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ROLE OF ARBITRATOR IN FINALISING THE

ARBITRATION AGREEMENT

Project Report submitted to


Professor Mr. V. Inbavijayan.
(Faculty: ADR)

Project submitted by
MANOJ KUMAR.A
Semester VIII
Section-B

THE TAMILNADU DR.AMBEDKAR LAW UNIVERSITY


CHENNAI-28.

ROLE OF ARBITRATOR IN FINALISING THE ARBITRATION


AGREEMENT

Introduction
The source of the jurisdiction of the arbitrator is the arbitration
clause. The arbitration clause is normally a part of the main contract
governing the parties. An arbitration agreement on the other hand
constitutes a separate agreement, distinct from the main contract, and is
binding on the parties. Parties can, even after the disputes have arisen,
agree to have their disputes referred to arbitration. The agreement,
however, must be in writing. Although contracts are required to be signed
by the parties, arbitration clause need not be signed by the parties. An
arbitration clause is binding if the parties have given their express or
implied or tacit consent to refer the disputes to arbitration. Subject to the
law of limitation, parties can refer their disputes to arbitration any time.
The Arbitrator while drafitng an Arbitration agreement takes into account
the several para meters for smooth fuctioning of the process. He plays a
key role in drafting and constructing the Arbitration agreement. The
following are essential attributes
Arbitration Agreement
An arbitration agreement is collateral to the substantial stipulation
of the contract. It is merely procedural and ancillary to the contract and it
is a mode of settling the disputes, though the agreement to do so is itself
subject to the discretion of the court. It is distinguishable from other
clauses in the contract.
Legal Advice
No part of this Guidance Note should be taken as legal advice. You
should seek legal advice when adopting the sample arbitration agreement
or clause so that they can be tailored to your particular scenario.

Duties Imposed by Parties in the Arbitration Agreement


The parties may impose specific duties on the arbitrator either in
the arbitration agreement or in any subsequent agreement. Such duties
may be imposed either before the arbitrator is appointed or after her
appointment. It is important for a prospective arbitrator to look carefully
at the agreement to ascertain whether it contains duties that she may not
be able to fulfil in the event that she is appointed arbitrator. As a matter of
courtesy, parties should consult the arbitrator prior to the imposition of
any additional duty after appointment. Where the arbitrator finds that she
is unable to perform such a duty and the parties insist on its performance,
the arbitrator may have to offer her resignation.
Powers of Arbitrator
Section 13 lays down the powers of arbitrators or umpire. It is
subject to the agreement of the parties. But they cannot be compelled to
exercise those powers. This section is applicable to statutory arbitration as
well. The various powers are as under :
(1) To administer oath to parties and witnesses appearing before him;
(2) To state a special case for the opinion of the court on any question of
law or state the award in the form of a special case for the opinion of the
court;
(3) To make the award conditional or in the alternative;
(4) To correct in an award any clerical mistake or error arising from any
accidental slip or omission;
(5) To administer any party interrogatories.
Power of Arbitrator to Delegate his Duties
The Arbitration and Conciliation Act, 1996 does not make any
special reference as to the power of arbitrator to delegate his duties in a
proceeding. However, under Sec.6 of the Act reference has been made as

to the taking of Administrative Assistance in an arbitration proceeding.


Along with this, under Secs.26 and 27, an arbitrator has been empowered
to

seek

assistance

from

experts

and

from

the

court.

Section6. Of the Act: In order to facilitate the conduct of arbitration


proceeding, the parties, or the arbitral tribunal with the consent of the
parties, may arrange for administrative assistance by a suitable institution
or person. This section provides freedom to the parties to choose suitable
experts in arbitration as and when required to facilitate smooth conduct of
the arbitration. In the context of Sec.6 administrative assistance
includes services in respect of arbitration such as receiving and sending
communications, arranging meeting, translation, interpretation etc.
Relevancy of Opinion of Expert in a dispute: Secs.45-51 of the Indian
Evidence Act deals with the relevancy of third parties in a suit. Sec. 45
says

that:

