Arbitrator
An arbitrator is an impartial individual appointed by the parties, by an institution, or by a court to adjudicate disputes submitted to arbitration. He/she performs a judicial function outside the formal court system—he or she hears both sides, evaluates evidence, and delivers a binding decision called an arbitral award. The arbitrator’s role is rooted in neutrality, procedural fairness, and adherence to the terms of the arbitration agreement, making them central to the system of alternative dispute resolution in India.
Composition of Arbitral Tribunal
Under Chapter III (Sections 10–15) of the Arbitration and Conciliation Act, 1996, the composition of an arbitral tribunal lies largely within the parties’ autonomy. Section 10 allows parties to decide the number of arbitrators, provided it is not an even number, preventing decision-making deadlocks. However, if the parties fail to specify, a sole arbitrator is presumed. This marks a departure from Article 10 of the UNCITRAL Model Law, which defaults to three arbitrators.
Number of Arbitrators
The constitution of an arbitral tribunal is governed by Section 2(1)(d) of the Arbitration and Conciliation Act, 1996, which defines it as either a sole arbitrator or a panel of arbitrators. However, an issue arises on the permissible number of arbitrators. Section 10 of the Act confers party autonomy to determine this number but expressly prohibits an even number of arbitrators to prevent a deadlock in decision-making. Where the parties fail to stipulate the number, Section 10(2) mandates a sole arbitrator.
In practice, both domestic and international arbitration commonly adopt either a sole arbitrator for simpler disputes or a three-member tribunal for complex matters. In the latter, each party nominates one arbitrator, and the two nominees appoint a third, known as the presiding arbitrator. This model, reflected in Section 11(3) of the Act, aligns with global arbitral norms and institutional rules that generally favour an odd-number composition.
The prevailing legal position is that Section 10(1) ordinarily bars the appointment of an even-numbered tribunal. However, if parties knowingly proceed with such an arrangement and raise no objection until after the award, they are deemed to have waived the defect. Thus, while the statutory framework promotes an odd-number composition to ensure decisional certainty, Indian jurisprudence recognises party autonomy and the principle of waiver as sufficient to validate even-numbered tribunals in exceptional circumstances.
Appointment of arbitrators
The Arbitration and Conciliation Act, 1996, gives utmost importance to party autonomy in determining both the number and the procedure for the appointment of arbitrators. Section 11(1) expressly empowers the parties to agree upon their preferred appointment mechanism. However, where no such agreement exists, or where the agreed procedure fails, the Act prescribes default mechanisms and enables judicial or institutional intervention to ensure the constitution of the arbitral tribunal.
Under Section 11(3), in a three-member tribunal, each party appoints one arbitrator, and the two appointed arbitrators jointly select a third, who acts as the presiding arbitrator. In the case of a sole arbitrator, Section 11(5) requires the parties to reach an agreement on the appointment. Where the parties have not agreed on the number of arbitrators, Section 10(2) stipulates that the tribunal shall consist of a sole arbitrator, to be appointed under the same procedure.
If the appointment procedure fails, the Act provides specific instances where a party may approach the court, or, following the 2019 amendments, an arbitral institution, for assistance. These include:
- Failure of a party to appoint its arbitrator within thirty days of the other party’s appointment (Section 11(4));
- Failure of the two appointed arbitrators to agree on the presiding arbitrator within thirty days (Section 11(4));
- Failure of the parties to agree on a sole arbitrator within thirty days of a request (Section 11(5)); or
- Failure of the agreed procedure due to inaction or noncompliance by a party or an institution (Section 11(6)).
The law today represents a balance between party freedom and institutional oversight. Parties can still create their own appointment processes, but legal protections make sure arbitration doesn’t fail due to lack of agreement or procedural mishaps. The 2019 reforms shift responsibility for appointments to specialized arbitration institutions and set clear qualification standards. This change aims to improve India’s arbitration framework and bring it in line with international standards.
