Architects DPC v. HSCC
(India) Limited [2019] 17 SCR 275 : (2020) 20 SCC 760; Central
Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML
(JV) [2019] 16 SCR 1234 : (2020) 14 SCC 712; Union of India v.
Parmar Construction Company [2019] 5 SCR 1009 : (2019) 15
SCC 682; Union of India v. Pradeep Vinod Construction Co [2019]
17 SCR 64 : (2020) 2 SCC 464; Govt. of Haryana PWD Haryana
(B and R) Branch v. G.F. Toll Road (P) Ltd [2019] 1 SCR 270 :
(2019) 3 SCC 505; Glock Asia-Pacific Limited v. Union of India
[2023] 6 SCR 717 : (2023) 8 SCC 226; Lombardi Engineering
Limited v. Uttarakhand Jal Vidyut Nigam Limited [2023] 13 SCR
943 : (2024) 4 SCC 341; Jaipur Zila Dugdh Utpadak Sahkari
Sangh v. Ajay Sales & Suppliers [2021] 7 SCR 768 : (2021) 17
SCC 248; Ellora Paper Mills v. State of M.P [2022] 16 SCR 399 :
(2022) 3 SCC 1 – referred to.
Perry v. Thomas 482 US 483 (1987); Harold Allen’s Mobile Home
Factory Outlet, Inc. v. Butler 825 So.2d 779,783-85 (Ala. 2002);
Philipp Bros. v. Icco 1990 Rev. 880,883; Raffineries de Petrole
d’Homs et de Banias v. Chambre de Commerce Internationale
1985 Recv. Arb. 141,146; Rosenberg v. Merril Lynch, Pierce,
Fennner & Smith Inc. 995 F.Supp. 190,208; Harold Allen’s Mobile
Home Factory Outlet, Inc. v. Butler 825 So.2d 779,783-85 (Ala.
2002); Hooters of America, Inc. v. Phillips 39 F. Supp. 2d 582
(D.S.C. 1998); Murray v. United Food and Commercial Workers
Union 289 F.3d 297 (4th Cir.2002); McMullen v. Meijer, Inc 355
F.3d 485 (6th Cir. 2004); Board of Ed. v. W. Harley Miller, Inc.
160 W. Va. 473, 236 S.E.2d 439 (W. Va. 1977); Sumukan Ltd. v.
Commonwealth Secretariat [2007] EWCA 1148; Swiss Federal
Tribunal (Judgement of 26 November 2002, DFT 4P_129/2002);
Court of Cassation (France) (Judgment of 31 January, 2002, 2003:2
Cahiers de l’Arbitrage 303); Judgement of 11 November 1981, DFT
107 Ia 155,158 (Swiss Fed. Trib.) – referred to.
[2024] 11 S.C.R. 2187

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

In the Judgment of Hrishikesh Roy, J.
Interplay Between Arbitration Agreements under A&C Act, 1996 &
Stamp Act, 1899 [2023] 15 SCR 1081 : (2024) 6 SCC 1 – followed.
A.Ayyasamy vs A. Paramasivam [2016] 11 SCR 521 : (2016) 10
SCC 386 – relied on.
Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman [2019] 12 SCR
123 : (2019) 8 SCC 714; Duro Felguera, S.A. v. Gangavaram Port
Ltd [2017] 10 SCR 285 : (2017) 9 SCC 729; SBP & Co. v Patel
Engineering [2005] Supp. 4 SCR 688 : (2005) 8 SCC 618; National
Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd [2008] 13 SCR
638 : (2009) 1 SCC 267; Executive Engineer, Irrigation Division,
Puri v. Gangaram Chhapolia [1984] 3 SCC 627; Secretary to
Government Transport Department, Madras v. Munusamy Mudaliar
[1988] Supp. (2) SCR 673 : [1988] Supp. SCC 651; International
Authority of India v. K.D. Bali and Anr [1988] 3 SCR 370 : [1988] 2
SCC 360; HRD Corporation (Marcus Oil and Chemical Division) v.
GAIL (India) Ltd. [2017] 11 SCR 857 : (2018) 12 SCC 471;
Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn. Ltd [2017]
1 SCR 798 : (2017) 4 SCC 665; TRF Ltd. v. Energo Engg. Projects
Ltd [2017] 7 SCR 409 : (2017) 8 SCC 377; Perkins Eastman
Architects DPC v. HSCC (India) Ltd [2019] 17 SCR 275 : (2020)
20 SCC 760; Central Organisation for Railway Electrification v.
ECI-SPIC-SMO-MCML (JV) [2019] 16 SCR 1234 : (2020) 14 SCC
712; Union of India Vs. Parmar Construction Company [2019]
5 SCR 1009 : (2019) 15 SCC 682; Union of India vs. Pradeep
Vinod Construction Company [2019] 17 SCR 64 : (2020) 2 SCC
464 – referred to.

Books and Periodicals Cited

In the Judgment of Dr Dhananjaya Y Chandrachud, CJI, J.B.
Pardiwala and Manoj Misra, JJ.
Law Commission of India, Amendments to the Arbitration and
Conciliation Act 1996, Report No. 246 (August 2014); Emmanuel
Gaillard, Legal Theory of International Arbitration’ (Brill, 2010);
Peter Binder, International Commercial Arbitration and Conciliation
in UNCITRAL Model Law Jurisdiction (2nd edn, 2005); Howard
Holtzmann and Joseph Neuhaus, A Guide to the UNCITRAL
Model Law on International Commercial Arbitration (Kluwer Law);
2188 [2024] 11 S.C.R.

Supreme Court Reports

UNCITRAL, 2012 Digest of Case Law on the Model Law on
International Commercial Arbitration (2012); Fouchard, Gaillard
and Goldman on International Commercial Arbitration (Emmanuel
Gaillard and John Savage, eds. 1999); Koulis v. Cyprus, Application
No. 48781/12; Shahla Ali and Odysseas G Repousis, ‘Appointment
of Arbitrators’ in UNCITRAL Model Law on International Commercial
Arbitration (Ilian Bantekas, et al eds, 2020); Gary Born, International
Commercial Arbitration (3rd edn.,) 1783; Michael Pryles, ‘Limits
to Party Autonomy in Arbitral Procedure’ (2007) 24(3) Journal of
International Arbitration 327-339; Jody Freeman, ‘The Contracting
State’ (2000) 28(1) Florida State University Law Review 155; Stavros
Brekoulakis and Margaret Devaney, ‘Public-private arbitration and
the public interest under English law’ (2017 Somaiya Organics
(India) Ltd. v. State of UP, (2001) 5 SCC 519) 80(1) Modern Law
Review 22, 30; Ilias Bantekas; Fouchard Gaillard Goldman on
International Commercial Arbitration (Kluwer Law International,
1999); Jerry L Mashaw; William B Rubenstein; William Wade and
Janson v. Driefontein Consolidated Mines, Limited, [1902] 2 AC
484 Christopher Forsyth, Administrative Law (12th edn, Oxford
University Press); David Caron and Lee Caplan, The UNCITRAL
Arbitration Rules: A Commentary (2nd edn, Oxford University Press,
2013); Fali Nariman, ‘Standards of Behaviour of Arbitrators’ (1988)
4(4) Arbitration International; S M Waddams, ‘Unconscionability
in Contracts’ (1976) 39(4) Modern Law Review 369; John A
Spanogle, ‘Analyzing Unconscionability Problems’ (1969) 117(7)
University of Pennsylvania Law Review 931; Percy H Winfield,
‘Public Policy in the English Common Law’ (1928) 42(1) Harvard
Law Review 76, 92; Stephen Waddams, Principle and Policy in
Contract Law (Cambridge University Press, 2011); Arthur Allen Leff,
‘Unconscionability and the Code-Emperor’s New Clause’ (1967)
115(4) University of Pennsylvania Law Review 485.

In the Judgment of Pamidighantam Sri Narasimha, J.
Pollock and Mulla, The Indian Contract and Specific Relief Acts,
vol 1 (14th edn, Lexis Nexis 2013), 524; Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, 1958;
Geneva Protocol on Arbitration Clauses; German Code of Civil
Procedure; Estonian Code of Civil Procedure.

In the Judgment of Hrishikesh Roy, J.
Gary Born, International Commercial Arbitration (2nd edn, Kluwer
2014); UNCITRAL 2012 Digest of Case Law on the Model Law on
[2024] 11 S.C.R. 2189

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

International Commercial Arbitration; Howard M. Holtzmann and
Joseph E. Neuhaus, A Guide to the UNCITRAL Model Law on
International Commercial Arbitration, at 479 (Kluwer 1989); 246th
Report of the Law Commission.

List of Acts

In the Judgment of Dr Dhananjaya Y Chandrachud, CJI, J.B.
Pardiwala and Manoj Misra, JJ.
Arbitration and Conciliation Act 1996; Contract Act 1872; Code
of Civil Procedure 1908; German Code of Civil Procedure 1877;
Dutch Code of Civil Procedure, 2003.

In the Judgment of Pamidighantam Sri Narasimha, J.
Arbitration and Conciliation Act, 1996; Indian Contract Act, 1872;
UNCITRAL Model Law; Code of Civil Procedure, 1908; Spanish
Arbitration Act, 2003.

In the Judgment of Hrishikesh Roy, J.
Arbitration and Conciliation Act,1996; UNCITRAL Model Law;
Arbitration Act, 1996.

List of Keywords

In the Judgment of Dr Dhananjaya Y Chandrachud, CJI, J.B.
Pardiwala and Manoj Misra, JJ.
Unilateral appointment of arbitrators; Qui facit per alium facit per
se; Nemo judex; Doctrine of unconscionability; Party autonomy;
Arbitration agreement; Consensual agreement; Freedom of the
parties; International commercial arbitration; Principle of minimum
judicial interference; Autonomy of the parties; Arbitral proceedings;
Mandatory provisions; Waiver of the right of a party to object;
Appointment of arbitrators; Independence and impartiality of
arbitrators; Equality in the arbitral proceedings; Public-private
arbitration; Arbitration as a quasi-judicial function; Article 14 of the
Constitution; Doctrine of bias; Principles of natural justice; Integrity
of arbitral process; Doctrine of Necessity; Principle of express
waiver; Panel of potential arbitrators; Unconscionability under the
Contract Act; US jurisprudence on unconscionability of arbitration
agreements; Public policy of arbitration; Unilateral appointment
clauses; Principle of equal treatment of parties.
2190 [2024] 11 S.C.R.

Supreme Court Reports

In the Judgment of Pamidighantam Sri Narasimha, J.
Access to Justice; Arbitration; Party autonomy; Independent and
impartial arbitral tribunal; Obligations of parties to the Arbitration
Agreement; Distinct duties of Arbitrators and Arbitrating Parties;
Legality of the contractual clause; Freedom of Contract; Statutory
incorporation of duties of the parties to the arbitration agreement;
Public Policy; Constitutional and Administrative laws; Restraint of
judicial institutions; Advance declaration; Unilateral appointment
procedures; Conduct of arbitral proceedings; Composition of
arbitral tribunal.

In the Judgment of Hrishikesh Roy, J.
Section 18 of the Arbitration and Conciliation Act,1996; Stage of
appointment of arbitrators; Applicability of the equality principle;
Equality Doctrine; Procedural protections; Judicial restraint;
Principle of minimal judicial intervention; Unilateral Appointments;
Independent and impartial tribunal; Failure or impossibility to Act;
Termination of mandate and Substitution of Arbitrator; Ineligibility.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 9486-9487
of 2019
From the Judgment and Order dated 03.01.2019 and 29.03.2019 of
the High Court of Judicature at Allahabad in ACA No.151 of 2018
With
Special Leave Petition (C) Nos.15936 of 2020, 6125 of 2021, 9462
of 2022 and 21131 of 2023 And Diary Nos.7086 And 13670 of 2024

Appearances for Parties
Tushar Mehta, Solicitor General, K.M. Nataraj, Arvind Kamath,
A.S.Gs., Neeraj Kishan Kaul, Guru Krishnakumar, Mrs. Madhavi
Divan, S.K. Gangele, Anand Padmanabhan, Naresh Kaushik,
Mahesh Jethmalani, Nakul Dewan, Gourab Banerji, P.V. Dinesh,
S. Mukunth, Sr. Advs., Amrish Kumar, Shashank Garg, Kanu
Agrawal, Aman Mehta, Raman Yadav, Ms. Aastha Singh, Ms.
Mili Bqaxi, Ms. Nishtha Jain, Ms. Jayashree Parihar, Raghav
Bhatia, Arjun Sharma, Ms. Aradhya Chaturvedi, Kumar Vinayakam
[2024] 11 S.C.R. 2191

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

Gupta, S. Ravi Shankar, Pai Amit, Ms. Pankhuri Bhardwaj, Nikit
Bala, Abhiyudaya Vats, Nikhil Pahwa, Kushal Dube, Ms. Ranu
Purohit, Ms. Bhavana Duhoon, Tathagata Dutta, Sanjeev Kapoor,
Mrs. Vanita Bhargava, Madhav Khosla, Samar Kachwaha, Rohit
Ghosh, Ritwik Mohapatra, Varun Tyagi, Toshiv Goyal, Dhruv
Sharma, Udit Sidhra, M/s. Khaitan & Co., Balaji Srinivasan,
Vishwaditya Sharma, Ashwin K, Vishesh Goel, Ms. Harsha
Tripathi, Aditya Nath, Shreyas Ranjan, Ms. Ritu Gangele, Ms.
Priya Sharma, Prathvi Raj Chauhan, Ms. Aishani Narain, Ms.
Nidhi Khanna, Ms. Aandrita Deb, Ms. Ruchi Arya, Arimardham
Sharma, Ms. Divya Swami, Nikhil Swami, Dhruv Tamta, Suman
K Doval, Nishchay Dutt, Mahesh Agarwal, Rishi Agrawala, Ankur
Saigal, Rohan Talwar, Pranjit Bhattacharya, Dr. Sunil Mittal,
Ms. Anu Tiwari, Chirag Nayak, Himanshu Saraswat, Pranav
Saigal, E.C. Agrawala, Vardhman Kaushik, Nishant Gautam,
Dhruv Joshi, Suyash Guru, Manan Sanghai, Mayank Sharma,
Vinay Kaushik, Anilendra Pandey, Rajeev Kumar Ranjan, Manoj
Kumar, Ms. Priya Kashyap, Aditya Narayan Singh, Sandeep,
M/s. Ranjan & Company, Saurav Aggarwal, Mrs. Sonali Jaitley
Bakhshi, Jaiyesh Bakhshi, Ravi Tyagi, Mayank Mishra, Gaurav
Mishra, Daman Popli, Ms. Neetu Devrani, Anubhav Yadav,
Sahil Dhawan, Anshuman Chawdhury, Ms. Kavya Pahwa, Ajay
Sharma, Shivam Chaudhary, Ms. Saloni Paliwal, Subodh Kr.
Pathak, Dharmendra Kumar Sinha, Shashi Ranjan, Subodh
Kumar Pathak, Shashiranjan, Pawan Kumar Sharma, Ms.
Priya Rastogi, A. Raghunath, Ms. Siya Choudhary, Ms. Serena
Jethmalani, Ms. Nooreen Sarna, Ms. Meher Tandon, Soumil
Jhanwar, Satyender Saharan, Sathvik Chandrashekhar, Anirudh
Krishnan, Shiva Krishnamurti, Ramkishore Karnam, Anuraag
Rajagopalan, Anirudh Ramkumar, Ms. Garima Jain, Ganesh
Chandru, Siddharth Agrawal, Shashwat Dhyani, Vinayak Sharma,
Apoorva Bhumesh, Chitransh Sharma, Tanmay Mehta, Sulaiman
Mohd Khan, Mrs. Taiba Khan, Bhanu Malhotra, Gopeshwar
Singh Chandel, Abdul Bari Khan, Rohit Amit Sthalekar, George
Pothan Poothicote, Ms. Manisha Singh, Prakarsh Kumar, Ashu
Pathak, Ms. Jyoti Singh, T.S. Sundaram, Venkata Supreeth, Mohit
Pandey, Rakesh Talukdar, S.P. Mukherjee, Raka Chatterjee,
Arunava Mukherjee, Somiran Sharma, Ms. Anna Oommen, Ms.
Syed Nazarat Fatima, Suryanu Sengupta, Dhrubajit Saikia, Mrs.
Prabha Swami, Advs. for the appearing parties.
2192 [2024] 11 S.C.R.

Supreme Court Reports

Judgment / Order of the Supreme Court#

Judgment

Dr Dhananjaya Y Chandrachud, CJI

Table of Contents*

A. Background ..................................................................... 4
i. Background to the reference ................................ 4
ii. The reference .......................................................... 11
B. Issues .............................................................................. 13
C. Submissions ................................................................... 13
D. Principles underpinning the Arbitration Act ............... 18
i. Party autonomy ...................................................... 20
ii. Mandatory provisions ............................................ 22
iii. Appointment of arbitrators ................................... 27
iv. Independence and impartiality of arbitrators ..... 32
v. Equality in the arbitral proceedings .................... 39
vi. Public-private arbitration ....................................... 41
E. The principle of equality applies at the stage of
appointment of arbitrators ............................................ 43
i. Arbitration as a quasi-judicial function ............... 43
ii. Equality applies at the stage of appointment of
arbitrators ............................................................... 48
F. Nemo judex rule and the doctrine of bias ................... 53
i. Principles of natural justice .................................. 54
ii. Doctrine of bias ...................................................... 57
iii. Test of real likelihood of bias ............................... 61
a. Automatic disqualification ................................ 61
b. Real likelihood of bias ..................................... 63

# Ed. Note: A total of three judgments were delivered. Hon’ble Dr Justice Dhananjaya Y Chandrachud,
Chief Justice of India, pronounced judgment on behalf of himself, Hon’ble Mr Justice J.B. Pardiwala
and Hon’ble Mr Justice Manoj Misra, Hon’ble Mr Justice Hrishikesh Roy and Hon’ble Mr Justice
Pamidighantam Sri Narasimha pronounced their separate judgments.
* Ed. Note: Pagination as per the original Judgment.
[2024] 11 S.C.R. 2193

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

iv. Indian approach to the bias test .......................... 71
v. Bias and doctrine of necessity in the context of
the Arbitration Act .................................................. 75
vi. Unilateral appointment of arbitrators is violative
of the equality clause under Section 18 .............. 83
G. Public-private contracts and public policy ................. 90
i. Unconscionability under the Contract Act .......... 90
ii. US jurisprudence on unconscionability of
arbitration agreements .......................................... 98
iii. Public-private contracts and public policy of
arbitration ................................................................ 102
H. Necessity of maintaining the principle of minimum
judicial interference ....................................................... 107
I. Prospective Overruling .................................................. 109
J. Conclusion ...................................................................... 111

A. Background
1. In the present batch of appeals, this Court has to decide the contours
defining the independence and impartiality of arbitral tribunals under
the Arbitration and Conciliation Act 1996.1 The Arbitration Act allows
parties to agree on a procedure for appointment of arbitrators.
The sanctity inhering in the arbitration agreement underscores the
autonomy of parties to settle their disputes by arbitrators of their
choice. However, the Arbitration Act subjects party autonomy to certain
mandatory principles such as the equality of parties, independence
and impartiality of the tribunal, and fairness of the arbitral procedure.
The reference to the Constitution Bench raises important issues
of the interplay between party autonomy and independence and
impartiality of the arbitral tribunal.

1 “Arbitration Act”
2194 [2024] 11 S.C.R.

Supreme Court Reports

i. Background to the reference
2. The Law Commission of India in its 246th Report opined that party
autonomy cannot be stretched to disregard the principles of impartiality
and independence of the arbitral process, specifically at the stage
of constituting of an arbitral tribunal.2 Hence, the Law Commission
suggested automatic disqualification of persons whose relationship
with the parties falls under any of the categories specified by law.
Following upon the recommendations of the Law Commission,
Parliament enacted the Arbitration and Conciliation (Amendment) Act
20153 to incorporate Section 12(5).4 Section 12(5) renders a person
whose relationship with the parties falls under any of the categories
specified under the Seventh Schedule ineligible for appointment.
Given the 2015 amendment, parties filed applications under Section
11(6) urging the invalidation of appointment procedures which gave
one party dominance in appointing arbitrators.
3. In Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation
Ltd.,5 the arbitration clause required the Delhi Metro Rail Corporation6

2 Law Commission of India, Amendments to the Arbitration and Conciliation Act 1996, Report No. 246
(August 2014). [The relevant observation reads:
“57. The balance between procedural fairness and binding nature of these contracts, appears to have
been tilted in favour of the latter by the Supreme Court, and the Commission believes the present
position of law is far from satisfactory. Since the principles of impartiality and independence cannot
be discarded at any stage of the proceedings, specifically at the stage of constitution of the arbitral
tribunal, it would be incongruous to say that party autonomy can be exercised in complete disregard of
these principles – even if the same has been agreed prior to the disputes having arisen between the
parties. There are certain minimum levels of independence and impartiality that should be required of
the arbitral process regardless of the parties’ apparent agreement. A sensible law cannot, for instance,
permit appointment of an arbitrator who is himself a party to the dispute, or who is employed by (or
similarly dependent on) one party, even if this is what the parties agreed. The Commission hastens to
add that Mr. PK Malhotra, the ex officio member of the Law Commission suggested having an exception
for the State, and allow State parties to appoint employee arbitrators. The Commission is of the opinion
that, on this issue, there cannot be any distinction between State and non-State parties. The concept of
party autonomy cannot be stretched to a point where it negates the very basis of having impartial and
independent adjudicators for resolution of disputes. In fact, when the party appointing an adjudicator is
the State, the duty to appoint an impartial and independent adjudicator is that much more onerous – and
the right to natural justice cannot be said to have been waived only on the basis of a “prior” agreement
between the parties at the time of the contract and before arising of the disputes.”]
3 “2015 amendment”
4 Section 12(5), Arbitration Act. [It reads:
“(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties
or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh
Schedule shall be ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen between them, waive the applicability
of this sub-section by an express agreement in writing.”]
5 [2017] 1 SCR 798
6 “DMRC”
[2024] 11 S.C.R. 2195

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to prepare a panel of engineers comprising of serving or retired
engineers of government departments or public sector undertakings.
The clause further stated that matters where the total value was
below Rupees 1.5 million should be referred to sole arbitrators, and
those exceeding the amount shall be arbitrated before a panel of
three arbitrators. The relevant clause for disputes to be decided by
three arbitrators was thus:
“(c) For the disputes to be decided by three Arbitrators, the
Purchaser will make out a list of five engineers from the
aforesaid panel. The supplier and Purchaser shall choose
one Arbitrator each, and the two so chosen shall choose
the third Arbitrator from the said list, who shall act as the
presiding Arbitrator.”
4. The issue before a two-Judge Bench of this Court was whether the
panel of arbitrators prepared by DMRC violated Section 12 of the
Arbitration Act. This Court emphasized that an arbitrator appointed in
terms of the agreement between the parties must be independent of
the parties. Further, this Court held that Section 12(5) read with the
Seventh Schedule does not put an embargo on retired government
employees from serving as arbitrators. It held that “[b]ias or even
real likelihood of bias cannot be attributed to such highly qualified
and experienced persons, simply on the ground that they served the
Central Government or PSUs.”7
5. The Court held that the arbitration clause had the following adverse
consequences: (i) the choice given by DMRC to the other party
was limited; and (ii) the discretion given to DMRC to curate a panel
of five persons gave rise to the suspicion that it “may have picked
up its own favourites.” To remedy the situation, it was held that a

7 Voestalpine (supra) [25]. [It reads:
“26. It cannot be said that simply because the person is a retired officer who retired from the government
or other statutory corporation or public sector undertaking and had no connection with DMRC (the party
in dispute), he would be treated as ineligible to act as an arbitrator. Had this been the intention of the
legislature, the Seventh Schedule would have covered such persons as well. Bias or even real likelihood
of bias cannot be attributed to such highly qualified and experienced persons, simply on the ground that
they served the Central Government or PSUs, even when they had no connection with DMRC. The very
reason for empanelling these persons is to ensure that technical aspects of the dispute are suitably
resolved by utilising their expertise when they act as arbitrators. It may also be mentioned herein that
the Law Commission had proposed the incorporation of the Schedule which was drawn from the red and
orange list of IBA guidelines on conflict of interest in international arbitration with the observation that
the same would be treated as the guide “to determine whether circumstances exist which give rise to
such justifiable doubts”. Such persons do not get covered by red or orange list of IBA guidelines either.”]
2196 [2024] 11 S.C.R.

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choice must be given to both parties to nominate any person from
the entire panel of arbitrators. Further, this Court observed that in
case of a government contract where the authority to appoint an
arbitrator rests with a government entity, there is an imperative to
have a “broad based panel”8 to instil confidence in the mind of the
other party and secure the principle of independence and impartiality
at the stage of the constitution of the arbitral tribunal.9
6. In TRF Ltd v. Energo Engineering Projects Ltd,10 the purchase
order issued by the respondent to the appellant contained an
arbitration clause that stated that any dispute or difference between
the parties in connection with the agreement shall be referred “to
sole arbitration of the Managing Director of Buyer or his nominee.”
After a dispute arose between the parties about the encashment
of the bank guarantee, the Managing Director of the respondent
appointed a former judge of this Court as the sole arbitrator in
terms of the arbitration clause. The issue before the Bench of three
Judges was whether the Managing Director was eligible to nominate
a sole arbitrator because of Section 12(5) of the Arbitration Act. The
Court distinguished the situation where both the parties appoint their
arbitrators from a situation where a person ineligible to be appointed
as an arbitrator nominates a sole arbitrator:
“53. […] when there are two parties, one may nominate
an arbitrator and the other may appoint another. That is

8 Voestalpine (supra) [28]. [“28. […] Keeping in view the spirit of the amended provision and in order to
instil confidence in the mind of the other party, it is imperative that panel should be broadbased. Apart
from serving or retired engineers of government departments and public sector undertakings, engineers
of prominence and high repute from private sector should also be included. Likewise panel should
comprise of persons with legal background like Judges and lawyers of repute as it is not necessary
that all disputes that arise, would be of technical nature. There can be disputes involving purely or
substantially legal issues, that too, complicated in nature. Likewise, some disputes may have the
dimension of accountancy, etc. Therefore, it would also be appropriate to include persons from this field
as well.]
9 Voestalpine (supra) [30] [“30. Time has come to send positive signals to the international business
community, in order to create healthy arbitration environment and conducive arbitration culture in this
country. Further, as highlighted by the Law Commission also in its report, duty becomes more onerous
in government contracts, where one of the parties to the dispute is the Government or public sector
undertaking itself and the authority to appoint the arbitrator rests with it. In the instant case also, though
choice is given by DMRC to the opposite party but it is limited to choose an arbitrator from the panel
prepared by DMRC. It, therefore, becomes imperative to have a much broadbased panel, so that there
is no misapprehension that principle of impartiality and independence would be discarded at any stage
of the proceedings, specially at the stage of constitution of the Arbitral Tribunal. We, therefore, direct
that DMRC shall prepare a broadbased panel on the aforesaid lines, within a period of two months from
today.”]
10 [2017] 7 SCR 409
[2024] 11 S.C.R. 2197

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altogether a different situation. If there is a clause requiring
the parties to nominate their respective arbitrator, their
authority to nominate cannot be questioned. What really
in that circumstance can be called in question is the
procedural compliance and the eligibility of their arbitrator
depending upon the norms provided under the Act and the
Schedules appended thereto. But, here is a case where
the Managing Director is the “named sole arbitrator” and
he has also been conferred with the power to nominate
one who can be the arbitrator in his place. Thus, there is
subtle distinction.”
7. The Court relied on the maxim qui facit per alium facit per se (what
one does through another is done by oneself)11 to hold that a person
who becomes ineligible to be appointed as an arbitrator cannot
nominate another person as an arbitrator:
“57. […] once the arbitrator has become ineligible by
operation of law, he cannot nominate another as an
arbitrator. The arbitrator becomes ineligible as per
prescription contained in Section 12(5) of the Act. It
is inconceivable in law that person who is statutorily
ineligible can nominate a person. …once the identity
of the Managing Director as the sole arbitrator is lost,
the power to nominate someone else as an arbitrator
is obliterated...”
(emphasis supplied)

8. In Perkins Eastman Architects DPC v. HSCC (India) Ltd.,12 the
arbitration clause stipulated that disputes or differences between
the parties to the contract “shall be referred for adjudication through
arbitration by a sole arbitrator appointed by the CMD HSCC within
30 days from the receipt of request from the Design Consultant.” The
Bench of two Judges held that the test to determine the possibility
of bias is directly relatable to the interest the person appointing an
arbitrator has in the outcome of the dispute. The Court held that

11 As applied by this Court in Pratapchand Nopaji v. Kotrike Venkata Setty (1975) 2 SCC 208 [9]
12 [2019] 17 SCR 275
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a person having an interest in the dispute “cannot and should not
have any role in charting out any course to the dispute resolution
by having the power to appoint an arbitrator.”13
9. TRF (supra) and Perkins (supra) both dealt with a situation where
a person who was rendered ineligible in terms of Section 12(5) was
making an appointment of a sole arbitrator. Consequently, Perkins
(supra) relied on TRF (supra) to observe that a person who has an
interest in the dispute or its outcome should not have the power to
unilaterally appoint a sole arbitrator:
“16. […] The next sentences in the paragraph, further
show that cases where both the parties could nominate
respective arbitrators of their choice were found to be
completely a different situation. The reason is clear that
whatever advantage a party may derive by nominating
an arbitrator of its choice would get counter-balanced
by equal power with the other party. But, in a case
where only one party has a right to appoint a sole
arbitrator, its choice will always have an element of
exclusivity in determining or charting the course for
dispute resolution. Naturally, the person who has an
interest in the outcome or decision of the dispute
must not have the power to appoint a sole arbitrator.
That has to be taken as the essence of the amendments
brought in by the Arbitration and Conciliation (Amendment)
Act, 2015 (3 of 2016) and recognised by the decision of
this Court in TRF Ltd.”
(emphasis supplied)

10. In Central Organisation for Railway Electrification v. ECI-SPIC-
SMO-MCML (JV) A Joint Venture Company,14 the arbitration was
to be held following Clause 64(3)(b) of the General Conditions of
Contract. The clause reads thus:
“64. (3)(b) Appointment of arbitrator where applicability
of Section 12(5) of the A&C Act has not been waived off

13 Perkins (supra) [16]
14 [2019] 16 SCR 1234 [“CORE”]
[2024] 11 S.C.R. 2199

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The Arbitral Tribunal shall consist of a panel of three retired
railway officers retired not below the rank of SAO officer,
as the arbitrator. For this purpose, the Railways will send
a panel of at least four names of retired railway officer(s)
empanelled to work as railway arbitrator indicating their
retirement date to the contractor within 60 days from the
day when a written and valid demand for arbitrators is
received by the GM.
Contractor will be asked to suggest to General Manager
at least two names out of the panel for appointment as
contractor’s nominee within 30 days from the date of
dispatch of the request by the Railways. The General
Manager shall appoint at least one out of them as the
contractor’s nominee and will, also simultaneously appoint
the balance number of arbitrators either from the panel
or from outside the panel, duly indicating the “presiding
arbitrator” from amongst the three arbitrators so appointed.
The GM shall complete this exercise of appointing the
Arbitral Tribunal within 30 days from the receipt of the
names of contract’s nominees. While nominating the
arbitrators, it will be necessary to ensure that one of them
has served in the Accounts Department.”
11. The first relevant issue before the Bench of three Judges was
whether the appointment of retired railway officers as arbitrators
was valid, given Section 12(5) read with the Seventh Schedule. The
Court relied on Voestalpine (supra) to observe that Section 12(5)
does not bar former employees of parties from being appointed as
arbitrator. The other issue was whether the General Manager could
appoint arbitrators. The Court held that the law laid down in TRF
(supra) and Perkins (supra) was not applicable because “the right
of the General Manager in formation of Arbitral Tribunal is counter-
balanced by respondent’s power to choose any two from out of the
four names and the General Manager shall appoint at least one out
of them as the contractor’s nominee.” The Court upheld the validity
of the arbitration clause and directed the constitution of the arbitral
tribunal in terms of the agreement.
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ii. The reference
12. In Union of India v. Tantia Constructions Limited,15 a three Judge
Bench prima facie disagreed with CORE (supra), observing:
"1. … on the facts of this case, the judgment of the
High Court cannot be faulted with (sic). Accordingly, the
Special Leave Petition is dismissed. However, reliance
has been placed upon a recent three-Judge Bench
decision of this Court delivered on 17.12.2019 in
Central Organisation for Railway Electrification v. ECI-
SPIC-SMO-MCML (JV) A Joint Venture Company, 2019
SCC OnLine SC 1635. We have perused the aforesaid
judgment and prima facie disagree with it for the basic
reason that once the appointing authority itself is
incapacitated from referring the matter to arbitration,
it does not then follow that notwithstanding this yet
appointments may be valid depending on the facts
of the case.
2. We therefore request the Hon’ble Chief Justice to
constitute a larger Bench to look into the correctness of
this judgment.”
(emphasis supplied)

13. When the reference came up on 12 July 2023, Mr R Venkataramani,
the Attorney General for India, submitted that the Union Government
had constituted an Expert Committee on Arbitration Law16 (chaired by
Dr T K Viswanathan) to reconsider the provisions of the Arbitration
Act. It was further submitted that the issues that have been raised
in the present reference would fall within the broad remit of the
Expert Committee. On 17 January 2024, the Constitution Bench
provided three months to the Union Government to evaluate the
recommendations of the Expert Committee.
The Court was informed on 16 April 2024 that the government
had not taken any decision on the recommendations of the Expert
Committee. The Constitution Bench decided to take up the reference
for final hearing.

15 2021 SCC OnLine SC 271.
16 “Expert Committee”
[2024] 11 S.C.R. 2201

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B. Issues
14. The following issues fall for the determination of this Court:
a. Whether an appointment process which allows a party who has
an interest in the dispute to unilaterally appoint a sole arbitrator,
or curate a panel of arbitrators and mandate that the other party
select their arbitrator from the panel is valid in law;
b. Whether the principle of equal treatment of parties applies at
the stage of the appointment of arbitrators; and
c. Whether an appointment process in a public-private contract
which allows a government entity to unilaterally appoint a sole
arbitrator or majority of the arbitrators of the arbitral tribunal is
violative of Article 14 of the Constitution.

C. Submissions
15. Mr Gourab Banerji, Mr Neeraj Kishan Kaul and Mr S Ravi Shankar,
senior counsel, and Mr Rohan Talwar, Mr George Poothan
Poothicote and Mr Anirurdh Krishnan, counsel, made the following
submissions:
a. Party autonomy is subject to the mandatory provisions of
the Arbitration Act such as Section 18 (equal treatment of
parties) and Section 12(5) (independence and impartiality of
the arbitration proceedings). A panel of potential arbitrators
unilaterally controlled by one party suffers from a lack of
independence and impartiality;
b. An arbitration clause that gives one party the power to appoint
a sole arbitrator will give rise to a reasonable apprehension of
bias concerning the independence and impartiality of the tribunal.
The test to determine the existence of reasonable apprehension
of bias is that of a reasonable third person;
c. Section 12(5) overrides an arbitration agreement because of the
non obstante clause. Although the statute does not specifically
bar an ineligible person from appointing an arbitrator, TRF
(supra) and Perkins (supra) rightly held that an ineligible person
could not appoint an arbitrator or curate a panel of arbitrators.
The thread running through TRF (supra) and Perkins (supra)
is that if a person has an interest in the outcome of the dispute,
2202 [2024] 11 S.C.R.

