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ARBITRAL INSTITUTION

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ARBITRAL INSTITUTION
By: Mr. M. GOVINDARAJAN
September 12, 2020
All Articles by: Mr. M. GOVINDARAJAN       View Profile
  • Contents

Appointment of arbitrators

Section 11 of the Arbitration and Conciliation Act, 1996 (‘Act’ for short) provides the procedure for the appointment of arbitrator in an arbitral proceedings.  The arbitrators may be appointed either by the parties to the agreement or through the Court.

Agreement

Section 11(1) of the Act provides that the parties to the agreement may appoint arbitrators.  Such agreement provides the arbitrator may be of any nationality.

Procedure

Section 11(2) of the Act provides that subject to sub-section (6) of the Act the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.  The arbitrator may be a sole arbitrator or more than one arbitrator but of even number.

Number of arbitrators

Section 10 of the Act provides that the parties are free to determine the number of arbitrators that such number shall not be an even number.  If no such number is determined the arbitral tribunal shall consist of a sole arbitrator.

Presiding Arbitrator

Section 11(3) of the Act provides that if there is no agreement as provided in Section 11(2) with three arbitrators, each party to the agreement shall one arbitrator.  The arbitrators appointed by the parties shall appoint the third arbitrator. The third arbitrator shall act as the presiding arbitrator.

Time limit

Section 11(4) of the Act provides that if there is an agreement as to the appointment of arbitrator any of the party may send notice to the other party for the appointment of arbitrator.   The received party is to appoint an arbitrator within 30 days from the date of receipt of notice from that person.

Appointment by Court

The Act has been amended during the year 2015 and 2019.  The provisions of amended Act 2015 have come into force.  The provisions relating to the Amendment Act 2019 have not yet notified.

Before the Amendment Act, 2015

Before the Amendment Act, 2015-

  • Section 11(4) of the Act provides that if the appointment procedure in sub-section (3) [appointment of three arbitrators] applies and-
  • 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(5) of the Act provides that 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 30 days from the receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.
  • Section 11(6) of the Act provides that where, under an appointment procedure agreed upon by the parties,-
  • a party fails to act as required under that procedure; or
  • the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
  • a person, including an institution fails to perform any function entrusted to him or it under that procedure,

a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

Thus the power of appointment of arbitrator was vested on Chief Justice of India or any person designated by the Chief Justice of India or institution designed by the Chief Justice of India.

If the appointment of arbitrator is required for international commercial arbitrator the Chief Justice of India is having jurisdiction to appoint the arbitrator either by itself as through the designated person or institution.

If the appointment of arbitrator is required for domestic arbitration, the terms ‘Chief Justice’ refers to the Chief Justice of High Court within whose local limits the Principal Civil Court referred to in Section 2(1)(e), is situated and where the High Court is the Court referred to in that clause, to the Chief Justice of High Court.

After the amendment Act, 2015

The provisions of the amendment Act, 2015 came into force with effect from 23.10.2015.  The amended Act transfers the power of appointment of arbitrator as per the procedure discussed as above from the Chief Justice of India to the Supreme Court or High Court or any person or institution designated by such Court.  Therefore there is a complete shift from the erstwhile regime to the period after amended Act, 2015.

Amendment Act, 2019

The Act was amended by Amendment Act, 2019 the provisions of which have not yet been notified.  The arbitrators, if the provisions of the amended Act, 2019 will come into force, shall be appointed by the arbitral institution designated by the Supreme Court or High Court.

For this purpose the amended Act inserted a new section 2(ca) defining the term ‘arbitral institution’.  The said section defines the expression ‘arbitral institution’ as an arbitral institution designated by the Supreme Court or High Court.

The amended Act, 2019 inserted a new section 11(3A).  The newly inserted section 11(3A) gives powers to Supreme Court and the High Court to designate arbitral institutions, from time to time. 

The newly inserted section 11(3A) provides that the Supreme Court and the High Court shall have the power to designate, arbitral institutions, from time to time, which have been graded by the Council under section 43-I, for the purposes of this Act:

Provided that in respect of those High Court jurisdictions, where no graded arbitral institution are available, then, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institution and any reference to the arbitrator shall be deemed to be an arbitral institution for the purposes of this section and the arbitrator appointed by a party shall be entitled to such fee at the rate as specified in the Fourth Schedule:

Provided further that the Chief Justice of the concerned High Court may, from time to time, review the panel of arbitrators.

The Amendment Act, 2019 amends all the provisions which require the appointment of arbitrator by Supreme Court or High Court or any person or institution designated by such Court. 

Arbitration Council of India

The Amendment Act, 2019 provides that the Central Government shall, by notification in the Official Gazette, establish, for the purposes of this Act, a Council to be known as the Arbitration Council of India to perform the duties and discharge the functions under this Act.

The Arbitration Council of India, in regard to arbitral institution, may-

  • frame policies governing the grading of arbitral institutions;
  • review the grading of arbitral institutions and arbitrators;
  • promote institutional arbitration by strengthening arbitral institutions;
  • make recommendations regarding personnel, training and infrastructure of arbitral institutions.

The Council shall make grading of arbitral institutions on the basis of criteria relating to infrastructure, quality and calibre of arbitrators, performance and compliance of time limits for disposal of domestic or international commercial arbitrations, in such manner as may be specified by the regulations.

 

By: Mr. M. GOVINDARAJAN - September 12, 2020

 

 

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