Arbitrator Definition, Appointment of Arbitrator
Arbitrator Definition - A private, neutral person chosen to
arbitrate a disagreement, as opposed to a court of law. An arbitrator could be used to settle any non-criminal
dispute, and many business contracts make provisions for an
arbitrator in the event of a disagreement. Generally, resolving a
disagreement through an arbitrator is substantially
less expensive than resolving it through a court of law.
A person chosen to settle the issue between parties engaged
in a dispute.
APPOINTMENT OF ARBITRATOR - The parties can agree on a
procedure for appointing the arbitrator or arbitrators. If they are unable to
agree, each party will appoint one arbitrator and the two appointed arbitrators
will appoint the third arbitrator who will act as a presiding arbitrator.
[section 11(3)]. If one of the party does not appoint an arbitrator within 30
days, or if two appointed arbitrators do not appoint third arbitrator within 30
days, the party can request Chief Justice to appoint an arbitrator. [section
11(4)]. The Chief Justice can authorise any person or institution to appoint an
arbitrator. [Some High Courts have authorised District Judge to appoint an
arbitrator]. In case of international commercial dispute, the application for
appointment of arbitrator has to be made to Chief Justice of India. In case of
other domestic disputes, application has to be made to Chief Justice of High
Court within whose jurisdiction the parties are situated. [section 11(12)]
CHALLENGE TO APPOINTMENT OF ARBITRATOR - An arbitrator
is expected to be independent and impartial. If there are some circumstances
due to which his independence or impartiality can be challenged, he must
disclose the circumstances before his appointment. [section 12(1)]. Appointment
of Arbitrator can be challenged only if (a) Circumstances exist that give rise
to justifiable doubts as to his independence or impartiality (b) He does not
possess the qualifications agreed to by the parties. [section 12(3)].
Appointment of arbitrator cannot be challenged on any other ground.. The
challenge to appointment has to be decided by the arbitrator himself. If he
does not accept the challenge, the proceedings can continue and the arbitrator
can make the arbitral award. However, in such case, application for setting
aside arbitral award can be made to Court. If the court agrees to the
challenge, the arbitral award can be set aside. [section 13(6)]. Thus, even if
the arbitrator does not accept the challenge to his appointment, the other
party cannot stall further arbitration proceedings by rushing to court. The
arbitration can continue and challenge can be made in Court only after arbitral
award is made.
Arbitration and Conciliation Act, 1996 (Section 11 - Appointment of arbitrators)
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11-
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Appointment
of arbitrators.
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(1)
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A person of any nationality
may be an arbitrator, unless otherwise agreed by the parties.
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(2)
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Subject to sub-section (6),
the parties are free to agree on a procedure for appointing the arbitrator
or arbitrators.
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(3)
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Failing any agreement
referred to in sub-section (2), in an arbitration with three arbitrators,
each party shall appoint one arbitrator, and the two appointed arbitrators,
shall appoint the third arbitrator who shall act as the presiding
arbitrator.
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(4)
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If the appointment procedure
in sub-section (3) applies and –
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(a)
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a party fails to appoint an
arbitrator within thirty days from the receipt of a request to do so from
the other party; or
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(b)
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the two appointed
arbitrators fail to agree on the third arbitrator within thirty days from
the date of their appointment, the appointment shall be made upon request
of a party, by the chief justice or any person or institution designated by
him.
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(5)
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Failing any agreement
referred to in sub-section (2), in an arbitration with a sole arbitrator if
the parties fail to agree on the arbitrator within thirty days from receipt
of 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 any person
or institution designated by him.
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(6)
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Where, under an appointment
procedure agreed upon by the parties –
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(a)
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a party fails to act as
required under that procedure; or
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(b)
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the parties, or the two
appointed arbitrators, fail to reach an agreement expected of them under
that procedure; or
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(c)
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a person, including an
institution, fails to perform any function entrusted him or it under that
procedure, a party may request the Chief Justice or any person or
institution designated by him take the necessary measure, unless the
agreement on the appointment procedure provides other means for securing
the appointment.
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(7)
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A decision on a matter
entrusted by sub-section (4) or sub-section (5) or sub section (6) to the
Chief Justice or the person or institution designated by him is final.
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(8)
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The Chief’ Justice or the
person or institution designated by him, in appointing arbitrator, shall
have due regaled to –
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(a)
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any qualifications required
of the arbitrator by the agreement of the parties and
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(b)
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other considerations as are
likely to secure the appointment of an independent, and impartial
arbitrator.
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(9)
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In the case of appointment
of sole or third arbitrator in an international commercial arbitration, the
Chief Justice of India or the person or institution designated by him may
appoint an arbitrator of a nationality other than the nationalities of the
parties where the parties belong to different nationalities.
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(10)
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The Chief Justice may make
such scheme as he may deem appropriate for dealing with matters entrusted
by sub-section (4) or sub-section (5) or sub-section (6) to him.
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(11)
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Where more than one request
has been made under sub-section (4) or subsection (5) or sub-section (6) to
the Chief Justices of different High Courts or their designates, the Chief
Justice or his designate to whom the request has been first made under the
relevant sub-section shall alone be competent to decide on the request.
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(12)
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(a) and (b)
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(a)
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Where the matters referred
to in sub-sections (4), (6), (7), (8) and (10) arise in an international
commercial arbitration the reference to “Chief Justice” in those
subsections shall he construed as a reference to the “Chief Justice of
India.”
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(b)
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Where the matters referred
to in sub-sections (4), (5), (7), (8), and (10) arise in any other
arbitration, the reference to “Chief Justice” in those
sub-sections shall he construed as a reference to the Chief Justice of the
High Court within whose local limits the principal Civil Court referred to
in clause (e) of sub-section (1) of section 2 is situate and, where the
High Court itself is the Court referred to in that clause, to the Chief
justice of that High Court.
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