Powers and Functions of Arbitrators
Introduction
------------
Arbitration thrives on the impartiality, efficiency, and expertise of arbitrators. The powers
and
functions conferred upon arbitrators under the Arbitration and Conciliation Act, 1996,
ensure that
the arbitral process is effective, fair, and independent. Arbitrators are entrusted with quasi-
judicial
authority, enabling them to act as decision-makers while maintaining party autonomy. This
document
explores the statutory powers, functional roles, and judicial interpretations of arbitrators’
authority.
General Powers of Arbitrators
-----------------------------
1. **Jurisdictional Powers** (Section 16) – Tribunal decides its own jurisdiction, including
validity of arbitration agreement.
2. **Procedural Powers** (Section 19) – Free from CPC/Evidence Act; may set flexible
procedure.
3. **Interim Measures** (Section 17) – Power to order interim protection of assets and
evidence.
4. **Appointment of Experts** (Section 26) – Arbitrators may appoint technical experts to
assist.
5. **Power to Issue Awards** (Sections 28–31) – Authority to deliver final and binding
decisions.
6. **Power to Award Costs** (Section 31A) – Determines allocation of arbitration costs.
Functions of Arbitrators
------------------------
1. **Ensuring Fairness** (Section 18) – Equal treatment and opportunity to present case.
2. **Case Management** – Controlling timelines, hearings, evidence, and avoiding delays.
3. **Maintaining Neutrality** – Section 12 mandates disclosure of conflicts (Fifth/Seventh
Schedule).
4. **Facilitating Settlement** (Section 30) – Encouraged to mediate/conciliate during
proceedings.
5. **Reasoned Decision-Making** (Section 31) – Awards must be reasoned, unless parties
agree otherwise.
Judicial Interpretation: Key Cases
----------------------------------
1. **ONGC v. Saw Pipes Ltd. (2003, SC)**
- Facts: Award challenged on grounds of patent illegality.
- Held: Expanded “public policy” to include patent illegality.
- Impact: Increased scrutiny of arbitral powers.
2. **Associate Builders v. Delhi Development Authority (2015, SC)**
- Held: Arbitrator’s reasoning must not be perverse or ignore material evidence.
- Reinforced fairness and rationality as core functions.
3. **Centrotrade Minerals & Metal v. Hindustan Copper Ltd. (2017, SC)**
- Facts: Multi-tier arbitration clause.
- Held: Party autonomy respected; arbitrator must honor agreed procedure.
4. **Perkins Eastman Architects v. HSCC (India) Ltd. (2019, SC)**
- Facts: Employer had unilateral appointment power.
- Held: Neutrality must be ensured; arbitrators must not be biased.
5. **ONGC v. Western Geco International Ltd. (2014, SC)**
- Expanded public policy further, requiring reasonableness and application of mind.
Comparative Perspective
-----------------------
- **UNCITRAL Model Law**: Basis for Indian Act; stresses arbitrators’ independence and
powers.
- **UK Arbitration Act, 1996**: Broad procedural discretion, minimal judicial interference.
- **Singapore (SIAC Rules)**: Arbitrators empowered with strong case management tools.
- **ICC Arbitration Rules**: Provide detailed procedural guidance for arbitrators.
Importance of Arbitrators’ Powers
---------------------------------
- **Efficiency**: Arbitrators manage disputes swiftly.
- **Fairness**: Equal opportunity and impartiality.
- **Autonomy**: Parties retain control with arbitrator oversight.
- **Enforceability**: Well-reasoned awards enforceable globally.
Challenges and Criticisms
-------------------------
- **Judicial Interference**: Excessive use of Section 34 undermines arbitrators.
- **Bias Concerns**: Appointment procedures sometimes compromise neutrality.
- **Costs**: High arbitration costs contradict efficiency goals.
- **Consistency**: Inconsistent judicial precedents create uncertainty.
Advantages of Current Framework
-------------------------------
- Flexibility and efficiency in procedures.
- Strong enforcement of awards as court decrees.
- Incorporation of international standards.
- Recognition of neutrality and independence.
Suggested Reforms
-----------------
- Reduce excessive judicial review of awards.
- Strengthen institutional arbitration in India.
- Lower costs and increase transparency.
- Better arbitrator accreditation and training.
Conclusion
----------
The powers and functions of arbitrators under the Arbitration and Conciliation Act, 1996
ensure that
arbitration remains a fair, efficient, and autonomous process. Judicial decisions like *Saw
Pipes*,
*Associate Builders*, and *Perkins Eastman* have refined the scope of these powers,
striking a balance
between autonomy and accountability. While challenges such as judicial overreach and
costs persist,
arbitrators remain central to the credibility of arbitration. Strengthening their
independence and
efficiency will ensure arbitration’s continued growth as the preferred dispute resolution
mechanism.
