How Arbitrator can be appointed by Supreme Court?

The arbitrator has a significant impact on how the case is decided in an arbitration. An impartial third-party entity serves as an arbitrator. They hear the evidence, apply the law, and make a decision regarding the arbitration's outcome.

Who may serve as an arbitrator?
  • Anyone of sound mind may be chosen to serve as an arbitrator.
  • The arbitrator may be of any nationality
  • The parties at their discretion select the arbitrator and the arbitrator’s credentials.
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If a party fails to appoint an arbitrator by the third arbitrator within thirty days of the date of receipt of a request to do so from the other party or if the two arbitrators who have been selected fail to agree on the third arbitrator within thirty days after the date of their appointment, the appointment shall be made, upon a party's request, by the Chief Justice of the High Court or by any entity he designates.

The appointment of the arbitrator shall be made upon request of a party, by the Chief Justice of the High Court or any person or institution designated by him, if the parties cannot agree on the arbitrator within 30 days of receiving a request from one party, there is no system in place to appoint a solitary arbitrator from the other party to so agree.

Procedure for an appointment:

In the case of UOI v. VS Engineerings, the Supreme Court noted that if the railways or other public institutions failed to name an arbitrator within the allotted time, then the other party could approach the Supreme Court or High Court and they could name the officials as agreed upon by the parties or someone new. As stated in Union of India v. Parmar Construction Company, the court must adhere to the procedure agreed upon by the parties in a dispute involving private parties.

  • Section 11 only authorizes the High Court to name an arbitrator or the presiding arbitrator in the following circumstances:
  • If there is a legitimate arbitration agreement in place and it specifies the appointment of one or more arbitrators, those individuals must be chosen with the assent of all parties to the dispute.
  • Conflicts over the appointment of arbitrators have developed between the parties to the arbitration agreement or between the appointed arbitrators.

A party may ask the Chief Justice of the High Court or any person or institution he designates to take the necessary actions in absence when one or more of the following events occurs under an appointment procedure agreed upon by the parties:

  • A party fails to act as required under that procedure;
  • The parties or two appointed arbitrators fail to reach an agreement as required under that procedure; or
  •  A person, including an institution, fails to perform any function as required under that procedure.

The Chief Justice of the High Court's decision, or that of the individual or organization he designates in selecting an arbitrator, shall be final.

In making such an appointment, two factors must be taken into account:

  • The arbitrator's independence and impartiality, as well as
  • The requirements that must be met, as specified in the parties' agreement.

These conditions allow the Chief Justice of a High Court to nominate someone. The Chief Justice of India, or a person or organization he designates, is the appointing authority in cases involving the appointment of a sole or third arbitrator in international commercial arbitration.

Important case law:

Indian Drugs and Pharmaceuticals Ltd. v. Indo Swiss S. Gem Mfg. Co. Ltd., it was decided that the arbitration clause cannot allow for the court to appoint a retired High Court judge as an arbitrator when it expressly states that the Chairman and Managing Director of IPDL, the appellant in this case, must refer the disagreement to an arbitrator.

The Chief Justice of India appointed an arbitrator to represent the Bangladeshi company in National Aluminium Co.Ltd v. Metalimpex Ltd., a case in which the Bangladeshi company had neglected to appoint an arbitrator by the arbitration agreement based on an application under S.11 of the Arbitration and Conciliation Act, 1996.

Disagreement among arbitrators:

If there is any disagreement among the arbitrators, there will be no decision, and the presiding arbitrator's jurisdiction will be invoked. If the arbitrators cannot agree on a particular issue, the presiding arbitrator may decide the entire dispute absent any contrary language in the arbitration agreement, as was decided in Probodh v. Union of India.

Presiding Officer (Umpire) Appointment: Only when an even number of arbitrators disagree does the matter of the Presiding Officer's nomination come up. The third arbitrator may be chosen in either of the two situations listed below: either by the parties themselves at the time of submission or by the arbitrators.

Appointment of the sole arbitrator: If a sole arbitrator is chosen, the other party must be notified; otherwise, his selection will not be deemed legal.

Appointment of presiding arbitrator: The arbitrators are deemed to have agreed to the reference as soon as they accept their positions and start communicating with one another about it. There is a disagreement when one of the arbitrators declines to act or agrees to the appointment of a third arbitrator. In this situation, the Chief Justice of the High Court is qualified to designate the presiding arbitrator.

Due to his expertise in the subject matter under dispute, the arbitrator should be carefully chosen. He must be able to maintain a civil environment before the tribunal, be devoid of forensic eloquence, and ensure that the evidence is presented in the way accepted in equity and law courts. His judgment must be reasonable, unbiased, and made in the best interests of equity, justice, and morality. He must pay close attention to the facts in dispute that are presented to him.

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