School of Law, Hyderabad.

Project Topic: Appointment of Arbitrator/s by court in India

Submitted to:

Submitted by: Sai Amith

SAP ID: 81021319024

Contents
1. Abstract
2. Introduction
3.
4. Conclusion
5. References

Abstract
The agreement of the parties is the foundation of arbitration. However, sometimes the
parties' agreement does not include a mechanism for appointing the arbitral tribunal,
or the parties do not follow the stages outlined in the protocol. In such circumstances,
the parties are compelled to seek the appointment of the arbitral tribunal through the
domestic courts. The principle of judicial appointment of arbitrators, as outlined in the
Model Law, has also been implemented in Indian arbitration law. While the law
requires courts to try to appoint arbitrators as soon as feasible, Indian courts
frequently conduct a substantive assessment of the dispute in order to identify reasons
to deny the appointment of arbitrators.

On the failure of a party-agreed procedure or a lack of consensus between the parties

over the arbitrator, Section 11 of the Arbitration and Conciliation Act of 1996 allows
the Chief Justice to select arbitrators. Every year, a large number of applications for
the appointment of arbitrators are filed in the Supreme Court and the high courts.

Introduction

Despite the fact that Section 11 of the Arbitration and Conciliation Act, 1996... is
considered one of the most complex and disputed provisions in the entire legislation,
it is the life support for the field of arbitration in India. The aforementioned section 11
lays out in full the procedure for appointing arbitrators and gives the court the
authority to look into the existence of an arbitration agreement while ruling on the
application.

This portion has developed through time, from Konkan Railways1 to Central
Railways2, the latter of which was just passed by the Supreme Court of India. But,
before we get into Section 11, let's take a look at why the Arbitration Act has become
so vital. In comparison to civil courts, which are seen to be slow, antediluvian in their
approach to business parlance, and strict in terms of procedural rules, it is gaining in
prominence because to its rapid rendering of judgements, flexibility of procedure, and
predictable outcomes. This page will summarise current judicial tendencies in relation
to Section 11.

Provision for Appointment of Arbitrator:

The number of arbitrators is decided by the parties to the agreement. Parties are free
to choose the number of arbitrators as long as they are equal on both sides of the
dispute, according to Section 10(1). If such an agreement does not exist, then there
will be just one (single) arbiter.

Section 11 deals with the appointment of arbitrators.

Unless the parties agree otherwise, any person of any nationality may serve as an
arbitrator – Sec. 11(1); 

The parties are free to agree on a method for appointing the arbitrator or arbitrators –
Sec. 11(2);

In an arbitration with three arbitrators, if there is no agreement, each party appoints

one arbitrator, and the two appointed arbitrators appoint the third arbitrator, who will
serve as the Presiding Arbitrator – Sec. 11(3);

If a party fails to appoint an arbitrator within thirty days of receiving a request to do

so from the other party, or the two appointed arbitrators fail to agree on a third
arbitrator within thirty days of their appointment, the Chief Justice or any person or
institution designated by him shall make the appointment upon request of a party –
Sec. 11(4);

If the parties fail to agree on an arbitrator within thirty days of receipt of a request by
one party from the other party to do so, the Chief Justice/his designee shall make the
appointment upon request of a party – Sec. 11(5);

Under an appointment procedure agreed upon by the parties-

A party fails to follow the procedure's requirements; or

The parties, or the two arbitrators, are unable to reach an agreement as required by the
procedure; or

A person, including an institution, fails to carry out any role that has been entrusted to
him or her under that procedure.

Unless the agreement or the appointment procedure provide for other ways of
securing the appointment, a party may request the Chief Justice or his designate to
take required measures – Sec. 11(6);
The decision of the Chief Justice/his designate in appointing an arbitrator is final-Sec.
11(7);

The Chief Justice/his designate while appointing an arbitrator shall take regard to-

Any qualifications required of the arbitrator by the agreement of the parties; and

Other considerations as are likely to secure the appointment of an independent and

impartial arbitrator- Sec. 11(8);

In the case of appointment of sole or third arbitrator in an international commercial

arbitration, the Chief Justice/his designate may appoint an arbitrator of a nationality
other than the nationalities of the parties where the parties belong to different
nationalities – Sec.11(9);

Section 12 discusses the grounds for challenging an arbitrator's appointment. This

provision states that if a person is approached about being an arbitrator, he must
decide in writing if there are any circumstances that might cause justifiable suspicions
about his independence or impartiality. Only the following circumstances allow an
arbitrator to be called into question:

There are circumstances that raise reasonable suspicions about his independence or
impartiality; or

He lacks the qualities that the parties agreed on.

