Section 11 of the Arbitration and Conciliation Act, 1996 is one of the important sections while defining how the arbitrators are to be appointed in India. This section presents the different methods, procedures, as well as conditions applied while appointing the arbitrator in the above Act, with a particular focus on party autonomy and in cases of providing clarity where parties cannot make mutual decisions. Recently, amendments of the Act have bestowed upon the Supreme Court and High Court powers to appoint arbitral institutions dealing with appointments for dealing with the process of arbitration efficiently and ensuring that arbitration processes before arbitral institutions are fair and sound. The provisions of this section are imperative in both domestic and international commercial arbitration as they ensure the making of arbitration before a fair and competent arbitrator who can deliver quality dispute resolution.

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Section 11 Of The Arbitration And Conciliation Act, 1996: Appointment Of Arbitrators

The Appointment of Arbitrators section discusses the two scenarios in which arbitration proceedings can exist wherein parties agree to a method or require courts to intervene. Each sub-section is broken down as follows:

Subsection (1): Eligibility of Arbitrator's Nationality:

Any person having any nationality can act as an arbitrator, provided always with the agreement of the parties.

Subsection (2): Agreement on Appointment Procedure:

The parties are free to agree on the method by which the arbitrators shall be appointed.

Subsection (3): Default Process for Three Arbitrators:

Where no method is so agreed and three arbitrators are required, each party shall appoint one. The two thus appointed shall, within ten days after their appointment, jointly appoint a third who shall act as chairman.

Subsection (3A): Designation of Arbitral Institutions by Courts:

The Supreme Court or High Courts may designate graded arbitral institutions for appointing arbitrators. In areas with no such institution, the Chief Justice of the relevant High Court can maintain a panel of arbitrators.

Subsection (4) Procedure in case of default by a Party in Appointments:

If the process in Subsection (3) above is operative and a party does not nominate an arbitrator within 30 days of a request therefor, or if the two nominated arbitrators are unable to agree on the third, the arbitral institution designated (having the jurisdiction of the Supreme Court or High Court) makes that appointment.

Subsection (5): Nomination of Sole Arbitrator when a Party Fails

If, under this subsection, where a single arbitrator must be appointed, the parties fail to agree on the appointment within thirty days after a request, therefore, Subsection (4) requires the institution or member of an institution designated for such an appointment to make the appointment.

Subsection (6): Remedial Procedure for Agreed Appointment Failures:

If a party fails to act, if there is disagreement as to who should act or if a person or an institution fails to act in accordance with its function under an agreed procedure, the designated arbitral institution shall make the necessary appointment.

Subsection (6A): Examination of Arbitration Agreement (Omitted in 2019 Amendment):

Courts, until 2019, had been permitted to see designation only through the prism of an arbitration agreement's existence.

Subsection (6B): Designation Is Not a Judicial Delegation

The Supreme Court or High Court nominates a person or institution under this section. This nomination does not entrust judicial power to that institution.

Subsection (7): Finality of Court-Designated Institution’s Decision (Omitted in 2019 Amendment)

Decisions under Subsections (4), (5), and (6) were previously final, without appeal rights. The 2019 amendment deletes this provision.

Subsection (8): Disclosure and Independence in Appointment:

An arbitral institution designated shall ensure that the appointed arbitrator discloses, in writing to him or her, prior to appointment under Section 12, and an impartial arbitrator shall be appointed by the parties based on party agreements and contents of disclosure.

Subsection (9) Arbitrator's Nationality in International Cases:

In international arbitrations, the institution so appointed may appoint an arbitrator of a different nationality than that of each party where they belong to different nationalities.

Subsection (10): Court Schemes for Dealing with Matters (Deleted in 2019 Amendment):

Courts may establish schemes to deal with matters under subsections (4), (5), or (6), but this has been deleted by the 2019 amendment.

Subsection (11): Competency of Institution Receiving the First Request:

When two or more conflicting appointments of an arbitrator are made to different arbitration institution(s), the first-in-time request shall be dealt with by that institution.

