ADR PROJECT ON

SECTION 11: APPOINTMENT OF ARBITRATORS

MAHARASHTRA NATIONAL LAW UNIVERSITY

AURANGABAD, MAHARASHTRA

SUBMITTED TO:
Ms. Sakshi Gupta
Assistant Professor of Law

SUBMITTED BY:
Hariom Shran Bajpai

Roll No- 11 Semester V, B.A.LL.B (Hons.)

Date of submission- 12/10/2019.

 TABLE Of CONTENTS

S.No PARTICULARS PAGE NO.

1 COVER PAGE 1
2 TABLE OF CONTENTS 2
3 ACKNOWLEDGEMENT 3
4 CHAPTER 1: Introduction 4
5 CHAPTER 2: Meaning and Definition 5
6 CHAPTER 3: Appointment of Arbitrator 6-11
7 CHAPTER 4: 2019 Amendment Act 12
8 CHAPTER 5: Conclusion 13

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 ACKNOWLEDGEMENT

This project could never have been possible without the help, guidance and cooperation of my
teachers, and many others. Ms. Sakshi Gupta, my teacher was extremely kind to me throughout. She
gave me all the support in the world to do the project unhampered. Her insistence on clarity of
expression and logical formulation has been a constant reminder to me. I have gained valuable
learning experience under her supervision. I take this opportunity to thank the library staff of the
Maharashtra National Law University, Aurangabad who helped me to collect the data for the same.

It would never have been possible to complete this study without an untiring support from my
MNLU-A family.

Hariom Shran Bajpai


Roll No 11

Sem-V B.A.LL.B (Hons.)

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 CHAPTER 1: INTRODUCTION
The Arbitration proceedings in India are governed by the Arbitration and Conciliation Act, 1996.
The Indian Arbitration Act is based on the UNCITRAL Model Law on International Commercial
Arbitration 1985 and the UNCITRAL Arbitration Rules 1976. The UNCITRAL Model Law was
adopted in 1985 with the objective to assist States in reforming and modernizing their laws on
arbitral procedure so as to take into account the particular features and needs of international
commercial arbitration.
In the year 2006, the UNCITRAL Model Law was amended with the object to modernise
the form requirement of an arbitration agreement to conform with international contract practices
and establish a more comprehensive legal regime dealing with interim measures in support of
arbitration. Accordingly, the General Assembly of the United Nations recommended that all
countries give due consideration to the said Model Law, in view of the desirability of uniformity of
the law of arbitral procedures and the specific needs of international Commercial arbitration
practice.
In view of the recommendation, the Indian Legislature enacted the Arbitration and
Conciliation Act in 1996 with the object to consolidate and amend the law relating to domestic
arbitration, international commercial arbitration and enforcement of foreign arbitral awards so as to
define the law relating to conciliation and for matters connected therewith or incidental thereto.
In order to serve the purpose of the Act, and to meet the demands of the parties to the
dispute, there lies a greater need of the appointment of and intermediary or the a person called as
arbitrator. However it is equally important to have a mechanism to regulate and control the powers
of the arbitrator.
Accordingly, with the due process of time, various judgements by the courts, have clearly
stated the regulatory measures for the arbitrators, and the same will be dealt in brief in the project.

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 CHAPTER 2: MEANING AND DEFINITION

DEFINITION:-
An arbitrator is person selected by mutual consent of the parties to settle the matters in

