Appointment and Removal of an Arbitrator under Indian Law

Arbitration in India is governed primarily by the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as "the Act"). The Act provides a structured framework for the appointment and
removal of arbitrators to ensure fairness, neutrality, and efficiency in dispute resolution. These
provisions ensure that arbitration remains a credible alternative to litigation.

1. Appointment of an Arbitrator

The appointment of an arbitrator is primarily governed by Section 11 of the Act, which provides
detailed guidelines regarding the procedure, parties' autonomy, and court intervention when
required.

A. Party Autonomy in Appointment (Section 11(2))

 Parties are free to mutually agree on the procedure for appointing an arbitrator.

 The arbitration agreement can specify:

o Number of arbitrators (must be an odd number as per Section 10(1)).

o Mode of selection (nomination by parties, appointment by an arbitral institution,

etc.).

o Qualifications of the arbitrator.

B. Default Appointment by Courts (Section 11(3)–(6))

If the parties fail to appoint an arbitrator within 30 days, the following procedure applies:

1. For a sole arbitrator (Section 11(5)): If the parties fail to agree, the arbitrator is appointed by
the High Court (domestic arbitration) or the Supreme Court (international commercial
arbitration).

2. For a panel of three arbitrators (Section 11(3)):

o Each party appoints one arbitrator.

o The two arbitrators must then appoint a third arbitrator (presiding arbitrator).

o If the two arbitrators fail to agree on the third arbitrator, the Supreme Court or the
High Court will intervene.

C. Power of Courts and Designated Institutions (Sections 11(6) & 11(6A))

 The 2015 Amendment to the Act limits judicial interference by restricting court scrutiny to
whether a valid arbitration agreement exists (Section 11(6A)).

 The 2019 Amendment further allows the Supreme Court and High Court to delegate the
appointment power to designated arbitral institutions.

D. Qualifications and Neutrality of an Arbitrator (Sections 12 & 13)

1. Independence and Impartiality (Section 12):

 o Arbitrators must disclose any circumstances that might raise justifiable doubts
about their impartiality or independence.

o The Fifth Schedule lists situations where a reasonable apprehension of bias may
arise (e.g., if the arbitrator has a direct financial interest).

o The Seventh Schedule provides grounds that automatically disqualify an arbitrator

(e.g., an arbitrator having a close business relationship with one of the parties).

2. Failure to Meet Qualifications (Section 13):

o Parties can agree on qualifications that an arbitrator must possess.

o If an arbitrator does not meet the agreed criteria, they can be challenged through
the procedure provided in the arbitration agreement.

2. Removal of an Arbitrator

The removal of an arbitrator may occur due to various reasons, such as bias, misconduct, or failure
to act in a timely manner. The Act provides both party-driven mechanisms and court intervention
to ensure fairness in arbitration.

A. Challenge to an Arbitrator’s Appointment (Sections 12 & 13)

 A party can challenge an arbitrator’s appointment if:

o There are justifiable doubts regarding their independence or impartiality.

o They fail to meet the agreed qualifications.

 The challenge must be filed within 15 days of becoming aware of the reasons for challenging
the arbitrator.

B. Procedure for Challenging an Arbitrator (Section 13(2)–(4))

1. The party must submit a written challenge explaining the reasons.

2. If the arbitrator refuses to step down, the arbitration tribunal itself decides the challenge
(self-review mechanism).

3. If the challenge is rejected, the party cannot approach the court immediately but can raise
the issue after the final award is passed.

C. Termination of an Arbitrator’s Mandate (Section 14)

An arbitrator’s mandate automatically terminates if:

1. They become de jure or de facto unable to perform their functions.

2. They fail to act without undue delay.

3. They withdraw voluntarily or both parties agree to remove them.

Court Intervention (Section 14(2))

  If a dispute arises about whether an arbitrator’s mandate should be terminated, a party can
apply to the High Court or Supreme Court for a decision.

D. Grounds for Removal (Sections 12–14 & Seventh Schedule)

1. Conflict of Interest (Seventh Schedule): If an arbitrator has personal or financial ties with
any party.

2. Bias or Lack of Impartiality (Section 12): If an arbitrator shows favoritism or has a past
association with a party.

3. Incapacity or Misconduct (Section 14): If an arbitrator is unable to perform their duties due
to illness or misconduct.

