Introduction 

• Arbitration has emerged as a preferred method for resolving commercial disputes because of its flexibility, efficiency, and party autonomy.  
• Central to an effective arbitration process is the proper constitution of the arbitral tribunal—the decision-making body that will ultimately resolve the dispute.  
• Chapter III of the Arbitration and Conciliation Act provides a comprehensive framework governing the composition of arbitral tribunals, including the number of arbitrators, appointment procedures, challenges to arbitrators, and the termination and replacement of arbitrators. 

What is an Arbitral Tribunal? 

• Section 2 (1) (d) of the Arbitration and Conciliation Act, 1996 (A & C Act) states that arbitral tribunal means a sole arbitrator or a panel of arbitrators. 

Legal Provisions for the Composition of Arbitral Tribunal 

Section 10: Number of Arbitrators 

• Section 10(1) states that: Parties have the freedom to decide how many arbitrators they want, but the total number must be odd. This prevents deadlocks in decision-making. 
• Section 10(2) states that: If parties don't specify the number of arbitrators in their agreement, the tribunal will consist of a single arbitrator by default. 

Section 11: Appointment of Arbitrators 

• Sub- section 11(1) states that: An arbitrator can be of any nationality unless the parties have specifically agreed otherwise. 
• Sub- section 11(2) states that: Parties can agree on any procedure they wish for appointing arbitrators. 
• Sub- section 11(3) states that: If there's no agreed procedure and three arbitrators are needed, each party will appoint one arbitrator, and those two arbitrators will together appoint the third arbitrator who will act as the presiding arbitrator. 
• Sub- section 11(4) states that: When the procedure in 11(3) applies, and: 
  • A party fails to appoint an arbitrator within 30 days of being asked to do so, or 
  • The two appointed arbitrators fail to agree on the third arbitrator within 30 days, then the Supreme Court or High Court (or a person/institution they designate) will make the appointment when requested by a party. 
• Sub- section 11(5) states that: If there's no agreed procedure and a sole arbitrator is needed, but parties can't agree on who to appoint within 30 days, the Supreme Court or High Court (or their designate) will make the appointment upon request. 
• Sub- section 11(6) states that: Even if there is an agreed procedure, the Supreme Court or High Court (or their designate) can step in to appoint an arbitrator when: 
  • A party doesn't follow the agreed procedure, or 
  • Parties or appointed arbitrators can't reach the expected agreement, or 
  • A person or institution fails to perform their function under the procedure, unless the agreement provides another way to secure the appointment. 
• Sub- section 11(6A) states that: When considering applications under 11(4), 11(5), or 11(6), the Supreme Court or High Court must only examine whether an arbitration agreement exists, regardless of previous court judgments. 
• Sub- section 11(6B): When the Supreme Court or High Court designates a person or institution to appoint arbitrators, this is not considered a delegation of judicial power. 
• Sub- section 11(7) states that: Decisions made by the Supreme Court, High Court, or their designate under 11(4), 11(5), or 11(6) are final, and no appeal (including Letters Patent Appeal) is allowed against such decisions. 
• Sub- section 11(8) states that: Before appointing an arbitrator, the Supreme Court, High Court, or their designate must: 
  • Seek a written disclosure from the prospective arbitrator as per Section 12(1) 
  • Consider any qualifications required by the parties' agreement 
  • Take into account the disclosure's contents and other factors likely to secure an independent and impartial arbitrator 
• Sub- section 11(9) states that: In international commercial arbitration, when appointing a sole or third arbitrator, the Supreme Court (or its designate) may appoint someone of a nationality different from the parties if the parties are from different countries. 
• Sub- section 11(10) states that: The Supreme Court or High Court may create schemes for handling matters under 11(4), 11(5), or 11(6). 
• Sub- section 11(11) states that: If appointment requests are made to different High Courts, the High Court that received the first request has exclusive jurisdiction to decide. 
• Sub- section 11(12) states that : The section clarifies jurisdiction: 
  • For international commercial arbitration, "Supreme Court or High Court" means the Supreme Court 
  • For other arbitrations, it means the High Court within whose jurisdiction the principal Civil Court is located 
• Sub- section 11(13) states that: Applications for appointing arbitrators must be processed expeditiously, with efforts to complete within 60 days from service of notice on the opposing party. 
• Sub- section 11(14) states that: High Courts may frame rules for determining arbitrators' fees and payment methods, considering the rates in the Fourth Schedule. This doesn't apply to international commercial arbitration or where parties have agreed to follow an arbitral institution's fee rules. 