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such person should not have any role in the process of appointing
an arbitrator, including curation of a panel of potential arbitrators;
d. TRF (supra) and Perkins (supra) only carved out an exception
for situations where both parties are permitted to appoint an
arbitrator of their choice;
e. A unilaterally appointed panel is contrary to the principle of
equal treatment of parties enshrined under Section 18, which is
a mandatory provision. Although Section 18 is part of Chapter V
dealing with the conduct of arbitral proceedings, it also applies
at the stage of the constitution of arbitral tribunals. A lack of
mutuality in the appointment process is a violation of Section
18 because it gives an unfair advantage to one party;
f. In Lombardi Engineering Limited v. Uttarakhand Jal Vidyut
Nigam Limited,17 this Court held that arbitration agreements
must conform with the Constitution. An arbitration clause
authorizing one party to unilaterally appoint an arbitrator or
curate a panel of arbitrators is unconscionable and violative of
Article 14. Section 23 of the Indian Contract Act 187218 also
prohibits unconscionable contracts;
g. In Voestalpine (supra), this Court directed the constitution of
a broad-based panel of arbitrators. However, the constitution
of such a panel restricts the choice of the other party and falls
foul of the requirement of equality and impartiality; and
h. CORE (supra) does not consider Voestalpine (supra), Section
11(8), and the principle of an independence and impartiality
under Section 12. Further, the counter-balancing test evolved
in Perkins (supra) is only applicable in situations where both
parties have an equal and unfettered choice in appointing their
arbitrators. It does not apply to situations where one party’s
choice of arbitrators is restricted to a pre-selected list by the
other party; and
i. The prohibition on a person ineligible under Section 12(5) from
nominating an arbitrator or a panel of arbitrators can be traced

17 [2023] 13 SCR 943
18 “Contract Act”
[2024] 11 S.C.R. 2203

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to Section 18. Further, if the panel of arbitrators is curated and
controlled by one party, it gives rise to “justifiable doubts” as
to the independence and impartiality of the arbitrator under
Section 12.
16. Mr Tushar Mehta, Solicitor General of India, Mr K M Nataraj, Additional
Solicitor General of India, Mr Arvind Kamath, Additional Solicitor
General of India, Mr Mahesh Jethmalani, Ms Madhavi Divan, Mr
Guru Krishna Kumar, Mr Anand Padmanabhan, Mr Naresh Kaushik,
Mr Nakul Dewan, Mr P V Dinesh, senior counsel, and Mr Shashank
Garg, counsel, made the following submissions:
a. The principle of party autonomy is ingrained in the entire
architecture of the Arbitration Act. Section 11(2) allows the
parties to agree on a procedure for appointing arbitrators. The
procedure contemplated under Section 11(2) can include one
party preparing a panel of arbitrators and giving a choice to the
other party to select its nominee from the panel;
b. The duty of the Supreme Court or the High Court to appoint an
independent and impartial arbitrator under Section 11(8) arises
only in situations contemplated under Sections 11(4), 11(5), and
11(6) where parties fail to abide by the agreed procedure. The
provision does not hinder the right of the parties to agree on a
procedure for appointment of arbitrators under Section 11(2);
c. The action of “appointing” or “enlisting” a person as an arbitrator
is distinct from “acting” as an arbitrator. Section 12(5) expressly
prohibits a person who is ineligible in terms of the Seventh
Schedule from being appointed as an arbitrator. However, the
Arbitration Act does not expressly prohibit such an ineligible
person from appointing an arbitrator or enlisting a panel of
potential arbitrators;
d. The Arbitration Act does not recognize any presumed ineligibility
concerning arbitrators. The ineligibility must be real and actual
according to Section 12;
e. The equality of treatment under Section 18 does not refer to inter
se equality between the parties at the stage of agreeing upon
a procedure for appointing an arbitrator. Section 18 mandates
the arbitral tribunal to treat the parties with equality and give
them a full opportunity to present their case. Further, Section
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18 only applies after the composition of the arbitral tribunal
during the conduct of arbitral proceedings;
f. The Arbitration Act provides adequate statutory safeguards for
securing the independence and impartiality of arbitrators. These
safeguards include: (i) Section 12(5) read the Seventh Schedule;
(ii) mandatory disclosure under Sections 12(1) read with the
Fifth Schedule; (iii) challenge procedures under Sections 13
and 14; and (iv) judicial review of the decision of an arbitrator
under Section 34;
g. Voestalpine (supra) has upheld the maintenance of a panel of
potential arbitrators by public sector undertakings. It correctly
laid down the broad-based principle for the operation of a panel
of arbitrators. Further, it did not bar former employees of the
parties to the arbitration agreement from serving as arbitrators;
h. TRF (supra) erred by relying on the maxim qui facit per alium
facit per se which is usually applied in the context of delegation
of authority. The act of appointing or nominating an arbitrator
under an arbitration clause is not an act of delegation of the
appointing authority’s power. Rather, the arbitrator exercises an
independent power of adjudication within the limits laid down by
the pertinent arbitration agreement and the Arbitration Act; and
i. Non-banking financial companies19 include arbitration clauses
in the standard form contracts entered into with the borrowers.
Since the nature of the dispute generally involves default in
payment by the borrowers, the arbitration clause allows the
NBFCs to appoint an arbitrator. Nevertheless, the arbitrator has
to satisfy the criteria laid down under Section 12.

D. Principles underpinning the Arbitration Act
17. Our courts have jurisdiction to try all suits of a civil nature except
where cognizance is expressly or impliedly barred.20 Section 28 of the
Contract Act bars any agreement that prohibits parties from enforcing

19 “NBFCs”
20 Section 9, Code of Civil Procedure 1908. [It reads:
“9. Courts to try all civil suits unless barred – The Courts shall (subject to the provisions herein contained)
have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either
expressly or impliedly barred.”]
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their rights under contract by usual legal proceedings in ordinary
tribunals. However, the provision makes an exception to a contract
by which two or more persons agree to refer the disputes that may
arise between them in respect of any subject or class of subjects to
arbitration.21 Thus, parties can contract out of the traditional justice
dispensing mechanism to refer their disputes to arbitration.
18. The Arbitration Act consolidates and amends the law relating
to domestic arbitration, international commercial arbitration and
enforcement of foreign arbitral awards. It brings the domestic
arbitration law in consonance with the UNCITRAL Model Law
on International Commercial Arbitration 1985.22 One of the main
objectives of the Arbitration Act is to make provision for an arbitral
procedure that is fair, efficient and capable of meeting the needs of
the specific arbitration.
19. Article 2A of the Model Law enunciates the following principles to
interpret the provisions of national arbitration laws: (i) regard for the
arbitration law’s international origin; (ii) the need to promote uniformity
in its application; and (iii) observance of good faith. It further provides
that issues not expressly settled under the arbitration law are to be
settled in conformity with the “general principles” on which the law
is based.23

21 Section 28, Indian Contract Act 1872. [It reads:
“28. Agreements in restraint of legal proceedings, void – Every agreement, -
(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any
contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he
may thus enforce his rights; or
(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability,
under or in respect of any contract on the expiry of a specified period so as to restrict any party from
enforcing his rights;
is void to that extent.
Exception 1 – Saving of contract to refer to arbitration dispute that may arise – This section shall not
render illegal a contract, by which two or more person agree that any dispute which may arise between
them in respect of any subject or class of subjects to arbitration, and that only the amount awarded is
such arbitration shall be recoverable in respect of the dispute so referred.
Exception 2 – Saving of contract to refer questions that have already arisen – Nor shall this section
render illegal any contract in writing, by which two or more person agree to refer to arbitration any
question between them which has already arisen, or affect any provision of any law in force for the time
being as to references to arbitration.
22 “Model Law”
23 Article 2A, Arbitration Act. [It reads:
“Article 2A International origin and general principles
(1) In the interpretation of this Law, regard is to be had to its international origin and to the need to
promote uniformity in its application and the observance of good faith.
(2) Questions concerning matters governed by this Law which are not expressly settled in it are to be
settled in conformity with the general principles on which this Law is based.”]
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20. The principles of interpretation suggested by the Model Law require
courts to assume a global perspective consistent with the prevailing
practice in courts of other jurisdictions and arbitral tribunals.24 The
Model Law encourages resort to “general principles” to fill the gaps
in the national arbitration laws.25 The term “general principles” is
intended to refer to principles widely accepted by legal systems.26
The above principles of interpretation will also apply when interpreting
the provisions of the Arbitration Act.

i. Party autonomy
21. Section 7 defines an arbitration agreement to mean an agreement
by the parties to submit to arbitration all or certain disputes which
have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not. The arbitration
agreement records the consent of the parties to submit their disputes
to arbitration.27 Arbitration is premised on a consensual agreement
to submit disputes to (a) a decision-maker chosen by or for the
parties; (b) to render a binding resolution of the dispute following
adjudicatory procedures which afford the parties an opportunity to
be heard. The right to arbitrate is a private right of the parties to
adjudicate in personam disputes.
22. The basis of any arbitration is the freedom of the parties to agree
to submit their disputes to an individual or to a panel of individuals
whose judgment they are prepared to trust and obey. Party autonomy
is fundamental to international commercial arbitration because it
allows the parties to design the arbitration proceedings to suit their
needs and commercial reality. Party autonomy has been described
by this Court as the “brooding and guiding spirit”28 and “backbone”29
of arbitrations. The principle of minimum judicial interference
supplements the autonomy of parties by prohibiting courts from

24 Ilias Bantekas, ‘International Origin and General Principles’ in UNCITRAL Model Law on International
Commercial Arbitration: A Commentary (Cambridge University Press, 2020) 44.
25 Ibid, at 48
26 Gary Born (supra) 2971; Emmanuel Gaillard, Legal Theory of International Arbitration’ (Brill, 2010) 55
27 Cox and Kings Ltd v. SAP India Pvt Ltd, 2023 INSC 1051 [60]
28 Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2016) 4 SCC 126 [5]
29 Centrotrade Minerals & Metals Inc v. Hindustan Copper Ltd. (2017) 2 SCC 228 [38]
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interfering in arbitral proceedings unless mandated by the law.30 This
principle respects the autonomy of the parties to mutually chart the
course of the arbitral proceedings.
23. The Arbitration Act has given pre-eminence to party autonomy
throughout the arbitral process. The Arbitration Act has used
phrases such as “unless otherwise agreed by the parties”,31 “failing
any agreement”,32 “the parties are free to agree”,33 “failing such
agreement”, 34 and “unless the agreement on the appointment
procedure provides other means”35 to recognise the autonomy of
parties to determine the arbitral proceedings. The use of the above
phrases also indicates that an arbitrator is bound by the procedures
agreed upon between the parties.36
24. Some of the relevant provisions of the Arbitration Act which reflect
the principle of party autonomy are encapsulated below:
a. Section 10 allows parties the freedom to decide the number
of arbitrators;
b. Section 11(2) allows parties the freedom to agree on a procedure
for appointing the arbitrator or arbitrators;
c. The Proviso to Section 12(5) allows parties to waive the
applicability of the provision by an express agreement in writing
after the dispute has arisen; and
d. Section 14 allows parties to mutually terminate the mandate
of an arbitrator.
25. Additionally, the parties are free to agree on the procedures to be
followed by the arbitral tribunal,37 the place of arbitration,38 the date

30 Section 5, Arbitration Act. [It reads:
“5. Extent of judicial intervention – Notwithstanding anything contained in any other law for the time being
in force, in matters governed by this Part, no judicial authority shall intervene except where so provided
in this Part.”]
31 Sections 3, 11(1), 14(2), 15(3), 15(4), 20(3), 21, 23(3), 24(1), 26, 29(1), 31(7a), 33(4), Arbitration Act
32 Sections 11(3), 11(5), 13(2), 19(3), 20(2), 22(2), Arbitration Act
33 Sections, 11(2), 13(1), 19(2), 20(1), 22(1), Arbitration Act
34 Section 34(2)(a)(v), Arbitration Act
35 Section 11(6), Arbitration Act
36 N S Nayak and Sons v. State of Goa (2003) 6 SCC 56 [14]; Sree Kamatchi Amman Constructions v.
Railways (2010) 8 SCC 767 [19]
37 Section 19, Arbitration Act
38 Section 20, Arbitration Act
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of commencement of arbitral proceedings,39 the language to be used
in the arbitral proceedings,40 procedure for hearings and written
proceedings,41 consequence of a default by a party,42 appointment
of experts,43 and the manner of decision making by the arbitral
tribunal.44 Thus, the Arbitration Act recognises and enforces mutual
commercial bargains and understanding between the parties at all
stages of the arbitration proceedings. However, the autonomy of the
parties under the Arbitration Act is not without limits. It is limited by
certain mandatory provisions of the Arbitration Act.

ii. Mandatory provisions
26. Part I of the Arbitration Act applies where the place of arbitration
is in India.45 Section 4 deals with a waiver of the right of a party to
object in the following terms:
“4. Waiver of right to object. – A party who knows that –
(a) any provision of this Part from which the parties may
derogate, or
(b) any requirement under the arbitration agreement,
has not been complied with and yet proceeds with the
arbitration without stating his objection to such non-
compliance without undue delay or, if a time limit is provided
for stating that objection, within that period of time, shall
be deemed to have waived his right to so object.”
27. Section 4 is a deeming provision.46 It deems that a party has waived
its right to object if it proceeds with the arbitration without stating
its objection to non-compliance of any provisions from which the
parties may derogate or of any requirement under the arbitration

39 Section 21, Arbitration Act
40 Section 22, Arbitration Act
41 Section 24, Arbitration Act
42 Section 25, Arbitration Act
43 Section 26, Arbitration Act
44 Section 29, Arbitration Act
45 Section 2(2), Arbitration Act
46 Shree Subhlaxmi Fabrics (P) Ltd. v. Chand Mal Baradia (2005) 10 SCC 704 [9]
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agreement.47 Importantly, Section 4 distinguishes between derogable
(non-mandatory) and mandatory provisions.48
28. Section 4 is based on Article 4 of the Model Law.49 The purpose of
incorporating Section 4 is to inform the arbitrators of the principle
of waiver.50 Peter Binder suggests that Article 4 aims to prohibit the
adoption of delay tactics by parties and contribute to the fluency of
the proceedings.51 A party to arbitration has a right to object to any
non-compliance with procedural requirements. Section 4 implies a
waiver of this right under certain conditions based on the principle of
waiver or estoppel.52 The procedural default at issue must be stipulated
either in the arbitration agreement or a non-mandatory provision under
Part I of the Arbitration Act. If the arbitration agreement is silent on
a procedural point, the provisions of the Arbitration Act take effect.
According to Section 4, a party cannot insist on compliance with
non-mandatory provisions of the Arbitration Act if it fails to make
a timely objection.53 Section 4 of the Arbitration Act necessarily
implies that parties cannot proceed with arbitration in derogation of
a mandatory provision.
29. The initial draft of Article 4 of the Model Law did not make an exception
for mandatory provisions. Therefore, suggestions were made to
“soften” the provision by limiting “the waiver rule to non-compliance
with non-mandatory provisions.”54 Further, a proposal was also made
to include a list of mandatory provisions under the Model Law. It was
suggested that such a list “would make it unnecessary to include in

47 BSNL v. Motorola India (P) Ltd. (2002) SCC 337. [“39. Pursuance to Section 4 of the Arbitration and
Conciliation Act, 1996, a party which knows that a requirement under the arbitration agreement has
not been complied with and still proceeds with the arbitration without raising an objection, as soon as
possible, waived their right to object.”]
48 A/CN.9/246 (44)
49 Article 4, Model Law [It reads:
“A party who knows that any provision of this Law from which the parties may derogate or any requirement
under the arbitration agreement has not been complied with and yet proceeds with the arbitration without
stating his objection to such non-compliance without undue delay or, if a time-limit is provided therefor,
within such period of time, shall be deemed to have waived his right to object.”]
50 Howard Holtzmann and Joseph Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration 196
51 Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdiction
(2nd edn, 2005) 49
52 A/CN.9/264 (17)
53 Howard Holtzmann and Joseph Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration (Kluwer Law) 197
54 A/CN.9/245 [178]
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the non-mandatory provisions such wording as “unless otherwise
agreed by the parties.”55 The Secretariat considered it unnecessary
to include a list of mandatory provisions given the overall scheme of
the Model Law.56 It was also of the opinion that mandatory provisions
could be discerned from the content of such provisions.
30. Holtzmann and Neuhaus give the following examples of mandatory
provisions under the Model Law:
“Examples of provisions that appear to be mandatory
and therefore cannot be waived under Article 4 are the
following: the requirement that the arbitration agreement
be in writing (Article 7(2)); the requirement that the parties
be treated with equality and that each party be given a
full opportunity of presenting his case (Article 18); the
requirement that a party be given notice of any hearing
and be sent any materials supplied to the arbitral tribunal
by the other party (Article 24(2), (3)); the requirement that
an award – including an award on agreement terms – be
in writing, that it state its date and place, and that it be
delivered to the parties (Article 30(2), 31(1), (3), (4))”57
31. The above extract suggests that an arbitration agreement entered
into by the parties is subject to certain well-defined and mandatory
legal principles. For instance, Section 34(2)(a)(v) allows for refusal
of enforcement of arbitral awards if the composition of the arbitral
tribunal or arbitral procedure was not following the agreement of the
parties unless such agreement conflicts with the mandatory provisions

55 Composite draft text of a model law on international commercial arbitration: some comments and
suggestions for consideration, A/CN.9/WG.II/WP.50
56 Composite draft text of a model law on international commercial arbitration: some comments and
suggestions for consideration: note by the secretariat (A/CN.9/WG.II/WP.50) [The secretariat gave the
following reasons for not providing a list of mandatory provisions in the Model Law itself: “Firstly, a
considerable number of provisions are obviously by their content of a mandatory nature. Secondly,
there are a number of provisions granting freedom to the parties, accompanied by suppletive rules
failing agreement by the parties; here the question of mandatory nature seems to be a philosophical
one and equally redundant. Thirdly, with respect to some draft articles only a part of the provisions (e.g.
a time limit) is non-mandatory. Fourthly, in respect of some of the provisions already decided to be non-
mandatory, the Working Group was of the view that this should, for the sake of emphasis, be expressed
in the individual provision, despite the general listing in article 3. Fifthly, it is suggested that, in addition
to the provisions already decided to be non-mandatory and drafted accordingly, […] there are only few
further provisions which may be regarded as non-mandatory and, if so, could be easily marked as such
by adding the words “unless otherwise agreed by the parties;”]
57 Holtzmann and Neuhaus (supra) 198
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of the law.58 The composition of the arbitral tribunal or the arbitral
procedure must not only be in accordance with the agreement of
the parties but also be consistent with the mandatory standards laid
down under the Arbitration Act.59 In case of a conflict, mandatory
provisions of the Arbitration Act prevail over the arbitration agreement
between the parties.60
32. Under the Arbitration Act, the mandatory provisions must be deduced
from their content. For instance, the use of the phrase “unless
otherwise agreed by the parties” is an indicator of the fact that the
provision is derogable because it gives priority to the agreement of
the parties. In contrast, the use of the word “shall” in a provision is
an indicator that the legislature intended to give it a mandatory effect.
However, the use of “shall” is not the sole indicator to determine the
mandatory nature of a provision. The provision must be interpreted
by having regard to its text and the context to determine its nature.61
33. As opposed to the Indian approach, the UK Arbitration Act 1996 lists
the mandatory provisions under Schedule I.62 In this context, Section
4 provides that the mandatory provisions have effect notwithstanding
any agreement to the contrary.63 It further provides that the non-

58 Section 34(2)(a)(v), Arbitration Act. [It reads:
“(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with agreement
of the parties, unless such agreement was in conflict with a provision of this Part from which the parties
cannot derogate, or failing, such agreement, was not in accordance with this Part.”]
59 Report of the United Nations Commission on International Trade Law on the work of its eighteenth
session (3-21 June 1985) Supplement No. 17 (A/40/17) [290]. [The report states:
“290. As regards the standards set forth in the subparagraph, it was understood that priority was
accorded to the agreement of the parties. However, where the agreement was in conflict with a
mandatory provision of “this Law” or where the parties had not made an agreement on the procedural
point at issue, the provisions of “this Law”, whether mandatory or not, provided the standards against
which the composition of the arbitral tribunal and the arbitral procedure were to be measured.”]
60 A/CN.9/246, para 135
61 State of UP v. Babu Ram Upadhya (1961) 2 SCR 679 [29]; Raza Buland Sugar Co. Ltd. v. Municipal
Board, 1964 SCC OnLine SC 119 [8]
62 Schedule I, UK Arbitration Act 1996. [Section 33 which imposes a legal duty on the tribunal to act fairly
and impartially is one of the mandatory provisions under the UK legislation.]
63 Section 4, UK Arbitration Act. [It reads:
“4. Mandatory and non-mandatory provision.
The mandatory provisions of this Part are listed in Schedule 1 and have effect notwithstanding any
agreement to the contrary.
The other provisions of this Part (the “non-mandatory provisions”) allow the parties to make their own
arrangements by agreement by provide rules which apply in the absence of such agreement.
The parties may make such arrangements by agreeing to the implication of institutional rules or providing
any other means by which a matter may be decided.
It is immaterial whether or not the law applicable to the parties’ agreement is the law of England and
Wales or, as the case may be, Northern Ireland.
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mandatory provisions allow the parties to make their arrangements
by agreement. Lord Mustill and Stewart Boyd term Section 4 as one
of the ‘four pillars’ of the UK Arbitration Act.64 They observe that the
provision is one of the instances indicating the influence of the state
on the internal law of arbitration.65

iii. Appointment of arbitrators
34. Section 10 provides that “parties are free to determine the number
of arbitrators, provided that such number shall not be an even
number.”66 If parties fail to determine the number of arbitrators, the
arbitral tribunal shall consist of a sole arbitrator. Section 11 pertains
to the appointment of arbitrators. Section 11(2) provides that subject
to Section 11(6), parties “are free to agree on a procedure for
appointing the arbitrator or arbitrators.” Section 11 provides recourse
to the following contingencies if the parties fail to adhere to the
agreed procedure for the appointment of an arbitrator or arbitrators:
“(3) Failing any agreement referred to in sub-section (2),
in an arbitration with three arbitrators, each party shall
appoint one arbitrator, and the two appointed arbitrators
shall appoint the third arbitrator who shall act as the
presiding arbitrator;
(4) If the appointment procedure in sub-section (3) applies
and –
(a) a party fails to appoint an arbitrator within thirty days
from the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the

The choice of law other than the law of England and Wales or Northern Ireland as the applicable law in
respect of a matter provided for by a non-mandatory provision of this Part is equivalent to an agreement
making provision about that matter.
For this purpose an applicable law determined in accordance with the parties’ agreement, or which is
objectively determined in the absence of any express or implied choice, shall be treated as chosen by
the parties.”]
64 Lord Mustill and Stewart Boyd, Commercial Arbitration (2nd edn, Butterworths 2001) 23.
65 Ibid, at 57.
66 Section 10, Arbitration Act. [It reads:
“10. Number of arbitrators – (1) The parties are free to determine the number of arbitrators, provided that
such number shall not be an even number.
(2) Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of sole
arbitrator.”]
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third arbitrator within thirty days from the date of their
appointment,
The appointment shall be made, on an application of a
party, by the Supreme Court or, as the case may be, by
the High Court or any person or institution designated by
such Court.
(5) Failing any agreement referred to in sub-section (2),
in an arbitration with a sole arbitrator, if the parties fail to
agree on the arbitrator within thirty days from receipt of
a request by one party from the other party to so agree
the appointment shall be made, upon request of a party,
by the Supreme Court or, as the case may be, the High
Court or any person or institution designated by such Court.
(6) Where, under an appointment procedure agreed upon
by the parties, -
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach
an agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any
function entrusted to him or it under that procedure,
A party may request the Supreme Court or, as the case may
be, the High Court or any person or institution designated
by such Court to take necessary measure, unless the
agreement on the appointment procedure provides other
means for securing the appointment.”
35. In terms of the legislative scheme in Section 11, parties are free to
agree on a procedure for appointing the arbitrator or arbitrators. The
procedure for appointment agreed by the parties is subject to the
power of the Supreme Court or the High Courts under Section 11(6)
to appoint an arbitrator in cases where the parties do not agree on
a procedure or if the parties or the arbitrator fail to act following the
agreed procedure. Thus, Section 11(6) allows judicial involvement as
a default mechanism and not as an independent basis for choosing
the arbitrators irrespective of the parties’ agreement. Further, parties
can invoke Sections 11(3), 11(4) or 11(5), as the case may be, only
upon the failure of the agreed procedure for appointment of arbitrators.
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36. Party autonomy is the governing feature of the constitution of the
arbitral tribunal.67 The process of selecting a tribunal allows parties
to choose arbitrators with peculiar experience or expertise.68 Parties
are free to agree either on a specified individual or individuals as
arbitrators or on a procedure for the selection of arbitrators. Most
international arbitration statutes give primacy to the agreement of
parties for the constitution of the arbitral tribunal.69 The genesis of
this international consensus could be traced to the Geneva Protocol
on Arbitration Clauses 1923 which stated that the “arbitral procedure,
including the constitution of the arbitral tribunal, shall be governed
by the will of the parties and by the law of the country in whose
territory the arbitration takes place.”70
37. When appointing an arbitrator under Section 11, the appointing
authority has to ensure the appointment of independent and impartial
arbitrators in terms of Section 11(8):
“(8) The Supreme Court or, as the case may be, the High
Court or the person or institution designated by such Court
shall seek a disclosure in writing from the prospective
arbitrator in terms of sub-section (1) of section 12, and
have due regard to –
(a) any qualifications required for the arbitrator by the
agreement of the parties; and
(b) the contents of the disclosure and other considerations
as are likely to secure the appointment of an independent
and impartial arbitrator.”
38. Section 11(8) requires an appointing authority to have due regard to
the qualifications required for the arbitrator as agreed by the parties.
For instance, if the agreement only allows a professional of a particular
class such as a chartered accountant to serve as an arbitrator, the
appointing court should normally abide by this requirement. However,
while appointing an arbitrator following the agreed qualifications, the

67 UNCITRAL, 2012 Digest of Case Law on the Model Law on International Commercial Arbitration (2012) 59
68 Gary Born (supra) 1807
69 Fouchard, Gaillard and Goldman on International Commercial Arbitration (Emmanuel Gaillard and John
Savage, eds. 1999) 453.
70 Article 2, Protocol on Arbitration Clauses signed on 24 September 1923
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appointing court must also have due regard for considerations that are
likely to secure an independent and impartial tribunal. Section 11(8)
imposes a duty on the appointing court to ensure the appointment
of an independent and impartial arbitrator.
39. Section 11 is based on Article 11 of the Model Law. The draft text of
the Model Law contained a provision which invalidated an arbitration
agreement if it accorded a predominant position or unfair advantage
to one party in the appointment of the arbitrator. The provision is
extracted below:
“An arbitration agreement is invalid [if] [to the extent
that] it accords one of the parties a [predominant
position] [manifestly unfair advantage] with regard to the
appointment of arbitrators.”71
40. The Working Group decided to delete the above paragraph from the
draft article based on the following reasoning:
“90. The prevailing view, however, was to delete paragraph
(2) since (a) there was no real need for such a rule in
view of the fact that the few instances aimed at could
appropriately be dealt with by other provisions of the
model law (e.g., on challenge of arbitrator or setting aside
of award); (b) the wording was too vague and could thus
lead to controversy or dilatory tactics and, above all, to a
misinterpretation which could endanger well-established
and recognised appointment practices; (c) the legal
sanction, in particular the idea of partial invalidity, was
not sufficiently clear.
91. The Working Group, after deliberation, decided to delete
paragraph (2). That decision, however, should not be
understood as condoning practices where one party
had a clearly greater influence on the appointment
without good reasons.”72
(emphasis supplied)

71 A/CN.9/233 [17]
72 ibid
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41. The Working Group noted that other provisions in the Model Law
such as Article 12 (challenge to an arbitrator) and Article 34 (setting
aside of an arbitral award) implicitly restrict the autonomy of parties to
appoint arbitrators.73 Thus, an arbitrator may be subject to challenge
if the agreed procedure for appointment by the parties fails to adhere
to the standards of independence and impartiality prescribed under
Section 12. Gary Born also opines that the autonomy of parties to
select arbitrators is generally subject to certain limitations, including
mandatory requirements of equality and due process, impartiality
and independence, and capacity requirements.74

iv. Independence and impartiality of arbitrators
42. Section 12 provides the grounds to challenge the appointment of
arbitrators.75 Section 12(1) mandates that a person who has been
approached to be appointed as an arbitrator must disclose in writing
any circumstances that are likely to give rise to “justifiable doubts
as to his independence or impartiality.” The Fifth Schedule to the
Arbitration Act specifies circumstances that give rise to justifiable

73 Shahla Ali and Odysseas G Repousis, ‘Appointment of Arbitrators’ in UNCITRAL Model Law on
International Commercial Arbitration (Ilian Bantekas, et al eds, 2020)
74 Gary Born, International Commercial Arbitration (3rd edn.,) 1783; Also see Michael Pryles, ‘Limits to Party
Autonomy in Arbitral Procedure’ (2007) 24(3) Journal of International Arbitration 327-339.
75 Section 12, Arbitration Act. [It reads:
(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall
disclose in writing any circumstances,—
(a) such as the existence either direct or indirect, of any past or present relationship with or interest in
any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional
or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and
(b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability
to complete the entire arbitration within a period of twelve months.
Explanation 1.—The grounds stated in the Fifth Schedule shall guide in determining whether
circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an
arbitrator.
Explanation 2.—The disclosure shall be made by such person in the form specified in the Sixth Schedule.]
(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without
delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have
already been informed of them by him.
(3) An arbitrator may be challenged only if—
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality; or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated,
only for reasons of which he becomes aware after the appointment has been made.
(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties
or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh
Schedule shall be ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen between them, waive the applicability
of this sub-section by an express agreement in writing.]
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doubts as to the independence or impartiality of arbitrators.
Section 12(1) also mandates an arbitrator to disclose in writing any
circumstances that are likely to affect the ability to devote sufficient
time to the arbitration and in particular the ability to complete the
entire arbitration within twelve months. The duty of disclosure is a
continuing duty. Section 12(3) provides that an arbitrator may be
challenged only if: (i) circumstances exist that give rise to justifiable
doubts as to independence or impartiality; or (ii) the arbitrator does
not possess the qualifications agreed to by the parties.
43. Before the 2015 amendment, this Court generally upheld arbitrator
appointment clauses which gave one party “unfettered discretion”
to appoint a sole arbitrator.76 It was also held that there was no bar
under the Arbitration Act for an employee of a government or Public
Sector Undertaking,77 which is a party to an arbitration agreement,
to act as an arbitrator.78 However, it was observed that there could
be justifiable apprehension about the independence or impartiality of
an employee arbitrator who was the “controlling or dealing authority”
regarding the subject contract or if the arbitrator was a direct
subordinate to the officer whose decision was the subject-matter of
the dispute.79 The Court suggested phasing out arbitration clauses
providing for the appointment of serving officers as arbitrators to
“encourage professionalism in arbitration.”80

76 Datar Switchgears Ltd. v. Tata Finance Ltd. (2000) 8 SCC 151 [23] [“23. When parties have entered into
a contract and settled on a procedure, due importance has to be given to such procedure. Even though
rigor of the doctrine of “freedom of contract” has been whittled down by various labour and social welfare
legislation, still the court has to respect the terms of the contract entered into by parties and endeavour
to give importance and effect to it. When the party has not disputed the arbitration clause, normally he is
bound by it and obliged to comply with the procedure laid down under the said clause.”];
77 “PSUs”
78 Indian Oil Corporation Ltd. v. Raja Transport (P) Ltd. (2009) 8 SCC 520 [30]
79 Raja Transport (supra) [34]; Denel (Proprietary) Ltd. v. Bharat Electronics Ltd. (2010) 6 SCC 394 [21];
Bipromasz Birpron Trading Sa v. Bharat Electronics Ltd. (2012) 6 SCC 384 [50]
80 Union of India v. Singh Builders Syndicate (2009) 4 SCC 523 [25]. [“25. We find that a provision for serving
officers of one party being appointed as arbitrator(s) brings out considerable resistance from the other
party, when disputes arise. Having regard to the emphasis on independence and impartiality in the new
Act, Government, statutory authorities and government companies should think of phasing out arbitration
clauses providing for serving officers and encourage professionalism in arbitration.”]; See North Eastern
Railway v. Tripple Engg. Works, (2014) 9 SCC 288 [8]; Union of India v. UP State Bridge Corporation Ltd.
(2015) 2 SCC 52 [20] [“20. Therefore, where the Government assumes the authority and power to itself,
in one-sided arbitration clause, to appoint the arbitrators in the case of disputes, it should be more vigilant
and more responsible in choosing the arbitrators who are in a position to conduct the arbitral proceedings
in an efficient manner, without compromising with their other duties. Time has come when the appointing
authorities have to take call on such aspects failing which (as in the instant case), Courts are not powerless
to remedy such situations by springing into action and exercising their powers as contained in Section 11
of the Act to constitute an Arbitral Tribunal, so that interest of the other side is equally protected.”]
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44. The 2015 amendment mandates arbitrators to make disclosures
before their appointment in terms of the categories specified
under the Fifth Schedule. The Fifth Schedule prescribes thirty-four
categories that give rise to justifiable doubts as to the independence
or impartiality of arbitrators. These categories are classified as
follows: (i) the relationship of the arbitrator with the parties or
counsel; (ii) the relationship of the arbitrator to the dispute; (iii) the
arbitrator’s direct or indirect interest in the dispute; (iv) previous
services rendered by the arbitrator to one of the parties or other
involvement in the case; (v) relationship between an arbitrator and
another arbitrator or counsel; (vi) relationship between arbitrator
and party and others involved in the arbitration, and (vii) and other
circumstances.
45. The 2015 amendment has incorporated Section 12(5) to provide
for ineligibility of a person to be appointed as an arbitrator whose
relationship with the parties or counsel or the subject matter of the
dispute falls under any of the categories specified in the Seventh
Schedule. Section 12(5) reads thus:
“(5) Notwithstanding any prior agreement to the
contrary, any person whose relationship, with the
parties or counsel or the subject-matter of the dispute,
falls under any of the categories specified in the
Seventh Schedule shall be ineligible to be appointed as
an arbitrator:
Provided that parties may, subsequent to disputes having
arisen between them, waive the applicability of this
sub-section by an express agreement in writing.”
46. The Seventh Schedule to the Arbitration Act divides the specified
categories based on three factors: (i) arbitrator’s relationship with
the parties or counsel; (ii) the relationship of the arbitrator to the
dispute; and (iii) arbitrator’s direct or indirect interest in the dispute.
The categories that are relevant for the present reference are as
follows:
“1. The arbitrator is an employee, consultant, advisor or
has any other past or present business relationship with
a party.
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5. The arbitrator is a manager, director or part of the
management, or has a similar controlling influence, in
an affiliate of one of the parties if the affiliate is directly
involved in the matters in dispute in the arbitration.”
47. Section 12(5) overrides any prior procedure for appointing the
arbitrators agreed upon between the parties under Section 11(2)
due to the non obstante clause. However, the proviso to Section
12(5) allows parties to waive the applicability of that provision after
the dispute has arisen. The proviso secures “real and genuine party
autonomy” by allowing parties to waive the applicability of Section
12(5).81
48. Section 12(5) does not prescribe a method to challenge the
appointment of an ineligible person. Section 14 deals with the
termination of the mandate of an arbitrator who is unable to perform
their functions.82 A person who is ineligible to be appointed as an
arbitrator in terms of Section 12(5) becomes de jure unable to perform
functions according to Section 14. Resultantly, the mandate of such
an ineligible person gets automatically terminated and they are liable
to be substituted by another arbitrator under Section 14.83