controversy between them. A person appointed to adjudicate the difference is called an arbitrator.
An arbitrator is a tribunal chosen by the consent of the parties.
Any person who enjoys the confidence of the parties may be selected as an arbitrator. Every
person is free to choose his own judge for the settlement of any matter in controversy, and the judge
so chosen, if accepted by the opposite party, becomes an arbitrator. They may choose an arbitrator
by lot or in any other way. If they an incompetent or unfit person, that is their own affair.
An arbitrator should be a person who stands indifferent between the parties. He should have
no interest direct or remote in the subject-matter of the controversy or in the parties. Any person
who is under any legal disability by virtue of statutory provision or by reason of public policy
cannot act as an arbitrator. An arbitration agreement appointing a supreme head of the state as an
arbitrator would be against public policy and hence void at its inception. The dictionary meaning of
Arbitration is “hearing and determining a dispute between the parties by a person or persons chosen
by the parties”.
In an English judgement named Collins v. Collins, 1858 28 LJ Ch 184: 53 ER 916 the court
gave a wide definition to the concept of Arbitration which reads as follows: “An arbitration is a
reference to the decisions of one or more persons either with or without an umpire, a particular
matter in difference between the parties”. It was further observed by the court that proceedings are
structured for dispute resolution wherein executives of the parties to the dispute meets in presence
of a neutral advisor and on hearing both the sides and considering the facts and merits of the
dispute, an attempt is made for voluntary settlement.
Arbitration can be a voluntary one i.e., agreed between the parties or it can be ordered by the court.

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 CHAPTER 3: APPOINTMENT OF ARBITRATOR
NUMBER OF ARBITRATORS:-
The Arbitration and conciliation Act of 1996 states that parties can determine the number of
arbitrators they wish to appoint however, this should not be an even number.If they are unable to do
so, the arbitral tribunal shall consist of a sole arbitrator. The statutory requirement of odd numbers
of arbitrators is can be moved away from, which means that if they wish to exercise an option of
choosing even number of arbitrators and agree to not to challenge the award thereafter, the award
rendered would be a valid and binding.
If neither of the parties challenge the composition then any challenge to the composition
must be raised by a party before the time period prescribed under the Act, failing which it will not
be open to that party to challenge the award after it has been passed by the arbitral tribunal. The Act
enables the arbitral tribunal to rule on its own jurisdiction. A challenge to the jurisdiction of the
arbitral tribunal cannot be raised, after the submission of the statement of defense although the party
might have participated in the appointment of the arbitrator and might have appointed the arbitrator
himself. Both parties can choose the arbitrators.

QUALIFICATION OF ARBITRATORS:-
The parties should ideally follow an agreed procedure for appointing the arbitrators.
However if that fails and an application is filed in court for appointment, the Chief Justice or the
person or institution designated by him, in appointing an arbitrator, shall have due regard to any
qualifications required of the arbitrator by the agreement of the parties.1
A clause in the agreement, which provides for settling the dispute by arbitration through
arbitrators having certain qualifications or in certain agreed manner is ordinarily followed by the
courts and not derogated from unless there are strong grounds for doing so. The appointment of an
arbitrator can be challenged within 15 days after he learns of the constitution of the arbitral tribunal
or after becoming aware of the circumstance that he does not possess the necessary qualification.
It is not open to a party, especially in government contracts, to contend that appointment of
only one arbitrator only by one of the parties to the dispute will violate the principle that no man
can be a judge in his own cause if that party had voluntarily entered into the contract with
knowledge of this fact and had thus accepted the terms and conditions of the contract. The question

1 Arbitration and Conciliation Act, 1996, Section 11(8)(a)

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of its maintainability before the arbitral tribunal stating that the arbitration clause in the contract
between the parties is void and unenforceable law cannot be accepted.2

REQUIREMENTS FOR FILING AN APPLICATION FOR THE APPOINTMENT OF AN ARBITRATOR:-

The essential pre-conditions to be satisfied before an application for appointment of arbitrator by
Court is filed are:-
(i) There should be an arbitration clause in the contract in terms of section 7;
(ii) The party filing the application should have knowledge of the arbitration agreement;
(iii) There is a dispute between the parties in relation to the contract containing the
arbitration agreement;
(iv) A notice invoking an arbitration clause has been issued and received by the other party.

EXISTENCE OF ‘DISPUTE’ A PRECONDITION OF THE RIGHT TO SEEK APPOINTMENT:-

A dispute or difference is a pre-condition of the right to arbitrate and seek an appointment. Mere
disagreement on a central issue is sufficient to constitute a dispute, a claim need not necessarily
arise. And merely raising a claim cannot satisfy the precondition of the dispute.

