Law > Civil Laws > Alternate Dispute Resolution > Arbitration Tribunal (Sections 10-17 of the Arbitration and Conciliation Act)
Alternative Dispute Resolution or ADR refers to an assortment of dispute resolution procedures that primarily serve as alternatives to litigation and are generally conducted with the assistance of a neutral and independent third party. In this article, we shall introduce ourselves with Arbitration. ADR processes are conducted with the assistance of an ADR neutral, who is an unbiased, independent, and impartial third party not connected with the dispute, and helps the disputant parties to resolve their disputes by the use of the well-established dispute resolution processes. Arbitration, Conciliation, Mediation, Negotiation, and Lok Adalats are different methods of ADR. In this article, we shall study arbitration and arbitration tribunal.
Arbitration:
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. The decision given by the arbitral tribunal is called an award. In India, the procedure of arbitration is regulated by the Arbitration and Conciliation Act, 1996.
Arbitration Tribunal:
Chapter III of the Arbitration and Conciliation Act, 1996 lays down the arrangements for the Composition of an Arbitral Tribunal.
Number of Arbitrators:
Section 10(1) of the Arbitration and Conciliation Act, 1996 gives provision for the number of arbitrators in the arbitration tribunal. The parties to the dispute are allowed to mutually choose the number of arbitrators that shall establish the arbitral tribunal to adjudicate the dispute. It is, in any case, necessary that the number of arbitrators appointed shall be an odd number and not an even. This provision guarantees that there are no ties.
According to Section 10(2) of the Arbitration and Conciliation Act, 1996, if the parties to the dispute are unable to choose the number of arbitrators, in that case, just a single arbitrator shall be appointed.
Nationality of Arbitrator:
Section 11(1) of the Arbitration and Conciliation Act, 1996, a person of any nationality may be an arbitrator unless otherwise agreed by the parties.
Procedure to Appoint Arbitrator:
According to Section 11(2) of the Arbitration and Conciliation Act, 1996, the parties are free to agree on the procedure of appointment of the arbitrator or arbitrators.
According to Section 11(2) of the Arbitration and Conciliation Act, 1996, if parties fail to appoint arbitrator as specified in Section 10 clause 2, then each party shall appoint one arbitrator and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
Rule 22 of the Rules of Arbitration gives that if the value of the claim made under arbitration is One Crore or less, a solitary arbitrator can resolve the dispute if the parties agree to it. In cases where the claim to the dispute surpasses one Crore, the arbitral tribunal shall be made out of three arbitrators with the agreement of the parties.
Challenge to the Appointment of Arbitrator:
Section 12 of the Arbitration and Conciliation Act, 1996 deals with the circumstances in which the appointment of an arbitrator can be challenged.
- Circumstances exist that give rise to justifiable doubts as to independence or impartiality on account of any past or present relationship with or interest in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kinds, or
- He has no time due to his present or future assignments which is likely to affect his ability to devote sufficient time to the arbitration and in particular their ability to complete the entire arbitration within a period of twelve months.
- He does not possess the qualifications agreed to by the parties.
- The arbitrator falls in a category mentioned in the Seventh Schedule of the Act
- The fifth schedule to the Act gives grounds that give justifiable doubts as to the independence or impartiality of the arbitrator.
The arbitrator has to inform parties about the circumstances mentioned above from time to time throughout the proceeding. A party may challenge 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.
Requisite Qualifications of Arbitrator:
- The arbitrator must have requisite qualifications and none of the disqualifications prescribed in the arbitration agreement.
- The arbitrator should possess all the required capacity by law to assume the office of the arbitrator.
- H must be a person of the general reputation of fairness, integrity, and capable of applying objectivity in arriving at settlement in the dispute.
- The arbitrator should be free from any bias
- The arbitrator must be free from any connection with parties and the subject matter.
Reasons for Termination of Mandate of Arbitrator:
Section 14 of the Arbitration and Conciliation Act, 1996, governs the situation of termination of the mandate of the arbitrator because of his failure to act. The grounds for termination of the mandate under Section 14 are as follows:
- The arbitrator becomes de jure or de facto unable to perform his function.
- For some other reasons fails to act without undue delay
- The arbitrator withdraws from office.
- The parties agree to the termination of his authority as an arbitrator.
The arbitrator becomes de jure or de facto unable to perform his function:
De Jure refers to an arbitrator’s legal incapacity to perform his functions under the law and relates to circumstances under which the arbitrator by law is barred from continuing in office. For example: if an arbitrator becomes bankrupt or convicted for a criminal offence, then he becomes de jure unable to adjudicate the case. De Facto refers to factual inability. It relates to a factual happening during the process of arbitration. For example: if the arbitrator falls seriously ill or has some physical incapacity, then he becomes de facto unable to perform his function.
For some other reasons fails to act without undue delay:
In situations where the arbitrator is taking too long to adjudicate the dispute, this provision shall apply. If the arbitrator takes too long to even conduct the first hearing, let alone adjudication of the case; the parties can resort to this provision to terminate the mandate of the arbitrator.
The arbitrator withdraws from office:
For the reasons suitable to the arbitrator, if he withdraws from office, then automatically his mandate is terminated. This can happen because of various reasons and the arbitrator is not bound to give a detailed explanation of the same.
