Calcutta HC has held that all unilateral appointments of arbitrators are not invalid unless it falls under the Seventh Schedule. In the present matter, Justice Bhattacharya differentiated between a clause that permits unilateral appointment of an arbitrator and a clause that provides for arbitration before some person in charge of one of the parties or right of that person to delegate his function to a third party.

It also held that filing pleadings before an arbitration tribunal and acquiescing to it’s jurisdiction is equivalent to satisfying the requirement of the proviso under Section 12(5) which calls for an express agreement.

In the present case, the parties entered into an agreement in 2018. The arbitration clause under it conferred a unilateral right of appointment of arbitrator on the respondent. The arbitrator filed his disclosure and also passed a consent order. Later on, the Petitioner challenged the appointment of the arbitrator under Section 12(5) and entry 12 of the Seventh Schedule.

An application under Section 14 was filed by the Petitioner to terminate the mandate of the Ld. Sole Arbitrator and stay all further proceedings. The petitioners argued that the appointment is invalid because of the unilateral appointment of the Arbitrator. The respondents showed that the petitioner was aware of the disclosure made by the Arbitrator, is an afterthought and has been filed to wriggle out of the consent order.

The Court clarified that there is no requirement for both the parties to execute a formal agreement, the agreement has to fulfil the benchmark of an express promise. The statements contained in pleadings filed by the petitioner before the Arbitrator constitute an express agreement as contemplated under the proviso of Section 12(5). The de jure or de facto termination of mandate of an arbitrator under Section 14 must not only be assessed in light of the proviso to section 12(5) but also with reference to the express agreement entered into between the parties subsequent to the dispute having arisen between the parties.