Supreme Court Bars High Court Review of Arbitrator Appointments

In a landmark ruling that reinforces the principle of minimal judicial interference in arbitration proceedings, the Supreme Court of India has held that a High Court lacks the jurisdiction to review or recall its own order appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act). The decision in Hindustan Construction Company Ltd. v. Bihar Rajya Pul Nirman Nigam Limited , delivered on November 28, 2025, by Justices J.B. Pardiwala and R. Mahadevan, sets aside a Patna High Court order that had revisited its earlier appointment, emphasizing the finality of such orders and the self-contained nature of the A&C Act.

The judgment underscores a critical shift in arbitral jurisprudence, prioritizing party autonomy and expeditious dispute resolution over protracted judicial oversight. As Justice R. Mahadevan observed in the lead opinion, "Once an arbitrator is appointed, the arbitral process must proceed unhindered. There is no statutory provision for review or appeal from an order under Section 11, which reflects a conscious legislative choice." This ruling comes at a time when arbitration in public contracts, particularly those involving state instrumentalities, has faced increasing scrutiny for delays and procedural manipulations.

Background of the Dispute

The case originated from a 2014 contract awarded by Bihar Rajya Pul Nirman Nigam Limited (BRPNNL), a state-owned entity, to Hindustan Construction Company Ltd. (HCC) for constructing a bridge over the River Sone in Bihar's Aurangabad and Rohtas districts. Clause 25 of the contract provided for arbitration of disputes, with the Managing Director of BRPNNL empowered to appoint the arbitrator—a unilateral mechanism later challenged as violative of neutrality principles.

Disputes arose during contract execution, leading HCC to invoke arbitration. After BRPNNL's Managing Director failed to appoint an arbitrator, HCC approached the Patna High Court under Section 11(6) of the A&C Act. In August 2021, the High Court appointed retired Justice Shivaji Pandey as the sole arbitrator. The parties actively participated for over three years, attending more than 70 hearings and jointly seeking extensions of the arbitrator's mandate under Section 29A twice.

However, in early 2024—nearing the final arguments—BRPNNL filed a review petition challenging the existence of a valid arbitration agreement under Clause 25. Citing a subsequent High Court interpretation in a similar matter and a Bihar government notification substituting arbitration with institutional mechanisms, BRPNNL argued the clause was inoperative. Shockingly, the Patna High Court allowed the review in October 2024, suspending proceedings and, by December 2024, dismissing HCC's Section 11 petition entirely. Aggrieved, HCC appealed to the Supreme Court.

The bench's preface poignantly captured the irony of arbitration: "Arbitration is often a friend in conferences but a foe in practice," noting how parties embrace it in contracts but resist it in disputes, necessitating judicial safeguards for fairness.

Key Holdings: No Review Jurisdiction Under Section 11

The Supreme Court addressed three central issues, delivering a scathing critique of the High Court's overreach.

Functus Officio and Absence of Review Power

The Court categorically ruled that once a High Court appoints an arbitrator under Section 11(6), it becomes functus officio —exhausted of its powers—and cannot revisit the order. Drawing from the seven-judge bench decision in In re: Interplay Between Arbitration Agreements under the A&C Act and the Stamp Act (2024) 6 SCC 1, the bench emphasized the A&C Act as a "self-contained code" where unenumerated judicial powers are prohibited. Section 5 explicitly limits intervention to specified provisions, excluding review of Section 11 orders.

Justice Mahadevan condemned the Patna High Court's actions as an "appeal in disguise," undermining certainty and eroding trust in arbitral processes. High Courts, though courts of record with inherent review powers under general law, face circumscribed authority in arbitration matters. Review is permissible only for patent errors or overlooked facts, not to reappraise law or facts already settled. Here, the review—filed nearly three years post-appointment, after extensive participation—violated these limits and estoppel principles under Section 4.

The Court clarified remedies: Challenges to jurisdiction must proceed via Section 16 before the tribunal or Special Leave Petition under Article 136, not review petitions. BRPNNL's delay and joint conduct (e.g., Section 29A extensions) estopped it from reopening the issue.

