Supreme Court Bars High Court Review of Arbitrator Appointments; Madras HC Voids Award Over Jurisdictional Flaw

In a landmark ruling that underscores the principle of minimal judicial interference in arbitration proceedings, the Supreme Court of India has firmly held that high courts cannot revisit or review their own orders appointing arbitrators under Section 11(6) of the Arbitration and Conciliation Act, 1996 (A&C Act). This decision, delivered in Hindustan Construction Company Ltd. v. Bihar Rajya Pul Nirman Nigam Limited and Others , sets aside a Patna High Court order that had recalled its earlier appointment after nearly three years of active arbitration. Concurrently, the Madras High Court, in a separate but related development, has set aside an arbitral award in an international commercial arbitration, ruling it a nullity due to the high court's lack of jurisdiction to appoint the arbitrator—a power reserved exclusively for the Supreme Court. These judgments, both dated November 28, 2025, reinforce the sanctity of arbitral processes and highlight jurisdictional boundaries in India's arbitration regime.

The Supreme Court's Stance on Finality of Arbitrator Appointments

The Supreme Court case arose from a construction contract dispute between Hindustan Construction Company Ltd. (HCC) and Bihar Rajya Pul Nirman Nigam Limited (BRPNNL) over a bridge project on the River Sone, awarded in 2014. The arbitration clause in Clause 25 of the contract vested the power to appoint the arbitrator solely with BRPNNL's Managing Director, a unilateral mechanism common in public sector contracts. When a second dispute emerged and the Managing Director failed to act, HCC approached the Patna High Court under Section 11(6) of the A&C Act. In 2021, the high court appointed retired Justice Shivaji Pandey as the sole arbitrator.

For over three years, the parties engaged robustly in the proceedings: more than 70 hearings were held, and the high court itself extended the arbitrator's mandate twice under Section 29A. With final arguments nearly complete in early 2024, BRPNNL filed a review petition challenging the existence of a valid arbitration agreement, citing a subsequent interpretation of a similar clause in another case. The Patna High Court accepted the review, suspended proceedings, and dismissed the original Section 11 petition, effectively invalidating the appointment.

HCC appealed to the Supreme Court, where a bench comprising Justices J.B. Pardiwala and R. Mahadevan delivered a scathing rebuke of the high court's actions. Authored by Justice R. Mahadevan, the judgment emphasized that "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."

The Court declared the high court functus officio —having discharged its duty—upon making the appointment, rendering it powerless to "sit in judgment over the very issue it had already settled." The review was branded an "appeal in disguise," undermining the A&C Act's framework of limited judicial intervention. Drawing from precedents like TRF Ltd. v. Energo Engineering Projects Ltd. and Perkins Eastman Architects DPC v. HSCC (India) Ltd. , the bench invalidated the unilateral appointment mechanism as violative of Article 14's equality principles but applied the doctrine of severability to preserve the core arbitration agreement.

Critically, the Court addressed waiver by conduct: despite BRPNNL's active participation and joint Section 29A applications, it could not later challenge the appointment via review. "Having chosen neither [Section 16 objection before the tribunal nor SLP under Article 136], and having participated... they were estopped from reopening the matter," the judgment stated. The appeal was allowed, restoring the arbitral process and directing the high court to appoint a substitute arbitrator within two weeks to resume from the interrupted stage, without de novo hearings.

The bench opened with a poignant observation: "Arbitration is often a friend in conferences but a foe in practice," highlighting how parties invoke it eagerly during contract negotiations but resist it when disputes arise, necessitating judicial safeguards for fairness.

Legal Analysis: Reinforcing Arbitral Autonomy and Minimal Interference

This ruling addresses three pivotal questions: (1) the permissibility of high court review under Section 11(6); (2) validity of unilateral arbitration clauses; and (3) waiver implications under Sections 4, 12(5), and 29A.

On review jurisdiction, the Court reaffirmed that the A&C Act is a "self-contained code," where unpermitted actions are prohibited. Referencing the seven-judge bench in In Re: Interplay Between Arbitration Agreements and Stamp Act (2024), it limited the referral court's role to a prima facie check on the arbitration agreement's existence, deferring validity challenges to the tribunal under Section 16. The high court's review was deemed ultra vires, diluting judicial order sanctity and eroding arbitral confidence.

Regarding unilateral clauses, the judgment severed the biased appointment provision while upholding the agreement's enforceability, citing prior awards under the same clause. This aligns with evolving jurisprudence against arbitrariness in public contracts.

Waiver analysis harmonized statutory provisions: active participation estops belated challenges, especially absent Seventh Schedule ineligibility. The Court dismissed reliance on non-speaking SLP dismissals as precedent, per Kunhayammed v. State of Kerala .

