Selection and Appointment of Arbitrators in India: Legal Framework, Regulations, and Judicial Pronouncements

Introduction

The appointment of arbitrators forms the cornerstone of arbitration proceedings in India, determining the credibility and effectiveness of dispute resolution outside traditional courts. The Arbitration and Conciliation Act, 1996, which was enacted to align Indian arbitration law with the UNCITRAL Model Law, establishes detailed procedures for selecting and appointing arbitrators. This legal framework underwent significant transformations through amendments in 2015 and 2019, fundamentally reshaping how arbitrators are selected and the standards of independence and impartiality they must maintain. The appointment process balances party autonomy with necessary safeguards to ensure fairness and neutrality in arbitral proceedings.

Legislative Framework Governing Appointment of Arbitrators

The primary legislation governing arbitrator appointment is Section 11 of the Arbitration and Conciliation Act, 1996 [1]. This provision embodies the principle of party autonomy while establishing default mechanisms when parties cannot agree. Section 11(1) establishes that a person of any nationality may serve as an arbitrator unless parties agree otherwise. This provision recognizes the international nature of commercial arbitration and facilitates cross-border dispute resolution.

Under Section 11(2), parties retain complete freedom to establish their own procedure for Appointment of arbitrators, subject to certain statutory limitations. When parties agree on a three-arbitrator tribunal under Section 11(3), each party appoints one arbitrator, and these two arbitrators then select a third presiding arbitrator. For sole arbitrator appointments under Section 11(5), if parties fail to reach agreement within thirty days of receiving a request from the other party, the appointment falls to designated arbitral institutions or courts [2].

The 2019 amendments introduced Section 11(3A), empowering the Supreme Court and High Courts to designate arbitral institutions graded by the Arbitration Council of India for handling appointments. This institutional mechanism aims to reduce judicial backlog and professionalize the appointment process. Where graded institutions are unavailable, Chief Justices maintain panels of arbitrators to discharge these functions. Section 11(13) mandates that arbitral institutions must dispose of appointment applications within thirty days from service of notice on the opposite party, ensuring expeditious commencement of proceedings.

Qualifications and Ineligibility Criteria for Appointment of Arbitrators

The 2015 Amendment Act introduced critical provisions addressing arbitrator independence and impartiality through Section 12(5) and associated schedules. Section 12(5) declares that any person whose relationship with the parties, counsel, or subject matter falls under categories specified in the Seventh Schedule becomes ineligible for appointment as an arbitrator. This provision operates as a non-obstante clause, overriding any prior contractual agreements, though parties may waive these restrictions through express written agreement after disputes arise [3].

The Fifth Schedule outlines circumstances giving rise to justifiable doubts about an arbitrator’s independence or impartiality. These grounds form the basis for challenging arbitrators under Section 13 of the Act. The Seventh Schedule, conversely, specifies absolute ineligibility criteria. Key categories include arbitrators who are employees, consultants, or advisors of a party; arbitrators with current representation or advisory relationships with parties; arbitrators within the same law firm representing a party; and arbitrators holding management positions in affiliated entities directly involved in the dispute [4].

The distinction between the Fifth and Seventh Schedules carries substantial procedural implications. As the Supreme Court clarified in HRD Corporation v. GAIL (India) Limited, Seventh Schedule challenges relate to ineligibility causing immediate disqualification, rendering arbitrators de jure unable to perform their functions under Section 14(1)(a). Fifth Schedule challenges, however, concern justifiable doubts about independence or impartiality, requiring parties to first approach the arbitral tribunal under Section 13, with recourse to Section 34 applications only after the award is rendered [5].

Judicial Interpretation of Appointment Powers of Arbitrators

The landmark judgment in SBP & Co. v. Patel Engineering Ltd., delivered by a seven-judge bench of the Supreme Court in 2005, fundamentally altered the understanding of Section 11 powers. The Court overruled its previous decision in Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd., holding that the power exercised by the Chief Justice under Section 11(6) is judicial in nature, not merely administrative [6]. This determination meant that Chief Justices must examine preliminary aspects including their own jurisdiction, the existence of a valid arbitration agreement, the existence of a live claim, conditions for exercising their power, and the qualifications of proposed arbitrators.

The Court reasoned that conferring this power on the highest judicial authority in each state and at the national level was intended to add credibility to the arbitral process. The judgment established that appeals against Section 11(6) orders lie only under Article 136 of the Constitution to the Supreme Court, eliminating intermediate appellate remedies. However, the 2015 Amendment Act introduced Section 11(6A), which significantly curtailed judicial examination by directing courts to confine themselves to examining the existence of an arbitration agreement, notwithstanding any previous judgments.

Subsequent jurisprudence has refined the scope of judicial intervention at the appointment stage. In National Insurance Company Ltd. v. Boghara Polyfab Pvt. Ltd., the Supreme Court categorized preliminary issues into three classes: issues the Chief Justice must decide, issues the Chief Justice may decide at discretion, and issues best left for arbitral tribunals. This framework permits Chief Justices to refer complex questions to arbitral tribunals while maintaining oversight on fundamental jurisdictional matters.

