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Arbitrator independence and impartiality are the foundation of arbitration. Parties accept a private decision-maker only because they trust that person to be fair. If the arbitrator has a link to one side, the award may be challenged and years of effort can be lost.
The Arbitration and Conciliation Act, 1996 deals with this through Section 12 and two Schedules. This guide explains the disclosure duty, the difference between the Fifth and the Seventh Schedule, the idea of ineligibility, and the practical checks every party should make.
What does Section 12 require?
Under Section 12(1), a person approached for appointment must give a written disclosure of any circumstance that is likely to give rise to justifiable doubts about independence or impartiality. The disclosure also covers circumstances that may affect the person's ability to complete the arbitration within twelve months. The Sixth Schedule provides a format for the disclosure.
Section 12(2) requires the arbitrator to keep disclosing such circumstances from the time of appointment and throughout the proceedings, unless the parties already know them. Section 12(3) allows a challenge if there are justifiable doubts, or if the arbitrator lacks the qualifications the parties agreed.
What is the Fifth Schedule?
The Fifth Schedule lists circumstances that give rise to justifiable doubts about independence or impartiality. These are grounds for disclosure and for challenge. They do not by themselves bar the person from acting, but a party who objects in time can ask for a replacement. The grounds are drawn from international guidance and cover areas such as:
- The arbitrator's relationship with a party or counsel, for example current or recent engagements for a party or its affiliate.
- The arbitrator's relationship with the dispute, for example earlier advice on the same matter or a published view on it.
- A direct or indirect interest in the dispute, such as holding shares in a party.
- Close family links with a party, its directors or its counsel.
Read the Schedule itself for the exact list and time periods. Practical use depends on the facts of each case.
What is the Seventh Schedule and Section 12(5)?
Section 12(5) goes further. It says that any person whose relationship with the parties, counsel or the dispute falls in a category listed in the Seventh Schedule is ineligible to be an arbitrator. This applies even if the parties have agreed otherwise earlier. Typical categories include:
- An employee, consultant or advisor of a party, or someone with another past or present business relationship with a party.
- A lawyer in the firm that represents a party in the dispute.
- A manager, director or part of the management of a party or its affiliate.
- A person with a significant financial interest in a party or in the outcome.
- A close family member of a party, a director or the counsel.
The only exception is the proviso to Section 12(5). Parties may waive ineligibility, but only by an express agreement in writing made after the dispute has arisen.
Fifth Schedule and Seventh Schedule compared
| Point | Fifth Schedule | Seventh Schedule |
|---|---|---|
| Effect | Gives rise to justifiable doubts | Makes the person ineligible |
| Section | Section 12(1) and 12(3) | Section 12(5) |
| Can parties agree to ignore it? | Parties may choose not to challenge, but the duty to disclose remains | Only by express written waiver after the dispute arises |
| How raised | Challenge procedure under Sections 12 to 13 | Application to the court under Section 14 where the arbitrator is unable to act |
| Typical example | A past engagement for a party | The arbitrator is a consultant to a party |
What have the courts said?
The Supreme Court has addressed ineligibility in several decisions. In TRF Ltd v Energo Engineering Projects (2017), it held that a person who is ineligible cannot nominate another arbitrator. In Perkins Eastman Architects v HSCC (2019), it held that a party with an interest in the outcome cannot unilaterally appoint a sole arbitrator. In Bharat Broadband Network v United Telecoms (2019), it held that waiver under the proviso to Section 12(5) must be express and in writing, and cannot be inferred from conduct.
These cases shape how appointment clauses are read today. Our later article in this series on unilateral appointment explains the latest Supreme Court position.
A practical checklist before you accept an arbitrator
- Ask for a written disclosure in the Sixth Schedule format before you agree.
- Compare the disclosure against the Fifth and Seventh Schedules, line by line.
- Check past work for either party, its group companies and its counsel.
- Ask about the arbitrator's other commitments and ability to finish within the time limits.
- If you decide to waive any ineligibility, do it only after the dispute has arisen and only in a signed document.
- Record your decision and keep all disclosures in the file.
Related guides: choosing the right arbitrator, Section 11 appointment of arbitrator and choosing an arbitration law firm in Chennai.
Key takeaways
- Section 12 requires a written disclosure of anything that raises justifiable doubts.
- The Fifth Schedule lists grounds for doubt and challenge.
- The Seventh Schedule makes a person ineligible under Section 12(5).
- Waiver of ineligibility must be express, written and made after the dispute arises.
- Review disclosures carefully before you accept an arbitrator.
Frequently asked questions
What is the difference between the Fifth and the Seventh Schedule?
The Fifth Schedule lists circumstances that raise justifiable doubts about independence or impartiality and are grounds for challenge. The Seventh Schedule lists relationships that make a person ineligible under Section 12(5), regardless of what the parties agreed earlier.
Can parties waive the Seventh Schedule restriction?
Yes, but only through an express agreement in writing made after the dispute has arisen. The Supreme Court held in Bharat Broadband (2019) that waiver cannot be implied from conduct, so keep a signed document.
What must an arbitrator disclose?
Under Section 12(1), the arbitrator must disclose in writing any circumstance that may raise justifiable doubts about independence or impartiality, and any circumstance affecting the ability to finish within twelve months. The Sixth Schedule gives the format, and the duty continues during the proceedings.
What happens if an ineligible person is appointed?
The person may be treated as unable to perform the functions under Section 14, and a party can apply to the court to end the mandate. Awards made by an ineligible arbitrator are at risk of being set aside, so raise the issue early.
Can a lawyer from the same firm as my opponent's counsel be an arbitrator?
No. A lawyer in the firm representing a party in the dispute falls in the Seventh Schedule categories, which make the person ineligible. The parties could waive it only by express written agreement after the dispute has arisen.
Is a prior business link always a problem?
Not always. A link may give rise to doubts under the Fifth Schedule, or may make the person ineligible under the Seventh Schedule, depending on its nature and recency. Read the Schedules carefully, ask for full disclosure and take advice on the facts.
Sources and references
Disclaimer: this article is general information on Indian arbitration law and is not legal advice. Laws and judgments change, so please verify the current position and take professional advice for your facts.
Last reviewed: October 2026.
