Supreme Court Rules Against Unilateral Arbitrator Appointments

The Supreme Court has ruled against the unilateral appointment of arbitrators by public sector undertakings in contracts. The bench deemed this practice as violating constitutional principles of fairness and equality, especially Article 14. The ruling applies to arbitrator appointments made on or after the judgment date.

The Supreme Court of India delivered a landmark verdict on Friday, ruling against the unilateral appointment of arbitrators by public sector undertakings in contractual disputes, terming such practices as unconstitutional.

A five-judge constitution bench led by Chief Justice D Y Chandrachud declared that unilateral appointment clauses in public-private contracts infringe upon Article 14's right to equality. The bench examined if a process allowing a party with vested interests to unilaterally appoint a sole arbitrator or influence the selection undermines legal validity.

In response, the court held that the principle of equal treatment applies throughout arbitration proceedings. This marks a significant decision aimed at ensuring impartiality and fairness in arbitration, with the ruling set to impact future arbitrator appointments. The decision also aligns with ongoing reforms in India's arbitration sector.

(With inputs from agencies.)