NUMBER OF ARBITRATORS

The parties are free to determine the number of arbitrators, provided that such number shall
not be an even number. Failing the determination, the arbitral tribunal shall consist of a sole
arbitrator.

Section 10 provides for the appointment of a sole arbitrator or more than one arbitrator but
such arbitrators shall not be even in number. The provision relating to appointment of Umpire
as existed in the old Arbitration Act1 of 1940 has been dropped in the new Act of 1996. But
where the number of arbitrator is three, the third arbitrator will be appointed by the two
arbitrators nominated by one each of the two parties. The 'third arbitrator' shall act, not as an
Umpire but as 'Presiding Arbitrator 2." The two arbitrators will appoint the third arbitrator
called the Presiding Arbitrator within a period of thirty days from the date of their
appointment.

The provision contained in Section 10 that the number of arbitrators shall not be an even
number is a derogable provision. Therefore, any agreement which permits parties to appoint
an even number of arbitrators would not be contrary to provision of Section 10 and such an
agreement would not be invalid and void. 'Where the parties agreed upon an even number of
arbitrators and objection as to the composition of Arbitral Tribunal is not taken before the
Tribunal itself or within the prescribed time limit under Section 16 (2) of the Act, it will be
deemed as a waiver of objection under Section 4 and consequently the award so passed by the
Arbitral Tribunal cannot be set aside under Section 34 (2) (a)(v) because the composition of
tribunal was in accordance with agreement between the parties.

Judicial trend:

1. Head, National Jute Manufacturers Corporation Ltd. v. Saraoj Agarwal3

There was no mention of the number of arbitrators to be appointed, nor was any procedure
for appointment of arbitrator was provided. Director (Personnel) of the Corporation was not
willing to act as an arbitrator. In such a situation, Sub-Judge himself had appointed the
arbitrators. The validity of such appointment was challenged before the High Court. The
1 Section 10, Para 2 of the 111,4 Schedule of the old Arbitration Act, 1940.
2 Section 11 (3) Arbitration & Conciliation Act, 1996.
3 AIR 2008 Pat 25

1
Court held that there was nothing on record to show that the Sub-Judge was designated by
Chief Justice to appoint arbitrators. Therefore, the appointment was patently illegal and liable
to be set aside.

2. Sime Darby Engineering S.D.N. v. Engineering India Ltd4.

The Supreme Court that where arbitration clause in the agreement is silent as to the number
of arbitrators to be appointed, the provision of sub-clause (21 of Section 10 would apply and
only one arbitrator should be appointed and reference to expression 'arbitrators' in some other
clause in the agreement would not affect the intention of parties as expressed by them in the
arbitration clause.

APPOINTMENT OF ARBITRATORS

A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. The
parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Although
failing any such agreement in arbitration with three arbitrators, each party shall appoint one
arbitrinator, and the two appointed arbitrators shall appoint the third arbitrator and he shall
act as the presiding arbitrator. If a party fails to appoint an arbitrator within thirty days from
the receipt of a request to do so from the other party or 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.

Although the Chief Justice or the person or institution designated by him, in appointing an
arbitrator, shall have due regard to :

(a) any qualifications required of the arbitrator by the agreement of the parties; and

(b) other considerations as are likely to secure the appointment of an independent and
impartial arbitrator.

In case of International Commercial Arbitration:

Where the matters arise in an international commercial arbitration, the reference to "Chief
Justice" shall be construed as a reference to the "Chief Justice of India".
4 AIR 2009 SC 3158

2
Relevant cases:

1. Patitapazvan Mahapatra v. S. E. Eastern Circle5

The High Court of Orissa observed that expression 'arbitration agreement' need not be
specifically mentioned in arbitration clause. The term arbitration agreement has been given
wide import in its definition and therefore, it could be in one single document or could be
gathered from several documents. It could also be gathered from correspondence in the form
of letters, fax messages, telegrams and even telex messages. Any clause in the
agreement/document which mentions about resolution of dispute only, could be interpreted as
an arbitration clause for the purpose of application of the provisions of the Arbitration Act.

● Vacancy of Arbitrator due to death or withdrawal of consent.—

A situation may arise where the parties may have appointed the arbitrator or arbitrators by
consent but subsequently a vacancy may occur due to death of the arbitrator or withdrawal of
consent by him. In such a contingency the provisions of Section 14 of the Act would apply.

