INTRODUCTION

Carrying on business activities entails many issues, one of which is parties

entering into various contracts which lay down terms and conditions. Although,

generally, efforts are made for unhindered implementation of the contracts, it may so

happen that, in their performance, disputes arise which the existing stipulations can’t take

into account. In fact it is not humanly possible to provide for all eventualities which can

give rise to disputes and lay down ways and means to avoid them. Therefore a

mechanism has to be in place which will help in amicable settlement of altercation. While

knocking at the doors of the courts for justice is pervasive, the delays and the costs

involved in court process cannot be wished away. Alternative machinery, which is

expeditious, offers swifter and less formal procedure as compared to courts, flexible and

which is also cost effective with legal backing, was always in demand. And this

machinery is Arbitration. It simply means out of court settlement of disputes through a

third party who is non-partisan and picked by the parties themselves. In the eventuality of

the parties not reaching a conclusion as to the arbitrators themselves there are provisions

to allow any other neutral body such as the court to appoint the arbitrator. This process is

well-accepted throughout the world. In the Indian context, the Arbitration Act 1940 was

in the statute book for long but with globalization of the Indian Economy, it has given

way to The Arbitration and Conciliation Act, 1996 which has made the law of arbitration

in line with the global law.

This is an attempt to study the provision which allows the Chief Justice or any person

or institution delegated by him to appoint the arbitrator. Infact as far as this provision is

concerned the Indian law is not a replication of the model law or any of the legal systems.

This has been done keeping in mind the new globalised scenario and the objective of

minimal court interference.

However there have been various problems faced with the working of this provision.

The debate regarding the nature and scope of the provision has been addressed by many.

Various forums have expressed divergent views. The judiciary has been oscillating

between this being an administrative or judicial power as the consequences regarding the

right to appeal would depend on that. Further even the power to look into preliminary

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questions by the appointing body in spite of a specific provision in the Act giving the

arbitrator the power to do the same has been debated in the same context.

Various forums to suit their own interests are complicating the process of arbitration.

However what must not be forgotten under any circumstances is the general scheme of

the Act. The objective of the Act is to provide speedy and cost effective dispute

resolution and hence build confidence in the Indian dispute settlement mechanism.

LEGAL LANDSCAPE

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The scheme for appointment of the arbitrator in clearly explained in section 11 of

the Arbitration and Conciliation Act, 1996. Section 11 gives the parties the freedom to

agree on a procedure to appoint an arbitrator. It envisages a situation where failing an

agreement in arbitration with three arbitrators, each party shall appoint one arbitrator and

the two appointed arbitrator, and the two appointed arbitrators shall appoint the third

arbitrator who shall appoint the third who shall act as the presiding arbitrator1. Further

(a) If a party fails to appoint an arbitrator within 30 days from the receipt of a request to

do so from the other party; or

(b) The two appointed arbitrators fail to agree on the third arbitrator within thirty days

from the date of their appointment;

The appointment shall be made upon request by the Chief Justice or any person or

institution designated by him2. The same is the provision in the case of a sole arbitrator as

well.3

The power of the chief justice to appoint an arbitrator has also been clearly stated in

sec 11. Section 11(6) Where, under an appointment procedure agreed upon by the parties-

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of

them under that procedure; or

(c) or a person including an institution, fails to perform any function entrusted to him or

it under that procedure;

A party may request the Chief Justice or any person or institution designated by him to

take necessary measure, unless the agreement on the appointment procedure provides

other means for securing appointment4.

Hence these sections together clearly lay out the scheme for appointment of the

arbitrators and the various situations in which the Chief Justice or any institution

designated by him may be approached for the appointment of the arbitrator. Further the

1996 is a comprehensive code of arbitration. In order to understand the scheme of the Act

1 Section 11 (3), Arbitration and Conciliation Act, 1996.2 Section 11 (4), Arbitration and Conciliation Act, 1996.3 Section 11 (5), Arbitration and Conciliation Act, 1996.4 Section 11 (6), Arbitration and Conciliation Act, 1996.

