Arbitration Tribunal

 Introduction

According to section 2(1) (d), an ‘Arbitral Tribunal’ means a sole arbitrator or a panel of arbitrators.The Amendment Act enables the Supreme Court (on account of international commercial arbitration) and the High Court (in cases other than international commercial arbitration) to assign arbitral establishments with the end goal of arrangement of arbitrators. Such arbitral establishments will be evaluated by the Arbitration Council of India. Where a reviewed arbitral establishment isn’t accessible, the Chief Justice of the concerned High Court may keep up a board of arbitrators for releasing the capacities and obligations of the arbitral organization.

The arbitrator may be of any nationality and parties are at liberty to agree on the procedure for appointing the arbitrator or arbitrators for their cause. But Section 11(9) of the Arbitration Act, 1996 provides that in case of arbitrator which involves international commercial transaction, an arbitrator or arbitrators shall be appointed of different nationality, other than the nationality of parties. Thus in case of an international commercial dispute between India or Bangladesh, an Indian or Bangladesh must not be appointed as an arbitrator.

Where the number of arbitrators agreed upon is three and no procedure has been is laid down, each party shall appoint one arbitrator and the two arbitrator shall appoint a ‘third arbitrator’ as Presiding Arbitrator. ^[1]

Under the 1996 Act parties are free to appoint the arbitrators on its own. But according to The Arbitration And Conciliation (Amendment) Act, 2019 the parties are allowed to appoint the arbitrator from the receipt date within 30 days, so on the arbitrators also given a period of 30 days to appoint a third arbitrator for completing arbitration. If the parties fail to appoint the arbitrator, the Chief Justice of High Court shall have the power to appoint the arbitrator or Presiding arbitrator within the territory of parties to settle the dispute. Therefore in case of international commercial arbitration, the Chief Justice of India shall have the power to appoint such person. However the arbitral institution will determine the fees of the arbitral tribunal and the manner of its payment which is specified in the fourth schedule of the Act.

The amended Act of 2019 requires the arbitrator to disclose in writing any circumstances which are likely to give rise to reasonable doubts about their independence or impartiality in the proceeding. If there is any matter arise they are under a legal duty to inform the parties in writing about their interest. ^[2]

It has been explained that except if the gatherings in any case concur, the alterations made to the Act by the Arbitration and Conciliation (Amendment) Act, 2015 won’t have any significant bearing to the arbitral procedures which initiated before the beginning of the Arbitration and Conciliation (Amendment) Act, 2015 i.e., October 23, 2015. This overrules the position set somewhere by the Supreme Court in BCCI v. Kochi Cricket Private Limited. ^[3]

ARBITRAL TRIBUNAL IN INDIA

No doubt, arbitration is a better method of resolving disputes between the parties. However a broad study of the arbitration system prevailing in India presents a sad state of affairs. As every dispute finally goes to the court and the matter is abnormally delayed. The eminent advocate Fali s. Nariman has remarked:

Although Indian law favours dispute resolution by arbitration, Indian sentiment abhors the finality attached to arbitral award. Aided and abetted by the legal fraternity, the aim of every party to an arbitration (domestic or foreign) is : “try to win if you can; if you cannot, do your best to see the other side cannot enforce the award for as long as possible.” The trouble is that neither the private sector

nor the public sector in India are as yet sufficiently infused with the “spirit of arbitration.“^[4]

The continued failure of the Indian courts to resist the urge to intervene in arbitrations is harmful in two ways. First, in a legal system torment by delays, a pro-arbitration stance would reduce the pressure on the courts. There are 13 judges for every million people in India, compared to 51 in Britain and 107 in the United States. Recent reports indicate that over 30 million cases are currently pending resolution in India. Arbitration is therefore not just an attractive option for resolving disputes, it is essential for maintaining the integrity of the Indian legal system.

Secondly, for a nation looking to attract foreign investment, it is imperative that its legal system provides efficient and predictable remedies to foreign investors. If a legal system does not hold the promise of speed or certainty, a risk premium is added to the cost of the transaction which, if excessive, may make the transaction commercially unviable. Foreign investors typically prefer arbitration and have shrink from Indian courts due to prolonged delays in litigation caused by a backlog of cases.

