Consent Cannot Confer Jurisdiction In International Commercial Arbitration

 Kartik Shukla is fifth year B.A., LL.B. (Hons.) student at National Law University Odisha

  Keywords: International Commercial Arbitration, Appointment, High Court

    I.         Introduction

The appointment of arbitrators lies at the heart of the arbitral process which determines the integrity of arbitral proceedings. The Arbitration and Conciliation Act, 1996 (hereinafter, “Arbitration Act”) clearly lays down the framework for such appointments by distinguishing between domestic and international commercial arbitrations. Section 11 of the Act allows   Courts to appoint arbitrators in case of default, but this power is exclusively given to the Supreme Court for International Commercial Arbitrations (ICAs) under Section 11(12)(a). This statutory scheme ensures that matters involving foreign parties are supervised by the apex judicial authority to preserve consistency, international credibility, and neutrality.

However, recent judicial decisions particularly in Earnest Business Services Pvt. Ltd. v. Government of the State of Israel (Bombay High Court, 2019) and Hala Kamel Zabal v. Arya Trading Ltd. (Delhi High Court, 2024) have blurred this jurisdictional demarcation. These decisions are proceeded on the assumption that where both parties consent to the High Court appointing an arbitrator in an ICA such appointment becomes valid and does not vitiate the arbitral proceedings. This assumption raises serious questions not only about the statutory sanctity of Section 11 but also on the non-derogablility of jurisdiction under the Arbitration Act.

This blog explores the recent judicial stance that the power to appoint an arbitrator in international commercial arbitrations cannot be given to the High Court simply because the parties agree, stay silent, or for the sake of convenience. Jurisdiction is a matter of legislative conferment cannot arise from party autonomy. Any deviation from established principle of law renders the arbitral appointment and the subsequent award void ab initio.

   II.         Legislative framework and jurisdictional divide under section 11 of arbitration act

The Arbitration Act provides several ways for appointment of arbitrator(s). Firstly, the parties can mutually decide on any procedure for the appointment. Secondly, in a three-member tribunal, both parties nominate one arbitrator, and the two nominated arbitrators jointly select the third, who acts as the presiding arbitrator. Thirdly, if the parties fail to agree or a party defaults in making the appointment within 30 days, the Chief Justice or a designated institution/person may appoint the arbitrator. Fourthly, where the agreement names a specific authority or person to appoint the arbitrator and that person fails to do so, the Chief Justice can intervene. Lastly, in the case of international commercial arbitrations, the appointment is made by the Chief Justice of India or his designate. This ensures impartiality and independence in the arbitral process.

International Commercial Arbitration means

An arbitration invoked to settle dispute arising from a legal relationship that is regarded as commercial under Indian law, where at least one party is foreign in nature. A party is considered foreign if

a)     it is an individual who is a national of, or habitually resides in, a country other than India;

b)    a company incorporated outside India;

c)     an association or body of individuals whose central management and control are exercised outside India; or

d)     the government of a foreign country.

In the Arbitration Act the authority to appoint arbitrator(s) differs for domestic and international Commercial arbitrations. In the case of international commercial arbitration, Section 11(12)(a) provides that the Supreme Court of India, or any institution or person designated by it, may appoint the sole or third arbitrator. This ensures neutrality especially when the parties belong to different nations. In contrast, under Section 11(12)(b), for domestic arbitrations, the power to appoint the arbitrator lies with the High Court within whose jurisdiction the principal civil court is situated, or with any institution or person designated by that High Court. After the 2015 Amendment, this power is expressly vested in the Supreme Court and High Courts themselves, rather than in the Chief Justices individually.

  III.         Jurisdiction of High Courts to Appoint Arbitrators in International Commercial Arbitrations

The Bombay High Court in 2019 in “Earnest Business Services P. Ltd. v. Government of the State of Israel” held that the parties having participated in the proceedings and having agreed upon the appointment of an arbitrator in their pleadings, had effectively waived any objection to the Court’s competence. The Court treated the absence of a timely jurisdictional challenge as implied consent, thereby characterising the limitation under Section 11(12)(a) as a procedural objection capable of waiver rather than as an issue of inherent jurisdiction.

Recently, Delhi High Court in “Hala Kamel Zabal v. Arya Trading Ltd” permitted  the appointment through the High Court  while reling on the arbitration agreement and parties’ failure to raise objections at the appropriate stage. On this reasoning, the Court considered the defect, if any, in the appointment process to have been cured by consent and acquiescence.

The underlying assumption behind both the cases is that when both parties consent to the appointment of an arbitrator by the High Court, such appointment is valid even in cases of International Commercial Arbitration (hereinafter ICA) as they have waived procedural objection. However, this assumption does not align with the statutory scheme of the Arbitration Act because firstly, the appointment of the arbitrator and the subsequent award are non-est and a nullity, as parties cannot confer jurisdiction to the Court even by consent [A]. Secondly, the challenge to jurisdiction can be raised at any stage, and the principle of waiver or failure to challenge the appointment of the arbitrator during the arbitration proceedings will not bar the same [B]. Thirdly, while appointing the arbitrator, the High Court did not merely record the consent of the parties but performed the function of appointment [C].

A)   The appointment of the arbitrator and the subsequent award are non-est and a nullity, as parties cannot confer jurisdiction to the Court even by consent

It is a well-established legal principle that jurisdiction cannot be conferred by agreement or acquiescence. As the Supreme Court in “Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd.” held that while parties may restrict jurisdiction to one of several competent courts, they cannot confer jurisdiction upon a court that otherwise lacks it under Section 20 of the Code of Civil Procedure, 1908. The same reasoning applies with even greater force in arbitration matters, where the jurisdictional competence of a court is explicitly defined by statute. Therefore, even if both parties consent to the High Court making an appointment, such consent cannot override the statutory mandate that only the Supreme Court may do so in ICA matter.