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it is important to study some other relevant provisions as well. According to section 5 of

the Act 'no judicial authority shall intervene except where so provided in this part5. The

Act envisages a difference in referring the parties to arbitration under the New York

Rules and for domestic arbitration. This is clear from a cursory study of the Section 8 6

and Section 457. The difference between the two sections is apparent while section 8

states that the judicial authority shall refer the parties to arbitration and section 45 gives

the judicial authority the discretion to refer the parties to arbitration unless it finds that

the said agreement is null and void and inoperative. So the difference in procedure as in

the case of enforcement of foreign awards and domestic arbitration are apparent. Hence

in the opinion of the researcher since the two are clearly worded differently the difference

in the two situations is apparent. So if a general overview of the 1996 Act is conducted it

will be seen that the Act is a Code envisaging minimum intervention by the court as it

clear by a reading of Section 5 of the Act and all situations where an appeal can be made

against an order of the arbitral tribunal have been clearly stated in section 37 of the Act.8.

Since the Act covers the situations where an appeal would be possible it clearly excludes

all other possibilities.

After these sections it would be easy to come to the conclusion that the 1996 Act

provides greater autonomy to the parties and has reduced judicial interference. The Act is

based on the Model law by the United Nations Commission for International Trade Law 5 Section 5- notwithstanding anything contained in any other law for the time being in force, for matters governed by this part, no judicial authority shall intervene except where so provided in this part.6 Section 8 Power to refer parties to arbitration where there is an arbitration agreement(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if the party so applies not later than when submitting his first statement on the substance of the dispute refer the parties to arbitration. 7 Power of judicial authorities to refer party to arbitration notwithstanding anything contained in Part I or in the Code of Civil Procedure, a judicial authority when seized of an action in a matter in respect of which the parties have made an agreement referred to in Section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative and incapable of being performed.8 Section 37 Appealable Orders(1) an appeal shall lie from the following order ( and no others) to the court authorized by law to hear appeals from original decrees of the court passing the order namely-(a) Granting or refusing to grant any measure under section 9.(b) Setting aside or refusing to set aside an arbitral award under section 34.(2) appeal shall also lie to a court from an order of the arbitral tribunal-(a) accepting the plea referred to in sub section 2 or sub section 3 of section 16; or(b) granting or refusing to grant an interim measure under section 17(3) no second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away an right to appeal to the Supreme Court.

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(UNCITRAL) of which India is a member and meets the specific need for international

commercial arbitration. The important feature of the UNCITRAL model rules and law is

that they have harmonized concepts on arbitration and conciliation of different legal

systems of the world and thus contain provisions designed for universal application. The

new Act has been instrumental in attracting foreign investors and making them feel

secure in the environment of efficient and speedy justice9.

However the provisions of section must be examined in the light of these objectives

of the Arbitration and Conciliation Act, 1996. This provision differs from the model law

and also from the law of most of the other countries. The model law in Art 11(4)

contemplates the appointment of arbitrators by 'Court or other Authority specified in Art

6 mandates that 'the functions referred to in Art 11(4) shall be performed by (each state

enacting this model law specifies the court, courts or where referred to therein, other

authority competent to perform these functions10.thus it must be observed that the Section

11 of the Indian Act is not a replication of the model UNCITRAL model. Infact keeping

the objective of minimal court interference in mind Section 11 of the Indian Act is

probably more progressive than the model law as has been stated by Dr. Gerold Hermann

a principal drafter of the model law.11

Hence the objectives of the 1996 act are clear and are reflected in almost all the

provisions of the Act. The main objective being speedy justice and minimal intervention

of the courts section 11 facilitates such an objective as the chief justice as an officer is

given the power to appoint or arbitrator or designates any institution to do the same. So

the parties do not have to go through the courts for the appointment of the arbitrator and

it can be done in a speedy fashion.