81 Law Commission of India (supra) [“60. The Commission, however, feels that real and genuine party
autonomy must be respected, and, in certain situations, parties should be allowed to waive even the
categories of ineligibility as set in the proposed Fifth Schedule. This could be in situations of family
arbitrations or other arbitrations where a person commands the blind faith and trust of the parties to
the dispute, despite the existence of objective “justifiable doubts” regarding his independence and
impartiality. To deal with such situations, the Commission has proposed the proviso to section 12 (5),
where parties may, subsequent to disputes having arisen between them, waive the applicability of the
proposed section 12 (5) by an express agreement in writing. In all other cases, the general rule in the
proposed section 12 (5) must be followed.”]
82 Section 14, Arbitration Act. [It reads:
“14. Failure or impossibility to act – (1) The mandate of an arbitrator shall terminate and he shall be
substituted by another arbitrator, if –
(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without
undue delay; and
(b) he withdraws from his office or the parties agree to the termination of his mandate.
(2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1),
a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of
the mandate.
(3) If, under this section or sub-section of (3) of section 13, an arbitrator withdraws from his office or a
party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity
of any ground referred to in this section or sub-section (3) of section 12”]
83 Bharat Broadband Network Ltd. v. United Telecoms Ltd. (2019) 5 SCC 755 [17] [“17. The scheme of
Sections 12, 13 and 14, therefore, is that where an arbitrator makes a disclosure in writing which is likely
to give justifiable doubts as to his independence or impartiality, the appointment of such arbitrator may be
challenged under Sections 12(1) to 12(4) read with Section 13. However, where such person becomes
“ineligible” to be appointed as an arbitrator, there is no question of challenge to such arbitrator, before
such arbitrator. In such a case i.e. a case which falls under Section 12(5), Section 14(1)(a) of the Act
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49. The disclosure requirement helps prevent the appointment of an
unacceptable candidate.84 The duty of disclosure is a continuing
requirement to: (i) provide the information to any party who did not
obtain it before the arbitrator’s appointment; and (ii) secure information
about circumstances that only arise at a later stage of the arbitral
proceedings, that is, new business affiliations or share acquisitions.85
50. During the drafting of Article 12 of the Model Law, proposals were
mooted to provide specific circumstances or grounds for challenging
the appointment of arbitrators. The Secretariat noted that instead
of prescribing a list of all the possible grounds of challenge, an
alternative would be to prescribe “a general formula such as
“circumstances giving rise to justifiable doubts as to the arbitrator’s
impartiality or independence.””86 The Working Group did not set forth
any comprehensive understanding of the meaning of the standard
for challenge included under Article 12.87 It acknowledged that the
general formula is exhaustive and will include most of the grounds of
challenge set forth under national laws.88 According to the Working
Group, the grounds of challenge under national law applicable to
judges, such as a financial interest or previous involvement in the
subject matter or a certain relation to one of the parties, could apply
to arbitrators.89
51. Section 13 prescribes the procedure for challenging an arbitrator in
terms of Section 12(3).90 Section 13(1) provides that the parties are

gets attracted inasmuch as the arbitrator becomes, as a matter of law (i.e. de jure), unable to perform
his functions under Section 12(5), being ineligible to be appointed as an arbitrator. This being so, his
mandate automatically terminates, and he shall then be substituted by another arbitrator under Section
14(1) itself.”]
84 A/CN.9/264, page 30
85 Ibid.
86 Report of the Secretary-General: possible features of a model law on international commercial arbitration,
A/CN.9/207, [65].
87 Holtzmann and Neuhaus (supra) 388
88 A/CN.9/264, page 31. [It reads:
“4. Paragraph (2), like article 10(1) of the UNCITRAL Arbitration Rules, adopts a general formula for
the grounds on which an arbitrator may be challenged. This seems preferable to listing all possible
connections and other relevant situations. As indicated by the word “only”, the grounds for challenge
referred to here are exhaustive. Although reliance on any specific reason listed in a national law (often
applicable to judges and arbitrators alike) is precluded, it is submitted that it would be difficult to find any
such reason which would not be covered by the general formula.”]
89 Report of the Secretary-General: possible features of a model law on international commercial arbitration,
A/CN.9/207, [65]
90 Section 13, Arbitration Act. [It reads:
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free to agree on a procedure for challenging an arbitrator. If the parties
fail to agree on a procedure, the arbitral tribunal shall decide on the
challenge. In case the challenge to the arbitrator is not successful,
the arbitral tribunal shall continue with the arbitral proceedings and
make an arbitral award. A party may later make an application for
setting aside such an arbitral award under Section 34.

v. Equality in the arbitral proceedings
52. Chapter V of the Arbitration Act deals with the ‘conduct of arbitral
proceedings.’ Section 18 provides that the parties “shall be treated
with equality and each party shall be given a full opportunity to present
his case.” Section 18 establishes two principles: equal treatment
of the parties and a right to a fair hearing. This provision has been
referred to as the “due process clause of arbitration.”91
53. Section 18 is based on Article 18 of the Model Law. Article 18
was initially paragraph 3 of Article 19 dealing with the freedom of
parties to determine the rules of procedure. It was later formed into
a separate article considering its overall importance. The Working
Group stated that the freedom of parties is subject to mandatory
provisions including the then paragraph 3 of Article 19:
“3. The freedom of the parties is subject only to the
provisions of the model law, that is, to its mandatory
provisions. The most fundamental of such provisions,
from which the parties may not derogate, is the one
contained in paragraph (3). Other such provisions
concerning the conduct of the proceedings or the making

“13. Challenge procedure – (1) Subject to sub-section (4), the parties are free to agree on a procedure
for challenging an arbitrator.
(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator
shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming
aware of any circumstance referred to in sub-section (3) of section 12, send a written statement of the
reasons for the challenge to the arbitral tribunal.
(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party
agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-
section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an
arbitral award.
(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make
an application for setting aside such an arbitral award in accordance with section 34.
(6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may
decide as to whether the arbitrator who is challenged is entitled to any fees.”]
91 Holtzmann and Neuhaus (supra) 550.
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of the award are contained in articles 23(1), 24(2)-(4), 27,
30(2), 31(1), (3), (4), 32 and 33(1), (2), (4), (5).”
(emphasis supplied)

54. Ultimately, paragraph 3 of Article 19 was placed in a separate article
in the form of Article 18. This was meant to distinguish two distinct
issues: party autonomy to determine rules of procedure and fairness
of arbitral proceedings.92 Moreover, the separation was meant to
emphasise the importance of procedural fairness over the autonomy
of parties to determine procedural rules.
55. Article 18 constitutes a fundamental principle that is “applicable to
the entire arbitral proceedings.”93 The Working Group has also stated
that the principles of equality and fairness “should be observed not
only by the arbitral tribunal but also by the parties when laying down
any rules of procedure.”94 It was the understanding of the Working
Group that the principle of equality of parties applies to arbitral
proceedings in general, including aspects such as the composition
of arbitral tribunal.95 Article 18 also operates as a limitation on Article
19 which provides broad autonomy to both the parties and, in the
absence of an arbitration agreement, to the arbitral tribunal when
determining the procedure to be followed in conducting the arbitral
proceedings.96 It imposes a duty on the arbitral tribunal to ensure
fairness in the arbitral process.

vi. Public-private arbitration
56. Private law is a part of common law which involves relationships
between individuals by way of contract or tort.97 The demands of the
modern market economy require the State to contract out certain

92 Ilias Bantekas, Equal Treatment of Parties in Ilias Bantekas, et al (eds) UNCITRAL Model Law on
International Commercial Arbitration (2020, CUP) 524
93 Report of the United Nations Commission on International Trade Law on the work of its eighteenth
session (3-21 June 1985) Supplement No. 17 (A/40/17) [176].
94 A/CN.9/246 [62]
95 Holtzmann and Neuhaus (supra) 552. [It was observed by the Secretariat that: “It had always been the
understanding of the Working Group … that the fundamental principle enunciated in article 19(3) [Article 18
in the final text] would apply to arbitral proceedings in general; it would thus govern all provisions in chapter
V and other aspects, such as the composition of the arbitral tribunal, not directly regulated therein.”]
96 Holtzmann and Neuhaus (supra) 551
97 K K Saksena v. International Commission on Irrigation & Drainage (2015) 4 SCC 670 [43]
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public tasks to private entities. The procurement of goods and services
is among the most common forms of government contracting with
private providers.98 Indian law does not provide a special regime
governing contracts by public authorities. Generally, the resolution
of disputes arising out of the contractual terms of a public-private
contract is subject to ordinary civil law remedies.99 Arbitration is one
of the preferred private dispute resolution mechanisms adopted in
public-private contracts.
57. An arbitration involving a company owned or controlled by government
would likely involve public interest, considering the impact of an
arbitral award on public finances. However, the Arbitration Act does
not make a distinction between public-private arbitrations and private
arbitrations. This lack of differentiation also extends to other aspects of
arbitration including appointment of arbitrators, conduct of arbitration
proceedings, and setting aside and enforcement of arbitral awards.100
Since the grounds for setting aside an arbitral award have been
narrowly framed, the thrust of this privately ordered legal system is
on the decision made by the arbitral tribunal. Moreover, the Arbitration
Act mandates the arbitration proceedings to be conducted following
two main principles: (i) equality of parties; and (ii) independence and
impartiality of arbitral proceedings.
58. In Pam Developments Private Limited v. State of West Bengal,101
the arbitrator made an award in favour of the contractor. When
the contractor sought to enforce the award, the State government
obtained a stay by relying on Order XXVII Rule 8-A of the Code of
Civil Procedure 1908.102 This Court held that since the Arbitration Act
is a self-contained code, the provisions of the CPC “will apply only
insofar as the same are not inconsistent with the spirit and provisions
of the Arbitration Act.” Noting that no special treatment can be given
to the government under the Arbitration Act, the Court observed:
“26. Arbitration proceedings are essentially alternate
dispute redressal system meant for early/quick resolution of

98 Jody Freeman, ‘The Contracting State’ (2000) 28(1) Florida State University Law Review 155
99 Subodh Kumar Singh Rathour v. Chief Executive Officer, 2024 SCC OnLine SC 1682
100 Stavros Brekoulakis and Margaret Devaney, ‘Public-private arbitration and the public interest under
English law’ (2017) 80(1) Modern Law Review 22, 30.
101 (2019) 8 SCC 112
102 “CPC”
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disputes and in case a money decree — award as passed
by the arbitrator against the Government is allowed to be
automatically stayed, the very purpose of quick resolution
of dispute through arbitration would be defeated as the
decree-holder would be fully deprived of the fruits of the
award on mere filing of objection under Section 34 of the
Arbitration Act. The Arbitration Act is a special Act which
provides for quick resolution of disputes between the
parties and Section 18 of the Act makes it clear that
the parties shall be treated with equality. Once the Act
mandates so, there cannot be any special treatment
given to the Government as a party. As such, under
the scheme of the Arbitration Act, no distinction is
made nor any differential treatment is to be given to
the Government, while considering an application for
grant of stay of a money decree in proceedings under
Section 34 of the Arbitration Act. As we have already
mentioned above, the reference to CPC in Section 36 of
the Arbitration Act is only to guide the court as to what
conditions can be imposed, and the same have to be
consistent with the provisions of the Arbitration Act.”
(emphasis supplied)

Therefore, the Arbitration Act does not provide different or special
treatment to the government in arbitrations by or against the
government.103

E. The principle of equality applies at the stage of appointment
of arbitrators

i. Arbitration as a quasi-judicial function
59. According to well-established legal principles, an act of a statutory
authority will be a quasi-judicial if: (i) the authority is empowered

103 Pam Developments Pvt Ltd (supra) [27-28] [“28. Section 36 of the Arbitration Act also does not provide
for any special treatment to the Government while dealing with grant of stay in an application under
proceedings of Section 34 of the Arbitration Act. Keeping the aforesaid in consideration and also the
provisions of Section 18 providing for equal treatment of parties, it would, in our view, make it clear that
there is no exceptional treatment to be given to the Government while considering the application for stay
under Section 36 filed by the Government in proceedings under Section 34 of the Arbitration Act.”]
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under a statute; (ii) the mandate is to decide disputes arising out of
a claim made by one party which is opposed by another party; and
(iii) the body which decides has to determine the rights of contesting
parties who are opposed to each other.104 A quasi-judicial function
is required to be exercised judicially, that is, following the principles
of natural justice because of its impact on the rights of persons
affected.105 In Jaswant Sugar Mills Ltd. v. Lakshmi Chand,106 a
Constitution Bench has identified the following criteria to determine
whether an act is judicial:
“(1) it is in substance a determination upon investigation of
a question by the application objective standards to facts
found in the light of pre-existing legal rules;
(2) it declares rights or imposes upon parties obligations
affecting their civil rights; and
(3) that the investigation is subject to certain procedural
attributes contemplating an opportunity of presenting
its case to a party, ascertainment of facts by means of
evidence if a dispute be on questions of fact, and if the
dispute be on question of law on the presentation of legal
argument, and a decision resulting in the disposal of the
matter on findings based upon those questions of law
and fact.”
60. An arbitrator’s relationship with parties is contractual. The rights and
obligations of an arbitrator are principally the result of the contractual
relations with the parties.107 However, the position under common
law is that the rights and duties of an arbitrator are derived from a
conjunction of contract and quasi-judicial status granted by national
laws. In Norjarl v. Hyundai Heavy Industries, Lord Browne-Wilkinson
observed that it is impossible to distinguish contractual matters

104 Province of Bombay v. Khushaldas Advani, 1950 SCC 551. [Justice S R Das (as the learned Chief
Justice then was) observed: 80.1.(i) that if a statute empowers an authority, not being a court in the
ordinary sense, to decide disputes arising out of a claim made by one party under the statute which
claim is opposed by another party and to determine the respective rights of the contesting parties who are
opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the
contrary it is the duty of the authority to act judicially and the decision of the authority is a quasi-judicial
act;
105 Airports Economic Regulatory Authority of India v. Delhi International Airport Limited, 2024 INSC 792 [37]
106 1962 SCC OnLine SC 20 [13]
107 Gary Born (supra) 2111
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from those of quasi-judicial status.108 Similarly, in ONGC v. Afcons
Gunanusa JV, this Court recognized that the rights and duties of
arbitrators flow from: (i) the national laws governing arbitration which
give a quasi-judicial status to arbitrators wheres they have to act
as impartial adjudicators; and (ii) the arbitrator’s contract with the
parties which governs many aspects of the arbitrator-party relationship
including remuneration, confidentiality, and timelines for completion
of arbitral proceedings.109
61. An arbitral tribunal performs a quasi-judicial function because it
substantially determines the rights and liabilities of competing parties
through adjudicative means.110 The tribunal is generally required to
arrive at decisions or awards based on procedural and substantive
law. The Arbitration Act allows flexibility to parties to select the
procedural and substantive law to be followed by the arbitral tribunal.
During the arbitration process, the arbitral tribunal generally meets
at a place agreed upon by the parties, considers the statement of
claim and defence, conducts oral hearings, and may appoint experts.
Thus, arbitral tribunals act judicially to adjudicate the rights of parties.
62. The Arbitration Act is a self-contained code.111 The legal framework
contained under the Arbitration Act and the Contract Act recognises
and enforces the contractual intention of parties to entrust an
arbitral tribunal with the authority to settle their disputes. Section 8
of the Arbitration Act mandates judicial authorities to refer parties
to arbitration where there is an arbitration agreement. The other
provisions of the Arbitration Act are also geared towards ensuring
minimal judicial interference112 in arbitral proceedings and recognizing
the competence of the arbitral tribunals to rule on their jurisdiction.113
63. Although the Arbitration Act recognizes the autonomy of parties to
decide on all aspects of arbitration, it also lays down a procedural

108 K/S Norjarl A/S v. Hyundai Heavy Industries Co. Ltd., [1992] QB 863 [Lord Browne-Wilkinson in his
opinion observed that it is “impossible to divorce the contractual and status considerations: in truth the
arbitrator’s rights and duties flow from the conjunction of those two elements.”]
109 ONGC Ltd. v. Afcons Gunanusa JV (2024) 4 SCC 481 [102]
110 Srei Infrastructure Finance Ltd. v. Tuff Drilling Private Limited (2018) 11 SCC 470 [14]
111 In re Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the
Indian Stamp Act 1899, 2023 INSC 1066 [85]
112 Section 5, Arbitration Act
113 Section 16, Arbitration Act
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framework to regulate the composition of the arbitral tribunal and
conduct of arbitral proceedings. The incorporation of Section 12(5)
is a recognition of the well-established principle that quasi-judicial
proceedings should be conducted consistent with the principles of
natural justice. Section 18 serves as a guide for arbitral tribunals to
follow the principles of equality and fairness during the conduct of
arbitral proceedings. Thus, the Arbitration Act requires the arbitral
tribunals to act judicially in determining disputes between parties.114
64. Since arbitral proceedings have “trappings of a court”, the law requires
arbitral tribunals to act objectively and “exercise their discretion in
a judicial manner, without caprice, and according to the general
principles of law and rules of natural justice.”115 An arbitral award can
be set aside if the composition of the arbitral tribunal or the arbitral
procedure violates the mandatory provisions of the Arbitration Act,
including Sections 12 and 18. Thus, the Arbitration Act emphasizes
that the substance of the law cannot be divorced from the procedure.
65. Section 31 mandates that an award made by an arbitrator shall
be in writing and signed by all members of the arbitral tribunal.116
The provision further provides that an arbitral award shall state the
reasons upon which it is based, unless the parties have agreed
that no reasons are to be given. This provision is consistent with
the principle that a quasi-judicial authority must generally record its
reasons in support of the order it makes.117 Further, the decision
rendered by an arbitral tribunal is binding and enforceable “in the
same manner as if it were a decree of the court.”118
66. Arbitral tribunals serve as effective alternatives to traditional justice
dispensing mechanisms. The purpose of arbitral tribunals is to be
expeditious where the law is slow, cheap where the law is costly,
simple where the law is technical, and a peace-maker instead of

114 Engineering Mazdoor Sabha v. Hind Cycles Ltd., 1962 SCC OnLine SC 134 [5]; Dewan Singh v. Champat
Singh (1969) 3 SCC 447 [9]
115 Grindlays Bank Ltd. v. Central Govt. Industrial Tribunal, 1980 Supp SCC 420 [8]
116 Section 31, Arbitration Act
117 Siemens Engg. & Mfg. Co. of India Ltd. v. Union of India (1976) 2 SCC 981.
118 Section 36, Arbitration Act. [It reads:
36. Enforcement (1) Where the time for making an application to set aside the arbitral award under
section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced
in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner
as if it were a decree of the court.”]
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a stirrer up of strife.119 Arbitral tribunals can inspire confidence in
their adjudicatory process by conducting fair and impartial hearings
and providing sufficient and cogent reasons for their decisions.120
Given the adjudicatory functions performed by arbitral tribunals, the
decisions which emanate from them must be grounded in a process
that is independent and impartial.

ii. Equality applies at the stage of appointment of arbitrators
67. Section 18 contains the principle of natural justice to give full
opportunity to parties to present their case.121 In Union of India v.
Vedanta Ltd., Justice Indu Malhotra, writing for a three Judge Bench,
observed that the “[f]air and equal treatment of the parties is a non-
derogable and mandatory provision, on which the entire edifice of
the alternate dispute resolution mechanism is based.”122 The purpose
of Section 18 is to give the arbitral process a semblance of judicial
proceedings by infusing the principles of equality and fairness.123
The theoretical basis for this understanding stems from the fact that
arbitrators are authorities vested with powers to resolve disputes
under the law.124
68. The first part of Section 18 provides that “parties shall be treated with
equality.” The broad nature of the prescription has to be complied
with not only by arbitral tribunals, but also by parties while giving
expression to party autonomy. The principle has to be followed in
all procedural contexts of arbitral proceedings, including the stage

119 Redfern and Hunter on International Arbitration (7th edition, 2022) 3
120 Siemens Engg. (supra) [6]. [6. […] If courts of law are to be replaced by administrative authorities and
tribunals, as indeed, in some kinds of cases, with the proliferation of Administrative Law, they may have
to be so replaced, it is essential that administrative authorities and tribunals should accord fair and
proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit
reasons in support of the orders made by them. Then alone administrative authorities and tribunals
exercising quasi-judicial function will be able to justify their existence and carry credibility with the people
by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support
of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must
inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence
of compliance with it would not satisfy the requirement of law.]
121 Associate Builders v. DDA (2015) 3 SCC 49 [30]; Srei Infrastructure Finance Ltd. v. Tuff Drilling (P) Ltd.
(2018) 11 SCC 470 [16];
122 (2020) 10 SCC 1 [121]
123 Mustill and Boyd (supra) 58
124 Ilias Bantekas, ‘Equal treatment of parties in International Commercial Arbitration’ (2020) 69(4)
International & Comparative Law Quarterly 991, 992.
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of appointment of arbitrators.125 According to Peter Binder, the
principle of equal treatment of parties “means that no party may
be given preference in the arbitrator-selection process regardless
of how strong its bargaining power may be.”126 Countries such as
Germany,127 the Netherlands,128 Spain,129 and Estonia130 allow the
party that has been disadvantaged by an asymmetric appointment
clause to request courts to appoint an arbitrator or arbitrators. The
underlying principle is that the courts should not recognise and
enforce agreements that are unfair and biased.
69. In Indian Oil Corporation Ltd. v. Raja Transport (P) Ltd.,131 the
arbitration clause provided that any disputes arising between the
parties shall be referred to the “sole arbitration of the Director,
Marketing of the Corporation or of some officer of the Corporation
who may be nominated by the Director, Marketing.” It was contended
that an arbitration clause which allows one party to nominate its
officer as the sole arbitrator is against the principle of independence
and impartiality contained in Sections 11(8), 12, and 18. A two-Judge

125 Fouchard Gaillard Goldman on International Commercial Arbitration (Kluwer Law International, 1999)
465
126 Peter Binder, International Commercial Arbitration and Conciliations in UNCITRAL Model Law
Jurisdictions (2nd edn, Sweet and Maxwell 2005) 109
127 Section 1034(2) of the German Code of Civil Procedure 1877. [It reads:
“Section 1034 – Composition of the arbitral tribunal
(1) The parties are free to agree on the number of arbitrators. Absent such agreement, the number of
arbitrators is three.
(2) If the arbitration agreement grants preponderant rights to one party with regard to the composition of
the arbitral tribunal, thus placing the other party at a disadvantage, the latter party may request that the
court appoint the arbitrator or arbitrators in derogation from the appointment or appointments already
made or in derogation from the appointment procedure agreed. The application is to be made no later
than the expiry of two weeks after the party has become aware of the composition of the arbitral tribunal.
Section 1032(3) applies accordingly.”]
128 Article 1028(1) of the Dutch Code of Civil Procedure, 2003. [It reads:
“If the arbitration agreement gives one of the parties a privileged position with regard to the appointment
of the arbitrator or arbitrators, the other party may, despite the method of appointment laid down in
that agreement, request the Provisional Relief Judge of the District Court within one month after the
commencement of the arbitration to appoint the arbitrator or arbitrators. The other party shall be given
an opportunity to be heard. The provisions of Article 1027(4) shall apply accordingly.”]
129 Article 15(2), Spanish Arbitration Act 2003. [It reads:
“Article 15: Appointment of arbitrators
2. The parties are able to freely agree on the procedure for the appointment of the arbitrators, provided
that there is no violation of the principle of equal treatment.”]
130 Section 721(2), Estonian Code of Civil Procedure. [It reads:
“(2) If an arbitral agreement gives one of the parties, in the formation of an arbitral tribunal, an economic
or other advantage over the other party which is materially damaging to the other party, such party may
request that the court appoint one arbitrator or several arbitrators differently from the appointment which
already took place of from the rules of appointment agreed upon earlier.”]
131 (2009) 3 SCC (Civ) 460
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Bench of this Court rejected this contention by holding that Sections
11, 12, and 18 do not prohibit an employee of either of the parties
from acting as an arbitrator:
“32. Section 18 requires the arbitrator to treat the parties
with equality (that is to say without bias) and give each party
full opportunity to present his case. Nothing in Sections
11, 12, 18 or other provisions of the Act suggests that any
provision in an arbitration agreement, naming the arbitrator
will be invalid if such named arbitrator is an employee of
one of the parties to the arbitration agreement.”
Raja Transport (supra) was delivered before the 2015 amendment.
Section 12(5) now renders an employee of either of the parties
ineligible for being appointed as an arbitrator.
70. The concept of equality under Article 14 enshrines the principle
of equality of treatment. The basic principle underlying Article 14
is that the law must operate equally on all persons under like
circumstances.132 The implication of equal treatment in the context of
judicial adjudication is that “all litigants similarly situated are entitled
to avail themselves of the same procedural rights for relief, and for
defence with like protection and without discrimination.”133 In Union
of India v. Madras Bar Association,134 a Constitution Bench held
that the right to equality before the law and equal protection of laws
guaranteed by Article 14 of the Constitution includes a right to have
a person’s rights adjudicated by a forum which exercises judicial
power impartially and independently. Thus, the constitutional norm of
procedural equality is a necessary concomitant to a fair and impartial
adjudicatory process.
71. Arbitration is an adversarial system. It relies on the parties to produce
facts and evidence before the arbitral tribunal to render a decision.
Procedural equality is generally considered to contain the following
indicia: (i) equal capability of parties to produce facts and legal
arguments; (ii) equal opportunities to parties to present their case; and
(iii) neutrality of the adjudicator.135 In an adversarial process, formal

132 M Nagaraj v. Union of India (2006) 8 SCC 212 [106]
133 Shree Meenakshi Mills Ltd. v. A V Visvanatha Sastri (1954) 2 SCC 497 [6]
134 (2010) 11 SCC 1 [102]
135 Jerry L Mashaw, ‘The Supreme Court’s Due Process Calculus for Administrative Adjudication in
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equality is important because it helps secure legitimate adjudicative
outcomes and create a level playing field between parties.136
72. The defining characteristic of arbitration law (particularly ad hoc
arbitration) is that it allows freedom to the parties to select their
arbitrators. This is unlike domestic courts or tribunals where the
parties have to litigate their claims before a pre-selected and randomly
allocated Bench of judges. Section 11(2) of the Arbitration Act allows
parties to agree on a procedure for appointing the arbitrators. The
“procedure” contemplated under Section 11(2) is a set of actions
which parties undertake in their endeavour to appoint arbitrators to
adjudicate their dispute independently and impartially. Without formal
equality at the stage of appointment of arbitrators, a party may not
have an equal say in facilitating the appointment of an unbiased
arbitral tribunal. In a quasi-judicial process such as arbitration, the
appointment of an independent and impartial arbitrator ensures
procedural equality between parties during the arbitral proceedings.
This is also recognised under Section 11(8) which requires the
appointing authority to appoint independent and impartial arbitrators.
73. The 2015 amendment has introduced concrete standards of
impartiality and independence of arbitrators. One of the facets of
impartiality is procedural impartiality. Procedural impartiality implies
that the rules constitutive of the decision-making process must favour
neither party to the dispute or favour or inhibit both parties equally.137
Further, a procedurally impartial adjudication entails equal participation
of parties in all aspects of adjudication for the process to approach
legitimacy.138 Participation in the adjudicatory process is meaningless
for a party against whom the arbitrator is already prejudiced.139 Equal

Mathews v Eldridge: Three Factors in Search of a Theory of Value’ (1976) 44(28) University of Chicago
Law Review 29, 52. [Professor Mashaw states that “insofar as adjudicatory procedure is perceived
to be adversarial and dispute resolving, the degree to which procedures facilitate equal opportunities
for the adversaries to influence the decision may be the most important criterion by which fairness is
evaluated.”]
136 William B Rubenstein, ‘The Concept of Equality in Civil Procedure’ (2001-2002) 23 Cardozo Law Review
1865, 1890.
137 William Lucy, The Possibility of Impartiality (2005) 25(1) Oxford Journal of Legal Studies 3, 11
138 Ibid, at 22.
139 Lon Fueller, ‘The Forms and Limits of Adjudication’ (1978) 92(2) Harvard Law Review 353, 364.
[Professor Fueller states: “…whole analysis will derive from one simple proposition, namely, that the
distinguishing characteristic of adjudication lies in the fact that it confers on the affected party a peculiar
form of participation in the decision, that of presenting proofs and reasoned arguments for decision in his
favor. Whatever heightens the significance of this participation lifts the adjudication towards its optimum
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participation of parties in the process of appointment of arbitrators
ensures that both sides have an equal say in the establishment of
a genuinely independent and impartial arbitral process.
74. Under Sections 12(1) and 12(5), the Arbitration Act recognises
certain mandatory standards of independent and impartial tribunals.
The parties have to challenge the independence or impartiality of
the arbitrator or arbitrators in terms of Section 12(3) before the
same arbitral tribunal under Section 13.140 If the tribunal rejects the
challenge, it has to continue with the arbitral proceedings and make
an award. Such an award can always be challenged under Section
34. However, considerable time and expenses are incurred by the
parties by the time the award is set aside by the courts. Equal
participation of parties at the stage of the appointment of arbitrators
can thus obviate later challenges to arbitrators.
75. Independence and impartiality of arbitral proceedings and equality of
parties are concomitant principles. The independence and impartiality
of arbitral proceedings can be effectively enforced only if the parties
can participate equally at all stages of an arbitral process. Therefore,
the principle of equal treatment of parties applies at all stages of
arbitral proceedings, including the stage of the appointment of
arbitrators.

F. Nemo judex rule and the doctrine of bias
76. The principles of natural justice principally consist of two rules: (i) no
one shall be a judge in their own cause (nemo judex in causa sua);
and (ii) no decision shall be given against a party without affording a
reasonable opportunity of being heard.141 Adherence to the principles
of natural justice is a facet of procedural fairness. A decision made
by the State to the prejudice of a person must be after following the
basic rules of justice and fair play.142 The principles of natural justice
are applied because administrative or quasi-judicial proceedings

expression. Whatever destroys the meaning of that participation destroys the integrity of adjudication
itself. Thus, participation through reasoned argument loses its meaning if the arbiter of the dispute is
inaccessible to reason because he is insane, has been bribed, or is hopelessly prejudiced.”]
140 Chennai Metro Rail Ltd. v. Transtonnelstroy Afcons (JV) (2024) 6 SCC 211 [33]
141 Express Newspaper (P) Ltd. v. Union of India, 1958 SCC OnLine SC 23 [95]; A K Kraipak v. Union of
India (1969) 2 SCC 262 [20]; Mohinder Singh Gill v. Chief Election Commissioner (1978) 1 SCC 405 [52];
Swadeshi Cotton Mills v. Union of India (1981) 1 SCC 664 [27]
142 State of Orissa v. Binapani Dei, 1967 SCC OnLine SC 15 [9]
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can abridge or take away rights.143 Application of the principles of
natural justice prevents miscarriage of justice.144 Natural justice has
both an intrinsic and an instrumental function. The intrinsic function
values natural justice as an end in itself. It values natural justice as
an essential feature of fairness. In its instrumental element, natural
justice is viewed as a means to achieving just outcomes.
77. The principle of nemo judex is based on the precept that justice
should not only be done but manifestly and undoubtedly be seen
to be done.145 The principle of nemo judex applies to judicial,
quasi-judicial, and administrative proceedings.146 An adjudicator
should be disinterested and unbiased.147 A bias is a predisposition
to decide for or against one party, without proper regard to the true
merits of the dispute.148

i. Principles of natural justice
78. Article 14 of the Constitution provides that the State shall not deny
to any person equality before the law or equal protection of the
laws within the territory of India. Article 14 is founded on a sound
public policy to secure to all persons, citizens or non-citizens, the
equality of status and opportunity.149 One of the dimensions of the
equality jurisprudence evolved by this Court is that arbitrariness is
antithetical to equality.150 State action must be based on principles
of fairness and equality of treatment.151 Article 14 strikes at arbitrary
actions and ensures fairness and equality of treatment.152 Violation

143 Union of India v. K P Joseph (1973) 1 SCC 194 [10]
144 A K Kraipak (supra) [20]
145 The King v. Sussex Justices, [1924] 1 KB 256
146 J Mohapatra & Co. v. State of Orissa (1984) 4 SCC 103 [9]
147 A K Roy v. Union of India (1982) 1 SCC 271 [97];
148 Government of TN v. Munuswamy Mudaliar, 1988 Supp SCC 651 [12]
149 Basheshar Nath v. CIT, 1958 SCC OnLine SC 7; In Re Special Courts Bill, 1978; (1979) 1 SCC 380 [72].
[“72. […] (1) The first part of Article 14, which was adopted from the Irish Constitution, is a declaration
of equality of the civil rights of all persons within the territories of India. It enshrines a basic principle of
republicanism. The second part, which is a corollary of the first and is based on the last clause of the
first section of the Fourteenth Amendment of the American Constitution, enjoins that equal protection
shall be secured to all such persons in the enjoyment of their rights and liberties without discrimination
of favouritism. It is a pledge of the protection of equal laws, that is, laws that operate alike on all persons
under like circumstances.”]
150 State of Andhra Pradesh v. Nalla Raja Reddy, 1967 SCC OnLine SC 85 [24]
151 E P Royappa v. State of Tamil Nadu (1974) 4 SCC 3 [85]
152 Maneka Gandhi v. Union of India (1978) 1 SCC 248 [7]
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of the principles of natural justice results in arbitrariness.153 The
principle of reasonableness is an essential element of equality.154
Resultantly, a procedure contemplated under Article 21 must be
just, fair, and non-arbitrary. This Court has recognized that the
concept of reasonableness and non-arbitrariness pervades the entire
constitutional scheme.155
79. In Union of India v. Tulsiram Patel,156 a Constitution Bench of
this Court observed that violation of the principles of natural justice
results in arbitrariness:
“95. The principles of natural justice have thus come to be
recognized as being a part of the guarantee contained in
Article 14 because of the new and dynamic interpretation
given by this Court to the concept of equality which is the
subject-matter of that article. Shortly put, the syllogism
runs thus: violation of a rule of natural justice results in
arbitrariness which is the same as discrimination; where
discrimination is the result of State action, it is a violation
of Article 14: therefore, a violation of a principle of natural
justice by a State action is a violation of Article 14. Article
14, however, is not the sole repository of the principles of
natural justice. What it does is to guarantee that any law
or State action violating them will be struck down. The
principles of natural justice, however, apply not only to
legislation and State action but also where any tribunal,
authority or body of men, not coming within the definition
of State in Article 12, is charged with the duty of deciding
a matter. In such a case, the principles of natural justice
require that it must decide such matter fairly and impartially.”
80. Article 14 is an important facet of administrative, judicial and
quasi-judicial decision-making in India and demands fair play in
action.157 The object of observing the principles of natural justice
is to ensure that “every person whose rights are going to be

153 Satyavir Singh v. Union of India (1958) 4 SCC 252 [26]
154 Maneka Gandhi (supra) [7]
155 Ajay Hasia v. Khalid Mujib Sehravardi (1981) 1 SCC 722 [16]
156 (1985) 3 SCC 398
157 K L Tripathi v. State Bank of India (1984) 1 SCC 43 [32]
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affected by the proposed action gets a fair hearing.”158 The non-
observance of natural justice is itself a prejudice to any person
who has been denied justice depending upon the facts and
circumstances of each case.159 The principle of procedural fairness
is rooted in the principles of the rule of law and good governance.160
In Madhyamam Broadcasting Limited v. Union of India, 161
this Court held that the requirement of procedural fairness “holds an
inherent value in itself.” It was further observed:
“42. Inherent value in fair procedure: Fair procedure is
not only a means to the end of achieving a fair outcome
but is an end it itself. Fair procedure induces equality in
the proceedings. The proceedings ‘seem’ to be and are
seen to be fair.”
81. We recognize that arbitration is a private dispute settlement
mechanism. Yet, it is statutorily subject to the principles of equality
and fairness contained under the Arbitration Act. Section 18 of the
Arbitration Act mandates the equal treatment of parties and fairness in
arbitral proceedings as a mandatory principle governing the conduct
of arbitration. Thus, the resolution of disputes arising in a private
contractual relationship is subject to certain inherent principles which
a quasi-judicial body like an arbitral tribunal is required to adhere
to. Resolution of private disputes following the minimum statutory
standards of equality and fairness is essential not only in the interest
of justice, but also to uphold the integrity of arbitration in India.

ii. Doctrine of bias
82. In A K Kraipak v. Union of India,162 the Central Government
constituted a Special Selection Board for selecting officers to the
Indian Forest Service in the senior scale and junior scale from the
serving officers of the Forest department of the State of Jammu and
Kashmir. One of the members of the selection board was the officiating
Chief Conservator of Forests of Jammu and Kashmir. However, the

158 Bank of Patiala v. S K Sharma (1996) 3 SCC 364 [29]
159 S L Kapoor v. Jagmohan (1980) 4 SCC 379 [24]
160 Dharampal Satyapal Ltd. v. CCE (2015) 8 SCC 519 [26]
161 2023 SCC OnLine SC 366 [53]
162 (1969) 2 SCC 262
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Chief Conservator was also one of the candidates in contention for
the posts in the Indian Forest Service. Although the Chief Conservator
was not present when his name was considered for selection by the
board, he was present and participated in the deliberations when
the names of other candidates were being considered.
83. The Constitution Bench held that the real question was not whether
the Chief Conservator was biased, but whether there was a
reasonable ground for believing that he was likely to have been
biased. It was observed that a reasonable likelihood of bias has
to be determined by taking into consideration human probabilities
and the ordinary course of human conduct.163 It was observed that
the Chief Conservator had an interest in keeping his rivals out and
securing the position for himself. Further, it was held that the other
members of the selection board would have been influenced by the
Chief Conservator’s opinion about other candidates. Resultantly, this
Court struck down the entire selection made by the board.
84. In J Mohapatra v. State of Orissa,164 the State government had
constituted a committee to select books for general reading to be
kept in school and college libraries. For the years 1980 to 1982, the
committee selected and purchased books in a prescribed manner.
The list of books prepared by the committee was challenged before
the High Court. One of the grounds of challenge was that some of the
members of the committee were themselves authors of books that
were selected and purchased. The High Court rejected the challenge
on two grounds: (i) the decision of the committee was subject to
the approval of the State government; and (ii) the role played by an
individual member of the committee was insignificant and could not
have influenced the decision of the committee.

