Unilateral Appointments And Public Policy

**Joshita Yashi and Anya Tandon

Abstract: This paper questions the arbitral regime of India through its statutory design, judicial interpretation and unilateral practices of appointing judges thus proving that there are systemic risks to impartiality. It offers incremental structural reforms to balance party independence with constitutional justice to improve the doctrinal consistency, institutional legitimacy, and effectiveness in the domain of commercial arbitration jurisprudence.

The arbitration framework of the Arbitration and Conciliation Act, 1996 (“Act”) is based on the apparent promise to make the arbitrators independent and unbiased, and the disclosure requirement in Section 12 takes the form of the main mechanism. The statutory language requires that an arbitrator, at first instance, and at any time during the proceedings, publish in writing such situations that are likely to result in justifiable doubt as to his independence or lack of bias, or as to his inability to effectively serve. In addition, Schedules V and VII of the Act give additional details, where Schedule V enumerates the grounds that give rise to justifiable doubts as to an arbitrator’s independence or impartiality, and Schedule VII specifies the categories that render an arbitrator per se ineligible for appointment.

Although the Act provides an elaborate explanation of the grounds of bias, Section 13 of the Act provides that any appeal in case of such justifiable doubts should be resolved by the arbitral tribunal itself; that is, the same arbitrator whose impartiality is at stake or the tribunal at large, in which he or she is a member. This type of self-judgement risks violating the natural-justice maxim, “nemo judex in causa sua” (no one should be a judge in his own cause) by allowing an adjudicator to assess objections to his own impartiality. It also systematically predetermines the dispute-resolution process through the tribunal’s discretion, even in the presence of a competent court. The statutory form differs with the international standards, including the ones embedded in the UNCITRAL Model Law, in which courts are able to independently evaluate such difficulties, which may precede the ultimate award of the tribunal. 

The impact of such divergence is worsened in the Indian context by the fact that ad hoc arbitration is more prevalent in the Indian setting in which the institutional protections available through institutional panels, including independent challenge bodies are mostly lacking. It is in these structural risks that institutional challenges procedures often place primacy on neutral institutional appraisals in other jurisdictions.

To make this weakness even worse is the interaction with Section 5 of the Act, which prohibits active judicial interference; the intention of the legislature to de-escalate court intervention, inadvertently leaving parties without an effective interim judicial system to refute bias allegations, thus forcing Indian courts to apply, as a way of filling in the gaps created by legislative ambiguity, Article 14 of the Constitution (equal protection/fairness).

In practice, courts have had difficulties in spelling out standards of fairness, thus compelling judicial interpretation to address systemic gaps. The conflict between a statutory requirement of impartiality and a procedural regime of protective help of arbitral self-adjudication, therefore, shows not a drafting flaw alone, but a systemic flaw in the Indian arbitration ecosystem that is in urgent need of correction in order to maintain procedural integrity and credibility in arbitration.

The Arbitration and Conciliation Act 1996, gives special focus to the autonomy of the parties, which allows parties to decide on the means of appointing arbitrators. However, constitutional principles of fairness are increasingly limiting this self-determination. Section 12(5) of the Act prohibits the appointment of some arbitrators regardless of the party agreement, but permits a post-dispute waiver. Ideally, this provision is a mediation of the contractual preference and the neutrality safeguards. Nevertheless, the lack of clear statutory requirements on fairness has seen courts apply Article 14 and Section 18 as a tool of regulating the appointment of arbitrators, effectively transforming the prospective structure of the Act.

The above tension is especially depicted in the case of TRF Ltd v Energo Engineering

 (“TRF“) and in the case of Perkins Eastman Architects DPC v HSCC (India) Ltd  (“Perkins“). In TRF, the Supreme Court found that a disqualified Managing Director (under Section 12(5)) is not entitled to replace a substitute arbitrator. Building on this argument, the Court struck down unilateral appointment clauses in Perkins where the appointment authority was not involved with the tribunal. Notably, in the two rulings, the Court invalidated the clauses ex ante without analysing the possibility of actual bias occurring. The conception ceased to be a judicial evaluation of the behaviour of an arbitrator and evolved to condemn the unilateral form of the clause.

This argument effectively cancels the waiver clause of Section 12(5): in case a clause is void under the Section 11 stage the following post-dispute waiver is also ineffective. Therefore, the judiciary replaces the textual mechanism that is meant to allow an informed post-dispute waiver with categorical ban on unilateral appointments. Despite the criticisms of this intervention being declared as judicial activism, the Court casts this intervention as a gap in the legislature; the Act provides no real benchmarks of fairness in appointment procedures, forcing the judges to bring in constitutional equality values.

A basic doctrinal confusion is at the root of this doctrinal change: the confusion of structural unfairness, ex ante bias in the mechanism of appointments, and substantive unfairness, ex post malpractice or animosity towards a specific arbitrator. The latter is mostly related to the Act since Section 12 disclosures and 13 challenges are focused on individual impartiality. The former is now the subject of judicial interpretation, which invalidates the clauses that do not provide any tangible evidence of prejudice.

The constitutionalisation of appointments gives prominence to procedural equality but will be subject to a distortion of the original architecture of the Act that envisaged minimal intervention with waiver being balanced. Furthermore, this change is contrary to the more moderate position of the UNCITRAL Model Law, allowing the court to intervene, but does not necessarily consider unilateral appointments void. In such a way, the neutrality-protecting fairness jurisprudence of the Court also imposes limitations on the autonomy of the parties on the one hand and transforms the statutory systems on the other hand- a doctrinal contradiction that is at the core of modern Indian arbitration.