Before concluding the examination of legal landscape as regards the power of the

Chief Justice to appoint an arbitrator and the general scheme of the Act it is important to

observe the change that has been seen after 1940 Act.Section 8 of the 1940 Act

corresponds to section 11 of the 1996 Act12.So the old Act talks about the court

9 K.G Singhania, 'Comparative Study of the Indian Arbitration Act 1940 and the Arbitration and Conciliation Act 1996', Arbitration and ADR, Vol. 3, No 2, October 1998.10 Consultation Paper on review of Working of the Arbitration and Conciliation Act, 1996, Law Commission of India.11 Dr Gerold Hermann, at the XV ICCA Congress held at New Delhi, March 2-4, 2000.12 Section 8 of the Arbitration Act 1940 states thatPower of the Court to Appoint arbitrator or umpire-(1) in any of the following cases:-

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appointing the arbitrator which is similar to the provision of the model law. However the

1996 Act clearly deviates from that principle and gives the Chief Justice or any institution

designated by him to appoint the arbitrator. This could be understood in the context of the

liberalization policy of the government of India to integrate the Indian economy with the

world economy and the subsequent increase in the international sale of goods and

services, investment, communication and transportation. In order to keep pace with the

disputes that would arise from these activities, India had to streamline its arbitral

mechanism. Hence the ultimate goal is to provide a quick and cost effective remedy as

any other law in the world. In the case of section 11 the drafters went a step ahead of the

model law and envisaged a situation where court intervention would be minimal and the

Chief Justice or any institution designated by him will have the power to appoint an

arbitrator.

(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not after differences have arisen, concur in the appointment or appointments; or

(b) if any appointed arbitrator neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that that it was intended that the vacancy should not be supplied, and the parties or the arbitrator, as the case may be, do not supply the vacancy; or

(c) where the parties or the arbitrators are required to appoint an umpire and not appoint him,any party may serve the other parties or arbitrators as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy (2) If the appointment is not made within 15 clear days after the service of the said notice, the court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties.

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DISCRETION OF THE COURT

Having examined the legal provisions regarding the power of the Chief Justice

to appoint the arbitrator it is important to observe the factual situation as well. The

important question that needs to be considered is whether the Chief Justice or any

institution designated by him also has the power to go into preliminary questions before

the appointment of the arbitrator. As far as the legal provisions are concerned it was been

clearly seen that there is a difference between the domestic and foreign arbitration

procedures. In the case of sec 35 the court has the power to see whether the agreement is

null inoperative or void before appointing an arbitrator. However in the case of section 8

no such provision is given. Even under the 1940 Act the Court had the power to refuse

the appointment of an arbitrator if there was no arbitration clause in existence. In the case

of Dayanand Reddy v. A.P Industrial Infrastructure Corporation13 it was held by the

courts that the original agreement signed by the parties did not contain any clause for

arbitration. It was further held that in the absence of clear intention of the parties

agreement for arbitration cannot and should not be inferred more so when the specific

case of the respondent is that by mistake the clause relating to arbitration crept in the

copy of the agreement. Further also in the case of Bharat Bhushan v. UP Small Industries

Corporation Ltd.14 a contractor made an application under section 8 of the 1940 Act for

the appointment of an independent arbitrator. Application was allowed by the civil judge

an in appeal the High Court held that the court had no jurisdiction under section 8 of the

1940 Act to appoint an arbitrator because in the circumstances of the case none of the

clauses of section 8 were attracted. However the Supreme Court in turn upheld the

decision of the High Court but the for different reasons. They held that the disputed

agreement did not contemplate any arbitration the application under section 8 was

misconceived.

However the situation under the 1996 Act should be different as the Act only says

that in certain cases the chief Justice or any institution designated by him shall appoint an

arbitrator under some given circumstances. However there has been varied opinion and

13 Dayanand Reddy v. A.P Industrial Infrastructure Corporation, (1993) 3 SCC 137.14 Bharat Bhushan v. UP Small Industries Corporation Ltd., (1999) 2 SCC 166.

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debate on that issue. Some High Courts have taken the view that before taking necessary

measures for securing appointment of the arbitrator or arbitrators under section 11 the

Chief Justice or his designate can go into the question of existence or validity of the

arbitration agreement and the arbitrality of the subject matter of the dispute in arbitration.

In the case of Lachamanna B Horamani v. State of Karnataka15 the judge went into the

issue of whether there was a valid clause referring the parties to arbitration and then the

judge decided to appoint Chief Engineer as the sole arbitrator. Also in the case of Lloyds

Steel Industries Limited v. Oil and Natural gas Corp. Ltd16. There was a contract with an

arbitration clause. The applicant's bill involving huge amounts was with held for about 4

1/2 years and the applicant suffered great loss. The applicant agreed to enter into a

memorandum of understanding and so the original claim between them was settled.