APPOINTMENT OF ARBITRATOR THROUGH COURT ASSISTANCE:-

Contentious Issues under Chief Justice's Powers:-
The Parties to an arbitration are free to agree on the procedure for appointing of arbitrators.
The situations suitable for intervention of the Chief Justice or his designate naming an arbitrator
are:
(i) The procedure agreed is not followed;
(ii) There is no agreement on procedure.
In both situations, the intervention of the Chief Justice or his designate are necessary. Under the first
situation, if a party fails to act under such procedure, or the parties (or the two arbitrators, one
appointed by each party) are unable to reach an agreement expected of them under such procedure,
or a third party (including an institution) fails to perform any function entrusted to it under such
procedure, any part may request the Chief Justice or his designate to take necessary measure, unless
such other measure have been provided in the agreement for securing such appointment.

2 NandanBiomatrix Ltd. v. D1 Oils Ltd2009 4 SCC 495

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In a petition moved under Section 11 of the 1996 Act, the Supreme Court has in a catena of cases
held that the broad issues which can be decided by the Chief Justice are as follows:-
(i) Territorial Jurisdiction;
(ii) Existence of an Arbitration Agreement; 3
(iii)Appointment of an Arbitrator; 4
(iv) Subsistence of an Arbitrable Dispute; 5

APPOINTMENT OF AN ARBITRATOR: ADMINISTRATIVE OR JUDICIAL

Section 11 provides for the procedure of appointment of Arbitrator by the Chief Justice. S.
11 (7) of the 1996 Act provides that 'a decision on a matter entrusted by section 11(4) or section
11(5) or section 11(6) to the Chief Justice or the person or institution by him is final.
This led to a number of disputes regarding the nature of the order passed by the Chief Justice on
appointment of Arbitrators and whether the same was judicial or administrative in nature?
(i) Initial Interpretation: Order is Administrative
Amongst some of the earliest interpretations of the provision of S.11(7) was the case
of Sundaram Finance Ltd v. NEPC India Ltd.6 In this case it was held “Under the 1996 Act
appointment of arbitrator/s is made as per the provision of Section 11 which does not require the
Court to pass a judicial order appointing arbitrator/s.” This decision was reiterated in the case
of Ador Samia Private Ltd v. Peekav Holdings Limited, where it was held by the Hon'ble Supreme
Court that "It is now well settled that petition under Article 136 can lie for challenging a judgment,
decree, determination, sentence or order in any cause of matter passed or made by any court or
tribunal in the territory of India.
As the learned Chief Justice or his designate under Section 11(6) of the Act acts in
administrative capacity as held by this Court in the aforesaid decision it is obvious that this order is
not passed by any court exercising any judicial function nor it is a tribunal having trappings of a
judicial authority... In view of this settled legal position therefore, there is no escape from the
conclusion that orders passed by the learned Chief Justice under Section 11(6) of the Act being of

3 A.P.T.D.C v. Pampa Hotels Ltd, AIR 2010 SC 1806

4 Ador Samia Private Ltd v. Peekay Holding Ltd., AIR 1999 SC 3246
5 Sukanya Holdings v. Jayesh H. Pandya, (2003) 5 SCC 531: AIR 2003 SC 2252
6 [1999] 1 SCR 89 : MANU/SC/0012/1999
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an administrative nature cannot be subjected to any challenge directly under Article 136 of the
Constitution of India.

