Choosing The Right Arbitrator: Key To Successful Dispute Resolution In India

The selection of an arbitrator is arguably the most critical step in any arbitration process. This individual acts as the neutral judge, guiding the proceedings, ensuring a fair hearing, and ultimately delivering a well-reasoned and enforceable award. This article delves into the intricacies of selecting an arbitrator in the Indian context, providing a roadmap for making an informed and strategic decision.

The selection of arbitrators is grounded in the provisions set forth by the Arbitration and Conciliation Act of 1996 (the Act) and its subsequent amendments. Some of key provisions on this aspect include-

• Mutual Agreement (Section 10): Parties have the freedom to appoint an arbitrator (or arbitrators, ensuring an odd number) through mutual consent. This allows them to tailor their choice to the specific requirements of the dispute.
• Court Appointment (Section 11): If parties fail to agree, the Act prescribes a mechanism for court intervention:
• Domestic Arbitration: The High Court, or a designated person or institution, appoints the arbitrator upon request of a party (Section 11(6)).
• International Commercial Arbitration: The Supreme Court, or a designated person or institution, handles the appointment (Section 11(9)).
• The 2015 Amendment and its Impact: The Arbitration and Conciliation (Amendment) Act, 2015, strengthens the framework by:
  • Disclosure Requirements: Prospective arbitrators must disclose potential conflicts or factors affecting their ability to complete the arbitration within a reasonable timeframe (Section 12(1)).
  • Eligibility and Disqualification: Clear guidelines are provided on circumstances raising doubts about independence or disqualification (Fifth & Seventh Schedules).
  • Expedited Appointments: Courts or designated institutions are urged to dispose of appointment applications within 60 days (Section 11).

While specific procedures may vary by jurisdiction, several core principles guide arbitrator selection across the globe:

• Subject Matter Expertise: The chosen arbitrator should possess in-depth knowledge and experience in the specific area of law or industry relevant to the dispute. For instance, a construction dispute would benefit from an arbitrator with a proven track record in handling complex engineering contracts.
• Neutrality and Independence: Absolute impartiality is crucial. Any potential conflicts of interest, past dealings with parties, or personal biases must be disclosed and addressed. Parties should carefully scrutinize the arbitrator’s background for potential conflicts. The 2016 Delhi High Court case of Venture Global Engineering Ltd. v. ONGCserves as a cautionary tale. The court set aside the arbitral award due to the arbitrator’s non-disclosure of a prior professional relationship with one of the parties.
• Availability and Timeliness: An arbitrator’s workload can significantly impact the timeline of the arbitration process. Consider the arbitrator’s caseload to ensure a timely resolution, especially when dealing with time-sensitive disputes.
• Language Skills: If the parties or proceedings involve multiple languages, fluency in relevant languages is essential. This ensures clear communication and avoids misunderstandings during the hearing. Case in point being in a recent dispute involving a US pharmaceutical company and an Indian generic drug manufacturer, where the contract was in English but crucial technical documents were in Hindi, selecting an arbitrator proficient in both languages would be beneficial.
• Arbitration Institution (if applicable): Many Indian arbitration institutions, like the Delhi International Arbitration Centre (DIAC) or the Arbitration and Conciliation Centre (DRACC), maintain lists of qualified arbitrators with diverse expertise and experience. These lists can be a valuable resource for identifying suitable candidates. The DIAC has recently introduced a panel of arbitrators specializing in renewable energy projects.

Selecting an effective arbitrator is an investment in a fair and efficient dispute resolution process. A practical checklist taking in account the above discussed factors to guide you through the above key considerations would include-

1. Review the Arbitration Agreement:
   • Does it specify the number of arbitrators and the selection process (mutual agreement or institutional appointment)?
   • Are there any qualifications or restrictions on the arbitrator’s nationality or background?
   • Does it reference any specific arbitration rules that might outline arbitrator selection procedures?
2. Nature of the Dispute:
   • Identify the key legal and factual issues involved in the dispute.
   • What specific industry knowledge or technical expertise is required in the arbitrator?
3. Desired Qualities:
   • Consider the temperament and personality traits that would be most conducive to efficient and fair proceedings.
   • Should the arbitrator be known for a decisive or more collaborative approach?
   • Would it be advisable to appoint a sole arbitrator with extensive experience or a multi-member tribunal with diverse expertise for highly complex disputes?

1. Review Lists of Accredited Arbitrators: Access reputable arbitration institution resources or online directories to find qualified arbitrators based on expertise, language skills, and location criteria.
2. Disclosure Requirements: Ensure the chosen arbitrator completes all necessary disclosures regarding potential conflicts of interest, fees, and availability

1. Mutual Agreement (if applicable): Negotiate with the other party on a mutually agreeable arbitrator, exchanging information on potential candidates and discussing qualifications.
2. Institutional Appointment (if applicable): Follow procedures outlined in the chosen arbitration institution’s rules for arbitrator nomination and appointment, considering submitting a ranked list of preferred arbitrators with justifications.
3. Online Arbitration Platforms: Online platforms are increasingly streamlining arbitrator selection, document exchange, and virtual hearings, potentially reducing costs, especially in minor disputes.

• Cost and Fees: Be mindful of the arbitrator’s fee structure and potential for additional costs associated with complex proceedings.
• Location: Where will the arbitration proceedings take place? Arbitrator location can impact travel logistics and potentially, costs.
• Past Awards (if available): Researching past awards issued by the arbitrator can provide insights into their reasoning and approach to resolving disputes.
• Party Consent (if court appointment): If court appointment becomes necessary, be prepared to present arguments advocating for your preferred candidate(s) to the court.

In the recent case involving Construction Company and the National Highways Authority of India (NHAI), our expertise in selecting an arbitrator proved instrumental in navigating the complexities of an Engineering, Procurement, and Construction (EPC) dispute. Faced with contentious issues surrounding project delays, change orders, and technical compliance, the paramount challenge lay in identifying an arbitrator with a nuanced understanding of construction law, extensive experience in infrastructure projects, and familiarity with NHAI disputes. Through meticulous research and collaboration with industry specialists, we meticulously evaluated potential arbitrators, considering factors such as their legal acumen, past awards, and availability. Ultimately, my recommendation of a retired judge renowned for his expertise in infrastructure projects and construction law ensured that our client was strategically positioned for a successful arbitration.

By understanding the legal framework, considering the key factors outlined in this article, and incorporating the practical checklist, one can significantly increase its chances of a successful arbitration outcome. This is where an experienced arbitration counsel can prove invaluable. As a strategist, it is crucial to understand your specific dispute, identify the necessary arbitrator qualifications, and develop a selection strategy aligned with your needs.