Party That Unilaterally Appointed Arbitrator Not Barred From Challenging Appointment U/S 12(5) Of Arbitration Act: Delhi High Court

The Delhi High Court recently ruled that a party who unilaterally appoints an arbitrator is not precluded from challenging that appointment under Section 12(5) of the Arbitration and Conciliation Act, 1996. This significant decision affirms that such unilateral appointments fundamentally vitiate the arbitral award, rendering it susceptible to being set aside, even if the aggrieved party did not explicitly object earlier. The Court clarified that an absence of a response to a Section 21 notice does not automatically imply consent to the designated arbitrator. It underscored that unilateral appointments are void from inception, striking at the core of a fair adjudicatory process. Consequently, any award stemming from a tribunal constituted in such a manner is considered null and void. The right to challenge jurisdiction due to a unilateral appointment can be exercised at any stage, including post-award proceedings. Furthermore, a valid waiver of ineligibility under Section 12(5) necessitates a written agreement executed after the dispute has arisen.