02 September 2019

Appointment of arbitrator – Arbitration Section 11 when not applicable

2nd September 2019

The 3-Judge Bench of the Supreme Court has upheld the view that Section 11 of the Arbitration and Conciliation Act, 1996, for appointment of arbitrator by the Court, is not applicable in a dispute involving NHAI as National Highway Act, 1956 provides for appointment of arbitrator by the Central Government.

The Court was of the opinion that in view of the power being vested exclusively with the Central Government to appoint an Arbitrator under Section 3G(5) of the Act 1956, being a special enactment, the application filed under Section 11(6) of the Act 1996 for appointment of an Arbitrator was not maintainable.

The Court in the case of NHAI v. Sayedabad Tea Company Ltd. observed that the legislature intended the 1956 Act to act as a complete code, and that the application of general law would impliedly be excluded. It noted that Section 3G(6) of 1956 Act stipulates that provisions of Arbitration Act will apply subject to provisions of 1956 Act.

Rejecting the contention that as the Central Government did not appoint the arbitrator within 30 days of the application, it lost its competence to appoint same, the Supreme Court held that if the Central Government does not appoint an Arbitrator within a reasonable time, it is open for the party to avail the remedy either by filing a writ petition under Article 226 of the Constitution or a suit for the purpose, but, the remedy of Section 11 of Act 1996 is not available.

The Court in this regard also observed that there is no statutory limitation provided under sub-section (5) of Section 3G of Act 1956 for the Central Government to appoint an arbitrator.

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