However there was a dispute regarding interest for delayed payment. The contention was

that the memorandum of association had put an end to the original agreement so the

arbitration clause in that could not be invoked. However the counsel for the applicant

contended that the appointment of the arbitrator was mandatory and it was for the arbitral

tribunal to rule on its own jurisdiction, including any objection as to the validity or

existence of the arbitration agreement. The court disregarded this contention and said that

even if the arbitral tribunal is required to decide the said question under section 16 of the

Act, still however before referring the matter for arbitration, arbitration agreement must

be in existence without the arbitration agreement there would be no question of referring

the matter for arbitration.

However there have been various courts that have also given decisions to the

contrary. In the case of Nucon India (P) Ltd. v. Delhi Vidyut Board (Desu)17 It was an

application for the appointment of an arbitrator under Section 11 of the Arbitration and

Conciliation Act, 1996 for adjudicating the dispute having arisen between the petitioners

and the respondents relating to the execution of the contract awarded by the respondents

for the work of construction of control room building for 400 KV Sub-Station of the

respondent (DESU) at Bawana, Delhi. The letter of intent was issued by the respondents

on 6th August, 1991. The contract was for Rs. 1,10,02,860. Time was the essence of the

15 Lachamanna B Horamani v. State of Karnataka, 1999 (1) Arb. LR 153.16 Lloyds Steel Industries Limited v. Oil and Natural gas Corp. Ltd., AIR 1997 Bom 337.17 Nucon India (P) Ltd. v. Delhi Vidyut Board (Desu), 2001 (2) Arb LR 135.

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contract and it was to be completed within a time period of six months, that is, by 8th

June, 1992. According to the petitioners, the contract could not be completed for various

reasons attributable to the respondents. The fact that there was an arbitration clause was

not disputed. When the respondents failed either to make the payment of the claim

amount or to appoint an Arbitrator in terms of the arbitration clause as demanded by the

petitioners, the petitioners were left with no other alternative but to file the present

petition under Section 11(6) of the Act. Learned counsel for the respondents claim that

they did appoint a sole arbitrator as per the arbitration clause and sent a notice to the

petitioner and so the petitioners claim under section 11 will become infructuaous.

However the petitioners claim that the appointment was made after the application was

made under the section and even after repeated requests the petitioner did not do the same

before the application was filed under sec 11(6). The court held that f the other party fails

to appoint an arbitrator within 30 days after the receipt of notice to do the court is chief

Justice is obligated to do so without going into the any other questions of jurisdiction.

Also in the case of Meda Narisimhulu v. Council of Scientific and Industrial Research

and another18 the judge held that 'the question of limitation however debatable it is,

should first be decided by the Chief Justice or a person designated by him before a

decision is taken on the appointment of the arbitrator. Therefore i see no bar to appoint an

arbitrator under section 11(6) read with other allied provisions inasmuch as the

respondent failed to respond to the applicants request for the appointment of the arbitrator

in terms of the agreement and the agreement does contain arbitration clause for the

appointment of the sole arbitrator. Further there are certain larger questions that may arise

in the context of section 11- the nature and amplitude of the power conferred on the Chief

Justice or the person designated by him; whether the chief justice is required to pass a

judicial order if there is a controversy with regard to arbitrality of the claims. It can be

safely said that the jurisdiction conferred on the CJ or the person designated by him under

section 11(4) and 11(6) does not comprehend the power to decide arbitrable and arguable

questions which could otherwise be decided by the arbitrator. Therefore there is no bar to

appoint an arbitrator under 11 (6) inasmuch as the respondent failed to respond to the

applicant's request for appointment of an arbitrator as per the terms of the agreement.18 Meda Narisimhulu v. Council of Scientific and Industrial Research and another, 1999 (Suppl) Arb LR 648.

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Hence all the cases clearly show that there is a divergence of judicial opinion on

the question of whether the chief justice or designated authority can go into preliminary

issues regarding jurisdiction inspite of the fact that section 16 clearly says that the

arbitrators have the power to adjudicate matter regarding their own jurisdiction.