163 A K Kraipak (supra) [15]. [15. […] But then the very fact that he was a member of the selection board
must have had its own impact on the decision of the selection board. Further admittedly he participated
in the deliberations of the selection board when the claims of his rivals particularly that of Basu was
considered. He was also party to the preparation of the list of selected candidates in order of preference.
At every stage of his participation in the deliberations of the selection board there was a conflict between
his interest and duty. Under those circumstances it is difficult to believe that he could have been impartial.
The real question is not whether he was biased. It is difficult to prove the state of mind of a person.
Therefore what we have to see is whether there is reasonable ground for believing that he was likely
to have been biased. We agree with the learned Attorney General that a mere suspicion of bias is not
sufficient. There must be a reasonable likelihood of bias. In deciding the question of bias we have to take
into consideration human probabilities and ordinary course of human conduct. It was in the interest of
Naqishbund to keep out his rivals in order to secure his position from further challenge. Naturally he was
also interested in safeguarding his position while preparing the list of selected candidates.]
164 (1984) 4 SCC 103
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85. This Court observed that a person who has written a book that is
submitted for selection has an interest in the matter of selection. It
was further observed that there is a direct correlation between the
selection of books by the committee and an increase in sales of the
books. The increased sales resulted in increased royalties for the
authors. Therefore, it was held that an author benefits financially if
their book is selected by the committee. This Court further disagreed
with the finding of the High Court that the author-member had an
insignificant role in the book selection process, by observing:
“11. […] to say that such author-member is only one of the
members of the Assessment Sub-Committee is to overlook
the fact that the author-member can subtly influence the
minds of the other members against selecting books by
other authors in preference to his own. It can also be that
books by some of the other members may also have been
submitted for selection and there can be between them a
quid pro quo or, in other words, you see that my book is
selected and in return I will do the same for you. In either
case, when a book of an author-member comes up for
consideration, the other members would feel themselves
embarrassed in frankly discussing its merits. Such author-
member may also be a person holding a high official position
whom the other members may not want to displease. It
can be that the other members may not be influenced
by the fact that the book which they are considering for
approval was written by one of their members. Whether
they were so influenced or not is, however, a matter
impossible to determine. It is not, therefore, the actual
bias in favour of the author-member that is material
but the possibility of such bias.”
(emphasis supplied)

86. In J Mohapatra (supra), it was observed that a decision-maker who
is prejudiced can possibly influence the decision of the authority in
tangible and intangible ways. This Court recognized that the doctrine
of necessity serves as an exception to the nemo judex rule. An
adjudicator, who is subject to disqualification on the ground of bias
or interest in the matter which he has to decide, may be required
to adjudicate in three situations: (i) if there is no other person who
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is competent or authorized to adjudicate; (ii) if a quorum cannot be
formed without him; or (iii) if no other competent tribunal can be
constituted.
87. In Ashok Kumar Yadav v. State of Haryana,165 some members of
the selection committee of the Haryana Public Service Commission
were related to the candidates who appeared for the viva voce
examination. Although the members did not participate when their
relatives were being interviewed, they participated in the interviews
of other candidates. The court observed that the test “is not that
the decision is actually tainted with bias, but that the circumstances
are such as to create a reasonable apprehension in the mind of
others that there is a likelihood of bias affecting the decision.” The
Court observed that the nemo judex rule extends to all cases where
an independent mind has to be applied to arrive at a fair and just
decision between rival claims of parties. However, the court resorted
to the doctrine of necessity to hold that the decision of the state
Public Service Commission, being a constitutional authority, was
not vitiated.166
88. The principle governing the doctrine of bias is that a member of a
judicial body with a predisposition in favour of or against any party
to a dispute or whose position in relation to the subject matter or a
disputing party is such that a lack of impartiality would be assumed
to exist should not be a part of a tribunal composed to decide the
dispute.167 This principle is applicable to authorities who have to act
judicially in deciding rights and liabilities and bodies discharging
quasi-judicial functions. A quasi-judicial authority empowered to
decide a dispute between opposing parties “must be one without
bias towards one side or the other in the dispute.”168 A member of a

165 (1985) 4 SCC 417
166 Ashok Kumar Yadav (supra) [18]. [18. We do not think that the principle which requires that a member
of a Selection Committee whose close relative is appearing for selection should decline to become a
member of the Selection Committee or withdraw from it leaving it to the appointing authority to nominate
another person in his place, need be applied in case of a constitutional authority like the Public Service
Commission, whether Central or State. If a member of a Public Service Commission were to withdraw
altogether from the selection process on the ground that a close relative of his is appearing for selection,
no other person save a member can be substituted in his place. And it may sometimes happen that no
other member is available to take the place of such member and the functioning of the Public Service
Commission may be affected.]
167 Gullapalli Nageswara Rao v. State of A P, 1959 SCC OnLine SC 53 [6]; relied in Mineral Development
Ltd. v. State of Bihar, 1959 SCC OnLine SC 49 [10]
168 Gullapalli Nageswara Rao v. A P State Road Transport Corporation, 1958 SCC OnLine SC 49 [30]
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tribunal which is called upon to try issues in judicial or quasi-judicial
proceedings must act impartially, objectively, and without bias.169

iii. Test of real likelihood of bias

a. Automatic disqualification
89. Bias is generally classified under three heads: (i) legal interest, which
means a judge is “in such a position that a bias must be assumed”; (ii)
pecuniary interest; and (iii) personal bias.170 A pecuniary or proprietary
interest, however small, automatically disqualifies a person.171 A
person who has an interest in the outcome of an issue that is to
be resolved would be acting as a judge in their own cause.172 The
question is not whether a judge has some link with parties involved
in a cause before the judge but whether the outcome of that cause
could realistically affect the judge’s interest.173 This principle has
been authoritatively stated by the House of Lords in Dimes v. Grand
Junction Canal.174 In that case, the Lord Chancellor decreed in
favour of a canal company in which he held substantial shares. The
House of Lords observed that the principle that no person should be
judge in their own cause “is not to be confined to a cause in which
he is a party, but applies to a cause in which he has an interest.”175
90. In R v. Bow Street Metropolitan Stipendiary Magistrate, ex parte
Pinochet Ugarte (No. 2),176 the House of Lords held that the former
head of Chile was not immune from extradition to Spain for trial of
alleged crimes against humanity. Lord Hoffman was one of the five

169 Manak Lal v. Dr. Prem Chand Sighvi, 1957 SCC OnLine SC 10
170 G Sarana v. University of Lucknow (1976) 3 SCC 585 [12]; Union of India v. B N Jha (2003) 4 SCC 531
[28]
171 R v. Rand (1866) LR 1 QB 230, 232. [Blackburn J. observed that “[t]here is no doubt that any direct
pecuniary interest, however small, in the subject of inquiry, does disqualify a person from acting as a
judge in the matter.”]; R v. Camborne Justices, ex parte Pearce, [1955] 1 QB 41.
172 Dimes v. The Proprietors of the Grand Junction Canal (1852) 3 HLC 759; Locabail (UK) Ltd. v. Bayfield
Properties Ltd, [1999] EWCA Civ 3004
173 Locabail (supra) [8]
174 (1852) 3 HL Cas 759
175 Dimes (supra) 793. [Lord Campbell observed: “No one can suppose that Lord Cottenham [Lord
Chancellor] could be, in the remotest degree, influenced by the interest that he had in this concern; but,
my Lords, it is of the last importance that the maxim that no man is to be a judge in his own cause should
be held sacred. And that is not confined to a cause in which he is a party, but applies to a cause in which
he has an interest.”]
176 [1999] UKHL 1
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members who agreed with the majority. During the hearings, Amnesty
International,177 a human rights body, intervened and participated
in the proceedings. It came to light after the judgment that Lord
Hoffman was a director and chairman of Amnesty International
Charity Limited,178 which was wholly owned and controlled by AI.
Resultantly, the House of Lords set aside its previous decision and
directed a rehearing of the matter.
91. Lord Browne-Wilkinson observed that AI and AICL were all “parts
of an entity or movement” working in different fields to establish
that Pinochet was not immune from extradition as a former head
of State. This interest of the organizations was termed as a non-
pecuniary interest to achieve a particular result. The rationale of
automatic disqualification was held to extend to situations where a
judge’s decision will lead to the promotion of a cause in which the
judge is involved with one of the parties.179 In re Pinochet (supra)
extended automatic disqualification to situations where a judge has
an interest in the cause, which is being promoted by one of the
parties to the case.

b. Real likelihood of bias
92. The nemo judex rule may be applicable where a judge’s conduct or
circumstances give rise to an apprehension of bias. In such situations,
the judge does not have a financial or cause-based interest in the
outcome of the dispute but provides benefit to a party by failing to
be neutral and impartial. The determination of bias does not depend

177 “AI”
178 “AICL”
179 In re Pinochet (supra) [Lord Browne-Wilkinson held: “My Lords, in my judgment, although the cases have
all dealt with automatic disqualification on the grounds of pecuniary interest, there is no good reason in
principle for so limiting automatic disqualification. The rationale of the whole rule is that a man cannot be
a judge in his own cause. In civil litigation the matters in issue will normally have an economic impact;
therefore a judge is automatically disqualified if he stands to make a financial gain as a consequence of
his own decision of the case. But if, as in the present case, the matter at issue does not relate to money
or economic advantage but is concerned with the promotion of the cause, the rationale disqualifying a
judge applies just as much if the judge’s decision will lead to the promotion of a cause in which the judge
is involved together with one of the parties. Thus in my opinion if Lord Hoffmann had been a member of
AI he would have been automatically disqualified because of his non-pecuniary interest in establishing
that Senator Pinochet was not entitled to immunity.”]; Lord Hutton, in his concurring opinion observed:
“I am of opinion that there could be cases where the interest of the judge in the subject matter of the
proceedings arising from his strong commitment to some cause or belief or his association with a person
or body involved in the proceedings could shake public confidence in the administration of justice as
much as a shareholding (which might be small) in a public company involved in the litigation.”]
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upon actual proof of bias but whether there is a real possibility of
bias based on the facts and circumstances.
93. In R v. Sussex Justices,180 the applicant was charged with the
offence of dangerous driving, which involved a collision with another
vehicle. The prosecution brought a case against the applicant before
the Magistrate’s court. Simultaneously, the driver of the other vehicle
also instituted civil proceedings against the applicant. The solicitor
hired by the other driver in civil proceedings was also acting as the
Magistrate’s clerk in the criminal proceedings. At the conclusion of
the evidence before the Magistrate, the acting clerk retired with the
judges to their chambers. The Magistrate convicted the applicant
without consulting the clerk. In appeal, the Divisional Court quashed
the conviction. Lord Hewart CJ held that the clerk’s involvement
in the civil proceedings made him unfit in the circumstances to
serve as clerk to the Magistrate in the criminal matter. Lord Hewart
CJ observed that the question depended not upon what actually
was done but upon what might appear to be done and the judicial
proceedings will be vitiated if there is “even a suspicion that there
has been improper interference with the course of justice.”
94. Over the course of time, the English courts have preferred the test
of real likelihood to determine bias. In R v. Barnsley Licencing
Justices,181 Devlin LJ observed that “real likelihood” depends on
the impression that the court gets from the circumstances in which
the justices were sitting. However, in Metropolitan Properties
Company v. Lannon,182 Lord Denning expressed the test of the real
likelihood of bias as being whether a reasonable person would think it
“likely or probable” that a judge or member of a tribunal was biased.
95. In Regina v. Gough,183 the House of Lords observed that the
probability standard laid down by Lord Denning in Metropolitan

180 [1924] 1 KB 256
181 (1960) 2 Q.B. 187
182 [1968] EWCA Civ 5 [Lord Denning observed: “It brings home this point: in considering whether there was
a real likelihood of bias, the Court does not look at the mind of the Justice himself or at the mind of the
Chairman of the Tribunal, or whoever it may be, who sits in a judicial capacity. It does not look to see
if there was a real likelihood that he would, or did, in fact favour one side at the expense of the other.
The Court looks at the impression which would be given to other people. Even if he was as impartial as
could be, nevertheless if right-minded persons would think that, in the circumstances, there was a real
likelihood of bias on his part, then he should not sit.”]
183 [1993] UKHL 1
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Properties (supra) was “too rigorous a test.” It reconciled the real
likelihood of bias test by grounding it in terms of possibility rather
than the probability of bias. Therefore, it restated the test in terms
of the real danger of bias:
“[…] having ascertained the relevant circumstances, the
court should ask itself whether, having regard to those
circumstances, there was a real danger of bias on the part
of the relevant member of the tribunal in question, in the
sense that he might unfairly regard (or having regarded
with favour), or disfavour, the case of a party to the issue
under consideration by him.”
The House of Lords observed that the court “personifies the
reasonable man” to ascertain the relevant circumstances from the
available evidence. The real danger of the bias test was criticized
by courts in other jurisdictions such as Australia and South Africa
for emphasising the court’s view of the circumstances rather than
the public perception of the bias.184
96. In Locabail (UK) Ltd. v. Bayfield Properties Ltd.,185 the Court of
Appeal observed that the test of real danger of bias could reach the
same results as the test of real possibility of bias since the court
is taken to personify the reasonable man. It further listed a few
circumstances which might give rise to real danger of bias:
“By contrast, a real danger of bias might well be thought
to arise if there were personal friendship or animosity
between the judge and any member of the public involved
in the case; or if the judge were closely acquainted
with any member of the public involved in the case,
particularly if the credibility of that individual could be
significant in the decision of the case; or if, in a case
where the credibility of any individual were an issue to be
decided by the judge, he had in a previous case rejected
the evidence of that person in such outspoken terms as
to throw doubt on his ability to approach such person’s
evidence with an open mind on any later occasion; or if on

184 Webb v. The Queen (1994) 181 CLR 41.
185 [1999] EWCA Civ 3004 [25]
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any question at issue in the proceedings before him the
judge had expressed views, particularly in the course of
the hearing, in such extreme and unbalanced terms as to
throw doubt on his ability to try the issue with an objective
judicial mind; or if, for any other reason, there were real
ground for doubting the ability of the judge to ignore
extraneous considerations, prejudices and predilections
and bring an objective judgment to bear on the issues
before him.”
(emphasis supplied)

97. In re Medicaments and Related Classes of Goods (No. 2),186 the
Court of Appeal made a “modest adjustment” to the real danger of
bias test laid down in Gough (supra) by holding that the court must
determine whether the circumstances “would lead a fair-minded and
informed observer to conclude that there was a real possibility,
or a real danger, the two being the same, that the tribunal was
biased.” In Porter v. Magill,187 the House of Lords approved the
adjustment made to the real danger of bias test. Lord Craighead
stated the bias test thus:
“103. […] The question is whether the fair-minded and
informed observer, having considered the facts, would
conclude that there was a real possibility that the tribunal
was biased.”
98. The shift in the bias test in the UK has “at its core the need for the
confidence which must be inspired by the courts in a democratic
society.”188 In Lawal v. Northern Spirit Limited,189 Lord Bingham
observed that a “fair-minded and informed observer”190 will adopt a

186 [2001] 1 WLR 700
187 [2002] 2 AC 357
188 Lawal v. Northern Spirit Limited, [2003] UKHL 25 [14]
189 Northern Spirit Limited (supra) [14]
190 In Helow v. Secretary of State, [2008] UKHL 62. [Lord Hope of Craighead observed:
“2. The observer who is fair-minded is the sort of person who always reserves judgment on every point
until she has seen and fully understood both sides of the argument. She is not unduly sensitive or
suspicious, as Kirby J observed in Johnson v Johnson (2000) 201 CLR 488, 509, para 53. Her approach
must not be confused with that of the person who has brought the complaint. The “real possibility” test
ensures that there is this measure of detachment. The assumptions that the complainer makes are not
to be attributed to the observer unless they can be justified objectively. But she is not complacent either.
She knows that fairness requires that a judge must be, and must be seen to be, unbiased. She knows
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balanced approach and as “a reasonable member of the public is
neither complacent nor unduly sensitive or suspicious.” The above
discussion shows that the bias test has undergone significant
development in the UK over the last four decades. The current bias
test in the UK is the real possibility of a bias test.
99. The real likelihood of bias test has also been applied by the UK
Supreme Court in the case of arbitral bias. In Haliburton Company v.
Chubb Bermuda Insurance Ltd.,191 the issue before the UK Supreme
Court was whether or not the UK Arbitration Act imposed a legal
obligation on arbitrators to disclose facts and circumstances known
to the arbitrator which would give rise to justifiable doubts as to
their impartiality. Although the UK Arbitration Act does not expressly
impose a duty of disclosure on arbitrators or potential arbitrators,
the UK Supreme Court read the general duty under Section 33 of
the legislation. Section 33 requires an arbitrator to act fairly and
impartially in conducting arbitral proceedings.192 It was held that the
statutory duty of fairness and impartiality “gives rise to an implied
term in the contract between the arbitrator and the parties” to make
that disclosure. Hence, it was held a legal obligation to disclose is
encompassed within the statutory obligation of fairness unless the
parties have expressly or implicitly waived their right to disclosure.193

that judges, like anybody else, have their weaknesses. She will not shrink from the conclusion, if it can
be justified objectively, that things that they have said or done or associations that they have formed may
make it difficult for them to judge the case before them impartially.
3. Then there is the attribute that the observer is “informed”. It makes the point that, before she takes
a balanced approach to any information she is given, she will take the trouble to inform herself on all
matters that are relevant. She is the sort of person who takes the trouble to read the text of an article as
well as the headlines. She is able to put whatever she has read or seen into its overall social, political or
geographical context. She is fair-minded, so she will appreciate that the context forms an important part
of the material which she must consider before passing judgment.”]
191 [2020] UKSC 48 [52]
192 UK Arbitration Act, 1996. [It reads:
“33. General duty of the tribunal –
(1) The tribunal shall –
(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting
his case and dealing with that of his opponent, and
(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or
expense, so as to provide a fair means for the resolution of the matters falling to be determined.
(2) The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions
on matters of procedure and evidence and in the exercise of all other powers conferred on it.”]
193 Haliburton (supra) [78]. [“78. Unless there is a disclosure, the parties may often be unaware of matters
which could give rise to justifiable doubts about an arbitrator’s impartiality and entitle them to a remedy
from the court under section 24 of the 1996 Act. Those remedies are necessary in the public interest. A
legal obligation to disclose such matters is encompassed within the statutory obligation of fairness. It is
also essential corollary of the statutory obligation of impartiality: an arbitrator who knowingly fails to act in
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100. Recently, the UK Law Commission suggested that the ruling in
Haliburton (supra) has limitations because: (i) an arbitrator may
not owe a duty of disclosure to parties who may not have signed
the arbitration agreement (non-signatory parties); and (ii) a contract
of appointment cannot create a duty of disclosure before the
appointment of the arbitrator.194 Therefore, the UK Law Commission
has recommended codification of the duty of disclosure to ensure
that the duty applies at the pre-appointment stage.195 There are two
important distinctions between the position of law in India and the
UK: First, the UK Arbitration Act does not require an arbitrator to be
completely independent of the parties;196 and second, Section 12
of the Indian Arbitration Act already imposes a mandatory duty of
disclosure on potential arbitrators.
101. Other jurisdictions also apply a real possibility of bias or reasonable
apprehension of bias test to determine judicial and arbitral bias.
Article 6 of the European Convention on Human Rights states that
“everyone is entitled to a fair and public hearing within a reasonable
time by an independent and impartial tribunal established by law” in
the determination of their civil rights and obligations. The European
Court of Human Rights197 determines the existence of impartiality for
Article 6 by applying (i) a subjective test which considers whether
the judge holds any personal prejudice or bias in a given case; and
(ii) an objective test to ascertain whether the tribunal’s composition
offers significant guarantees to exclude any legitimate doubt in
respect of its impartiality.198
102. In the vast majority of cases, the ECtHR has focused on the objective
test, which requires the court to determine “whether, quite apart

a way which fairness requires to the potential detriment of a party is guilty of partiality. Unless the parties
have expressly or implicitly waived their right to disclosure, such disclosure is not just a question of best
practice but is a matter of legal obligation.”]
194 UK Law Commission, Review of the Arbitration Act 1996: Final report and Bill, Law Com No. 413 (2023) 19
195 ibid
196 UK Law Commission (supra) [The Law Commission observed: “3.18 We continue to think that complete
independence is not possible. This is so especially where arbitrators are drawn from a small pool with
specialist expertise, or where they are expected to have immersive experience in a particular area of
activity. Any duty of independence might involve defining a required level of independence, which in turn
would be impossible, or it might involve defining independence in terms of impartiality after all, which we
note is the approach of some foreign legislation.”]
197 “ECtHR”
198 Nicholas v. Cyprus, Application No. 63246/10 [49]
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from the judge’s conduct, there are ascertainable facts which may
raise doubts as to his or her impartiality.”199 The objective test takes
into consideration hierarchical and other links between a judge and
the parties to the proceedings. The ECtHR’s approach, therefore,
emphasizes determining “whether the relationship in question is of
such a nature and degrees as to indicate a lack of impartiality on the
part of the tribunal.”200 The real possibility of bias test as evolved by
the English courts is in alignment with the bias test evolved by the
ECHR.201 The ECtHR has held that an arbitration agreement does
not constitute a waiver of the fair procedure guarantees contained
in Article 6, particularly the right to have disputes settled by an
independent and impartial tribunal.202

iv. Indian approach to the bias test
103. This Court has consistently adopted the real likelihood test to
determine bias.203 In Manak Lal v. Dr. Prem Chand Singhvi,204
Justice P B Gajendragadkar (as the learned Chief Justice then was)
observed that the test to determine bias is whether a litigant could
reasonably apprehend that a bias attributable to a member of the
tribunal might have operated against him in the final decision. In
S Parthasarathi v. State of AP,205 Justice KK Mathew observed
that the test of likelihood of bias is based on the reasonable
apprehension of a reasonable man fully cognizant of the facts. The
learned Judge further observed that the question of whether the real
likelihood of bias exists is to be determined on the probabilities to
be inferred from the objective circumstances by a court or based
on impressions that might reasonably be left on the minds of the
aggrieved party or the public at large.206 The legal development under

199 Morice v. France, Application No. 29369/10
200 Micallef v. Malta, Application No. 17056/06; Morice (supra) [77];
201 See William Wade and Christopher Forsyth, Administrative Law (12th edn, Oxford University Press) 371
202 BEG S.P.A. v. Italy, Application No. 5312/11 (20 May 2021)
203 Rattan Lal Sharma v. Managing Committee, Dr. Hari Ram (Co-Education) Higher Secondary School
(1993) 4 SCC 10 [11]
204 1957 SCC OnLine SC 10 [4]
205 (1974) 3 SCC 459 [14]
206 S Parthasarathi (supra) [16]. [It was observed: “16. The tests of “real likelihood” and “reasonable
suspicion” are really inconsistent with each other. We think that the reviewing authority must make a
determination on the basis of the whole evidence before it, whether a reasonable man would in the
circumstances infer that there is real likelihood of bias. The Court must look at the impression which
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English law about the real danger of bias test was also accepted by
this Court.
104. In Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant,207 this
Court observed that the real danger of bias is essentially based on
deciding bias based on the facts and circumstances of the individual
case.208 In M P Special Police Establishment v. State of M P,209 a
Constitution Bench referred with approval to Kumaon Mandal Vikas
Nigam Ltd. (supra).
105. Subsequently, the decision in P D Dinakaran v. Judges Inquiry
Committee,210 traced the evolution of the bias test under Indian
jurisprudence to state the following principles:
“71. […] To disqualify a person from adjudicating on the
ground of interest in the subject-matter of lis, the test
of real likelihood of the bias is to be applied. In other
words, one has to enquire as to whether there is real
danger of bias on the part of the person against whom
such apprehension is expressed in the sense that
he might favour or disfavour a party. In each case,
the court has to consider whether a fair-minded and
informed person, having considered all the facts would
reasonably apprehend that the Judge would not act

other people have. This follows from the principle that justice must not only be done but seen to be
done. If right minded persons would think that there is real likelihood of bias on the part of an inquiring
officer, he must not conduct the enquiry; nevertheless, there must be a real likelihood of bias. Surmise
or conjecture would not be enough. There must exist circumstances from which reasonable men would
think it probable or likely that the inquiring officer will be prejudiced against the delinquent. The Court will
not inquire whether he was really prejudiced. If a reasonable man would think on the basis of the existing
circumstances that he is likely to be prejudiced, that is sufficient to quash the decision.”]
207 (2001) 1 SCC 182
208 Kumaon Mandal Vikas Nigam (supra) [35] [“35. The test, therefore, is as to whether a mere apprehension
of bias or there being a real danger of bias and it is on this score that the surrounding circumstances
must and ought to be collated and necessary conclusion drawn therefrom — in the event however
the conclusion is otherwise inescapable that there is existing a real danger of bias, the administrative
action cannot be sustained: If on the other hand, the allegations pertaining to bias is rather fanciful and
otherwise to avoid a particular court, Tribunal or authority, question of declaring them to be unsustainable
would not arise. The requirement is availability of positive and cogent evidence and it is in this context
that we do record our concurrence with the view expressed by the Court of Appeal in Locabail case.”]
209 (2004) 8 SCC 788 [14. […] The question in such cases would not be whether they would be biased. The
question would be whether there is reasonable ground for believing that there is likelihood of apparent
bias. Actual bias only would lead to automatic disqualification where the decision-maker is shown to have
an interest in the outcome of the case. The principle of real likelihood of bias has now taken a tilt to “real
danger of bias” and “suspicion of bias”.]
210 (2011) 8 SCC 380
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impartially. To put it differently, the test would be whether
a reasonably intelligent man fully apprised of all the facts
would have a serious apprehension of bias.”
(emphasis supplied)

106. In Supreme Court Advocates-on-Record Association v. Union of
India,211 Justice J Chelameswar, writing for himself and Justice A K
Goel, summarized the following principles of the bias test in India:
“25.1. If a Judge has a financial interest in the outcome
of a case, he is automatically disqualified from hearing
the case.
25.2. In cases where the interest of the Judge in the case
is other than financial, then the disqualification is not
automatic but an enquiry is required whether the existence
of such an interest disqualifies the Judge tested in the light
of either on the principle of “real danger” or “reasonable
apprehension” of bias.
25.3. The Pinochet case added a new category i.e. that
the Judge is automatically disqualified from hearing a case
where the Judge is interested in a cause which is being
promoted by one of the parties to the case.”
107. Although there have been vacillations about the test in England,
the Indian courts have been largely consistent in their approach by
applying the test of real likelihood of bias or reasonable apprehension
of bias. Recently, the court has used the real danger of bias test.
However, the above discussion shows that there is no significant
difference between the real danger of bias test and the real possibility
of bias test if the question of bias is inferred from the perspective of
a reasonable or fair-minded person.
108. This Court has consistently applied the test of real likelihood of bias
to determine arbitrator bias. In HRD Corporation v. GAIL (India),212
the Court explained the application of the real likelihood of bias test
to determine the issue of arbitrator bias thus:

211 (2016) 5 SCC 808 [25]
212 (2018) 12 SCC 471 [20]
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“20. […] As has been pointed out by us hereinabove, the
items contained in the Schedules owe their origin to the
IBA Guidelines, which are to be construed in the light
of the general principles contained therein—that every
arbitrator shall be impartial and independent of the parties
at the time of accepting his/her appointment. Doubts as
to the above are only justifiable if a reasonable third
person having knowledge of the relevant facts and
circumstances would reach the conclusion that there
is a likelihood that the arbitrator may be influenced by
factors other than the merits of the case in reaching
his or her decision. This test requires taking a broad
commonsensical approach to the items stated in the Fifth
and Seventh Schedules. This approach would, therefore,
require a fair construction of the words used therein, neither
tending to enlarge or restrict them unduly.”
(emphasis supplied)

109. In Government of Haryana v. GF Toll Road Private Ltd.,213 the
Court had to decide whether a retired government employee could
be appointed as an arbitrator by the state government. Justice Indu
Malhotra, writing for the two-Judge Bench, observed that the test to be
applied for bias is whether the circumstances are such as would lead
a fair-minded and informed person to conclude that the arbitrator was
in fact biased. It was held that the Arbitration Act does not disqualify
a former employee from acting as an arbitrator, provided there are no
justifiable doubts as to their independence and impartiality.214 Thus,
in India, the sanctity and integrity of the arbitral process are held to
the same standard of bias as that applicable to judicial authorities.

v. Bias and doctrine of necessity in the context of the
Arbitration Act
110. In comparison to other jurisdictions, the Arbitration Act has adopted
a different approach to deal with the issue of arbitrator bias. Through

213 (2019) 3 SCC 505
214 GF Tolls Road Private Ltd. (supra) [23] [“23. An arbitrator who has “any other” past or present “business
relationship” with the party is also disqualified. The word “other” used in Entry 1, would indicate a
relationship other than an employee, consultant or an advisor. The word “other” cannot be used to widen
the scope of the entry to include past/former employees.”]
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the 2015 amendment, the Arbitration Act provides an extensive list
of circumstances which may give rise to justifiable doubts as to
an arbitrator’s independence or impartiality. The enumeration of
categories under the Fifth and Seventh Schedules is inspired by the
Orange and Red List of the IBA Guidelines on Conflicts of Interest
in International Arbitration.215 In HRD Corporation (supra) this Court
observed that the categories listed under the Fifth and Seventh
Schedules must be construed by taking a “broad commonsensical
approach” without restricting or enlarging the words.
111. Section 12 of the Arbitration Act places a duty on a person who is
approached for appointment as an arbitrator to disclose in writing
any direct or indirect circumstances such as: (i) the existence of
any direct or indirect past or present relationship with any of the
parties; (ii) interest in any of the parties; or (iii) interest in relation
to the subject-matter in dispute, whether financial, business,
professional, or other kind. The disclosure of circumstances made
by an arbitrator is a procedural safeguard which allows the parties
to assess whether disqualification of the arbitrator is required for a
case.216 Disclosure allows an arbitrator to overcome an appearance
of bias. The parties may challenge the appointment of an arbitrator
if the circumstances give rise to “justifiable doubts” as to their
independence or impartiality.
112. In Voestalpine (supra), this Court explained the distinction between
independence and impartiality thus:
“22. Independence and impartiality are two different
concepts. An arbitrator may be independent and yet, lack
impartiality, or vice versa. Impartiality, as is well accepted, is
a more subjective concept as compared to independence.
Independence, which is more an objective concept, may,
thus, be more straightforwardly ascertained by the parties
at the outset of the arbitration proceedings in light of the

215 IBA Guidelines on Conflicts of Interest in International Arbitration (25 May 2024) available at: https://
www.ibanet.org/document?id=Guidelines-on-Conflicts-of-Interest-in-International-Arbitration-2024
216 Koulis v. Cyprus, Application No. 48781/12. [“63. Given the importance of appearances, however, when
such a situation (which can give rise to a suggestion or appearance of bias) arises, that situation should
be disclosed at the outset of the proceedings and an assessment should be made, taking into account
the various factors involved in order to determine whether disqualification is actually necessitated in
the case. This is an important procedural safeguard which is necessary in order to provide adequate
guarantees in respect of both objective and subjective impartiality.”]
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circumstances disclosed by the arbitrator, while partiality
will more likely surface during the arbitration proceedings.”
113. The fundamental premise of arbitration is the impartial resolution of
disputes between parties according to the arbitration agreement.217
Unlike a judge, an arbitrator is generally engaged in occupations
and professions before, during, and after the arbitral proceedings.
The arbitrators may also have had prior commercial or professional
contacts and relationships with either of the parties to the dispute.
In such circumstances, arbitration law has evolved safeguards and
mechanisms to ensure the independence and impartiality of the
arbitral procedure. The independence of an arbitrator is generally
considered with respect to the relationships or links between the
arbitrator and one of the parties, whether financial, professional,
employment or personal.218 The independence of an arbitrator can
be deduced objectively because the dependence arises from the
relationship between an arbitrator and one of the parties, or somebody
closely connected with one of the parties.219 In comparison, the
existence of impartiality is inferred from facts and circumstances
surrounding an arbitrator’s exercise of quasi-judicial functions.220
114. An arbitrator will not be automatically disqualified in situations where
the relationship of an arbitrator with parties does not fall under the
categories mentioned under the Seventh Schedule. Yet, either of
the parties may have “justifiable doubts” about the independence or
impartiality of the arbitrator. The party challenging the appointment of
an arbitrator does not need to demonstrate that the arbitrator lacks
independence or impartiality. It only needs to show that there are
possible “doubts” as to an arbitrator’s independence or impartiality.221
The purpose behind incorporating the word “justifiable” under
Section 12 was to establish an objective standard for impartiality
and independence.222 Resultantly, the possibility of “doubts” must

217 Jivraj v. Hashwani, [2011] UKSC 40 [45]
218 Redfern and Hunter (supra) 226
219 Article 3, IBA Rules of Ethics for International Arbitrator 1987
220 Peter Binder (supra) 117
221 Gary Born (supra) 1911, 1912. [Gary Born suggests that: “Statutory (and judicial) references to the
“risks” or “possibility” of partiality are preferable to formulations including “doubt” or “suspicion.” The latter
phrases connote a subjective inquiry, as well as a flavor of speculation, which are misleading. The better
approach is instead to consider what objective risk (or possibility) of unacceptable partiality exists.”]
222 David Caron and Lee Caplan, The UNCITRAL Arbitration Rules: A Commentary (2nd edn, Oxford
University Press, 2013) 208
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be “real” in the sense that they should be derived from the objective
circumstances disclosed by an arbitrator.
115. The consideration of possible “doubts” must be undertaken from the
perspective of a “fair-minded and informed person” rather than the
subjective views of the parties or the arbitrators. According to Gary
Born, the standard of proof adopted under Article 12 of the Model
Law is relatively low to ensure “the integrity of the arbitral tribunal
and arbitral process, particularly given the extremely limited review
available for substantive or procedural errors by the arbitrators.”223
The issue of arbitrator bias is to be resolved by applying the test
of the real likelihood of bias in the given facts and circumstances.
116. Section 12(5) automatically disqualifies any person whose relationship
with the parties or counsel or subject matter of the dispute falls
under any of the categories mentioned under the Seventh Schedule.
The categories listed in the Seventh Schedule in essence denote
situations where an arbitrator might have a pecuniary, proprietary, or
cause-based interest in the arbitration. For instance, employees of
either of the parties are barred from acting as an arbitrator because
they have an immediate financial and cause-based interest in the
arbitration. If such an employee is appointed as an arbitrator, they
would be sitting as a judge in their cause because they have a
pecuniary interest in the outcome of the case.
117. In Voestalpine (supra), this Court observed that an individual who
had previously served the government, a public sector corporation or
a statutory corporation but had no connection to the party in dispute
could not be held to be ineligible for appointment as an arbitrator.
The Court observed:
“25. It cannot be said that simply because the person
is a retired officer who retired from the government or
other statutory corporation or public sector undertaking
and had no connection with DMRC (the party in dispute),
he would be treated as ineligible to act as an arbitrator.
Had this been the intention of the legislature, the Seventh
Schedule would have covered such persons as well. Bias
or even real likelihood of bias cannot be attributed to such

