Independence, Impartiality, and Equality in Indian Arbitration

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 20.08.2026

Independence, Impartiality, and Equality in Indian Arbitration

The Supreme Court of India’s recent Constitution Bench judgment in the case involving the Central Organisation for Railway Electrification (CORE) and M/s ECI SPIC SMO MCML (JV) has fundamentally clarified the principles governing the appointment of arbitrators under Indian law. This article provides a comprehensive overview of the judgment, its legal context, and its implications for arbitration in India, especially in public-private contracts.

Background: The Core Issues

The judgment addresses three pivotal questions:

1. Is it lawful for a party with an interest in a dispute to unilaterally appoint a sole arbitrator or curate a panel from which the other party must select?
2. Does the principle of equal treatment apply at the stage of appointing arbitrators?
3. Are such appointment processes in public-private contracts violative of Article 14 of the Constitution (equality before law)?

Legal Framework: Party Autonomy vs. Mandatory Safeguards

• Party Autonomy: The Arbitration and Conciliation Act, 1996 (the Arbitration Act) gives parties significant freedom to design their arbitration process, including the appointment of arbitrators.
• Mandatory Provisions: However, this autonomy is subject to non-derogable principles such as equality of parties (Section 18), independence and impartiality of arbitrators (Section 12), and fairness in procedure.
• 2015 Amendment: Section 12(5) was introduced, making anyone with certain relationships to the parties ineligible to be appointed as arbitrator, unless both parties expressly waive this after a dispute arises.

Key Principles Established by the Judgment

1. Equality at All Stages

• The principle of equal treatment (Section 18) applies not just during the arbitration proceedings but also at the stage of appointing arbitrators.
• Any process that gives one party a dominant or exclusive role in appointing arbitrators is inherently unequal and raises doubts about impartiality.

2. Unilateral Appointments and Curated Panels

• Clauses allowing one party to unilaterally appoint a sole arbitrator or require the other party to select from a panel curated by the first party are generally invalid.
• Such arrangements violate both the equality principle and the requirement for independence and impartiality.
• In public-private contracts, these clauses are also violative of Article 14 of the Constitution.

3. Public Policy and Unconscionability

• Arbitration agreements must not be unconscionable or contrary to public policy.
• The court reaffirmed that contracts induced by undue influence or that restrict access to justice are void.

4. Judicial Intervention: Minimal but Decisive

• Courts should intervene only when necessary, such as when the agreed procedure fails or is manifestly unfair.
• The court’s role is to ensure the appointment of an independent and impartial tribunal, not to routinely override party autonomy.

5. Prospective Application

• The new law applies prospectively to arbitrator appointments made after the date of the judgment, especially for three-member tribunals.

Practical Implications

• For Government and PSUs: While maintaining panels of arbitrators is permitted, mandating the other party to select only from such panels is not.
• For Private Parties: Both parties must have an equal say in the appointment process. Any clause that restricts this can be challenged.
• For Ongoing Arbitrations: The law applies prospectively, so existing tribunals are not automatically invalidated.

Comparative and International Perspective

• The judgment aligns Indian law with international best practices, where party autonomy is respected but not at the cost of fairness and impartiality.
• Many foreign jurisdictions also prohibit unilateral appointments or provide for court intervention when the process is unfair.

Conclusion

This Supreme Court judgment marks a significant step in strengthening the integrity of arbitration in India. By reinforcing the principles of equality, independence, and impartiality, it ensures that arbitration remains a credible and effective alternative to traditional litigation, especially in contracts involving the government or public sector undertakings.

Connected Matter

Supreme Court’s Examination of Pre-Deposit Clauses in Government Arbitration Contracts

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Source: Supreme Court

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