The Arbitration Tribunal as defined under Section 2(d) of the Act means "a sole arbitrator or a panel of arbitrators".
Section 10 of the Arbitration and conciliation Act, 1996 deals with the composition of Arbitral Tribunals under Chapter III of the said Act. Section 10 (1) and 10 (2) are as under:-
"10. Number of arbitrators. - (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."
Section 10(2) makes it very clear that where the number of arbitrator is not determined, the arbitral tribunal shall consist of a sole arbitrator.
In a recent case the arbitration clause was as under:
"12.1 This Subcontract shall be governed by and construed in accordance with the Laws of India. The Courts at
12.2 The Parties shall endeavour to resolve any dispute or difference amicably through joint negotiation and when necessary by reference to the Chief Executive of EIL and SSE. If any dispute or difference, which cannot be mutually resolved by the parties, the same shall be referred to arbitration inaccordance with the provisions contained in Indian Arbitration and Conciliation Act, 1996 which is generally in accordance with UNCITRAL rules.
12.3 The arbitrator(s) shall give reasoned award in respect of each dispute or difference referred to him. The award as aforesaid shall be final, conclusive and binding on all the Parties of this Subcontract in accordance with the Law.
12.4 The venue of the arbitration shall be at
By relying on para 12.2, it was argued that the said clause does not indicate about the number of arbitrators to be appointed while reciting that the matter be referred to arbitration in accordance with the provisions contained in the Indian Arbitration and Conciliation, 1996, which is generally in accordance with the UNCITRAL rules. Therefore, the number of arbitrators should be more than one and since it can not be an even number in view of s. 10 (1), there should be three arbitrators. This plea was opposed inter alia on the grounds that appointment of three arbitrators will be expansive and proceedings will take time as all arbitrator will consult each other regarding convenient time for meetings.
The Supreme Court held that even if UNCITRAL rules are referred the position will remain the same. UNCITRAL model law on International Commercial Arbitration also accepts the same definition of Arbitration Tribunal in Article 2(b). Article 10 of those rules is almost identical with Section 10 of the said Act. Article 2(b) and Article 10 of those rules are extracted herein below:-
"Article 2. Definition and rules of interpretation - For the purposes of this Law:
(a) xxx xxx
(b) "arbitral tribunal" means a sole arbitrator or a panel of arbitrators."
"Article 10. Number of arbitrators - (1) The parties are free to determine the number of arbitrators.
(2) Failing such determination, the number of arbitrators shall be three."
The court said that the definition of Arbitral Tribunal in Section 2(1)(d) of the said Act is verbatim the same as in Article 2(b). Article 10 of the UNCITRAL model law has close similarity with Section 10 of the said Act. Section 10 deviates from Article 10 of the UNCITRAL law only in the sense that Section 10(1) of the Act provides that despite the freedom given to the parties to determine the number of arbitrators such numbers shall not be even number. But in default of determination of the number, Section 10(2) provides the tribunal is to consist of a sole arbitrator. Therefore, scheme of Section 10(2) of the Act is virtually similar to Article 10.2 of the UNCITRAL model law.
Thus, where the Arbitration clause is silent about the number of arbitrators, Section 10(2) of the said Act squarely applies.
It has been also held that a policy decision of a party cannot change the contractual clause. In this case reliance was placed on a standard contract clause which provided that: “.. For Contracts costing upto Rs.10 Crores, a Sole Arbitrator should be appointed. For Contracts costing over Rs.10 Crores, a Committee of Arbitrators should be appointed composed of one Arbitrator to be nominated by the Contractor, one to be nominated by the Owner and the third Arbitrator, who will act as a Chairman but not as umpire, to be chosen jointly by the two nominees. The decision of majority of Arbitrators shall be final and binding on both parties."
Moreover, in this case the contract between the parties was entered into in 2004 and said policy decision came into effect in 2005. Therefore, the said policy decision could not in any way override contract between the parties.
(See, ARBITRATION PETITION NO.3 OF 2009, Sime Darby Engineering SDN. BHD. v. Engineers India Ltd.)
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