COMPOSITION OF ARBITRAL TRIBUNAL

(SECTION 10 – 15)

BRIEF OUTLINE

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. The Supreme Court held that there is noting in section 7 of the Act which defines
arbitration agreement to indicate that the requirement of the number of arbitrators is a part
of the arbitration agreement and therefore, the validity of an arbitration agreement does not
depend on the number of arbitrators specified therein. An arbitration agreement specifying
an even number of arbitrators cannot be a ground to render the arbitration agreement
invalid. .

Narayan Prasad Lohia v. Nikunj Kumar Lohia, 2002 (1) Arb LR 493 (SC): 2002 AIR
SCW 898, the parties agreed to resolve their disputes through two named arbitrators. Both
the parties participated in the arbitral proceedings. But after award was given, the
respondents applied to the Calcutta High Court for setting aside the award, inter alia, on
the ground that arbitration by two arbitrators was invalid as it was inconsistent with the
mandatory requirements of section 10(1). The High Court accepted this contention but the

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Supreme Court in appeal overturned the decision of the High Court. The Supreme Court
held that the provision of section 10 providing that the number of arbitrators shall not be
an even number, is a derogable provision and objection based on it could be waived. Thus,
an award is not liable to be set aside on the mere ground that the number of arbitrators was
an even number, when the parties had agreed upon an even number.

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

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 • 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 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)

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 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 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 (11(4), (5) & (6))

− 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 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.

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.

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APPOINTMENT IN CASE OF INTERNATIONAL COMMERCIAL ARBITRATION
AGREEMENT
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.
− 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.

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SECTION 11(3)
Failing any agreement referred to in sub-section (2), in an arbitration with three
arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators
shall appoint the third arbitrator who shall act as the presiding arbitrator.
Section 11(3) of the Act provides that in an arbitration with three arbitrators, if the
parties fail to agree on a procedure for appointment of arbitrator or arbitrators, each
party shall appoint one arbitrator and the two appointed arbitrators shall appoint
the third arbitrator who shall act as the presiding arbitrator. But if a party fails to
appoint an arbitrator within 30 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 30 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.
SECTION 11(4)
If the appointment procedure in sub-section (3) applies and
(a)a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the
other party; or
(b)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, on an application of the party, by the arbitral
institution designated by the Supreme Court, in case of international commercial arbitration, or by the
High Court, in case of arbitrations other than international commercial arbitration, as the case may be]
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

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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.

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)
Failing any agreement referred to in sub-section (2), in an arbitration with a sole
arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a
request by one party from the other party to so agree [the appointment shall be made on
an application of the party in accordance with the provisions contained in sub-section
(4).]
SECTION 11(6)
Where, under an appointment procedure agreed upon by the parties.
(a)a party fails to act as required under that procedure; or
(b)the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that
procedure; or
(c)a person, including an institution, fails to perform any function entrusted to him or it under that
procedure, a [the appointment shall be made, on an application of the party, by the arbitral institution
designated by the Supreme Court, in case of international commercial arbitration, or by the High Court,
in case of arbitrations other than international commercial arbitration, as the case may be] [Substituted
by Act No. 33 of 2019, dated 9.8.2019.] to take the necessary measure, unless the agreement on the
appointment procedure provides other means for securing the appointment.
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.

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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)
[The arbitral institution referred to in sub-sections (4), (5) and (6)] [Substituted by Act No.
3 of 2016 dated 31.12.2015.], before appointing an arbitrator, shall seek a disclosure in
writing from the prospective arbitrator in terms of sub-section (1) of section 12, and have
due regard to-
(a)any qualifications required for the arbitrator by the agreement of the parties; and
(b)the contents of the disclosure and other considerations as are likely to secure the appointment of an
independent and impartial arbitrator.]
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.
(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.

Bar of Limitation

There is right to apply for appointment of arbitrator for seeking reference to arbitration on
receipt of respondent's reply to notice. The period of limitation of 3 years would start
running from that date. Hence it was held that the application filed under section 11 beyond
3 years would be barred by limitation (A.P. Beverages Corpn. Ltd. v. M/s. IBM Global
Services India Ltd

Requirements of a Valid Appointment

The following are the requirements of a valid appointment of arbitrator/s-

1. The party appointing an arbitrator must give proper notice of appointment of the
arbitrator to the other party or parties. If the party appointing an arbitrator, do not
give notice to the other party informing about the appointment of an arbitrator, the
appointment of the arbitral tribunal will be invalid and the resulting award void.

2. The person who is to be appointed as the arbitrator must be informed about his
appointment. This is necessary because, before giving his consent, he has to
consider whether he should accept the appointment.

3. The consent of the person who is to be appointed as arbitrator to act as the

arbitrator must be obtained before his appointment. He has to review all aspects
before accepting appointment. [Trader Export S.A. v. Valkswagenwerk AG

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