Arbitrators: General Meaning,Powers & Functions

Appointment of Arbitrators

All Disputes, which are of civil nature, may be resolved at any of the following two forums i.e. the formal system of redressal through conventional system i.e. Courts and Tribunals, or Alternate Dispute Resolution (ADR) which includes Mediation, Conciliation, and Arbitration. Keeping in view the condition of the formal legal procedure, it will consistently be desirable over settle on ADR. Indiahas a classified law on ADR for example the Arbitration and Conciliation Act, 1996 which complies with model law on International Commercial Arbitration in 1985 by the United Nations Commission on International Trade Law(UNCITRAL). These model laws and rules make noteworthy commitment to the productive settlement of questions emerging in global business relations. Keeping in view the abovementioned, the Indian Arbitration and Conciliation Act, 1996 was passed by India wherein modalities have been settled regarding mediation, creation of courts, technique for intervention, creation of grants, response against arbitral awards, conclusion of arbitral honours and their implementation, requirement of outside honours and so forth.

Who is an Arbitrator?

Anyone can become an arbitrator, as arbitrator is not defined in any statute. There are no certifications or qualifications required. Many former judges serve as arbitrators. The only general requirement is that both parties should agree upon the person. However, in many fields, the arbitrators traditionally chosen are experts in the business or field of law involved. In labour and employment law fields, there are professional arbitrators who have practiced arbitration for many years and have gained the confidence of other professionals.

So, basically any person capable of entering into a contract, in theory, can be an arbitrator. In our daily live when we have a dispute with our family members or neighbour, we take the dispute to an elder of the house or the society who decides the matter. The elder essentially acts as an arbitrator and arbitrates the matter. Of course, arbitration as understood under law is a little more sophisticated than this setup, but it provides a basic idea of arbitration.

Since arbitration is a private arrangement, whereby when disputes arise it would be submitted to a private party instead of courts, the arbitrator can be anyone who is capable of contracting with the parties. Under the contract, a person agrees to act as arbitrator and adjudicate any dispute between the parties that is submitted to him by the parties.

How to hire an Arbitrator?

To hire an arbitrator, all that it takes is for the parties to agree upon a specific arbitrator and contact that arbitrator to determine if the person is willing to take the case. Where you have agreed to have the arbitration handled according to the rules of a particular association, the association may handle the process for you. For example, the American Arbitration Association has panels of arbitrators. It provides a list of arbitrators, which is sent to the disputing parties. They then choose an acceptable arbitrator from that list.

Number of Arbitrators

The parties have high level of freedom when deciding on the number of persons that can be chosen as arbitrators. There are many things that should be kept in mind at the time of appointment of arbitrators. For instance, the fees of the arbitrators, complexity of the matter, time required for meetings, duration of sessions when oral arguments would be made, etc. A specific the timings among the arbitrators. It becomes even more problematic as the number of arbitrators increase. At the same time there are advantages to having more than one arbitrator. More arbitrators result in greater discussions which can improve the quality of awards. It also brings greater expertise as arbitrators may be from different speciality and background. Section 10  also talks about the number of arbitrators in courts:

  • The parties are free to determine the number of arbitrators, provided that such number shall not be an even number.
  • Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of a sole arbitrator.

For example: Party A and Party B entered into a contract for construction of apartments. The contract contained an arbitration agreement, whereby all disputes between the parties would be submitted for arbitration by an arbitral tribunal having three arbitrators. In such a situation, the arbitrators could all be from different discipline and having varying expertise. For example, the arbitrators could be lawyer, architect, interior designer, civil engineer or a government servant. The parties therefore can choose almost anyone as arbitrators. It is important to remember that even though a private process, arbitration and its outcome (arbitral award) requires state supports at different junctures, but most importantly for enforcement. However, the state will only extend its supports for legal outcomes. therefore, it is important that the arbitrators are familiar with legal requirement especially under the Arbitration and Conciliation Act 1996 so as to ensure that the entire process and the outcome complies with all mandatory legal requirement.

And the 1996 Act clearly provides that there can be any number of arbitrators, as long as it is not even in number. Ordinarily, parties select one arbitrator. However, if more than one is selected, it is usually three. The reason is to ensure that there can be decision by majority. if there is even number of arbitrators, then there is a possibility that there might be a tie.

However, in a rather interesting decision in Narayan Prasad Lohia v. Nikunj Kumar Lohia, the Supreme Court held that even number of arbitrators is an acceptable possibility. Among the many reasons put forward, the court observed that it was possible that the two arbitrators may not disagree, in which case there would be consensus and not disagreement. Also, it was not correct to permit parties to proceed with the arbitration and raise objection only when the decision goes against them. Thus, after this decision, it seems that parties can choose ‘even’ number of arbitrators. However, in practice, this rarely happens.

Powers and functions of Arbitrator

There are four powers and functions of arbitrators are as follows:

  • Arbitrators shall have the duty to appoint a time and place of hearing at a convenient location and provide reasonable notice to the parties.
  • To consider any and all evidence offered by the parties which the panel deems necessary to an understanding and determination of the dispute.
  • Arbitrators shall maintain their impartiality throughout the course of the arbitration proceedings.
  • An arbitrator shall not be assigned to an arbitration panel if he or she has any relationship to either party to the dispute to be decided by that panel.
  • There shall be no direct communication between the parties and the arbitrators other than at the oral hearing. Any other oral or written communications between the parties and the arbitrators shall be channeled through the department for transmittal to the appropriate individual(s). Any such prohibited contact shall be reported by the arbitrators to the department and noted in the case record.

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