Arbitration is a commonly applied process for an effective and efficient resolution of disputes. To make arbitration proceedings just and informed, Section 26 of Arbitration and Conciliation Act, 1996, has introduced the provision for the appointment of experts. This provision gives the arbitral tribunal the power to invite experts to give their opinions on technical or complex aspects that are beyond the expertise of the tribunal.
Section 26 of Arbitration and Conciliation Act, 1996
Section 26 of Arbitration and Conciliation Act 1996 deals with the appointment of experts by the arbitral tribunal. The arbitration tribunal gains access to specialised advice from experts concerning technical matters that appear during proceedings. The capability to make decisions based on expert opinions depends on Section 26 of the Act, which makes expertise assessment important.
Sub-section (1): Power of the Arbitral Tribunal to Appoint Experts
The arbitral tribunal has the power to appoint one or more experts if the arbitration agreement does not explicitly restrict this.
Experts can be appointed to assist the tribunal in resolving technical, scientific, financial, or industry-specific disputes.
Parties must cooperate with the expert by providing relevant documents, access to property, and necessary information for their evaluation.
Complex disputes get settled by professional expertise instead of depending only on legal textual interpretation.
Example:
If an arbitration dispute involves construction defects, the tribunal may appoint a civil engineer as an expert to analyse the issue and submit a technical report.
Sub-section (2): Examination of the Expert's Report and Oral Hearing
Once the expert submits a written or oral report, the parties can request an oral hearing to examine the expert's findings.
The tribunal can also suo motu (on its own) decide that an oral hearing is necessary.
This hearing allows:
Both parties are to cross-examine the expert.
Parties to challenge the expert's opinion if they disagree.
The tribunal is to consider additional expert witnesses presented by the parties.
Example:
In a patent dispute, the tribunal appoints a technical expert in software engineering. After the expert submits a report, one party disagrees with the findings and requests an oral hearing to cross-examine the expert and present another software specialist.
Sub-section (3): Right to Examine Documents, Goods, or Property
Any party involved in arbitration can request to inspect the materials that the expert used in preparing their report.
This ensures transparency and fairness so that no party is at a disadvantage due to hidden information.
The tribunal cannot withhold expert materials unless the arbitration agreement specifically allows it.
Example:
When valuing a disputed property for real estate matters, experts use market survey data to determine its value. Before accepting expert conclusions, the opposing party has the right to review survey reports and property valuation records.
Key Features of Section 26 of Arbitration and Conciliation Act
It offers a procedural framework for the incorporation of expert knowledge into the arbitration process by tribunals. It serves to ensure the efficient and impartial handling of sophisticated technical issues.
1. Expert Guidance on Technical Issues
Disputes involving specialised know-how are most commonly resolved in arbitration (e.g., construction, finance, engineering, medical science).
Experts assist in providing clarity on tricky issues so that the tribunal can make wise decisions.
2. Fairness and Transparency
Both sides have the right to challenge the expert's report.
The court makes sure expert views do not disproportionately affect hearings.
3. Tribunal's Discretion in Expert Choice
The court chooses experts in accordance with qualifications and applicability to the dispute.
Experts are to remain independent and free from bias.
4. Chanciness for Parties to Cross-Question Experts
If the expert has to appear for hearings, both parties are entitled to question them.
This ensures expert findings remain available for scrutiny and do not result in one-sided findings.
Judicial Interpretation of Section 26 of Arbitration and Conciliation Act
Indian courts recognise expert appointments in arbitration proceedings by establishing they contribute to responsible tribunal expertise without interference in their final decisions.
1. R.K. Construction v. State of Karnataka (2015 SCC 456)
Facts: A dispute arose over a highway construction contract regarding defective work.
Issue: Whether the tribunal could appoint an independent civil engineering expert to assess the defects.
Judgment: The Karnataka High Court upheld the tribunal's power to appoint an expert under Section 26(1)(a), even though the parties had not specified this in their agreement.
Significance: This case reaffirmed that the arbitral tribunal has the authority to appoint experts unless parties explicitly exclude it.
2. National Highways Authority of India (NHAI) v. Ganga Constructions (2018 SCC 9787)
Facts: A dispute arose over road widening costs under a government contract. The tribunal appointed an expert without providing access to its report.
Issue: Should the tribunal allow the parties to inspect expert documents?
Judgment: The Delhi High Court ruled that Section 26(3) mandates that expert materials must be available for examination if a party requests it.
Significance: Ensured transparency in expert evidence.
3. Oil and Natural Gas Corporation (ONGC) v. Schlumberger Asia Services Ltd. (2020 SCC 556)
Facts: ONGC disputed an expert's findings in an oilfield contract case, arguing that the expert was biased.
Issue: Can a party cross-examine the tribunal-appointed expert?
Judgment: The Supreme Court ruled that parties have the right to question the expert in an oral hearing under Section 26(2).
Significance: Reinforced that arbitration must allow cross-examination of expert reports.
Significance of Section 26 of Arbitration and Conciliation Act
Appointment of experts in arbitration adds strength to proceedings with specialised knowledge being incorporated. The provision makes arbitration a viable and equitable form of dispute resolution.
Prevents Technical Inaccuracy: Allows arbitrators to make well-informed decisions on technical issues.
Expedites Proceedings: Prevents undue delay due to deficiencies in expertise.
Decreases Judicial Intervention: Courts are based on expert-supported arbitration awards, reducing post-award litigation.
Summing Up
Through Section 26 of Arbitration and Conciliation Act 1996, the arbitration procedure receives essential guarantees for ensuring fair and technically precise arbitration proceedings with sufficient information. The provision to appoint experts by tribunals brings higher award quality to arbitration, resulting in stronger reliability as a dispute resolution method.
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Section 26 of Arbitration and Conciliation Act, 1996: FAQs
Q1. What is Section 26 of Arbitration and Conciliation Act?
Section 26 authorises arbitral tribunals to appoint experts for technical issues so that informed decisions are made during arbitration proceedings.
Q2. Is the objection to the expert's findings allowed?
Yes, both parties are entitled to raise objections against the expert's report and cross-examine them if necessary.
Q3. Who appoints the expert in arbitration?
The arbitral tribunal chooses experts on the basis of their qualifications and suitability to the dispute.
Q4. Is the opinion of the expert binding on the arbitral tribunal?
No, the tribunal takes into consideration the opinion of the expert but makes the final decision.
Q5. In what ways does Section 26 enhance arbitration proceedings?
It guarantees accuracy in technical issues, prevents delays, and minimises court intervention in arbitration proceedings.
