Arbitration is a process of determining disputes between parties without going to court.
The testimony and evidence presented by the disputing parties are reviewed by an arbitrator, who then makes a decision that may include a monetary award.
Like a judge in a court case, an arbitrator acts as the decision-maker and referee in an arbitration proceeding. An arbitrator is an impartial, disinterested third person who decides the dispute between the conflicting parties on their will.
Appointment of Arbitrator
According to the Arbitration and Conciliation Act of 1996, the parties can choose an arbitrator together. Further, according to the same Act, the parties are entitled to select the number of arbitrators, but they must ensure that it is not an even number. However, there can also be a sole arbitrator in case of failure to do this.
Section 11 of the Arbitration and Conciliation Act outlines the process for appointing an arbitrator(s). Accordingly, unless specifically stated by the parties, any individual of any nationality can serve as an arbitrator.
The section mentioned above also discusses the circumstances in which the parties or the two arbitrators (in the case of a tribunal with three arbitrators) cannot mutually agree upon appointing an arbitrator. In such a situation, if the matter involves international commercial arbitration, the Supreme Court or any individual or organization authorized by such Court can appoint the arbitrator at the request of a party. In domestic arbitration, the High Court or any individual or organization chosen by that court appoints the arbitrator.
Further, if arbitral institutions are unavailable in any case, the Chief Justice of the High Court in question may maintain a panel of arbitrators available to carry out the duties of the arbitral institutions. A decision on an application for the appointment of an arbitrator must be made within 30 days.
Functions of Arbitrator
The role of an arbitrator in arbitration is similar to that of a judge in a lawsuit. The arbitrator plays the role of a private judge. The principal responsibilities of the arbitrators include:
- Interpreting and putting into practice the applicable laws and norms for arbitration
- Presiding over the arbitration proceeding during which testimony of both parties is presented
- Properly examining the testimonials and supporting evidence
- Deciding to resolve the conflict
- Managing the investigation’s scope to ensure that every piece of evidence and every witness has been thoroughly examined
The arbitrator must be fair and objective and should reveal every piece of information the parties must be aware of before the proceedings start.
Powers of the Arbitrator
Along with the responsibilities, the Arbitration and Conciliation Act gives the arbitrator certain powers to help them decide a dispute and deliver the award. These powers include the following:
1. Power to Administer an Oath to the Parties and Witnesses
The arbitrators have the authority to put all witnesses and the parties under oath. They may also issue interrogatories to the parties. The arbitrator performs this duty since they serve in a quasi-judicial capacity.
2. Power to Take Interim Measures
The arbitrators can take an interim measure when a party to the dispute approaches the tribunal. The arbitral tribunal may impose interim measures such as appointing a guardian for a juvenile or mentally unable person for arbitration, securing the amount in dispute in the arbitration, or such other interim measures as the arbitrator(s) may consider appropriate and effective.
3. Power to Appoint an Expert
If the arbitral tribunal thinks it is essential in any situation, he may appoint one or more experts to help him with a particular subject. He can also provide the experts with relevant data, documents, or objects for inspection and appoint the expert as a witness in a hearing if necessary.
4. Power to Proceed Ex-Parte
The arbitration tribunal has the power to proceed ex parte (an order which is given in the absence of one of the parties caused on their own will) in the following conditions:
- In cases where the claimant fails to submit or communicate their statements under section 23 of the Arbitration and Conciliation Act, 1996.
- In cases where the respondent fails to submit or communicate their statements under section 23 of the Arbitration and Conciliation Act, 1996.
- In cases where one or more disputing parties fail to attend an oral hearing or provide the document or other type of documentary evidence that the tribunal has requested.
5. Power to Make Awards
An arbitral award is identical to a judicial decision or judgment of the court. Declaring an arbitral judgment is not simply a power granted to arbitral tribunals. It is also a duty on their part to consider all the relevant evidence before making a decision.
Removal of Arbitrator
Section 12(3) of the Arbitration and Conciliation Act mentions the provisions for removing arbitrators. Following section 12(3), removal proceedings can be brought against an arbitrator if it seems that they are linked to one of the parties or have a personal stake in the outcome of the dispute, making it impossible for them to act impartially throughout the proceedings.
An arbitrator may also leave the case midway if certain unique circumstances prevent him from acting in accordance with the needs of the case, and a new arbitrator is then appointed. An arbitrator can also be dismissed if they engage in misconduct during the arbitration.
Grounds for Challenging the Appointment of the Arbitrator
An appointment of an arbitrator can only be questioned under the following two conditions:
- Circumstances exist that give rise to justified suspicions about his independence or impartiality, or
- He lacks the qualifications recognized by the parties.
Let me explain both conditions.
1. Non-Disclosure of Certain Circumstances
Before being appointed as an arbitrator, a prospective arbitrator must inform the parties to the dispute in writing of any circumstances likely to give rise to reasonable doubts about his impartiality or independence. The arbitrator must fulfil this obligation immediately, that is, before assuming his role as arbitrator. And an arbitrator can be contested if he fails to do so.
2. Non-Qualification
Although the Arbitration and Conciliation Act makes no explicit requirements for arbitrators. He must, however, possess specialized knowledge in the subject matter of the dispute at hand. In other words, an arbitrator should be well-versed in the subject area of the dispute. And, if he doesn’t possess the necessary qualifications the parties agreed to, his appointment can be challenged.
Further, any arbitrator who fits into one of the categories listed in the seventh schedule of the Arbitration and Conciliation Act is automatically disqualified, according to new section 12(5), inserted by the amendment in 2015.
The Seventh Schedule of the Arbitration and Conciliation Act includes the following:
- Relationship of the arbitrator to the conflicting parties
- Relationship of the arbitrator to the dispute
- The interest of the arbitrator in the dispute
Conclusion
An arbitrator is a decision-maker in the arbitration proceedings. The parties can mutually choose the number of arbitrators. However, they must ensure that it is not an even number. The arbitrator tribunal will always consist of either an odd number or sole arbitrators.
Furthermore, the arbitrator can be removed on the grounds mentioned in the Arbitration and Conciliation Act.
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