Bombay HC Rules Pre-2015 Unilateral Arbitrator Appointments Valid If Permitted Under Arbitration Agreement

The Bombay High Court ruled that unilateral arbitrator appointments before October 23, 2015, remain valid if the arbitration agreement permits the appointment. Justice Jitendra Jain delivered the judgment on August 4 while handling four execution proceedings involving SE Investments Ltd, now known as Paisalo Digital Ltd. The court's 71-page decision determined that prior to 2015, unilateral appointments were acknowledged in specific circumstances, including cases where the agreement named a particular arbitrator or designated a person or designation for appointment, or granted one party the authority to appoint an arbitrator.

However, the legal landscape shifted after the 2015 amendment to the Arbitration and Conciliation Act, which introduced Section 12(5) to strengthen the requirements of independence and impartiality of arbitrators. Jain clarified that the later legal position cannot be used to invalidate every arbitrator appointment made before the specified date.

The judge differentiated between contractual appointments and cases lacking provisions for unilateral appointment. If the agreement did not name an arbitrator or give either party the power to appoint, and one party proceeded without consent, the appointment would be considered invalid, and the proceedings and award could be deemed void.

The court emphasized that the position should be assessed based on the specific arbitration agreement and the circumstances surrounding the appointment. If an appointment had been challenged unsuccessfully earlier, the executing court cannot subsequently deem the resulting award void. These four interconnected matters have been set aside for further consideration on September 15.