SC Judgment of 5.1.2026 – Neutrality in Arbitration Reinforced
The appellant no.1 Bhadra and the appellant no.2 Novia had joint venture consortium of appellant no.3 for ground handling services at various airports in India.
AAI had two license agreement dated 29.11.2010 in favour of appellant no.3 for the specified airports.
Clause 78 provided for the sole arbitration of a person appointed by the Chairman of the Authority.
On 27.11.20215, the appellants invoked arbitration and requested for arbitrator as per Clause 78.
On 22.3.2016, the Arbitrator passed first procedural order that none of the parties had objection to his appointment.
On 30.7.2018, the Arbitrator passed nil award, rejecting the claims and the counter claims.
On 24.12.2024, the Single Bench rejected the application of the appellants for amendment of section 34 petition on the unilateral appointment of arbitrator.
In that context, the Supreme Court framed three issues for decision, in para 29 of the judgment.
To illustrate, one who cannot sit on a chair himself, cannot authorize another to sit on it either.
Once the Chairman is rendered ineligible by operation of law, he cannot nominate or appoint another person as an arbitrator.
The conduct of the parties is inconsequential and does not constitute a valid waiver under the proviso. The requirement of the waiver to be made expressly in the form of agreement in writing ensures that parties are not divested of their right to object inadvertently or by procedural happenstance.
It was held that filing a statement of claim cannot be equated to an “express agreement in writing” in terms of proviso to Section 12(5).
Waiver parameters – Whether Statement of Claim, Extesion of Time under Section 29A, Continued Participation in the Arbitral Proceedings till Award
The net effect of the aforesaid is that a notice invoking the arbitration clause under Section 21 of the Act, 1996, a procedural order, submission of statement of claim by the appellants, the filing an application seeking interim relief, or a reply to an application under Section 33 of the Act, 1996, cannot be countenanced to mean “an express agreement in writing” within the meaning of the proviso to sub-section (5) of Section 12 of the Act, 1996.
appellants were well within their right to challenge the ineligibility of the sole arbitrator even after the Award and in an application under Section 34 of the Act, 1996.
Before we part, we deem it fit to observe that an arbitrator is better equipped with the position of law on appointments, more particularly, unilateral appointments. Therefore, it becomes incumbent upon the arbitrator that upon entering reference and at the very first hearing, to ensure from the parties that they are willing to participate in the proceedings and to insist upon a written agreement waiving the requirement of Section 12(5) of the Act, 1996.
SC Judgment of 5.1.2026 – Neutrality in Arbitration Reinforced
No Arbitrator Appointment by Ineligible Authority – SC Ruling of 5.1.2026
SC 2026 Judgment – Invalidated Unilateral Appointment of Arbitrator by ineligible Authority – Reinforcing Independence and Neutrality under Section 12(5) AA
Judgment dated 5.1.2026 of the Supreme Court in Civil Appeal Nos.37-38 of 2026 of Bhadra International (India) Pvt Ltd and others Vs. Airports Authority of India
