The provisions regarding the appointment of Arbitration and Conciliation Act 1996, Arbitration Tribunals was composed. Arbitral challenge an Arbitrator is such a person who solves the dispute submitted to Arbitrator. Hence, the Arbitrator is an important person for the application of Arbitration and Conciliation Act 1966. He is called the base of Arbitration.
Along with the Arbitrator, the Arbitration Tribunals also has its importance. Actually Arbitrator acts as the Arbitration Tribunals. When Arbitrator is hearing a dispute then they are called as the arbitral tribunal. Arbitration Tribunals can be constituted by a sole Arbitrator or by several Arbitrator.
Appointment of Arbitration
Provision is laid down under section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of Arbitration. The arbitrator is appointed by the parties to dispute. The parties to a dispute can appoint anyone as an Arbitrator. Even an alien can be an Arbitrator provide that there is no otherwise agreement. It is clearly stated in section 11.” A person of any nationality may be an Arbitrator unless otherwise agreed by the parties.
The arbitrator could be in any number, but this number is required to be odd. The parties to a dispute can have an agreement with respect to the appointment of Arbitrator and the Arbitrator is required to be appointed in accordance with that agreement. If there is no such agreement between the parties, then three Arbitrator is required to be appointed. According to Section 11(3), in an Arbitration with three Arbitrator, each party shall appoint one Arbitrator, and the two appointed Arbitrator shall appoint the third Arbitrator who shall act as the presiding Arbitrator.
But if the above appointment procedure applies and a party fails to appoint an Arbitrator within thirty days from the recipient of a request to do so from the other party; or the two appointed Arbitrator fail to agree on the third Arbitrator within thirty days from the date of their appointment the appointment shall be made, upon request a party by the Chief Justice.
The decision of chief justice in such matters is final. The qualification of the person, independence and impartiality to do an act, etc. Shall be given due regards by the chief justice while appointed an Arbitrator.
But in this case of Neeraj Kumar Bohra Versus Union of India ( A.I.R.2009 Kolkata 59), it has been held by the Kolkata high court that the appointment of Arbitrator is required to be in accordance with the agreement even if it is made by the chief justice. The agreement admittedly stipulated that there could not be any Arbitration by any individual other than a gazetted railway officer, then such a gazetted officer will be appointed by the chief justice as an Arbitrator. An appointment of retired justice as an Arbitrator will be invalid.
In the case of Messer Bellhouse Associates Pvt. Ltd. Versus General Manager, Southern Railway, Chennai ( A.I.R.2001 Kerala 163), it has been held that where there is an agreement between the parties regarding the appointment of Arbitrator the Arbitrator arbitral shall be appointed in accordance to that agreement. No Arbitrator could be appointed by the court from its own side.
In the case of Uniflex Cable Limited Versus M.T.N.L.( A.I.R.2009 N.O.C.1732 Delhi), it has been held by the Delhi High court that where an Arbitration clause exists in an agreement executed by the parties there a concluded contract between the parties is necessary for the enforcement of it. In the absence of such a contract, the Arbitration clause cannot be operated.
In the case of Nucon India Pvt Ltd Versus Delhi Vidyut Board ( A.I.R. 2001 Delhi 227), it was held that if on the request of one party, the other party does not appoint an Arbitrator within 30 days, then this will not cease his right to appoint an Arbitrator. An appointment has to be made by the opposite party of an Arbitrator before the filing of the application under section 11 (6) of the Act. It was also held that if the appointment is made after the filing of the application under section 11, then such an appointment is a nullity and in fact no appointment in the eye of law.
But even after receiving notice regarding appointment of the Arbitration, the party fails to appoint its Arbitrator and the justice has appointed the Arbitrator, then that party extinguishes it’s right to appoint an Arbitrator in terms of the clause of the agreement. (Messer Dakshin Shelter Pvt Ltd Versus Geeta S. Johari A.I.R. 2012 S.C.1875).
According to the decision given in the case of explosives Consultation Application Pvt Ltd Versus I.D.L. Industry Ltd. ( A.I.R.2001 Andhra Pradesh 256), after 30 days the first party can make a request to the court to appoint an Arbitrator.