This question that has been widely debated recently. The Law Commission of India

has also gone into the question and conducted the study. According to the report of the

law commission it is true that section 16 of the arbitration Act, 1996 confers power on the

arbitrators to decide various jurisdictional issues. One view is that even jurisdictional

issues raised in section 11 stages should be decided only by arbitrators and not by courts.

They further clarify that it is the first time that such a specific power is given to the

arbitrator under the new Act. According to the law commission's understanding of section

16.It appears that the intention behind Section 16(1) is that such a power to decide

jurisdictional issues should be exercised by the arbitrators whenever disputes go before

them on being referred by the parties. if the matter straightway goes before the arbitrators

i.e. not by reference under section 11, the arbitrators can certainly decide the

jurisdictional issues and the decision on the said issues would always be amenable to

review under section 34 of the Act if the present position continues under section 11 the

arbitrators would decide questions of jurisdiction and if they accept the plea of lack of

jurisdiction, their order would be amenable to appeal under section 37 (2) (a). If however

they reject the said plea, there is no provision for appeal and the party has to wait till the

award is passed. Hence in the opinion of the Law Commission the courts should have the

power to go into issues of jurisdiction and when a party contends that there is no

arbitration agreement questions of fact are raised. In such an event a provision can be

made under section 11 that the court may have the evidence recorded by an advocate

commissioner appointed by it.

In the opinion if the researcher the law commissions understanding should be subject

to criticism as it is apparent that the main objective of the 1996 Act is speedy justice.

When the Act specifically confers power under section 16 on the arbitrator to go into

questions regarding jurisdiction the appointing authority should not have the right to

consider questions of jurisdiction. The Chief Justice or any designate is only required to

appoint an arbitrator in the eventuality that there is disagreement between the parties or

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deadlock. This is so that an impartial authority may be able to appoint an arbitrator in the

event of a dispute between the parties. Hence the function of the court or the designate

should be restricted to the appointment alone and not to go into the questions of

jurisdiction.

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NATURE OF THE POWER

An extremely important provision that has arisen in the context of the power of the

chief justice to appoint the arbitrator is what the nature of the power is. There has been a

wide controversy regarding this issue and various judicial opinions have been given. The

provisions of section 11 repose the statutory power in the Chief Justice or his designate in

cases where parties fail to agree with respect to the procedure or appointment of the

arbitrators. Despite the clear and unambiguous language of the statute, both confusion

and conflict have arisen on the question of whether the statutory functions of the Chief

Justice or his designate are acting under section 11 are of administrative or judicial

character?19

It would be important to understand the scope of the terms administrative and judicial.

The term administrative though bearing a wide range of meanings may be taken as

referring to 'broad areas of government activity in which repositories of power may

exercise every class of statutory function’. A judicial decision on the other hand

presupposes an existing dispute between two or more parties and involves the

presentation of their case by the parties to the dispute; ascertainment of facts by means of

evidence adduced by the parties; submission of legal arguments; decision which disposes

of the whole matter by a finding on disputed facts and an application of law when

necessary, and a ruling on any disputed questions of law20.

Hence now the nature of the power given to the Chief Justice or his delegate may be

examined. The question of whether the court has the power to go into the preliminary

question of the arbitrality of the dispute would also be answered if the power was held to

be judicial or administrative. In the case of K.R Raveendranath v. State of Kerela21

referred the question as to whether the Supreme Court or his designate acting under

section 11 to appoint an arbitrator could decide the questions of existence and validity of

the agreement to a larger bench. Following this decision a two-judge bench in the case of

19 O.P Malhotra, The Arbitration and Conciliation Act, 1996 (under publication by Butterworths, New Delhi).20 JAG Griffith et al, Principles of Administrative Law (4th ed., London: Pitman Publishing, 1967) at 143.21 K.R Raveendranath v. State of Kerela, (1996) 10 SCC 35.

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ICICI Ltd. v. East Coast Boat Builders & Engineers Ltd.22. Also referred the matter to a

larger bench for consideration. In the case of Sundaram Finance Ltd. v. NEPC India

Ltd.23 the court stated that the appointment of an arbitrator under section 11 does not

require a court to pass a judicial order. This opinion was reaffirmed in the case of Ador

Samia Pvt. Ltd. v. Peekay Holdings Ltd.24 here the court held that orders under section 11

of the Act are not judicial orders. It went on to say that as the learned Chief Justice or his

designate under section 11 (6) of the Act acts in administrative capacity. It is obvious that

such order cannot be passed by any court exercising judicial function nor is a tribunal

having the trappings of a judicial authority.