(ii) Doubting Thomas

This view of the Supreme Court in Ador Samia, was referred by a two judge bench of the
Supreme Court referred for re-consideration by a larger bench. The decision of the bench of three
judges in Konkan Railway Corporation Ltd & Ors v. Mehul Construction Co., affirmed the view
taken in Ador Samia, namely, that the order of the Chief Justice or his designate in exercise of the
power under S.11 of the Act was an administrative order and that such an order was not amenable to
the Jurisdiction of the Supreme Court under Article 136. The effect of this judgment was that the
decision of the Chief Justice being an administrative order was now amenable to the Writ
Jurisdiction under Article 226 of the Constitution and hence, as one may say “The High Courts were
flooded with Writ Petitions challenging the appointment of the Arbitrators.”
Thereafter, in Konkan Railway Corporation Ltd Anr v. Rani Construction Pvt. Ltd., a bench
of two learned judges of the Supreme Court referred to a larger bench the decision of the three
judge bench for re-consideration, which was taken up for hearing in the case of by a bench of five
judges in the case Konkan Railway Corporation Ltd Anr v. Rani Construction Pvt. Ltd. The issue
before the Court may be summed up in the following words of the referral order
“It appears that the Chief Justice or his nominee, acting under Section 11 of the Arbitration
and Conciliation Act, 1996, have decided contentious issues arising between the parties to an
alleged arbitration agreement and the question that we are called upon to decide is whether such an
order deciding issues is a judicial or an administrative order?”
The Hon'ble Supreme Court after examining the intricacies involved and after careful
examination of the case laws held that “In conclusion, we hold that the order of the Chief Justice or
his designate under Section 11 nominating an arbitrator us not an adjudicatory order and the Chief
Justice or his designate is not a tribunal. Such an order cannot properly be made the subject of a
petition for special leave to appeal under Article 136. The decision of the three Judge Bench in
Konkan Railway Corporation & Ors v. Mehul Construction Co. is affirmed.”

An arbitration agreement as defined under Section 7 of the Act is a condition precedent in order to
exercise the power to appoint an arbitrator or an Arbitral Tribunal, according to Section 11 of the
Act by the Chief Justice or his designate.

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 The Supreme Court has identified the duties of the chief justice or his designate.7 First they
identified and separated the preliminary issues that arise from the application under Section 11 of
the Act into three categories, that is:
(i) Issues that the Chief Justice or his designate must decide;
(ii) Issues which the Chief Justice or his designate choose to decide;
(iii)Issues that have to be left to the Arbitral Tribunal to decide.

(iii) Final Position

Section 11 of the Act provides for the procedure to appoint an arbitrator or arbitrators with
court assistance. The primary objective of seeking court interference under the Act is so that
securing the constitution of the arbitral tribunal can happen expeditiously. Parties can agree upon a
procedure for appointment of a sole arbitrator or arbitrators as under sub-section (2) of section 11
and can approach the court in the event they don’t have a procedure.
The court’s jurisdiction and the nature of its power as per section 11 has been quoted directly from
the judgment8:-
(i) The power of the Chief Justice of the High Court or the Chief Justice of India under Section
11(6) of the Act is a judicial power;
(ii) The power under Section 11(6) of the Act, in its entirety, could be delegated, by the Chief
Justice of that court to another judge of that judge;
(iii)The Chief Justice or the designated Judge will have to decide the preliminary aspects as
indicated earlier. These will be his own jurisdiction to entertain the request, the existence of
a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the
condition for the exercise of his power and on the qualifications of the arbitrator or
arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion
of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8)
of the Act if the need arises but the order appointing the arbitrator could only be that of the
Chief Justice or the designated Judge;
(iv) Designation of a District Judge as the authority under Section 11(6) of the Act by the Chief
Justice of the High Court is not warranted on the scheme of the Act;
(v) Once the matter reaches the Arbitral Tribunal or the sole arbitrator, the High Court would
not interfere with orders passed by the arbitrator or the Arbitral Tribunal during the course

7 S.B.P.& Co. v. Patel Engineering2005 8 SCC 618

8 Idib
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 of the arbitration proceedings and the parties could approach the Court only in terms of
Section 37 of the Act or in terms of Section 34 of the Act;
(vi) Since an order passed by the Chief Justice of the High Court or by the designated Judge of
that Court is a judicial order, an appeal will lie against that order only under Article 136 of
the Constitution to the Supreme Court;
(vii)There can be no appeal against an order of the Chief Justice of India or a Judge of the
Supreme Court designated by him while entertaining an application under Section 11(6) of
the Act;
(viii)In a case where the parties have constituted an Arbitral Tribunal without having recourse to
Section 11(6) of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters
as contemplated by Section 16 of the Act;
(ix) Orders under Section 11(6) of the Act have been made based on the position adopted in an
SC decision9, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made,
are to be treated as valid, all objections being left to be decided under Section 16 of the Act.
As and from this date, the position as adopted in this judgment will govern even pending
applications under Section 11(6) of the Act;
(x) Where District Judges had been designated by the Chief Justice of the High Court under
Section 11(6) of the Act, the appointment orders thus far made by them will be treated as
valid; but applications if any pending before them as on this date will stand transferred, to
be dealt with by the Chief Justice of the High Court concerned or a Judge of that Court
designated by the Chief Justice.” 10
For the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act,
1996, two things have to be taken care of:-
(i) That there is a dispute between the parties to the agreement and it is alive;
(ii) That the arbitrator has to be appointed according to the terms and conditions of the
agreement and as per the need of the dispute.