Section 11A: Power to Amend the Fourth Schedule 

• Sub- section 11A(1) states that: The Central Government can amend the Fourth Schedule (which deals with arbitrators' fees) through notification in the Official Gazette if deemed necessary or expedient. 
• Sub- section 11A (2) states that: Draft notifications must be laid before each House of Parliament for a total period of 30 days before being issued. Parliament may disapprove or modify the notification. 

Section 12: Grounds for Challenge 

• Sub- section 12(1) states that: When approached for potential appointment, a prospective arbitrator must disclose in writing: 
  • Any past or present relationship (direct or indirect) with parties or interest in the dispute that might raise doubts about independence or impartiality 
  • Any circumstances that might affect their ability to devote sufficient time, particularly their ability to complete arbitration within 12 months 
• Explanation 1: The Fifth Schedule provides guidance on circumstances that might raise doubts about independence or impartiality. 
• Explanation 2: Disclosures must be made using the form in the Sixth Schedule. 
• Sub- section 12(2) states that: Arbitrators must disclose any relevant circumstances to parties in writing without delay throughout the proceedings, unless parties already know about them. 
• Sub- section 12(3) states that: An arbitrator may be challenged only if: 
  • There are justifiable doubts about their independence or impartiality, or 
  • They don't have the qualifications agreed upon by the parties 
• Sub- section 12(4) states that: A party can challenge an arbitrator they appointed (or helped appoint) only for reasons discovered after the appointment. 
• Sub- section 12(5) states that: Regardless of any prior agreement, a person whose relationship with parties, counsel, or the dispute falls under any category in the Seventh Schedule is ineligible to be an arbitrator. 
• Exception: Parties may waive this restriction through an express written agreement after the dispute arises. 

Section 13: Challenge Procedure 

• Sub- section 13(1) states that: Parties can agree on a procedure for challenging arbitrators, subject to 13(4). 
• Sub- section 13(2) states that: If there's no agreed procedure, a party wishing to challenge an arbitrator must send a written statement outlining the reasons within 15 days of: 
  • Learning about the tribunal's constitution, or 
  • Becoming aware of circumstances mentioned in Section 12(3) 
• Sub- section 13(3) states that: Unless the challenged arbitrator withdraws or the other party agrees to the challenge, the arbitral tribunal will decide on the challenge. 
• Sub- section 13(4) states that: If a challenge is unsuccessful, the arbitral tribunal continues the proceedings and makes an award. 
• Sub-section 13(5) states that: When an award is made under 13(4), the party who challenged the arbitrator may apply to have the award set aside under Section 34. 
• Sub- section 13(6) states that: If an award is set aside following such an application, the Court may decide whether the challenged arbitrator is entitled to any fees. 

Section 14: Failure or Impossibility to Act 

• Sub- section 14(1) states that: An arbitrator's mandate terminates, and they must be replaced if: 
  • They become unable to perform their functions (legally or factually) or fail to act without undue delay, and 
  • They withdraw or parties agree to terminate their mandate 
• Sub- section 14(2) states that: If there's disagreement about the grounds in 14(1)(a), a party may ask the Court to decide on terminating the arbitrator's mandate, unless parties agreed to a different procedure. 
• Sub- section 14(3) states that: If an arbitrator withdraws or a party agrees to terminate their mandate under this section or 13(3), this doesn't mean they accept the validity of the grounds for termination. 

Section 15: Termination of Mandate and Substitution of Arbitrator 

• Sub- section 15(1) states that: Besides the circumstances in Sections 13 and 14, an arbitrator's mandate terminates when: 
  • They withdraw for any reason, or 
  • By or following agreement of the parties 
• Sub- section 15(2) states that: When an arbitrator's mandate terminates, a replacement must be appointed following the same rules that applied to the appointment of the arbitrator being replaced. 
• Sub- section 15(3) states that: Unless parties agree otherwise, when an arbitrator is replaced, the arbitral tribunal may decide whether to repeat previously held hearings. 
• Sub- section 15(4) states that: Unless parties agree otherwise, orders or rulings made before an arbitrator's replacement remain valid despite the change in tribunal composition. 

Conclusion 

The provisions governing the composition of arbitral tribunals embody the balance between party autonomy and procedural safeguards that characterizes modern arbitration law. Parties have substantial freedom to design the tribunal that will decide their dispute, but the law also provides default rules and court intervention when necessary to prevent procedural breakdowns. 

Understanding these provisions is crucial for effective participation in arbitration. The appointment, challenge, and replacement mechanisms ensure that arbitral tribunals are properly constituted, impartial, and equipped to resolve disputes efficiently. At the same time, the disclosure requirements and grounds for challenge protect the integrity of the arbitration process by addressing potential conflicts of interest.