Grounds for challenge of arbitrators
The Arbitration and Conciliation Act, 1996, includes procedural safeguards to maintain fairness. These safeguards are (i) allowing parties to choose their own arbitrator, (ii) requiring the arbitrator to disclose any possible conflicts, and (iii) giving parties the right to challenge an arbitrator’s appointment if there are reasonable concerns about their independence or fairness.
Independence and Impartiality
Independence and impartiality are the twin principles that are at the heart of fair arbitration. In the case of independence, arbitrator parties must not share any relationships at all, financially, professionally, or personally, that are external or objective. Bias and favoritism are ruled out by the arbitrator's impartiality which pertains to the arbitrator's mental state.
The arbitrator, when accepting an appointment, has to disclose in writing any relationship, interest, or condition that is past, present, or could create reasonable doubts about the independence or impartiality of the arbitrator.
Explanation 1 to Section 12(1) refers to the Fifth Schedule that contains 34 instances of potential doubts. These include from professional or financial ties to family connections with the parties or their lawyers.
Section 12(5) elaborates on the issue of ineligibility of arbitrators. The Seventh Schedule sets forth the conditions which disqualify an arbitrator from appointment automatically. This includes a professional or financial relationship with each party that is still ongoing, prior participation in the dispute, or having a vested interest in the result. While the Fifth Schedule is concerned with identifying bias that may arise, the Seventh Schedule outlines disqualifications very clearly.
Continuing Obligation of Disclosure
Section 12(2) imposes a continuing obligation on the arbitrator to promptly disclose any circumstance arising during the arbitral proceedings that could raise doubts about independence or impartiality. The arbitrator must also disclose if they lack adequate availability to devote time to the arbitration or to ensure its completion within the twelve-month statutory timeline.
Challenge to Appointment
According to Section 12(3), the appointment of an arbitrator can be disputed on two main grounds: There are doubts about the existence of independence or impartiality that can be considered justifiable, or the arbitrator did not have the qualifications that the parties had agreed upon. The Act establishes in this manner a framework that is both balanced and respectful of the integrity of arbitration as well as of the party's autonomy. The reliance on disclosure, objective standards of bias, and procedural transparency accentuates the very fact that an arbitrator has to be impartial, both in appearance and in fact, which is the fourth pillar of the arbitral process.
Procedure for Challenging appointment of arbitrator and Termination of the mandate of arbitrator
The Arbitration and Conciliation Act, 1996, in its Section 13 has provided rules regarding the use of testimony in court to the extent they aim at the annulment of the arbitrator's appointment. Though still giving parties the opportunity to speak about their own opinion, the Act provides the way out by which parties can get the arbitrator removed when no agreement exists.
Where there is no procedure prescribed in the contract, Section 13(2) to (6) gives the following steps:
Written Challenge (Section 13(2)): A party that wants to challenge the arbitrator should, within 15 days of (i) being aware of the arbitration panel or (ii) knowing of any fact that raises questions of impartiality under Section 12(3), submit a written document stating the reasons for the challenge to the tribunal.
Decision by the Tribunal (Section 13(3)): The tribunal itself hears the challenge unless the arbitrator who is the subject of the challenge resigns or the other party accepts the challenge.
Continuation of Proceedings (Section 13(4)): If the challenge is unsuccessful, the tribunal goes on with the proceedings and issues the award.
Subsequent Recourse (Section 13(5)): The party that opposed the arbitrator may then apply to the court to set aside the final award under Section 34 on the grounds that the tribunal was improperly constituted.
Fees and Costs (Section 13(6)): If the award is finally set aside, the court will decide whether the arbitrator whose ruling was contested will get any payment for the hearings that took place or not.
Termination of Mandate
The mandate of an arbitrator automatically terminates in the following situations under Sections 14 and 15 of the Act:
- Incapacity or Inability to Perform – where the arbitrator is unable to perform their functions de jure or de facto (Section 14(1)(a));
- Withdrawal or Resignation – where the arbitrator voluntarily withdraws (Section 14(1)(b));
- Failure to Act Without Undue Delay – where the arbitrator fails to proceed efficiently (Section 14(1)(a));
- Expiry of Term – where the parties agree that the arbitrator’s term has ended (Section 15(1)(b));
- Judicial Termination – where the court terminates the mandate due to a valid challenge concerning impartiality or independence (Section 14(3)).