9 Konkan Railway Corporation. Ltd. v. Rani Construction (P) Ltd2000(8) SCC 159
10 S.B.P & Co. v. Patel Engineering2005 8 SCC 618
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 CHAPTER 4: 2019 AMENDMENT ACT,:-
As per the 2019 Amendment Act, the following are the considerations upon the appointment of the
arbitrators:-
(i) The Amendment Act empowers the Supreme Court (in the case of an international commercial
arbitration) and the High Court (in cases other than international commercial arbitration) to
designate arbitral institutions for the purpose of appointment of arbitrators. Such arbitral
institutions will be graded by the Arbitration Council of India.
(ii) Where a graded arbitral institution is not available, the Chief Justice of the concerned High
Court may maintain a panel of arbitrators for discharging the functions and duties of the arbitral
institution.
(iii)In the absence of a procedure to appoint an arbitrator or failure of such procedure under the
agreement, the appointment will be made by the arbitral institution designated by the Supreme
Court or the High Court, as the case may be.
(iv) The application for appointment of an arbitrator will be disposed of by the arbitral institution
within a period of thirty days from the date of service of notice on the opposite party. The
arbitral institution will determine the fees of the arbitral tribunal and the manner of its payment
to the arbitral tribunal subject to the rates specified in the Fourth Schedule to the Act.

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 CHAPTER 5: CONCLUSION
Effect of judgment in S.B.P. & Co v. Patel Engineering & Anr. (SBP)

One of the most important effects of the judgment was the prospective ruling direction,
which provided that any appointment of an arbitrator under S. 11 made prior to 26.10.2005 had to
be treated as valid and objections including the existence or validity of the arbitration agreement,
have be decided by the arbitrator under S.16 of the Act. The legal position enunciated by SBP
would govern only application to be filed under S.11 of the Act from 26.10.2005 as also
applications under S.11 (6) of the Act pending as on 26.10.2005 where arbitrator was not appointed.
The decision of the Hon'ble Supreme Court was reiterated in the case of Maharishi Dayanand
University v. Anand Coop. L/C Society Ltd & Anr., wherein it was observed by the Court that if an
appointment of an arbitrator has been made before 26.10.2005, that appointment has to be treated as
valid even if it challenged before this Court.

The next issue which has been raised in many an appeal i.e. who should decide whether
there is an arbitration agreement or not. Should it be decided by the Chief Justice or his designate
before making an appointment of arbitrator under S.11 or the arbitrator who is appointed under S.11
of the Act? This issue is no longer res-integra. Ever since the decision in SBP., it is recognised law,
that any question on whether there is an arbitration agreement or not, or whether the party who has
applied under S.11 of the Act, is a party to such an agreement, is an issue which has to be decided
by the Chief Justice or his designate under S.11 before making appointment of arbitrator.

The decision of the Supreme Court in SBP was a watershed moment in the history of the
Arbitration Act in India. The decision in SBP has gone a long way in clearing many a legal hurdle in
appointment of arbitrators under the Act. It has clearly laid down the law applicable to the exercise
of powers by the Chief Justice or his designate under S. 11 of the Act.

The aim of this Article would hence be achieved by summarizing the powers of the Chief
Justice or his designate under S.11 - his own jurisdiction, to entertain the request, the existence of a
valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition
for exercise of his power and on the qualifications of the arbitrator or arbitrators, and by believing
that it has cleared many a doubt on the subject.

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