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14. The court’s role in ensuring an arbitrator’s impartiality and independence is indeed essential. However, this duty, as is clear from above, must be grounded in Section 12 of the Arbitration Act which provides adequate standards for dealing with potential conflicts or biases. By setting specific parameters for impartiality, Section 12 effectively limits arbitrary or unjustified challenges while still safeguarding the fairness of arbitration.

15. If the criteria for fairness, impartiality, or independence are not clearly defined, a party may challenge the appointment of an arbitrator on the ground that the procedure is "manifestly unfair" or that the other party holds a "predominant position." In such cases, a party looking to delay proceedings could file baseless objections against appointments, leading to unnecessary judicial intervention and thereby delaying arbitration until these challenges are resolved. This tactic can effectively halt the arbitration process, leading to avoidable delays in resolution- a problem exacerbated by the broader issue of judicial backlog in India.

26. The Law Commission also significantly noted that if the appointing authority is the State, it is even more essential to have an independent and impartial tribunal. Weighing the observations of the 246th Report of the Law commission, India has formally incorporated the International Bar Association(IBA) Guidelines into its statutory framework, introducing a comprehensive system of checks and balances11.

27. Section 12 of the Arbitration Act provides a mechanism to address issues, if any, that may arise pertaining to impartiality of arbitrators. An amendment was carried out in Section 12 and significantly, the Fifth and Seventh Schedule were adopted in the Arbitration Act which provides a statutory reference point to determine independence and eligibility. Section 12(5) reads as under:

35. In Voestalpine(supra), the issue before the bench of two judges was whether the panel of arbitrators prepared by DMRC violated Section 12 of the Arbitration Act. It was held that Section 12(5) read with the Seventh Schedule does not bar retired government employees, from serving as arbitrators. It however held that in the case of a government contract where the authority to appoint arbitrators rests with a government entity, it is imperative to have a ‘broad-based’ panel to secure the principle of impartiality and independence of the Arbitrator. It is relevant to note that the basis on which such a panel was upheld in Voestalpine(supra) was that the persons who have been nominated are subject to the rigours of Section 12.

1. The issue before us is whether the appointment process under an arbitration agreement, which allows a party who has an interest in the dispute to unilaterally appoint a sole arbitrator or curate a panel of arbitrators and mandate that the other party select their arbitrator from the panel, is valid in law. Prior to the 2015 Amendment to Section 12 of the Arbitration and Conciliation Act, 1996 1, courts permitted such unilateral constitution of arbitral tribunals by one party. However, post amendment, judgments oscillated between negative and conditional affirmations. This Constitution Bench is called upon to clarify the correct position, essential for dispelling uncertainty. The argument against such an appointment process is based on Sections 12(5) and 18 of the Act, as well as on public law considerations such as equal treatment of parties under Article 14, unfair and unreasonable procedure, and non-arbitrariness.