Subsection (12): Interpretation of Arbitral Institutions in International Commercial Arbitration:

References in earlier subsections to arbitral institutions include institutions appointed under Subsection (3A) in international or other specific arbitration proceedings for the purpose of consistency.

Subsection (13): Time Frame for Disposal of Appointment Applications:

Notice of any arbitration appointment application shall be given to the opposite party from the date the opposite party is served with notice. The appointed institution or authority has a period of 30 days to resolve applications for the appointment of an arbitrator(s), and the dates commence from the date the opposite party is given notice.

Subsection (14): Determination of arbitration fees

The arbitral institution lays down fees payable by the tribunal, as provided for in the Fourth Schedule, but this provision does not extend to international cases and to cases where parties otherwise agreed.

Explanation: Subsection (14) is excluded for international arbitrations or arbitration with agreed fee arrangements within the rules of an arbitral institution.

This section discussed the party's autonomy to choose the arbitrators, arbitral institutions default arbitration, and judiciary-restricted powers; all this has been revised by the 2019 amendment to its procedures along with maintaining its integrity within the arbitration process.

Learn about How Arbitration & Conciliation Act works in India!

Case Laws for Section 11 of the Arbitration Act

This court section deals with the appointment of arbitrators under the Arbitration and Conciliation Act, of 1996, in India. In the course of time, the Indian courts have interpreted this section with refinement through many landmark judgments. Some of the most important judgements are cited as follows:

SBP & Co. v. Patel Engineering Ltd. (2005): 

It held the power exercised by the Chief Justice under Section 11 is judicial rather than administrative. It clarified the fact that determining the existence and validity of the arbitration agreement precedes the appointment of an arbitrator.

Duro Felguera S.A. v. Gangavaram Port Ltd. (2017): 

Even post the amendment in 2015, it was underscored by the Supreme Court that strictly in accordance with Section 11(6A), the task of the court remains limited to seeing whether an arbitration agreement exists or not. Here, a whole shift towards making judicial intervention minimum at the stage of appointment was contemplated.

Mayavati Trading Pvt. Ltd. v. Pradyuat Deb Burman (2019): 

The Supreme Court reiterated the judgement of Duro Felguera by reiterating the fact that the court under Section 11 only verifies if an arbitration agreement exists and does nothing else beyond it.

Vidya Drolia & Ors. v. Durga Trading Corporation (2020): 

The Court held that in the referral stage under Section 11, there should be a prima facie examination to ensure that frivolous or non-existent arbitration agreements should not move forward. This judgment balances judicial scrutiny with the principle of minimal intervention.

Also Check out Section 14 of Arbitration Act

Conclusion

This very structured approach to arbitral appointment under Section 11 of the Arbitration and Conciliation Act, 1996 allows party autonomy within judicial intervention when necessary. This has streamlined the recent amendments by allowing arbitral institutions under the Supreme Court and High Courts to designate arbitration that remains impartial, efficient, and accessible. This chapter is crucial to the promotion of arbitration for an equitable resolution of disputes and encourages the increasing requirement for arbitration both domestically and internationally, which creates confidence in arbitration in India.

Know Section 13 of Arbitration Act

Section 11 of Arbitration Act FAQs

Q1. What is the function of Section 11 of the Arbitration and Conciliation Act?

Section 11 is a procedure for the selection of arbitrators within India and outlines a frame for party autonomy and judicial intervention in cases where parties cannot agree.

Q2. Can an arbitrator be of any nationality under Section 11?

Yes, an arbitrator can be of any nationality unless parties otherwise agree.

Q3. What if parties cannot agree on an arbitrator?

If parties are unable to agree on an arbitrator, then the Supreme Court or High Court-designated arbitral institution will appoint him.

Q4. Who appoints the third arbitrator in a panel of three arbitrators?

When a three-member panel is convened, each party nominates one arbitrator, and the two nominated arbitrators nominate the third, who is the presiding arbitrator.

Q5. What role do arbitral institutions play in making appointments for arbitrators?

As designated by the Supreme Court and the High Courts, arbitral institutions facilitate the process of appointment and ensure even when parties are unable to agree that the qualifications and impartiality are complied with.