| Section 11 of the Act of 1996 deals
with the appointment of arbitrators. It provides that the
parties are free to agree on a procedure for appointing an
arbitrator or arbitrators. In the event of there being no
agreement in regard to such procedure, in an arbitration by
three arbitrators each party is required to appoint one arbitrator
and the two arbitrators so appointed must appoint the third
arbitrator. If a party fails to appoint an arbitrator within
thirty days from the request to do so by the other party or
the two arbitrators appointed by the parties fail to agree
on a third arbitrator within thirty days of their appointment,
a party may request the Chief Justice to nominate an arbitrator
and the nomination shall be made by the Chief Justice or any
person or institution designated by him. If the parties have
not agreed on a procedure for appointing an arbitration in
an arbitration with a sole arbitrator and the parties fail
to agree on an arbitrator within thirty days from receipt
of a request to one party by the other party, the nomination
shall be made on the request of a party by the Chief Justice
or his designate. Where an appointment procedure has been
agreed upon by the parties but a party fails to act as required
by that procedure or the parties, or the two arbitrators appointed
by them, fail to reach the agreement expected of them under
that procedure or a person or institution fails to perform
the function entrusted to him or it under that procedure,
a party may request the Chief Justice or his designate to
nominate an arbitrator, unless the appointment procedure provides
other means in this behalf. The decision of the Chief Justice
or his designate is final. In nominating an arbitrator the
Chief Justice or his designate must have regard to the qualifications
required of the arbitrator in the agreement between the parties
and to other considerations that will secure the nomination
of an independent and impartial arbitrator.
The Supreme Court observed that there is nothing in Section
11 that requires the party other than the party making the
request to be noticed. It does not contemplate a response
from that other party. It does not contemplate a decision
by the Chief Justice or his designate on any controversy that
the other party may raise, even in regard to its failure to
appoint an arbitrator within the period of thirty days. That
the Chief Justice or his designate has to make the nomination
of an arbitrator only if the period of thirty days is over
does not lead to the conclusion that the decision to nominate
is adjudicatory.
In a given case, if a party has justifiable doubts about
the independence and impartiality of the arbitrator appointed
by the Chief Justice or his designate, it is open to such
party to challenge the arbitrator under Section 12 of the
Act of 1996, adopting the procedure laid
down in Section 13. Even in a case where the Chief Justice
or his designate has appointed an arbitrator before the expiry
of the prescribed period of 30 days, it is open to the aggrieved
party to challenge the jurisdiction of the arbitrator and
such a challenge may be decided by arbitral tribunal itself
under Section 16.
The Supreme Court observed that the schemes made by the Chief
Justices under section 11 cannot govern the interpretation
of Section 11. To the extent that the Chief Justice of India
scheme, 1996 goes beyond Section 11 by requiring, in Clause
7, the service of notice upon the other party to the arbitration
agreement to show cause why the nomination of an arbitrator,
as requested, should not be made, it is bad in law and must
be amended.
The Supreme Court also observed that although the UNCITRAL
Model Law and Rules of Arbitration have been taken into account
for drafting the Act of 1996, they are not identical and hence
the UNCITRAL Model Law and Judgements and literature are not
a guide to the interpretation of the Act of 1996 and especially
of Section 11 thereof.
Article 136 of the Constitution of India empowers the Supreme
Court to grant special leave to appeal any judgement, decree,
sentence or order in any cause or matter passed or made by
any court or tribunal in the territory of India. The Supreme
Court held that since the order of the Chief Justice or his
designate acting under Section 11 nominating an arbitrator
is not an adjudicatory order and the Chief Justice or his
designate is not a tribunal, such an order cannot properly
be made the subject of the Petition for special leave to appeal
under Article 136 of the Constitution of India.
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