Validity of the Arbitration Agreement

On Clause 25's enforceability, the Court affirmed its validity under Section 7, invoking the doctrine of severability. While unilateral appointment clauses in public contracts violate Article 14 and neutrality (per TRF Ltd. v. Energo Engineering Projects Ltd. (2017) 8 SCC 377; Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2020) 20 SCC 760; and the Constitution Bench in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) (2024)), the core agreement to arbitrate survives.

The "negative covenant" barring arbitration if appointment fails was severed as arbitrary and violative of Section 18 (equal treatment). Parties' prior acceptance of an award under the same clause, plus conduct evidencing intent (Section 7(4)(c)), confirmed the agreement's subsistence. The Court rejected BRPNNL's reliance on a non-precedential SLP dismissal in State of Bihar v. Kashish Developers , reiterating that non-speaking orders bind only parties, not future benches ( Kunhayammed v. State of Kerala (2000) 6 SCC 359).

Waiver by Conduct and Section 29A Extensions

Harmonizing Sections 4, 12(5), and 29A, the bench held that joint applications for mandate extensions constitute waiver under Section 4 where no Seventh Schedule ineligibility exists. Section 12(5) mandates express post-dispute written waivers for disqualifications, but here, none applied. BRPNNL's active participation waived objections, preventing belated challenges.

Legal Implications: Reinforcing Arbitral Autonomy

This judgment fortifies the 2015, 2019, and 2021 amendments' intent to curtail judicial meddling, aligning with UNCITRAL principles of party autonomy and competence-competence. For public sector undertakings (PSUs), it signals accountability: The Court warned BRPNNL's Managing Director against "administrative apathy," urging model litigant behavior under Articles 14 and 298.

Practically, it curtails "review creep" in Section 11 proceedings, promoting finality and reducing satellite litigation. In infrastructure disputes—common in India—this ensures continuity, avoiding de novo restarts that inflate costs (HCC claimed Rs. 50 lakhs in fees alone). The ruling's emphasis on severability aids in salvaging arbitration agreements in legacy contracts with outdated clauses.

Critically, it harmonizes waiver doctrines: Section 4 applies to procedural lapses, while Section 12(5) guards impartiality. Legal practitioners must advise clients on timely Section 16 pleas, as post-award challenges under Section 34 remain viable for inherent jurisdiction defects ( Lion Engineering Consultants v. State of M.P. (2018) 16 SCC 758).

Broader Impacts on Arbitration Practice

The decision's ripple effects extend to institutional arbitration and PSUs. By invalidating unilateral clauses yet preserving agreements, it encourages neutral mechanisms, potentially boosting investor confidence in public tenders. However, it cautions against over-reliance on post-appointment conduct; express waivers remain essential for conflicted appointments.

For High Courts, the functus officio doctrine limits supervisory roles under Articles 226/227, curbing "helicopter parenting" in arbitration. The bench's preface highlights systemic issues: Parties' tactical delays mirror civil litigation's ills, undermining arbitration's efficiency.

In international contexts, though domestic, the ruling echoes global pro-arbitration trends, emphasizing expedition over interference. Future cases may test its application to institutional appointments or hybrid clauses.

Conclusion: A Step Toward Arbitral Maturity

The Supreme Court has decisively tilted the scales toward arbitral independence, declaring, "Courts must resist re-entering what the statute has shut through the front door." By allowing HCC's appeal, restoring proceedings, and directing substitute arbitrator appointment (continuing from interruption stage within one year), the bench preserves progress while issuing a cautionary note to PSUs.

This 50-page judgment, rich in precedent analysis, is a must-read for arbitration counsel. It not only resolves the instant dispute but recalibrates judicial-arbitral dynamics, ensuring arbitration remains "a friend" in practice, not just conferences. As India aspires to a robust arbitration ecosystem, such rulings pave the way for swifter, fairer resolutions in commercial disputes.