Appointment of arbitrators in India
Appointment of arbitrators in India
In India Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties. If parties enter into an agreement and are aware of the relevant clauses especially contracts with government/ corporations / public sector undertaking cannot subsequently refuse to accept the arbitrator named in the agreement to be appointed as the Arbitrator.
The Supreme Court of India has held in the case of Indian Oil Corporation Ltd & Ors. Vs. Raja Transport Private Ltd that unless there is reasonable apprehension that the person mentioned in the arbitration agreement as the arbitrator is not likely to act independently or impartially, or if the named person is not available in that case the Chief Justice or his designate may after recording reasons appoint an arbitrator U/s. 11 (8) of the Arbitration and Conciliation Act 1996. It is settled by a series of decision of the Supreme Court of India, that the arbitration agreements in Government contracts providing that an employee of the department will be the arbitrator, are either void or unenforceable.
In the case of International Airports Authority of India v. K.D. Bali, 1988 2 SCC 360 the Supreme Court has held that there must be reasonable evidence to satisfy that there was a real likelihood of bias. Vague suspicions of whimsical, capricious and unreasonable people should not be made the standard to regulate normal human conduct.
In the case of Northern Railway Admn. v. Patel Engg. Co. Ltd., (2008) 10 SCC 240 the Supreme Court has held that if the arbitration agreement provides for arbitration by a named arbitrator, the courts should normally give effect to the provisions of the arbitration agreement, however in case of any reasonable apprehension that the named Arbitrator in the agreement is not likely to act independently or impartially, or if the named person is not available, then the Chief Justice or his designate may, after recording reasons for not following the agreed procedure of referring the dispute to the named arbitrator, appoint an independent arbitrator in accordance with Section 11(8) of the Act.
Usha K. Srivastava
Consulta Juris
Hira Building, Ground Floor, 17/19 Mint Road, Mumbai – 400 001, India