 Section 11(6A) of the Arbitration Act limits the Court’s role in the appointment process to verifying the existence of a valid arbitration agreement. It does not, allow a non-competent court to assume jurisdiction merely because both parties consent. The statutory division of role between the Supreme Court and High Courts under Section 11(12) serves a clear institutional and functional purpose to ensure that international arbitrations are supervised by the apex court. This maintain uniformity and safeguards India’s international arbitration framework which helps India in becoming a favorable seat for International Arbitrations. Allowing High Courts to act merely because both parties agree would undermine this legislative intent. It would create inconsistency in the applicability of law.

Moreover, consent cannot validate an act which is done without jurisdiction. A court acting beyond its jurisdiction acts in violation of the principle of legality which renders the appointment void ab initio. The doctrine of waiver or estoppel cannot apply to jurisdictional defects because jurisdiction pertains to the competence of the court itself and not to procedural irregularity. Hence even if neither party objects to the High Court’s appointment of the arbitrator such appointment cannot be cured by acquiescence or consent because the law does not permit this.

Supreme Court’s in Narayan Prasad Lohia recognised that certain objections relating to the composition of an arbitral tribunal may be waived if not raised at the appropriate stage. However, Narayan Prasad Lohia operates in a distinct legal context. The case concerned irregularities in tribunal composition within an otherwise competent arbitral framework, where the appointing authority itself was not statutorily barred.

In contrast, the present issue concerns institutional incompetence, namely, whether a High Court can exercise a power that the statute vests exclusively in the Supreme Court. This is not a defect in how the tribunal was constituted, but a defect in who had the authority to constitute it.

Therefore, the reasoning adopted in the Earnest Business Services and Hala Kamel Zabal cases fails to appreciate that the statutory jurisdiction of the Supreme Court under Section 11(12)(a) cannot be displaced or substituted by the parties’ mutual consent. Jurisdiction flows from statute, not from the will of the parties. Any contrary interpretation would blur the clear legislative distinction between domestic and international commercial arbitrations, dilute the hierarchy established by Parliament, and open the door to jurisdictional chaos.

B)   The challenge to jurisdiction can be raised at any stage, and the principle of waiver or failure to challenge the appointment of the arbitrator during the arbitration proceedings will not bar the same

Section 11 of the Arbitration Act is non-derogable in nature, and its mandate cannot be diluted or bypassed by any procedural development during the proceedings. The section clearly allocates the power of appointment depending on the nature of the arbitration specifically, in an ICA, the authority to appoint an arbitrator vest exclusively in the Supreme Court under Section 11(12)(a). Therefore, any appointment made by a High Court in such a matter would be without jurisdiction and consequently void. This remains true irrespective of the stage at which the objection is raised.

It is a settled principle that jurisdictional defects go to the root of the matter and cannot be cured by procedural waiver or acquiescence. In “Kiran Singh v. Chaman Paswan”,the  Supreme Court categorically held that a decree or order passed by a court without jurisdiction is a nullity. Its invalidity can be raised at any stage, including execution or collateral proceedings. Similarly, in “Harshad Chiman Lal Modi v. DLF Universal Ltd,” it was held that objections as to inherent lack of jurisdiction cannot be waived and can be raised even after a final adjudication.

Waiver principles recognised in Narayan Prasad Lohia apply to procedural non-compliance, not to jurisdictional usurpation. Extending waiver to situations of inherent lack of jurisdiction would collapse the fundamental distinction between void and voidable acts, a distinction consistently maintained in Indian jurisprudence.

The fact that the appointment was not challenged before the arbitral tribunal cannot legitimize an act that is ultra vires the statute. Participation by both parties does not cure a jurisdictional defect. The High Court’s appointment of the arbitrator in an ICA constitutes a jurisdictional error, not a procedural irregularity, and therefore renders the entire arbitral process, including the resultant award, void ab initio.

C)    While appointing the arbitrator, the High Court did not merely record the consent of the parties but performed the function of appointment

The argument that High Court merely recorded the parties’ consent to the appointment of an arbitrator, without exercising power under Section 11 has fallacy as such characterization c annot conceal the substantive effect of the order the appointment of an arbitral tribunal. In ICA such appointment is governed exclusively by Section 11(12)(a) of Act, which confers jurisdiction solely on the Supreme Court. Even if the appointment was made “by consent,” it derives its force only from judicial endorsement, not from private agreement, and therefore falls within the statutory domain of Section 11. Jurisdiction under Section 11(12)(a) being mandatory and non-derogable, the High Court could not have undertaken such appointment in any capacity, and the same is void ab initio. Consent or acquiescence cannot cure a lack of jurisdiction.

 IV.         Conclusion

The High Court judgments in Earnest Business Services and Hala Kamel Zabal have introduced a jurisprudence that weakens the statutory clarity intended by Parliament under Section 11 of the Arbitration Act. When High Courts claim jurisdiction in international commercial arbitrations just because both parties agree, it overlooks a fundamental rule - that  the authority to decide such matters must come from the law itself, not merely from party consent. Section 11(12)(a) was carefully crafted to assign the Supreme Court the clear responsibility of overseeing international commercial arbitrations in India. This helps in ensuring that the arbitration process remains consistent and uniform across the country. If this important role were treated as something parties could simply waive, it would disturb the delicate balance of authority leading to confusion. Consent from the parties cannot make an act valid if it was done without proper legal authority, nor can silent acceptance make legal what the law expressly forbids. As a result, any appointment made by a High Court in such arbitrations, regardless of the parties’ agreement is invalid from the outset and contradicts both the law’s intent and the principles that maintain the integrity of arbitration.