1. In Himmat La! v. Keshav La16

One of the two arbitrators appointed by the parties died before filing the award. The Court
held that unless the arbitration agreement does not show that the vacancy so caused should
not be filled, the party appointing the deceased arbitrator may serve a written notice on the
other party or the arbitrators to concur in the appointment of new arbitrator to fill up the
vacancy vacancy

GROUNDS FOR CHALLENGE

When a person is approached in connection with his possible appointment as an arbitrator, he

shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his
independence o impartiality. An arbitrator, from the time of his appointment and throughout
the proceeding, shall, without delay, disclose to the parties, in writing, any circumstances
referred to in sub sections (1) unless they have already been informed of them by him.

An arbitrator may be challenged only if:

5 AIR 2008 Ori 80

6 (1994). 1 Arb. LR 59 (Guj).

3
a. Circumstances exists that give rise to justifiable doubts as to his impartiality and
independence,
b. He does not passes the qualifications agreed to by the parties.

A party may challenge an an arbitrator appointed by him, or in whose appointment he has

participated, only for reasons of which he becomes aware after the appointment has been
made.

This section enumerates the grounds on which the appointment of arbitrator can be
challenged by a party or parties whereas the succeeding section i.e, Section 13 prescribes the
procedure to be adopted for challenging the appointment of an arbitrator. Both the sections
are therefore cognate sections. Sub-sections (1) and (2) of Section 12 enjoin a duty upon the
arbitrator to disclose at the time of his appointment or after appointment throughout the
arbitral proceedings, any circumstances which are likely to give rise e reasonable
apprehension as to his impartiality or independence.

Sub-section (3) lays down vet another ground, namely, lack of qualifications on which th:
appointment of an arbitrator may he challenged by a party to arbitration dispute.

Sub-section (4) of the section enables a party who has participated in the appointment of the
arbitrator or appointed an arbitrator to challenge such appointment if he becomes aware of
any reason which may have rendered the arbitrator disqualified to act as such, any time
during the arbitration proceedings.

In Keshav Singh v. Indian Engineering Corporation7,

The Supreme Court has affirmed that the process of appointment of an arbitrator is complete
as soon as the appointment is made. Thus where both the parties have named their arbitrator,
the persons so appointed would be deemed to be arbitrators even before they have accepted
the office and formally communicated their consent to the parties concerned.

● Refusal to act as Arbitrator.—

After an appointment as arbitrator is offered to a person, he can decline the offer by express
or implied refusal Explaining the meaning of the term 'refusal' the Supreme Court in State of
West Bengal v. National Builders 8 observed, "refusal to act means denial to do something

7 AIR 1972 SC 1528

8 AIR 1994 SC 200

4
which one is obliged to do under law". Obviously, a reluctant arbitrator cannot be forced to
act.

CHALLENGE PROCEDURE

The parties are free to agree on a procedure for challenging an arbitrator. Failing any such
agreement, a party who intends to challenge an arbitrator shall within fifteen days after
becoming aware of the constitution of the arbitral tribunal or after becoming aware of any
circumstances referred to in sub-section (3) of Section 12, send a written statement of the
reasons for the challenge to the arbitral tribunal9.

This section provides that the parties are free to agree on a procedure for challenging an
arbitrator. In case the parties have not prescribed any procedure, the provision of sub-section
(2) would be attracted and the party challenging the appointment of arbitrator shall send to
the arbitral tribunal a written statement of reasons within 15 days after becoming aware of the
circumstances or after becoming aware of the constitution of the arbitral tribunal. After the
expiry of 15 days, the right to challenge would be deemed to have been waived by the party.
On receipt of the written statement from the party as referred to in sub-section (2) the arbitral
tribunal will decide the challenge unless the arbitrator so challenged himself withdraws from
his office or the other party also agrees to the challenge in which case the arbitrator has no
option but to relinquish the office.

In case of sole arbitrator, where one party has challenged his appointment and the other party
also joins it, the sole arbitrator will have to vacate the office. But where the arbitral tribunal
consists of more than one arbitrators and one of the arbitrator's appointment is challenged by
a party and the tribunal has rejected the plea of challenge, there is no option for the
challenging party but to accept the decision of the arbitral tribunal because there is no
provision in this section for review by the court.

FAILURE OR IMPOSSIBILTY TO ACT

The mandate of an arbitrator shall terminate if:

9 Section 13(2)

5
he becomes de jure or de facto unable to perform his fuctions or for other reasons fails to act
without undue delay, and

he withdraws from his office or a the parties agree to the termination of his mandate.

If a controversy remains concerning any of the grounds referred above , a party may, unless
otherwise agreed by the parties, apply to the court to decide on the terminate of the mandate.

