Express Agreement in Writing Under Section 12(5): Why Silence and Participation Are No Longer Enough

One of the most misunderstood aspects of arbitration law in India is the concept of waiver under Section 12(5). Many parties believe that if they participate in arbitration without objection, they lose the right to challenge the arbitrator later, which belief is no longer legally sustainable, and this misunderstanding has led to serious consequences, where awards worth crores have been set aside purely because the statutory requirement of waiver was not met. The recent Delhi High Court decision in the Omni Projects case reinforces a strict interpretation of this requirement.

Section 12(5) creates a disqualification for arbitrators whose relationship falls within the Seventh Schedule. However, the proviso allows parties to waive this disqualification. The key requirement is that such a waiver must be made by an express written agreement after disputes have arisen.

The Supreme Court in Bharat Broadband Network Ltd. v. United Telecoms Ltd. (2019) 5 SCC 755 clarified that this agreement must be explicit and cannot be inferred from conduct. The Court relied on principles under the Contract Act to explain that an express agreement means an agreement made in words, not implied actions.

The Supreme Court in Bhadra International (India) (P) Ltd. v. Airports Authority of India, 2026 SCC OnLine SC 7, took this principle further, and it held that even prolonged participation in arbitration proceedings does not amount to waiver. Filing claims, attending hearings, or even jointly extending the arbitrator’s mandate does not satisfy the requirement.

The Court emphasized that a waiver must reflect conscious and informed consent; this means the party must be aware of the arbitrator’s ineligibility and still choose to proceed through a written agreement.

In the Omni Projects case, both parties participated fully in arbitration proceedings. No objection was raised during the arbitration. However, after the award was passed, the respondent challenged the award on the grounds of invalid appointment, and the Court accepted this challenge, and it held that participation cannot substitute the requirement of an express written waiver. The absence of such a document meant that the arbitrator was ineligible and the award was void. This is a significant departure from earlier assumptions about waiver.

The rationale behind this strict approach lies in ensuring neutrality and fairness in arbitration. The Supreme Court has repeatedly emphasized that arbitration must inspire confidence in both parties. Unilateral appointments inherently raise concerns of bias. Therefore, the law requires a conscious and deliberate waiver to override this concern, and in our experience, courts are increasingly unwilling to dilute this requirement, even in cases where both parties actively participated.

A common mistake clients make is treating a waiver as a technical issue rather than a substantive legal safeguard. Practically, what we have seen is that parties often rely on procedural conduct such as attending hearings or filing pleadings to argue waiver. This approach is now legally untenable. If parties intend to proceed with an otherwise ineligible arbitrator, they must execute a clear written agreement after disputes arise.

This document should explicitly state that both parties are aware of the ineligibility and still agree to proceed. Moreover, anything less exposes the award to challenge.

The law on waiver under Section 12(5) is now settled with clarity as “Silence is not consent. Participation is not a waiver. Procedural conduct is not enough”. Only an express agreement in writing can validate the appointment of an otherwise ineligible arbitrator.

In our experience, addressing this issue at the right stage can save years of litigation and significant costs. Arbitration strategy today must begin not with the dispute, but with ensuring that the foundation of the process is legally sound.