Arbitration and Conciliation Act, 1996
Composition of the Arbitral Tribunal: Sections 10 to 15
Six sections govern who decides the dispute. Section 10 fixes the number of arbitrators, Section 11 the machinery for appointing them, Section 12 the disclosure they must make and the relationships that disqualify them, Section 13 the procedure for challenging one, Section 14 the termination of a mandate, and Section 15 substitution. The centre of gravity of this part of the Act has shifted since 2015. The Fifth and Seventh Schedules introduced that year, and the decisions on unilateral appointment that followed, have made the independence of the tribunal the dominant question, displacing the older preoccupation with delay in appointment.
1. Number of Arbitrators: Section 10
Section 10, Arbitration and Conciliation Act, 1996 (1) The parties are free to determine the number of arbitrators, provided that such number shall not be an even number. (2) Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of a sole arbitrator. |
The prohibition on an even number exists to avoid deadlock. It is not, however, a mandatory provision going to jurisdiction. In Narayan Prasad Lohia v. Nikunj Kumar Lohia, (2002) 3 SCC 572 the Supreme Court held that Section 10 is derogable, so that where the parties have agreed on two arbitrators and have taken part in the proceedings without objection, the objection is deemed waived under Section 4 read with Section 16(2), and the award cannot be set aside on that ground alone. The practical rule remains to provide for one or three.
2. Appointment: Section 11
The agreed procedure, what happens when it fails, and the scope of the court's examination
2.1 The scheme
- Nationality. Section 11(1) provides that a person of any nationality may be an arbitrator unless otherwise agreed by the parties.
- Party autonomy. Section 11(2) leaves the parties free to agree on a procedure for appointing the arbitrator or arbitrators.
- The default for three arbitrators. Under Section 11(3), failing agreement, each party appoints one arbitrator and the two so appointed appoint the third, who acts as the presiding arbitrator.
- Default in appointment. Section 11(4) applies where a party fails to appoint within thirty days of a request, or where the two appointed arbitrators fail to agree on the third within thirty days of their appointment. Section 11(5) applies where the parties fail to agree on a sole arbitrator within thirty days of receipt of a request by one party from the other.
- Failure of the agreed procedure. Section 11(6) applies where a party fails to act as required, or the parties or the two appointed arbitrators fail to reach the agreement expected of them, or a person or institution entrusted with a function fails to perform it.
- Qualifications and independence. Section 11(8) requires the appointing authority, before appointing, to seek a disclosure in writing from the prospective arbitrator under Section 12(1) and to have due regard to the qualifications required by the agreement and to the contents of that disclosure.
- International commercial arbitration. Section 11(9) provides that where the parties belong to different nationalities, a sole or third arbitrator of a nationality other than those of the parties may be appointed.
- Expedition and fees. An application under the section is to be disposed of as expeditiously as possible, with an endeavour to dispose of it within sixty days, and the Fourth Schedule supplies a model fee structure where the High Court has framed rules for the purpose.
⚠ Who appoints, and the institutional machinery For an international commercial arbitration the application lies to the Supreme Court or a person or institution designated by it; for any other arbitration, to the High Court or a person or institution designated by it. The amendment of 2019 sought to move this function from the courts to arbitral institutions graded by the Arbitration Council of India, but the provisions establishing that Council and the accompanying machinery have not been brought fully into force, and appointments in practice continue to be made by the Supreme Court and the High Courts, or by institutions they designate. |
2.2 The scope of examination at the appointment stage
Before 2015 the appointment function had been held to be judicial and to involve a full enquiry into the existence and validity of the agreement, the arbitrability of the claim and even the live character of the dispute. Section 11(6A), inserted in 2015, confined the examination to the existence of an arbitration agreement, and the decisions since have narrowed it further.