223 Garn Born (supra) 1912
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highly qualified and experienced persons, simply on the
ground that they served the Central Government or PSUs,
even when they had no connection with DMRC. The very
reason for empanelling these persons is to ensure that
technical aspects of the dispute are suitably resolved by
utilising their expertise when they act as arbitrators. It
may also be mentioned herein that the Law Commission
had proposed the incorporation of the Schedule which
was drawn from the red and orange list of IBA guidelines
on conflict of interest in international arbitration with the
observation that the same would be treated as the guide
“to determine whether circumstances exist which give
rise to such justifiable doubts”. Such persons do not get
covered by red or orange list of IBA guidelines either.”
The Court refers to the fact that the individual had no connection with
DMRC, the party in dispute, at two places in the above extract. Hence,
the fact that he had previously been employed with government or
a corporation controlled by government (but not DMRC which was
the disputant) was held not to render the individual ineligible.
118. In G F Toll Road (supra), the arbitration contract between the State
government and the contractor allowed for the constitution of a three-
member arbitral tribunal “of whom each party shall select one and
the third arbitrator shall be appointed under the Rules of Arbitration
of the Indian Council of Arbitration.” After disputes arose between
the parties, the State government appointed a retired Engineer-in-
Chief as their arbitrator. The contractor and the Indian Council of
Arbitration224 challenged the appointment of the State’s arbitrator on
the ground that he was a former employee of the State government.
The issue before this Court was whether Section 12(5) read with
the Seventh Schedule disqualifies a former employee from being
appointed as an arbitrator.
119. Justice Indu Malhotra, writing for the Bench of two judges, held
that the apprehension of bias against the State’s arbitrator was
unjustified because: (i) the arbitrator was employed by the State over
ten years ago; (ii) the use of the expression “is an” under Entry 1
of the Seventh Schedule indicates that an arbitrator is disqualified

224 “ICA”
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only if they are current employees of one of the parties; and (iii)
the expression “other” under the said entry indicates a relationship
other than an employee. It was observed that the expression “other”
cannot “be used to widen the scope of the entry to include past/
former employees.”225
120. The categories mentioned under the Seventh Schedule are such that
it is difficult to distinguish the interests of an arbitrator from those
of a party to which an arbitrator is connected. In such cases, the
issue is whether the outcome of the arbitration will realistically affect
the arbitrator’s interests. The law prioritises the objective criterion
of independence over the subjective criterion of impartiality. Once
it is established that an arbitrator falls under any of the categories
mentioned in the Seventh Schedule, they are automatically
disqualified without any investigation into whether or not there is
any real likelihood of bias. Since the ineligibility envisaged under
Section 12(5) goes to the root of the appointment, an application
may be filed under Section 14(2) of the Arbitration Act to the court
to decide on the termination of the arbitrator’s mandate.226
121. An objection to the bias of an adjudicator can be waived.227 A waiver
is an intentional relinquishment of a right by a party or an agreement
not to assert a right.228 The Arbitration Act allows parties to waive
the application of Section 12(5) by an express agreement after the
disputes have arisen. However, the waiver is subject to two factors.
First, the parties can only waive the applicability of Section 12(5)
after the dispute has arisen. This allows parties to determine whether
they will be required or necessitated to draw upon the services of
specific individuals as arbitrators to decide upon specific issues. To
this effect, Explanation 3 to the Seventh Schedule recognizes that
certain kinds of arbitration such as maritime or commodities arbitration
may require the parties to draw upon a small, specialized pool.229 The

225 G F Toll Road (supra) [23]
226 HRD Corporation v. GAIL (India) Ltd. (2018) 12 SCC 471 [12]
227 Supreme Court Advocates-on-Record Association (supra) [30]
228 State of Punjab v. Davinder Pal Singh Bhullar (2011) 14 SCC 770 [41]
229 “Explanation 3 – For the removal of doubts, it is clarified that it may be the practice in certain specific
kinds of arbitration, such as maritime or commodities arbitration, to draw arbitrators from a small,
specialized pool. If in such field it is the custom and practice for parties frequently to appoint the same
arbitrator in difference cases, this is a relevant fact to be taken into account while applying the rules set
out above.”]
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second requirement of the proviso to Section 12(5) is that parties must
consciously abandon their existing legal right through an express
agreement. Thus, the Arbitration Act reinforces the autonomy of
parties by allowing them to override the limitations of independence
and impartiality by an express agreement in that regard.
122. The proviso to Section 12(5) is a reflection of the common law
doctrine of necessity. The nemo judex rule is subject to the doctrine
of necessity and yields to it.230 The doctrine of necessity allows an
adjudicator who may be disqualified because of their interest in
the matter to continue to adjudicate because of the necessity of
the circumstances.231 The proviso to Section 12(5) allows parties
to exercise their autonomy to determine if there is a necessity to
waive the applicability of the ineligibility prescribed under Section
12(5). Thus, common law principles and doctrines are adjusted to
subserve the fundamental principles of arbitration by giving priority
to the autonomy of parties.
123. In Bharat Broadband Network Ltd. (supra), this Court held that the
proviso to Section 12(5) requires an express agreement in writing,
that is, an agreement made in words as opposed to an agreement
that can be inferred by conduct.232 It was explained that such an
agreement must be made by both parties with full knowledge of the
fact that although a particular person is ineligible to be appointed
as an arbitrator, the parties still have full faith and confidence
in them to continue as an arbitrator.233 The principle of express
waiver contained under the proviso to Section 12(5) also applies
to situations where the parties seek to waive the allegation of bias
against an arbitrator appointed unilaterally by one of the parties.
After the disputes have arisen, the parties can determine whether
there is a necessity to waive the nemo judex rule. This balances
the autonomy of parties and the principles of an independent and
impartial arbitral tribunal.

230 Tulsiram Patel (supra) [101]; Swadeshi Cotton Mills v. Union of India (1981) 1 SCC 664 [44]
231 Charan Lal Sahu v. Union of India (1990) 1 SCC 613 [105]
232 Bharat Broadband Network Ltd. (supra) [20]
233 Bharat Broadband Network Ltd. (supra) [20] [This Court observed: “20. […] It is thus necessary that there
be an “express” agreement in writing. This agreement must be an agreement by which both parties, with
full knowledge of the fact that Shri Khan is ineligible to be appointed as an arbitrator, still go ahead and
say that they have full faith and confidence in him to continue as such.”]
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vi. Unilateral appointment of arbitrators is violative of the
equality clause under Section 18
124. The doctrine of bias as evolved in English and Indian law emphasizes
independence and impartiality in the process of adjudication to inspire
the confidence of the public in the adjudicatory processes. Although
Section 12 deals with the quality of independence and impartiality
inherent in the arbitrators, the provision’s emphasis is to ensure an
independent and impartial arbitral process.
125. Fali Nariman, distinguished lawyer and erudite jurist, in an article
on ‘Standards of Behaviour of Arbitrators’,234 opined that the level of
probity expected of arbitrators is no less, and perhaps more stringent
than what is expected of judges:
“Though litigation is compulsory and arbitration is
consensual, both are judicial processes of an adversarial
character. That is why arbitration has always been regarded
as quasi-judicial. Standards of behaviour expected of
arbitrators – with reference to their impartiality and their
independence – are no less stringent than that demanded
of judges; in fact, arbitrators are expected to behave a
shade better since judges are institutionally insulated by
the established court-system, their judgments being also
subjected to the corrective scrutiny of an appeal.”
126. The agreement on the number of arbitrators is a matter of party
autonomy. However, the choice of arbitrators has a direct effect on the
conduct of arbitral proceedings. In commercial cases, the choice of the
number of arbitrators is usually between one and three. The parties
select the number of arbitrators by considering factors such as the
needs of a particular dispute, costs, and efficiency.235 In case parties
cannot agree upon the number of arbitrators, national arbitration
legislation specifies the number of arbitrators to be appointed. For
instance, Article 10(2) of the Model Law provides that if the parties
fail to determine the number of arbitrators, three arbitrators will
be appointed.236 Interestingly, the Arbitration Act departs from the

234 Fali Nariman, ‘Standards of Behaviour of Arbitrators’ (1988) 4(4) Arbitration International 311, 312.
235 Redfern and Hunter (supra) 210
236 Article 10(2), Model Law. [It reads:
“Article 10. Number of arbitrators
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Model Law by providing that the arbitral tribunal shall consist of a
sole arbitrator if parties fail to determine the number of arbitrators.237
127. Reference of disputes to a sole arbitrator has various advantages,
including easy arrangements of meetings or hearings, reduced
expenses since the parties will only have to bear the expense of
one arbitrator, and speedy decision-making.238 In the case of the
appointment of a sole arbitrator, the decision-making vests in the
hands of one person. This poses a greater risk of bias against the
weaker party, especially if the arbitrator is unilaterally appointed by
the other party.
128. If a person having a financial interest in the outcome of the arbitral
proceedings unilaterally nominates a sole arbitrator, it is bound to give
rise to justifiable doubts on the independence and impartiality of the
arbitrator. The possibility of bias by the arbitrator is real because the
person who has an interest in the subject matter of the dispute can
chart out the course of the entire arbitration proceeding by unilaterally
appointing a sole arbitrator. A party may select a particular person to be
appointed as a sole arbitrator because of a quid pro quo arrangement
between them. Moreover, the fact that the sole arbitrator owes the
appointment to one party may make it difficult to decide against that
party for fear of displeasure. It is not possible to determine whether
the sole arbitrator will be prejudiced, but the circumstances of the
appointment give rise to the real possibility of bias.
129. Equal treatment of parties at the stage of appointment of an arbitrator
ensures impartiality during the arbitral proceedings. A clause that
allows one party to unilaterally appoint a sole arbitrator is exclusive
and hinders equal participation of the other party in the appointment
process of arbitrators. Further, arbitration is a quasi-judicial and
adjudicative process where both parties ought to be treated equally
and given an equal opportunity to persuade the decision-maker of
the merits of the case. An arbitral process where one party or its

(1) The parties are free to determine the number of arbitrators.
(2) Failing such determination, the number of arbitrators shall be three.”]
237 Section 10, Arbitration Act [It reads:
“10. Number of arbitrators – (1) The parties are free to determine the number of arbitrators, provided that
such number shall not be an even number.
(2) Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of a sole
arbitrator.”]
238 Redfern and Hunter (supra) 211
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proxy has the power to unilaterally decide who will adjudicate on
a dispute is fundamentally contrary to the adjudicatory function of
arbitral tribunals.239
130. In comparison, a three-member arbitral tribunal usually allows each
party to nominate one arbitrator of their choice, with the third arbitrator
being appointed either by the two party-appointed arbitrators or by
agreement of parties.240 The fact that both parties nominate their
respective arbitrators gives them “a sense of investment in the
arbitral tribunal.”241 A three-member arbitral tribunal also enhances
the quality of the adjudicative deliberations and ensures compliance
with due process.242 According to Gary Born, the major advantage
of a three-member tribunal is that the parties can participate in the
selection of the tribunal to the maximum extent possible.243
131. In a three-member tribunal, each of the parties seeks to appoint a
co-arbitrator. However, the third arbitrator is usually appointed by
a process which allows equal participation of both parties in the
appointment process. The equal participation of parties enables
the appointment of an independent and impartial third arbitrator.
Hence, any perceived tilt of an arbitrator in favour of the party which
nominated that arbitrator is offset by the appointment of the third
arbitrator in the course of a deliberative process involving both the
arbitrators or as envisaged in the agreement between parties. Perkins
(supra) rightly observed that whatever advantage a party may derive
by nominating an arbitrator of its choice would get counter-balanced
by equal power with the other party.244 This counter-balancing will
ideally apply only in situations where the arbitrators are appointed
by the parties in the exercise of their genuine party autonomy. TRF
(supra) and Perkins (supra) have been relied upon by this Court
on numerous occasions, including in Glock Asia-Pacific Limited
v. Union of India245 and Lombardi Engg Ltd. v. Uttarakhand Jal
Vidyut Nigam Ltd.246

239 Gary Born (supra) 1952
240 Ibid, 211
241 Ibid.
242 Gary Born (supra) 1794
243 Ibid, at 1796.
244 Perkins (supra) [16]
245 (2023) 8 SCC 226 [20]
246 (2024) 4 SCC 341 [85]
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132. In Voestalpine (supra) and CORE (supra), one of the parties curated
a panel of arbitrators and mandated the other party to select their
arbitrator from the panel. Since the curation of the list is exclusively
undertaken by one party, the other party is effectively excluded
from the process of curating the panel from which exclusively, the
appointment of an arbitrator is to be made. The other party has to
mandatorily select its arbitrator from a curated panel, restricting
their freedom to appoint an arbitrator of their choice. This is against
the principle of equal treatment contained under Section 18. In this
situation, there is no effective counter-balance because both parties
do not participate equally in the process of appointing arbitrators.
The party curating the panel can restrict the choice of the party only
to a person who is on the panel selected by the other party and to
no other person.
133. Many PSUs are regularly involved in arbitration disputes and
constantly need the services of arbitrators. Such institutions often
maintain a pool of potential arbitrators with the sole object of having
a ready pool of qualified professionals who have committed their time
and consented to act as arbitrators for fixed fees. The Arbitration
Act does not prohibit parties to an arbitration agreement from
maintaining a curated panel of potential arbitrators. However, the
problem arises when the PSUs make it mandatory for other parties
to select their nominees from the curated panel of arbitrators. When
a PSU exercises its discretion to curate a panel, the very factor that
the PSU is choosing only a certain number of persons as potential
arbitrators and not others will raise a reasonable doubt in the mind
of a fair-minded person. The PSUs may conceivably have nominated
a person on the panel of potential arbitrators because they have a
certain predisposition in favour of the former. This doubt is reinforced
when the other party is given no choice but to select its arbitrator
from the curated panel.
134. In CORE (supra), the three-member tribunal was sought to be
constituted in the following manner: (i) the Railways would suggest
at least four names of retired railway officers; (ii) the contractor would
select two names out of the panel for appointment as their arbitrator;
(iii) The General Manager (of the Railways) would thereafter choose
at least one person out of the two to be appointed as the contractor’s
arbitrator; and (iv) The General Manager would proceed to appoint
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the balance arbitrators from the panel or outside the panel and also
indicate the presiding arbitrator.
135. Such an arbitrator-appointment clause is likely to give rise to justifiable
doubts as to the independence and impartiality of arbitrators for two
reasons: (i) the contractor is restricted to choosing its arbitrator from
the panel of four arbitrators nominated by the party who is a disputant;
and (ii) the contractor’s choice is further constrained because it
is made subject to the decision of the General Manager who will
choose one among the two persons suggested by the party. Since
the contractor has to select its arbitrator from a curated panel, the
arbitration clause does not allow the contractor equal participation
in the appointment of their arbitrator. Moreover, the clause allows
the General Manager to appoint the balance arbitrators from either
the panel or outside the panel. Thus, the process of appointing the
arbitrators is unequal because the General Manager can go beyond
the panel of four potential arbitrators, while the contractor is bound
by the names enlisted in the panel.
136. In a three-member tribunal, the independence and impartiality of a
third or presiding arbitrator are prerequisites to the integrity of the
arbitral proceedings. In CORE (supra), the arbitration clause allowed
the General Manager to unilaterally nominate the presiding officer out
of the panel of three arbitrators. The clause does not countenance
any participation from the contractor in the process of appointing or
nominating the presiding officer. Thus, the process of appointing and
nominating the presiding officer is unequal and prejudiced in favour
of the Railways. The fact that the General Manager is nominating
the presiding officer gives rise to a reasonable doubt about the
independence and impartiality of the entire arbitration proceedings.
137. Given the above discussion, it needs reiteration that the Arbitration
Act does not prohibit PSUs from empanelling potential arbitrators.
However, an arbitration clause cannot mandate the other party to
select its arbitrator from the panel curated by PSUs. The PSUs can
give a choice to the other party to select its arbitrators from the
curated list provided the other party expressly waives the applicability
of the nemo judex rule.

G. Public-private contracts and public policy
138. An arbitration is a creature of contract between the parties. An
arbitration agreement must meet the criteria laid down under Section
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7, in addition to satisfying the principles of contract law prescribed
under the Contract Act to be considered valid.247 According to the
Contract Act, a promisor makes a proposal when they signify to the
promisee their willingness to do or abstain from doing anything, to
obtain the assent of the promisee to such act or abstinence. The
proposal is said to be accepted when the promisee signifies their
assent. A proposal becomes a promise upon acceptance. Every
promise and every set of promises, forming the consideration248 for
each other, is an agreement. An agreement enforceable by law is
a contract.

i. Unconscionability under the Contract Act
139. The Contract Act accounts for unconscionability under Section 16
relating to undue influence. It provides that a contract induced by
undue influence is unconscionable. A contract is induced by undue
influence where the relations subsisting between the parties are
such that one of the parties is in a position to dominate the will of
the other and uses that position to obtain an unfair advantage.249 A
contract induced by undue influence is voidable at the option of the
party whose consent was caused by undue influence.250 Illustration
(c) to Section 16 pertains to an unconscionable bargain:

247 See Cox and Kings [63].
248 Section 2(d) defines consideration as follows: [“(d) When, at the desire of the promisor, the promise or
any other person has done or abstained from doing, or does or abstains from doing, or promises to do
or to abstain from doing, something, such act or abstinence or promise is called a consideration for the
promise;”]
249 Section 16, Contract Act. [It reads:
“16. “Undue Influence” defined – (1) A contract is said to be induced by “undue influence” where the
relations subsisting between the parties are such that one of the parties is in a position to dominate the
will of the other and uses that position to obtain an unfair advantage over the other.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to
be in a position to dominate the will of another –
(a) where he hold a real or apparent authority over the other or where he stands in a fiduciary relation
to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affect
by reason of age, illness, or mental or bodily distress.
(3) Where a person who is in a position to dominate the will of another, enters into a contract with him,
and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the
burden of proving that such contract was not induced by undue influence shall lie upon the person in a
position to dominate the will of the other.
Nothing in this sub-section shall affect the provision of Section 111 of the Indian Evidence Act, 1871 (I
of 1872).”]
250 Section 19A, Contract Act.
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“(c) A, being in debt to B, the money-lender of his village,
contracts a fresh loan on terms which appear to be
unconscionable. It lies on B to prove that the contract was
induced by undue influence.”
140. Section 23 pertains to unlawful consideration or object of an
agreement:
“23. What considerations and objects are lawful, and
what not – The consideration or object of an agreement
is lawful, unless –
it is forbidden by law; or
is of such a nature that if permitted, it would defeat the
provisions of any law; or
is fraudulent; or
involves or implies injury to the person or property of
another; or
the Court regards it as immoral, or opposed to public policy.”
141. Although the Contract Act does not define the expression “public
policy”, it has generally been defined as a principle of judicial
legislation or interpretation founded on the current needs of the
community.251 Section 23 codified the common law position that
“all contracts and agreements which have as their object anything
contrary to principles of sound policy are void.”252 The prevalent view
in the nineteenth century was that the doctrine of public policy should
be governed by precedent and courts should refrain from inventing
new heads of public policy. The purpose behind limiting the grounds
of public policy was to respect the freedom of contract of parties,
which was also considered as a paramount policy in common law.253
Under the common law, a contract for marriage brokerage, creation
of a perpetuity, in restraint of trade, gaming or wagering, or assisting
the King’s enemies were unlawful and opposed to public policy.254

251 Percy H Winfield, ‘Public Policy in the English Common Law’ (1928) 42(1) Harvard Law Review 76, 92.
252 Stephen Waddams, Principle and Policy in Contract Law (Cambridge University Press, 2011) 152.
253 Ibid, at 158
254 Janson v. Driefontein Consolidated Mines, Limited, [1902] 2 AC 484
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142. This Court has adopted a flexible approach to the application of
the doctrine of public policy to contracts. In Gherulal Parakh v.
Mahadeodas Maiya,255 this Court had to decide on the validity of a
wagering contract under Section 23 of the Contract Act. The three-
Judge Bench observed that public policy is a branch of common
law and can be applied in clear and incontestable cases of harm
to the public. It was further observed that the doctrine could be
invoked by evolving “a new head under exceptional circumstances
of a changing world.” The court must determine public policy by
considering the welfare of society and the social consequences
of the rule propounded, especially in light of the factual evidence
available to its probable result.256 In Delhi Transport Corporation
v. DTC Mazdoor Congress,257 this Court held that courts can rely
upon the Constitution as a source of public policy. In his concurring
opinion, Justice Ramaswamy observed:
“292. From this perspective, it must be held that in the
absence of specific head of public policy which covers
a case, then the court must in consonance with public
conscience and in keeping with public good and public
interest invent new public policy and declare such practice
or rules that are derogatory to the Constitution to be
opposed to public policy. The rules which stem from
the public policy must of necessity be laid to further the
progress of the society in particular when social change
is to bring about an egalitarian social order through rule
of law. In deciding a case which may not be covered by
authority courts have before them the beacon light of the
trinity of the Constitution and the play of legal light and
shade must lead on the path of justice, social, economic
and political. Lacking precedent, the court can always be
guided by that light and the guidance thus shed by the
trinity of our Constitution.”
143. In Central Inland Water Transport Corporation v. Brojo Nath
Ganguly,258 this Court had to decide on the validity of Rule 9 of

255 1959 SCC OnLine SC 4
256 Murlidhar Aggarwal v. State of UP (1974) 2 SCC 472 [32]
257 1991 Supp (1) SCC 600
258 (1986) 3 SCC 156
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Central Inland Water Transport Corporation Ltd Service Discipline
and Appeal Rules 1979 which empowered the corporation to
terminate the employment of its permanent employees with three
months’ notice. These rules constituted part of the contract of
employment between the Corporation and its employees. The issue
before this Court was whether Rule 9 was void under Section 23
of the Contract Act for being opposed to public policy. It was held
that the court could refuse to enforce an unfair and unreasonable
clause in a contract entered into between parties who are not equal
in bargaining power:
“89. […] The Constitution was enacted to secure to all
the citizens of this country social and economic justice.
Article 14 of the Constitution guarantees to all persons
equality before the law and the equal protection of the
laws. The principle deducible from the above discussions
on this part of the case is in consonance with right and
reason, intended to secure social and economic justice and
conforms to the mandate of the great equality clause in
Article 14. This principle is that the courts will not enforce
and will, when called upon to do so, strike down an unfair
and unreasonable contract, or an unfair and unreasonable
clause in a contract, entered into between parties who
are not equal in bargaining power. It is difficult to give
an exhaustive list of all bargains of this type. No court
can visualize the different situations which can arise in
the affairs of men. One can only attempt to give some
illustrations. For instance, the above principle will apply
where the inequality of bargaining power is the result of the
great disparity in the economic strength of the contracting
parties. It will apply where the inequality is the result of
circumstances, whether of the creation of the parties or
not. It will apply to situations in which the weaker party is
in a position in which he can obtain goods or services or
means of livelihood only upon the terms imposed by the
stronger party or go without them. It will also apply where
a man has no choice, or rather no meaningful choice, but
to give his assent to a contract or to sign on the dotted line
in a prescribed or standard form or to accept a set of rules
as part of the contract, however unfair, unreasonable and
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unconscionable a clause in that contract or form or rules
may be. This principle, however, will not apply where
the bargaining power of the contracting parties is equal
or almost equal. This principle may not apply where
both parties are businessmen and the contract is a
commercial transaction. In today’s complex world of giant
corporations with their vast infrastructural organizations
and with the State through its instrumentalities and
agencies entering into almost every branch of industry
and commerce, there can be myriad situations which
result in unfair and unreasonable bargains between parties
possessing wholly disproportionate and unequal bargaining
power. These cases can neither be enumerated nor fully
illustrated. The court must judge each case on its own
facts and circumstances.”
(emphasis supplied)

144. The Court held that Rule 9(i) was void under Section 23 of the
Contract Act for being opposed to public policy. The principle of
unconscionability cannot be applied to contracts where: (i) the
bargaining power of the contracting parties is equal or almost
equal;259 and (ii) both parties are businessmen and the contract is
a commercial transaction. This Court has held that the doctrine of
unequal bargaining of parties does not generally apply to arbitration
agreements, which are in the nature of commercial contracts.260
However, the principles of non-arbitrariness continue to apply in
situations where a government instrumentality enters into a contract
with a private party.

259 See Indian Bank v. Blue Jaggers Estates Ltd. (2010) 8 SCC 129 [23] [“23. It must be remembered
that the respondents were not in a position of disadvantage vis-à-vis the appellant. If they so wanted,
the respondents could have declined to avail loan and other financial facilities made available by the
appellant. However, the fact of the matter is that they had signed the agreement with open eyes and
agreed to abide by the terms on which the loan, etc. was offered by the appellant. Therefore, the doctrine
of unconscionable contract cannot be invoked for frustrating the action initiated by the appellant for
recovery of its dues.”]; ICOMM Tele Ltd. v. Punjab State Water Supply and Sewerage Board (2019) 4
SCC 401 [11].
260 S K Jain v. State of Haryana (2009) 4 SCC 357 [8] [“8. It is to be noted that the plea relating to unequal
bargaining power was made with great emphasis based on certain observations made by this Court in
Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly [(1986) 3 SCC 156 : 1986 SCC (L&S)
429 : (1986) 1 ATC 103] . The said decision does not in any way assist the appellant, because at para
89 it has been clearly stated that the concept of unequal bargaining power has no application in case of
commercial contracts.”]
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145. The government has the freedom to enter into contracts with private
parties. However, the award of governmental contracts is subject to
the exercise of judicial review to prevent arbitrariness or favouritism.261
The government has to abide by the principles laid down under Article
14 while awarding contracts.262 In Food Corporation of India v.
Kamdhenu Cattle Feed Industries,263 this Court held that in the
“contractual sphere as in all other State actions, the State and all its
instrumentalities have to conform to Article 14 of the Constitution of
which non-arbitrariness is a significant facet.” It was further observed
that since a public authority possesses powers only to use them
for the public good, they have a duty to act fairly and “to adopt a
procedure which is ‘fair play in action’.”264
146. In Tata Cellular v. Union of India,265 this Court held that contractual
decisions of government and its instrumentalities “must be free
from arbitrariness not affected by bias or actuated by mala fides.”
In a public-private contract, the state must act fairly, justly, and
reasonably.266 When a state acts contrary to the public good or public
interest, it acts contrary to Article 14.267
147. In ICOMM Tele Ltd. v. Punjab State Water Supply and Sewerage
Board,268 this Court had to adjudicate on the validity of a pre-deposit
arbitral clause in a public-private contract. According to the pre-
deposit clause, a party invoking arbitration was required to furnish a
“deposit-at-call” for ten percent of the amount claimed. To determine
the validity of the clause from the viewpoint of arbitrariness, this
Court held that a contractual clause would be arbitrary “which would
be unfair and unjust and which no reasonable man would agree

261 Mahabir Auto Stores v. Indian Oil Corporation (1990) 3 SCC 752 [12]; Directorate of Education v.
Educomp Datamatics Ltd. (2004) 4 SCC 19 [9]
262 Tata Cellular v. Union of India (1994) 6 SCC 651 [70]; Air India Ltd. v. Cochin International Airport Ltd.
(2000) 2 SCC 617 [7]
263 (1993) 1 SCC 71 [7]
264 Kamdhenu Cattle Feed Industries (supra) [7]
265 (1994) 6 SCC 651 [94]
266 ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd. (2004) 3 SCC 553 [23]
267 ABL International (supra) [53]. [“53. From the above, it is clear that when an instrumentality of the State
acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual,
constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in
Article 14 of the Constitution.”]
268 (2019) 4 SCC 401
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to.”269 This Court termed the pre-deposit clause to be violative of
Article 14 for being excessive and disproportionate. Importantly,
the Court held that the pre-deposit requirement was contrary to the
object of arbitration because it served as a deterrent for a party to
invoke arbitration.270 The pre-deposit clause was termed arbitrary for
defeating the purpose of arbitration.
148. In Lombardi (supra), a decision of a three-Judge Bench of this
Court, a term of contract mandated “the party initiating the arbitration
claim […] to deposit 7% of the arbitration claim in the shape of fixed
deposit receipt as security deposit” in a public-private arbitration
agreement. This Court observed that an arbitration agreement has
to comply with the “operation of law”, which includes the grundnorm.
It was observed that the layers of grundnorm in the context of an
arbitration agreement include (i) the Constitution of India; (ii) the
Arbitration Act and any other Central and State law; and (iii) the
arbitration agreement entered into by the parties under Section 7 of
the Arbitration Act.271 Further, this Court observed that party autonomy
“cannot be stretched to an extent where it violates the fundamental
rights under the Constitution.”272 It was concluded that the pre-deposit
clause violated Article 14 of the Constitution.

ii. US jurisprudence on unconscionability of arbitration
agreements
149. Section 2 of the Federal Arbitration Act provides that an agreement
in writing to submit to arbitration an existing controversy arising out
of a contract shall be “valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any

269 ICOMM Tele (supra) [23]
270 ICOMM Tele (supra) [27] [“27. Deterring a party to an arbitration from invoking this alternative dispute
resolution process by a pre-deposit of 10 per cent would discourage arbitration, contrary to the object of
de-clogging the court system, and would render the arbitral process ineffective and expensive.”]
271 Lombardi (supra) [80]
272 Lombardi (supra) [83] [“83. The concept of “party autonomy” as pressed into service by the respondent
cannot be stretched to an extent where it violates the fundamental rights under the Constitution. For
an arbitration clause to be legally binding it has to be in consonance with the “operation of law” which
includes the Grundnorm i.e. the Constitution. It is the rule of law which is supreme and forms parts of
the basic structure. The argument canvassed on behalf of the respondent that the petitioner having
consented to the pre-deposit clause at the time of execution of the agreement, cannot turn around and
tell the Court in a Section 11(6) petition that the same is arbitrary and falling foul of Article 14 of the
Constitution is without any merit.”]
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contract.”273 The US Supreme Court has held that issues concerning
validity, irrevocability, and enforceability of arbitration agreements will
be decided with reference to the state law grounds such as fraud,
duress, and unconscionability.274 The doctrine of unconscionability has
been codified by the Uniform Commercial Code and is now a part
of American contract law. Section 2-302 of the Uniform Commercial
Code allows courts to refuse enforcement of unconscionable contracts
or limit the application of an unconscionable clause to avoid any
unconscionable result.275
150. The doctrine of unconscionability has roots in equity. An unconscionable
contract “is a contract which no man in his senses, not under delusion,
would make, on the one hand, and which no fair and honest man
would accept on the other.”276 Unconscionability has also been defined
to include: (i) an absence of meaningful choice on the part of one
of the parties; and (ii) unreasonable contractual terms favourable
to one party.277 The unconscionability doctrine seeks to balance the
freedom of contract with the values of protecting the weaker parties
from imposition and oppression.278
151. Unconscionability focuses on abuses relating to the contract formation
process (procedural unconscionability) and the substantive terms
of the contract (substantive unconscionability).279 In determining
procedural unconscionability, the court is concerned with factors
such as the relative bargaining power of the parties and whether

273 Section 2, Federal Arbitration Act. [It reads:
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce
to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal
to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing
controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
274 Perry v. Thomas, 482 US 483 (1987); Doctor’s Associates Inc v. Casarotto, 517 US 681 (1996).
275 Section 2-302, Uniform Commercial Code. [It reads:
If the court as a matter of law finds the contractor or any clause of the contract to have been
unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce
the remainder of the contract without unconscionable clause, or it may so limit the application of any
unconscionable clause as to avoid any unconscionable result.
When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable
the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting,
purpose and effect to aid the court in making the determination.”]
276 Hume v. United States, 132 US 406 (1889)
277 Williams v. Walker-Thomas Furniture Co., 350 F.2d 445 (D C Cir. 1965)
278 S M Waddams, ‘Unconscionability in Contracts’ (1976) 39(4) Modern Law Review 369, 369.
279 John A Spanogle, ‘Analyzing Unconscionability Problems’ (1969) 117(7) University of Pennsylvania Law
Review 931, 932.
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the parties had a meaningful choice. Substantive unconscionability
is geared towards pitting the substance of the contractual terms
against the legitimate interests of the parties and considerations of
public policy.280
152. US courts have consistently held that an arbitration agreement which
provides for the unilateral formation of a panel of arbitrators by one
of the parties is inherently inequitable and unconscionable.281 The
reason is that a unilateral arbitrator selection clause is inimical to the
principle of arbitration, that is, the resolution of disputes through a fair
and impartial tribunal. It has been held that an arbitration agreement
that allows one of the parties to unilaterally control the arbitral tribunal
conflicts with the “fundamental notions of fairness”282 and does not
meet the “minimum levels of integrity which we must demand of
a contractually structured substitute for judicial proceedings.” 283
The US courts have emphasised the importance of equality in the
appointment process as a means to secure fairness in the arbitration
proceedings.284
153. In Hooters of Am. Inc. v. Phillips,285 the US Court of Appeals for the
Fourth Circuit had to determine the validity of an arbitration agreement
for employment-related disputes. The arbitration agreement provided
for the formation of a three-member arbitral tribunal. The employer
and employee select their arbitrators, who in turn select the third
arbitrator. However, the employee’s arbitrator and the third arbitrator
were selected from a list of arbitrators created exclusively by the
employer. The Court observed that the arbitration agreement gave
Hooters “control over the entire panel and places no limits whatsoever
on whom Hooters can put on the list.” It was further observed:
“Under the rules, Hooters is free to devise lists of partial
arbitrators who have existing relationships, financial or
familial, with Hooters and its management. In fact, the rules

280 Arthur Allen Leff, ‘Unconscionability and the Code-Emperor’s New Clause’ (1967) 115(4) University of
Pennsylvania Law Review 485, 487.
281 Board of Education of Berkely County v. W Harley Miller Inc, 236 S.E.2d 439 (1977)
282 Ditto v. Remax Preferred Props, 861 P.2d 1000, 1004; Harold Allen’s Mobile Home Factory Outlet Inc v.
Butler, 825 So.2d 779, 783 (Ala 2002)
283 Graham v. Scissor Tail Inc, 28 Cal 3d 807
284 Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith Inc, 995 F.Supp 190, 208 (D. Mass 1998)
285 173 F.3d 933
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do not even prohibit Hooters from placing its managers
themselves on the list. Further, nothing in the rules restricts
Hooters from punishing arbitrators who rule against the
company by removing them from the list. Given the
unrestricted control that one party (Hooters) has over the
panel, the selection of an impartial decisionmaker would
be a surprising result.”
The Court noted that arbitration is a system where disputes between
parties are resolved by an impartial third party and allowing one
party to control the arbitral tribunal was against the principles of
arbitration.286
154. In McMullen v. Meijer,287 the issue before the US Court of Appeals
for the Sixth Circuit was whether the arbitration agreement provided
the employee “an effective substitute for the judicial forum”. The
agreement allowed the employer to unilaterally select a pool of at least
five potential arbitrators. The employer and employee were required
to mutually select a sole arbitrator from that pool of arbitrators by
alternatively striking names until only one remained. The Court held
that the process of selection of the arbitrator prevented the arbitration
from being an effective substitute for a judicial forum because: (i)
the employer exercised unilateral control over the entire panel; (ii)
the arbitrator selection procedure allowed the employer to create a
symbiotic relationship with its arbitrators, which promulgated bias;
and (iii) the arbitrator selection procedure inherently lacked fairness
and neutrality.

iii. Public-private contracts and public policy of arbitration
155. Although arbitration law is an autonomous legal field,288 it functions
within the boundaries prescribed by the state. For instance,
adjudication of certain proceedings is reserved by the legislature
exclusively for the courts as a matter of public policy.289 The non-
arbitrable proceedings generally include disputes relating to rights and

286 Hooters of Am Inc (supra) 939
287 355 F.3d 485, 493
288 Cox and Kings (supra) [95]
289 Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (2011) 5 SCC 532 [35]; A Ayyasamy v. A
Paramasivam (2016) 10 SCC 386 [38]; Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1 [76]
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liabilities that give rise to or arise out of criminal offences, matrimonial
disputes relating to divorce, judicial separation, restitution of conjugal
rights, child custody, and guardianship matters.290 The safeguards of
public policy ensure that arbitration proceedings, which are effective
substitutes for civil courts, are conducted within a framework in the
broader public interest.291
156. Section 34 of the Arbitration Act specifies the grounds for setting aside
an arbitral award. The grounds are separated into two categories: (i)
Section 34(2)(a) contains those grounds that have to be proved by
the parties; and (ii) Section 34(2)(b) contains grounds that a court
has to examine ex officio. The challenge of arbitral awards on ex
officio grounds is “of fundamental importance to the institution of
arbitration as a whole.”292
157. Section 34(2)(b) specifically provides that an arbitral award may be
set aside if the court finds that the arbitral award conflicts with the
public policy of India. The provision further clarifies “public policy of
India” to only mean that: (i) the making of the award was induced
or affected by fraud or corruption or was in violation of section 75
or section 81; (ii) it is in contravention with the fundamental policy
of Indian law; or (iii) it is in conflict with the most basic notions of
morality or justice.
158. This Court has construed the expression “public policy of India”
appearing under Section 34 to mean the “fundamental policy of
Indian law”.293 The concept of “fundamental policy of Indian law” has
been held to cover compliance with statutes and judicial precedents,
adopting a judicial approach, and compliance with the principles of
natural justice.294 In OPG Power Generation Private Limited v.