Recently in the case of Wellington Associates Ltd v. Kirit Mehta25 acting as a

designate of the Chief Justice of India in an International Commercial Arbitration

Jagannadha Rao J had assumed full judicial powers. In this case he held that the

jurisdiction of the CJI or his designate to decided question is not excluded by Section 16

of the Act. Further he held that arbitration clause was an enabling provision only having

no mandatory sense and thus no reference could be made to an Arbitral tribunal. He

stated that even if the Chief Justice of India or his designate is to be treated as an

administrative authority, the position is that when the said authority is approached

seeking appointment of an arbitrator or an arbitral tribunal and a question is raised that

there is to start with, no arbitration clause the CJI or his designate would have to decide

the question. What must be noted here is that Jagannadha Rao J was the same judge who

had deemed it appropriate to refer the matter to a larger bench in the earlier case of ICICI

Ltd.

Another important case in this regard is that of Konkan Railway Corporations Ltd. v.

M/s Mehul Construction Co.26, in this case it was stated that if it was held that the order

under section 11(6) is a judicial or quasi judicial order then the said order would be

amenable for judicial intervention. And any reluctant party may frustrate the entire

purpose by adopting dilatory tactics in approaching a court of law even against an order

of appointment of an arbitrator. Such an interpretation has to be avoided in order to

22 ICICI Ltd. v. East Coast Boat Builders & Engineers Ltd, (1998) 9 SCC 728.23 Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479.24 Ador Samia Pvt. Ltd. v. Peekay Holdings Ltd., (1998) 8 SCC 572.25 Wellington Associates Ltd v. Kirit Mehta, (2000) 4 SCC 272.26 Konkan Railway Corporations Ltd. v. M/s Mehul Construction Co, (2000) 3 SCCJ 265.

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achieve the basic objective for which the country has enacted the 1996 Act. If on the

other hand it is held that the order passed in administrative in nature then in such a case

when the CJ or his designate refuses erroneously to make an appointment then an

intervention could be possible by the court. It would be a case of non-performance of the

duty of the chief justice or his designate and then a writ of mandamus would lie. The

nature and function of the Chief Justice being essentially to aid the construction of the

arbitral tribunal the legislature consciously chose to confer the power on the chief justice

and not the court. Hence the power is an administrative power and not a judicial power.

This court clearly went into the details of the function of the Chief Justice and his

designate and came to the conclusion that it is an administrative power.

However a contrary view has also been held in the case of KonKan Railway

Corporation Ltd. v. Rani Construction Pvt. Ltd.27 In this case it has been pointed out that

there could be a variety of situations where preliminary issues arising at the stage of

Section 11 would have to be decide by the chief justice or his nominee, by a judicial

order and this would save time and expenditure and this view is not inconsistent with the

UNCITRAL model. It was held that if the order is treated as an administrative order it

could be challenged before a single bench of the High Court, the by a Division Bench and

finally under Art 136 to the Supreme Court. On the other hand in the case of a judicial

order there would be a direct appeal to the Supreme Court under Art 136. The bench

referred to the case of Azov Shipping Co. v. Baltic Shipping Co.28 where the question of

jurisdiction was first decided by the arbitrator and then came up before the court. The

court observed that this was perhaps a case where the parties could have straightway

come first before the court for determination of this issue, as that would have saved costs

and time. Hence the court held that the power was a judicial power and holding so would

be in the interests of justice and in keeping with the objectives of the Act.

Hence clear divergence of opinion can be seen as regards the issue. There are two main

views regarding the nature of the power. People who contest that the power is an

administrative power state the reasons for it thus,

(1) The chief justice is a repository of the statutory power, to make the necessary

measure for securing the appointment of the arbitrator or arbitrators. 27 KonKan Railway Corporation Ltd. v. Rani Construction Pvt. Ltd, 2000 (3) Arb LR 435.28 Azov Shipping Co. v. Baltic Shipping Co, 1999 (1) LL.LR 68.

