MAHARASHTRA NATIONAL LAW UNIVERSITY MUMBAI
Alternative Dispute Resolution
Final Submission
Appointment of arbitrator: a critical analysis
Submitted to: Prof. Chirag Balyan Submitted by: Vijay (2016054)
SEMESTER VI (Jan- May 2019)
1
Abstract- In this article, the author critically analyse the law and practice of the
appointment of arbitrators in India by examining the relevant section of Arbitration Act,
the high level committee report by Justice B.N. Shrikrishna, 246th Law Commission
Report, the 2018 amendment bill and cases of the Supreme Court of India.
1. Introduction
Section 11 of the Arbitration Act 1996, talks about detailed procedure about the
appointment of the arbitrators.1 India is consistently working on its governing law
arbitration as the 2015 amendment Act came and recently the 2018 amendment bill is
proposed to deal with the arbitration practice in India and make it efficacious and good
alternative to general litigation practice. Our country is ranked 163th out of 190
countries at the parameter of contract enforcement in ease of doing report released by
World Bank.2 Therefore, there is substantial requirement to make arbitration practice
more efficient and competent. The high level committee by Justice B.N. Shrikrishna has
made recommendation to revamp the practice of arbitration and these proposed
recommendation included in the 2018 amendment bill.
In arbitration, the parties have right to choose their arbitrator and rationally they must be
given maximum freedom in the appointment of arbitrators. The Law commission in its
246th report recommended that the power of appointment is delegable to the arbitral
institution and which led to inclusion of section 11 (6A) by the 2015 Amendment in the
Act which paves way for minimum court intervention.3
But there has been a lot of delay in the appointment of arbitrator due to the extensive
involvement of courts and not designating any arbitral institution for the appointment
despite the provision has been included for the same in the Act by the 2015 amendment.
The Supreme Court first time directed the Mumbai Centre for International Arbitration
(MCIA) for the appointment of arbitrator, in the dispute between Sun Pharmaceutical
Industries Ltd., Mumbai and M/s Falma Organics Limited Nigeria. This is the first time
where the Supreme Court has designated the arbitral institution under Section 11 of the
1
Malhotra O.P. The Law and Practice of Arbitration and Conciliation (6th ed., Nagpur:
LexisNexis Butterworths, 2013).
2
https://www.livemint.com/Opinion/j9Uew2P8hAynnV9dt42cxJ/Opinion--Contract-enforcement-needs-to-be-
improved-on-war-f.html
3
L aw Commission of India, Report No. 246 – Amendments to the Arbitration and Conciliation Act, 1996
(2014), at 37 (Mar. 10, 2017), available at http://lawcommissionofindia.nic.in/reports/Report246.pdf.
2
Act. The arbitration may become more effective if the courts designate the institution in
the appointing the arbitrator as there has been court delay in the appointment.4
2. Supreme Court on appointment of arbitrators
a) Pre-2015 amendment
Prior to the 2015 amendment, the Supreme Court had adjudicated on the contention of
whether the power of courts for appointing the arbitrator is judicial or administrative in
nature. The Court in Konkan Railway Corporation Limited v Mehul5 Construction
Company held that the power of the court under section 11(6) is administrative in nature
while appointing the arbitrators. The similar stance is reinforced by the apex court in the
case of Arasmeta Captive Power Co Private Limited v Lafarge India Private Limited.6
By taking opposite stance in the case of SBP and Co v Patel Engineering Limited7 the
court held that the power for appointing an arbitrator under section 11 is judicial in
nature and the same stance further clarified by the court in the National Insurance Co
Ltd v Boghara Polyfab Pvt Ltd8 case. Therefore, the court power vested under the
section 11(6) of the act was given a wide interpretation. This stance was maintained till
the 2015 amendment was effected.
b) Post 2015 amendment
The 2015 amendment introduce section 11(6A) into the Act and the court in the case of
Duro Felguera SA v Gangavaram Port Limited9 held that the legislative intention
behind the introduction of section 11(6A) is to minimise the court discretion in the
appointing of the arbitrator and it should be intact. The court also opined that the court
role is restricted to examine the validity of arbitration agreement. If the valid arbitration
agreement is observed by the court then the dispute is referred to the tribunal for
deciding the question of enforceability of the agreement. The Supreme Court in United
India Insurance Co Ltd v Hyundai Engineering and Construction Co Ltd10 decided on
the issue of whether the claims seek by the parties within the ambit of the arbitration
agreement. The court held that the arbitration clause has to be interrupted by taking the
4
http://arbitrationblog.kluwerarbitration.com/2017/09/05/appointment-arbitrators-india-finally-courts-divest-power/
5
(2000) 7 SCC 201
6
(2013) 15 SCC 414
7
(2005) 8 SCC 618
8
(2009) 1 SCC 267
9
(2017) 9 SCC 729
10
2018 (10) SCALE 72
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note of conditionality clause. It was further opined that a clause should be invigorate.