The parties agree to the termination of his authority as an arbitrator
If one of the parties wants removal of the arbitrator, then they must approach the court for the same. However, if both the parties agree to remove the arbitrator, then they can do so pursuant to making an agreement under section 15(1)(b) and terminate the mandate of the arbitrator. A party singularly does not have the power to revoke the authority of the arbitrator. But both/all parties in the agreement can do the same and do not need to approach the court to enforce the termination.
Procedure of Termination of Mandate of Arbitrator:
An arbitrator’s mandate can be terminated:
- by the arbitrator (by recusing themselves from the arbitral tribunal);
- by the parties;
- by the arbitral tribunal;
- by a court order;
- on the death of the arbitrator; or
- because of the arbitrator’s physical incapacity to proceed with the mandate.
If the situation falls within any of the grounds mentioned under section 14, then the party willing to terminate the mandate must approach the Court. An application for removing the arbitrator may be made to the court in whose jurisdiction the contract was executed, or subject matter of the work was performed, or within whose jurisdiction the office of the arbitrator was situated. The power to remove an arbitrator by the court is discretionary in nature. Every application to the court under section 14 is not supposed to be ruled in the affirmative. There might be situations where the court does not feel the need to remove the arbitrator. If the conditions mentioned under section 14 are satisfied, then it is imperative for the court to remove the arbitrator.
However, if both the parties agree to remove the arbitrator, then they can do so pursuant to making an agreement under section 15(1)(b) and terminate the mandate of the arbitrator. A party singularly does not have the power to revoke the authority of the arbitrator. But both/all parties in the agreement can do the same and do not need to approach the court to enforce the termination.
Substitution of Arbitrator:
If termination of mandate of Arbitrator is done under Section 13 or 14 of the Act, he shall be substituted. The procedure of substitution is laid down in Section 15 of the Act. Section 15(2) of the 1996 act allows for arbitrators to be substituted if their mandate has been terminated.
Where the mandate of arbitrator terminates, a substitute 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 the arbitrator is replaced under subsection 2, any hearing previously held may be repeated at the discretion of arbitral tribunal.
Unless otherwise agreed by the parties, an order of ruling of the arbitral tribunal made prior to the replacement of an arbitrator under section shall not be invalid solely because there is a change in the composition of arbitral tribunal.
Jurisdiction of Arbitral Tribunal:
Chapter IV of the Act contains Sections 16 and 17 that deal with the jurisdiction of an arbitration tribunal. Section 16 of the Act deals with the Competence of arbitral tribunal to rule on its own jurisdiction and conveys that the arbitral tribunal has the independence of choosing its own jurisdiction and freedom from the interference of courts regarding any matter related to arbitration.
Section 16– Competence of arbitral tribunal to rule on its jurisdiction:
The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement and for this purpose,
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract when it’s validity is challenged before the tribunal.
(b) a decision by the arbitral tribunal that the contract is null and void shall not mean that the arbitration clause invalid.
If there is a plea that the arbitral tribunal does not have jurisdiction, it cannot be raised after the submission of the statement of defence. Even an arbitrator may raise such a plea. However, if there is any delay and if such a delay is justified, the arbitral tribunal may admit a later plea according to sub section 4 of section 16 of the Act.
A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal shall decide on a plea referred to above and, where the arbitral tribunal takes a decision rejecting the plea, it shall continue with the arbitral proceedings and make an arbitral award. A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34 of the Act which deals with ‘Application for setting aside arbitral award’.
Power of Arbitration Tribunal to Order Interim Measures:
Section 17 of the Act deals with arbitral tribunal’ power to order interim measures.
A party may, during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced apply to the arbitral tribunal for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings or as an interim measure of protection in any of the following matters;
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient.
The arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it.
Powers of Arbitral Tribunal:
- The arbitrator has a power to administer an oath to the parties. It is necessary for him to act as a quasi-judicial authority
- Power to take interim measures
- According to section 25, an arbitrator has an power to proceed to ex-parte
- Power to appoint an expert
- Power to make awards
Duties of Arbitral Tribunal:
- To fix a time and place for arbitration, which is convenient to the parties
- Duty to disclose
- Duty to efficiently resolve the dispute
- Duty to determine the rules for the procedure
Reasons to Terminate Mandate of Arbitral Panel:
- The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party.
- The arbitrator currently represents or advises one of the parties or an affiliate of one of the parties.
- The arbitrator currently represents the lawyer or law firm acting as counsel for one of the parties.
- The arbitrator is a lawyer in the same law firm which is representing one of the parties.
- The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration.
- The arbitrator’s law firm had a previous but terminated involvement in the case without the arbitrator being involved himself or herself.
Distinguishing Between Section 9 and 17 of the Act.
| Section 9 | Section 17 |
| It provides for interim measures by Court | It provides for interim measures by Arbitral Tribunal |
| Court exercises powers in certain matters of arbitration | Arbitral tribunal only deals with subject matter of the dispute |
| It can be invoked any time before the arbitral tribunal is constituted. | It can be invoked anytime during arbitration proceedings. |
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