1 staffer for 4,155 arbitrations: HC raps bank

What did the Delhi High Court find troubling about Axis Bank's appointment of the same sole arbitrator in thousands of cases?

The court was troubled because Axis Bank repeatedly chose the same sole arbitrator in thousands of disputes. Arbitration depends on a decision-maker who is independent and impartial. When one party controls the appointment again and again, the process can appear tilted, even if bias is not proven in every case.

The disclosed example was striking. Vikrant Bhardwaj acted as arbitrator in 4,155 cases involving Axis Bank over four to five years. The court said arbitrators handling thousands of matters for one appointing party, without proper declarations, create justifiable doubts about independence. It called the situation “the tip of the iceberg.”

The court directed Axis Bank to explain how this happened and ordered the RBI to caution banks and financial institutions. Axis Bank said it stopped unilateral appointments in 2023. It must also propose action concerning awards already issued through that process, while the RBI examines whether broader guidance is needed.

What is arbitration, and what does it mean for one party to unilaterally appoint an arbitrator?

Arbitration is a way to resolve a dispute outside ordinary court proceedings. The parties present their claims and evidence to an arbitrator, who issues an arbitral award. That process matters because the decision-maker must be independent and impartial, so both sides can trust the result.

A unilateral appointment occurs when one party, rather than both parties or a neutral appointing body, selects the arbitrator. In the article, Axis Bank had appointed arbitrators in disputes involving its borrowers. The concern is not simply that a bank made an appointment, but that repeated appointments by the same party can create reasonable doubts about neutrality.

The Delhi High Court said this practice goes against arbitration’s core neutrality. Axis Bank acknowledged that awards from such appointments were void from inception under Supreme Court rulings. The bank also said it had discontinued unilateral appointments, with none made since 2023.

How many cases did Vikrant Bhardwaj handle for Axis Bank, and how many awards nationwide involved arbitrators appointed unilaterally by the bank?

The figures show a large-scale appointment practice, not an isolated dispute. Axis Bank disclosed that Vikrant Bhardwaj acted as sole arbitrator in 4,155 cases involving the bank over four to five years. That volume prompted the Delhi High Court to question whether repeated appointments could remain genuinely independent.

The bank also disclosed that around 76,000 awards had been passed nationwide by arbitrators unilaterally appointed in disputes involving Axis Bank. These were awards across the country, while the 4,155 figure specifically concerns Bhardwaj’s work for the bank. The distinction matters because the figures measure different parts of the practice.

Axis Bank said about 65% of Bhardwaj’s cases had been settled. It further said execution petitions had not been filed in about 1,264 cases. The bank told the court it stopped making unilateral appointments in 2023, but must still explain how earlier awards will be handled.

Why can repeated appointments by the same party create doubts about an arbitrator's independence and impartiality?

Independence means the arbitrator is not controlled by either side. Impartiality means the arbitrator approaches the dispute fairly, without favoritism. Arbitration needs both qualities because the arbitrator’s award can determine a party’s legal and financial position.

Repeated appointments can create a dependence concern, even without direct proof of a biased decision. One party supplies a large stream of cases and selects the same person each time. The relationship may therefore look unequal to the other side. The Delhi High Court said arbitrators appointed in thousands of matters by one party cannot easily be viewed as free from bias.

The article gives a concrete example: Vikrant Bhardwaj handled 4,155 Axis Bank matters over four to five years. The court also criticized appointments made without proper declarations. It said the pattern goes against arbitration’s core neutrality and creates justifiable doubts about the arbitrator’s independence and impartiality.

What happens to an arbitral award when the arbitrator was appointed through a process that violates neutrality requirements?

Neutral appointment rules protect the legitimacy of an arbitral award. If the arbitrator is selected through a process that violates required neutrality, the losing party may challenge the award. The problem is structural: the decision-maker’s appointment itself may be legally defective, rather than merely an issue about the result.

Shikha Ghosh challenged an Axis Bank award in a loan dispute. She said she had not been properly served and did not know about the proceedings. After the bank disclosed the appointment practice, it acknowledged that awards arising from unilateral appointments were void ab initio under Supreme Court rulings. The High Court therefore declared the award unenforceable against Ghosh.

The court did not treat this as a closed matter. It directed Axis Bank to explain what it would do about awards already issued by unilaterally appointed arbitrators. The order shows that affected awards may require review or further legal action, but the article does not prescribe one universal remedy for every case.

What alternatives are available for appointing a neutral arbitrator instead of allowing one party to choose the arbitrator alone?

The article condemns unilateral appointments but does not list a preferred replacement system. In general arbitration practice, neutrality is better protected when both parties agree on the arbitrator or when an independent appointing authority makes the choice. The goal is to prevent one side from controlling the decision-maker.

Common alternatives include a mutually selected sole arbitrator, a three-member tribunal where each side chooses one member, or an institution that appoints from a vetted panel. Courts or another designated appointing authority may also intervene when parties cannot agree. Transparent criteria, conflict disclosures, and rotation can further reduce repeated selection by one party.

These mechanisms address the concern raised by the Delhi High Court: thousands of appointments by one bank can create justifiable doubts about independence. Axis Bank said it discontinued unilateral appointments in 2023. The RBI was asked to consider guidance for banks and financial institutions, but the article does not say which appointment model it will recommend.

Why is the Reserve Bank of India involved, and what can a banking-sector regulator do about arbitration practices used by banks?

The RBI is involved because Axis Bank’s arbitration practice concerns a regulated banking institution and may affect many borrowers. A sector regulator can promote consistent standards across banks, identify risky practices, and ask supervised institutions to change procedures. Its involvement can therefore extend the court’s concern beyond one individual case.

The Delhi High Court specifically directed the RBI to caution banks and financial institutions against unilaterally appointing arbitrators. The court also asked it to examine whether remedial measures or guidance should be issued. This followed disclosures that about 76,000 awards nationwide involved arbitrators unilaterally appointed in Axis Bank disputes.

The RBI’s precise future action is not stated in the article. It could, within its regulatory role, communicate expectations, seek information, monitor compliance, or coordinate guidance on neutral appointment processes. Axis Bank and the RBI were ordered to file affidavits by November 16. The broader aim is to prevent similar neutrality concerns across the banking sector.

Key Facts:

📌 One arbitrator handled 4,155 Axis Bank cases.

📌 The court called repeated appointments a threat to neutrality.

📌 RBI was asked to caution banks about unilateral appointments.

📌 Arbitration resolves disputes through an arbitrator’s award.

📌 Unilateral appointment lets one party choose the arbitrator alone.

📌 Neutrality is central to a trustworthy arbitration process.

📌 Bhardwaj handled 4,155 Axis Bank arbitrations.