COMPOSITION

Prior to this amendment Act, no doubt parties were free to appoint the arbitrators, provided that such number shall not be an even number. But as per the Arbitration and Conciliation (Amendment) Act, 2019 it shall be consist of a chairperson who is either judge of Supreme Court; or a judge of a High Court; or a Chief Justice of High Court; or an eminent person with expert knowledge in conduct of arbitration proceeding. Therefore other members consist of an eminent arbitration practitioner, an academician with experience in arbitration, and government appointees.The ex-officio Members of the Council will remember the Secretary to the Government of India for the Department of Legal Affairs, Ministry of Law and Justice and Secretary to the Government of India in the Department of Expenditure, Ministry of Finance or their individual agents not underneath the position of Joint Secretary. One representative of a recognised body of commerce and industry will be a part time member.

RIGHTS OF ARBITRATOR

The arbitration agreement may define the rights, powers and duties of the arbitrator provided an equivalent that is not contrary to any provision of law. A number of the powers are prescribed by law and judicial courts:

• Administrative assistance– The arbitral tribunal may organise the proceedings with the consent of parties for administrative assistance by an appropriate institution or person.
• Interim measures– Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a celebration, order a celebration to require any interim measure of protection because the arbitral tribunal may consider necessary in respect of the topic matter of the dispute. Further, the arbitral tribunal may require a celebration to supply appropriate security in reference to a measure so ordered. (Sec. 17)
• Jurisdiction– Section 16 empowers the arbitral tribunal to rule on its own jurisdiction sort of a court. It also can decide any objection with reference to the existence or validity of the arbitration agreement.
• Place of arbitration and language– Unless otherwise agreed by the parties, the arbitral tribunal shall fix the place of arbitration and therefore the language to be utilized in arbitral proceedings. (Sections 20 and 22)
• Hearings and written proceedings– The arbitral tribunal shall have the discretionary power to decide whether to carry oral proceeding or to be conducted on the idea of the document. (Section 24)
• Termination of proceedings–  The arbitral tribunal shall terminate the proceedings, unless otherwise agreed by the parties, where, without showing sufficient cause, the claimant fails to speak his statement of claim (Sec. 25). The opposite grounds for termination of proceedings are laid down in section 32
• Appointment of expert– Section 26 of the Act empowers arbitrators to appoint experts unless the parties themselves have agreed to the contrary.

JURISDICTION OF ARBITRAL TRIBUNAL

The term ‘jurisdiction’ signifies ‘the power to decide.^[5] If there is any irregularity or illegality in the procedure or in the pleading it would not be covered by term jurisdiction. Section 16 empowers the arbitral tribunal to decide the vires of its own jurisdiction that is the scope of arbitration on the basis of arbitration agreement and the reference made to it. Therefore the court has no jurisdiction to adjudicate upon the question of arbitral tribunal’s jurisdiction. However if the parties desirous to challenge the jurisdiction of arbitral tribunal shall raise the objection before the statement of defence submit.

The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with reference to the existence or validity of the arbitration agreement for this purpose:-

(a) A clause which forms a part of contract shall be treated as an agreement independent of the opposite terms of the contract; and

(b) A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure by law itself the invalidity of the arbitration clause. [Section 16 (1)]

Thus, the Act confers competence on the arbitral tribunal to decide on its own jurisdiction and to consider objections with respect to the existence or validity of the arbitration agreement.

Similarly, a plea may be made that the arbitral tribunal is exceeding the scope of its authority during the arbitral proceedings. [Section16 (3)]

COMMENCEMENT OF ARBITRAL PROCEEDINGS

Section 21 provides the arbitral proceedings in respect of a particular dispute shall commence on the date on which a request for that dispute to be referred to arbitrator by the respondent. The Arbitration and conciliation Act states a party can commence the proceedings against the other party by issuing a notice. Although the Limitation Act 1963 applies to all the arbitral proceedings except to the extent which is expressly excluded by the Arbitration and Conciliation Act. If there is any proceeding commenced after the limitation period i.e. three years from the date that will be concluded as time barred.

Procedure

The parties can agree on the procedure to conduct the arbitration proceedings. If no such party agreed upon procedure, the tribunal is advised to conduct the proceeding in such manner which is appropriate. The tribunal is expressly exempted from applying the procedure of the Civil Procedure Code 1908. If the arbitrator is administered under arbitration agreement by an arbitration institution, the rules of that institution becomes a part of the arbitration clause by implication.

Under the Arbitration and Conciliation Act dissenting opinions are permitted. It is an opinion to prepare a separate award or to give their opinions in the same document which hold the award of the majority members of the tribunal. But this opinion does not form part of the majority decision and therefore it is not enforceable.

