Express Waiver and the Right to Object to Arbitrator Ineligibility under the Arbitration and Conciliation Act, 1996

Introduction

The case of Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India¹, is a judgment of a two-Judge Bench (Justices J.B. Pardiwala and K.V. Viswanathan) rendered on 5 January 2026. The Court held that mere participation in arbitral proceedings does not, by itself, operate as a waiver of a party’s right to object to an arbitrator’s eligibility under Section 12(5) of the Arbitration & Conciliation Act, 1996; any waiver of that right must be an “express agreement in writing” entered into after the dispute arose.

Brief facts

The parties were contracting under licence agreements dated 29 November 2010 which contained Clause 78 vesting the Chairman of the Airports Authority of India (“AAI”) with the power to appoint a sole arbitrator. Disputes were referred to arbitration in November 2015; the Chairman appointed a sole arbitrator who issued a procedural order recording “no objection” by the parties and later passed awards dated 30 July 2018 dismissing claims. The appellants challenged the awards alleging that the appointment process offended Section 12(5) read with the Seventh Schedule of the Act.

Issue

Whether (i) the Chairman’s unilateral appointment of a sole arbitrator was invalid under Section 12(5) and the Seventh Schedule, and (ii) the appellants’ participation in the arbitral proceedings (including a procedural order recording no objection, filing pleadings and seeking extensions) amounted to a waiver of objection under the proviso requiring an “express agreement in writing.”

Arguments

The appellants submitted that the unilateral appointment was void ab initio because the Chairman fell within the disqualifications enumerated in the Seventh Schedule and therefore could not validly appoint an arbitrator; any appointment by an ineligible appointing authority produces a de jure ineligible arbitrator and null proceedings. They further argued that waiver under Section 12(5) is permitted only by a conscious, written, post-dispute agreement and cannot be inferred from participation or procedural conduct. The respondent relied on the procedural order recording consent, filings before the tribunal, and joint actions (such as requests for extension) to contend that an “express agreement in writing” existed or, at least, the appellants had waived objection by conduct.

Judgment

The Supreme Court allowed the appeals and set aside both the judgment of the High Court and the arbitral awards dated 30 July 2018. The Court held that the unilateral appointment of the sole arbitrator by the Chairman of the Airports Authority of India was invalid, as the appointing authority fell within the disqualifications contemplated under Section 12(5) read with the Seventh Schedule of the Arbitration and Conciliation Act, 1996, rendering the arbitrator de jure ineligible to act.

The Court reiterated that the proviso to Section 12(5) permits waiver of such ineligibility only through an express agreement in writing entered into after the disputes have arisen. Mere participation in the arbitral proceedings such as not objecting at the initial stage, participating in hearings, filing pleadings, or seeking procedural extensions does not amount to a valid waiver under the statute.

Accordingly, the Court rejected the contention that the appellants had waived their objection by conduct and held that the arbitral proceedings conducted by an ineligible arbitrator were legally unsustainable. The Court further clarified that challenges to the mandate of an ineligible arbitrator may be raised before the tribunal through the statutory mechanism under Sections 14 and 15 for termination or substitution of the arbitrator and may also be raised at the post-award stage in proceedings under Section 34 of the Act.

Analysis

The decision reiterates a strict statutory approach to arbitrator eligibility and to the scope of waiver under the 2015 amendments. The Court treats Section 12(5) as a public-law safeguard that operates “by operation of law” to disqualify persons whose relationships with parties, counsel or subject-matter fall within the Seventh Schedule; once that statutory ineligibility attaches, it vitiates the appointing capacity of the nominating authority and the mandate of any arbitrator appointed thereby. The practical effect is twofold: first, it curtails contractual formulations that seek to concentrate appointment power in one party or in an official who may be tainted by institutional interests; second, it places a premium on explicit, contemporaneous written consent when parties wish to preserve an appointment that would otherwise be forbidden by the Seventh Schedule.

The Court’s insistence that waiver must be both “express” and “in writing” narrows the scope of conduct-based or implied waivers under Section 4 of the Act and distinguishes between ordinary procedural consent and the heightened waiver that removes a statutory disqualification. Practitioners must now treat any procedural record of “no objection” or routine participation as legally insufficient to extinguish a Section 12(5) objection; the safe route remains a signed, post-dispute document expressly stating knowledge of the disqualification and an intention to waive it. This clarity reduces uncertainty but also raises transactional costs: contracting parties and appointing authorities who desire a one-sided mechanism must secure explicit written waivers after disputes arise, or risk future nullification.

Institutional implications for public authorities and commercial counterparties are significant. Many standard form public contracts vest appointment authority in a statutory officer (chairman, managing director, tender approving authority). Under this ruling, where such an officer is captured by any Seventh Schedule entry, the appointment will be void unless the other party signs an express post-dispute written waiver. That places an onus on public bodies to design appointment mechanisms consistent with the legislative emphasis on equal treatment and neutrality, and on private parties to be vigilant in preserving objections or executing clear waivers if they so elect. The judgment also aligns with precedents (TRF, Perkins Eastman, Bharat Broadband) that treat the integrity of the tribunal’s constitution as central to enforceability; it therefore tightens the judicial scrutiny of appointment processes and confirms that remedies for defective constitution are available both pre-award (substitution) and post-award (set-aside).

For arbitration counsel this means earlier and sharper tactical choices: object promptly where eligibility is suspect, or secure a documented, express waiver after the dispute arises if continuation before the same tribunal is desired. For arbitral institutions and drafters, the ruling counsels revisiting appointment clauses to avoid one-sided mechanisms and to build neutral selection routes that do not depend on a single potentially ineligible official.

Conclusion

The Supreme Court in Bhadra International v. AAI confirms that statutory ineligibility under Section 12(5) cannot be erased by conduct; waiver must be an express post-dispute written agreement. The ruling invalidates unilateral appointments made by persons caught by the Seventh Schedule, clarifies available remedies, and requires practitioners and public authorities to secure explicit written waivers or adopt neutral appointment procedures to avoid nullity. The decision thus strengthens the procedural foundations of impartial arbitration while preserving a narrow, well-defined route for party autonomy consistent with the Act.

1. Civil Appeal Nos. 37-38 of 2026. ↩︎