Last Updated on October 4, 2018 by Legalseva.net
Arbitration is the process of resolving disputes between or among the parties through the use of one or more arbitrators rather than courts. It is an alternative to litigation as a dispute resolving mechanism. The term ‘arbitrator’ had not been defined in the Arbitration and Conciliation Act, 1996 nor was it defined in the old Act of 1940. However, in light of the new amended Arbitration Act of 2015, an arbitrator may be defined as a person to whom the matters in dispute are submitted by the parties and those functions are more or less judicial, i.e., to decide the law and facts involved in the matter referred to him and do away with the differences thus dispensing equal justice to all the parties. While performing his ‘quasi-judicial’ functions, the arbitrator is expected to act with utmost honesty and impartiality without any bias towards any party.
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The source of jurisdiction of an arbitrator is the arbitration clause. An arbitration clause is usually a part of the main contract itself. However, the parties can opt for arbitration as a dispute resolving mechanism even after the dispute has arisen, provided that the agreement to that effect should be in writing. An arbitration agreement constitutes a separate document, other than the main contract, and is binding on the parties.
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The Arbitration and Conciliation (Amendment) Act, 2015 grants the liberty to the parties to appoint the arbitrators mutually. S.10 of the Act talks about the number of arbitrators that can be appointed by the parties. According to this section, the parties are free to determine the number of arbitrators, provided that such number shall not be even. Further, if the parties fail to do so, there shall be a sole arbitrator. Whether the arbitrator is a sole person or a panel, it is called an ‘Arbitral Tribunal’.
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The right of the parties to choose their own arbitrators is considered as one of the pillars of the principle of ‘party autonomy’ as envisaged by the UNITRAL model law and is incorporated under S.11 of the Arbitration and Conciliation (Amendment) Act, 2015. According to Section 11, the parties may adopt any of the following modes for the appointment of the arbitrator-
- An arbitrator may be named in the arbitration agreement/ arbitration clause itself;
- The parties may agree that the reference for appointment of as arbitrator shall be made to a person designated in the agreement;
- The parties may agree for Institutional Arbitration under which arbitrators are appointed by a permanent institution.
In case the parties agree to opt for Institutional Arbitration, they do not appoint the arbitrators themselves but surrender this right to the Arbitral Institution. In such a situation, the parties have no direct relationship with the arbitrator so appointed.
As far as the nationality of the arbitrator is concerned, a person of any nationality may be appointed as an arbitrator unless otherwise agreed by the parties. However, where the dispute involves an international commercial transaction, an arbitrator of a nationality other than those of the parties must be appointed.
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If the procedure for the appointment of the arbitrator as agreed by the parties fails, then, upon the request of a party, the appointment shall be made by the Supreme Court, orany person or institution designated by such a court, in case of an International Commercial Transaction or by High Court, or any person or institution designated by such court, in case of domestic arbitration. The Arbitration and Conciliation (Amendment) Act, 2015 neither lays down any qualifications nor guiding principles which should be taken into consideration while appointing the arbitrators. However, the Chief Justice, or the person or institution designated by him for appointing the arbitrator shall have due regard to any qualifications required of the arbitrator by the agreement of the parties. Some general qualifications that a person designated to be appointed as an arbitrator must possess are-
- Confidence of parties;
- Impartiality;
- Technical and legal qualifications;
- No conflict of interest;
- Should be able to enter into a contract vis-à-vis Adjudication of the Arbitration Agreement.
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Fifth Schedule of the Act (Annexure A) contains the list of grounds that gives rise to the doubts as to independence and impartiality of the arbitrator. Further, the Seventh Schedule (Annexure B) lays the grounds which makes a person unfit to be appointed as an arbitrator. The Court, after the Arbitral Tribunal has been appointed, shall not interfere in the proceeding thereof.
This post is written by Bhumika Khandelwal of ILS College, Pune. For any subject specific advice from Arbitration Lawyers in Chandigarh, Panchkula Mohali Zirakpur, please dial 99888-17966 or you may also write to us at [email protected]t