Though the local courts can intervene in domestic arbitration proceedings but there is no corresponding provision anywhere in the Act with reference to foreign arbitral proceedings. Therefore it includes the power to issue interim orders, over evidence i.e. pronounced directly to the tribunal and appoint arbitrators. As stated in Firm Ashok Traders & Another v.Gurumukh Das Saluja& others,^[6] the Supreme Court ruled that commencement of arbitration proceedings under Section 21 is not dependent on interim relief being allowed or denied under Section 9 of the Act.

Moreover in case the respondent is fails to participate in arbitration proceeding without reasonable cause, the tribunal may proceed ex parte or adjourn the proceedings. Further if the respondent is fails to communicate its defence statement, the tribunal may treat the respondent’s right as being loss or continue the proceedings without considering such failure.

While the Arbitration and Conciliation Act did not grant power to compel the third party to join the pending proceedings. But the court may pass the decree against the third party on the recommendation of tribunal to provide the evidence directly. If a party fails to attend as per court orders, it is subject to same penalties and punishment as it may have incurred during court proceedings.

According to Arbitration and Conciliation (Amendment) Act, 2019 the arbitrator, the arbitral institution and the parties must maintain the confidentiality of all arbitral proceedings except the award as its disclosure is necessary for the purpose of implementation and enforcement of award. Further Section 23 has been amended to state that the statement of claim and defence must be completed within a period of six months from the date of all the arbitrator received notice in writing of their appointment.

ARBITRAL TRIBUNAL AWARDS

An arbitral award is a final decision or judgement of the arbitral tribunal on all matters referred to it. It is as binding in its nature as the judgement of a court. It is required to be in writing and to be signed by all the members of tribunal or by the majority with reasons for any omitted signatures. An award should state the date and place of the arbitration, and signed copy must be delivered to each party.

According to the Arbitration and Conciliation (Amendment) Act, the tribunal must awards within 12 months of the date that it enters the reference. Although this period can be extended only up to six months if all the party agree but if tribunal is fail to make the award within the given time period or within mutually extended period, it’s mandate would be terminated, except when the period has been extended by the court.

This Act does not impose any specific limitation on the remedies available through arbitration. Thus the limitations are same as those applicable in Indian court proceeding. However the tribunal can order specific performance and award damages, declarations, costs and interest. Although under Indian law, exemplary or punitive damages for breach of contract are not available but courts can issue interim measures pending constitution of the tribunal. Thereafter, this power continues through the proceedings until the declaration of the award, only if the courts recognised that the interim measures ordered would not be effective by the tribunal.

Though courts and tribunals both can issue interim measures, but court has wider powers to grant interim protection. It includes injunctions, appointment of a receiver, order for preservation, custody, sale and protection of goods, to secure the amount in arbitration dispute and any other interim measure that may be justified. Thus the Arbitration and Conciliation (Amendment) Act has cleared that the Indian courts will have the power to provide interim measures of protection in relation to arbitrations seated outside India.

WARSAW COURT OF APPEAL DEFINES RULES FOR ARBITRAL TRIBUNALS IN MATTERS INVOLVING STATE AID

On 26 January 2018, the Circuit Court in Warsaw dismissed the action to nullify the award but the minister appealed the judgement to the Warsaw Court of Appeal. However the European Commission intervened in the appeal proceedings.

The judgment of the Warsaw Court of Appeal evokes several comments. It repeat the importance of EU rules on state aid and notify that arbitration practitioners shouldn’t ignore their implications. The load attached by the Court of Justice of the EU and therefore the European Commission to state aid rules is notorious. Already back in 2007, enforcement of EU state aid rules prompted the CJEU to disregard the principle of res adjudicata in domestic civil court proceedings (C-119/05 Lucchini C). Therefore, it’s only somewhat controversial that the necessity to make sure the appliance of EU rules on state aid might be invoked by national courts to justify annulment or maybe review of the merits of an arbitral award.

The novelty within the AWSA case consists therein the Court of Appeal de facto extended onto arbitral tribunals the obligations defined within the Commission notice on the enforcement of State aid law by national courts C). This is often a controversial proposition. Firstly, the requirement of national courts to enforce EU rules on state aid stems from the principle of loyal co-operation, which extends onto all organs of Member States. Arbitral tribunals, however, aren’t organs of Member States, and that they aren’t even considered to be a neighbourhood of the EU judiciary (C-284/16 Achmea, para. 58 %; 102/81 Nordsee, paras. 12-14 C). Thus the rationale for extending a similar duty on arbitral tribunals seems imperfect. Secondly, arbitral tribunals don’t have the required tools that national courts have. They can’t ask the CJEU questions associated with the interpretation of EU state aid rules under Article 267 TFEU, or seek information and/or assistance from the EU Commission pursuant to Article 29 of Regulation 1589/2015 of 13 July 2015 laying down detailed rules for the appliance of Article 108 of the Treaty on the Functioning of the European Union (codification).

