COMPOSITION OF ARBITRAL TRIBUNAL

(SECTION 10 – 15)

BRIEF OUTLINE

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The Arbitral Tribunal is creature of an agreement. It is open to the parties to confer upon it such
powers and prescribe such procedure for it to follow, as they think fit, so long as they are not opposed
to law. The agreement must be in conformity with the law. The Arbitral Tribunal must also act and
make its award in accordance with the general law of the land and the agreement
NUMBER OF ARBITRATORS
- SECTION 10 -

DISCRETION OF THE PARTIES – S.10(1)

 The parties are free to determine the number of arbitrators who shall
constitute the Arbitral Tribunal.
 However, the number so determined shall not be an even number

FAILURE TO DETERMINE NUMBER OF ARBITRATORS – S.10(2)

 In case of failure to determine the numbers of arbitrators at the behest of the
parties, then the arbitral tribunal shall constitute of a sole arbitrator.

Arbitration agreement specifying even number of arbitrators cannot be a ground to

render arbitration agreement invalid, M.M.T.C. Ltd. v. Sterlite Industries
(India) Ltd., (1996) 6 SCC 716.
Narayan Prasad Lohia v Nikunj Kumar Lohia- Court has inter-alia observed
that even as a matter of public policy it cannot be said that Section 10
compulsorily preclude the appointment of an even number of arbitrators. Where
the parties agree to even number of arbitrators and the composition of the Arbitral
Tribunal or the arbitration procedure are in accordance with the agreement of the
parties, they cannot allowed to resile the award if it is not to their liking

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 APPOINTMENT OF ARBITRATORS
- SECTION 11 -

SECTION 11 – OUTLINE
Section 11 provides the detailed procedure as to the appointment of the arbitrator.
The following provisions shall be discussed in detail with respect to the same.
 Nationality of the arbitrator – S.11(1);
 Choice of parties to set a procedure for appointment - S.11(2);
 Default/failure of parties to appoint the arbitrator - S.11(3);
 Appointment made by High Court or Supreme Court upon the request of
a party – S.11(4)
 Failure to appoint an arbitrator within 30 days – S.11(5)
 Party’s request to High Court or Supreme Court to take necessary
measures. – S.11(6)
 Designation of person shall not be regarded as delegation of judicial power
– S.11(6B)
 Undertaking by the person or institution – S.11(8)
 Supreme Court to exercise the powers in case of international
commercial arbitration – S.11(9)
 Power of the Courts to make rules/scheme to exercise the powers –
S.11(10)
 More than one request to different High Courts, request made first shall be
considered – S.11(11)
 Reference to the Court shall be deemed to be a reference to the Supreme
Court in case of International Commercial Arbitration. – S.11(12)
 Reference to High Court shall be deemed to be a reference to the High Court
within whose limits the principal Civil Court is situated. – S.11(12)
 Period to dispose of the application made to the Court, 60 days. –
S.11(13)
 Rules as to determination of fees of the arbitral tribunal. – S.11(14)

APPOINTMENT OF ARBITRATORS

(1)By the Parties (2)By the Designated (3)By Arbitral Institution

(4) By Court
Authority

(1) APPOINTMENT OF ARBITRATORS BY PARTIES

 SEC 11(1)- A person of any nationality may be an arbitrator, unless
otherwise agreed by the parties.
 However, in case of an international commercial arbitration the arbitrator
shall be of a different nationality than the disputant parties.
 SEC 11(2) The parties are free to choose the procedure for appointment of
the arbitrator. The Supreme Court in India Household and Healthcare
Ltd. v. L. G. Household & Healthcare Ltd., held that the arbitration
clause provided that dispute shall be referred to common arbitrator, or two
arbitrators of whom one was to be appointed by each party. If the appellant
did not appoint any arbitrator nor was the respondent called upon to appoint
its arbitrator by notice. The Court ruled that under these circumstances, an

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 application for appointment of an arbitrator was not maintainable unless
procedure agreed by parties was duly complied with.
 If the parties do not name their own arbitrator, they mutually agree that
arbitrator may be appointed by the third designated person.