Number of arbitrators

The Supreme Court held in Sime Darby Engineering SDN.BHD V. Engineers India
Limited – 2009 (7) TMI 1199 that where the arbitration clause in the agreement
between the parties is silent as to the number of arbitrators, Section 10 (5) would
apply where the arbitral tribunal is to consist of a sole arbitrator in default of the
number being determined. The claim that a panel of three arbitrators should be
appointed based on the inclusion of the term "arbitrator(s)" in the arbitration clause of
the arbitration agreement is without merit.

Court intervention:

The Act keeps court involvement in the arbitral procedure to a bare minimum in order
to protect the parties' agreement to have their disputes resolved in a forum of their
choosing. In order to achieve this goal, the legislative intent was not to submit every
order issued by an authority under the Act to judicial scrutiny in a court of law.

Anti-suit proceedings:

A party seeking to delay the lawsuit and have the disagreements resolved through
arbitration must show that the arbitrator is competent or empowered to do so. Even if
the parties agreed to refer their problems to arbitration, an application would only be
made if there is currently a judicial case pending. The fact that the case is still pending
is indicative of a disagreement. The only thing the court needs to check is whether the
dispute's subject matter is covered by the arbitration agreement.

If (a) no application for referring the dispute to the arbitrator has been filed by the
parties to the arbitration agreement; (b) no such application has been filed before
submitting the first statement on the substance of the dispute in a pending suit; or (c)
no such application has been filed without the original arbitration agreement or a duly
certified copy thereof, the matter will not be referred to the arbitral tribunal by the
Court. If the suit involves subjects that are not covered by the arbitration agreement or
between parties who are not parties to the arbitration agreement, the application to the
court will be denied.

Appointment of arbitrator through Court assistance:

The existence of an arbitration agreement, as described in Section 7 of the Act, is a
requirement for the Chief Justice or his designee to exercise the power to appoint an
arbitrator/Arbitral Tribunal under Section 11 of the Act. In the absence of an
arbitration agreement or mutual consent, it is not possible to appoint an arbitrator to
resolve disputes between the parties.

The obligation of the Chief Justice or his designate is described in the SBP & Co case

when the court is asked to intervene for the appointment of an Arbitral Tribunal under
Section 11. In that case, the Supreme Court divided the preliminary questions that
may arise for examination in an application under Section 11 of the Act into three
categories:

(i) matters that must be decided by the Chief Justice or his nominee;
(ii) concerns over which he has control, i.e., ones over which he has the option of
making a decision; and

(iii) problems that should be decided by the Arbitral Tribunal.

The Chief Justice/his designee will have to decide on the following problems (first
category):

(a) Whether the applicant has filed an application with the competent High Court.

(b) Whether there is an arbitration agreement in place, and if so, whether the party
applying under Section 11 of the Act is a party to it.

The following are the issues (second category) that the Chief Justice/his designee may
decide on (or leave to the Arbitral Tribunal's decision):

(a) Whether the claim is a live or a dead (long-barred) claim.

(b) Whether the contract/transaction has been completed by documenting satisfaction

of the parties' mutual rights and obligations or by receiving the final payment without
objection.

The following are the matters (third category) that the Chief Justice or his designate
should delegate solely to the Arbitral Tribunal:

(i) Whether a claim is subject to arbitration (for example, a matter reserved for a
departmental authority's final decision and excepted or excluded from arbitration).

(ii) The merits of the case or any claim in the arbitration.

According to the Act's scheme, if questions in the second category are made in any
application under Section 11 of the Act, the Chief Justice/his designate may consider
them by taking evidence, if necessary. Alternatively, he could leave those questions
unresolved by directing the Arbitral Tribunal to make a decision.

The Arbitral Tribunal cannot re-visit the same matter if the Chief Justice or his
designate chooses to examine and decide it. The Chief Justice/his designee will be
guided by the Act's goal in deciding whether to settle the question or refer it to the
Arbitral Tribunal (that is expediting the arbitration process with minimum judicial
intervention). When claims of forgery or fabrication are levelled against a document
representing a full and final settlement of a contract, it is proper for the Chief Justice
or his designate to rule on the matter.