In Nutshell, all the foregoing implies that the initiation of an arbitration versus a public party with unresolved state aid issues may currently trigger significant legal risks that even the foremost skilled and qualified arbitral tribunal could also be unable to discharge on its own, and which can surface a few years after the ultimate award was rendered. This needs debate on the reconciliation of the wants which will exist under EU law with reference to arbitrators, and therefore the natural limitations of economic arbitration.

CONCLUSION

An arbitrator(s) or arbitral tribunal performs the function of a judge, in other words an arbitrator adjudicates/judges the dispute between the parties. The terms arbitrator(s) or arbitral tribunal are interchangeable and refers to an equivalent person or group of persons. Thus there might be one (sole) arbitrator or quite one arbitrator. Both would be mentioned as arbitral tribunal

A unique feature of arbitration unlike court based adjudication is that the parties get to pick their arbitrators or delegate to an establishment (like ICC, FICCI, ICADR, etc.) the facility to appoint on their behalf. This is often considered to be a key advantage because the parties can choose the one that will adjudicate their dispute as compared a court based system where they need no control over the judge. The purpose that an arbitrator adjudicates the matter, is vital to know. In other words, an arbitrator doesn’t simply express an opinion supported materials given to the arbitrator. In fact, that might be expert evaluation. Rather the arbitrator works sort of a judge, before whom the parties present their dispute, submit evidences, produce witnesses then the arbitrator applies the law to the matter and decides during a judicial manner.

The Hon’ble supreme court of Delhi (the “Court”) has within the case titled ‘ShapoorjiLimitedPallonji and Co. Private Limited v. Jindal India Thermal Power, put the aforementioned ambiguity to rest vide its order dated January 23, 20201 (the “Order”) wherein it’s examined whether the amendments introduced to Section 29A (1) and Section 23(4) of the Arbitration Act are going to be applicable retrospectively.

In India, appointment and termination (removal) of arbitral tribunal is regulated by the Arbitration and Conciliation Act 1996. The law prescribes various provisions for various possibilities which may arise in appointing or removal of arbitrators. The various authorities which have the facility for appointment and removal are the District Court (Court), supreme court and Supreme Court of India.

In nutshell a person are often an arbitrator, if he capable of contracting. In our daily lives when there’s any dispute arose between relations or neighbours, we may take the dispute to elders of the house or society who resolve the matter. Here the elder essentially act as arbitrator, and he arbitrates the matter. Of course, arbitration as understood under law may be a little more sophisticated than this setup, but it provides a basic idea of arbitration.

Since arbitration may be a private arrangement, whereby when dispute arise it might be submitted to a personal party rather than courts. While under the contract, an individual agrees to act as arbitrator and adjudicate any disputes between the parties that’s submitted to him, by the parties.

1.  Referred to as umpire under the old Arbitration Act, 1940. The umpire system has been done away with the new Act of 1996.

2.  Section 12 of the Act 1996.

3. (2018) 6 SCC 287

4. Section 7(3) of the 1996 Act.

5. Bharat Cooking Coal Ltd. v. Chakraborty &Mondal , 1993 (2) Arb LR 208 (Cal), (affirmed by Supreme Court in 1995 (2)Arb LR 66 ).

6. Hindustan Prefab Ltd. v. Dosajh& Co., 2004 (2) Arb LR 91 (Del): (2004) 111 DLT 182;

Books Referred:

1. Paranjape N.V; Law relating to Arbitration and Conciliation in India; Central Law Agency
2. Garg K.C; Sareen V.K; Sharma Mukesh; Chawla R.C; Mercantile Law; Kalyani Publishers

Online Websites Referred:

1. https://arbitrationlaw.com
2. https://www.mondaq.com/india/arbitration-dispute-resolution
3. http://www.manupatrafast.in
4. https://www.prsindia.org/billtrack/arbitration-and-conciliation-amendment-bill-2019
5. https://www.advocatekhoj.com/library/bareacts/arbitrationandconciliation
6. https://www.lexology.com/library
7. http://www.lawstreetindia.com/
8. http://arbitrationblog.kluwerarbitration.com

Author Details: Chahat Garg (University Institute of law, Regional Center Ludhiana)