In a significant ruling, the Bombay High Court has set aside multiple arbitral awards on the ground that the unilateral appointment of sole arbitrators rendered the appointments void ab initio. The Court relied on the Supreme Court's decision in Bhadra International (India) Pvt. Ltd. and Others vs. Airports Authority of India, which held that unilateral appointments are invalid and can be challenged at any stage, including execution. The judgment provides clarity on the procedural invalidity of such appointments and offers parties an opportunity to initiate fresh arbitration proceedings, with the limitation period adjusted accordingly.
Background & Facts
The Dispute
These proceedings involved Serial Nos. 901 to 1086, 1090, 1094, and 1097 to 1156 before the Bombay High Court, Ordinary Original Civil Jurisdiction. The cases arose from commercial disputes where arbitral awards had been passed based on unilateral appointments of sole arbitrators. The office of the Prothonotary & Senior Master of the Bombay High Court identified that the appointments were unilateral, raising questions about their validity under the Arbitration and Conciliation Act, 1996.
Procedural History
- Pre-2026: Arbitration proceedings were initiated, and sole arbitrators were unilaterally appointed by one party in each case.
- Arbitral Awards: Awards were passed in favor of the party that appointed the arbitrator.
- Execution Applications: The successful parties filed execution applications to enforce the arbitral awards.
- 2026: The matters were listed before the Bombay High Court in light of the Supreme Court's decision in Bhadra International (India) Pvt. Ltd. and Others vs. Airports Authority of India, which held that unilateral appointments of arbitrators are void ab initio.
Relief Sought
The applicants sought the following reliefs:
- Setting aside of the arbitral awards on the ground of unilateral appointment of arbitrators.
- Dismissal of the execution applications and connected interim applications.
- Exclusion of the period from the invocation of arbitration till the date of the judgment for the purpose of limitation in initiating fresh arbitration proceedings.
- Liberty to apply if an express agreement existed under the proviso to Section 12(5) of the Arbitration and Conciliation Act, 1996, waiving the ineligibility of the arbitrator.
The Legal Issue
The central question before the Court was whether arbitral awards passed by unilaterally appointed arbitrators could be enforced, or whether such appointments rendered the awards void ab initio and liable to be set aside.
Arguments Presented
For the Applicants
The applicants relied on the Supreme Court's decision in Bhadra International (India) Pvt. Ltd. and Others vs. Airports Authority of India, which held that unilateral appointments of arbitrators are invalid and void ab initio. They argued that the ineligibility of the arbitrator could be raised at any stage, including during execution proceedings, and that the arbitral awards should therefore be set aside.
For the Respondents
No arguments were presented on behalf of the respondents, as none were present during the proceedings.
The Court's Analysis
The Court examined the legal principle established in Bhadra International (India) Pvt. Ltd. and Others vs. Airports Authority of India, wherein the Supreme Court held that unilateral appointments of arbitrators are void ab initio. The Court observed:
"Unilateral appointment of arbitrator is void ab initio and the ineligibility can be raised at any stage and even in execution."
The Court further noted that the office of the Prothonotary & Senior Master had already identified the unilateral nature of the appointments in these cases. Consequently, the arbitral awards stood vitiated due to the invalidity of the appointments. The Court emphasized that parties could initiate fresh arbitration proceedings in accordance with the law, with the limitation period adjusted to exclude the time elapsed since the invocation of arbitration.
The Verdict
The Bombay High Court passed the following orders:
- All arbitral awards in the listed matters were set aside due to the unilateral appointment of arbitrators.
- The Commercial Execution Applications, Execution Applications, and connected Interim Applications and Chamber Summons were dismissed/disposed of.
- Parties were granted liberty to initiate fresh arbitration proceedings in accordance with the law.
- The limitation period for initiating fresh proceedings was adjusted by excluding the period from the invocation of arbitration till the date of the judgment (29th April 2026).
- Parties were permitted to apply if an express agreement in writing existed under the proviso to Section 12(5) of the Arbitration and Conciliation Act, 1996, waiving the ineligibility of the arbitrator or the right to object.
What This Means For Similar Cases
Unilateral Appointments Are Void Ab Initio
- Practitioners must ensure that arbitrators are appointed bilaterally or through a neutral mechanism as prescribed under the Arbitration and Conciliation Act, 1996. Unilateral appointments are void ab initio and can be challenged at any stage, including during execution.
- Arbitral awards passed by unilaterally appointed arbitrators are liable to be set aside, and enforcement proceedings will fail.
Limitation Period Adjustment
- Courts may exclude the period from the invocation of arbitration till the date of judgment when setting aside awards due to unilateral appointments. This adjustment ensures that parties are not prejudiced by delays caused by invalid proceedings.
Waiver Under Section 12(5)
- Parties can waive the ineligibility of an arbitrator or the right to object under Section 12(5) of the Arbitration and Conciliation Act, 1996, only through an express agreement in writing. Such waivers must be carefully drafted and agreed upon before the appointment of the arbitrator to avoid invalidity.
Fresh Arbitration Proceedings
- Parties are permitted to initiate fresh arbitration proceedings if the original award is set aside. Practitioners should ensure compliance with the Arbitration and Conciliation Act, 1996 to avoid procedural defects.