290 Booz Allen & Hamilton Inc. (supra) [36]. [36. The well-recognised examples of non-arbitrable disputes
are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences;
(ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child
custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters
(grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy
matters governed by special statutes where the tenant enjoys statutory protection against eviction and
only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.]
291 Redfern and Hunter (supra) 552
292 Peter Binder (supra) 274
293 Ssangyong Engg. & Construction Co. Ltd. v. NHAI (2019) 15 SCC 131 [34]; NHAI v. P Nagaraju (2022)
15 SCC 1 [39]
294 MMTC v. Vedanta Ltd. (2019) 4 SCC 163 [11];
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Enexio Power Cooling Solutions India Private Limited,295 this
Court explained the concept of “fundamental policy of Indian law” thus:
“The expression “in contravention with the fundamental
policy of Indian law” by use of the word ‘fundamental’
before the phrase ‘policy of Indian law’ makes the
expression narrower in its application than the phrase
“in contravention with the policy of Indian law”, which
means mere contravention of law is not enough to make
an award vulnerable. To bring the contravention within
the fold of fundamental policy of Indian law, the award
must contravene all or any of such fundamental principles
that provide a basis for administration of justice and
enforcement of law in this country. Without intending to
exhaustively enumerate instances of such contravention,
by way of illustration, it could be said that (a) violation of
the principles of natural justice; (b) disregarding orders of
superior courts in India or the binding effect of the judgment
of a superior court; and (c) violating law of India linked to
public good or public interest, are considered contravention
of the fundamental policy of Indian law.”
159. In Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd.,296
this Court held that the most basic notions of morality and justice
under the concept of “public policy” will include bias.
160. The provisions of the statute, including Section 34, highlight the
important role played by the Indian legal system in recognising
and enforcing arbitral awards. It is one such instance where the
Indian courts exercise a measure of control over the private arbitral
process.297 This control over the arbitral process ensures that the
arbitral awards are made by following certain minimum standards
of due process and justice.298 Thus, the courts must ensure that the
arbitral awards are consistent with the fundamental policy of Indian
law such as compliance with the principles of natural justice. As a
corollary, Section 34 places a responsibility on the arbitral tribunals

295 2024 SCC OnLine SC 2600
296 (2024) 7 SCC 197 [34]
297 Redfern and Hunter (supra) 58
298 Ibid.
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to ensure that the arbitral proceedings are consistent with the
fundamental policy of Indian law.299
161. By agreeing to arbitrate in a public-private contract, the government
or its companies agree to settle their disputes with private contractors
through arbitration. Since the activities of the government have a
public element, it is incumbent upon the government to ensure that
it enters into a contract with the public without adopting any unfair
or unreasonable procedure.300 Every action of a public authority or
a person acting in the public interest or any act that gives rise to
a public element must be based on principles of fairness and non-
arbitrariness.301 Therefore, government agencies have to consider the
principles of equality and non-arbitrariness when crafting arbitration
procedures, including the procedure for the appointment of arbitrators.
The terms of the arbitration agreement must meet the minimum
standards of equality and fairness. In a public-private contract, the
government and its instrumentalities must ensure that the arbitral
process contemplated by the contract is also fair to the other party
to avoid arbitrariness.
162. The possibility of bias is real in situations where an arbitration clause
allows a government company to unilaterally appoint a sole arbitrator
or control the majority of the arbitrators. Since the government
has control over the arbitral tribunal, it can chart the course of the

299 Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1 [70] [“70. Arbitrators, like the courts, are
equally bound to resolve and decide disputes in accordance with the public policy of the law. Possibility
of failure to abide by public policy consideration in a legislation, which otherwise does not expressly or
by necessary implication exclude arbitration, cannot form the basis to overwrite and nullify the arbitration
agreement. This would be contrary to and defeat the legislative intent reflected in the public policy
objective behind the Arbitration Act. Arbitration has considerable advantages as it gives freedom to the
parties to choose an arbitrator of their choice, and it is informal, flexible and quick. Simplicity, informality
and expedition are hallmarks of arbitration. Arbitrators are required to be impartial and independent,
adhere to natural justice, and follow a fair and just procedure. Arbitrators are normally experts in the
subject and perform their tasks by referring to facts, evidence, and relevant case law.”]
300 Eurasian Equipment & Chemicals Ltd. v. State of West Bengal (1975) 1 SCC 70 [17]; Ramana Dayaram
Shetty v. International Airport Authority of India (1979) 3 SCC 489 [12] [12. It must, therefore, be taken to
be the law that where the Government is dealing with the public, whether by way of giving jobs or entering
into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot
act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action
must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or
discretion of the Government in the matter of grant of largesse including award of jobs, contracts, quotas,
licences, etc. must be confined and structured by rational, relevant and non-discriminatory standard or
norm and if the Government departs from such standard or norm in any particular case or cases, the
action of the Government would be liable to be struck down, unless it can be shown by the Government
that the departure was not arbitrary, but was based on some valid principle which in itself was not
irrational, unreasonable or discriminatory.]
301 LIC v. Consumer Education & Research Centre (1995) 5 SCC 482 [23]
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arbitration proceedings to the prejudice of the other party. Resultantly,
unilateral appointment clauses fail to provide an effective substitute
for judicial proceedings in India. Further, a unilateral appointment
clause is inherently exclusionary and violates the principle of equal
treatment of parties and procedural equality.
163. Unilateral appointment clauses in a public-private contract fail
to provide the minimum level of integrity required in authorities
performing quasi-judicial functions such as arbitral tribunals.
Therefore, a unilateral appointment clause is against the principle of
arbitration, that is, impartial resolution of disputes between parties. It
also violates the nemo judex rule which constitutes the public policy
of India in the context of arbitration. Therefore, unilateral appointment
clauses in public-private contracts are violative of Article 14 of the
Constitution for being arbitrary in addition to being violative of the
equality principle under the Arbitration Act.

H. Necessity of maintaining the principle of minimum judicial
interference
164. In re Interplay Between Arbitration Agreements under Arbitration
and Conciliation Act 1996 and the Stamp Act 1899,302 a seven
judge Bench of this Court emphasized the importance of minimal
judicial interference by the courts at the Section 11 stage. This Court
held that the scope of the proeceeding under Section 11 must be
confined to the existence of an arbitration agreement. The Court
further observed:
“165. The legislature confined the scope of reference under
Section 11(6-A) to the examination of the existence of an
arbitration agreement. The use of the term “examination”
in itself connotes that the scope of the power is limited to
a prima facie determination. Since the Arbitration Act is a
self-contained code, the requirement of “existence” of an
arbitration agreement draws effect from Section 7 of the
Arbitration Act. In Duro Felguera [Duro Felguera, S.A. v.
Gangavaram Port Ltd. (2017) 9 SCC 729: (2017) 4 SCC
(Civ) 764], this Court held that the Referral Courts only
need to consider one aspect to determine the existence

302 2023 INSC 1066
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of an arbitration agreement — whether the underlying
contract contains an arbitration agreement which provides
for arbitration pertaining to the disputes which have arisen
between the parties to the agreement. Therefore, the
scope of examination under Section 11(6-A) should be
confined to the existence of an arbitration agreement
on the basis of Section 7. Similarly, the validity of an
arbitration agreement, in view of Section 7, should be
restricted to the requirement of formal validity such
as the requirement that the agreement be in writing.
This interpretation also gives true effect to the doctrine
of competence-competence by leaving the issue of
substantive existence and validity of an arbitration
agreement to be decided by Arbitral Tribunal under
Section 16.
166. The burden of proving the existence of arbitration
agreement generally lies on the party seeking to rely on
such agreement. In jurisdictions such as India, which
accept the doctrine of competence-competence, only prima
facie proof of the existence of an arbitration agreement
must be adduced before the Referral Court. The Referral
Court is not the appropriate forum to conduct a mini-trial
by allowing the parties to adduce the evidence in regard to
the existence or validity of an arbitration agreement. The
determination of the existence and validity of an arbitration
agreement on the basis of evidence ought to be left to the
Arbitral Tribunal. This position of law can also be gauged
from the plain language of the statute.
167. Section 11(6-A) uses the expression “examination of
the existence of an arbitration agreement”. The purport of
using the word “examination” connotes that the legislature
intends that the Referral Court has to inspect or scrutinise
the dealings between the parties for the existence of
an arbitration agreement. Moreover, the expression
“examination” does not connote or imply a laborious
or contested inquiry. On the other hand, Section
16 provides that the Arbitral Tribunal can “rule” on
its jurisdiction, including the existence and validity
of an arbitration agreement. A “ruling” connotes
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adjudication of disputes after admitting evidence from
the parties. Therefore, it is evident that the Referral
Court is only required to examine the existence of
arbitration agreements, whereas the Arbitral Tribunal
ought to rule on its jurisdiction, including the issues
pertaining to the existence and validity of an arbitration
agreement.”
(emphasis supplied)

The Constitution Bench held that the nature of objections to the
jurisdiction of an arbitral tribunal on the basis that stamp duty has
not been paid or is inadequate cannot be decided on a prima facie
basis.303 Hence, it was observed that objections of such a kind will
require a detailed consideration of evidence and submissions and
a finding as to the law as well as the facts.
165. At the Section 11 stage, a referral court only has to determine the
existence of arbitration agreement. The validity of the arbitration
clause providing for the procedure for appointment of arbitrators
will require the referral court to enter into a detailed consideration of
evidence and render a finding as to law and facts. This issue should
be left to be decided by the arbitral tribunal in view of the doctrine of
competence-competence. The arbitral tribunal is competent to rule
on its jurisdiction, including the issue of validity of the arbitration
clause for violating the equality principle under the Arbitration Act.

I. Prospective Overruling
166. A decision of this Court has retrospective effect unless expressly
given a prospective effect. Commercial relations are structured on
the basis of law. A change in law may have the effect of distorting
established rights and commercial bargains between parties.304
To avoid large-scale social and economic disruption, this Court
can exercise its discretionary jurisdiction under Article 142 to give
prospective effect to its decisions.305 The application of the doctrine of
prospective overruling results in the application of the law declared by

303 In re Interplay between Arbitration Agreements under Arbitration and Conciliation Act 1996 and Stamp
Act 1899 (supra) [196]
304 Somaiya Organics (India) Ltd. v. State of UP (2001) 5 SCC 519 [46]
305 Belsund Sugar Co. Ltd. v. State of Bihar (1999) 9 SCC 620 [112]
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this Court to cases arising in future.306 In Mineral Area Development
Authority v. Steel Authority of India,307 eight Judges of this Court
held that the doctrine of prospective overruling is applied to bring
about a smooth transition of the operation of law without unduly
affecting the rights of people who acted upon the overruled law.
167. In Bharat Aluminium Company v. Kaiser Aluminium Technical
Services,308 a Constitution Bench of this Court prospectively overruled
Bhatia International v. Bulk Trading S A309 observing:
“197. The judgment in Bhatia International [(2002) 4 SCC
105] was rendered by this Court on 13-3-2002. Since
then, the aforesaid judgment has been followed by all
the High Courts as well as by this Court on numerous
occasions. In fact, the judgment in Venture Global Engg.
[(2008) 4 SCC 190] has been rendered on 10-1-2008 in
terms of the ratio of the decision in Bhatia International
[(2002) 4 SCC 105]. Thus, in order to do complete justice,
we hereby order, that the law now declared by this Court
shall apply prospectively, to all the arbitration agreements
executed hereafter.”
168. In the present reference, we have upheld the decisions of this Court
in TRF (supra) and Perkins (supra) which dealt with situations
dealing with sole arbitrators. Thus, TRF (supra) and Perkins (supra)
have held the field for years now. However, we have disagreed
with Voestalpine (supra) and CORE (supra) which dealt with the
appointment of a three-member arbitral tribunal. We are aware of
the fact that giving retrospective effect to the law laid down in the
present case may possibly lead to the nullification of innumerable
completed and ongoing arbitration proceedings involving three-
member tribunals. This will disturb the commercial bargains entered
into by both the government and private entities. Therefore, we hold
that the law laid down in the present reference will apply prospectively
to arbitrator appointments to be made after the date of this judgment.
This direction only applies to three-member tribunals.

306 Sarwan Kumar v. Madan Lal Aggarwal (2003) 4 SCC 147 [15]
307 2024 SCC OnLine SC 1974
308 (2012) 9 SCC 552
309 (2002) 4 SCC 105
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J. Conclusion
169. In view of the above discussion, we conclude that:
a. The principle of equal treatment of parties applies at all stages
of arbitration proceedings, including the stage of appointment
of arbitrators;
b. The Arbitration Act does not prohibit PSUs from empanelling
potential arbitrators. However, an arbitration clause cannot
mandate the other party to select its arbitrator from the panel
curated by PSUs;
c. A clause that allows one party to unilaterally appoint a sole
arbitrator gives rise to justifiable doubts as to the independence
and impartiality of the arbitrator. Further, such a unilateral clause
is exclusive and hinders equal participation of the other party
in the appointment process of arbitrators;
d. In the appointment of a three-member panel, mandating the other
party to select its arbitrator from a curated panel of potential
arbitrators is against the principle of equal treatment of parties.
In this situation, there is no effective counterbalance because
parties do not participate equally in the process of appointing
arbitrators. The process of appointing arbitrators in CORE
(supra) is unequal and prejudiced in favour of the Railways;
e. Unilateral appointment clauses in public-private contracts are
violative of Article 14 of the Constitution;
f. The principle of express waiver contained under the proviso to
Section 12(5) also applies to situations where the parties seek
to waive the allegation of bias against an arbitrator appointed
unilaterally by one of the parties. After the disputes have arisen,
the parties can determine whether there is a necessity to waive
the nemo judex rule; and
g. The law laid down in the present reference will apply
prospectively to arbitrator appointments to be made after the
date of this judgment. This direction applies to three-member
tribunals.
170. The reference is answered in the above terms.
171. Pending application(s), if any, shall stand disposed of.
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Judgment

Hrishikesh Roy, J.

1. I have read the scholarly judgment of the learned Chief Justice DY
Chandrachud and also the erudite one authored by brother Justice
PS Narasimha.
2. I am in agreement with the view of the learned Chief Justice that
the principle of equality under Section 18 of the Arbitration and
Conciliation Act,1996(for short ‘Arbitration Act’) applies at all stages of
the proceedings including the stage of appointment of arbitrators. His
judgment offers a thorough examination (in Part D) of the mandatory
provisions within the Model Law and the Arbitration Act, which
underscores the applicability of the equality principle and the same
is not reiterated here for the sake of brevity. It is also correct to say
that the Arbitration Act does not provide special or different treatment
to government or government undertakings involved in arbitration.
3. Nonetheless, it is not possible for me to agree with the view canvassed
that the principles of constitutional law can be invoked to reinforce the
equality doctrine in the realm of arbitration. On this aspect, Justice
Narasimha has rightly opined that public law principles evolved
in Constitutional and Administrative law, should not generally be
imported to arbitration law.
4. Anchoring the principle of equality amongst the arbitrating parties from
the framework of the Arbitration Act, rather than invoking constitutional
and administrative law principles, in my opinion, will not only preserve
impartiality in the appointment of arbitrator but will also ensure party
autonomy. It is also imperative to observe that Courts should exercise
judicial restraint at the threshold stage of appointing an arbitrator. This
will then safeguard the core principles of equality, party autonomy,
and minimal judicial intervention in the arbitration domain.
5. The notion that Alternative Dispute Resolution offers ‘rough justice’
rather than true justice, is no more in vogue although some scepticism
towards arbitration was earlier noticed, across various jurisdictions.1
Trusting the arbitral process is essential and we must dispel the
notion that arbitration provides ‘second-hand justice’. To lend
credibility to the arbitral process, statutory procedural safeguards

1 Gary Born, International Commercial Arbitration (2nd edn, Kluwer 2014)
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promoting basic fairness must be given full play. A key factor in
establishing arbitration’s legitimacy lies in ensuring independence
and impartiality at all stages of the arbitral process. At the same
time, excessive judicial intervention must be avoided. By striking
this balance between procedural protections and judicial restraint,
we can reinforce arbitration’s role as an autonomous system capable
of delivering justice on par with traditional courts.
Scope of Judicial Interference
6. The principle of minimal judicial intervention in the arbitral process
is an integral element of the Indian arbitration law. The relevant part
of the Statement of Objects and Reasons of the Arbitration Act is
extracted below to press home this aspect:
“(i) to comprehensively cover international commercial
arbitration and conciliation as also domestic arbitration
and conciliation;
(ii) to make provision for an arbitral procedure which is
fair, efficient and capable of meeting the needs of the
specific arbitration;
(iii) to provide that the arbitral tribunal gives reasons for
its arbitral award;
(iv) to ensure that the arbitral tribunal remains within the
limits of its jurisdiction;
(v) to minimise the supervisory role of courts in the
arbitral process;
(vi) to permit an arbitral tribunal to use mediation, conciliation
or other procedures during the arbitral proceedings to
encourage settlement of disputes;
(vii) to provide that every final arbitral award is enforced
in the same manner as if it were a decree of the court;
(viii) to provide that a settlement agreement reached by
the parties as a result of conciliation proceedings will
have the same status and effect as an arbitral award on
agreed terms on the substance of the dispute rendered
by an arbitral tribunal; and
(ix) to provide that, for purposes of enforcement of foreign
awards, every arbitral award made in a country to which
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one of the two International Conventions relating to foreign
arbitral awards to which India is a party applies, will be
treated as a foreign award.”
[emphasis supplied]

7. Article 5 of the UNCITRAL Model Law(for short ‘Model law’) and
Section 5 of the Arbitration Act is extracted below:
“Article 5. Extent of Court intervention- In matters governed
by this Law, no court shall intervene except where so
provided in this Law.”
“Section 5. Extent of judicial intervention.—Notwithstanding
anything contained in any other law for the time being in
force, in matters governed by this Part, no judicial authority
shall intervene except where so provided in this Part.”
8. The Statement of Objects and Reasons of the Arbitration Act read
along with Section 5 of the Act makes it clear that the legislative intent
behind the Arbitration Act was to, inter alia, minimise the intervention
of the Courts and provide for timely resolution of disputes. It is also
crucial to note that the Parliament in Section 5, made a significant
departure from Article 5 of Model law by adding a non-obstante clause,
‘Notwithstanding anything contained in any other law’, emphasizing
that the Courts should exercise restraint and other laws should not be
made the basis for court’s intervention with the agreed arbitral process.
9. Section 11 deals with ‘Appointment of Arbitrator’. Section 11(2)
provides that subject to Section 11(6), parties are ‘free to agree
on a procedure for appointing the arbitrator or arbitrators’. At this
stage, the language in Section 11(6) of the Arbitration Act needs to
be noticed which reads thus:
“(6) Where, under an appointment procedure agreed upon
by the parties,—
(a) a party fails to act as required under that procedure;
or (b) the parties, or the two appointed arbitrators, fail
to reach an agreement expected of them under that
procedure; or
(c) a person, including an institution, fails to perform
any function entrusted to him or it under that procedure”
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10. The consideration to be given to the agreed procedure is also clear
from Section 11(8) of the Arbitration Act:
[11(8) The Supreme Court or, as the case may be, the
High Court or the person or institution designated by
such Court, before appointing an arbitrator, shall seek a
disclosure in writing from the prospective arbitrator in terms
of sub-section (1) of section 12, and have due regard to—
(a) any qualifications required for the arbitrator by the
agreement of the parties; and
(b) the contents of the disclosure and other
considerations as are likely to secure the appointment
of an independent and impartial arbitrator.]
[emphasis supplied]

11. In ad-hoc arbitration, the parties have the option to choose the
arbitrator as per the procedure agreed between parties. It is only when
‘a party fails to act as required under that procedure’ as contemplated
in Section 11(6) of the Act that the court’s intervention is expected.
However, the term “fail(ure) to act” should not be interpreted to allow
Courts to intervene particularly at the Section 11 stage. It is also
essential to bear in mind that under Section 11(8) the Court, ‘shall
seek a disclosure in writing from the prospective arbitrator in terms of
sub-section (1) of section 12’, thereby underscoring the importance
of impartiality and independence in the appointment of arbitrators.
Therefore, essential safeguards are also provided under Section 11
for the appointment of arbitrator.
12. In the context of Article 11, UNCITRAL Digest of Case Law on the
Model Law on International Commercial Arbitration2 provides as under:
“20. Securing an independent and impartial tribunal was
said in one case to be the major objective that ought to
be pursued by the court or competent authority intervening
on the basis of article 11, while in another case it was
said to be the paramount consideration. It has also been
explicitly identified as an important consideration in several
other cases.”

2 UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration
[2024] 11 S.C.R. 2283

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

13. The Commentary on Article 11 by Howard M. Holtzmann and Joseph
E. Neuhaus3 provides:
“….. the working group cited as examples two articles that
give rise to such restrictions: Article 12 concerning grounds
for challenging arbitrators and Article 34 concerning court’s
power to set aside arbitral awards. Thus, for example, if
the procedure agreed on results in an arbitral tribunal that
fails to meet the standard of impartiality and independence
established by Article 12 the arbitrator would be subjected
to challenge. ….The working group considered at some
length adding to Article 11 an explicit on the parties’ freedom
to determine the procedures for selection of arbitrators.
The provision would have stated that a procedure agreed
upon by the parties would be invalid if or to the extent that
it gave one party a ‘predominant position’ or in the words
of an alternate draft a ‘manifestly unfair advantage’ with
regard to the appointment of arbitrators. This provision
was later deleted because (1)the problem did not arise
frequently; (2)other provisions of the law such as Article
12 and 34, could be used to address the problem and (3)
the wording was regarded as too vague and thus could
lead to dilatory tactics and potentially invalidation of ‘well-
established and recognized appointment practices’’
14. The court’s role in ensuring an arbitrator’s impartiality and
independence is indeed essential. However, this duty, as is clear
from above, must be grounded in Section 12 of the Arbitration
Act which provides adequate standards for dealing with potential
conflicts or biases. By setting specific parameters for impartiality,
Section 12 effectively limits arbitrary or unjustified challenges while
still safeguarding the fairness of arbitration.
15. If the criteria for fairness, impartiality, or independence are not clearly
defined, a party may challenge the appointment of an arbitrator
on the ground that the procedure is “manifestly unfair” or that the
other party holds a “predominant position.” In such cases, a party
looking to delay proceedings could file baseless objections against
appointments, leading to unnecessary judicial intervention and thereby

3 Howard M. Holtzmann and Joseph E. Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration, at 479 (Kluwer 1989)
2284 [2024] 11 S.C.R.

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delaying arbitration until these challenges are resolved. This tactic
can effectively halt the arbitration process, leading to avoidable
delays in resolution- a problem exacerbated by the broader issue
of judicial backlog in India.
16. Section 11(6A) was inserted in the Arbitration Act through the 2015
Amendment:
“11(6A) The Supreme Court or, as the case may be,
the High Court, while considering any application under
sub-section (4) or sub-section (5) or sub-section (6), shall,
notwithstanding any judgment, decree or order of any
Court, confine to the examination of the existence of
an arbitration agreement.”
[emphasis supplied]

17. The language in Section 11(6A) read with Section 5 of the Arbitration
Act, and an interpretation focusing on the legislative intent informs
us about the narrow scope for court’s scrutiny under Section 11(6A),
at the stage of appointment of arbitrators,.
18. In Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman,4 a three-Judge
Bench of this Court affirmed the reasoning in Duro Felguera, S.A.
v. Gangavaram Port Ltd.5 by observing that the examination under
Section 11(6A) is “confined to the examination of the existence of
an arbitration agreement and is to be understood in the narrow
sense.” It was also held that the position of law prior to the 2015
Amendment Act, as set forth by the decisions of this Court in SBP &
Co. v Patel Engineering6 and National Insurance Co. Ltd. v. Boghara
Polyfab (P) Ltd,7 which widened the scope of judicial intervention,
are legislatively overruled.
19. In the concurring opinion in A.Ayyasamy vs A. Paramasivam,8 it was
observed as under:
“53. The Arbitration and Conciliation Act, 1996, should in
my view be interpreted so as to bring in line the principles

4 (2019) 8 SCC 714
5 (2017) 9 SCC 729
6 (2005) 8 SCC 618
7 (2009) 1 SCC 267
8 (2016) 10 SCC 386
[2024] 11 S.C.R. 2285

Central Organisation for Railway Electrification v.
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underlying its interpretation in a manner that is consistent
with prevailing approaches in the common law world.
Jurisprudence in India must evolve towards strengthening
the institutional efficacy of arbitration. Deference to a forum
chosen by parties as a complete remedy for resolving
all their claims is but part of that evolution. Minimising
the intervention of courts is again a recognition of the
same principle.”
[emphasis supplied]

20. In the significant decision on the Interplay Between Arbitration
Agreements under A&C Act, 1996 & Stamp Act, 1899,9 7 judges
of this Court had emphasized on the minimal supervisory roles of
Court in arbitral process:
“81. One of the main objectives behind the enactment of
the Arbitration Act was to minimize the supervisory role
of courts in the arbitral process by confining it only to the
circumstances stipulated by the legislature. For instance,
Section 16 of the Arbitration Act provides that the arbitral
tribunal may rule on its own jurisdiction “including ruling
on any objection with respect to the existence or validity
of the arbitration agreement.” The effect of Section
16, bearing in view the principle of minimum judicial
interference, is that judicial authorities cannot intervene in
matters dealing with the jurisdiction of the arbitral tribunal.
Although Sections 8 and 11 allow courts to refer parties
to arbitration or appoint arbitrators, Section 5 limits the
courts from dealing with substantive objections pertaining
to the existence and validity of arbitration agreements
at the referral or appointment stage. A referral court at
Section 8 or Section 11 stage can only enter into a prima
facie determination. The legislative mandate of 1prima
facie determination ensures that the referral courts do
not trammel the arbitral tribunal’s authority to rule on its
own jurisdiction.”
21. While reiterating on the limited scrutiny of courts at the stage of
initiating the arbitral process, the 7-judge bench also emphasized

9 (2024) 6 SCC 1
2286 [2024] 11 S.C.R.

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that while Section 16 deals with both ‘existence’ and ‘validity’, Section
11 deals only with ‘existence’ of the arbitration agreement.
22. In view of the above authoritative pronouncement by the 7-Judge
bench, critical scrutiny at the Section 11 stage would be antithetical
to the objective of the Arbitration Act and this will also impinge on
the principle of party autonomy. As we have noted earlier, Section
11(8) itself provides for the requirement of disclosure under Section
12 and therefore importing principles of constitutional law to justify
intervention at the Section 11 stage, would surely defeat the very
objective of the Arbitration Act. This will also be a departure from
the expected norm of minimal judicial intervention.
Unilateral Appointments- Whether Permissible?
23. One of the core issues to be considered here is whether unilateral
appointment of arbitrators is permissible. While such appointments
were a norm and approved by Courts prior to the 2015 Amendment,10
the legal terrain has been altered with the changed provisions.
24. Significantly, the 246th Report of the Law Commission addressed
the issue of party autonomy and the independence and impartiality
of arbitrators in the following words:
“the principles of impartiality and independence cannot be
discarded at any stage of the proceedings, specifically at
the stage of constitution of the Arbitral Tribunal, it would be
incongruous to say that party autonomy can be exercised
in complete disregard of these principles — even if the
same has been agreed prior to the disputes having arisen
between the parties.”
25. The Law Commission report also made the following critical
observation:
“60. The Commission, however, feels that real and
genuine party autonomy must be respected, and, in certain
situations, parties should be allowed to waive even the
categories of ineligibility as set in the proposed Fifth
Schedule. This could be in situations of family arbitrations
or other arbitrations where a person commands the blind

10 Executive Engineer, Irrigation Division, Puri v. Gangaram Chhapolia, [1984] 3 SCC 627; Secretary
to Government Transport Department, Madras v. Munusamy Mudaliar, [1988] (Supp) SCC 651;
International Authority of India v. K.D. Bali and Anr, [1988] 2 SCC 360
[2024] 11 S.C.R. 2287

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faith and trust of the parties to the dispute, despite the
existence of objective “justifiable doubts” regarding his
independence and impartiality. To deal with such situations,
the Commission has proposed the proviso to section 12 (5),
where parties may, subsequent to disputes having arisen
between them, waive the applicability of the proposed
section 12 (5) by an express agreement in writing. In
all other cases, the general rule in the proposed section
12 (5) must be followed. In the event the High Court is
approached in connection with appointment of an arbitrator,
the Commission has proposed seeking the disclosure in
terms of section 12 (1). and in which context the High Court
or the designate is to have “due regard” to the contents
of such disclosure in appointing the arbitrator.”
[emphasis supplied]

26. The Law Commission also significantly noted that if the appointing
authority is the State, it is even more essential to have an independent
and impartial tribunal. Weighing the observations of the 246th
Report of the Law commission, India has formally incorporated
the International Bar Association(IBA) Guidelines into its statutory
framework, introducing a comprehensive system of checks and
balances.11
27. Section 12 of the Arbitration Act provides a mechanism to address
issues, if any, that may arise pertaining to impartiality of arbitrators.
An amendment was carried out in Section 12 and significantly, the
Fifth and Seventh Schedule were adopted in the Arbitration Act which
provides a statutory reference point to determine independence and
eligibility. Section 12(5) reads as under:
[(5) Notwithstanding any prior agreement to the contrary,
any person whose relationship, with the parties or counsel
or the subject-matter of the dispute, falls under any of the
categories specified in the Seventh Schedule shall be
ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having
arisen between them, waive the applicability of this
subsection by an express agreement in writing.]”

11 HRD Corporation (Marcus Oil and Chemical Division) v. GAIL (India) Ltd. (2018) 12 SCC 471
2288 [2024] 11 S.C.R.

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28. The Fifth Schedule adopts the Orange List from the IBA Guidelines
on Conflicts of Interest in International Arbitration(for short ‘IBA
Guidelines’) requiring arbitrators to disclose any circumstances that
might reasonably affect their impartiality, including relationships with
the parties, counsel, or subject matter of the dispute. The Sixth
Schedule specifies the requirement of disclosure to be made by
an arbitrator. The Seventh Schedule incorporates the ‘Red List’ of
the IBA Guidelines, outlining scenarios of relationship conflict that
would result in de jure ineligibility of the arbitrator. Therefore, the
interpretation that all unilateral appointments are automatically nullified
under Section 12(5) of the Act, would go way beyond the legislative
intent of the Arbitration Act. If the Legislature had intended such a rigid
restriction, there would be no need for the proviso to Section 12(5),
which explicitly permits parties to waive this requirement through an
agreement in writing. This again underscores the emphasis on party
autonomy, in the arbitral process.
29. Section 13 outlines the challenge to the procedure in respect of
grounds under Section 12(3). Section 13(1) states that parties are
free to agree on a procedure to challenge an arbitrator. Section
13(2) provides as under:
“13(2) Failing any agreement referred to in sub-section (1),
a party who intends to challenge an arbitrator shall, within
fifteen days after becoming aware of the constitution
of the arbitral tribunal or after becoming aware of any
circumstances referred to in sub-section (3) of section 12,
send a written statement of the reasons for the challenge
to the arbitral tribunal.”
Section 13(4) next states that if a challenge to an arbitrator under
13(1) or 13(2) is not successful; the tribunal shall continue with the
proceedings.
30. Section 14 is titled ‘Failure or impossibility to Act’. It provides for
the termination of an arbitrator’s mandate if he, de facto or de jure,
becomes unable to perform his functions or for other reasons, fails
to act without undue delay. Unless agreed otherwise, one can apply
to ‘Court’ to decide on the termination of a mandate. It is crucial to
note that the term ‘Court’ herein is not the Section 11 Court.
31. Section 15 is titled ‘Termination of mandate and Substitution of
Arbitrator’. Section 15(1) states that in addition to the circumstances
mentioned in Section 13 and 14, the mandate of an arbitrator shall
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terminate when he withdraws from office for any reason, or by (or
pursuant to) an agreement of the parties. Section 31 provides for
the form and contents of the arbitral award. Section 32 provides for
the termination of the arbitrator’s mandate, either by delivery of a
final award or any of the circumstances mentioned in Section 32(2)
such as withdrawal of the claim by the claimant, agreement between
parties to terminate proceedings, or continuation of proceedings
having become unnecessary or impossible.
32. What follows from the above is that if the Arbitrator has any
relationship with any of the parties that raises a reasonable
apprehension of bias, such an arbitrator can anyway be de jure
barred under Sections 12 and 14, read with the Fifth and the
Seventh Schedules of the Arbitration Act. Post-appointment also,
a challenge can be made under Section 13(2) of the Arbitration
Act against appointment. It is also possible to finally set aside an
award for procedural violations, under Section 34(2)(iii) or 34(2)
(v) of the Arbitration Act.
33. Importantly, the Arbitration Act does not per se prohibit unilateral
appointment of arbitrators. If those nominated in the panel fit into
the limiting factors, underscored in Section 12(5) read with the
Fifth and Seventh Schedule of the Act, the same will not upset
the level playing field to be provided to the arbitrating parties. The
2015 Amendment, addressed specific concerns regarding fairness,
potential advantage to one party as well as independence and
impartiality of an unilaterally appointed arbitrator under the IBA
Guidelines. An eligible arbitrator, not otherwise disqualified under
Schedule VII of the Act, can be appointed unilaterally, and courts
should refrain from imposing their own opinion countermanding
the clear intent of the parties. The statutory safeguards, under the
Arbitration Act provide a checklist and a counterbalance and thereby
rule out inequality for the arbitrating parties.
34. The judgments in Voestalpine Schienen GmbH v. Delhi Metro Rail
Corpn. Ltd12 (for short ‘Voestalpine’), TRF Ltd. v. Energo Engg.
Projects Ltd13 (for short ‘TRF’), Perkins Eastman Architects DPC v.
HSCC (India) Ltd.14 (for short ‘Perkins’), and Central Organisation

12 2017) 4 SCC 665
13 (2017) 8 SCC 377
14 (2020) 20 SCC 760
2290 [2024] 11 S.C.R.

