Supreme Court of India in Perkins Eastman Architects DPC & Anr Versus HSCC (India) Ltd., ARBITRATION APPLICATION NO. 32 OF 2019, has held that the person who has interest in the outcome of the decision of the dispute must not have the power to appoint a Sole Arbitrator.
Court looked into a number of judgements and law commission reports regarding ‘Neutrality of Arbitrators’, ‘party autonomy’ and ‘independence and impartiality of the Arbitrator’. And held that party autonomy cannot override the requirement of independence and impartiality of the Arbitrator, which is a hallmark of any arbitration proceedings.
This judgement has plugged a big loop hole in the justice system.
Understand in detail by watching this video:
You can read the complete Supreme Court of India Judgement here:
Reviewed and updated by Century Law Firm, Delhi – October 2026. Statutory references are to the Acts as in force on that date.
Unilateral appointment of arbitrators: from Perkins Eastman to the 2024 Constitution Bench
Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2019) built on TRF Ltd. v. Energo Engineering Projects Ltd. (2017), where the Supreme Court had held that a person who is himself ineligible to act as arbitrator under Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996 – typically the managing director of a party – cannot nominate another person as arbitrator either. Perkins extended the logic: even where the clause does not name the managing director as arbitrator but gives him the sole power to appoint one, the appointment is invalid, because a party interested in the outcome cannot have exclusive control over the composition of the tribunal. The Court then appointed an independent arbitrator under Section 11(6).
- Section 12(5) and the Seventh Schedule (inserted by the 2015 amendment) make a person whose relationship with the parties or the dispute falls within the Schedule – employee, consultant, adviser or other past or present business relationship – de jure ineligible, “notwithstanding any prior agreement to the contrary”.
- Waiver only after the dispute. The proviso to Section 12(5) permits waiver only by an express agreement in writing made after the dispute has arisen; participation in the proceedings is not waiver (Bharat Broadband Network Ltd. v. United Telecoms Ltd., 2019).
- Panels maintained by one party. In Voestalpine Schienen GmbH v. DMRC (2017) the Court allowed appointment from a broad-based panel, but in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) (Constitution Bench, 8 November 2024) it held, by majority, that a clause allowing a public-sector party to appoint the arbitrator unilaterally, or to force the other party to choose from a panel it curates, violates the principle of equal treatment in Section 18 and the independence requirements of Section 12(5), and is invalid – prospectively, for appointments made after that date.
- Practical effect. Government contracts, PSU tenders and many commercial agreements with “the Chairman shall appoint the sole arbitrator” clauses are now unenforceable on that point; the parties must agree on an arbitrator or approach the High Court (or the Supreme Court for international arbitrations) under Section 11 for appointment, and courts routinely appoint retired judges or institutional arbitrators instead.
- Challenging an existing appointment. An award by an ineligible arbitrator is open to challenge under Section 34 for lack of jurisdiction; the challenge should be raised before the tribunal under Section 13 at the earliest, and the ineligibility is not cured by the other party’s silence.
Related reading: Arbitration and Conciliation Act, 1996 explained, arbitration and judicial intervention, Commercial Courts Act, 2015 and resolving contract disputes.
Frequently asked questions
No. Following TRF (2017), Perkins Eastman (2019) and the Constitution Bench decision in CORE v. ECI-SPIC-SMO-MCML (2024), a clause giving one party – or its officer – the sole power to appoint the arbitrator is invalid; the arbitrator must be appointed by agreement, by a neutral institution, or by the court under Section 11.
The managing director is ineligible under Section 12(5) read with the Seventh Schedule, and under TRF he cannot nominate anyone else either. The rest of the clause survives, and either party may apply to the court for appointment of an independent arbitrator.
Only by an express written agreement made after the dispute has arisen (proviso to Section 12(5)); a clause in the original contract does not count, and merely participating in the arbitration is not a waiver.
