Meaning - Arbitration is a process by which a dispute between the parties is settled outside the court, by a third person. An Arbitrator is a person to decide the dispute outside the Court. He may be appointed either by the parties or by the Court. There may be a sole Arbitrator or a panel of Arbitrators. Whether the Arbitrator is a sole person or a panel, it is called ‘Arbitral Tribunal’. The award given by the Arbitral Tribunal is equal to a decree of a Civil Court. In most of the matters, the arbitrator / arbitral tribunal resembles a Court, however it is not a Court. The Arbitration and Conciliation Act, 1996 is based upon the principle of disposing the dispute in a cost effective, quick and fair manner. An Arbitrator deals with the matters of the dispute concerning the Arbitration Agreement. The arbitration and the office of the arbitrator flow from the Arbitration Agreement.
In Satyendra Kumar v. Hind Construction Ltd., AIR 1852 Bom. 227, it was held that -
“Where the parties to dispute refer the matter to a person and such person holds a judicial inquiry in deciding that dispute and comes to a judicial decision, such a person is called an 'Arbitrator'"
According to Section § 2(1)(d) of The Arbitration and Conciliation Act, 1996, ‘arbitral tribunal’ means a sole arbitrator or a panel of arbitrators.
Section § 10 of The Arbitration and Conciliation Act, 1996 stipulates the numbers of arbitrators in an arbitral tribunal -—
Kinds Of Arbitrations - There are two kinds of arbitrations, viz -
(1) Statutory Arbitration; and
(2) Arbitration by Agreement
Appointment of Arbitrators
Section 11 of The Arbitration and Conciliation Act, 1996 provides for the appointment of Arbitrator(s). An arbitrator is appointed under the following means -
(1) Appointment by Parties
(2) Appointment by Court
The parties may agree to appoint a sole (one) arbitrator or more than one arbitrator. An arbitrator named by the parties and so appointed can proceed with the arbitration proceedings. If the parties do not name their own arbitrator, they may mutually agree that arbitrator(s) may be appointed by a third designated person.
§ 11 (4) to § 11 (12) of the said act, confer upon the Court, the power to appoint arbitrator(s). Court in this context means “the Principal Civil Court” of original jurisdiction in a district and includes the High Court. The general rule is that power to appoint arbitrator is vested in the parties. An arbitration clause is inserted to that effect in the arbitration agreement. In case, one party fails to appoint an arbitrator on request or reference, the other party may file an application to the civil court for appointment of arbitrator(s).
In the matter of Construction India v. Secretary, Works Department, Govt. of Orissa and Ors., (1998) 2 SCC 89, the parties to the dispute failed to agree on the arbitrator within thirty days form the request of the petitioner. In the case at hand, § 11 (5) was invoked wherein the Hon’ble Apex Court issued an order as follows -
“Both the parties have filed panel of names for appointment of arbitrator. Heard. Shri G.S.Patnaik, Chairman, Arbitration Tribunal, Orissa, is appointed as sole arbitrator, send the reference to him”
Object and purpose of Section § 11 - “Section § 11 is an insurance against failure of arbitration agreement cause by failure or refusal to appoint an arbitrator in terms of the agreement.”.
In P. Kumaran v. Executive Engineer, (1999) 3 Arb. LR 98 (Bom), the Court has observed -
“The scheme of Sec. § 11 specifically provides that if procedural part of appointment of Arbitrator is not followed by the designated or agreed authority, the arbitration clause would not be frustrated or defeated.
xxx
In this view of the matter … if the Chief Engineer … fails to appoint an Arbitrator, it would be inconsistent with the provision of Sec. § 11 (6) (c) of the Act to say that the matter is not to be referred to arbitration at all. There is no substance in this contention raised by the learned counsel for the Respondent that the matter is not required to be referred to the Arbitrator.”