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for Railway Electrification v. ECI-SPIC-SMO-MCML (JV),15 (for short
‘CORE’) have been discussed in detail in the respective judgments
of my learned Brothers and therefore, only references to the said
decisions to support the present opinion are being made.
35. In Voestalpine (supra), the issue before the bench of two judges
was whether the panel of arbitrators prepared by DMRC violated
Section 12 of the Arbitration Act. It was held that Section 12(5)
read with the Seventh Schedule does not bar retired government
employees, from serving as arbitrators. It however held that in
the case of a government contract where the authority to appoint
arbitrators rests with a government entity, it is imperative to have
a ‘broad-based’ panel to secure the principle of impartiality and
independence of the Arbitrator. It is relevant to note that the basis
on which such a panel was upheld in Voestalpine (supra) was that
the persons who have been nominated are subject to the rigours
of Section 12.
36. In Perkins (supra), the question before the 3-judge bench was whether
the Managing Director of the Respondent, who is ineligible to be
appointed as an arbitrator under Section 12(5) read with Seventh
Schedule, can nominate the sole arbitrator. Therefore, the Court was
only concerned with the authority or power of the Managing Director
and cannot be understood to conclude that unilateral appointments
are impermissible. The distinction between ‘ineligibility’ and ‘unilateral’
appointments must be borne in mind.
37. Similarly, the question before the Court in TRF (supra) was in
the context of the ineligibility of the arbitrator and should not be
interpreted as conclusively deciding on the impermissibility of
unilateral appointments.
38. In CORE (supra), the three-judge bench endorsed an arbitration
clause that provided for current and former employees of one party to
be appointed by the other party by asserting that such an appointment
was balanced by an equal power of selection granted to the other
party. As already noted by Justice Narasimha, the Court relied on
Union of India Vs. Parmar Construction Company16 and Union of
India vs. Pradeep Vinod Construction Company17but did not consider

15 (2020) 14 SCC 712
16 (2019) 15 SCC 682
17 (2020) 2 SCC 464
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that these cases interpreted clause 34 of the General Conditions
of Contract (GCC), prior to the 2015 amendment. The prescription
for a broad- based panel as set out in Voestalpine (supra) was also
not noted. The issue with the arbitration clause in CORE (supra) is
that it exemplifies a situation where there may be an imbalance of
bargaining power, particularly in contracts involving public sector
undertakings or large private corporations. In such cases, one
party may wield disproportionate influence over the selection of
the arbitrator, undermining the fairness of the arbitration process.
This imbalance of power makes it imperative that the appointment
process be scrutinized carefully to uphold the principle of equality,
as laid down in Section 18 of the Arbitration Act. Therefore, the
Court erred in refusing to exercise its power under Section 11(6) to
appoint an arbitrator, in such a case of complete lack of consensus
between the parties.
39. Concerns about the presumed bias of an arbitrator nominated by
the claimant must also be tested against the objective standard of
independence and impartiality, provided under the Seventh Schedule
of the Arbitration Act. The appointment of arbitrators must scrupulously
be made through the consent of the parties. The recourse to Section
11 must not be readily inferred in view of the remedies contained in
Sections 12, 13, 14 and 15 of the Act. In any case, the scrutiny on
whether to intervene has to be on a case-to-case basis.
40. Arbitration without party autonomy prevailing, will be like a
redressal mechanism, without spirit. Liberty for the parties opting
for Arbitration without equality being enshrined from the stage
of inception to conclusion would be like a soulless process. The
Arbitration Act as discussed earlier provides for adequate guard
rails to ensure that the arbitrator(s) to be appointed are capable
of independently discharging their responsibilities. The Sixth and
Seventh Schedule requires the proposed arbitrator(s) to disclose
any circumstances that might reasonably affect their impartiality,
including relationship with the parties, the counsel or the subject
matter of the dispute. In this scenario, since parties opt for the
arbitration route to avoid redressal in Court, minimal judicial
intervention should be the norm.
41. In my view, all unilateral appointments must not be declared void by
way of a declaration of this Court. The 2015 Amendment in Section
12(5) itself provides for a specific waiver i.e. (a) an express consent
in writing and (b)the consent must be obtained after the dispute has
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arisen. Therefore, it is abundantly clear that an agreement between
the parties(provided it satisfies the specific waiver requirements under
Section 12(5)) can effectively cure any concerns about impartiality
or independence in such cases.
42. Adequate safeguards are provided within the Arbitration Act to
ensure a level playing field as discussed in the preceding paragraphs
and therefore to answer the question in this reference, a search
within the provisions of the Arbitration Act should first be made.
In my view, the obligations of fair treatment should be grounded
in the Arbitration Act rather than in the principles of Constitutional
or administrative law. The choice of the parties in the agreement
should not be disregarded without compelling reasons, through
judicial intervention especially when the Arbitration Act provides
clear remedies under Sections 12, 13, 14, and 15 of the Arbitration
Act. It is only when there is a complete lack of consensus between
the parties that the Court’s interference under Section 11 could be
justified.
43. Flowing from the above discussion, the following are the conclusions :-
a) Section 18 applies to all stages of arbitration including the stage
of appointment of an arbitrator. The Arbitration Act does not
provide for any special treatment to the government irrespective
of whether the arbitration is by or against the government.
b) Unilateral appointment of Arbitrators is permissible as per the
legislative scheme of the Arbitration Act. There is a distinction
between ‘ineligibility’ and ‘unilateral’ appointment of arbitrators.
As long as an arbitrator nominated by a party is eligible under
the Seventh Schedule of the Act, the appointment (unilateral
or otherwise), should be permissible. It is only in cases of a
complete lack of consensus that the court should exercise its
power under Section 11(6) of the Arbitration Act to appoint
an independent and impartial arbitrator as per Section 11(8)
read with Section 12 and 18 of the Arbitration Act. At the
appointment stage, the scope of judicial intervention is otherwise
extremely narrow.
c) The independence and impartiality of the arbitrator must be
examined within the statutory framework of the Arbitration Act,
particularly Section 18 read with 12(5). Public Law constitutional
principles should not be imported to arbitration proceedings
particularly at the threshold stage of Section 11.
[2024] 11 S.C.R. 2293

Central Organisation for Railway Electrification v.
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Judgment

Pamidighantam Sri Narasimha, J.

Contents*

A. Introduction ....................................................................... 3
B. Access to Justice .............................................................. 4
C. Arbitration as Substitute Dispute Resolution .................... 5
i. Two inviolable values of Arbitration, party
autonomy and an independent and impartial
Arbitral Tribunal ........................................................ 6
D. Party autonomy ................................................................. 7
E. Obligations of parties to the Arbitration Agreement to
constitute an independent and an impartial Arbitral
Tribunal ............................................................................. 9
i. Distinct duties of Arbitrators and Arbitrating
Parties ....................................................................... 9
ii. Freedom of Contract and its limitations under
Contract Act .............................................................. 10
iii. Public Policy Consideration to Constitute an
Independent Tribunal ................................................ 11
iv. The limits of public policy considerations for
commercial transactions and inapplicability of
unconscionability ....................................................... 12
v. Section 28 of the Contract Act and Access
to Justice ................................................................... 13
F. Section 12, subsequent to 2015 Amendment .................. 15
i. Two categories of challenge under Section 12 ........ 16
ii. Public policy consideration in Section 12(5) ............ 18
G. Power of the Court to Constitute an Independent
Tribunal and the stage at which the power is
exercised ........................................................................... 18
i. Section 11(8) ............................................................. 19
H. Precedents of this Court on Section 12(5) after its
amendment ....................................................................... 24

* Ed. Note: Pagination as per the original Judgment.
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I. International Perspective .................................................. 30
i. Legislative framework of certain foreign
jurisdictions ............................................................... 30
ii. Judicial pronouncements of certain foreign
jurisdictions ............................................................... 32
J. On the opinion of the Hon’ble CJI .................................... 36
K. Conclusion ........................................................................ 39

A. Introduction
1. The issue before us is whether the appointment process under an
arbitration agreement, which allows a party who has an interest in the
dispute to unilaterally appoint a sole arbitrator or curate a panel of
arbitrators and mandate that the other party select their arbitrator from
the panel, is valid in law. Prior to the 2015 Amendment to Section 12
of the Arbitration and Conciliation Act, 1996,1 courts permitted such
unilateral constitution of arbitral tribunals by one party. However, post
amendment, judgments oscillated between negative and conditional
affirmations. This Constitution Bench is called upon to clarify the
correct position, essential for dispelling uncertainty. The argument
against such an appointment process is based on Sections 12(5)
and 18 of the Act, as well as on public law considerations such as
equal treatment of parties under Article 14, unfair and unreasonable
procedure, and non-arbitrariness.
2. I have considered it necessary to locate the obligations of the parties
to constitute an independent and impartial arbitral tribunal within the
Indian Contract Act, 1872,2 and the Arbitration Act, and not to apply
public law principles evolved in constitutional and administrative
laws. This is to ensure party autonomy, coupled with minimal judicial
intervention, a foundational principle of dispute resolution through
arbitration. When parties choose arbitration over Court proceedings
as an exception under Section 28 of the Contract Act, they are under

1 Hereinafter “the Act” or “Arbitration Act”.
2 Hereinafter “the Contract Act”.
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a duty to constitute an independent and impartial tribunal as an
effective substitute, failing which the arbitration agreement will be
void as opposed to public policy under Section 23 of the Contract
Act. This obligation is the Second Principle that governs arbitration.
Whether the agreement is compliant with the duty to constitute an
independent and impartial tribunal and not opposed to the public
policy effecting access to justice is always determined by the Court.
This is the third principle. There is a clear statutory incorporation
of these three principles in the Contract Act and the Arbitration
Act. I believe that enduring answers to the questions before this
Constitution Bench will lie in the balance between these principles.
2.1 Enquiry into disputes relating to legality and propriety of a
contractual clause enabling unilateral appointment of arbitral
tribunal arises when an application under Section 11(6) for
appointment or under Section 14 of the Arbitration Act for
substitution are brought before the Court. It is at this stage
that the Court will examine the arbitration clause to ensure
independence and impartiality. It will be impermissible for the
court to intervene at a stage prior to that, to declare agreements
to be void as an advanced ruling. This is to ensure party
autonomy, particularly when the Arbitration Act itself enables
parties to waive certain mandatory provisions such as Section
12(5) of the Arbitration Act.

B. Access to Justice
3. Access to justice constitutes the very foundation of democratic
governance, serving as the linchpin of a fair and equitable society.
Our Constitution, in its wisdom, establishes a comprehensive judicial
architecture, encompassing the Supreme Court, the High Courts,
and subordinate courts as public law and ordinary civil/criminal
remedies to safeguard this inalienable right. Furthermore, specialised
tribunals and commissions are constituted to adjudicate specific
disputes, leveraging expertise and facilitating expeditious resolution,
thereby guaranteeing swift and effective justice to all. It is imperative
that these judicial remedies are effective. In fact, effectiveness of
judicial remedies is a constitutional mission, and it is always a work
in progress for the Supreme Court to ensure that the remedies are
impartial, readily accessible, financially viable, swiftly administered,
and comprehensively tailored.
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4. Beyond the realm of public law and ordinary civil/criminal remedies, as
indicated herein above, parties to a dispute may elect to resolve their
differences through mutually agreed procedures, crystallised in the
form of contractual agreements. It is permissible in law to have such
alternative dispute resolution mechanisms through contract. Section
28 of the Contract Act protects these alternative dispute resolution
agreements through arbitration between contesting parties, fostering an
environment conducive to expeditious and amicable dispute resolution.

C. Arbitration as Substitute Dispute Resolution
5. The Arbitration and Conciliation Act, 1996 provides a simple, efficient,
cost-effective, confidential, and a fair dispute resolution remedy by
empowering the parties to choose their arbitrators and also the
procedure for conduct of the arbitral proceedings. Recognising party
autonomy, Section 53 of the Act restrains judicial authorities from
intervening with the arbitral remedy except as provided in the Act. The
mandate of Section 5 is reflected in a number of judicial decisions of
this Court, enabling easy access to arbitration by merely examining
the existence of an arbitration agreement between the parties, and
at the same time refraining from interfering with the arbitral award on
grounds other than manifest arbitrariness or against public policy.4
6. Two inviolable values of Arbitration, party autonomy and an
independent and impartial Arbitral Tribunal: Two important values are
inviolable for arbitration to be a viable, effective, and at the same
time, credible alternative dispute resolution remedy; they co-exist in
the duality of freedom and duty. They are the freedom to contract,
constitute, and channel arbitration proceedings, i.e., party autonomy
on the one hand, and the duty towards constituting an independent and
impartial arbitral tribunal on the other. These values are independent,
yet interdependent for a credible and effective dispute resolution.5

3 Section 5 of the Act reads:
“5. Extent of judicial intervention: Notwithstanding anything contained in any other law for the time being
in force, in matters governed by this Part, no judicial authority shall intervene except where so provided
in this Part.”
4 Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1; M/s Arif Azim Co. Ltd. v. M/s Aptech Ltd.
(2024) 5 SCC 313; SBI General Insurance Co Ltd v. Krish Spinning, 2024 SCC OnLine SC 1754 on
minimal judicial intervention.
5 These are also recognised as fundamental principles of arbitration law. See Centrotrade Minerals
& Metals Inc v. Hindustan Copper Ltd. (2006) 11 SCC 245; Union of India v. Uttar Pradesh Bridge
Corporation Limited (2015) 2 SCC 52.
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7. With this introduction, I will now examine the following issues in detail;
(i) Party autonomy, as recognised and incorporated in the scheme
of the Act;
(ii) Constituting an independent and impartial arbitral tribunal, which
obligation of parties is distinct from the duty of the arbitrator to
be unbiased and neutral;
(iii) The obligation of the parties is founded on contract and public
policy considerations, without which agreements are void and
unenforceable in law;
(iv) Apart from the obligations on the parties, the Contract Act and
Arbitration Act empower the courts to ensure constitution of an
independent and impartial arbitral tribunal;
(v) The determination as to whether an arbitral tribunal is
independent and objective is examined by the court only when
it takes up an application under Section 11(6) or Section 14 of
the Arbitration Act.

D. Party autonomy
8. Arbitration is an agreement by the parties to submit to arbitration all
or certain disputes which have arisen or which may arise between
them, as provided under Section 7(1) of the Act. Party autonomy
is a product of freedom to contract and recognises the freedom
of parties to determine the terms of contract. It is said to be the
“brooding and guiding spirit in arbitration” and the “grund norm” of
arbitration.6 Party autonomy is ingrained as a fundamental principle
in the Act. The freedom to enter into such an agreement belongs to
the parties7 and this will also include the freedom to determine the
law governing the arbitration agreement.8
8.1 Second, parties are free to determine composition of the arbitral
tribunal, such as the number of arbitrators,9 the nationality of

6 Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2016) 4 SCC 126.
7 Cox and Kings v. SAP India Pvt Ltd (2024) 4 SCC 1, para 180.
8 Bharat Aluminium Co. (supra).
9 Section 10 of the Act, provided that it is not even number.
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the arbitrator,10 the procedure for appointment,11 the grounds
of challenge, including waiver of challenge,12 the procedure for
challenging an appointed arbitrator,13 terminate the mandate
of an arbitrator,14 and even the consequences of substitution
of arbitrator.15
8.2 Third, the parties have the autonomy to determine the
conduct of arbitral proceedings, the procedure to be followed
by the arbitral tribunal in the conduct of proceedings,16 the
place of arbitration,17 the date of commencement of arbitral
proceedings, 18 the language to be used in the arbitral
proceedings,19 the time for submitting statements of claim
and defence,20 including amendments,21 whether the arbitral
tribunal will conduct oral hearings or proceed on the basis
of documents and other material,22 in cases of default by
a party to communicate statement of claim or defence, or
failure to appear at an oral hearing or produce documentary
evidence,23 and regarding the appointment of experts by the
arbitral tribunal.24
8.3 Fourth, the parties to the arbitration agreement have the
freedom to determine the procedure as well as the termination
of arbitral proceedings. This will include the determination of
the rules applicable for the resolution of the dispute,25 whether
the decision will be made by a majority of the members in an

10 Section 11(1).
11 Section 11 (2), subject to Section 11(6).
12 Section 12, including 12(5) proviso.
13 Section 13(1), subject to Section 13(4)
14 Section 15(1)(b).
15 Section 15(3) and 15(4).
16 Section 19(2).
17 Section 20(1).
18 Section 21.
19 Section 22(1).
20 Section 23(1).
21 Section 23(3).
22 Section 24(1).
23 Section 25.
24 Section 26.
25 Section 28.
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arbitral tribunal with more than one arbitrator,26 extension of time
limit for the completion of proceedings,27 fast track procedures,28
grant of pendente lite and pre-reference interest,29 and whether
the arbitral tribunal can make an additional arbitral award as to
claims presented in the arbitral proceedings but omitted from
the award.30
8.4 Fifth, the parties can challenge and/or apply for the enforcement
of the award. Chapter VII and Chapter VIII set out the recourse
available to parties after the arbitral award, for it to be set aside
by the courts,31 the finality and enforceability of the award,32
appeals,33 and miscellaneous provisions.34

E. Obligations of parties to the Arbitration Agreement to
constitute an independent and an impartial Arbitral Tribunal
9. I will now examine the principles that impinge upon the freedom
to contract and limit of party autonomy. Before that, a necessary
distinction needs to be drawn for clarity and certainty.
9.1 Distinct duties of Arbitrators and Arbitrating Parties. There are
two distinct obligations. The first is the obligation of the parties
to the agreement, and the second is the neutrality and objectivity
that an arbitrator must maintain. The obligations on the parties
to the arbitration agreement to constitute an independent and
impartial arbitral tribunal is distinct from the objectivity and
impartiality that an arbitrator(s) must himself maintain. The
foundation of the former is within the statutory framework,
coupled with certain public policy considerations. The latter is
simply the duty to act judicially, it is not superimposed by any
statute or public policy, but arises because of the very nature
of the calling, i.e., to judge what is right and what is wrong.

26 Section 29.
27 Section 29A(2).
28 Section 29B.
29 Section 31(7)(a).
30 Section 33(4).
31 Section 34.
32 Sections 35 and 36.
33 Section 37.
34 Sections 38 to 43.
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Though the constitution of the arbitral tribunal is inextricably
connected to the agreement between the parties, core duties
of the arbitrator(s) in deciding the case is independent of the
contract. The Arbitration Act provisions grounds to challenge
appointment of an arbitrator at various stages, including after
making of the award. The issue with which we are concerned
is not about the arbitrator or the award of the arbitral tribunal,
but about the legality of the contractual arbitration clause that
enables one of the parties to unilaterally constitute the arbitral
tribunal. Clarity about the issue arising for consideration is
necessary to focus on the right questions that we must ask.
10. Therefore, to understand the question relating to the legality of the
contractual clause, we must get to the first principles that govern
arbitration agreements, which in turn takes us to the first principles
of law of contract.
11. Freedom of Contract and its limitations under Contract Act. The
foundation of the law of contract is in the freedom to contract and
its enforceability in law. Sections 2(a), (b), and (d), of the Contract
Act define ‘proposal’, ‘promise’ and ‘consideration’, and reflect the
autonomy of the parties declaring the terms and conditions and
reciprocal promises. Section 2(e) provides that “Every promise and
every set of promises, forming the consideration for each other, is an
agreement”. Agreements are contracts if they are made by the free
consent of parties,35 and free consent36 exists when it is not caused
by coercion,37 undue influence,38 fraud39 and misrepresentation.40
Furthermore, agreements attain the status of contracts only if they
are made for lawful consideration and with a lawful object.41 The
consideration or object of an agreement is lawful only when it is
not opposed to public policy. It is here that the duty and obligation
of the Court arises as it is the exclusive province of the Court to
decide if an agreement is in consonance with public policy or not.

35 Section 10 of the Contract Act
36 Section 14 of the Contract Act.
37 Section 15 of the Contract Act
38 Section 16 of the Contract Act
39 Section 17 of the Contract Act
40 Section 18 of the Contract Act
41 Section 23 of the Contract Act.
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This position is clear from the text of Sections 10 and 23 of the
Contract Act, which are extracted hereinbelow for ready reference;
“10. What agreements are contracts.—All agreements
are contracts if they are made by the free consent of
parties competent to contract, for a lawful consideration
and with a lawful object, and are not hereby expressly
declared to be void.
Nothing herein contained shall affect any law in force in
India and not hereby expressly repealed by which any
contract is required to be made in writing or in the presence
of witnesses, or any law relating to the registration of
documents.”
“23. What considerations and objects are lawful, and
what not.—The consideration or object of an agreement
is lawful, unless—
it is forbidden by law; or
is of such a nature that if permitted, it would defeat the
provisions of any law; or
is fraudulent; or
involves or implies injury to the person or property of
another; or
the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of
an agreement is said to be unlawful. Every agreement
of which the object or consideration is unlawful is void.”
12. Public Policy Consideration to Constitute an Independent Tribunal.
Under the Contract Act, public policy considerations limit contractual
freedom to the extent of declaring an agreement void when the court
regards it as opposed to public policy.42 The power of determining
the meaning and scope of public policy is of the court.43
13. The public policy principle has been interpreted to mean that parties
to a contract cannot agree to terms or to an object which have the

42 Section 23 of the Contract Act.
43 Indian Financial Association of Seventh Day Adventists v. M.A. Unneerikutty (2006) 6 SCC 351, para 17.
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tendency to harm the public good and public interest.44 The freedom
of contract is restricted by taking into account the protection and
promotion of public welfare, and the larger interest of the community,
which must be beyond the parties contracting freedom.45 Courts in
India have relied on and applied the public policy principle in the
following broad categories of cases: i) where the object is injurious
to good government in domestic and foreign affairs; ii) whose object
interferes with the proper administration of justice; iii) whose object
is injurious to marriage and which promotes sexual immorality; and
iv) agreements in restraint of trade.46
14. The limits of public policy considerations for commercial transactions
and inapplicability of unconscionability. One of the most significant
instances wherein our courts have travelled beyond the above
categories of public policy restrictions on contractual freedom is
in the case of Central Inland Water Transport v. Brojo Nath
Ganguly47 where Court expounded on ‘unconscionability’ as a
facet of public policy. This ground is particularly relevant for our
analysis as Mr. Banerji has pointed out several US cases wherein
arbitration agreements that allow one party to control the pool of
potential arbitrators were held to be unconscionable. Therefore,
it is necessary to set out the contours of unconscionability under
Indian contract law.
15. Through the doctrine of unconscionability, this Court in Brojo Nath
Ganguly (supra) introduced inequality of bargaining power as a ground
to refuse enforcement of unreasonable and unfair contracts that shock
the conscience of the court. It has envisaged for this principle to
apply in cases where the weaker party does not exercise meaningful
choice and must agree to a standard form of contract.48 However, the
Court has also circumscribed the applicability of unconscionability and
held that it will not apply when parties have equal or almost equal
bargaining power, such as in commercial transactions and contracts

44 Gherulal Parekh v. Mahadeodas Maiya (1959) Supp 2 SCR 406, para 23; Central Inland Water Transport
Corpn Ltd v. Brojo Nath Ganguly (1986) 3 SCC 156, para 92; Rattan Chand Hira Chand v. Askar Nawaz
Jung (1991) 3 SCC 67, para 17; Indian Financial Association of Seventh Day Adventists (supra), para
19; Assistant General Manager v. Radhey Shyam Pandey (2020) 6 SCCC 438, para 72.
45 Pollock and Mulla, The Indian Contract and Specific Relief Acts, vol 1 (14th edn, Lexis Nexis 2013), 524.
46 ibid, 524-566; P. Rathinam v. Union of India (1994) 3 SCC 394, para 93.
47 (1986) 3 SCC 156
48 Brojo Nath Ganguly (supra), paras 89, 92-93.
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between businessmen.49 The inapplicability of ‘unconscionability’ to
commercial contracts has been reiterated by this Court in the context
of arbitration agreements.50 In view of the settled position, I cannot
accept the submissions of Mr. Banerji on this issue.
16. Section 28 of the Contract Act and Access to Justice. Access to
justice is a constitutional principle. It provides remedies for redressal
of grievances arising out of violation of rights and dereliction of
duties. The remedies through ordinary civil courts and tribunals
comprise credibility, efficiency, objectivity, expeditious disposal,
comprehensiveness as well as financial viability. Prohibiting restraint
from accessing these remedies is a public policy.
17. Section 28 of the Contract Act secures access to justice by declaring
that agreements in restraint of public law remedies are void. Section
28 is extracted hereinbelow for ready reference;
“28. Agreements in restraint of legal proceedings,
void.— Every agreement,—
(a) by which any party thereto is restricted absolutely from
enforcing his rights under or in respect of any contract,
by the usual legal proceedings in the ordinary tribunals,
or which limits the time within which he may thus enforce
his rights; or
(b) which extinguishes the rights of any party thereto, or
discharges any party thereto, from any liability, under or in
respect of any contract on the expiry of a specified period
so as to restrict any party from enforcing his rights, is void
to the extent.
Exception 1.—Saving of contract to refer to arbitration
dispute that may arise.—This section shall not render
illegal a contract, by which two or more persons agree that
any dispute which may arise between them in respect of any
subject or class of subjects shall be referred to arbitration,
and that only the amount awarded in such arbitration shall
be recoverable in respect of the dispute so referred.

49 ibid, para 89.
50 S.K. Jain v. State of Haryana (2009) 4 SCC 357, para 8; ICOMM Tele Limited v. Punjab State Water
Supply and Sewerage Board (2019) 4 SCC 401, paras 13-14.
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Exception 2.—Saving of contract to refer questions that
have already arisen.—Nor shall this section render illegal
any contract in writing, by which two or more persons agree
to refer to arbitration any question between them which
has already arisen, or affect any provision of any law in
force for the time being as to references to arbitration.”
Limitations on agreements which restrain access is necessary
to secure the constitutional mandate of justice to all by providing
access to public law and ordinary civil/criminal remedies from being
void. Exceptions 1 and 2 to Section 28 are arbitration agreements
and enable substituted dispute resolution, fostering an environment
conducive to expeditious and amicable resolution.
18. Access to justice, as provided through ordinary courts and tribunals,
can be substituted through other systems and forums. As the
substitution is only a replacement of the forum, the essentiality of
remedy such as credibility, efficiency, etc. must continue to inhere
in the substituted forum as well. In public law remedies, this issue
was considered when administrative tribunals were constituted for
the first time to substitute ordinary remedies. It was upheld subject
to the condition that the tribunals are worthy successors, meaning
that they must have the necessary credibility, efficiency and other
features that are integral to judicial remedy.
19. Similarly, arbitration being a substituted remedy contracted by the
parties, it must also comprise the basic features of a judicious
remedy, the most important being an independent and impartial
decision-making forum.
20. The question whether the substituted forum continues to inhere the
essentiality of a remedy, in order to be compliant with the larger
principle of access to justice, is for the court to examine. The Arbitration
Act incorporates this principle of public policy in Sections 11, 12 as
well as Section 34. It is in this context that I will now proceed to
examine Section 12 of the Act.

F. Section 12, subsequent to 2015 Amendment
21. After the amendment, Section 12 of the Act reads:
“12. Grounds for challenge.—(1) When a person is
approached in connection with his possible appointment
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as an arbitrator, he shall disclose in writing any
circumstances,—
(a) such as the existence either direct or indirect, of any
past or present relationship with or interest in any of the
parties or in relation to the subject-matter in dispute,
whether financial, business, professional or other kind,
which is likely to give rise to justifiable doubts as to his
independence or impartiality; and
(b) which are likely to affect his ability to devote sufficient
time to the arbitration and in particular his ability to complete
the entire arbitration within a period of twelve months.
Explanation1.—The grounds stated in the Fifth Schedule
shall guide in determining whether circumstances exist
which give rise to justifiable doubts as to the independence
or impartiality of an arbitrator.
Explanation 2.—The disclosure shall be made by such
person in the form specified in the Sixth Schedule.
(2) An arbitrator, from the time of his appointment and
throughout the arbitral proceedings, shall, without delay,
disclose to the parties in writing any circumstances
referred to in sub-section (1) unless they have already
been informed of them by him.
(3) An arbitrator may be challenged only if—
(a) circumstances exist that give rise to justifiable doubts
as to his independence or impartiality, or
(b) he does not possess the qualifications agreed to by
the parties.
(4) A party may challenge an arbitrator appointed by him,
or in whose appointment he has participated, only for
reasons of which he becomes aware after the appointment
has been made.
(5) Notwithstanding any prior agreement to the contrary,
any person whose relationship, with the parties or counsel
or the subject-matter of the dispute, falls under any of the
categories specified in the Seventh Schedule shall be
ineligible to be appointed as an arbitrator:
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Provided that parties may, subsequent to disputes having
arisen between them, waive the applicability of this sub-
section by an express agreement in writing.”
22. Two categories of challenge under Section 12. The effect of the
2015 Amendment is that there are now two separate categories
for the parties to challenge the appointment of an arbitrator. First,
a challenge under Section 12(3) to an appointed arbitrator based
on justifiable doubts regarding his independence and impartiality,
by using the procedure under Section 13. While Section 12(3) itself
remains unamended, the insertion of Explanation 1 in Section 12(1),
read with the Fifth Schedule, now enlists the circumstances that
give rise to justifiable doubts as to an arbitrator’s independence
and impartiality. The Fifth Schedule contains 34 entries that have
been adopted from the Red and Orange Lists of the IBA Guidelines.
A written disclosure on these grounds must be made in the form
provided in the Sixth Schedule.51
22.1 The second category is under Section 12(5) which declares
certain persons to be ‘ineligible’ to be appointed as arbitrators.
These ineligibilities are enlisted in the Seventh Schedule. The
provision itself stipulates that such ineligibility is notwithstanding
any prior agreement to the contrary. In these situations, the
ineligibility of the person to act as an arbitrator is a matter of
law and goes to the root of their appointment.52 As they are de
jure unable to perform their function, their mandate automatically
terminates under Section 14(1)(a), and the appointment need not
be challenged before the arbitral tribunal under Section 13. The
parties can apply to the court under Section 14(2) for a decision
on the termination of the arbitrator’s mandate and appointment
of a substituted arbitrator.53 The only way for parties to by-pass
such ineligibility, as provided in the proviso, is to enter into an
express agreement in writing, subsequent to the disputes having
arisen, to waive the applicability of Section 12(5).54

51 HRD Corporation (Marcus Oil and Chemical Division) v. GAIL (India) Ltd. (2018) 12 SCC 471, paras 11-
12; Chennai Metro Rail Ltd v. Transtonnelstroy Afcons (JV) (2024) 6 SCC 211, para 25.
52 Bharat Broadband Network Limited v. United Telecoms Limited (2019) 5 SCC 755.
53 ibid, paras 15-17; HRD Corporation (supra), paras 11-12; Chennai Metro Rail (supra), para 26.
54 ibid.
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23. The difference between these categories is important to bear in
mind. In the former situation, there is no bar to the appointment
itself, but the appointment may later be challenged before the arbitral
tribunal. On the other hand, in the latter situation, the Act places an
express bar on the appointment of certain ‘ineligible’ persons as
arbitrators, notwithstanding any prior agreement to the contrary. Their
appointment is invalid from the very beginning, and in the application
before the court under Section 14, the only question is whether the
arbitrator falls under one of the categories of the Seventh Schedule
and whether there is an agreement waiving the applicability of Section
12(5) in accordance with the proviso.55
24. At this stage, it may be relevant to note that the entries of the
Seventh Schedule are common with the first 19 entries of the Fifth
Schedule. This Court in HRD v. GAIL (supra) has noted that the
purpose of such overlapping entries is to ensure that the disclosure
under the Sixth Schedule encompasses disclosure on entries
contained in the Seventh Schedule. Otherwise, the parties will be
put at a disadvantageous position as they will not have access to
such information.56 Since this is the purpose of identical entries, it
follows that if any of the entries in the Seventh Schedule applies,
then the consequence under Section 12(5), rather than Section 12(1)
read with Section 12(3), will ensue.
25. Public policy consideration in Section 12(5). The neutrality,
independence, impartiality, integrity, and objectivity of an arbitral
tribunal are matters of public policy, and the validity of arbitration
agreements must be tested against this touchstone. The object
and purpose of Section 12(5) is to secure the independence and
impartiality of the arbitral tribunal by placing a restriction on the
choice of the parties in appointing certain persons as arbitrators, who
are declared as “ineligible” under the Seventh Schedule. Section 12
is therefore a statutory incorporation of the public policy principle of
access to justice that I have delineated hereinabove, and the Fifth
and Seventh Schedules enlist the situations when the appointment
of certain persons could and would conflict with the independence
of the tribunal. The courts can examine whether an appointment

55 Chennai Metro Rail (supra), paras 29-33.
56 HRD (supra), para 17.
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procedure accords or violates this provision. Therefore, the court
will be guided by Section 12 of the Act, read with the Fifth and
Seventh Schedules, to determine whether arbitration agreements
providing for unilateral appointments and panel appointments are
opposed to the public policy duty on the parties to appoint an
independent tribunal.
26. The next important question is the stage at which the court will
exercise its power and jurisdiction to examine whether the arbitration
agreement is in consonance with Section 12 and the broad public
policy principle of constitution of an independent and impartial tribunal.
I will now consider this question.

