Section 11 of the Arbitration and Conciliation Act, 1996 deals with the appointment of arbitrators. A person of any nationality may be appointed arbitrator unless the contrary intention is expressed by the parties. The parties are free to agree on a procedure for appointment of arbitrator or arbitrators. Where parties fail to appoint three arbitrators, each party shall appoint one arbitrator and the two arbitrators shall appoint the third arbitrator. Hence, appointing three arbitrators is mandatory, with the third one being the presiding arbitrator.
Where a party fails to appoint an arbitrator in accordance with the third arbitrator with the within thirty days from the date of receipts of a request to do so from the other party or two appointed arbitrators fail to agree on the third arbitrator within 30 days from the date of their appointment, the appointment shall be made, upon a request of a party, by the Chief Justice of the High Court or any person or institution designated by him. In the absence of any procedure to appoint a sole arbitrator, if the parties fail to agree on the arbitrator within 30 days from receipt on a request by one party from the other party to so agree, the appointment shall be made upon request of a party, by the Chief Justice of the High Court or any person or institution designated by him.
Where under an appointment procedure agreed upon by the parties –
a) a party fails to act as required under that procedure; or,
b) the parties or two appointed arbitrators fail to reach an agreement as required under that procedure, or
c) a person including an institution fails to perform any function as required under that procedure, a party may request the Chief Justice of the High Court or any person or institution designated by him to take the necessary measures in absence of an agreement for other means of securing the appointment.
The decision of the Chief Justice of the High Court or the person or the institution designated by him in appointing an arbitrator shall be final. In such appointment, two considerations are to be made –
a) Required qualifications of the arbitrator as provided in the agreement of the parties, and
b) independent and impartial person as an arbitrator.
These are the circumstances under which the Chief Justice of a High Court can make an appointment.
In case of appointment of a sole or third arbitrator in international commercial arbitration, the appointing authority is the Chief Justice of India or a person or institution designated by him.
Important case laws
In Indian Drugs & Pharmaceuticals Ltd. v. Indo Swiss S. Gem Mfg. Co. Ltd., it has been held that no retired High Court Judge can be appointed as an arbitrator by the court when the arbitration clause states categorically that the difference/dispute shall be referred “to an arbitrator by the Chairman and Managing Director of IPDL who is the appellant in this case.”
In National Aluminium Co.Ltd v. Metalimpex Ltd., a Bangladeshi company failed to nominate its arbitrator in terms of the arbitration agreement on an application under S.11 of the Arbitration and Conciliation Act, 1996, the Chief Justice of India nominated an arbitrator to act on behalf of the Bangladeshi company.
Procedure for the appointment –
Section 11 only confers power on the High Court to appoint an arbitrator or presiding arbitrator only when the following conditions are fulfilled:
a) where there is a valid arbitration agreement;
b) the agreement contains for the appointment of one or more arbitrators;
c) the appointment of the arbitrator is to be made by mutual consent of all the parties to the dispute.
d) differences have arisen between the parties to the arbitration agreement; or between the appointed arbitrators;
e) the differences are on the appointment or appointments of arbitrators.
Appointment of a third arbitrator by the court in case of disagreement between two arbitrators
In ICICI Ltd. v. East Coast Boat Builders & Engineers Ltd., two arbitrators were appointed by respective parties, but they did not agree on the name of the third arbitrator. The petitioner made an application for appointment of the third arbitrator by the court under s.11 of the Act. The court accepted the prayer and appointed the third arbitrator.
Lack of jurisdiction to appoint the arbitrator
In Kanagarani Durairaj v. Dwaragan, it was held that “in absence of a delegation of power by the Chief Justice of High Court under s.11 of the Act, the City Civil Court has no jurisdiction to appoint an arbitrator under s.11 of the court.”
The disagreement between arbitrators
If there is any disagreement between the arbitrators, there is no award and the jurisdiction of the presiding arbitrator can be invoked. In the absence of any contrary provision in the arbitration agreement, the presiding arbitrator can adjudicate the whole case if the arbitrators disagree on any particular point, as held in Probodh v. Union of India.
Appointment of Presiding Officer (Umpire)
The question for the appointment of Presiding Officer arises only when there is a conflict of opinion between an even number of arbitrators. Appointment of the third arbitrator may be made in any one of the two following cases:
a) By the parties themselves at the time of submission, and
b) by the arbitrators.
Appointment of the sole arbitrator
Where a sole arbitrator is appointed, it must be notified to the other side, otherwise, his appointment cannot be considered valid. ‘
Appointment of presiding arbitrator
As soon as the arbitrators accept their appointments and communicate with each other the reference, they are presumed to have entered upon the reference. When one of the arbitrators refuses to act or concur on the appointment of a third arbitrator, there is a disagreement and in such as case, the Chief Justice of the High Court is competent to make the appointment of the presiding arbitrator.
The arbitrator should be chosen carefully because of his special knowledge of the subject matter which is in dispute. He should be able to keep the atmosphere clear at the tribunal and must be free from forensic eloquence and to see that the evidence in the manner customary in the court of law and equity. He must give attention to the facts in dispute placed before him and his decision should be practical and impartial and in the best interest of justice, good conscience, and equity.