Arbitration Act- Procedure of appointment of Arbitrators

Introduction

We will discuss below things 
  1. Appointment by Parties
  2. Appointment by Parties and Authorities 
  3. Appointment by Authorities

Procedure by Parties

Parties are given free hand to apply any procedure for appointment of arbitrators. Section 11 clause 2 provides that
Subject to sub-section(6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
Arbitration institutes when applied to them, can provide the arbitrators as per the procedure of these institutes.

Appointment can be done in below ways. For example if party needs 3 arbitrators.

  • Each party will appoint one arbitrator.
  • This appointed arbitrator will choose third one
  • Or, Other institution like FICCI, Chamber of Commerce etc will appoint if parties have agreed that arbitrator should be appointed by these institutions

Now what if, parties have decided to go to arbitration but haven't decided about the procedures of appointment

Or they decided the procedures, but some further action is needed to appoint the arbitrators. Section 11 again come to the rescue.

Alternative Method- By parties and arbitrators

When number of arbitrator is one

When number of arbitrator to be appointed is one and there is no agreed procedure, then parties have to appoint arbitrator in below manner.

For example, there is dispute between Nirav and Vijay. Both have decided to go to arbitrator for resolution of dispute. but they forgot to mention the procedure to appoint arbitrator. In this case Nirav will send names of few person, out of which Vijay may choose to appoint any one from the list. If they both agree one one name for example, Narendra is friend of both of them. So if they agreed upon name of Narendra, they are done!

Note, if Nirav asked to agree Vijay to appoint, and Vijay don't respond in 30 days, Nirav can go to authority which will be discussed later.

When number of arbitrator is three

Clause 3 if Section 11 provides for appointment in this case. Again let's take the name of Nirav and VIjay.

Nirav will appoint one say Narendra, Vijay appoint Arun. After this Narendra and Arun will appoint the third one. This is also simple.


What if now there are some problems:
  1. In first case parties are unable to reach a consensus and unable to agree on one name
  2. In second case, appointed arbitrators are unable to reach consensus and unable to agree the one name
  3. Or for example, it is decided by parties that arbitrator would be appointed by some institution like LCIJ (London Court of International Arbitration or Lucknow Court of International Arbitration), but such institute is unable to appoint any arbitrator 
Who will appoint the arbitrators then ?

Appointment by Authorities provided by Act

When parties fails to reach an agreement over an appointment then
  1. In domestic arbitration, High Court will appoint arbitrator
  2. In international arbitration, Supreme court will intervene in appointment


However if there is any earlier appointment by parties, then it cannot be challenged in a court. It was stated in SBP & Co V Patel Engineering by Supreme court.

Also these authorities tell the parties to appoint the arbitrators. If parties fail, the authorities will appoint the arbitrator. Such authority will give due regard to qualification mentioned by parties. For example if Nirav and Vijay have decided earlier to appoint one Civil Engineer, then court have to give due regard to those qualifications.


Conclusion

To summarize
1) Party may have agreed procedure
2) If no procedure, then by consent parties have to appoint arbitrators
3) If No consent is reached then parties can move to Courts.(Supreme court, High Court)










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