An arbitrator who leaves India to settle abroad or an arbitrator appointed ex-officio but his
office having been abolished would be deemed to have become incapable of acting de facto
as arbitrator. De facto incapacity may also be caused due to withdrawal of arbitrator from the
arbitral tribunal or where he expresses inability to proceed with the arbitration after entering
upon the reference. It may be stated that death of the arbitrator should not be interpreted his
inability or incapacity to perform his function as arbitrator because it results into
impossibility of performance rather than inability to perform In case of death of arbitrator, a
substitute arbitrator shall be appointed under Section 15 (2).

TERMINATION OF MANDATE AND SUBSTITUTION OF

ARBITRATOR (SECTION 15)

In addition to the circumstances referred to in Section 13 or Section 14, the mandate of an

arbitrator shall terminate :

(a) where he withdraws from office for any reason; or

(b) by or pursuant to agreement of the parties.

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.

Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2),
any hearing previously held may be repeated at the discretion of the arbitral tribunal.

Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior
to the replacement of an arbitrator under this section shall not be invalid solely because there
has been a change in the composition of the arbitral tribunal.

6
● Court has no jurisdiction to remove arbitrator while arbitral proceedings are going
on

In the instant case, the petition was directed against the order of the Division Bench of the
Calcutta High Court dated 30th March, 2000 which had stayed operation of the interim order
passed by the learned Single Judge and directed - the arbitration proceedings to go on. The
Division Bench simultaneously referred the question to Full Bench, requiring clarification
whether under Section 15 of the Arbitration and Conciliation Act, 1996, the Court has any
jurisdiction to remove any arbitrator while arbitration proceedings are going on. Answering
in the negative, the Supreme Court in its decision held that it is not appropriate to stay
proceedings before arbitrator. He will conclude proceedings but will not sign the award
which shall be subject to order passed in appeal which is pending before the Division Bench
of the High Court.

CONCLUSION

The Act provides that the arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement. The
arbitration agreement shall be deemed to be independent of the contract containing the
arbitration clause, and invalidity of the contract shall not render the arbitration agreement
void. Hence, the arbitrators shall have jurisdiction even if the contract in which the arbitration
agreement is contained is vitiated by fraud and/or any other legal infirmity. Further, any
objection as to jurisdiction of the arbitrators should be raised by as party at the first instance,
i.e., either prior to or along with the filing of the statement of defence. If the plea of
jurisdiction is rejected, the arbitrators can proceed with the arbitration and make the arbitral
award. Any party aggrieved by such an award may apply for having it set aside under Section
34 of the Act. Hence, the scheme is that, in the first instance, the objections are to be taken up
by the arbitral tribunal and in the event of an adverse order, it is open to the aggrieved party
to challenge the award.

An arbitrator may be challenged only in two situations. First, if circumstances exists that give
rise to justifiable grounds as to his independence or impartiality; second, if he does not posses
the qualifications agreed to by the parties. A challenge is required to be made within 15 days
of the petitioner becoming aware of the constitution of the arbitral tribunal or of the
circumstances furnishing grounds for challenge. Further, subject to the parties agreement, it is

7
the arbitral tribunal (and not the court - unlike under the old Act of 1940) which shall decide
on the challenge. If the challenge is not successful the tribunal shall continue with the arbitral
proceedings and render the award, which can be challenged by an aggrieved party at that
stage. This is another significant departure from the Model Law, which envisages recourse to
a court of law in the event the arbitral tribunal rejects the challenge

Normally in any judicial system a first appeal against a Court Judgment is a right of the party
and hence the first appellate court needs to once again look into the merits of the case and
pass a reasoned judgment. This is because the parties never have the right to choose their
judge or their qualification or knowledge on particular filed of business. But in the arbitration
cases the parties choose their arbitrators, knowledge and qualification and hence there need
not be another appreciation of merits of the case. That is why the UNICITRAL model law as
well as Indian Arbitration & Conciliation Act, 1996 restrict the scope of the appeal against an
arbitral award. The objective of such a restriction is to avoid wastage of time by once again
looking into the merits of the case and re-appreciate the evidence and to ensure finality of an
arbitral award.

8
 BIBLIOGRAPHY

Books:

1. Paranjpe, V.N., Law relating to Arbitaration and Conciliation in India, 2013 (5 th

edition), Central Law Agency.
2. Singh, Avatar, law of Arbitaration and Conciliation.

Research papers:

1. THE ARBITRATION LAW OF INDIA: A CRITICAL ANALYSIS by Sumeet

Kachwaha published in Asia International Arbitrational Journal, Volume 1, Number
2, Pages 105-126
2. India: Law Of And Procedure For Appointment Of Arbitrator(S) by Article by Ginny
J. Rautray and Saurendra Rautray.