The method for appointing an arbitrator or arbitrators with judicial assistance is

outlined in Section 11 of the Act. The sole purpose of obtaining court assistance under
the Act is to expedite the establishment of the arbitral tribunal. The parties to an
arbitration agreement can agree on a procedure for appointing a lone arbitrator or
arbitrators, as described in section 11 sub-section (2). If the parties have not agreed on
a method for choosing the arbitrator as anticipated by sub-section (2) of section 11 of
the Act, or if the circumstances specified in sub-section (6) have arisen, a party may
approach the Chief Justice or his designate. The parties are allowed to agree on any
procedure for appointing the arbitrator under Section 11(2). In the event that the
procedure fails to secure the agreed-upon appointment, the aggrieved party may
utilise Section 11 subsections (4), (5), or (6), as the case may be.

The existence of an appointment procedure and a party's failure to appoint the

arbitrator within 30 days of receiving a request to do so from the other party, or when
the two appointed arbitrators fail to agree on the presiding arbitrator within 30 days of
their appointment, are dealt with in subsection (4) of section 11 of the Act. Subsection
(5) deals with the parties failing to agree on a sole arbitrator within 30 days of a
request in that regard being made by one of the parties to the arbitration agreement,
and subsection (6) deals with the Chief Justice appointing an arbitrator or an Arbitral
Tribunal when the party, the two arbitrators, or a person, including an institution
entrusted with the function, fails to do so.

Only when a party fails to act in accordance with the arbitration agreement does
Section 11(6) of the Act apply. Section 11(6) allows for a request to be made to the
Chief Justice of India or his nominee to take the necessary action if the following
conditions are met:

(a) a party fails to act as required by the parties' agreed-upon appointment method;

(b) the parties or the two arbitrators chosen by them fail to reach an agreement
anticipated of them under that procedure;

(c) a person, including an institution, fails to execute any function entrusted to him or
her under that procedure.
There is no time restriction for filing an application for appointment of an arbitrator
under section 11(6) of the Act, however under sections 11(4) and 11(5) of the Act, a
period of 30 days is required.

Subsections (3) and (5) will only apply if the parties do not agree on a procedure for
appointing the arbitrator or arbitrators, as defined in sub-section (2) of section 11 of
the Act. Subsections (3) and (5) of section 11 of the Act will not apply if the parties
have agreed on a mechanism for appointing arbitration or arbitrators. Similarly, if the
circumstances specified in clause (a) or (b) or (c) of this sub-section are met, a request
to the Chief Justice or an institution designated by him to take the appropriate actions
can be submitted under sub-section (6) of section 11.

As a result, a combined reading of the various sub-sections of Section 11 of the Act

reveals that where the parties have not agreed on a procedure for appointing the
arbitrator as contemplated by sub-section (2) of Section 11, the request to the Chief
Justice for appointment of an arbitrator can be made under sub-sections (4) and (5) of
Section 11. Parties who have agreed on a procedure for appointing an arbitrator as
contemplated in sub-section (2) but have not taken or performed certain consequential
measures as enumerated in clauses (a) or (b) or (c) of sub-section (6) can make a
request to the Chief Justice for appointment of an arbitrator under sub-section (6).

Section 11's subsection (7) renders the Chief Justice's decision on subjects made by
him final while forming the arbitral tribunal. The Chief Justice's decision on a subject
entrusted by sub-section (4), sub-section (5), or sub-section (6) of that section,
however, has finality under section 11 (7) of the Act.

When making an appointment, the Chief Justice or the person or institution chosen by
him must take into account the qualifications necessary for an arbitrator by the parties'
agreement, as well as other factors that are likely to assure the appointment of an
independent and impartial arbitrator. Even when exercising authority under section
11(6) of the Act, the court must take into account the provisions of section 11(8) of
the Act.

Apart from ensuring that the arbitrator possesses the necessary qualifications required
of the arbitrator by the parties' agreement, the aforementioned section states that the
court must take into account other factors that are likely to result in the appointment
of an independent and impartial arbitrator. In the matter of Indian Oil Corpn. Ltd., it
was stressed that while the court should generally make the appointment in
accordance with the approved protocol, the Chief Justice or his designate may deviate
from it after noting reasons for doing so.

