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This article is written by Shalu Gothi, B.A.LLB (Hons.) from FIMT, School of Law, New Delhi. This article talks about the powers and functions of an arbitrator given under The Arbitration and Conciliation Act, 1996. 

Introduction

The UNCITRAL Model Law which was passed in the year of 1985, by the United Nations Commission on International Trade Law (UNCITRAL), made a significant contribution in passing The Arbitration and Conciliation Act, 1996 in India. While adopting the Model Law, United Nations General Assembly had recommended that all countries had to give due consideration to the said Model Law for the purpose of uniformity of the law related to international commercial arbitration and conciliation. In this regard, India has passed The Arbitration and Conciliation Act, 1996.

The Arbitration and Conciliation Act, 1996

This Act consolidates all the laws relating to domestic arbitration, international arbitration, enforcement of foreign awards in India. The Act also defines the law related to conciliation and other matters related therewith. This Act has become very beneficial for both consumers and businesses to ensure cost-effective solutions to their dispute without any undue delay and unreasonable harassment. The main reason for the passing of this Act is so that the parties become capable to solve their dispute outside the court in the presence of an arbitrator appointed by themself.

Matters coming under the purview of the Arbitration and Conciliation Act, 1996

Generally, it is considered that the matters which can be decided by the civil court all come under the purview of this Act, but this is not true. The matters which are related to morality, status, and public policies are not generally referred to as arbitration. However, the following matters can be referred to arbitration:

  • Cases related to the specific question of law,
  • Cases related to actual possession of the land,
  • Cases related to damages under any contract,
  • Cases related to disputes arising in any contract,
  • Cases under which pure question of law is arising out of contract,
  • Disputes of law and facts, 
  • Cases related to winding up of a company.

Who is an arbitrator?

The arbitrator is a professional who helps the parties in the dispute to arrive at the final harmonious agreement or settlement. The arbitrator is also referred to as an ‘Umpire’ or ‘referee’.

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Appointment of the arbitrator (Section 10 and Section 11)

Section 10 of this Act provides that parties have the power to decide the number of arbitrators but such numbers shall not be an even number. However according to Section 11, the parties are free to decide the procedure of appointment of arbitrator or arbitrators in the arbitration agreement but when no such procedure is determined, then each party is required to appoint one arbitrator and the two arbitrators so appointed must have to appoint the third one. If the parties fail to appoint the arbitrator according to the above procedure within 30 days from the date of request made or the arbitrators appointed fail to agree on one person, any party may request the Chief Justice to nominate an arbitrator to them. However, if the parties have not agreed on the procedure of appointing one arbitrator or fails to agree on one person within 30 days from the receipt of a request made by another party, the nomination shall be made by the Chief Justice on the request of one of the parties. However, where an appointment procedure has been agreed upon by the parties, but the parties fail to act as required, a party may request the Chief Justice to nominate an arbitrator and then the decision of Chief Justice is final.

Powers of the arbitrator in an arbitration proceeding

The arbitrator is the one who will give the arbitral award, therefore, The Arbitration and Conciliation Act, 1996 provides several powers to him in order to decide the award.

Power to administer an oath to the parties and witnesses

The arbitrator has the power to administer the oath to the parties and witnesses. He also could issue interrogatories to the parties if he thought it necessary to do so. There is no express provision relating to that power being given under The Arbitration and Conciliation Act, 1966. However, it is implicitly applied to the fact that he acts like a quasi-judicial authority in arbitration.

Power to take interim measures 

According to Section 17 of this Act, when any party during the arbitration proceeding or at any time after making of the arbitral award, may seek the interim measure before the arbitration tribunal. The arbitration tribunal has the power to take an interim measure relating to:

  • Appointment of guardian for minor or person of unsound mind;
  • For the protection of:-
  1. Interim custody and sale of goods which are subjected to the arbitration agreement;
  2. Securing amount which is disputed in the arbitration;
  3. Detention, prevention or inspection of any property or thing which is subjected to arbitration;
  4. Appointment of receiver;
  5. Such other interim measure is necessary for the eyes of the Court. 

Power to proceed to ex-parte

In any arbitration proceeding, the arbitrator has the power to proceed to ex-parte i.e in the favor of one party if another party contravenes any provision of this Act. According to Section 25, there are three conditions under which the court may pass an ex- parte award:

  1. When the claimant fails to communicate his statement of claim in accordance with Section 23(1) of the Act.
  2. When the respondent fails to communicate his statement of claim in accordance with Section 23(1) of the Act.
  3. When any party fails to appear at an oral hearing or to produce the document or to produce documentary evidence.

