We are in complete agreement with observations of G. S. Patel J in Lite Bite Foods Pvt. Ltd. v. AAI, 2019 SCC OnLine Bom 5163, that, “The guiding principle is neutrality, independence, fairness and transparency even in Arbitral-Forum selection process.”

It would not be unreasonable for a party to apprehend, an Arbitrator unilaterally appointed by opposite party may not act with complete impartiality. The test to determine bias is not actual proof of bias but reasonable apprehension of bias.

We must be mindful, if Legislature intended, waiver under Section 12(5) could arise by implication or conduct as mentioned under Section 4, it would have refrained from introducing a heightened and mandatory requirement, more particularly, in light of rigours of Seventh Schedule. The statutory design makes it evident, bar under Section 12(5) can be removed only by a clear, unequivocal and written agreement executed after dispute arose, and not by any form of tacit acceptance or procedural participation.

One could argue, a miscreant may participate in Arbitral Proceedings up to passing of an Award, despite having full knowledge of Arbitrator’s ineligibility. Such an apprehension is reasonable. The party making an unilateral appointment must endeavour to enter into an express written agreement as stipulated in Section 12(5) so as to safeguard proceedings from being rendered futile. It becomes incumbent upon Arbitrator, at very first hearing, to insist upon a written agreement waiving requirement of Section 12(5).

– Hon’ble Justice J.B. Pardiwala, Bhadra International (India) Pvt. Ltd. v. Airports Authority of India, [Civil Appeal Nos. 37-38 of 2026].