Unilateral appointment of an arbitrator deemed void under Arbitration and Conciliation Act, 1996
In a significant ruling on May 26, 2026, the Delhi High Court set aside an arbitration award concerning a dispute between the Air Force Naval Housing Board and M/s N G Constructions. The Court, presided over by Justice Avneesh Jhingan, declared that the appointment of the arbitrator was void from the outset, as it contravened Section 12(5) of the Arbitration and Conciliation Act, 1996.
The case stemmed from a contract executed on June 10, 2010, for the construction of residential apartments. A dispute arose, leading to the invocation of arbitration by M/s N G Constructions on November 18, 2019. Subsequently, the Air Force Naval Housing Board unilaterally appointed a sole arbitrator. This appointment and the resulting award were contested under Section 34 of the Act.
The primary legal issue revolved around the unilateral appointment of an arbitrator, which was argued to be ineligible under the Act. The Court referenced the Supreme Court's decision in Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, which emphasized that such an appointment, without express written waiver by both parties, is void. The Court also cited the case of Mahavir Prasad Gupta and Sons v. Govt. of NCT of Delhi, reinforcing that any unilateral appointment of an arbitrator is null and void, and any proceedings or awards resulting from such an appointment are unenforceable.
The Delhi High Court concluded that the Air Force Naval Housing Board's appointment of the arbitrator lacked the requisite express consent in writing from both parties, rendering the arbitration proceedings and the award null. The Court allowed the petition and set aside the impugned award, emphasizing that the waiver of ineligibility must be a clear, written agreement, and cannot be implied through conduct or participation in proceedings.
Bottom line:-
An arbitrator unilaterally appointed by one party, in contravention of Section 12(5) of the Arbitration and Conciliation Act, 1996, is void ab initio, and the resulting award is unenforceable. Waiver of ineligibility must be express and in writing, and cannot be inferred through conduct or implication.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 - Sections 12(5), 34, Seventh Schedule
Air Force Naval Housing Board v. M/s N G Constructions, (Delhi) : Law Finder Doc id # 2907113
