Arbitration is one of the favorite means to resolve disputes expeditiously without lengthy court trials. The formation of the arbitral tribunal is one of the important factors on which the effectiveness of arbitration is dependent. The number of arbitrators who may be appointed to hear a dispute is regulated under Section 10 of Arbitration and Conciliation Act, 1996.
The part of the arbitration agreement stipulates procedural rules to maintain fairness while ensuring operational efficiency as well as preventing procedural obstacles. Nevertheless parties can select the number of arbitrators under this clause as long as the total number remains odd yet it contains a default mechanism for situations where parties do not establish this decision.
Section 10 of Arbitration and Conciliation Act: Number of arbitrators
Section 10 of Arbitration and Conciliation Act, 1996, is covered under Chapter III, Composition of Arbitral Tribunal. It addresses the number of arbitrators in an arbitral tribunal. Here's a detailed breakdown:
1. Party Autonomy in Determining Number of Arbitrators
Section 10(1) – Freedom to Choose
Provision: The number of arbitrators can be chosen by parties but must remain odd.
Implication: This clause establishes party autonomy through which tribunals may be formed using various configurations. The number of tribunal members needs to be an odd amount to avoid deadlocks in decision making but it allows freedom for parties to establish how their tribunal should be composed.
2. Default Provision in Absence of Agreement
Section 10(2) – Sole Arbitrator by Default
Provision: The tribunal contains only one arbitrator when the parties fail to define the number of arbitrators in the dispute resolution agreement.
Implication: Arbitration moves forward more efficiently when automatic appointment procedures come into effect since this helps prevent delay even when parties disagree about the tribunal members.
Also, Learn How to Become an Arbitrator in India
Importance of Section 10 of Arbitration and Conciliation Act
Section 10 establishes a procedure for tribunal formation which maintains flexibility for the parties as well as effective tribunal operation. These are the key advantages that distinguish Section 10 among others:
1. Guarantees Effective Decision-Making
By requiring an odd number of arbitrators, the provision guarantees that a decision is made without voting deadlocks.
2. Provides Parties with Autonomy to Decide
Parties have the autonomy to decide on the number of arbitrators that best fit their dispute, provided it's an odd number.
For simple disputes, parties may opt for a sole arbitrator, whereas complex disputes might require a three-member tribunal.
3. Prevents Delays in Arbitration Proceedings
If the parties cannot agree on the number of arbitrators, the default mechanism is provided by the law (single arbitrator).
This avoids extraneous litigation of tribunal make-up and keeps arbitration on track.
4. Cost-Effective Arbitration
Arbitration involving multiple arbitrators increases costs, as fees must be paid to each arbitrator.
By defaulting to a single arbitrator, Section 10 minimizes arbitration costs.
5. Conforms to International Arbitration Standards
International arbitration legislation, such as the UNCITRAL Model Law, generally suggests an odd number of arbitrators to avoid deadlocks.
Section 10 brings Indian arbitration law in line with international best practices, making India a friendly jurisdiction for arbitration.
Also, Checkout Advantages of ADR Over Litigation
Judicial Interpretations and Case Laws
The Indian judicial system has addressed multiple times the mandatory nature of Section 10 of Arbitration and Conciliation Act including the requirement for an odd number of decision-makers.
1. Narayana Prasad Lohia v. Nikunj Kumar Lohia & Ors. (2002)
Issue: Whether an arbitral tribunal consisting of two arbitrators is automatically invalid under Section 10.
Supreme Court’s Ruling:
A tribunal with two arbitrators is not automatically void.
If a party fails to object at the beginning of arbitration, they cannot challenge the award later on this ground.
Section 10 is a procedural rule, meaning it does not affect the award’s validity if both parties have accepted the even-numbered tribunal.
Key Takeaway: Section 10 encourages compliance, but an arbitration award is not automatically invalid just because the tribunal had an even number of arbitrators.
Also, Get to Know What does Public Interest Litigation in the Constitution of India
2. MMTC Ltd. v. Sterlite Industries (India) Ltd. (2009)
Issue: Whether courts should intervene if parties fail to specify the number of arbitrators.
Supreme Court’s Ruling:
If parties do not decide, arbitration must be conducted with a sole arbitrator (as per Section 10(2)).
Courts should not interfere unless there is a specific agreement stating otherwise.
Key Takeaway: This ruling reinforces that a single arbitrator is the default rule, ensuring smooth proceedings.
Learn the Key Differences between Mediation & Arbitration
Summing Up
Section 10 of Arbitration and Conciliation Act of 1996 defines how tribunal members should be selected. The law enables arbitration to perform efficiently along with adaptability while preventing decision making. Through the provision for parties to nominate an odd number of arbitrators and reverting to a sole arbitrator where there is a disagreement, the provision makes the arbitration process easier and in consonance with international best practices.
Related Posts:
Section 10 of Arbitration and Conciliation Act: FAQs
Q1. What does Section 10 of Arbitration and Conciliation Act, 1996 state?
Section 10 specifies that parties can decide the number of arbitrators, but it must be odd. If they fail to decide, a sole arbitrator is appointed by default.
Q2. Why must the number of arbitrators be odd?
An odd number avoids deadlock in decision-making, with the tribunal making a final determination without equal votes.
Q3. What happens if the parties do not agree on the number of arbitrators?
If there is no agreement, arbitration will proceed with a single arbitrator as per Section 10(2).
Q4. Can an arbitral tribunal have an even number of arbitrators?
Technically, an even number is not permitted under Section 10. However, if both parties accept an even-numbered tribunal and do not object, the arbitration may still proceed.
Q5. What is the significance of Section 10?
The clarity and fairness of arbitration proceedings and efficient resolutions are ensured through Section 10 which prevents tribunal composition disputes.
Q6. Does Section 10 apply to both domestic and international arbitration in India?
Yes, Section 10 applies to all arbitrations governed by the Arbitration and Conciliation Act, 1996, including both domestic and international cases.