Restrictions on Unilateral Appointments

The watershed judgment in TRF Ltd. v. Energo Engineering Projects Ltd., decided by a three-judge bench in 2017, established that persons ineligible to act as arbitrators under Section 12(5) and the Seventh Schedule cannot nominate arbitrators either. The Court applied the maxim “qui facit per alium facit per se” (what one does through another is done by oneself), holding that allowing disqualified persons to nominate arbitrators would defeat the purpose of the 2015 amendments [7]. This ruling addressed arbitration clauses where managing directors or other interested parties possessed the power to appoint arbitrators.

The TRF principle was extended and clarified in Perkins Eastman Architects DPC v. HSCC (India) Ltd., where the Supreme Court held that any person with an interest in the dispute’s outcome cannot possess the power to appoint a sole arbitrator. The Court emphasized that this interpretation aligned with the essence of the 2015 amendments, which sought to eliminate structural bias from the appointment process [8]. The judgment reinforced that unilateral appointment clauses, where one party controls arbitrator selection, violate fundamental principles of independence and impartiality.

The jurisprudence on unilateral appointments continued developing through various decisions. In Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd., the Supreme Court examined arbitration clauses requiring parties to nominate arbitrators from panels maintained by one party. While the Court did not automatically invalidate such arrangements, it mandated that panels must be broad-based and inclusive, not narrowly tailored to favor one party. The panel should include diverse experts, engineers, and retired judges, not merely former employees of one party.

Arbitrator Fees and Compensation Framework

The Fourth Schedule, introduced by the 2015 Amendment Act, establishes a model fee structure for arbitrators based on the sum in dispute. Section 11(14) originally empowered High Courts to frame rules for determining arbitral tribunal fees, considering rates specified in the Fourth Schedule. The 2019 amendments transferred this function to arbitral institutions, which must determine fees subject to Fourth Schedule rates. The Schedule provides that sole arbitrators receive an additional twenty-five percent above the prescribed fees [9].

The Supreme Court’s decision in ONGC v. Afcons Gunanusa JV comprehensively addressed Fourth Schedule interpretation. The Court held that the Rs. 30 lakh fee ceiling applies to each individual arbitrator, not collectively to the tribunal. Furthermore, the ceiling applies cumulatively to both base and variable amounts. The Court emphasized that the Fourth Schedule represents default fees applicable when parties or parties and the tribunal cannot reach consensus, but it does not override express agreements on fees reached before disputes arise.

The judgment reinforced party autonomy as paramount in fee determination. Arbitral tribunals cannot unilaterally fix their own fees, as this violates the doctrine of prohibition in rem suam. The Court directed that at the commencement of proceedings, parties and the tribunal must finalize terms of reference containing fee components, serving as a tripartite agreement. Where institutional arbitration applies or international commercial arbitration is involved, the Fourth Schedule does not mandate fee structures if institutional rules or party agreements govern.

Role of Arbitral Institutions in Appointments

The 2019 amendments significantly enhanced the role of arbitral institutions in the appointment process. Section 11(3A) requires the Supreme Court and High Courts to designate graded arbitral institutions for handling appointments. These institutions must meet standards established by the Arbitration Council of India under Section 43-I. The shift toward institutional appointments aims to reduce judicial workload, expedite the appointment process, and bring specialized expertise to arbitrator selection.

Designated institutions assume responsibility for ensuring appointees meet independence and impartiality standards. Under Section 11(8), before appointing arbitrators, institutions must seek written disclosures from prospective arbitrators regarding circumstances that might affect their independence or impartiality. Institutions must have due regard to qualifications required by party agreements and disclosure contents when making appointments. This process institutionalizes transparency and accountability in arbitrator selection.

Section 11(14) authorizes arbitral institutions to determine tribunal fees and payment methods, subject to Fourth Schedule rates. This authority empowers institutions to establish standardized, transparent fee structures aligned with international best practices. Institutions also bear responsibility for maintaining panels of qualified arbitrators across various specializations, facilitating efficient matching of arbitrators to dispute types. The institutional framework represents a fundamental shift from ad hoc, court-centric appointments toward professional, standardized selection mechanisms.

Challenges and Termination of Arbitrator Mandates

Section 13 of the Act permits parties to challenge appointment of arbitrators when circumstances exist that give rise to justifiable doubts about independence or impartiality. Challenges must be made in writing, stating reasons, within fifteen days after becoming aware of the tribunal’s constitution or circumstances giving rise to doubts. The arbitral tribunal itself decides on challenges unless the challenged arbitrator withdraws or other parties agree to the challenge.