4. Failure to Act in a Timely Manner (Section 14): If the arbitrator delays proceedings
excessively.

3. Appointment of a Substitute Arbitrator (Section 15)

If an arbitrator is removed or resigns, a substitute arbitrator must be appointed following the same
procedure as the original appointment.

 If the arbitration agreement does not specify the procedure, the court may intervene under
Section 11.

 The new arbitrator can either continue from where the previous arbitrator left off or
restart proceedings if necessary.

4. Judicial Precedents on Appointment and Removal of Arbitrators

A. TRF Ltd. v. Energo Engineering Projects Ltd. (2017)

 The Supreme Court held that a person who is ineligible to act as an arbitrator cannot
appoint another arbitrator.

B. Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2019)

 The Supreme Court ruled that a party with an interest in the dispute cannot unilaterally
appoint an arbitrator, as it violates the principles of natural justice.

C. Bharat Broadband Network Ltd. v. United Telecoms Ltd. (2019)

 It was held that a unilaterally appointed arbitrator is not valid, and any arbitrator who
becomes ineligible must be removed immediately.

D. HRD Corporation v. GAIL (India) Ltd. (2018)

 The Supreme Court clarified the grounds of challenge under Sections 12 and 13 and
emphasized the importance of neutrality.

Conclusion
The appointment and removal of arbitrators under Indian law strike a balance between party
autonomy and judicial oversight to maintain the integrity of arbitration. The Act provides clear
grounds for challenging arbitrators to ensure neutrality, and courts have played a significant role in
curbing bias and conflicts of interest.

Below is an in‐depth discussion of the powers of an arbitrator under Indian law, based on the
provisions of the Arbitration and Conciliation Act, 1996 and related case law:

Overview of Arbitrator’s Powers

Under Indian arbitration law, an arbitrator is vested with significant autonomy to manage and direct
the arbitration proceedings. The Act, along with the general principles of arbitration, recognizes that:

 Arbitrators are the masters of their own procedure.

 They are granted wide discretion to conduct proceedings “in the manner they consider
appropriate,” as long as they respect the parties’ rights and the agreed framework of the
arbitration.

Key Powers of an Arbitrator

1. Procedural Control

 Setting the Procedure:

An arbitrator has the authority to determine the procedural rules for the arbitration process,
including the scheduling of hearings, deadlines for submissions, and the overall conduct of
the proceedings. This power is exercised in light of any procedural guidelines agreed upon by
the parties or, in their absence, as per the arbitrator’s discretion.

 Managing Hearings and Submissions:

Arbitrators can decide whether to hold oral hearings, accept documentary evidence alone,
or employ a hybrid approach. Unless the parties have agreed otherwise, the arbitrator
should hold oral hearings if one party requests them.

2. Evidence and Admissibility

 Determining Admissibility:
One of the core powers is to assess the evidence presented. An arbitrator may:

o Determine what evidence is admissible.

o Decide on the relevance, materiality, and weight of that evidence.

This means that, unlike traditional courts which are bound by strict evidentiary rules,
arbitrators enjoy a broader discretion to decide which pieces of evidence are
persuasive.

 Evaluating Documentation and Witness Statements:

Even if parties rely primarily on documents, an arbitrator has the power to invite
 supplementary submissions, including witness statements or expert opinions, to clarify or
support the evidence.

3. Decision-Making Authority

 Ruling on Merits:
After considering all evidence and arguments, the arbitrator issues an award. This decision-
making power is comprehensive and includes:

o Deciding the merits of the case.

o Applying relevant legal principles to the facts.

o Arriving at a conclusion that binds the parties, subject to limited grounds for judicial
review.

 Handling Ex Parte Proceedings:

If a party fails to appear without sufficient cause, the arbitrator may conduct parts of the
proceedings in their absence. However, such ex parte decisions do not automatically
constitute an admission by the defaulting party; rather, the decision is made based on the
available evidence.