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(2) The judicial function broadly speaking presupposes an existing dispute between two

or more parties. The request to take the necessary measure for securing appointment

of the arbitrator is not resolving any dispute relating to the existence or validity of the

arbitral agreement.

(3) The functions discharged by the CJ or a designate are administrative in character. Just

because it is a judge who has been vested with the power does not make it a judicial

function.

(4) This function of the Chief Justice is analogous to the power given to the Chief Justice

under Art 146 for appointment of officers and servants and the expenses of the

Supreme Court. This is clearly an administrative power even though it is discharged

by the Chief Justice.

(5) The function of the Chief Justice under section 11 are exercisable by himself or 'any'

other person or institution designated by him. The use of the word 'any would indicate

that the power could be delegated to a non-judicial functionary also.

(6) As a rule judicial functions cannot be delegated. If this were a judicial function then

they could not have been designated to any person or institution that the court Chief

Justice thinks fit.

These are the reasons presented by the proponents of the administrative nature of the

power. The researcher agrees with the view that the power is not a judicial power. Most

of the views given above clearly indicate that the nature of the power is not one of

adjudicating on a dispute.

On the other hand the law commission of India clearly believes that power is meant to

be a judicial power and that there should be an amendment to the section changing the

words 'Chief Justice or any person or institution designated by him' to 'the court' taking it

back to the provision as it stood in the 1940 model. According to them any question of

jurisdiction decided by the Supreme Court would be binding under Art 141 and will be a

final order without giving scope for further litigation. If the jurisdiction issue is decided

by a bench of the High Court in domestic arbitration cases then only one appeal would lie

to the Supreme Court. This would save time and expense in their opinion. Further they

have suggested that applications may be placed before the concerned bench of the

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Supreme Court or the High Court, as original applications, without mixing them up with

other arbitration cases so that they might get top priority.

Another point of view presented from a practical point of view is that there can be

two situations. If the arbitrator is appointed then the parties are bound to proceed with the

arbitration and no appeal lies in terms of the express provision of section 37. Once the

courts appoint an arbitrator the arbitral tribunal is constituted pursuant to the courts

orders. Any challenge to the jurisdiction had to be made before the arbitral tribunal

pursuant to section 16. Section 16 (6) says that any party aggrieved by such an award

may make an application for setting aside the award under section 3429.

On the other hand if the court turns down the request then there is no arbitral tribunal

to raise their disputes. So under section 37 a Special Leave Petition would be possible.

Hence where the Chief Justice appoints the arbitrator the decision is clearly

administrative and no appeal lies. However when the Chief Justice turns down the request

for such appointment the decision examines the facts and circumstances of the case and

decides the rights and liabilities of the parties and so is clearly judicial in nature.

Another view that could be examined in the opinion of the researcher is that this is

not a power given to the Chief justice at all but a function that he must perform himself or

through a designated body. It is basically the performance of a legal duty where no

element of choice enters. Nothing in section 11 suggests that the Chief Justice or any

person or institution designated by him has a choice in the matter of deciding whether to

appoint an arbitrator or not. It is a function that he must perform as per the request of the

parties. in which case the whole debate regarding administrative or judicial power would

be of no consequence as it is just a power to a public functionary which he must perform

in the course of his duty. The fact that there is no choice in the matter of appointment can

also be seen from the difference between section 8 and 11 as compared to section 45. In

section 45 there is a clear element of choice available to the court. If the court feels that

the agreement is null and void it has the power not to refer the parties for arbitration.

However in the case of domestic arbitration there is no such element of choice as per the

Act.

29 Ranbir Krishnan, ' Appointment of Arbitrator by Court under the Indian Arbitration and Conciliation Act, 1996’, International Arbitration Law Reporter, Vol. 3. (London: Sweet and Maxwell, 2000) at 37.

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Hence there are various divergent views available in this regard. The Supreme Court

still has to give a large bench decision upon the matter. The Law Commission has made

suggestions to amend the act and make it a clearly judicial power. Various practitioners

have also followed the middle path. Hence in the opinion of the researcher in this whole

debate the party's interest should not be forgotten and the object and scheme of the Act to

attain speedy and inexpensive disposal to the suit should not be forgotten.