📖 Duro Felguera SA v. Gangavaram Port Ltd., (2017) 9 SCC 729 Held: After the insertion of Section 11(6A) the court is required only to examine the existence of an arbitration agreement, and nothing more. The elaborate enquiry contemplated by the earlier decisions is no longer permissible, and all other issues are for the arbitral tribunal. |
📖 NTPC Ltd. v. SPML Infra Ltd., (2023) 9 SCC 385 Held: The referral court applies a two-fold test: it examines the existence and validity of the arbitration agreement, and it examines whether the dispute is ex facie non-arbitrable or the claim is a deadwood or frivolous one. The jurisdiction is limited and is described as passing through the eye of a needle; the court weeds out only the manifestly non-existent claim and leaves every contested question to the tribunal. Significance: Read with Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1, this states the present standard: prima facie examination, a narrow power to reject the hopeless case, and reference in every case of doubt. |
Two further points belong here. Objections as to stamping are no longer examined at this stage: the seven-Judge reference of December 2023 on the interplay between the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 held that an unstamped or insufficiently stamped agreement is inadmissible but not void, that the defect is curable, and that the question is for the tribunal. And an order under Section 11 is not appealable; the only recourse is by special leave under Article 136 of the Constitution.
3. Independence and Impartiality: Section 12
Disclosure, and the different consequences of the Fifth and Seventh Schedules
Section 12(1) and (5), Arbitration and Conciliation Act, 1996 (1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and any circumstances which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within twelve months. (5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator. The proviso permits the parties, subsequent to disputes having arisen between them, to waive the applicability of this sub-section by an express agreement in writing. |
The disclosure is made in the form set out in the Sixth Schedule. The Fifth Schedule lists the grounds which give rise to justifiable doubts and guides the disclosure; the Seventh Schedule lists the relationships which make a person ineligible altogether. The distinction between the two Schedules is the key to this part of the Act.
📖 HRD Corporation v. GAIL (India) Ltd., (2018) 12 SCC 471 Held: The Fifth and Seventh Schedules operate differently. Where the ground falls within the Fifth Schedule, the arbitrator is not ineligible; the remedy is a challenge before the tribunal under Section 13, and if it fails, the party must await the award and apply under Section 34. Where the ground falls within the Seventh Schedule, Section 12(5) renders the person ineligible, his mandate terminates de jure, and the appropriate course is an application to the court under Section 14(1)(a). Significance: This is the decision that tells a party which door to use, and the distinction is regularly examined. |
📖 Bharat Broadband Network Ltd. v. United Telecoms Ltd., (2019) 5 SCC 755 Held: Ineligibility under Section 12(5) goes to the root of the appointment; the mandate of such an arbitrator terminates de jure and the appointment is void. The waiver permitted by the proviso requires an express agreement in writing made after the disputes have arisen; participation in the proceedings, or the failure to object, does not amount to waiver, and Section 4 has no application because the provision is not one from which the parties may derogate. |
4. Unilateral Appointment
The most litigated application of Section 12(5) concerns clauses which allow one party to control the constitution of the tribunal. The law developed in three steps.
📖 TRF Ltd. v. Energo Engineering Projects Ltd., (2017) 8 SCC 377 Held: A clause naming the Managing Director of one party as arbitrator, or his nominee, cannot operate after the amendment of 2015, because the Managing Director is himself ineligible under Section 12(5) read with the Seventh Schedule. Once the person is ineligible to act as arbitrator, he is equally ineligible to nominate another; what cannot be done directly cannot be done indirectly. |
📖 Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760 Held: The principle in TRF is not confined to a clause where the named person is also the arbitrator. Where an ineligible person has the exclusive power to appoint the sole arbitrator, the appointment is invalid, because that party's interest in the outcome of the dispute would operate through the choice of the tribunal. A clause conferring such exclusive power on one side therefore cannot be enforced, and the court appoints under Section 11. |
📖 Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV), (2025) 4 SCC 641 Held: A Constitution Bench held that an arbitration clause in a public-private contract requiring one party to select its arbitrator from a panel curated by the other is invalid. Unilateral appointment procedures offend the principle of equal treatment in Section 18 and the requirement of fairness under Article 14 of the Constitution. A public sector undertaking may maintain a panel of potential arbitrators, but it cannot compel the other party to choose only from it. The ineligibility may be waived only by an express agreement in writing after the dispute has arisen. Significance: This is the governing authority on appointment clauses in standard form and government contracts, and it required a large number of such clauses to be redrafted. |
5. Challenge to an Arbitrator: Sections 12(3) and 13
Section 12(3) states the grounds: circumstances exist that give rise to justifiable doubts as to the arbitrator's independence or impartiality, or he does not possess the qualifications agreed to by the parties. Section 12(4) provides that a party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment.