(2) APPOINTMENT OF ARBITRATORS BY EX OFFICIO DESIGNATED OFFICIAL

 The parties may also agree on appointment of an arbitrator by an ex officio
designated official who is holding a particular office.

Case Law - V. Singh v. Hindustan Zinx Ltd.

The appointment of the sole arbitrator was challenged on the allegation of
bias. The Court held that the company expressly stipulated and appellant
expressly agreed with the reference of the dispute to the sole arbitrator
appointed by the Company, who may even be an employee of the Company.
As both the parties accepted the clause and entered into the contract, the
appellant thus waived his right to complain against the arbitrator’s
appointment and was bound by the express terms of the contract.

3. APPOINTMENT BY INSTITUTIONAL ARBITRATOR

 Institutional arbitration, having now been recognised as arbitral tribunal by
law the appointment of arbitrators may also be made by a permanent
arbitration institution. Where the arbitration clause in a contract permanent
institutional arbitration, it will automatically incorporate the comprehensive
set of procedures of such institution in the contract between the parties. The
arbitrators appointed by the institution are chosen from the panel of experts
who are specialised and well experienced in administering arbitration
cases over the years
 Some arbitration agreements contain a clause that arbitrator/s will be
appointed by the parties themselves but the procedure to be followed by
arbitral tribunal would be governed by the rules of particular arbitration
institution. Thus, in Iron & Steel Co. Ltd. v. Tiwari Roadlines, the
appellant and respondent entered into a trans transportation contract under
which respondent Co. was to transport steel materials from appellant's
dockyard to different parts of India. The arbitration clause provided that in
case of any dispute between the parties, it will be resolved in accordance
with rules of arbitration framed by the Indian Council of Arbitration (ICA). The
respondent had given performance bank guarantee and the appellant
encashed this bank guarantee when the dispute arose between them. The
respondent without approaching the ICA, filed an application under Section
11 (6) before the City Civil Court, Hyderabad for appointment of an arbitrator
and the Court appointed a retired Judicial Officer as the arbitrator. The
appellant challenged the appointment by a writ petition which was dismissed
by the High Court. Thereupon he moved an appeal to the Supreme Court on

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 the ground that as per agreement only ICA could appoint the arbitrator and,
therefore, Court had no power to do the same. The Supreme Court held that
application moved by the respondent was not maintainable and the Court
had no jurisdiction to entertain the same. The respondent should have made
efforts to resolve the dispute by arbitration through the Indian
Council of Arbitration.

(4) APPOINTMENT BY COURT

 It is pertinent to note that the appointment of the arbitrator cannot be
directly made by the High Court or the Supreme Court.
 The parties ought to approach the arbitral tribunal first.
 If they are not satisfied or if the tribunal fails to appoint the arbitrator within
the stipulated period of 30 days, in such a case the parties may approach the
Court for appointment of the arbitrator.

Scope of Court’s Power u/s. 11

 Section 11 enables the parties to approach the High Court or the Supreme
Court as the case may in case of appointment of arbitration.
 When there is a dispute regarding the constitution of the arbitral tribunal.
 When there is a disagreement on constitution of the Arbitral Tribunal
between the parties.
 It is aimed to remove the dead lock or undue delay in the process of
appointment of arbitrator.

Case Law – Konkan Railway Corporation Ltd. v. M/s. Mehul Const ruction Co.
Appointment of an arbitrator was held to be an administrative act of the
Court.

Case Law – SBP & Co. v. Patel Engineering Ltd.

Appointment of an arbitrator was held to be a judicial act.

Nature of power exercised by Courts

 There have been conflicting decision as to the nature of power exercised
by the Courts while appointing the arbitrators.
 Before the 2015 amendment, the appointment of arbitrator by the Court
was considered to be a judicial act, however post 2015 amendment, it is
considered as an administrative act.

Court’s Power u/s. 11(6)

 Jurisdiction of the Court – Upon filing of the application the Court can
adjudicate upon the preliminary aspects of its own jurisdiction to entertain
the application and the very existence of the arbitration agreement.
 The Court shall not interfere with the order passed by the Arbitral
Tribunal, once the matter reaches there.

