Many contracts — particularly those drafted by government bodies, public-sector undertakings and large companies — have allowed one party to appoint the sole arbitrator, or to prepare a panel from which the other party must select its nominee.
In November 2024, a Constitution Bench of the Supreme Court in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) addressed such clauses. The Court held that a clause allowing one party to unilaterally appoint a sole arbitrator, or to curate a panel from which the other party is required to choose, is contrary to the principles of equality, independence and impartiality that underpin the arbitral process.
The ruling builds on earlier decisions holding that a person who is ineligible to act as arbitrator under Section 12(5) cannot nominate the arbitrator either. The effect is that a stronger contracting party cannot control the composition of the tribunal through its drafting.
For parties relying on existing contracts, this means that an appointment made under a one-sided clause may be open to challenge, and the court may appoint an independent arbitrator under Section 11 instead.
When drafting new contracts, use a neutral appointment mechanism: nomination by each party with a presiding arbitrator chosen by the nominees, or appointment by a recognised arbitral institution.
This note summarises the reported judgment for general information and is not legal advice on any specific matter.