The ability of the Chief Justice of India or a person or institution chosen by him to
appoint the single or third arbitrator in an international commercial arbitration is dealt
with in sub-section (9) of section 11.

The Chief Justice's competence to devise a scheme for dealing with topics entrusted to
him by sub-sections (4), (5), or (6) of Section 11 is dealt with under subsection (10) of
Section 11.

Section 11's sub-section (11) deals with the relative jurisdiction of Chief Justices of
various High Courts who are approached with requests relating to the same dispute,
and determines who shall accept such a request.

In relation to international arbitration, sub-section (12) of section 11, clause (a)

explains that references to the "Chief Justice" in the relevant sub-sections refer to the
"Chief Justice of India." The word "Chief Justice" shall otherwise be read as a
reference to the Chief Justice of the High Court within whose local limits the
Principal Court is located, according to clause (b).

In S.B.P & Co. v. Patel Engineering, the court's jurisdiction and the sort of power it
has when acting under the terms of section 11 were characterised as follows:

(i) The authority conferred by Section 11(6) of the Act on the Chief Justice of the
High Court or the Chief Justice of India is not an administrative power. It's a judicial
authority.

(ii) The Chief Justice of the High Court could only delegate the power under Section
11(6) of the Act to another High Court judge, and the Chief Justice of India could
only delegate the power to another Supreme Court judge.

(iii) In the instance of a High Court or Supreme Court Judge being designated, the
power exercised by the designated Judge is that of the Chief Justice, as bestowed by
statute.

(iv) The Chief Justice or the appointed Judge will have the authority to decide on the
preliminary issues mentioned earlier in the decision. The existence of a legal
arbitration agreement, the existence or otherwise of a live claim, the existence of the
requirement for the exercise of his power, and the qualifications of the arbitrator or
arbitrators will all be considered. If the necessity arises, the Chief Justice or
designated Judge may seek the advice of an institution in the matter of designating an
arbitrator qualified under Section 11(8) of the Act, but the order appointing the
arbitrator can only come from the Chief Justice or designated Judge.

(v) The Chief Justice of the High Court's designation of a District Judge as the
authority under Section 11(6) of the Act is not justified within the Act's structure.

(vi) Once the matter reaches the Arbitral Tribunal or the sole arbitrator, the High
Court will not interfere with the arbitrator's or Arbitral Tribunal's orders made during
the course of the arbitration proceedings, and the parties will be able to approach the
(vii) Because an order of the Chief Justice of the High Court or a designated Judge of
that Court is a judicial order, it can only be appealed to the Supreme Court under
Article 136 of the Constitution .Court only under Section 37 or Section 34 of the Act.

(viii) An order of the Chief Justice of India or a Supreme Court Judge selected by him
while entertaining an application under Section 11(6) of the Act cannot be appealed.

(ix) In a situation where the parties have formed an Arbitral Tribunal without
resorting to Section 11(6) of the Act, the Arbitral Tribunal would have jurisdiction to
resolve all matters covered by Section 16 of the Act.

(x) Since all have been guided by this Court's decision in Konkan Rly. Corpn. Ltd. v.
Rani Construction (P) Ltd., and orders under Section 11(6) of the Act have been made
based on that decision, we clarify that all appointments of arbitrators or Arbitral
Tribunals made thus far are to be treated as valid, with all objections to be decided
under Section 16 of the Act. Even pending applications under Section 11(6) of the Act
shall be governed by the position adopted in this judgement as of this date.

(xi) Where District Judges were designated by the Chief Justice of the High Court
under Section 11(6) of the Act, their appointment orders will be considered valid;
however, any applications pending before them on this date will be transferred to the
Chief Justice of the High Court concerned or a Judge of that Court designated by the
Chief Justice.
Nothing stops an arbitrator from proceeding with the arbitration if he or she is
selected by the Chief Justice's designee under Section 11 of the Act. It follows that, if
the authority under Section 11 finds it necessary, the mere fact that an appeal from an
order dismissing the suit under Order 7 Rule 11 CPC (on the ground that the disputes
were required to be settled by arbitration) is pending before the High Court will not
prevent the appointment of an arbitrator under Section 11 read with Section 15(2) of
the Act.

Two considerations must be kept in mind while appointing an arbitrator under Section
11 of the Arbitration and Conciliation Act, 1996:

(i) That a disagreement exists between the parties to the agreement and that the
disagreement is still active.

