SECTION 13 OF THE ARBITRATION AND CONCILIATION ACT

The nomination of arbitrators is covered under this section. The method for choosing arbitrators
if the parties are unable to agree on the appointment process, which is an essential component
of any arbitration action, is described in this section.

Here's an explanation of Section 13:

1. The Act first invites parties to voluntarily agree on the 1appointment of arbitrators
(Section 13(1)). The parties can decide the number of arbitrators at their discretion, but
if they cannot agree, there will only be one arbitrator.

2. Appointment by Each Party (Section 13(2)): If the arbitration agreement calls for a
three-member arbitral panel, each party must select one arbitrator. The 3rd arbitrator,
who will serve as the presiding arbitrator or umpire, shall be mutually chosen by the
two arbitrators designated by each side. The court may appoint an arbitrator if either
party fails to do so within 30 days or if the arbitrators chosen by both parties cannot
reach an agreement on a third arbitrator within that time.

3. Court Appointment (Section 13(3)): If the arbitration does not specify the number of
arbitrators or the parties cannot agree on the arbitrators' appointment, the court will
make the appointment. According to its judgment, the court may appoint either a single
arbitrator or a panel of arbitrators.

4. Challenges to Appointment (Section 13(4)): This section states that a party may
contest the appointment of an arbitrator if they have reasonable grounds to question the
arbitrator's objectivity or independence or if the arbitrator falls short of the requirements
set forth by the parties. The challenge must be raised within 15 days after learning of
the circumstances supporting the challenge.

5. Solitary Arbitrator Appointment Procedure (Section 13(5)): If the parties have

agreed to select a solitary arbitrator but cannot agree on who should be chosen, the court
will make the choice.

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 6. Subsequent Appointments (Section 13(6)): Unless the parties agree otherwise, a
replacement arbitrator shall be appointed by the same procedures as those used for the
initial appointment if an arbitrator is dismissed or resigns during the arbitration
proceedings.

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Section 13 of the Act ensures that the arbitration process remains impartial and fair. It provides
a mechanism for appointing arbitrators in situations where parties cannot agree, and it also
allows for challenges to arbitrators if there are concerns about their impartiality or
qualifications. Ultimately, the goal of Section 13 is to facilitate the smooth conduct of
arbitration proceedings by ensuring the appointment of competent and unbiased arbitrators.

Here are some examples of situations where a challenge to the appointment of an arbitrator
under Section 13 may arise:

1. Lack of Impartiality or Independence: A party may challenge the appointment of an

arbitrator if they believe that the arbitrator lacks impartiality or independence. For
instance, if the arbitrator has a close personal or financial relationship with one of the
parties, it could raise concerns about bias.

2. Lack of Qualification: If the arbitrator needs the credentials specified by the parties in
the arbitration agreement or as mandated by law, this may cause a challenge. For
instance, a challenge can be brought if the arbitration agreement stipulates that the
arbitrator must be an expert in construction law and the arbitrator chosen does not
possess this knowledge.

3. Failure to Act Without Delay: Section 13 also allows for a challenge if the arbitrator
fails to act immediately. If an arbitrator unreasonably delays the proceedings, it could
be a basis for challenge.

4. Incapacity: If the arbitrator becomes incapable of performing their duties due to illness
or any other reason, this may lead to a challenge.

It is important to note that the specific grounds for challenging an arbitrator's appointment may
vary depending on the jurisdiction and the arbitration agreement in place. Parties should

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carefully review the applicable law and their arbitration agreement to determine the grounds
for challenging an arbitrator. Additionally, the process for making such challenges is usually
outlined in the arbitration law or rules governing the arbitration.

CASE LAW
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Sindhu Suresh Gowda vs M/S. India Infoline Finance

In this case, the plaintiffs have objected to the sole arbitrator's appointment, but the sole
arbitrator has yet to decide on the issue before moving forward. Given the discussion above
and the additional arguments made by the plaintiffs, it is abundantly clear that the allegations
in the plaint fall under Section 13 of this Act. As a result, the award made by the sole arbitrator
is, therefore, due to be overturned.

SECTION 43(J) OF ARBITRATION AND CONCILIATION ACT

Section 43(j) of this act relates to the arbitral tribunal's power to make orders to secure costs.
This section is a part of the Indian legislation governing arbitration and conciliation
proceedings in India. Here’s an explanation of Section 43(j):

1. Background: Arbitration is a method of resolving disputes outside the court system. In

some cases, one of the parties involved in arbitration may be concerned that the other
party might not be able to pay the costs associated with the arbitration proceedings.
This concern could arise due to various reasons, such as the financial condition of the
other party or their history of non-payment. In such situations, Section 43(j) comes into
play.

2. Security for Costs: Section 43(j) empowers the arbitral tribunal to order one of the
parties to provide security for the costs of the arbitration. In simpler terms, if the tribunal
believes that there is a reasonable risk that one party may not be able to cover the
expenses of the arbitration, it can order that party to deposit a sum of money as security.

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 3. Purpose: The primary purpose of ordering security for costs is to ensure that the
arbitration process can continue smoothly without 4disruptions due to the financial
issues of one party. It is intended to prevent a situation where one party, typically the
claimant, brings a claim and cannot pay the costs associated with the arbitration,
causing delays and potential injustice to the other party.

4. Discretion of the Arbitral Tribunal: The decision to order security for costs is at the
arbitral tribunal's discretion. The tribunal will consider various factors when making
this decision, including the party's financial situation against whom the order is sought
and the case's merits.

5. Enforceability: An order for security for costs made by the arbitral tribunal is
enforceable in the same manner as a court order, which means that if a party fails to
comply with the order, the other party can seek enforcement through the courts.

6. Fairness: It is important to note that the arbitral tribunal should exercise its power
under Section 43(j) fairly and by the principles of natural justice. It should not be used
to burden one party unduly or hinder the arbitration process.

In summary, Section 43(j) of the Arbitration and Conciliation Act, 1996 allows the arbitral
tribunal in India to order a party to provide security for the costs of arbitration if there is a
reasonable risk that the party may not be able to cover these costs. This provision helps ensure
the smooth progress of arbitration proceedings and maintains fairness between the parties
involved.

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