APPOINTMENT IN CASE OF INTERNATIONAL COMMERCIAL ARBITRATION

AGREEMENT

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The position of appointment of arbitrators in case of international commercial
arbitration agreement can be understood in light of the following judgments:
In a recent judgment handed down in Bharat Aluminium Co. v. Kaiser
Aluminium Technical Service Inc., the Constitution Bench of the Supreme Court
resolved the conflicting views on the applicability of Part I of the Arbitration Act,
1996 and over-ruling its earlier decision in Bhatia International v. Bulk Trading S.A.
and another, observed that Part I of the Act is applicable only to all the arbitrations
which takes place within the territory of India and where the Court comes to a
determination that the juridical seat is outside India or where law other than Indian
law governs the arbitration agreement, Part I of the Arbitration Act, 1996 would be
excluded by necessary implication. In other words, only those agreements which
stipulate that the law governing the arbitration agreement is Indian Law would
continue to be governed by the Bhatia rule. Thus, where the arbitration agreement
is governed by the English law, Part I of the Indian Arbitration Act, 1996 stands
impliedly excluded

The following explanation of the erstwhile provision is to be found in a decision of

the Supreme Court in Grid Corpn of Orissa Ltd v AES Corpn “There is no
quarrel with the proposition that Section 11(9) of the Act is not mandatory and the
word ‘may’ therein cannot be read as ‘shall’ and to appoint an arbitrator not
belonging to the nationality of either of the parties is not mandatory. However,
there is nothing wrong in the two arbitrators having formed an opinion in
consultation with each other that a person of a third nationality would be
preferable as presiding arbitrator.

In yet another case of Railway Shisiju Corporation v. New Delhi Municipal

Council (NDMC), the Chinese Railways Corporation invoked the arbitration clause
while NDMC did not respond. Later it suggested two names instead of one in the
arbitration clause. Keeping in view the sensitiveness of the case, the Supreme
Court ruled that insisting on two arbitrator was contrary to the contractual terms
and therefore, it could not be permitted. Allowing the petition, the Supreme Court
directed the NDMC to appoint one arbitrator

Objectionable appointment by the party

The parties who have chosen their arbitrator and agreed to abide by his decision
are no longer in a position to turn around and contend that the person of their
choice was biased against one of them. The Supreme Court adopted this view in
Manak Lal v Prem Chand Singhvi.

in Nandyal Coop Spg Mills Ltd v K.V. Mohan Rao, it was held by the Supreme
Court that the appointment by a party an arbitrator who had admittedly acted on
an earlier occasion the appellant’s arbitrator was not proper and the respondent
had a right to object to the nomination. A situation like this would empower the
court to appoint an arbitrator.

Vacancy of Arbitrator due to death or withdrawal of consent

 If a vacancy occurs subsequent to the appointment of the arbitrator on
account of death or any other reason, in such case provisions of Section 14
would apply.

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  However, in case if the arbitrator wishes to withdraw mid-way when most of
the case has been put before him along with the documents and other
evidence, the Court in such a case would not permit him to withdraw his
consent.

SECTION 11(3)
SECTION 11(4)
Datar Switchgear Ltd. v Tata Finance Ltd- the opposite party does not make
the appoint- ment within 30 days, the right to make the appointment is not
forfeited. It will continue. But the appointment has to be made before the applicant
makes an application under Section 11 seeking appointment. Then the right of the
opposite party ceases.

Case Law – Konkan Railway Corporation Ltd. v. M/s. Mehul Construction Co.
Appointment of an arbitrator was held to be an administrative act of the
Court.

Case Law – SBP & Co. v. Patel Engineering Ltd.

Appointment of an arbitrator was held to be a judicial act.

Konkan Railway Copn Ltd v Rani Construction Private Limited- The

Supreme Court has endorsed this view of the matter by observing that having
regard to the decision in the Konkan Railway case, the civil judge erred by going
into the substance of the dispute sought to be referred to arbitration. The
application was for appointment of an arbitrator and the objection raised was as to
whether the dispute was referable to arbitration. Contentious issues should not be
gone into or decided at the stage of appointment of arbitrators and no time should
be wasted in such exercise. All such matters should be raised before the Arbitral
Tribunal.

