Section 11 of the Arbitration and Conciliation Act
Section 11 of the Arbitration and Conciliation Act, 1996, is a pivotal provision that governs the appointment of arbitrators. It is designed to ensure that the arbitration process can proceed even if the parties to a dispute fail to agree on a procedure for appointment or if a party defaults on its obligation to appoint an arbitrator. The section primarily emphasizes party autonomy while also providing for judicial intervention as a last resort.
Here is a breakdown of the key provisions and principles of Section 11:
1. Party Autonomy in Appointment
Section 11(2): This is the foundational principle of the section. It states that the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. This gives them the flexibility to choose a sole arbitrator, a three-member tribunal, or any other method they deem fit.
Section 11(1): A person of any nationality can be an arbitrator, unless the parties have agreed otherwise. This provision promotes a broad pool of potential arbitrators, especially in international commercial arbitrations.
2. Default Procedure for Appointment
Section 11 provides a clear default mechanism if the parties fail to agree on a procedure.
For a three-arbitrator tribunal (Section 11(3)): Each party appoints one arbitrator. The two appointed arbitrators then jointly appoint a third arbitrator, who serves as the presiding arbitrator.
For a sole arbitrator (Section 11(5)): If the parties fail to agree on a sole arbitrator within 30 days of one party requesting the other to do so, the appointment will be made by the Supreme Court or the High Court.
3. Judicial Intervention as a Last Resort
Section 11 is most significant for outlining the procedure for judicial intervention when the agreed-upon appointment process fails.
Section 11(6): This is a crucial subsection. It comes into play in three specific scenarios where a party or institution fails to perform its function under the agreed-upon procedure:
A party fails to act as required by the procedure.
The parties, or the two appointed arbitrators, fail to reach an agreement expected of them under the procedure.
A person or institution entrusted with a function fails to perform it.
In any of these situations, a party can request the Supreme Court (for international commercial arbitration) or the High Court (for other arbitrations) to make the necessary appointment.
4. Role of the Supreme Court and High Courts
The role of the courts under Section 11 has been a subject of significant judicial interpretation. The courts' function is not to act as a full-fledged judicial body but to make the appointment efficiently and with minimal intervention. The Supreme Court and High Courts may:
Designate arbitral institutions: The courts can designate arbitral institutions to perform the functions of appointing arbitrators.
Make the appointment themselves: If there is no designated institution or the situation requires it, the courts can directly appoint an arbitrator.
Limited Scope of Inquiry: The court's role is generally restricted to a prima facie determination of whether a valid arbitration agreement exists. Issues related to the merits of the dispute, or whether the claim is barred by limitation, are typically left for the arbitral tribunal to decide under the principle of kompetenz-kompetenz.
Key Amendments and Case Law
2015 Amendment: The Arbitration and Conciliation (Amendment) Act, 2015, aimed to minimize judicial intervention at the pre-referral stage. It introduced provisions to expedite the process and clarify the limited scope of a court's inquiry under Section 11.
Landmark Judgments: The Supreme Court has repeatedly clarified the scope of Section 11. In a series of judgments, including TRF Ltd. v. Energo Engineering Projects Ltd. and Perkins Eastman Architects DPC v. HSCC (India) Ltd., the court has invalidated arbitration clauses that allow one party to unilaterally appoint a sole arbitrator, citing concerns over impartiality and independence. The principle established is that a person who is ineligible to be an arbitrator cannot, in turn, nominate another arbitrator.
In conclusion, Section 11 is a cornerstone of the Indian arbitration framework. It balances the principle of party autonomy with the need for an effective and fair dispute resolution mechanism, ensuring that the arbitral process does not stall due to procedural deadlocks and that the appointments are made with due regard to the independence and impartiality of the arbitrators.
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