When the court has to form an opinion upon a point of foreign law or of
science or art, or in questions as to identity of handwriting or finger
impressions, the opinions upon that point of persons specially skilled in
such foreign law, science or art, or in questions as to identity of
handwriting or finger impressions are relevant facts. Such persons are
called experts.
To take the assistance from experts in solving an issue has been an old
tradition of the courts. In some matters, there is need of professional or
technical skill which the courts do not always possess. So in such cases
the opinion of experts becomes crucial. As for example, when the court
has to determine the cause of a ship-wreck or an air-crash, there may be
many technical causes behind it and, therefore, the court will need the
assistance
acquainted

of technicians, they being better


with

such

cases1

The above section permits only the opinion of an expert to be cited in


1. Folokes v. Chadal, (1782) 3 Doug. K.B. 157

evidence. The weight that ought to be attached to the opinion of an


expert is a different matter from its relevancy. The Act only provides about
the relevancy of expert opinion but gives no guidance as to its value.
However, it is settled legal position that ordinarily an expert opinion needs
no corroboration, it cannot be treated to the same class of evidence as
that of an accomplice and insist upon corroboration 2 An expert should be
an independent person and not an associate of the company in whose
favour his opinion was expressed 3Section.46 of the Indian Evidence Act,
1872 provides that facts, not otherwise relevant, are relevant if they
support or are inconsistent with the opinions of expert, when such
opinions are relevant. The effect of the provision is that when the opinion
of expert is relevant and has been cited, any fact which will either support
his opinion or contradict it will also become relevant. It is to be noted that
the provisions of the Indian Evidence Act, 1872 do not apply to the arbitral
proceedings in strict sense.
Sec.27 of the Act: Under Sec.27 the arbitral tribunal can seek assistance
of the court in taking evidence by sue motu or on request of a party. The
arbitral tribunal no power to issue summon to persons except the
disputing

parties

in

the

arbitration.

Thus, in order to facilitate smooth conduct of an arbitration proceeding an


arbitrator with the prior consent of the parties can delegate his functions
to experts for their assistance in solving the dispute. The expert may be
legal or a technical expert depending upon the nature of the issue to be
decided. This process of delegation to experts has been well-recognised in
civilised nations in suits and in arbitral proceeding.
Power of Arbitrator to Punish for Contempt
Section 27 (5) of the Arbitration and Conciliation Act
2 Murari Lal v. Stat of M.P., AIR 1980 SC 531
3 Ramnathan v. State of Tamilnadu, AIR 1978 SC 1204

The decisions of the Supreme Court fail to take notice of Section 27 (5) of
the Arbitration and Conciliation Act, which expressly confers the power on
the arbitral tribunal to punish for its contempt.
Section 27 (5) specifies that Persons failing to attend in accordance with
such process, or making any other fault, or refusing to give their evidence,
or guilty of any contempt to the arbitral tribunal during the conduct of
arbitral proceedings, shall be subject to the like disadvantages, penalties
and punishments by order of the Court on the representation of the
arbitral tribunal as they would incur for the like offences is suits tried
before the Court.
Delhi High Court on interpretation of Section 27 (5) of Arbitration and
Conciliation Act
In a case titled Sri Krishan v. Anand, the Delhi High Court was seized of
the question whether a whether a petition under Section 9 of the
Arbitration and Conciliation Act would lie for the same interim measure
which has already been granted by the arbitral tribunal under Section 17.
The petitioner had sought to justify the petition under Section 9 on the
ground that orders passed by an arbitral tribunal are toothless and
unenforceable.
The Arbitrators have no Power:

To allow withdrawal of the reference


To receive or realize monies
Alter the terms of arbitration agreement
Award damages otherwise than in accordance with law.

Duties of Arbitrator
1. Duty to follow rules of natural justice:
An arbitrator must observe the rules of natural justice. He must act in a
judicial manner.

His enquiry should not be slip-shod but full and

complete. He must give due notices and maintain proper record of the
proceedings. He ought not hear one side in the absence of the other side.
Any departure from the rules of natural justice is sure to vitiate the award.
2. Duty to act fairly to both parties:
The arbitrator must act fairly to both parties. He must not favor one party
more than another, or do anything for one party which he does not do for
another.
3. Duty not to delegate:
An arbitrator must not delegate his duties to a third person, or to a coarbitrator. Since one who has an authority to do an act for another, must
do it himself and cannot delegate to another. This rule is, however, subject
to the exception that an arbitrator may delegate to another the
performance of an act of ministerial character only.
4. Duty to decide according to law:
It is duty of an arbitrator, in the absence of a provision to the contrary, to
decide the question according to legal rights of the parties and not
according to what he may consider to be fair and reasonable under the
circumstances. If an arbitrator decides honestly, through wrongly, he is
not guilty of misconduct. But deliberate disregard of law in matters of
arbitration is misconduct.
5. Duty not to exceed his authority:
An arbitrator cannot go beyond the scope of his authority. He derives his
authority from the arbitration agreement. He cannot take upon himself an
authority which is not conferred by the submission. If the arbitrators go
beyond the scope of reference and decide a dispute not referred to them,
the award is bad.