Appointment of a Substitute Arbitrator
Under Section 15(2), when an arbitrator’s mandate is terminated, a substitute must be appointed in accordance with the same rules or procedure that governed the initial appointment. Unless otherwise agreed, earlier hearings may be repeated at the tribunal’s discretion, but prior orders or rulings remain valid.
Arbitrator as defined in case laws
Number of Arbitrators
Section 10 of the Act gives parties the freedom to choose how many arbitrators they want, as long as that number isn’t even. In the case of Narayan Prasad Lohia v. Nikunj Kumar Lohia, the Supreme Court ruled that an award from a tribunal with an even number of members isn’t automatically invalid if neither party raised an objection at the outset, highlighting the idea of waiver under Section 4. Likewise, in MMTC Ltd. v. Sterlite Industries (India) Ltd., the Court reaffirmed that the parties have the autonomy to shape the tribunal's makeup, as long as they stay within the legal boundaries.
Appointment of Arbitrators
In the case of TRF Ltd. v. Energo Engineering Projects Ltd., the Supreme Court made it clear that if someone is not eligible to serve as an arbitrator, they can't nominate someone else for that role. This decision emphasised the importance of independence as outlined in Section 12(5) and the Seventh Schedule. The principle was further developed in Perkins Eastman Architects DPC v. HSCC (India) Ltd., where the Court prohibited one-sided appointments by parties with a vested interest, acknowledging that such actions compromise impartiality.
Grounds for Challenge and Challenge Procedure
The landmark case of International Airport Authority of India v. K.D. Bali set a crucial precedent, emphasizing that arbitrators need to uphold both actual and perceived impartiality. It’s not just about whether bias influenced the decision; it’s about whether it could reasonably seem that way. Fast forward to Indian Oil Corporation Ltd. v. Raja Transport (P) Ltd., where the Court made it clear that government employees can act as arbitrators, provided they weren’t directly involved in the contract at hand. This ruling strikes a practical balance between having the right expertise and maintaining neutrality.
Termination of the Mandate of the Arbitrator
In the case of Union of India v. Singh Builders Syndicate, the Supreme Court pointed out that if arbitrators cause significant delays and keep pushing back hearings, it could be a valid reason to terminate their mandate under Section 14. Likewise, in Srei Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd., it was established that an arbitrator's mandate is considered terminated if they are either legally or practically unable to carry out their duties, ensuring that the process remains fair and orderly.
Substitute Arbitrator
The Supreme Court in Yashwith Constructions (P) Ltd. v. Simplex Concrete Piles India Ltd. clarified that substitute arbitrators must be appointed under the same procedure as the original arbitrator, whether that procedure arises from party agreement or court appointment. This view was reaffirmed in ACC Ltd. v. Global Cements Ltd., where the Court held that if the initial appointment was court-made under Section 11(6), the replacement must also be so made.
Doctrine of Separability and Competence–Competence
The doctrine was recognised in SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd., where the Court held that an arbitration clause in an unregistered lease deed survives independently by virtue of separability. The principle of Kompetenz-Kompetenz was reinforced in Kvaerner Cementation India Ltd. v. Bajranglal Agarwal, where the Supreme Court ruled that arbitral tribunals have the authority to rule on their own jurisdiction under Section 16.
Conclusion
An arbitrator occupies a central role in India’s system of alternative dispute resolution, balancing party autonomy with the principles of fairness and neutrality. The Arbitration and Conciliation Act, 1996, sets out a comprehensive legal framework that governs every stage of an arbitrator’s function, from appointment and composition of the tribunal to challenges, termination, and substitution. Judicial interpretation has further strengthened these principles by ensuring that independence and impartiality remain the cornerstone of the arbitral process. Ultimately, the role of the arbitrator is to deliver efficient, unbiased, and enforceable justice outside the formal court structure, reflecting the law’s intent to make arbitration a credible and self-contained mechanism for dispute resolution.