G. Power of the Court to Constitute an Independent Tribunal
and the stage at which the power is exercised
27. Power of the Court to ensure that the agreement is not only
independent and impartial but also seems independent and impartial.
27.1 When a party to the arbitration agreement alleges that the
core principle of the remedy is compromised in the procedure
prescribed under the agreement by filing an application under
Section 11(6), it is at this stage that the court will examine
it. The provisions of Section 12, coupled with the Fifth and
Seventh Schedules, will come to the aid of the court in coming
to the conclusion on whether the arbitral tribunal maintains
the sanctity of a credible remedy.
28. Section 11(8): Section 11(8) of the Arbitration Act recognises the
power of the court to appoint an arbitrator de hors the arbitration
agreement to secure the independence and impartiality of the arbitral
tribunal, and consequently to ensure that public policy is protected.
Sections 11(6) and 11(8) reads:
“11. Appointment of arbitrators –
…
(6) Where, under an appointment procedure agreed upon
by the parties,—
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach
an agreement expected of them under that procedure; or
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(c) a person, including an institution, fails to perform any
function entrusted to him or it under that procedure,
a party may request the Supreme Court or, as the case may
be, the High Court or any person or institution designated
by such Court to take the necessary measure, unless the
agreement on the appointment procedure provides other
means for securing the appointment.
***
(8) The Supreme Court or, as the case may be, the High
Court or the person or institution designated by such Court,
before appointing an arbitrator, shall seek a disclosure
in writing from the prospective arbitrator in terms of sub-
section (1) of section 12, and have due regard to—
(a) any qualifications required for the arbitrator by the
agreement of the parties; and
(b) the contents of the disclosure and other considerations
as are likely to secure the appointment of an independent
and impartial arbitrator.”
29. Section 11(8) comes into play when the court is required to secure the
appointment of the arbitrator on an application by the parties under
sub-sections (4), (5), or (6). We are concerned with sub- section (6)
here, as it applies when the parties have determined an appointment
procedure but it fails due to the failure of one of the parties, the
appointed arbitrators, or the entrusted arbitral institution. In such
cases, the court will appoint the arbitrator upon an application
from the parties, and while doing so, it shall have due regard to
the qualifications required of the arbitrator by the agreement and
other consideration as are likely to secure the appointment of
an independent and impartial arbitrator, as provided under sub-
section (8).
30. While the general rule is that the court may adhere to the appointment
procedure in the agreement in view of party autonomy, it is not bound
by this procedure.57 Rather, Section 11(8) allows the Court to weigh

57 Indian Oil Corporation v. Raja Transport Pvt Ltd (2009) 8 SCC 520, para 45; North Eastern Railway v.
Tripple Engineering Works (2014) 9 SCC 288, paras 5-8.
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other considerations regarding the qualifications of the arbitrator
under the agreement, or to secure the independence and impartiality
of the arbitrator, and in that light, appoint a person as an arbitrator
by deviating from the procedure in the agreement.58 When “there
is material to create a reasonable apprehension that the person
mentioned in the arbitration agreement as the arbitrator is not likely
to act independently or impartially… then the Chief Justice or his
designate may, after recording reasons for not following the agreed
procedure for referring the dispute to the named arbitrator, appoint an
independent arbitrator in accordance with Section 11(8) of the Act.”59
31. In such an exceptional situation, the court can deviate from the
appointment procedure provided in the agreement on the basis of
material that indicates that the named arbitrator is not likely to act
independently or impartially. It must also record the reasons for the
same.60 The following principles laid down in Indian Oil Corporation
(supra) summarise the position:
“48. In the light of the above discussion, the scope of
Section 11 of the Act containing the scheme of appointment
of arbitrators may be summarised thus:
…
(vi) The Chief Justice or his designate while exercising
power under sub-section (6) of Section 11 shall endeavour
to give effect to the appointment procedure prescribed in
the arbitration clause.
(vii) If circumstances exist, giving rise to justifiable doubts
as to the independence and impartiality of the person
nominated, or if other circumstances warrant appointment
of an independent arbitrator by ignoring the procedure

58 Northern Railway Administration, Ministry of Railway, New Delhi v. Patel Engineering Company (2008)
10 SCC 240, paras 12-14; North Eastern Railway (supra), paras 5-8.
59 Indian Oil Corporation (supra), para 45. Also see Ace Pipeline Contracts (P) Ltd. v. Bharat Petroleum
Corpn. Ltd. (2007) 5 SCC 304, para 20; Uttar Pradesh State Bridge Corporation (supra), para 16.
60 See Denel (Proprietary) Limited v. Bharat Electronics Limited (2010) 6 SCC 394; Bipromasz Bipron
Trading SA v. Bharat Electronics Ltd. (2012) 6 SCC 384; Denel (Proprietary) Limited v. Ministry of
Defence (2012) 2 SCC 759 as examples of cases where the named arbitrator was not appointed on
the basis of material that raised justifiable doubts regarding his independence and impartiality. Also see
Rajasthan Small Industries Corporation Limited (supra), para 22 as an example for a case where the
Court upheld the appointment of the named arbitrator as there was no material to show that a party has
reason to believe that the arbitrator had not acted independently or impartially.
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prescribed, the Chief Justice or his designate may, for
reasons to be recorded ignore the designated arbitrator
and appoint someone else.”
32. Therefore, the power of the court to ensure the appointment of a
neutral tribunal is not restricted to Section 12(5). Rather, Section 12(5)
guides the court when it examines whether an arbitration agreement
violates public policy of constituting an independent and impartial
tribunal. In such cases, the court will not adhere to the procedure
to the agreement, as the same becomes unenforceable, and will
proceed to appoint an independent arbitrator. Further, Section 11(8)
reifies and concretises the power of the court as it enables the court
to undertake an examination on a case-to-case basis, based on the
material and the evidence in each case, whether the independence
or impartiality of the arbitrator is compromised.
33. What must be noted is that the court exercises the discretion under
Section 11(8) while adjudicating on the facts in each case. However,
the provision does not, in any manner, impose a blanket prohibition
that is justifiable on a public policy consideration against unilateral
appointments or appointments from a panel maintained by one party.
All it does is that it leaves it open for the parties to the agreement
to apply to the court if there are concerns regarding the neutrality or
objectivity of arbitrators appointed through the agreed upon procedure.
The court will then examine the facts, circumstances, material, and
evidence in every application before it, to determine whether a case
is made out to appoint an arbitrator de hors the agreement, but such
ruling will be specific to that case rather than a declaration prohibiting
such agreements altogether.
34. Assertions that a person’s freedom to contract is grounded only
in common law and statute, are ostensible at best. The freedom
of speech and expression engrafted in Article 19(1)(a) of the
Constitution and significantly, the freedom to carry on occupation,
trade and business Article 19(1)(g) read with the constitutional right
to property under Article 300A, do provide a substantial foundation
for a constitutional basis for the ‘freedom to contract’. The statutory
framework governing contract laws, statutory restrictions on what
contracts are lawful, what contracts are void and what considerations
are lawful do have significant constitutional moorings. Sections 23
to 30 of the Contract Act reflect constitutional colours, when they
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declare that agreements in restraint of trade, agreements in restraint
of legal proceedings, agreements restraining marriage etc are void.
Similarly, this Court has employed constitutional tools from Part III
and Part IV of the Constitution to breathe fresh life into the term
“public policy” in the context of Section 23 of the Contract Act.61
35. This constitutional re-conceptualisation of contract law is not without
relevance in the case. The freedom to contract out of traditional court
based remedies and to opt for arbitral remedies is informed and
regulated by constitutional considerations. To this end, what subject
matters are arbitrable and how remedies are to be designed within
the universe of arbitration, are informed not only by considerations
of freedom to contract, but also a larger constitutional responsibility
to provide access to justice. ‘Party autonomy’ encapsulated within
a larger freedom to contract must tempered with a person’s right
to access justice and corresponding duty on the State to provide
access to justice.
36. Access to justice in this context is not a mere avenue for dispute
redressal. It means access to timely, efficacious, and equitable system
for dispute resolution. Arbitration though is often referred to as an
alternative form of dispute resolution, it has, in practice evolved into a
substituted form of dispute resolution. Therefore, arbitral remedies too
must withstand constitutional scrutiny and provide access to arbitral
tribunals that are not just independent and impartial, but also seem
independent and impartial. In this scheme, it matters not whether the
tribunal and its composition is decided by the State, PSUs, other State
actors, or private entities. The underlying principle is that when party
autonomy is exercised to appoint members to the arbitral tribunal,
members who are so appointed are not just independent, but must
also seem to be independent.
37. This constitutional concern for access to justice which is not only
in fact unbiased and fair, but also seems and appears unbiased
and fair, is far more relevant to people who do not at present find
place in the arbitration universe that is predominantly populated by
big businesses, the mega-affluent contractors, and the millionaires.
Access to justice, and by implication effective arbitral remedies are

61 Brojo Nath Ganguly (supra); Delhi Transport Corporation v. DTC Mazdoor Congress (1991) Supp (1)
SCC 600.
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equally relevant for “the common man, for the poor and the humble,
for those who have businesses at stake, for the “butcher, the baker
and the candlestick maker’”.62

H. Precedents of this Court on Section 12(5) after its
amendment
38. The substantial argument before us is that a unilateral or panel-
based appointment process is invalid under Section 12(5) read with
the Seventh Schedule. I will now deal with the case-law on Section
12(5), to examine how this Court has interpreted this provision and
the public policy consideration to declare certain kinds of arbitration
agreements as being violative of Section 12(5). For the sake of
brevity and focus, the principles and main holding of each judgment
may be stated as follows:
I. First, it is important to note that Section 12(5) of the Act is a
mandatory and non-derogable provision, which overrides the
arbitration agreement between the parties that prescribes a
person who is ineligible to act as an arbitrator. However, the
proviso enables parties to waive its applicability through an
express agreement in writing between them, subsequent to
the dispute.63
II. In Voestalpine,64 a division bench of this Court upheld the
validity of an arbitration agreement that mandates appointment
of arbitrators from a panel maintained by the Delhi Metro Rail
Corporation (DMRC). The Court held that a panel comprising
serving or retired engineers of government departments or
PSUs does not fall foul of the Fifth or Seventh Schedule as
they do not have any connection with DMRC and bias or real
likelihood of bias cannot be attributed to such highly qualified
and experienced persons.65 Rather, the purpose of empanelling
them is due to their technical expertise.66 Nevertheless, the
Court held that to inspire confidence in the panel, DMRC must

62 Bidi Supply Co v. Union of India, 1956 SCR 267.
63 Haryana Space Application Centre v. Pan India Consultants Private Limited (2021) 3 SCC 103, para 18.
64 Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation (2017) 4 SCC 665.
65 ibid, paras 24 and 25.
66 ibid, para 26.
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not further limit Voestalpine’s choice from the panel to a list of
5 persons prepared by it. Voestalpine and the two appointed
arbitrators must have full freedom to make their choice from
the entire panel.67 Further, the Court also observed that the
panel must be broad-based and comprise members of other
professions and expertise such as engineers from the private
sector, judges, lawyers, accountants, etc.68
III. In TRF Limited,69 a three-judge bench of this Court considered
the validity of an arbitration clause which provided that the
Managing Director of the respondent would act as the arbitrator
or nominate the sole arbitrator. The issue before the Court was
whether the Managing Director, who is ineligible to act as an
arbitrator under Section 12(5) read with the Seventh Schedule,
can nominate the sole arbitrator.70 The Court answered this
question in the negative by relying on various judgments on
delegation of authority and the maxim “qui facit per alium facit
per se” (what one does through another is done by oneself).71
Thus, the Court extended the ineligibility to act as an arbitrator
under Section 12(5) to also include the ineligibility to appoint the
sole arbitrator. However, while doing so, it did not test whether
the nominee arbitrator is himself ineligible under Section 12(5),
nor did it source its decision in any other provision of the statute
that restricts the authority of a person who is ineligible to be
an arbitrator to appoint the arbitrator. Further, no reasonable
apprehension or justifiable doubt was raised regarding the
nominated arbitrator’s independence and impartiality to warrant
an appointment by the court de hors the arbitration agreement
under Section 11(8) of the Act.
IV. Subsequently, in Perkins,72 the Court interpreted and relied
on the ruling in TRF (supra) while considering an arbitration
agreement where the Chairman and Managing Director (CMD)
of the respondent could appoint the sole arbitrator. It held that

67 ibid, paras 27 and 28.
68 ibid, paras 29 and 30.
69 TRF Limited v. Energo Engineering Projects Limited (2017) 8 SCC 377.
70 ibid, paras 50, 53.
71 ibid, paras 50-54.
72 Perkins Eastman Architects DPC v. HSCC (India) Limited (2020) 20 SCC 760.
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even if the arbitration agreement does not provide for the CMD
to act as an arbitrator, as was the case in TRF (supra), he
remains incompetent to nominate the arbitrator, which stems
from his interest in the outcome of dispute, thereby creating
a possibility of bias.73 The Court held that the ineligibility to
appoint is a result of operation of law, as a person who is
ineligible to act as an arbitrator must not have an exclusive
role in charting the course of dispute resolution by appointing
the arbitrator.74 However, in cases where both parties can
nominate an arbitrator of their choice, the advantage to any
one party would get counter-balanced.75 The problems in the
reasoning in TRF (supra), i.e., the absence of a statutory source
for ineligibility to appoint, and justifiable doubts regarding the
nominated arbitrator’s independence and impartiality to warrant
a court appointment de hors the agreement, are not addressed
even in Perkins (supra).
V. A three-judge bench in CORE76 interpreted the arbitration clause
64(3)(b) of the GCC in railway contracts, which provides for
appointment of a three-member arbitral tribunal from a panel
of retired officers maintained by the Railways. The General
Manager, Railways would send a list of at least four names,
from which the other party must suggest at least two names
as its nominee. The General Manager would then appoint one
of these two persons as the contractor’s nominee, and appoint
the balance arbitrators, including the presiding arbitrator, from
within or outside the panel. The Court held that appointment of
arbitrators must be as per the arbitration agreement,77 and that
appointment from a panel of retired officers is not prohibited
under Section 12(5) of the Act.78 It held that the rulings in TRF
(supra) and Perkins (supra) will not apply to the present case

73 ibid, para 20.
74 ibid, para 21.
75 ibid.
76 Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) (2020) 14 SCC 712.
Hereinafter referred to as “CORE”.
77 ibid, para 22. The Court relied on Union of India v. Parmar Construction Company (2019) 15 SCC 682
and Union of India v. Pradeep Vinod Construction Co (2020) 2 SCC 464.
78 ibid, para 26. The Court relied on Voestalpine (supra) and Govt. of Haryana PWD Haryana (B and R)
Branch v. G.F. Toll Road (P) Ltd (2019) 3 SCC 505.
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as the advantage accruing to the Railways through appointing
their arbitrator is counter-balanced by the contractor’s right
to choose two names from the list, out of which the General
Manager will appoint at least one of them as the contractor’s
nominee.79 There are three noteworthy aspects of this reasoning:
first, that the Court relies on Parmar Construction (supra) and
Pradeep Vinod Construction (supra) while ruling on adherence
to the appointment procedure in the agreement, but does not
consider that these cases interpreted Clause 64 of the GCC prior
to the amendment in law and the arbitration clause pursuant
to the 2015 Amendment. Second, the Court does not deal with
the prescriptions for a panel-based appointment that were set
out in Voestalpine (supra) – that the other party must have
freedom to make its choice from the complete panel rather
than a limited list, and that the panel must be broad-based.
The panel in CORE (supra) does not meet these criteria, but
has been upheld by the Court. Further, CORE (supra) does not
overrule or doubt TRF (supra) and Perkins (supra), but only
differentiates its facts and in fact, relies on the counter-balancing
exception set out in these judgments.
VI. In Glock Asia-Pacific Limited v. Union of India,80 the Court
appointed an independent arbitrator under Section 11 as the
arbitration agreement provided for a person ineligible under
Section 12(5) read with clause 1 of the Seventh Schedule to
act as the arbitrator. Subsequently, in Lombardi Engineering
Limited v. Uttarakhand Jal Vidyut Nigam Limited,81 the Court
cited and followed Perkins (supra) to appoint an independent
arbitrator, as the arbitration agreement therein was similar to
that in Perkins (supra).
39. This Court has also interpreted entries of the Fifth and Seventh
Schedules of the Act, and has set out their contours in various cases.
The following principles can be culled out from the judgments:
I. In HRD v. GAIL (supra), this Court held that a broad
commonsensical approach must be adopted while interpreting

79 ibid, paras 37-38.
80 (2023) 8 SCC 226.
81 (2024) 4 SCC 341, see paras 85-91.
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the entries of the Schedules, such that they are not unduly
enlarged or restricted.82 It rejected the submission that an
expansive view must be taken to remove even the remotest
likelihood of bias since the grounds for challenge of an award
have been narrowed after the 2015 Amendment.83 Rather, it
held that since the entries in these Schedules are based on
the Red and Orange Lists of the IBA Guidelines, they must be
interpreted as per the principles contained in these Guidelines.
The standard to be adopted is that a reasonable third person
who has knowledge of the relevant facts and circumstances
would conclude that there is a likelihood of the arbitrator being
influenced by factors other than the merits of the dispute.84
II. In Jaipur Zila Dugdh Utpadak Sahkari Sangh v. Ajay Sales
& Suppliers85 and in Ellora Paper Mills v. State of M.P.,86 this
Court has held that the purpose of Section 12(5) and the
Seventh Schedule is to ensure the neutrality, independence,
and impartiality of the arbitral tribunal.87 Further, in Jaipur Zila
(supra), the Court held that the Seventh Schedule must be read
as a whole, considering its object and purpose.88
III. This Court in Chennai Metro Rail Ltd. (supra) rejected a
challenge to the arbitrator’s eligibility under Section 12(5) on a
ground that is not enumerated in the Seventh Schedule. Once
the Parliament has devised a statutory scheme prescribing the
de jure ineligibility of certain persons to act as an arbitrator, the
Court must not deviate and add to these grounds, as it would
create uncertainty in the arbitration process.89
40. After reviewing prior precedents and in view of what I have held
about party autonomy, it can be said that the 2015 Amendment to
Section 12, specifically the insertion of Section 12(5) and the Seventh
Schedule, incorporates the overarching public policy consideration

82 HRD v. GAIL (supra), para 20.
83 ibid.
84 ibid.
85 (2021) 17 SCC 248.
86 (2022) 3 SCC 1.
87 Jaipur Zila Dugdh (supra), para 14.
88 ibid, paras 16-17.
89 Chennai Metro Rail (supra), para 41.
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that binds the contracting parties to constitute an independent and
an impartial arbitral tribunal as a credible and an effective substitute
to ordinary courts and tribunals established to provide access to
justice. In furtherance of this objective, the court will not be bound by
the procedure for constitution of the arbitral tribunal in the arbitration
agreement.

I. International Perspective
41. Having noted the perspective of this Court on the duty of the parties
to appoint an independent tribunal after the 2015 Amendment,
and before concluding, it is necessary to examine the international
perspective on the issue. I must caveat that consideration of foreign
laws and judgments of foreign jurisdiction do not have a direct
bearing on the interpretation of our laws. At the most they grant us
a perspective and nothing more. Further I will demonstrate that there
is no single, universal standard on this issue; rather, each country
has taken a different stance based on its own laws, policies, legal
culture, and dispute resolution framework. Consequently, there is no
uniform application or consistency in legal principles on this matter.
Therefore, while foreign laws and precedents may provide insights,
they should be referenced cautiously, acknowledging that differences
in context may make direct reliance inappropriate.
42. Legislative framework of certain foreign jurisdictions. Internationally,
party autonomy is highly valued in appointing arbitrators and
composing arbitral tribunals. For example, the New York Convention90
(Article V(1)(d)) permits refusal of award recognition if the tribunal’s
composition deviates from party agreement, underscoring the primacy
of party autonomy. The UNCITRAL Model Law also upholds party
autonomy as a core principle in tribunal composition. Similarly, Section
591 of Federal Arbitration Act of US accords primacy to appointment

90 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.
91 Section 5, Federal Arbitration Act. It reads as:
Section 5. Appointment of arbitrators or umpire
If in the agreement provision be made for a method of naming or appointing an arbitrator or arbitrators
or an umpire, such method shall be followed; but if no method be provided therein, or if a method be
provided and any party thereto shall fail to avail himself of such method, or if for any other reason there
shall be a lapse in the naming of an arbitrator or arbitrators or umpire, or in filling a vacancy, then upon
the application of either party to the controversy the court shall designate and appoint an arbitrator or
arbitrators or umpire, as the case may require, who shall act under the said agreement with the same
force and effect as if he or they had been specifically named therein; and unless otherwise provided in
the agreement the arbitration shall be by a single arbitrator.
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procedure as agreed to between the parties. The arbitration agreement
must be in accordance with Section 2 which requires the same to
be, “valid, irrevocable, and enforceable, save upon such grounds as
exists at law or in equity for the revocation of any contract.” This has
been used by US courts to source ‘unconscionability’ as a ground
to test the validity of an arbitration agreement.92
43. Article 2 of Geneva Protocol on Arbitration Clauses93 provides that
“the constitution of arbitral tribunal, shall be governed by the will
of the parties and by the law of the country in whose territory the
arbitration takes place.” Article 1028 of Code of Civil Procedure,
Netherlands provides that in case the arbitration agreement gives
one of the parties to the dispute a privileged position in appointing
arbitrators, then, the other party may, despite the agreement, request
the relevant court to appoint an arbitrator. Similarly, Section 1034 of
German Code of Civil Procedure stipulates that if in the arbitration
agreement, one of the parties has a preponderant right in so far as
composition of the arbitral tribunal is concerned, thereby putting the
other party at a disadvantage, then such latter party can request
the court to appoint an arbitrator in derogation of the appointment
procedure agreed upon. Article 15(2) of Spanish Arbitration Act, 2003,
though enables the parties to freely agree on the procedure for the
appointment of arbitrator, makes the same subject to an obligation
to ensure that there is no violation of principle of equal treatment.
44. The Estonian Code of Civil Procedure, vide Section 721 also in
similar terms provides that if in the arbitration agreement, one party
has been given economic or other advantage in the formation of an
arbitral tribunal which is materially damaging to the other party, such
party may make a request to the court for the appointment.
45. Article 3, Annexure 1 of ‘European Convention Providing a Uniform
Law on Arbitration’ states that an arbitration agreement is invalid if
it gives one party a privileged position in matters of appointment.
46. The analysis of foreign legislations shows that while party autonomy
is recognised in appointment and composition of an arbitral tribunals,
certain national laws explicitly prohibit unilateral appointments that

92 Perry v. Thomas, 482 US 483 (1987); Harold Allen’s Mobile Home Factory Outlet, Inc. v. Butler, 825
So.2d 779,783-85 (Ala. 2002)
93 Geneva Protocol on Arbitration Clauses, Sept. 24, 1923, 27 L.N.T.S. 158.
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disadvantage one party. Where legislatures saw it fit to ban such
appointments, they have done so explicitly, embedding unilaterality as
a vitiating factor in the statute, not leaving it to judicial interpretation.
This legislative clarity ensures that unilaterality is a codified breach
of an arbitral tribunal’s integrity, removing any ambiguity or scope
for discretionary judgment.
47. Judicial pronouncements of certain foreign jurisdictions. Judicial
pronouncements across jurisdictions have adopted differing views.
Gary Born94 has surveyed numerous foreign precedents in this regard
and has referred to decisions of the Swiss Federal Tribunal95 and
Paris Cour d’Appel96 (Paris Appellate Court), which hold that the
composition of the arbitral tribunal is a matter of party autonomy
and the appointment, removal, and replacement of arbitrators must
be as per the agreement. The Court of Cassation (France), in one
of its decisions,97 has upheld an arbitration agreement where one
party provides a list of potential arbitrators from which the other party
must choose an arbitrator.
48. However, at the same time, there are pronouncements which frown
upon unilaterality in matters of appointment of arbitrator/arbitral
tribunal. For instance, in one Swiss decision,98 it has been held:
“The Federal Tribunal…has developed principles, under
which conditions an arbitral tribunal sufficiently safeguards
impartial and independent adjudication. The most
important of these principles….is that no party may have a
preponderant influence on the appointment of the tribunal.”
(emphasis supplied)

49. American Courts have also dealt with this issue. Despite there being
no express statutory proscription against unilaterality in matters of
appointment, in one of its decisions, the Massachusetts District Court
remarked that “both the parties to a dispute must have an equal right to

94 Born (supra), 1878.
95 Judgement of 26 November 2002, DFT 4P_129/2002.
96 Philipp Bros. v. Icco, 1990 Rev. 880,883; Raffineries de Petrole d’Homs et de Banias v. Chambre de
Commerce Internationale, 1985 Recv. Arb. 141,146
97 Judgment of 31 January, 2002, 2003:2 Cahiers de l’Arbitrage 303.
98 Judgement of 11 November 1981, DFT 107 Ia 155,158 (Swiss Fed. Trib.).
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participate in the appointment process.”99 Similarly, in another case,100
the Supreme Court of Alabama invalidated an arbitration agreement
as being unconscionable for the reason that it excluded one party
from the appointment process. Further, in Hooters of America, Inc.
v. Phillips,101 the arbitration clause was held to be against rules of
neutrality and the award refused enforcement because one party
was given exclusive control over the panel of potential arbitrators
from which the other party could select its nominee arbitrator. It was
observed that:
“In this case, the challenge goes to the validity of the
arbitration agreement itself. Hooters materially breached
the arbitration agreement by promulgating rules so
egregiously unfair as to constitute a complete default of
its contractual obligation to draft arbitration rules and to
do so in good faith. Hooters and Phillips agreed to settle
any disputes between them not in a judicial forum, but
in another neutral forum -- arbitration. Their agreement
provided that Hooters was responsible for setting up such
a forum by promulgating arbitration rules and procedures.
To this end, Hooters instituted a set of rules in July 1996.
The Hooters rules when taken as a whole, however, are so
one-sided that their only possible purpose is to undermine
the neutrality of the proceeding.”
Further, on the question of unilateral composition of panel, the court
remarked:
“The Hooters rules also provide a mechanism for selecting
a panel of three arbitrators that is crafted to ensure a
biased decisionmaker. Rule 8. The employee and Hooters
each select an arbitrator, and the two arbitrators in turn
select a third. Good enough, except that the employee’s
arbitrator and the third arbitrator must be selected from a
list of arbitrators created exclusively by Hooters. This gives
Hooters control over the entire panel and places no limits
whatsoever on whom Hooters can put on the list. Under

99 Rosenberg v. Merril Lynch, Pierce, Fennner & Smith, Inc. 995 F.Supp. 190,208.
100 Harold Allen’s Mobile Home Factory Outlet, Inc. v. Butler, 825 So.2d 779,783-85 (Ala. 2002)
101 39 F. Supp. 2d 582 (D.S.C. 1998).
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the rules, Hooters is free to devise lists of partial arbitrators
who have existing relationships, financial or familial, with
Hooters and its management. In fact, the rules do not even
prohibit Hooters from placing its managers themselves on
the list. Further, nothing in the rules restricts Hooters from
punishing arbitrators who rule against the company by
removing them from the list. Given the unrestricted control
that one party (Hooters) has over the panel, the selection
of an impartial decisionmaker would be a surprising result.”
50. Similarly, in Murray v. United Food and Commercial Workers Union,102
the District Court of Maryland held the arbitration agreement to be
unconscionable because the arbitrator was selected from a list of
potential arbitrators curated by one of the parties to the dispute. In
doing so, the court observed that, “Although an arbitration agreement
will not be invalidated for failure to “replicate the judicial forum”,
we again refuse to enforce an agreement so utterly lacking in the
rudiments of even-handedness.” This line of reasoning continues in
McMullen v. Meijer, Inc.103 where the agreement granted one party
unilateral control over the pool of potential arbitrators. There, the
court noted that, “when the process used to select the arbitrator
is fundamentally unfair, as in this case, the arbitral forum is not
an effective substitute for a judicial forum, and there is no need to
present separate evidence of bias or corruption.”
51. The importance of composition of a just and proper arbitral tribunal
was also highlighted by the Supreme Court of West Virginia in Board
of Education of Berkley County v. W. Harley Miller, Inc.104 There,
the disputes were to be settled pursuant to a standard arbitration
provision contained in the construction contract with the Board which
provided that disputes shall be decided by arbitration in accordance
with the Construction Industry Arbitration Rules of the American
Arbitration Association. While the clause did not give one party
unilateral control over the pool of arbitrators, the Court nonetheless
discussed the issue of unilaterality in matters of appointment and
reasoned that:

102 289 F.3d 297 (4th Cir.2002).
103 355 F.3d 485 (6th Cir. 2004).
104 Board of Ed. v. W. Harley Miller, Inc., 160 W. Va. 473, 236 S.E.2d 439 (W. Va. 1977).
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“A functional analysis of the West Virginia cases which do
not favor arbitration demonstrates that this Court would
not countenance an arbitration provision by which the
parties agree that all disputes will be arbitrated by a panel
chosen exclusively by one of the parties. This is the classic
rabbits and foxes situation, with the foxes stacking the
arbitration panel in their favor. Such a contract provision
is inherently inequitable and unconscionable because in
a way it nullifies all the other provisions of the contract.”
(emphasis supplied)

52. In a case decided by the England and Wales Court of Appeal in
Sumukan Ltd. v. Commonwealth Secretariat,105 the award passed
by the arbitrator was set aside on the ground that one of the parties
to the dispute was not consulted in the appointment of arbitrator. It
was observed:
“Furthermore if the arbitrators were to be selected from a
Panel, and if there was a procedure for the appointment
of the Panel aimed at guarding against any apparent lack
of independence, it seems to me right that a substantial
failure to comply with that procedure should have an effect
on the jurisdiction of the tribunal itself.”
53. The comparative analysis of judicial pronouncements across
jurisdictions reveals that, while party autonomy is often respected
in the appointment of arbitrators, courts are also wary of provisions
granting one-sided control over the arbitral panel. Rulings from the
U.S., Switzerland, France, and the UK highlight differing views on
this matter. This diversity in views across jurisdictions reinforces the
need for caution in relying on foreign precedents or laws.

J. On the opinion of the Hon’ble CJI
54. I have had the benefit of the exhaustive and erudite judgment of the
Hon’ble Chief Justice Dr. D.Y. Chandrachud. I have already given
reasons for my decision. I find it necessary to indicate certain issues
about the perspective and the final conclusion.

105 [2007] EWCA 1148.
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54.1 At the outset, I reiterate the necessary distinction between the
duty of the parties to arbitration agreement to constitute an
independent arbitral tribunal and the duty of the arbitrator to
act judicially. In this case, we are concerned with the former
and not about the duty of the arbitrator.
54.2 Holding that an arbitral tribunal has the “trappings of a court”
as it determines the competing rights and liabilities of parties
through an ‘adjudicatory process’, and therefore it must act
judicially has the problems of introducing public law principles
in contractual dispute resolution. This formulation has
engendered the application of principles of procedural equality,
equal treatment under Article 14, fairness, non-arbitrariness,
justice, reasonableness, impartiality and bias, all of which
have been subsequently invoked in the judgment as core
values. I tried to locate the obligations of contracting parties
to the arbitration agreement within the province of contract
law and public policy considerations therein. This approach,
I believe, is better suited for the determination of disputes in
arbitration law, as it balances and protects the twin values of
party autonomy through judicial restraint, and the duty the
parties to constitute an independent arbitral tribunal without
compromising any one in favour of the other.
54.3 There is a certain difficulty in invoking Section 18 of the Act
and applying it as an equality principle mandating equal
opportunity to both the contracting parties at the time of
constituting the arbitral tribunal. Section 18 is the obligation
of the arbitrator in conduct of arbitral proceedings. I have
already highlighted the important distinction between the
duty of the arbitrator to act judicially and the obligations of
the parties to constitute an independent arbitral tribunal. That
apart, the text and the context of Section 18 as is evident
from the scheme of the Act eschews application of Section 18
at the time of appointment. This is clear through two factors:
first, through the placement of Section 18 in Chapter V, on
‘Conduct of arbitral proceedings’, which comes after Chapter
III on ‘Composition of arbitral tribunal’; and second, through
the wording of Section 18, which makes it clear that the
obligation to treat the parties with equality is on the arbitral
tribunal, rather than the parties to the arbitration agreement.
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The later portion of Section 18, which mandates that “each
party shall be given a full opportunity to present his case”,
further fortifies this view.
54.4 The doctrine of bias and the contours of the test of real
likelihood of bias have been discussed through various
significant decisions of this Court rendered in the context of
administrative and constitutional law. Considering that the
issue before us is the legality of a procedure in the arbitration
clause, I find it difficult to apply the doctrine of bias or real
likelihood of bias at this stage. The real issue is about the
imbalance caused due to unilateral power of one of the parties
to the contract to constitute the arbitral tribunal. Composition
of the arbitral tribunal is part of party autonomy but there is
always the power, coupled with duty, of the court to ensure
that procedure under the arbitration clause enables constitution
of an independent arbitral tribunal. This scrutiny or enquiry by
the court is at the stage of considering the application under
Section 11. I am of the opinion that we cannot, as an advance
ruling, give a declaration that all arbitration clauses enabling
unilateral appointments are null and void at this stage.
54.5 I am of the opinion that a priori declaration that arbitration
agreements that prescribe unilateral appointment procedures
are invalid can lead to many problems in the day-to-day working
of arbitral remedies. Particularly for institutions involving
multiple transactions such as insurance claims, credit card
defaults, etc. involving large number of cases but each claim
may be of small sum. Our declaration of law substantially
covers domestic arbitration, it will not be confined to high
and international commercial arbitration. There could also
be situations where the unilateral constitution of the panel of
arbitrators could have credible members with respect to which
no one can have an objection. Rather than declaring that all
such agreements are void, it would be better to strengthen
the remedial mechanisms available under the Act. This way,
the choice of the parties is not completely ignored, and
impartiality and independence of the arbitral tribunal is also
ensured through close scrutiny by courts on a case-to-case
basis. In any event, as indicated earlier, the enquiry about the
arbitration clause will be at the stage of Section 11.
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55. I consider it necessary to note that mere existence of some
relationship with the appointing authority does not inherently
undermine autonomy. For instance, senior officers always serve as
appellate authorities, and their objectivity is not compromised due
to their employment. The solution is in the remedies and certainty
in law. System of governances must evolve and recognize the
capability in handling distinct professional duties. It is said that
the key difference between humans and other beings lies in their
ability to think independently and even against our own interests.
While it is important to acknowledge potential conflicts of interest,
it does not mean that the system must bend backward to cater to
unending suspicion and doubt. A balance must be struck between
ensuring confidence in the system and fostering a healthy culture
of independence and objective in functioning. If we focus solely on
identifying and disqualifying individuals for perceived conflicts, the
process becomes an endless cycle of mistrust.

K. Conclusion
56. With these findings and observations, I summarise my conclusions
as follows:
I. Dispute resolution through arbitration encompasses two
independent yet interdependent principles: contractual freedom
as party autonomy and statutory obligation as duty to constitute
an independent arbitral tribunal.
II. Party autonomy in making of an arbitration agreement is an
essential feature of arbitration. It commences with choosing the
members of the arbitral tribunal, extends to the procedure that
would apply for its conduct, and concludes with the method by
which an award could be challenged before a court. It is thus
a brooding and guiding spirit of arbitration. Party autonomy
is sufficiently incorporated in the Arbitration Act, along with a
restraint on judicial intervention.
III. The moment parties choose arbitration over ordinary civil
proceedings for dispute resolution, their duty to establish an
independent and impartial tribunal arises. The substitution of
arbitration in place of civil courts as an exception under Section
28 of the Contract Act is only for a forum and not for contracting
out of the most essential feature of a dispute resolution, i.e.,
[2024] 11 S.C.R. 2327

Central Organisation for Railway Electrification v.
M/s ECI SPIC SMO MCML (JV) A Joint Venture Company

independence and impartiality must exist in every forum. This
essential feature is the inviolable public policy consideration
under Section 23 of the Contract Act from which the parties
cannot opt out. Arbitration agreements which are not compliant
of this public policy consideration are void under Section 23
of the Contract Act. Thus, there is a statutory incorporation of
duties of the parties to the arbitration agreement.
IV. If an arbitration agreement is considered by the court as not
enabling constitution of an independent and impartial tribunal,
any submission that the said agreement is a binding contract,
or it is in exercise of party autonomy is not tenable as such
an agreement will be against public policy and as such not an
enforceable contract.
V. In view of the statutory incorporation of these duties, it is not
necessary to apply public law principles evolved in constitutional
and administrative laws. Sourcing these duty obligations from
Contract Act and Arbitration Act is important to maintain the
integrity of the party autonomy and restraint of judicial institutions.
VI. The power to ensure that the arbitration agreement is compliant
of the public policy requirement of establishing an independent
and impartial tribunal is always of the Court. This principle is
recognised and statutorily incorporated in the Contract Act and
the Arbitration Act. It is the duty of the court to ensure that the
arbitration agreement inspires confidence and it will enable
establishment of an independent and impartial arbitral tribunal.
VII. Neither public policy considerations under the Contract Act or
the Arbitration Act restrain the parties to the arbitration from
maintaining a panel of arbitrators in any manner. However,
arbitration agreements enabling one of the parties to unilaterally
constitute arbitral tribunal do not inspire confidence of
independence and may violate the public policy requirement
of constituting an independent and impartial tribunal. The court
will, therefore, scrutinise the agreement and hold them to be
invalid if it considers it appropriate.
VIII. The occasion for the court to examine the constitution of the
independent and impartial tribunal under the arbitration clause
will arise when one of the parties makes an application under
Sections 11, 14 or 34. It is not permissible for the court to give
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an advance declaration that all such agreements which enable
one of the parties to unilaterally constitute the arbitral tribunal
would be void per se. No two agreements are the same and
it is necessary for the court to examine the text and context of
the agreement.
IX. All applications pending before the courts challenging the
unilateral appointment clauses will be disposed of applying the
test as to whether such a clause enables establishment of an
independent and impartial tribunal.

Result of the case: Reference answered.

†
Headnotes prepared by: Ankit Gyan