Report No. 176
(15) Section 11: Several amendments are proposed in Section 11. At the same time care is taken to see that reference to arbitration is not delayed.
(i) Section 11 (4) to (12): In these sub-sections, the proposal is to replace the words "Chief Justice of India" and the word "Chief Justice" by the words, "Supreme Court" and "High Court", so that the appointment of the arbitral tribunal is made on the judicial side.
The advantages of such an amendment and certain mis-conceptions in regard to advantages under the existing Section 11, are discussed at great length in the report of the Commission and also by way of pointing out that under the UNCITRAL Model as well as in the new arbitration laws of various countries, the appointment is on the judicial side.
Reference is also made the recent Act in Ireland which allows the High Court to make the appointment and defines the "High Court" as the President of the Court, meaning thereby that the appointment of the arbitral tribunal is made by the President of the High Court on the judicial side.
(ii) Section 11(5A): This sub-section is proposed to be introduced as a consequence of the proposed Section 10A dealing with Scott v Avery clauses where a party is not able to fulfill the condition precedent of obtaining an award before an action is filed under section 8 before a judicial authority.
The reason is that if the arbitration agreement is found to be null and void etc., it is not possible to obtain an award. In such cases, the parties are permitted under the proposed sub-section (5A), to avail of the procedure under Section 11 for appointment of arbitral tribunal because the arbitral agreement has been held to be null and void etc.
(iii) Section 11 (4),(5) & (6) proposed to be amended: These sub-sections are proposed to be amended are added as stated above, by stating that if a party to whom a request is made for appointment of an arbitral tribunal, does not choose to take any action to make an appointment, the said party must be deemed to have waived the right make the appointment.
This provision has become necessary because several parties who receive notices for appointment of arbitral tribunal do not send any reply nor appoint an arbitrator and when the other party goes to Court under Section 11 seeking appointment, they rely on their prerogative to make the appointment.
We also propose to increase the period from 30 days to 60 days to make the appointment in sub-sections (4) and (5). We have also proposed that if the appointment procedure as stated in sub-section (6) is not followed, the right to make the appointment under the procedure shall be deemed to have been waived.
(iv) Section 11 (13), (14): These two sub-sections are proposed to be introduced on the same lines as sub-sections (4) and (5) of Section 8, already referred to, thereby requiring the Supreme Court or the High Court, as the case may be, (in the case of an application under Section 11 in an international arbitration or a purely domestic arbitration between Indian nationals, in India), to decide preliminary issues as to whether
(a) there is no dispute in existence, or
(b) the arbitration agreement is null and void or inoperative, or
(c) the arbitration agreement is incapable of being performed, or
(d) the arbitration agreement is not an existence.
However the above Courts need not decide these questions if:
(a) relevant facts or documents are in dispute, or
(b) oral evidence is necessary to be adduced, or
(c) the enquiry into these questions is likely to delay the reference to arbitration, or
(d) the requests for deciding the question was unduly delayed or
(e) the decision on the question is not likely to produce substantial savings in cause of arbitration, or
(f) there is no good reason as to why these questions should be decided at that stage. If the above Courts find that the preliminary questions are simple enough they may decide the same. Otherwise they shall refer these questions also to the arbitral tribunal. Thus sufficient care is taken to see that nobody takes undue advantage of the right to raise preliminary jurisdictional issues or to cause delay in the appointment of arbitrators. At the same time care is taken to see that parties do not incur unnecessary costs by being referred to arbitration.