Subhashish Kumar Sahu, BBA LLB Student, KIIT School of Law
“Arbitration in not the child of a statute, but a contract”, as rightly said by Russel, Arbitration is a settlement procedure adopted by parties in times of dispute, priorly agreed upon by them via an agreement which is duly regulated by the Arbitration and Conciliation Act, 1996 which in itself is an emerging subject in the field of law. However, the most important thing in an arbitration after the arbitration clause in an agreement, is an arbitrator. Apart from the set rules and procedures or the agreed upon modes of standardization, the whole non judicial proceeding of arbitration rests in the hands of the arbitrator who pronounces arbitral awards in relief of the disputes aroused amongst the parties. Hence, it is quintessential and of primordial importance to have a proper qualified arbitrator to meet the necessary criteria.
In contrast to a judicial proceeding where the judges mostly focus on coming to a conclusion, the arbitration proceeding with the help of a skilled arbitrator is driven towards addressing the arguments upholding natural justice as well as segregating the issues awarding the arbitral awards based on a sound reasoning for its proper and calculated valuation. Hence, it is necessary for an arbitrator to uphold to the greatest norms as well maintain proper ethical standards in his conduct. But, for the same legislature has not mandated various conditions as criteria for an arbitrator which makes the task quite challenging.
Arbitrator as per the Cambridge dictionary is “A person who has been officially chosen to make a decision between two people or groups who do not agree.” But the very own statute of Arbitration and Conciliation Act, 1996 has not defined the term arbitration in it, nor in any other of the existing legislations. Similarly, the qualifications of an arbitrator are feebly stated as to absence of any firm and definite criteria.
According to Section 11 of the Arbitration and Conciliation Act, 1996, an arbitrator can be of any nationality unless until agreed upon by parties. Hence, this leaves a room for setting up of criteria by the parties to the dispute for an arbitrator. But the general rule also adds up that the arbitrator should be major and of sound mind. The arbitrators and appointed usually by the parties, in ad hoc or by the arbitral associations or institutions, in case the party had opted for a standardized procedure approaching the desired arbitration institute.
Now, the lack of specific set of requirements for an arbitrator made it quite a challenging task as well as a questionable mechanism for dispute settlement as the whole process lies upon the arbitrator. With regard to this, the Arbitration and Conciliation (Amendment) Act, 2019 introduced an Eighth Schedule in the existing act which added up various qualifications for an arbitrator to be appointed. It had rigorous qualifications requirements so as to have at least 10 years of experience as an advocate within the Advocates Act, 1961 or is a charted/cost accountant or a company secretary as per their respective acts with minimum 10 years of practicing experience, or have been an officer of the Indian Legal Service or with law degree having 10 years of experience in autonomous bodies, PSUs, self-employed, in senior management of private companies or having senior level of experience in administration in Central/State government. They amendment had also introduced various general norms for the arbitrator in addition to these conditions. These conditions even if were necessary to a certain extent, were also very much restrictive and rigorous in nature for a dispute resolution process like arbitration. Therefore, these faced heavy criticism for the tough norms it had established along with them being contrary to the independent nature of arbitration.
Then, vide the Arbitration and Conciliation (Amendment) Act, 2021, the Eighth Schedule was discarded and is now left just as a piece of reference and is non-enforceable in nature. Nonetheless, Section 43J of the act has left it open for the qualifications and norms required for the accreditation of arbitrators to be provided by regulations. But, till now, there has been no regulations published regarding the same. In an effort towards it, various Institutional Arbitration Centers have set up panels of experts to bring up an amicable solution to it.
Therefore, if we speak of the basic qualification required that would be assessed by any of the disputing parties apart from the basic mandates of act would be that the person must possess a valid law degree having professional qualification and knowledge in ADR with certain practical experience over the years. Apart from these, the essential qualities that one might look for is professionalism, drafting skills, ability to assess and manage tasks, being fair and impartial towards parties, having certain management and good communication skills.
Despite the non-availability of strict qualifications in the current world, the disqualifications still apply for an arbitrator towards furnishing his duties. In this, Section 12 (5) along with Schedule VII triggers, which makes it voidable at the expense of parties if the arbitrator has any sort of family, financial interests. Even prior representation and economic dependance of the arbitrator makes up for this cause. Section 14 of the act also adds certain grounds of the arbitrator being de facto or de jure can be removed mid proceeding if unable to perform the duties as an arbitrator. Therefore, the parties along with the arbitrator has to be precarious with these existing conditions that might impeach the credit of an arbitrator.
Hence, due to lack of mandatory qualification from legislature and failure of effective standards for arbitrator selection, the parties by themselves must resort to certain measures by mutually deciding among themselves so as to get the best out of an arbitration. This means can be achieved by drafting certain custom eligibility clauses for the arbitrator appointment, which might not be such strict in nature as the eight schedule, but essentially contain some of the mandates, to an extent that ascertains the arbitrator authenticity for both the parties. They can adhere to some norms such as specifying the domain of dispute and specific experience, knowledge, practice or maybe certifications. Additionally, parties can also interview and select certain arbitrators as per their choice to suit their dispute. As the last resort, one can always look up to the institutional arbitrators if the parties lack the confidence or find it not feasible for appointing the arbitrator by themselves, as they are professionally managed by the institutions also backed by institutional supports and supervision.
For, the selection as an arbitrator in the panel through empanelment of arbitrators, there are some additional qualifications enlisted which is not the current matter of discussion here. Even in the absence of various criteria for selection, parties can adhere to certain measures as stated along with their specific requirements to suit to their needs and interests as an Arbitrator plays the most important role in the process of dispute resolution.