In the case of Superintending Engineer S.R.B.C. verses Sriniwas Construction Ltd ( A.I.R. 2004 N.O.C. 148 Andhra Pradesh), it was held that where the parties have agreed that the matter of less than Rs. 50000/- value only will be submitted to the arbitration, there matter of the value of Rs. 100000/- or more cannot be submitted to the arbitration and such matters as per the agreement shall be instituted before a civil court.
Jurisdiction of the Arbitration Tribunals
Provision has been laid down under section 16 and 17 of the Arbitration and Conciliation Act, 1996 for the jurisdiction of the Arbitration Tribunals. Before going ahead it shall be proper to state that the power of Arbitral Tribunal is limited. They cannot issue an order beyond the matter referred to it ( M.D. Army welfare Housing Organisation Versus Sumanglam Service Pvt Ltd., A.I.R. 2004 S.C.1344).
Section 16 and 17 lays down the jurisdiction of the Arbitration Tribunals as:
Arbitration Tribunals can decide over the following questions:
- On the question of jurisdiction
- On the question related to the existence and validity of the Arbitration Agreement.
- Arbitration Tribunals can frame rules regarding its own jurisdiction.
In the case of Messer S.S. Fasteners versus Satyapal Verma (A.I.R. 2002 Punjab and Haryana 301), it was held that the Arbitration Tribunals has the jurisdiction to decide over its own jurisdiction and the existence and validity of the Arbitration Agreement.
According to the provisions of section 16(2), an objection in relation to the jurisdiction of the Arbitration Tribunals can be produced before the presentation of the written statement (statement of defence).
If a party finds that the Arbitration Tribunals is functioning beyond its jurisdiction, then an objection regarding it shall be made as early as possible during the Arbitration proceedings. Arbitral Tribunal shall dispose of such objections.
Arbitration Tribunals can dismiss or reject an objection related to jurisdiction and in such situations, the Arbitration proceedings can continue to make award [section 26(5)].
According to Section 17(1) of the Act, Unless otherwise agreed by the parties, the Arbitration Tribunals may, at the request of a party, order a party to take any interim measure of protection as the Arbitration Tribunals may consider necessary in respect of the subject matter of the dispute. The Arbitral Tribunals may require a party to provide appropriate security in connection with a measure so ordered.
The challenge to the appointment of Arbitrator
Section 12 (3) of the Arbitration and Conciliation Act, 1996 lays down those grounds on which the appointment of an Arbitrator could be challenged. These grounds are as given below:
- Where the circumstances exist that give rise to justifiable doubts as to his independence or impartiality
- Where Arbitrator does not possess the qualification agreed to by the parties.
Thus, on the basis of the above-ground the appointment of Arbitrator could be challenged, not on the other grounds. Also, this challenge could be made after the appointment when the parties came to know of either or both the above ground. If the parties know of both the ground before the appointment, it cannot be challenged after the appointment.
In the case of Amar Chand Versus Ambika Jute Mills (A.I.R.1964 S.C. 1036), it has been held by the supreme court that the permission to challenge the appointment of Arbitrator can only be allowed when it is necessary for justice. Any party cannot avoid the binding of the authority of Arbitrator by taking the excuse of the above challenge.
Also, mere suspicion over the impartiality of Arbitrator is not sufficient. It is required to be proved. ( International Airport Authority of India Versus B.K.Bali, A.I.R. 1988 S.C. 1099).
Procedure for challenge
Section 13 of the Arbitration and Conciliation Act 1996 mentioned the procedure for challenging the appointment of Arbitrator. The parties can agree regarding such proceedings. One who intends to challenge the appointment of Arbitrator, he should Within fifteen days becoming aware of the constitution of the Arbitration Tribunals.
After becoming aware of any circumstances referred to in subsection (3) of section 12, send a written statement of the reason for the challenge to the Arbitration Tribunals. After considering such a challenge by the Arbitration Tribunals the decision will be given over it. If the challenge is rejected then the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
An application can be made for setting aside such an arbitral award in accordance with section 34. If the award is challenged before the court and the award is set aside by the court, then the court shall decide whether the fee should be paid to the Arbitration or not. (Ashalata S. Lahoti versus Hiralal Leeladhar, (1999). Maharashtra Law Journal 352).