(ii) Second, an arbitrator must be appointed in accordance with the agreement's terms
and circumstances, as well as the need of the dispute.

Section 11 of the Act, which contains the scheme for appointing arbitrators, can be
summarised as follows:

 (i)Where the agreement provides for three arbitrators (each party to appoint one
arbitrator, and the two appointed arbitrators to appoint a third arbitrator), if a party
fails to appoint an arbitrator within 30 days of receiving a request from the other party
(or the two nominated arbitrators fail to agree on the third arbitrator within 30 days of
the date of the appointment), the Chief Justice or his designate will exercise the
powers of the Chief Justice or his designate

(ii) If the arbitration agreement specifies the appointment procedure, the Chief Justice
or his designate will exercise power under sub-section (6) of Section 11 if a party fails
to act as required under the agreed procedure (or the parties or the two appointed
arbitrators fail to reach an agreement expected of them under the agreed procedure or
any person/institute fails to act as required under the agreed procedure.

(iii) While failure of the other party to act within 30 days will give the party seeking
arbitration a cause of action to approach the Chief Justice or his designee in
circumstances falling under sub-sections (4) and (5), there is no such time-bound
requirement in sub-section (6) of Section 11. The aggrieved party may file a petition
under Section 11(6) of the Act if the arbitrator fails to act in accordance with the
agreed procedure within the time-limit specified in the arbitration agreement, or
within a reasonable time if no time-limit is specified.

(iv) Where the parties have agreed on the appointment procedure but no cause of
action for invoking the Chief Justice's or his designate's jurisdiction under clauses (a),
(b), or (c) of subsection (6) has arisen, the question of the Chief Justice or his
designate exercising power under subsection (6) is moot. The following are the
prerequisites for approaching the Chief Justice or his designee for the purposes of
taking required actions under subsection (6):

(a) a party failing to act as required under the agreed-upon appointment procedure; 

 (b) the parties (or the two appointed arbitrators) failing to reach an agreement as
expected under the agreed-upon appointment procedure; 

(c) a person/institution entrusted with any function under the agreed-upon

appointment procedure failing to perform such function.

(v) When exercising power under Section 11's sub-section (6), the Chief Justice or his
designate shall make every effort to follow the appointment procedure outlined in the
arbitration clause.

(vi) If circumstances exist that raise reasonable doubts about the independence and
impartiality of the person nominated, or if other circumstances warrant appointment
of an independent arbitrator by ignoring the procedure prescribed, the Chief Justice or
his designate may ignore the designated arbitrator and appoint someone else for
reasons to be recorded.
Conclusion

There are three conceivable solutions after a combined interpretation of the above-
mentioned rulings on the nomination of the arbitrators/sole arbitrator:

a. Appoint a sole arbitrator by mutual consent, with an express language in the

agreement specifying the name of the sole arbitrator to be appointed.

b ) If there is a dispute between the parties, petition the High Court/ Supreme Court to
appoint a sole arbitrator.

Because of his unique understanding of the subject area in dispute, the arbitrator
should be carefully chosen. He must be able to maintain a calm mood at the tribunal,
be free of forensic eloquence, and ensure that the evidence is presented in the way
expected in a court of law and equity. He must focus on the facts in question, and his
judgement must be practical and unbiased, as well as in the best interests of justice,
good conscience, and equity.

BOOKS REFERRED:

LAW OF ARBITRATION AND CONCILIATION BY AVATAR SINGH

References:

1. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2429622
2. https://academic.oup.com/arbitration/article-abstract/35/4/505/5685961
3. https://www.legalserviceindia.com/legal/article-2794-appointment-of-
arbitrator.html
4. http://:arbitrationandcouciliattionwordp
5. http://:indiakanoon.org/doc/170945616/.
6. Halsbury’s Laws of England (Butterworths, 4th edition, 1991) para 332 and 601.
7. S.N. Prasad, Hitek Industries (Bihar) Limited v. Monnet Finance Limited, (2011)
1 SCC 320.
8. Konkan Railway Corporation Ltd. and Ors. v. Mehul Construction Co., (2000) 7
SCC 201.
9. Section 2 (e) of 1996 Act.
10. Section 2, Clause (4) of the Code of Civil Procedure, 1908.
11. SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618.