A decision of the Supreme Court by a majority of the seven-Member Bench (one

dissent) in SBP & Co v Patel Engg Ltd, laid down the points which have to be
considered before exercising the power of appointment. The Chief Justice [now a
graded arbitral institution designated on behalf of the Supreme Court (in case of
international commercial arbitration) or High Court (in the case of other
arbitrations) as the case may be] or his designate while functioning under Section
11(6) is bound to decide whether (i) he has jurisdiction, in the sense whether the
party making the motion has approached the right High Court, (ii) there is a valid
arbitration agreement in terms of Section 7, (iii) the person before him with the
request, is a party to the arbitration agreement, and (iv) there is a dispute/live
claim subsisting which is capable of being arbitrated upon (though the question
whether the live claim made comes under the purview of the arbitration
agreement should be left to be decided by the Arbitral Tribunal on taking evidence,
along with merits of the claims involved). On coming to a conclusion on these
aspects, he has to enquire if conditions for exercise of his power under Section
11(6) have been fulfilled; and if an arbitrator has to be appointed, who is the fit
person in terms of the provision.

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The jurisdiction of the court under Section 11(4)/11(6) was confined only to the
“existence of an arbitration agreement” via the introduction of Section 11(6-A)
[omitted by the 2019 Amendment Act], leaving all other preliminary issues to be
decided by the arbitrator. Section 11(6-A) amounted to a legislative overruling of
SBP & Co v Patel Engg Ltd,125 and National Insurance Co Ltd v Boghara Polyfab (P)
Ltd, thereby on this point. Consideration of preliminary objections such as
limitation, etc. by the court at the pre-reference stage, after insertion of Section
11(6-A) [omitted by the 2019 Amendment Act] is not permissible. After the
insertion of Section 11(6-A), the issue of limitation, which is a jurisdictional issue, is
to be decided by the arbitrator. Determining “existence of arbitration agreement”
has been explained to mean that “all that needs to be done, is to see if the
agreement contains a clause which provides for arbitration pertaining to the
disputes which have arisen between the parties to the agreement”.

Though Section 11(6-A) has been omitted, the Supreme Court has held it to be still
applicable inasmuch as the jurisprudence around it is read to be a part of the
section. In a case before the Supreme Court, it widened the scope of examination
of the arbitration agreement at the pre-arbitral stage to hold that the courts while
appointing an arbitrator must not act mechanically and relegate the parties to
arbitration, but must examine the arbitration agreement to ensure that the
arbitration agreement must correlate to the dispute at hand and the courts can
decline the reference if there is no correlation. The court observed that it would not
be usurping the jurisdiction of the arbitrator, but would only be streamlining the
process of arbitration.

SECTION 11(5)
SECTION 11(6)
ACC Pipeline Contracts (Private) Ltd. V Bharat Petroleum Corporation-
Time limit of 30 days does not apply when there is an agreed procedure for
appointment of arbitrator by parties u/s 11 of the Act.

A works contract carried the clause to the effect that any dispute should be
decided by the Commissioner. But the Commissioner failed to enter upon the
reference within 30 days of the receipt of notice. This enabled the aggrieved party
to seek appointment under Section 11(6)(c) of the Act. SPM Engineering Ltd. v
Guwahati Municipal Corporation

SECTION 11(8)
UOI v Pent Ocean Steam Ships Pvt. Ltd.- the argument was that the arbitrator
required qualification of a certain nature without which the arbitrator would not be
able to adjudicate upon the difference. The court found that the dispute only
related to determination of the fact whether loss of the consigned goods was due
to negligence of the carrier. This required no specialisation or qualification. The
order of appointment was not allowed to be challenged on that basis

(13) An application made under this section for appointment of an arbitrator or

arbitrators shall be disposed of by the arbitral institution within a period of thirty
days from the date of service of notice on the opposite party.

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(14) The arbitral institution shall determine the fees of the arbitral tribunal and the
manner of its payment to the arbitral tribunal subject to the rates specified in the
Fourth Schedule.