6. Duty to decide all matters referred:


It is the duty of the arbitrator to decide all the matter referred to him.
Where he omits to decide some of the important questions referred the
award is bad. A partial award is invalid and should be remitted for
reconsideration.
7. Duty to act together:
When there are several arbitrators, all must act together. The presence of
all the arbitrators at all the meetings is essential to the validity of the
award. Omission on the part of the arbitrators to act together amounts to
misconduct.
8. Duty not to accept hospitality:
An arbitrator should not accept hospitality from one of the parties, if the
invitation is given with the intention of inducing him to act unfairly. But
merely dining or lunching with one of the parties and his witness in the
absence of other will not invalidate an award.

Arbitrators Ethics Guidelines

The purpose of these Ethics Guidelines is to provide basic guidance


to JAMS Arbitrators regarding ethical issues that may arise during or
related to the Arbitration process. Arbitration is an adjudicative
dispute resolution procedure in which a neutral decision maker
issues an Award. Parties are often represented by counsel who
argues the case before a single Arbitrator or a panel of three
Arbitrators, who adjudicate, or judge, the matter based on the
evidence presented.

Arbitration - either entered into voluntarily after a dispute has


occurred, or as agreed to in a pre-dispute contract clause - is

generally binding. By entering into the Arbitration process, the


Parties have agreed to accept an Arbitrator's decision as final. There
are instances when an Arbitrator's decision may be modified or
vacated, but they are extremely rare. The Parties in an Arbitration
trade the right to full review for a speedier, less expensive and
private process in which it is certain there will be an appropriately
expeditious resolution.

Other sets of ethics guidelines for Arbitrators exist, such as those


promulgated by the National Academy of Arbitrators and jointly by
the

American

Arbitration

Association

and

the

American

Bar

Association. An Arbitrator may wish to review these for informational


purposes.

These Guidelines are national in scope and are necessarily general.


They are not intended to supplant applicable state or local law or
rules. An Arbitrator should be aware of applicable state statutes or
court rules, such as laws concerning disclosure that may apply to
the Arbitrations being conducted. In the event that these Guidelines
are inconsistent with such statutes or rules, an Arbitrator must
comply with the applicable law.

In addition, most states have promulgated codes of ethics for judges


and other public judicial officers. In some instances, these codes
apply to certain activities of private judges, such as court-ordered
Arbitrations.

Arbitrators

should

comply

with

codes

that

are

specifically applicable to them or to their activities. Where the codes


do not specifically apply, an Arbitrator may choose to comply
voluntarily with the requirements of such codes.

Misconduct of an arbitrator
The following is an illustrative list of what has been held to
constitute misconduct in the context of arbitral proceedings:

Where the arbitrator fails to comply with the term, express or

implied of the arbitration agreement;


Where the arbitrator makes an award which on ground of public

policy ought not to be enforced;


Where the arbitrator has been bribed or corrupted;
Where the arbitrator makes mistake as to the scope of authority

conferred by the agreement;


Where the arbitrator fails to decide all the matters referred to her;
If the award is inconsistent or ambiguous;
Where the arbitrator breached the rules of natural justice;
Where the arbitrator makes an error of law that is apparent of the
face of the award, but only if the point of law erroneously decided

was not specifically referred for the decision


Where the arbitrator wrongfully admits and acts on evidence

Findings
The Arbitrator has to uphold the dignity by not making a bias towards any
party and must duly serve the duty imposed on him through the
agreement.
Only a competent arbitrator can be presided over and he must meet out
the requirements mentioned by the parties in the agreement.
The role and duties of the arbitrator and the parties relationship with the
arbitrator has to be clearly defined.
Likewise any government record which is kept confidential the arbitrator
must protect the confidentiality of the parties to the arbitration
agreement, which is a implied duty. If the arbitrator has to seek any
assistance with regard to the dispute, he can share the matter on the
basis.

Many arbitration proceedings are interrupted by conflict of interest, as the


arbitrator fails to disclose any personal interest towards anyone of the
parties which may reult in a partial decision. In order to avoid such conflict
this should be avoided.
The decision with regard to the arbitration must be made in a deliberate
manner and the arbitrator can take as much time if he finds that the
arbitration process is somewhat lagging.
Equal treatment of the parties is the key element in the arbitration and if
the arbitrator finds any criminal misconduct by the parties to the
arbitration agreement he shall withdraw from his office.

Conclusion
The Arbitrator has the implied duty to follow the guidelines and rules
which is prescribed under the 1996 Act and has a duty to be bound to the
parties by whom he is appointed. To act fairly and impartially between the
parties, and to allow each party a reasonable opportunity to put their case
and to deal with the case of their opponent complying with the rules of
"natural justice" and to adopt procedures suitable to the circumstances of
the particular case, so as to provide a fair means for resolution of the
dispute. As the importance of the arbitration is to avoid the interference of
the court, so the arbitrator must be competent enough with that of the
court and the parties while choosing the arbitrator must ensure that he
act in accordance with the agreement between the parties.