Qualifications of an Arbitrator - A person designated to be appointed as an arbitrator must possess the below mentioned qualifications :
(1) Confidence of Parties
(2) Impartiality
(3) Technical and legal Qualifications
(4) Disinterested Party To Litigation aka No Conflict of Interest
(5) Should be able to enter into a Contract vis-à-vis Adjudication of the Arbitration Agreement
Powers of Arbitrator - An arbitrator is empowered to make award, which is binding on the parties. The arbitrator has an authority to award to grand interest if there is a debt payable with interest. The powers of the Arbitrator or Arbitral Tribunal may be explained under the following heads -
(1) Power to make awards;
(2) Power to take assistance (Sec. § 6);
(3) Power to rule on its Jurisdiction (Sec. § 16)
Section § 16 is derived from of UNCITRAL Model Arbitration Law. In this context, the Hon’ble Supreme Court in the matter of Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan, (1999) 5 SCC 651 has held -
“It will be noticed that under the Act of 1996, the arbitral tribunal is now invested with power under sub-section (1) of Sec. § 16 to rule on its own jurisdiction including ruling on any objection with respect to the existence or validity of the arbitration agreement and for that purpose, the arbitration clause which forms part of the contract shall be treated as an agreement independent of the other terms of the contract and any decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure affect the validity of the arbitration clause. This is clear from clause (b) of Sec. § 16 (1) which states that a decision by the arbitral tribunal that the main contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.”
(4) Power to pass interim relief (Sec. § 17);
(5) Determination of Rules of Procedure (Sec. § 19);
(6) Power to determine the Place of Arbitration (Sec. § 20)
(7) Language (Sec. § 22);
(8) Statements of Claim and Defence (Sec. § 23);
(9) Hearing and Written Proceedings (Sec. § 24);
(10) Default of a Party (Sec. § 25);
(11) Power to appoint an Expert (Sec. § 26
(12) Power to seek Court Assistance in taking Evidence (Sec. § 27)
(13) Award & Settlement Power (Sec. § 30)
(14) Power To Terminate Proceedings (Sec. § 32)
(15) Power of Correction and Interpretation of Award plus Additional Award (Sec. § 33)
(16) Power To Impose Interest and Deposits (Sec. § 38)
(17) Remuneration Power
(18) Power as to Lien on Arbitral Award and Deposits as to Costs (Sec. § 39)
Duties of Arbitrator - An arbitrator has certain sine qua non obligations and duties as hereunder -
(1) Equal Treatment of Parties - Must be impartial (Sec. § 18)
(2) Concerned with Dispute Only (Sec. § 34 (2) (a) (iv))
(3) Duty to follow provisions of 1996 Act - (Sec. § 34 (2) (a) (v))
(4) Duty towards Public Policy
(5) Obligations towards Time Limitation
(6) Obligations towards Remunerations
(7) Reasoned Award - in accordance with the Act.
(8) Principles of Natural Justice
(9) Duty to Withdraw or Recuse
(10) Should not act beyond his jurisdiction
(11) Should not be guilty of fraud or misconduct;
(12)Duty of Finality and Reasonableness
(13) Must act judicially and follow rules of justice, equity and good conscience (Sec. § 28)
(14) Should decide the dispute according to law
(15) Duty to Render Accounts (Sec. § 38)
(16) Duty towards Usages according to Trade (Sec. § 28 (3))
(17) Duty Towards Settlement (Sec. § 30)
(18) Ex Aequo Et Bono or as amiable compositeur - (Sec. § 28)
Suggested Readings:
Author Bio:
Anil hails from a Consulting Background in the area of Business, Technology and Project Management. This Article is a humble effort to the aforementioned domains by making a foray into Legal Research. The Author may be reached via anil [at] Satyagraha [dot] com
"Loved reading this piece by Anil Satyagraha?
Join LAWyersClubIndia's network for daily News Updates, Judgment Summaries, Articles, Forum Threads, Online Law Courses, and MUCH MORE!!"