Composition of Arbitral Tribunal & Jurisdiction
In international commercial arbitration, the arbitral tribunal plays a crucial role in resolving disputes. Such proceedings generally arise from an agreement between the parties involved to settle their differences through arbitration. In this setup, either a single arbitrator or a panel of arbitrators is appointed and granted the legal authority to adjudicate the matter.
The formation of the arbitral tribunal, whether it involves a sole arbitrator or a multi-member panel, is a key element in the arbitration process. The composition of the tribunal can significantly affect the resolution of the dispute and the overall effectiveness of the arbitration.
Additionally, the tribunal's composition has legal implications for the start date of the arbitration proceedings. It can also impact future actions, such as challenges to or enforcement of the arbitral award, highlighting its importance in the arbitration process.
Chapter 3 of the Arbitration and Conciliation Act: Formation of the Arbitral Tribunal
Chapter 3 of the Arbitration and Conciliation Act deals with the formation and structure of the arbitral tribunal. Here's an overview of its key provisions:
• Section 10: This section governs the number of arbitrators. Parties have the flexibility to decide on the number of arbitrators, though it must be an even number. If the parties do not adhere to this requirement, a sole arbitrator will be appointed by default.
• Section 11: This section addresses the nationality of arbitrators. It permits the appointment of arbitrators from any nationality, as agreed upon by the parties. Additionally, Sub-Section 6 allows the parties to decide on the method of appointing arbitrators. If the parties fail to make an appointment, Sub-Section 3 provides that three arbitrators will be appointed automatically, and these three will then choose a fourth, presiding arbitrator.
• Section 12: This section outlines the grounds on which an arbitrator can be challenged. Challenges may be based on doubts about the arbitrator's impartiality or independence, or a lack of qualifications. Parties are required to disclose any potential biases or connections that could affect the arbitrator’s impartiality.
• Section 13: This section sets out the procedure for challenging an arbitrator. It gives the arbitrator the opportunity to address allegations of partiality. If the challenge is upheld, the arbitrator may be removed and replaced if necessary. If the challenge is unsuccessful, the arbitrator will remain on the panel.
• Section 17: This section covers the appointment of new or substitute arbitrators when necessary.
• Section 14: This section deals with situations where an arbitrator cannot perform their duties or withdraws from the role.
• Section 15: This section provides details on the termination and substitution of arbitrators. It specifies the conditions under which an arbitrator may withdraw or have their mandate terminated, requiring the appointment of a substitute. In such cases, any prior hearings may need to be repeated at the discretion of the arbitral tribunal.
In the case of N.P. Lohia v. N.K. Lohia, it was established that the composition of the arbitral tribunal, as outlined in Section 10 of the Arbitration and Conciliation Act, can be challenged. Such a challenge could potentially lead to the setting aside of the arbitration award.
Similarly, in Konkan Railway Corporation Ltd v. Rani Construction Pvt Ltd. it was confirmed that Section 16 empowers the arbitral tribunal to determine its own jurisdiction independently. This provision extends beyond merely defining the tribunal's jurisdiction to addressing its foundational authority.
Sections 10 and 11 should be interpreted together. Section 10 specifies the number of arbitrators, while Section 11 deals with their appointment, particularly in scenarios involving either a sole arbitrator or a panel of three. The Supreme Court has clarified that an arbitration agreement is not rendered void solely because the parties opt to appoint two arbitrators.
Moreover, in Renusagar Power Co Ltd v. GE Co., the concept of public policy, as defined in the landmark case of ONGC v. Saw Pipes Ltd.,, was highlighted as crucial to India's legal interests.
The debate over whether an even number of arbitrators should be allowed persists. The ruling in the Lohia case aligns with the legal framework permitting parties to choose an even number of arbitrators under Section 10. This precedent, while primarily impacting cases with a sole arbitrator or a panel of three, enriches the global jurisprudential landscape.
JURISDICTION OF ARBITRAL TRIBUNAL
In the landmark case of Pharmaceutical Products of India Ltd. v. Tata Finance Ltd. , it was established that if the Arbitral Tribunal does not address jurisdictional issues as mandated by subsection 5 of the Act, it retains the authority to proceed with the arbitration and issue an award as it sees fit. Subsection (5) provides the procedure for challenging such an award, with Section 34 detailing the grounds for such challenges.
Building on the precedent established in Konkan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd., it was clarified that Section 16 empowers the Arbitral Tribunal to decide on its own jurisdiction. This authority encompasses not just the scope of its jurisdiction but also its foundational authority.
Jurisdiction of the Arbitral Tribunal When the Governing Contract is Void
In the significant case of Waverly Jute Mills Co. Ltd. v. Raymon, it was established that the arbitration agreement must be distinct, independent, and autonomous from the underlying contract. This principle ensures that the arbitration agreement does not become invalid merely because the contract is void. Any provision that is closely tied to the contract’s terms will be considered null and inoperative if the contract is found to be void.
Similarly, in Jawaharlal Burman v. Union of India, the court emphasized the separate status of the arbitration agreement from the main contract. The arbitration agreement may remain valid even if the contract terminates, or it may be void while the contract itself remains valid. This distinction highlights that challenging one does not necessarily impact the other.
In essence, the arbitration agreement is generally considered an integral part of the primary contract; disputing its existence or validity often implicates the main contract due to the Doctrine of Severability.
Section 17 of the Act authorizes the tribunal to grant interim protective measures that it deems necessary in relation to the subject matter of the dispute.
