Dispute regarding number of arbitrators

              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 Delhi shall have sole   jurisdiction.

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 New Delhi, India."

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.)