4. Flexibility in Procedure and Evidence

 Adaptability:
The arbitrator’s powers allow for a flexible, party-centric approach to evidence and
procedure. The traditional requirements of the Code of Civil Procedure or the Indian
Evidence Act do not bind arbitration proceedings unless the parties agree otherwise.

 Tailoring the Process:

This flexibility means that arbitrators can tailor the arbitration process to fit the complexity
and unique aspects of each dispute, ensuring that both procedural efficiency and fairness
are maintained.

5. Authority in Case of Default or Non-Compliance

 Proceeding Despite Non-Cooperation:

The arbitrator has the power to:

o Proceed with the arbitration even if one party does not submit their evidence or fails
to appear.

o Issue directions or even dismiss parts of a claim where necessary, ensuring that the
arbitration process is not unduly delayed by non-cooperative behavior.

 Continuity of Proceedings:
Even when challenges arise or an arbitrator has to address issues related to the composition
of the tribunal, their powers include making interim decisions or rulings that keep the
arbitration on track.

Judicial Perspective and Limited Oversight

While arbitrators enjoy broad powers to control proceedings, Indian courts maintain a limited
oversight role. The judiciary typically reviews arbitrator decisions only on the basis of:

 Arbitrability of the subject matter.

 Violation of due process or manifest injustice.

Courts refrain from interfering with the arbitrator’s discretion regarding procedural matters and
evidentiary rulings, as long as these decisions fall within the ambit of the arbitration agreement and
the Act.

Conclusion

In summary, the powers of an arbitrator under Indian law are extensive and designed to facilitate an
efficient, flexible, and fair dispute resolution process. These powers include managing the procedural
aspects of the arbitration, determining the admissibility and weight of evidence, making decisions on
the merits, and ensuring that proceedings continue even if a party is non-cooperative. This
autonomy is essential in maintaining arbitration as a viable and effective alternative to traditional
litigation, while still upholding principles of natural justice and fairness.

If you require further details on any specific aspect—such as the interplay between arbitrator
powers and judicial review, or the impact of recent amendments—please let me know!

Role of an Arbitrator

An arbitrator is a neutral third party responsible for resolving disputes outside the court system.
Their role is similar to that of a judge but in a more flexible and less formal setting.

Key Responsibilities

1. Neutrality and Impartiality

o Must remain independent and disclose any conflicts of interest (Section 12 of the
Arbitration and Conciliation Act, 1996).

o Cannot have any relationship that may raise doubts about their fairness (Fifth and
Seventh Schedules).

2. Decision-Making Authority

o Hears arguments and evidence from both parties.

o Issues a legally binding arbitral award (Section 31), enforceable like a court decree
(Section 36).

3. Procedural Control

o Determines rules of evidence and procedure (Section 19).

o Decides whether hearings are necessary or if written submissions suffice.

4. Facilitating Constructive Dialogue

 o Encourages cooperation rather than adversarial litigation.

o Ensures both parties are heard fairly.

Appointment of Arbitrators

Arbitrators are appointed in three ways:

1. By the Parties – Mutual agreement or each party appoints one arbitrator.

2. By Existing Tribunal Members – Two arbitrators appoint a third, known as the presiding
arbitrator.

3. By an External Authority – Courts or institutions appoint an arbitrator if parties fail to do so

(Section 11).

Introduction

Arbitration is a widely used alternative dispute resolution mechanism that enables parties to resolve
disputes privately, outside the formal judicial system. The Arbitration and Conciliation Act, 1996,
governs arbitration in India and empowers parties to select arbitrators and determine the rules
governing their arbitration proceedings. The key feature of arbitration is party autonomy, meaning
the jurisdiction and authority of the arbitrators are based on the agreement between the disputing
parties.

Section 16 of the Act plays a crucial role in arbitration as it gives arbitration tribunals the power to
decide their own jurisdiction. This principle, known as the Kompetenz-Kompetenz doctrine, aims to
reduce judicial intervention in arbitration proceedings and ensures smoother dispute resolution. By
granting tribunals the power to determine their jurisdiction, the Act reinforces the efficiency and
autonomy of arbitration, which is essential for maintaining confidence in the process.

Disputes That Can Be Referred to Arbitration

Not all disputes can be resolved through arbitration. Some matters are specifically excluded from
arbitration by law. These include:

 Criminal cases: Offenses that affect the public at large cannot be settled privately.

