The appointment of arbitrators is a critical phase in the dispute resolution process, governed primarily by the principle of party autonomy. The Arbitration and Conciliation Act, 1996, provides a clear framework for how a tribunal is formed and the various forms it can take.
1. Provisions Regarding Appointment (Section 11)
Section 11 of the Act is the primary provision dealing with the appointment of arbitrators. It balances the parties' right to choose their adjudicator with the court's power to step in when the process stalls.
Nationality (Section 11(1)): Unless otherwise agreed by the parties, a person of any nationality may be an arbitrator.
Procedure (Section 11(2)): Parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
Default Appointment (Three Arbitrators): If there is no agreed procedure for a three-member tribunal, each party appoints one arbitrator, and those two appointees then appoint the third "presiding" arbitrator.
Court Intervention (Section 11(4) & 11(6)): If a party fails to appoint an arbitrator within 30 days of a request, or if the two appointed arbitrators fail to agree on a third, the appointment is made by the Supreme Court (in International Commercial Arbitration) or the High Court (in domestic cases).
Arbitration Council of India (ACI): Following the 2019 Amendment, the Act envisions that the appointment process will eventually be handled by designated "Arbitral Institutions" graded by the ACI, further reducing direct court involvement.
2. Types of Arbitrators
Arbitrators can be classified based on their role within the tribunal or the nature of their appointment:
Sole Arbitrator: A single individual who hears the case and renders the award. This is common in smaller or less complex disputes to save time and costs.
Presiding Arbitrator (Umpire): In a tribunal of three, this is the third arbitrator appointed by the two party-appointed arbitrators. They act as the chairperson of the tribunal.
Party-Appointed Arbitrator: An arbitrator selected directly by one of the parties. Despite being appointed by one side, they have a legal duty to remain independent and impartial under Section 12.
Institutional Arbitrator: An arbitrator appointed from a panel maintained by a specialized institution (like the DIAC or SIAC) which administers the arbitration under its own rules.
Ad Hoc Arbitrator: An arbitrator appointed for a specific dispute where the parties have not chosen an institution to manage the process.
3. Qualifications and Disqualifications (Section 12)
While parties can choose anyone, the law ensures the integrity of the process through mandatory disclosures:
Disclosure (Section 12(1)): When a person is approached for appointment, they must disclose in writing any circumstances likely to give rise to justifiable doubts as to their independence or impartiality.
Seventh Schedule: This schedule lists specific relationships (professional, financial, or personal) that make a person ineligible to be an arbitrator unless the parties expressly waive this in writing after the dispute has arisen.
Fifth Schedule: This provides a guide to the types of circumstances that may give rise to justifiable doubts about an arbitrator’s neutrality.
4. Termination and Substitution
Termination of Mandate (Section 14 & 15): The mandate of an arbitrator terminates if they become de jure or de facto unable to perform their functions, withdraw from office, or if the parties agree to terminate them.
Substitution (Section 15(2)): Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
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