Executing courts cannot dismiss arbitral award execution solely on unilateral arbitrator appointment if appointment is by mutual consent; High Court directs caution and adherence to proper legal procedures
In a significant judgment dated August 4, 2026, the Kerala High Court, presided over by Justice Easwaran S., has set aside the dismissal order of an execution petition filed by M/s. Hedge Finance Limited against Sangeetha A.V. The dispute arose after the executing court (Additional District Court-V, Kozhikode) dismissed the execution petition on the ground that the appointment of the arbitrator was unilateral and therefore, the arbitral award was not executable.
The High Court thoroughly examined the powers of executing courts under Section 47 of the Code of Civil Procedure, 1908, and the Arbitration and Conciliation Act, 1996 (the Act), especially Sections 12(5), 34, and 47. The Court emphasized that executing courts have a limited scope of inquiry regarding the executability of an arbitral award and cannot substitute this with a full trial or re-examination of the arbitral issues. The proper forum for challenging an arbitral award remains an application under Section 34 of the Arbitration Act.
Critically, the Court noted that the arbitrator's appointment in this case was pursuant to a mutual agreement between the parties within the loan agreement dated December 16, 2019, which explicitly nominated a sole arbitrator by mutual consent. The Court found that such nomination does not amount to a unilateral appointment and does not violate Section 12(5) of the Arbitration Act, which bars an arbitrator with certain conflicts unless mutually agreed upon by the parties.
The Court distinguished the present case from the earlier decision in Hedge Finance Private Ltd. v. Bijish Joseph (ILR 2022 (3) KER 347), where a unilateral appointment was found problematic, clarifying that the Bijish Joseph principle does not apply when there is a clear mutual nomination of the arbitrator. It further referred to the Supreme Court’s decision in Swadesh Kumar Agarwal v. Dinesh Kumar Agarwal ((2022) 10 SCC 235), which underscored the finality of mutual consent in arbitrator appointment and limitations on invoking Section 11 of the Arbitration Act post such appointment.
The High Court’s judgment directs the Additional District Court-V, Kozhikode, to proceed with the execution petition in accordance with the law and cautions all District Courts in Kerala against unilaterally dismissing execution petitions on the ground of unilateral appointment without a careful factual inquiry.
This judgment reinforces the principle that the execution of arbitral awards must respect the parties’ consensual agreements on arbitrator appointment and procedural safeguards under the Arbitration Act and CPC, thereby bolstering arbitration as a speedy and effective dispute resolution mechanism.
Bottom Line:
Execution of arbitral awards cannot be dismissed solely on the ground of unilateral appointment of an arbitrator if the appointment is by mutual agreement in the loan agreement or post-dispute consent of the parties.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 12(5), 34, 47, Code of Civil Procedure, 1908 Section 47, Constitution of India Article 227
M/s. Hedge Finance Limited v. Sangeetha A.V., (Kerala) : Law Finder Doc Id # 2969201