The court therefore did not confine its power for examination of the validity of the
agreement but go beyond the power under section 11(6A).
3. Justice B.N. Shrikrishna Committee
The Justice Shrikrishna Committee (2017)11 has also recommended minimising the
discretion of Indian courts in the appointment of arbitrators. By taking the reference of
arbitrator appointment mechanism in Singapore and UK, the committee proposed that
appointment shall be done by the arbitral institution designated by the Courts as
contrary to the arbitrators being appointed by the courts directly and also proposed that
it should be done without the determining the validity of arbitration agreement by the
court first. If it happens so, it will cut down the court delay and will bring more
effectiveness in the arbitration practice in India.12
4. Appointment provisions under the 2018 amendment
The amendment bill lays foundation for arbitration council of India which will look
after arbitration practice and also grade and accredit the arbitral institution. The
amendment bill includes the proposed section 11(3A) which talks that the Supreme
Court & High Court will be designate the arbitral institution and these institutions will
be as appointing authorities for the arbitrators under the supervision of the arbitration
council of India. By the proposed Section 11(3A), the role of courts is restricted to
designate the arbitral institution only so the power of the courts in the appointment of
arbitrators is become very limited.13 The amendment Act also talks about the omitting
the section 11 (6A) which will be taken away even the power of the court to decide on
the existence of the valid arbitration agreement.14
11
http://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf
12
The Arbitration And Conciliation (Amendment) Bill, 2018 Available at https://www.prsindia.org/billtrack/arbitration-
and-conciliation-amendment-bill-2018
13
The Arbitration And Conciliation (Amendment) Bill, 2018 Available at
http://164.100.47.4/BillsTexts/LSBillTexts/PassedLoksabha/100-C_2018_Eng.pdf
14
http://arbitrationblog.kluwerarbitration.com/2018/12/27/proposed-repeal-of-section-11-6a-of-the-arbitration-and-
conciliation-act-1996-who-decides-the-question-of-existence-of-an-arbitration-agreement/
4
5. Conclusion
The 2018 amendment bill proposed the inclusion of section 11(3A) which make the
procedure of appointment more expeditious by minimising the power of courts in the
appointment of arbitrators. This will make arbitration dispute resolution quicker &
effective as there would be minimal court delay as the appointment will be done
through designated arbitral institutions only. The amendment bill omitted the section 11
(6A) which brings uncertainty as the power of courts to adjudicate on the contention of
valid arbitration agreement is taken away. It is important to expedite the process of
arbitration but still some amount of judicial interference is vital for the certainty in the
arbitration process.
6. Bibliography
a) Books
Malhotra O.P. The Law and Practice of Arbitration and Conciliation (6th ed.,
Nagpur:LexisNexis Butterworths, 2013).
b) Case Laws
Arasmeta Captive Power Co Private Limited v Lafarge India Private Limited,
(2013) 15 SCC 414
Duro Felguera SA v Gangavaram Port Limited, (2017) 9 SCC 729
Konkan Railway Corporation Limited v Mehul, (2000) 7 SCC 201
National Insurance Co Ltd v Boghara Polyfab Pvt Ltd, (2009) 1 SCC 267
SBP and Co v Patel Engineering Limited, (2005) 8 SCC 618
United India Insurance Co Ltd v Hyundai Engineering and Construction Co Ltd,
2018 (10) SCALE 72
c) Report
Law Commission of India, Report No. 246 – Amendments to the Arbitration and
Conciliation Act, 1996(2014), at 37 (Mar. 10, 2017), available at
http://lawcommissionofindia.nic.in/reports/Report246.pdf
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d) Web Sources
http://arbitrationblog.kluwerarbitration.com/2017/09/05/appointment-arbitrators-india-
finally-courts-divest-power/
http://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf
The Arbitration And Conciliation (Amendment) Bill, 2018 Available at
http://164.100.47.4/BillsTexts/LSBillTexts/PassedLoksabha/100-C_2018_Eng.pdf
http://arbitrationblog.kluwerarbitration.com/2018/12/27/proposed-repeal-of-section-11-6a-
of-the-arbitration-and-conciliation-act-1996-who-decides-the-question-of-existence-of-an-
arbitration-agreement/
https://www.livemint.com/Opinion/j9Uew2P8hAynnV9dt42cxJ/Opinion--Contract-
enforcement-needs-to-be-improved-on-war-f.html
