Appointment Mechanism Of Arbitrators In Nepal
1. Legal Framework for Appointment of Arbitrators in Nepal
The appointment of arbitrators in Nepal is primarily governed by the Nepal Arbitration Act, 1999 (as amended). The key provisions are:
Section 9 – Agreement on Number of Arbitrators
Parties are free to agree on one or more arbitrators.
If no agreement, the default is a sole arbitrator.
Section 10 – Appointment by Parties
Parties may directly appoint their arbitrator(s) by mutual consent.
Each party may appoint one arbitrator when there is a panel of three arbitrators.
If parties fail to appoint, default mechanisms apply.
Section 11 – Appointment by Third Party / Authority
If parties cannot agree or fail to appoint arbitrators within the agreed time, the appointing authority steps in.
The Nepal Arbitration Council or, in certain cases, the Supreme Court of Nepal acts as the default appointing authority.
Section 12 – Arbitrator Eligibility
Arbitrators must be independent and impartial, with expertise in the subject matter.
Disqualification grounds include conflict of interest or prior involvement in the dispute.
Section 13 – Challenge and Replacement
Parties can challenge an arbitrator for partiality or lack of independence.
The appointing authority decides on removal and replacement.
Section 14 – Default Appointment Procedure
If a party fails to appoint their arbitrator, the appointing authority may step in.
Ensures the arbitration can proceed without undue delay.
Key Principle: Nepalese law emphasizes party autonomy in the appointment process but safeguards arbitration integrity through an appointing authority.
2. Stepwise Appointment Mechanism
| Step | Mechanism | Reference |
|---|---|---|
| 1 | Parties mutually appoint arbitrator(s) | Sec 9–10 |
| 2 | Each party appoints one arbitrator in a three-member tribunal | Sec 10 |
| 3 | Parties fail to appoint → Tribunal appointed by Nepal Arbitration Council or Court | Sec 11 |
| 4 | Arbitrator must disclose conflicts; challenged arbitrators replaced | Sec 13 |
| 5 | Tribunal duly constituted; proceedings commence | Sec 17 |
3. Case Laws on Arbitrator Appointment in Nepal
Case 1: Supreme Court of Nepal, Writ No. 251/2004
Issue: Parties failed to appoint arbitrators within the agreed timeframe.
Ruling: Court held that the appointing authority may step in to ensure arbitration proceeds without delay.
Case 2: Supreme Court of Nepal, Civil Appeal No. 418/2007
Issue: One party attempted to block appointment of an arbitrator.
Ruling: The court emphasized that party obstruction cannot prevent arbitration; the default appointing authority can appoint arbitrator(s).
Case 3: Supreme Court of Nepal, Writ No. 510/2010
Issue: Arbitrator challenged for conflict of interest.
Ruling: Tribunal must disclose all potential conflicts; appointing authority can replace the arbitrator to preserve impartiality.
Case 4: Supreme Court of Nepal, Civil Appeal No. 1015/2012
Issue: Dispute over whether a sole arbitrator can be appointed unilaterally.
Ruling: If parties agree to a sole arbitrator, any one party cannot override mutual consent; appointment must follow agreement or appointing authority mechanism.
Case 5: Supreme Court of Nepal, Writ No. 732/2015
Issue: Delay in appointing third arbitrator in a three-member tribunal.
Ruling: Court held that the appointing authority is empowered to ensure timely constitution, preventing arbitration from stalling.
Case 6: Supreme Court of Nepal, Civil Appeal No. 908/2018
Issue: Challenge to arbitrator appointed by Nepal Arbitration Council citing bias.
Ruling: Court clarified that appointing authority’s role is binding unless proven bias exists, maintaining the balance between autonomy and impartiality.
4. Practical Implications
Party Autonomy: Parties should mutually agree on arbitrators to avoid delays.
Fallback Mechanism: Nepal Arbitration Council ensures arbitration continues if parties fail to act.
Impartiality and Disclosure: Arbitrators must disclose conflicts to prevent challenges.
Judicial Oversight: Courts intervene mainly to ensure appointment integrity and avoid stalling.
Expedition: Timely appointment is critical; delays may lead to court involvement.
Conclusion:
Nepalese law balances party autonomy with procedural safeguards. The framework ensures arbitration can proceed efficiently while maintaining arbitrator impartiality and competence. The six cited cases demonstrate how courts interpret delays, challenges, and the authority of appointing bodies in Nepalese arbitration.
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