- Agreed procedure first. Section 13(1) leaves the parties free to agree on a procedure for challenging an arbitrator.
- The statutory procedure. Failing agreement, Section 13(2) requires the challenging party to send a written statement of the reasons for the challenge to the tribunal within fifteen days of becoming aware of the constitution of the tribunal or of any circumstance referred to in Section 12(3).
- Who decides. Unless the challenged arbitrator withdraws or the other party agrees to the challenge, the tribunal itself decides on it under Section 13(3).
- If the challenge fails. The tribunal continues with the proceedings and makes an award under Section 13(4); the challenging party may then apply to set aside that award under Section 34, and Section 13(5) makes that the only recourse.
- Costs on success. Where an award is set aside on an application made under Section 13(5), the court may decide as to whether the arbitrator is entitled to any fees, under Section 13(6).
⚠ There is no immediate application to the court The scheme deliberately avoids interruption of the arbitration. A party whose challenge is rejected cannot go to the court at once; it must wait for the award. The single exception is ineligibility under Section 12(5), which is not a matter of challenge at all: the mandate has ended by operation of law, and the remedy is an application under Section 14 for the court to decide the controversy about termination. |
6. Termination of the Mandate: Section 14
Section 14(1) provides that the mandate of an arbitrator terminates and he is to be substituted by another arbitrator where he becomes de jure or de facto unable to perform his functions, or for other reasons fails to act without undue delay, and where he withdraws from his office or the parties agree to the termination of his mandate. Where a controversy remains concerning any of these grounds, a party may apply to the court to decide on the termination of the mandate, and Section 14(3) provides that a withdrawal or an agreement to terminate does not imply acceptance of the validity of any ground referred to in the section.
Expression | Meaning | Illustrations |
|---|---|---|
De jure inability | A legal disability that prevents the arbitrator from acting | Ineligibility under Section 12(5) with the Seventh Schedule; expiry of the mandate under Section 29A where no extension has been obtained |
De facto inability | A factual incapacity to perform the functions | Prolonged illness, death, permanent absence from the country, appointment to an office incompatible with the reference |
Failure to act without undue delay | Inaction over a period that frustrates the reference | Persistent failure to fix hearings or to make the award within the time allowed |
7. Substitution: Section 15
How the mandate ends, how the vacancy is filled, and what happens to what has already been done
Section 15(1) adds two further occasions on which the mandate terminates: where the arbitrator withdraws from office for any reason, and where the parties agree to the termination. Section 15(2) provides that a substitute arbitrator is to be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced, so the parties return to the agreed procedure and, failing it, to Section 11.
Two provisions deal with the work already done. Section 15(3) provides that, unless otherwise agreed by the parties, where an arbitrator is replaced, any hearings previously held may be repeated at the discretion of the arbitral tribunal. The discretion belongs to the reconstituted tribunal, and it is ordinarily exercised in favour of repeating the evidence of witnesses whose credibility matters, while accepting the documentary record as it stands. Section 15(4) provides that an order or ruling made before the replacement is not invalid merely because there has been a change in the composition of the tribunal, unless the tribunal decides otherwise. The two provisions together allow a reference to survive the loss of an arbitrator without starting again.
8. Related Topics and Provisions
Topic or provision | Connection |
|---|---|
The Arbitration Agreement and Reference: Sections 7 and 8 | The agreement from which the tribunal's authority comes |
Reference to Arbitration under Section 8 | The other route by which a dispute reaches the tribunal |
Sections 4, 16 and 18, A&C Act, 1996 | Waiver, jurisdiction and the mandatory duty of equal treatment |
Section 29A, A&C Act, 1996 | Time for making the award, and termination of the mandate on its expiry |
Sections 34 and 37, A&C Act, 1996 | Recourse after a failed challenge, and appeals |
Fourth, Fifth, Sixth and Seventh Schedules | Fees, justifiable doubts, the form of disclosure, and ineligibility |