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PRACTICE

Any law in practice is hardly ever what i is envisaged to be by the Act. However it

is necessary to remember the goals of the Act and not let practical manifestations take

over the legislature’s intent completely. It has been said that the issue of whether the

power of the Chief Justice is administrative or judicial and the issue of whether the Chief

Justice has the power authority to decide disputed cases apart from appointing the

arbitrator has now been complicated beyond comprehension. Several appointments are

held up in the meanwhile30.

Another aspect that needs to be looked into while examining the actual practice of

section 11 is the exercise of the power given to the Chief Justice to either appoint the

arbitrator himself or through an institution or person designated by him. An examination

of the cases where the chief justice has used his power to appoint an arbitrator it has most

often been a retired Judge or an advocate31. The serious concern here is the lack of

institutional arbitration in the country. However this could be explained on the terms that

ad hoc arbitration is preferred because of speed and the grounds of expense32. Another

reason could be the tendency of the judiciary to keep the power concentrated in it's own

hands. There could be various reasons for the same. However both international and

domestic arbitration needs to grow as it provides an effective method off dispute

settlement. However the attitudes of the practitioners and the courts will have to change

and the growth of the arbitration will have to be allowed unhindered.

30 MJ Antony, 'Litigants weep, lawyers laugh', Business Standard, 25th July, 2001.31 Meenakshi Devi v. MSTC Ltd., 2000 (Suppl) Arb LR 390; Ajit Prasad Jain v. Union of India, 2000 (Suppl) Arb LR 461.32 Henry J Brown, ADR Principles and Practice ( London: Sweet and Maxwell, 1998) at 115.

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CONCLUSION

This was an attempt to study the powers of the Chief Justice to appoint an arbitrator.

Under the Arbitration and Conciliation Act 1996, the parties are free to decide the

procedure for appointment of the arbitrators. However if there is a deadlock or a conflict

some neutral body is required to appoint the arbitrator to adjudicate upon the dispute.

This power under the Indian Act is given to the Chief Justice or any person or institution

designated by him. This provision has to be understood in the context of general scheme

of the Act itself. The mail objectives of the Act are to minimize court intervention and to

make arbitration a speedy and cost effective method of dispute resolution.

Hence in the opinion of the researcher the Chief Justice being an independent body

has been entrusted with the function to appoint arbitrators. It is significant to note that

this provision of our Arbitration and Conciliation Act, 1996 is different from the

UNCITRAL model and also from similar provisions in most other legal systems. This

would indicate that the drafting of our Act as regards is aspect is extremely progressive.

However various problems have emerged as regards the nature and scope of the

power conferred on the Chief Justice through section 11 of the 1996 Act. The moot

question being whether the power given to him is administrative or judicial and whether

the power took into jurisdictional issues is that of the arbitrator alone (under section 16 of

the 1996 Act) or the Chief Justice or his appointee even at the stage of appointment has

the power to examine questions of jurisdiction apart from just appointing the arbitrator. In

the opinion of the researcher the Act is a self contained code and so with provisions fro

minimum intervention of the court. Hence the Chief Justice or his designate should be

restricted to the mere appointment of the arbitrator and not go into jurisdictional

questions as the Act clearly gives the arbitral tribunal the power decide questions on it's

own jurisdiction. Further appeal provisions have also been clearly stated in the Act itself

so debate about the consequences flowing from the judicial or administrative character of

the should not be affecting the right to appeal of a party subjecting itself to arbitration

under the rules of the 1996 Act.

The entire controversy and debate has complicated the issue and makes the process

of arbitration seem very complicated. This however would be contrary to the intention of

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the Act. The legal practitioner today has made the process complicated and court oriented

to serve their own ends. This should be avoided at all lengths. The primary goal of the

Act to make the process of arbitration simple and cost effective should not be forgotten as

that is becoming increasingly important to promote international sales and encourage

foreign investors.

In the new globalised scenario increase of international sales should be of paramount

importance and making the process of dispute settlement simple and cost effective if a

major incentive as it gives the foreign party the confidence to trade with Indians. Hence

this being the primary goal in view the intervention of courts should be kept to a

minimum and the process should be made simple and cost effective.

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