Default is the term used to describe two kinds of situations concerning arbitration procedures, a) when a party fails to appoint an arbitrator within 30 days from notification or b) when appointment arbitrators fail to agree upon the appointment of the presiding officer within 30 days of their appointment. This default involuntarily forfeits the right of the parties/arbitrators to appoint a said arbitrator and the law in place, empowers the Courts (High Court in domestic arbitrations & the Supreme Court in international arbitrations) to intervene and act on the request made by the requesting party, to appoint the said arbitrator to continue and conclude the proceedings. This power of the court has been brought up in question in various cases, despite a provision for the same being laid down in Section 11(6) of the Arbitration and Conciliation Act, 2015.
Evolution of the Court’s Opinion
Regarding the subject matter of appointment of arbitrators post-default of either parties or the arbitrators themselves, the court has had a very flexible and consistent opinion that seems to have a logical and legal explanation. In case laws, such as the case of Datar Switchgears Limited v. Tata Finance Limited and Anr., the Supreme Court highlighted the absence of a period in S.11 (6) of the A&C Act, owing to which the power to appoint an arbitrator lied with the opposing, non-defaulting party even after 30 days, as long as there has been no application filed and submitted before the court under s.11, approaching them to appoint a said arbitrator.
In case the court has already been approached for appointment of an arbitrator under s.11, the Court cannot allow the work of an arbitrator by the defaulting party, owing to the legality of the matter since the filing of a request under s.11 would automatically put the issue in the hands of the court, this principle has been iterated in case laws such as Union of India v. Bharat Battery Manufacturing Company Pvt. Ltd. and Zion Promoters and Developers Pvt. Ltd. v. Ferrous Infrastructure Pvt. Ltd.
Although the court has held the previous judgment in various cases, it has also acted contrary in Rapti Contractor v. Executive Engineer and others. & Malu Sleepers Private Ltd. v. Union of India and Anr., by permitting and nominating the appointment of an arbitrator chosen by the respondent, despite the filing of a request under s.11. In response to the questions raised regarding the matter, through the case Tata Projects Ltd. v. Oil and Natural Gas Corporation, the High Court has stated that no provision prohibits the court from appointing the same arbitrator as chosen by one of the parties to a case, hence, such a decision is legitimate and does not violate the provisions of s.11.
While the Judiciary seems to have a proper stance regarding the appointment procedure of arbitrators, the lacuna in law arises when the very arbitrator, who caused the disagreement or defaulting of parties or arbitrators, is appointed by the court. Such an act raises questions of bias and points to the court's role in violating the rights of the grieved party. An independent stance much is taken, which is free of the loopholes mentioned above, which would remove any shortcomings that would otherwise fall in the lap of the Judiciary regarding the subject matter.
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