The court, however, doesn’t proceed ex-parte against any party without giving him the notice regarding the court’s intention to proceed ex parte on a specific date, time and place.

Power to appoint an expert 

According to Section 26 of the Act, the arbitrator has the power to appoint one or more experts to report to him on a specific issue, if he finds it necessary in any case. The arbitrator also has the power to give the expert any relevant information or documents or property for the purpose of his inspection. If necessary the arbitrator also has the power to appoint the expert as a participant in a hearing but in order to appoint an expert, the expert must have to show the parties that he has expertise in matters related to this case.

Power to make awards 

Power to make awards is the most important power as well as the duty of arbitrators which is given under The Arbitration and Conciliation Act, 1996. However, the rules applicable in an arbitration proceeding is:

  • In matters related to international commercial arbitration, the arbitral dispute shall be decided according to the rules of proceeding which is decided by the parties but if they fail to decide it, then the arbitrator himself decides the rules which are applicable.
  • In other matters, the arbitral tribunal shall have to decide the rule which is in accordance with the substantive law. 

However, with such aforesaid power, at the time of making such an award, the arbitrator also has the duty  to consider the following necessary aspects:

  • The party who is entitled to costs;
  • The party who pays the cost;
  • The amount and method of determining those costs;
  • The manner in which the costs shall be payable;
  • The cost of the arbitration proceeding or any other expenses fixed by the arbitration tribunal

If the number of arbitrators is more than one, then the decision must be signed either by all the arbitrators or by the majority of them. 

Duties of an arbitrator in an arbitration

In arbitration, the parties may impose specific duties on the arbitrator at the time of appointment. The general duties which the arbitrator has to fulfill in all kinds of arbitration are-

Duties to be independent and  impartial

Section 12 and Section 18 of The Arbitration and Conciliation Act, 1996 imposed an important duty on the arbitrator that in any arbitration proceeding that he must have to be independent and impartial. By being independent it means that there is no such personal or professional relationship between the arbitrator or parties which may affect the final judgment, however, by impartial, it means that the arbitrator should neither favor nor oppose any party and should give equal treatment to both parties.

Duty to determine time and place of arbitration 

According to Section 20 of this Act, it is the duty of the arbitrator to appoint the time and place of arbitration if the parties have failed to decide it amongst themselves. But at the time of determination, the arbitrator must keep in mind the circumstances including the convenience of the parties. The arbitrator unless otherwise agreed by the parties, also has the power to decide other places to hear the witness or expert or to an inspection of documents, goods, and other property.

Duty to disclosure

According to Section 12 of this Act, there is an obligation on an arbitrator to disclose all the relevant facts which are required to be known by both parties at the time of his first encounter with them.

In the case of Steel Authority of India v. British Marine 2016, the Court said that the arbitrator must have to disclose all such facts which are likely to affect impartiality or which might create an appearance of partiality or bias. 

Duty to effectively resolve the dispute

The arbitrator should have to make effective decisions without doing any misconduct. However, there is no guideline of misconduct that is given under the Act, its scope is to develop by case to case. The acts which are generally considered as misconduct on the parts of the arbitrator are: 

  • Fails to comply with terms, that is expressly or impliedly given;
  • Making awards that oppose public policy;
  • To be bribed or corrupted; 
  • Breach the rule of natural justice.

Duty to determine the rule of procedure

According to Section 19, the arbitration procedure is not bound by any code of procedure. Earlier parties are free to agree on the procedure that may be followed by the arbitration tribunal, It always depends upon the will of the parties but if they do not have any prior agreement on this, then the arbitrator has all the power to decide the procedure for such a case. this power includes the power to determine the admissibility, relevance, materiality or weight of any evidence.

Duty to interpret or correct the award

According to Section 33 of this Act, it is a duty of the arbitrator to correct or interpret the award passed by himself within 30 days from the date of receipt:

  • A party with notice to another party may request arbitration tribunal to correct any error like any typographical, computation, clerical, or any other error of similar nature;
  • A party with a notice to another party may request to interpret any specific part or parts of the award.

In this section, the court also may correct any error of the award on its own initiative within thirty days from the date of the arbitration award.

Conclusion 

These general powers and duties are important for an arbitrator to conduct fair arbitration proceedings, the arbitrator must also have to draw the checklist upon his specific duties given under the agreement. These duties differ from case to case so for every particular case so it is very impactful in every case. 

References 


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