Arbitrator’s Ineligibility Can Be Challenged at Any Stage: Supreme Court

The Supreme Court has held that a challenge to an arbitrator’s ineligibility can be raised at any stage of the proceedings, as an arbitral award passed by an ineligible arbitrator is non est and has no enforceability or recognition in law.

A Bench of Justices J B Pardiwala and K V Vishwanathan, in a judgment delivered on January 5, 2026, ruled that when an arbitrator is rendered ineligible by operation of Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996, the arbitrator’s mandate stands automatically terminated.

The Court held that in such cases, an aggrieved party may approach the court under Section 14 read with Section 15 of the Act for appointment of a substitute arbitrator. Where an award has already been passed by an ineligible arbitrator, the affected party is entitled to seek setting aside of the award under Section 34 of the Act.

Section 12(5) of the 1996 Act provides that any person whose relationship with the parties, their counsel, or the dispute falls within any of the categories specified in the Seventh Schedule is ineligible to be appointed as an arbitrator. The Court clarified that since such ineligibility arises by operation of law, not only is a person having an interest in the dispute disqualified, but any appointment made by such a person is ex facie invalid.

The Bench emphasised that the ineligibility under Section 12(5) can be waived only through an express agreement in writing entered into after the disputes have arisen. This requirement, the Court said, ensures that parties are not divested of their right to object inadvertently or through procedural conduct.

The Court categorically held that procedural acts such as issuing a notice invoking arbitration under Section 21, participating in hearings, filing pleadings, seeking interim relief, or responding to applications under Section 33 cannot be treated as an express written waiver within the meaning of the proviso to Section 12(5).

It further held that an arbitrator, upon entering reference and at the very first hearing, must ensure that the parties are willing to proceed and must insist on a written agreement waiving the applicability of Section 12(5), if such waiver is being relied upon.

The Court explained that arbitral proceedings commence upon receipt of a notice invoking arbitration under Section 21, unless otherwise agreed. Such a notice merely sets the arbitration agreement in motion and does not, by itself, amount to consent to the appointment of a particular arbitrator.

Reiterating settled principles, the Bench observed that jurisdiction of an arbitral tribunal flows solely from the consent of the parties. An arbitrator lacking jurisdiction cannot render a valid award on merits, and therefore, an objection to inherent lack of jurisdiction can be raised at any stage of the proceedings.

The Court also underlined the principle of equal treatment of parties, stating that equal participation in the constitution of the arbitral tribunal is essential to ensure independence and impartiality. It held that unilateral appointment of an arbitrator is inconsistent with the core principle of mutual confidence in arbitration and gives rise to legitimate apprehensions of bias.

The Bench clarified that party autonomy in arbitration does not override the requirement of equal treatment of parties or the independence and impartiality of arbitrators. Any exercise of party autonomy must conform to these foundational principles.

The ruling came in appeals filed by Bhadra International (India) Pvt Ltd and others, challenging arbitral awards passed in disputes with the Airport Authority of India. The appellants were engaged in providing ground handling services at various airports, and disputes arose between the parties in 2015.

The appellants invoked the arbitration clause and requested appointment of an arbitrator. The respondent unilaterally appointed a sole arbitrator, who in 2018 passed awards rejecting the claims and counterclaims of both sides, resulting in nil awards.

The appellants challenged the awards before the Delhi High Court on the ground that the unilateral appointment rendered the arbitrator ineligible under Section 12(5). The challenge was rejected by the single judge and subsequently by the division bench.

Setting aside the High Court’s judgment dated February 11, 2025, the Supreme Court held that the appointment was unilateral and that there was no express agreement in writing waiving the ineligibility of the arbitrator after disputes had arisen. The Court held that the conduct of the parties could not constitute a valid waiver under the proviso to Section 12(5).

The Bench held that an award passed by an ineligible arbitrator cannot be enforced, as jurisdiction cannot be conferred by consent or conduct where the law expressly bars such appointment. It reiterated that no act of the parties can cure an inherent lack of jurisdiction.

Accordingly, the Supreme Court set aside the impugned judgment and the arbitral awards passed by the sole arbitrator, while clarifying that the parties are free to initiate fresh arbitration proceedings in accordance with law.

Case Title: Bhadra International (India) Pvt Ltd v. Airport Authority of India

Bench: Justices J B Pardiwala and K V Vishwanathan

Date: January 5, 2026