 Matrimonial disputes: Issues like divorce, child custody, or maintenance require judicial
intervention.

 Insolvency and bankruptcy declarations: Matters impacting creditors and the financial
system.

 Winding up companies: Decisions affecting shareholders and stakeholders of a company.

 Testamentary disputes: Cases regarding wills or the distribution of inheritance.

Generally, disputes involving private rights (referred to as "right in personam") can be resolved
through arbitration. However, disputes involving public rights ("right in rem"), where the outcome
impacts a larger group of people, cannot be arbitrated. The Supreme Court in Booz Allen &
Hamilton Inc. v. SBI Home Finance Ltd. clarified this distinction, emphasizing that arbitration is
appropriate for contractual and commercial disputes but not for matters requiring judicial oversight.
Section 16: Empowering Arbitration Tribunals

Section 16 is a cornerstone provision of the Act. It empowers arbitration tribunals to rule on their
own jurisdiction and addresses objections raised by parties regarding the tribunal’s authority. The
provision ensures that jurisdictional disputes do not cause unnecessary delays and that arbitration
remains an efficient mode of dispute resolution.

Section 16(1): Power to Rule on Jurisdiction

This subsection gives arbitration tribunals the authority to decide their jurisdiction. It covers issues
such as whether an arbitration agreement exists or is valid. It also establishes the independence of
the arbitration clause in a contract, meaning:

 If a contract is declared invalid, the arbitration clause within the contract can remain valid.
This ensures disputes can still be resolved even if the overall contract is void.

 The arbitration tribunal can continue functioning based on the clause, separate from the rest
of the contract.

This provision is significant because it prevents parties from avoiding arbitration by challenging the
validity of the contract itself. The Supreme Court in HSBC Holdings Plc v. Avitel Post Studioz Ltd.
reinforced this concept by ruling that arbitration clauses are treated independently from the main
contract.

Section 16(2): Raising Objections to Jurisdiction

Parties have the right to challenge the tribunal's jurisdiction, but there are strict timelines:

 Objections must be raised at the earliest stage, typically before or along with the submission
of the defense statement.

 Even parties involved in appointing an arbitrator retain the right to challenge jurisdiction.
This principle was upheld in UP Rajkija Nirman Nigam Ltd. v. Indure (P) Ltd.

This provision prevents parties from delaying arbitration by raising jurisdictional objections at later
stages.

Section 16(3): Exceeding Scope of Authority

If a tribunal exceeds its authority by addressing matters beyond the arbitration agreement, parties
can object during the proceedings. This prevents tribunals from overstepping their boundaries and
ensures they operate within the agreed-upon scope of arbitration.

Section 16(4): Condonation of Delays

This subsection allows tribunals to accept late objections to jurisdiction or scope of authority if the
delay is justified. However, if the tribunal deems the delay unjustified, the objections may be
rejected. The case of S.N. Malhotra & Sons v. Airport Authority of India highlighted this principle,
emphasizing that objections should be raised in a timely manner.

Section 16(5): Decisions on Objections

When parties raise objections under Section 16(2) or 16(3), the tribunal must decide whether to
accept or reject them. If objections are rejected, arbitration continues, and the tribunal can make a
final award. Courts cannot interfere at this stage—the party must wait until the final award is issued
to challenge it under Section 34 or Section 37.

Section 16(6): Remedies Against Tribunal Decisions

Aggrieved parties can challenge the tribunal's decision on jurisdiction after the final award is issued:

 Section 34 allows parties to file an application to set aside the award.

 Section 37 provides remedies for appealing specific orders, including instances where the
tribunal terminates proceedings after upholding objections.

The Supreme Court in McDermott International Inc. v. Burn Standard Co. Ltd. clarified that
challenges to an arbitral tribunal's jurisdiction must follow these statutory remedies rather than
seeking direct judicial intervention.

Key Case Laws Related to Section 16

Several landmark cases clarify the application of Section 16:

 Union of India v. East Coast Boat Builders: Courts cannot interfere with the tribunal’s
jurisdictional decisions until the final award is issued.