Section 14 addresses termination of arbitrator mandates through several mechanisms. An arbitrator becomes de jure unable to perform functions when legally impossible to do so, such as when falling within Seventh Schedule categories. An arbitrator becomes de facto unable to perform functions when failing to act without undue delay. Parties may agree on procedures for terminating mandates, or failing such agreement, may apply to courts designated under Section 11 to decide on termination requests.

Section 15 governs substitute arbitrator appointments when mandates terminate. Where an arbitrator withdraws or parties agree to mandate termination, a substitute arbitrator shall be appointed according to the procedure applicable to the original appointment. However, the provision does not automatically apply when an arbitrator refuses to accept appointment initially. The Supreme Court in SBP & Co. v. Patel Engineering Ltd. clarified that “refuse” and “withdraw” bear distinct meanings—refusal occurs before acceptance, while withdrawal requires prior acceptance. Courts must carefully analyze whether circumstances warrant substitute appointments or fresh appointment procedures.

International Commercial Arbitration Considerations

Section 11 distinguishes between domestic and international commercial arbitration in appointment procedures. For international commercial arbitration, Section 11(12) provides that references to arbitral institutions should be construed as references to institutions designated under Section 11(3A). International commercial arbitration, as defined in Section 2(1)(f), involves disputes arising from legal relationships where at least one party is foreign.

The Fourth Schedule’s fee structure does not apply to international commercial arbitration, where institutional rules or party agreements typically govern fees. This exception recognizes that international arbitration often involves higher stakes and complexity justifying different fee arrangements. Similarly, party autonomy receives greater deference in international contexts, where parties may designate foreign arbitral institutions or specify arbitrators from particular jurisdictions.

Section 11(1)’s provision permitting arbitrators of any nationality assumes particular importance in international contexts. Parties in cross-border disputes frequently prefer neutral arbitrators from third countries to avoid perceived bias. The provision facilitates this practice while ensuring Indian courts retain supervisory jurisdiction over arbitrations seated in India. The balance between respecting party autonomy and maintaining necessary oversight characterizes India’s approach to international commercial arbitration.

Conclusion

The framework governing arbitrators selection and appointment in India reflects continuous evolution toward greater transparency, independence, and efficiency. Legislative amendments in 2015 and 2019, combined with judicial interpretation, have significantly strengthened safeguards against bias while respecting party autonomy. The introduction of the Fifth and Seventh Schedules established clear standards for arbitrator eligibility, while the prohibition on unilateral appointments eliminated structural advantages that compromised neutrality. The expanding role of designated arbitral institutions promises to professionalize the appointment process and reduce judicial burden. However, challenges remain in ensuring consistent application across jurisdictions, building institutional capacity, and balancing efficiency with thoroughness in vetting arbitrators. The legal regime continues developing through judicial interpretation, responding to practical challenges while advancing India’s objective of becoming a preferred seat for arbitration. The appointment mechanism’s success ultimately depends on how effectively arbitral institutions discharge their responsibilities and how consistently courts apply established principles while respecting the limited scope of judicial intervention that arbitration’s nature demands.

References

1. India Code, “The Arbitration and Conciliation Act, 1996 – Section 11,” accessed January 2026, https://www.indiacode.nic.in/show-data?actid=AC_CEN_3_46_00004_199626_1517807323919&orderno=11
2. iPleaders, “Section 11 of Arbitration and Conciliation Act, 1996,” accessed January 2026, https://blog.ipleaders.in/section-11-of-arbitration-and-conciliation-act-1996/
3. IBC Laws, “Section 11 of Arbitration and Conciliation Act, 1996: Appointment of arbitrators,” accessed January 2026, https://ibclaw.in/section-11-appointment-of-arbitrators/
4. IBC Laws, “The Seventh Schedule of Arbitration and Conciliation Act 1996,” accessed January 2026, https://ibclaw.in/the-seventh-schedule-of-the-arbitration-and-conciliation-act-1996/
5. The Arbitration Digest, “HRD Corporation v. GAIL (India) Ltd (2018) 12 SCC 471,” accessed January 2026, https://thearbitrationdigest.com/hrd-corporation-v-gail-india-ltd-2018-12-scc-471/
6. Indian Kanoon, “S.B.P. & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618,” accessed January 2026, https://indiankanoon.org/doc/1641452/
7. Indian Kanoon, “TRF Ltd. v. Energo Engineering Projects Ltd. (2017) 8 SCC 377,” accessed January 2026, https://indiankanoon.org/doc/192167806/
8. VIA Mediation Centre, “Perkins Eastman Architects DPC & Others v. HSCC (India) Ltd.,” accessed January 2026, https://viamediationcentre.org/readnews/NjU0/PERKINS-EASTMAN-ARCHITECTS-DPC-OTHERS-V-HSCC-INDIA-LTD
9. IBC Laws, “The Fourth Schedule of Arbitration and Conciliation Act 1996,” accessed January 2026, https://ibclaw.in/the-fourth-schedule-arbitration-and-conciliation-act-1996/

Published and Authorized by Vishal Davda