It took part in the arbitration for four years and never objected. The award still falls
Section 12(5) can only be waived by an express written agreement made after the dispute arises. The Delhi High Court holds that nothing else will do — not pleadings, not counter-claims, not silence.
The ordinary rule of arbitration is that a party which participates without objection loses the right to complain later. Section 4 of the Arbitration and Conciliation Act, 1996 says so, and the principle keeps parties from holding an objection in reserve to deploy if the award goes against them.
Section 12(5) is the exception. Where an arbitrator’s relationship with a party falls within the Seventh Schedule, he is ineligible — and the proviso allows that ineligibility to be waived only by an express agreement in writing entered into after the disputes have arisen.
On 25 September 2026 a Bench of Justice Anil Kshetarpal and Justice Vimal Kumar Yadav applied that distinction to an award that had taken four years to make.
The appeal
M/s Ahluwalia Contracts (India) Ltd. appealed under Section 37 against a judgment of 20 July 2026 by which a Single Judge allowed the Airports Authority of India’s petition under Section 34 and set aside an arbitral award of 10 August 2023.
The controversy was confined to the constitution of the Arbitral Tribunal — specifically, the appointment of the Sole Arbitrator by AAI itself. The contractor’s principal grievance was that the Single Judge, hearing a Section 34 challenge, had examined the validity of that appointment at all.
Mr. Anil Airi, Senior Advocate, appeared for the appellant; Mr. Vaibhav Kalra for AAI.
Two objections to the Court even looking
The contractor’s case had two limbs, and both were about procedure rather than the merits of the appointment.
The first was waiver by conduct. AAI had participated in the arbitral proceedings from 2019 until the award in 2023 — filing pleadings, having its claims and counter-claims considered — and had never raised an objection before the Tribunal. A party that does all that, the argument ran, and is then merely aggrieved by the ultimate award, cannot turn round and say the Tribunal was never validly constituted.
The second was scope. AAI’s Section 34 petition contained no ground challenging the appointment of the Sole Arbitrator, and the Single Judge had therefore travelled beyond the scope of the proceedings before him in examining it.
Why participation is not waiver
The Bench held that Section 12(5) constitutes a specific statutory departure from the general principle of waiver by conduct. That single sentence disposes of the first limb.
On the record, AAI had indeed participated from 2019 until 2023. But there was no material to show that, after the disputes arose, the parties entered into any express agreement in writing consciously waiving the applicability of Section 12(5). And participation in the proceedings, the submission of pleadings, the consideration of claims and counter-claims, or the failure to raise an objection before the Tribunal cannot be treated as a substitute for that statutory waiver.
The proviso means what it says: the waiver must be express, in writing, and subsequent to the dispute. Each of those three requirements does work. “Express” excludes inference from conduct. “In writing” excludes oral consent. And “subsequent to the disputes” excludes the clause in the contract itself — which is the whole point, since a party agreeing to a contract of adhesion has not meaningfully consented to whatever appointment mechanism it contains.
The Court rested this on the Supreme Court’s interpretation of the proviso in Bharat Broadband Network Ltd. v. United Telecoms Ltd. and in Bhadra International, and on the consistent view of Division Benches of the same Court in Mahavir Prasad Gupta and Titagarh Rail Systems.
Why the pleading point failed too
The second limb failed for a related reason, and the formulation is worth keeping.
An objection founded on the inherent lack of jurisdiction of an Arbitral Tribunal, where the statutory conditions rendering the arbitrator ineligible are attracted, is not converted into a valid appointment merely because the objection was not raised at an earlier stage. The Court noted that Bhadra International specifically recognises that an objection going to the inherent jurisdiction of the Tribunal may be raised at the stage of a Section 34 challenge.
The reasoning is the same in both limbs. An ineligible arbitrator is not made eligible by the other side’s silence, whether that silence occurs during the reference or in the drafting of the petition. Eligibility under Section 12(5) is a condition of the Tribunal’s existence rather than a personal objection available to a party, and the only cure the statute provides is the express written waiver it specifies.
What was not decided
The Bench recorded one limit on the consequences, and it matters to the parties.
The Single Judge had set aside the award only on the issue forming the subject matter of the appeal — the validity of the unilateral appointment of the Sole Arbitrator. He had not examined or determined the merits of the claims adjudicated by the Tribunal.
So the contractor’s claims have not been rejected. What has been lost is the award, and four years of arbitration, because the person who made it should never have been appointed.
The order
Finding no error in the Single Judge’s conclusion, the Court dismissed the appeal and closed the pending applications.
The practical lesson runs both ways and is worth stating plainly. A party appointed against by a unilaterally chosen arbitrator keeps the point however long the reference lasts and whatever it files in the meantime — which is protective, and deliberately so. But the party that made the appointment carries the whole risk of the years spent, because nothing the other side does short of an express written waiver will save the award. On a public contract of this size, that is an expensive way to discover that the arbitration clause was never worth invoking as drafted.