 M/s Uttam Singh Dugal v. M/s Hindustan Steel Ltd.: Findings on jurisdiction are interim
orders, not interim awards, and thus cannot be appealed.

 S.B.P. & Co v. Patel Engineering Ltd.: Remedies under Sections 34 and 37 are distinct—
Section 34 applies when arbitration is completed, while Section 37 applies when proceedings
are terminated due to upheld objections.

 S.N. Malhotra & Sons v. Airport Authority of India: Emphasized the importance of raising
objections on time, as delays without justification result in waiving the right to object.

 Ferro Alloys Corporation Ltd. v. A.P. State Electricity Board: Highlighted that jurisdictional
objections must be raised promptly to be considered valid.

Practical Implications for Businesses and Individuals

To ensure a smooth arbitration process, businesses and individuals should:

 Draft clear and comprehensive arbitration clauses specifying the tribunal's jurisdiction.

 Raise jurisdictional objections at the earliest possible stage.

 Avoid delaying tactics, as unjustified delays in raising objections can weaken their case.

 Seek legal advice on challenging arbitral awards under Sections 34 and 37 if necessary.

Conclusion

Section 16 of the Arbitration and Conciliation Act, 1996, empowers arbitration tribunals to operate
autonomously and efficiently. By allowing tribunals to decide their own jurisdiction, the Act
minimizes judicial interference and promotes quicker dispute resolution. Parties must act promptly
when raising objections to avoid waiving their rights.

The legislative intent of Section 16 aligns with the broader goals of arbitration: to reduce delays and
ensure disputes are resolved effectively. Courts play a supporting role, intervening only after
arbitration proceedings are completed, which reinforces the importance of party autonomy in
arbitration.

Interim measures in arbitration are temporary remedies or relief provided to protect the rights and
interests of the parties involved in arbitration proceedings. These measures are critical for ensuring
the effectiveness and enforceability of the final arbitral award. Here's an expanded explanation:

What Are Interim Measures?

Interim measures are urgent remedies granted by courts or arbitral tribunals to prevent harm,
preserve evidence, or protect assets during arbitration. They ensure that the arbitration process
remains fair and that the final award is not rendered meaningless.

Legal Framework in India:

In India, the Arbitration and Conciliation Act, 1996, governs the provision of interim measures. The
key sections are:

1. Section 9 - Court-Ordered Interim Relief

 Scope: Parties can seek interim measures from courts before, during, or after arbitration.
Courts are approached primarily when tribunal relief is inadequate or unavailable.

 Reliefs Provided:

o Preservation of property.

o Custody or sale of perishable goods.

o Securing the monetary claim.

o Injunctions or appointment of a receiver.

o Any other relief deemed appropriate by the court.

 Jurisdiction: The application must be filed in the court where the seat of arbitration is
located. For international arbitrations, only High Courts have jurisdiction.

2. Section 17 - Tribunal-Ordered Interim Relief

 Scope: After the arbitral tribunal is constituted, parties can seek interim measures directly
from the tribunal instead of courts.

 Reliefs Provided:

o Preservation of goods or property involved in the dispute.

o Securing the amount in dispute.

o Orders for inspection or collection of evidence.

o Injunctions or preventive measures.

 Limitations: Tribunal orders are only enforceable against the parties to the arbitration
agreement. Relief involving third parties must be sought through courts.

Enforceability:
  Orders under Sections 9 and 17 are enforceable as court orders, as per the amendments to
the Act. Non-compliance may lead to contempt proceedings.

Importance of Interim Measures

 Protection of Rights: They safeguard the interests of parties throughout the arbitration
process.

 Preservation of Evidence: Interim measures prevent the destruction or tampering of vital

evidence.

 Enforcement of Awards: They ensure that assets are available for enforcement after the
award is delivered.

Challenges

Despite their advantages, there are challenges:

 Tribunals lack jurisdiction over third parties.

 Non-compliance often requires court intervention.

 International tribunal orders are not directly enforceable in India.

Conclusion

Interim measures are a cornerstone of the arbitration process, ensuring that the proceedings remain
effective and equitable. They provide a safety net for parties and enhance the overall credibility of
arbitration as a mode of dispute resolution.