While declining to retrospectively invalidate unilaterally appointed Tribunals solely because Section 34 petitions were filed after the cut-off date, the Delhi High Court has ruled that 2015 Amendment to the Arbitration and Conciliation Act is substantive and not merely clarificatory. Hence, it applies prospectively from Oct 23, 2015, and cannot be retrospectively imported into arbitrations that commenced before that date merely because the Award or the Section 34 challenge was filed later.
The High Court explained that the 2015 Amendment to the Arbitration and Conciliation Act is substantive and prospective, and that the validity of unilateral appointment of a sole Arbitrator in arbitrations commenced before Oct 23, 2015, must be tested under the pre-amendment regime, regardless of whether the Award or the Section 34 petition was filed thereafter.
The statutory ineligibility introduced by Section 12(5) read with the Seventh Schedule cannot be retrospectively applied to such appointments, and the observations in Bhadra International (India) (P) Ltd. v. Airports Authority of India [2026 SCC OnLine SC 7] do not alter this position. Where the arbitration clause expressly contemplates statutory modifications and the parties’ conduct reflects acceptance of the amended regime, the 2015 Amendment may apply by virtue of agreement under Section 26 of the Arbitration and Conciliation Act.
A Single Judge Bench of Justice Jasmeet Singh traced the legal position prevailing prior to the 2015 Amendment, noting that under the unamended regime, the statutory scheme of the 1996 Act recognised and gave primacy to the procedure agreed upon by the parties for appointment of the Arbitrator. Section 11(2) expressly permitted parties to agree upon a procedure for appointment, and the legislative scheme was founded upon the principle of party autonomy. The Court observed that under the pre-2015 regime, unilateral or party-nominated appointments were not, by that fact alone, rendered invalid, although Courts did caution against the practice.
The Court then examined the genesis of the 2015 Amendment, noting that it was rooted in the recommendations of the 246th Report of the Law Commission of India. The Commission had observed that party autonomy, though central to arbitration, could not be stretched to a point where it undermined the requirement of an independent and impartial adjudicator. Paragraphs 56 and 57 of the Report recorded the concern that the principles of impartiality and independence could not be discarded at any stage of the proceedings, specifically at the stage of constitution of the Arbitral Tribunal. The explanatory note to the proposed amendment to Section 12 stated that the amendment was intended to further the goals of independence and impartiality by incorporating objective standards based upon the Red and Orange Lists of the IBA Guidelines on Conflicts of Interest.
The Court held that the 2015 Amendment could not be characterised as merely clarificatory of the 1996 Act, as it recalibrated the relationship between party autonomy and the independence and impartiality of the Arbitral Tribunal, subjecting what was earlier a matter of contractual choice to mandatory statutory standards.
The Court then examined Section 26 of the 2015 Amendment Act, which provides that nothing contained in the Amendment Act shall apply to Arbitral proceedings commenced before Oct 23, 2015, unless the parties otherwise agree, but the Amendment Act shall apply in relation to Arbitral proceedings commenced on or after that date. The Court noted the legislative history of Section 26, observing that the 2019 Amendment Act had sought to retrospectively omit Section 26 and insert Section 87, but in Hindustan Construction Co. Ltd. v. Union of India [(2020) 17 SCC 324], a three-Judge Bench of the Supreme Court struck down both the insertion of Section 87 and the retrospective deletion of Section 26 as manifestly arbitrary and violative of Article 14 of the Constitution. Consequently, Section 26 continued to govern the applicability of the 2015 amendments, and the interpretation of Section 26 as laid down in BCCI v. Kochi Cricket Pvt Ltd. [(2018) 6 SCC 287] remained the governing position.
The Court observed that the distinction drawn in BCCI could not be stretched to the extent that the institution of a Section 34 petition after Oct 23, 2015, retrospectively subjected the underlying arbitration to every substantive amendment introduced by the 2015 Amendment Act. A proceeding under Section 34 did not arise in a vacuum, as it was a proceeding instituted to challenge an Award rendered in an Arbitral proceeding, and the Award, the constitution of the Tribunal, the appointment of the Arbitrator, and the conduct of the arbitration were all elements of the same Arbitral process.
The Court explained that what could not be done directly, namely applying a substantive amendment to an arbitration which had already commenced before Oct 23, 2015, could not be achieved indirectly merely by treating the subsequent Section 34 proceeding as an entirely new and independent proceeding divorced from the arbitration whose Award was under challenge. The Court reiterated that the date of commencement of arbitration under Section 21 determined the applicability of the substantive Arbitral regime, and the subsequent institution of court proceedings did not, by itself, alter that position.
The Court further observed that the Bombay High Court in M/s. S. E. Investments Ltd. v. Star Bazaar Private Limited [2026 SCC OnLine Bom 8602] had correctly held that the decision in Bhadra International was concerned with the invocation of arbitration post the 2015 Amendment, and the observations therein that what was implicit prior to 2015 had been made explicit by the Amendment Act did not flow therefrom that unilateral appointments made prior to 2015 were void. Section 12(5) expressly provided for ineligibility of a person appointed as Arbitrator if he fell under any of the categories specified in the Seventh Schedule, but prior to 23.10.2015, there was no such express provision.
The Court said that the mere fact that certain principles were implicit in the pre-amendment Act did not lead to the conclusion that appointments made prior to 2015 were illegal. The Court also noted that the Constitution Bench in Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) [(2025) 4 SCC 641] had considered the entire law relating to independence, impartiality, bias, party autonomy, and unilateral appointment, but did not overrule the decisions permitting unilateral appointment under the pre-2015 regime and expressly made its ruling prospective only in respect of appointments to three-member Arbitral Tribunals.
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Briefly, the Delhi High Court was confronted with a batch of nineteen petitions filed under Sections 34 and 36 of the Arbitration and Conciliation Act, 1996, each challenging an Arbitral Award on the ground that the Arbitrator had been appointed unilaterally by one of the contracting parties. Although the factual matrix of each petition was distinct, the common legal issue was whether the constitution of the Arbitral Tribunal was valid, particularly where the appointment was made by one party alone.
During the hearing, the parties agreed to classify the petitions into three categories based on the stage of the arbitration and the court proceedings vis-à-vis the coming into force of the Arbitration and Conciliation (Amendment) Act, 2015 on Oct 23, 2015. Category A covered cases where both the commencement of arbitration and the Award preceded Oct 23, 2015, but the Section 34 petition was filed after the Amendment came into force. Category B covered cases where arbitration commenced before Oct 23, 2015, but the Award and the Section 34 petition were both filed after the cut-off date. Category C covered cases where the arbitration and the challenge thereto arose prior to the Amendment, but the arbitration agreement contained an express stipulation that any statutory modification or re-enactment of the arbitration law would govern the proceedings.