Implications are profound for arbitration practice. It curtails "procedural sabotage" by public entities, promotes finality to deter dilatory tactics, and cautions against converting reviews into appeals. For public sector undertakings (PSUs), the stern warning to BRPNNL's Managing Director on "administrative apathy" signals potential personal accountability, urging prompt action in disputes.

Practitioners must now advise clients on timely Section 16 or Article 136 remedies, avoiding post-facto reviews. This decision bolsters India's arbitration ecosystem, ranked 4th in global enforcement per the 2024 World Bank Ease of Doing Business, by minimizing court disruptions.

Madras High Court's Ruling on Jurisdictional Void in International Arbitration

In a parallel development, the Madras High Court, in M/s. China Datang Technologies and Engineering Company Limited v. M/s. NLC India Limited (2025:MHC:2716), set aside an entire arbitral award dated November 9, 2022, deeming it coram non judice due to inherent jurisdictional defect. The dispute involved a Rs. 556.50 crore contract for installing flue gas desulphurization systems at NLC's Neyveli New Thermal Power Project, awarded to the China-based claimant in 2019.

Delays attributed to COVID-19 led to contract termination in 2020 and encashment of a Rs. 55.65 crore performance bank guarantee. The claimant sought interim relief under Section 9, where both parties consented to a sole arbitrator (despite the agreement stipulating three). On October 12, 2020, a single judge appointed retired Supreme Court Justice R. Banumathi, disposing of the Section 9 application with interim protection.

The arbitrator awarded Rs. 5.10 crores on two claims to the claimant, permitted guarantee encashment, and rejected other claims and counterclaims totaling Rs. 91.45 crores by NLC. Both parties challenged under Section 34.

Raising a preliminary objection suo motu, Justice N. Anand Venkatesh questioned the high court's jurisdiction in this international commercial arbitration (ICA), as defined under Section 2(1)(f) involving a foreign-incorporated entity. Section 11(12)(a) vests exclusive appointment power in the Supreme Court for ICAs.

Despite consent, the Court held the October 2020 order non-est, lacking inherent jurisdiction. Parties cannot confer what the statute denies, per Harshad Chiman Lal Modi v. DLF Universal Ltd. Waiver under Section 4 applies only to derogable provisions; Section 11(6) is non-derogable. Section 16 objections' absence does not bar Section 34 challenges to jurisdictional nullities, overruling MSP Infrastructure Ltd. v. M.P. Road Development Corporation Ltd. per Lion Engineering Consultants v. State of M.P. .

The award was set aside under Section 34(2)(a)(v) and (b)(ii) for conflicting with public policy via statutory breach. Notably, NLC's later Section 11 petition (dismissed March 19, 2024, with liberty to approach the Supreme Court) underscored the jurisdictional reality.

Analysis: Jurisdictional Exclusivity and Waiver Limits in ICAs

The Madras ruling echoes Supreme Court precedents like Tata Sons (P) Ltd. v. Siva Industries & Holdings Ltd. and Amway India Enterprises (P) Ltd. v. Ravindranath Rao Sindhia , affirming the Supreme Court's monopoly in ICA appointments. Consent in Section 9 proceedings cannot validate high court action; such orders are nullities, per Roptonal Ltd. v. Anees Bazmee .

On waiver, the Court distinguished procedural from jurisdictional issues: "Jurisdiction can neither be waived nor created by consent." Section 4's derogation clause excludes core powers like Section 11(6), ensuring arbitral integrity in cross-border disputes.

This decision impacts ongoing ICAs where high courts have appointed arbitrators via consent. Awards may face invalidation, prompting parties to seek Supreme Court validation, as in Anees Bazmee v. Roptonal Ltd. . It cautions against inadvertent jurisdictional overreach, emphasizing pre-appointment compliance.

For foreign investors, it signals robust statutory safeguards, though procedural hiccups may deter. Legal practitioners must navigate Section 9 cautiously in ICAs, reserving appointments for the apex court.

Broader Implications for Indian Arbitration Landscape

Together, these judgments fortify the A&C Act's pro-arbitration ethos. The Supreme Court's emphasis on finality curbs endless litigation, aligning with the 2015 and 2019 amendments reducing court interference. The Madras ruling clarifies ICA boundaries, preventing forum-shopping.

For PSUs and contractors, timely compliance is key; delays invite estoppel. Internationally, these affirm India's commitment to efficient dispute resolution, potentially boosting FDI in infrastructure.

As arbitration evolves, these rulings remind stakeholders: autonomy thrives under statutory discipline. Future cases may test these limits, but for now, they pave a clearer path for unhindered arbitral justice.

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