Delhi High Court: Unilateral Arbitrator Appointment Invalid Without Express Written Waiver
Court Reaffirms Strict Bar Under Section 12(5) of Arbitration Act
Ruling Strengthens Neutrality and Fairness in Arbitration Proceedings
By Our Legal Reporter
New Delhi: January 15, 2026:
The Delhi High Court has delivered a landmark ruling that strengthens the integrity of arbitration in India. In MV Omni Projects (India) v. Union of India, a Division Bench comprising Justice Hari Shankar and Justice Om Prakash Shukla held that the unilateral appointment of an arbitrator by one party cannot be cured by consent, participation, or conduct of the other party. The Court clarified that only an express written waiver executed after disputes arise can validate such an appointment.
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This ruling is significant for businesses, government contracts, and arbitration practitioners, as it underscores the importance of neutrality in arbitral proceedings and limits the scope for biased appointments.
Case Background
- The Dispute: The case arose from a construction contract awarded by the Central Public Works Department (CPWD) in 2016 to MV Omni Projects (India).
- Arbitrator Appointment: The Union of India unilaterally appointed an arbitrator under the contract’s arbitration clause.
- Challenge: MV Omni Projects contested the appointment, arguing that unilateral appointments are barred under Section 12(5) of the Arbitration Act, read with the Seventh Schedule, which lists categories of ineligible arbitrators.
- Single Judge’s Order: A single judge of the Delhi High Court set aside the arbitral award passed against the company.
- Appeal: The Union of India appealed, but the Division Bench upheld the single judge’s ruling.
Court’s Observations
The Delhi High Court made several critical observations:
- Strict Bar Under Section 12(5): The Court emphasized that unilateral appointments are invalid unless expressly waived in writing.
- No Cure by Conduct: Participation in proceedings, consent, or failure to object cannot cure the defect.
- Written Waiver Requirement: The proviso to Section 12(5) allows waiver only through an express written agreement executed after disputes arise.
- Neutrality Principle: The ruling reinforces the principle that arbitrators must be independent and impartial, free from influence of either party.
Justice Hari Shankar observed:
“The rigour of Section 12(5) is relaxed only by the proviso, which entitles parties to waive the bar by an express agreement in writing. Consent or conduct cannot substitute this requirement.”
Legal Significance
This ruling has far-reaching implications for arbitration law in India:
- Neutrality Strengthened: Ensures that arbitrators are not appointed unilaterally, protecting fairness.
- Contractual Clauses Impacted: Many government and corporate contracts with unilateral appointment clauses may now face challenges.
- Consistency with Supreme Court Rulings: Aligns with earlier judgments such as Perkins Eastman Architects v. HSCC (India) Ltd. (2019), where the Supreme Court struck down unilateral appointments.
- Limits on Waiver: Clarifies that waiver must be explicit, written, and post-dispute, preventing implied waivers.
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Wider Implications
For Businesses
- Contract Drafting: Companies must revisit arbitration clauses to ensure compliance with Section 12(5).
- Risk of Awards Being Set Aside: Awards passed by unilaterally appointed arbitrators are vulnerable to challenge.
For Government Contracts
- CPWD and Other Agencies: Standard arbitration clauses in government contracts may need revision.
- Transparency: The ruling promotes accountability in public contracts.
For Arbitration Practitioners
- Procedural Safeguards: Arbitrators must ensure their appointment complies with neutrality requirements.
- Reduced Litigation: Clear rules reduce disputes over arbitrator eligibility.
Comparative Context
Globally, arbitration frameworks emphasize neutrality:
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- UNCITRAL Model Law: Requires impartiality and independence of arbitrators.
- UK Arbitration Act, 1996: Similar provisions prevent biased appointments.
- India’s Alignment: The Delhi High Court’s ruling aligns India with international best practices, boosting investor confidence.
Conclusion
The Delhi High Court’s ruling in MV Omni Projects (India) v. Union of India is a landmark in India’s arbitration jurisprudence. By holding that unilateral arbitrator appointments are invalid unless expressly waived in writing after disputes arise, the Court has reinforced the principles of neutrality, fairness, and transparency.
For businesses, government agencies, and arbitration practitioners, the message is clear: arbitration clauses must comply with Section 12(5), and written waivers are the only safeguard against invalid appointments. This ruling strengthens India’s position as a pro-arbitration jurisdiction aligned with global standards.
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