While arbitration is often lauded as an efficient alternative to court litigation, its efficacy is entirely dependent upon the legitimacy of the tribunal’s appointment. A growing body of jurisprudence now suggests that true finality cannot be achieved if the scales are tipped at the very outset.  When an arbitration agreement empowers a single party to constitute a panel ex post facto, that is after the dispute has arisen, it grants that party a disproportionate strategic advantage. This temporal window allows the appointing party to conduct exhaustive vetting and due diligence on potential nominees.

By analysing a candidate’s perceived disposition, the party can curate a panel tailored to the specific nuances of the ongoing conflict. In modern arbitration law, this is increasingly viewed as an invalid exercise of power, as the unilateral right to populate the roster of decision makers conflicts with the core mandate of procedural parity between the disputants.  The landmark ruling in Perkins Eastman Architect DPC v. HSCC (India) Ltd. (2019) established that a person ineligible to act as an arbitrator is also ineligible to nominate one, a principle lauded for securing tribunal neutrality. However, the same year, Central Organisation for Railway Electrification (CORE) v. M/s ECI-SPIC-SMO-MVML (2019) (“CORE“) created a conundrum by upholding clauses that allowed the Railways to curate a panel of retired officers from which the opposing party had to select. This divergence was flagged in Union of India v. M/s Tantia Constructions Limited (2021), where the Court prima facie disagreed with CORE, observing that an “incapacitated” authority cannot validly constitute a panel. Finally, in November 2024, a five-judge Constitution Bench in CORE II definitively overturned the 2019 ruling, declaring that unilateral panel curation violates the “equality of arms”. While this settles the law, the shift from Perkins to CORE II leaves a legacy of inconsistent precedents and high procedural instability for ongoing contracts and pending disputes. The judicial volatility directly fuels challenges under section 34 by providing a ground to contest the tribunal’s composition as “improper”. When appointments are deemed void ex post facto, the final awards are set aside, forcing parties to restart the process. This “litigation about arbitration” destroys the finality of awards and causes massive delays, undermining the core efficiency that arbitration promises. 

This systemic instability stems from a fundamental disagreement over the nature of impartiality: Whether it is a structural requirement or an evidentiary one? Does the principle of independence under section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996 necessitate a preemptive blanket ban on unilateral appointments, or should courts adopt a fact based, case by case assessment of bias? Is a unilateral structure inherently corrupt, or is partiality a matter of proof rather than automatic assumption? 

This has created a problematic binary. Critics argue that blanket bans are too broad, they fail to distinguish between coercive contracts and sophisticated commercial bargains where parties knowingly trade appointment rights for other concessions. Conversely, a case-by-case inquiry risks turning section 11 hearing into protracted disputes. To end this “litigation about arbitration”, we need a middle ground that secures a neutral tribunal without the procedural bloat that destroys arbitration’s core efficiency. The approach adopted by Indian courts stands in contrast to the methods practiced by global arbitration hubs, such as Singapore International Arbitration Centre (“SIAC“) and Hong Kong International Arbitration Centre (“HKIAC“). While Indian courts have been more inclined towards blanket prohibitions, these international centres have been successful in deploying a more flexible, institution focused approach. These international hubs have found a way out of the binary. These centres protect the integrity of the process without stripping the parties of their autonomy. By shifting the focus from who nominates to how that nomination is vetted, India could adopt a three-tiered strategy that is both cost and time efficient.  This strategy consolidates global best practices into a unified framework; first, implementing a list based selection to honour shared party preferences; second, applying mandatory confirmation power to provide an independent audit to all nominees; and lastly, utilizing “safe harbours” to ensure a diverse pool of experts. 

 The practical realization of this framework finds its most compelling blueprint in the List Procedure adopted by HKIAC which is an interesting alternative to the existing “all or nothing” strategy. Instead of one of the parties appointing an arbitrator, the list of a set of diverse experts is offered to both parties by the neutral institution. The parties strike off names that they consider to be objectionable and rank the others. The individual with the highest shared preference is appointed. This leaves the benefits of professional choice intact, but leaves the final arbitrator no longer a unilateralist product. Another safeguard is in the form of the mandatory confirmation power of SIAC under rule 13 read with rule 9. These rules state that a party is allowed to nominate an arbitrator, although such a nomination is tentative pending audit of the nominee by an independent body on conflict of interest. This effectively divorces the process of proposing a name and the conclusion of the appointment. This allows the parties to have a voice without influencing the scales, since initial nomination is separate from the final appointment. Finally, for long-term stability, institutional rosters should be treated as “safe harbours.” These are diverse, global professionals, contrary to narrow and internal pools of professionals, which are run by one corporation. Through these trends India will be able to leave behind blanket prohibitions and go to a more sophisticated system where fairness is not the result of an opaque process but a natural consequence of a transparent one. 

In conclusion, the Indian arbitration regime’s evolving stance on unilateral appointments reveals a deeper structural tension between party autonomy and constitutional commitments to fairness. Judicial interventions, while normatively grounded in ensuring equality of arms, have produced doctrinal inconsistency and procedural uncertainty that undermine arbitral finality. This paper has argued that neither blanket prohibitions nor purely evidentiary assessments of bias offer a sustainable solution. Instead, a calibrated, institution-centric approach which is anchored in transparent appointment mechanisms and independent oversight can only reconcile efficiency with legitimacy. By reorienting the focus from the identity of the appointing authority to the integrity of the appointment process, India can move towards a more coherent and credible arbitral framework that preserves both commercial flexibility and the foundational principles of natural justice.

**Joshita Yashi and Anya Tandon are first-year law students at National Law University Odisha, where they are pursuing BBA LL.B. (Hons.) and BA LL.B. (Hons.), respectively.

**Disclaimer: The views expressed in this blog do not necessarily align with the views of the Vidhi Centre for Legal Policy.