POWERS AND FUNCTIONS OF

ARBITRATOR IN AN
ARBITRATION PROCEEDING

S. Hrudai Tej
Assistant Professor of Law,
ICFAI Law School
The arbitrator is the one who will give the
arbitral award, therefore, the Arbitration
and Conciliation Act, 1996 provides
several powers to him in order to
determine the award.
Unlike judges in traditional courts, arbitrators are selected by
the parties, and their role is more flexible in procedural
matters.

While judges are bound by strict rules of procedure,

arbitrators have procedural autonomy, although their authority
is limited by the terms of the arbitration agreement.
1. Section 16 - Power to rule on the jurisdiction of the tribunal.
2. Section 17 - Power of an arbitrator to take interim measures.
3. Section 18 - Duty to act independently and impartially.
4. Section 19 - Determination of the rule of procedure.
5. Section 20 - Determination of place of arbitration.
6. Section 25 - Power to proceed ex-parte.
7. Section 26 - Power to appoint an expert.
8. Section 29A - Time frame for passing an award.
9. Section 33 - Procedure for interpretation or correction of an arbitral
award.
10. Section 12 - Grounds for challenge
11)Section 24 - Hearings and written proceedings.
12)Section 28 - Rules applicable to substance of dispute.
13)Section 30 - Settlement.
14)Section 31 - Form and contents of arbitral award.
15)Section 31A - Regime for costs.
16)Section 32 -Termination of proceedings.
 POWERS OF AN ARBITRATOR

1. Jurisdiction over the Dispute

• Under Section 16, an arbitrator has the authority to determine their own
jurisdiction. This means they can decide whether they have the power to hear
and resolve the dispute.

• They can also rule on objections regarding the existence or validity of the
arbitration agreement.
• This was affirmed in the case of Olympus Superstructures Pvt. Ltd. v.
Meena Vijay Khetan, where the Supreme Court confirmed that
arbitrators can determine the validity of the contract containing the
arbitration clause.
 2. Power to Decide the Procedure

• As per Section 19, the arbitrator has the flexibility to determine the
procedure for the arbitration, subject to the parties agreement.

• The arbitrator is not bound by the strict rules of evidence or procedure that
apply in courts.

• This allows for a more flexible, less formal approach to resolving disputes
 3. Interim Relief

• Under Section 17, arbitrators can grant interim measures such as preserving
the status of goods, appointing a receiver, or detaining properties involved in
the dispute.

• This allows the tribunal to protect parties interests during the arbitration
process.

• Courts also support interim measures ordered by arbitrators.

 4. Determination of place of arbitration

• Section 20: Place of arbitration

(1) The parties are free to agree on the place of arbitration.

(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall
be determined by the arbitral tribunal having regard to the circumstances of
the case, including the convenience of the parties.
 5. Proceeding Ex-Parte

• Section 25 deals with Default of a party. The arbitral tribunal shall

terminate the proceedings if either of the party fails to present their
statement of claim or statement of defence or “a party” not appearing at an
oral hearing or to produce documentary evidence.

• If a party fails to present its case, the arbitrator can proceed ex-parte under Section
25.

• This means the arbitrator can continue without waiting for the absent party, ensuring
that one party’s delay does not derail the proceedings.
• In the case of Hemkunt Builders v. Punjab University ((1997) 1 Arb. LR 348
(Delhi)) the notice of appearance and pre-warning notices with regard to the
ex-parte proceedings was served to the petitioner, but there was no interest or
reply from the petitioner’s side on the same.

• The Delhi High Court mentioned that it has been inferred that the petitioner
had no interest in the concerned matter, so ex-parte the arbitral award was
sustainable.
 6. Expert Appointment

• Under Section 26, arbitrators have the power to appoint experts to assist in
technical matters of the case.

• The arbitrator can appoint experts to provide opinions on specific issues relevant
to the dispute.

• The parties are required to cooperate with the expert and provide necessary
information or materials. They can also call upon these experts during hearings if
needed.
 7. Issuing Awards

• The most critical power is the issuance of the arbitral award. According
to Section 29A, an award must be issued within 12 months, which can be
extended with mutual consent of the parties.

• The award is binding and enforceable as a decree of court, subject to

limited grounds for challenge.
 8. Power to Settle the Dispute

• As per (Section 30),

The arbitrator can encourage parties to settle the dispute amicably at any
stage of the arbitration proceedings.

• If both parties agree, the arbitrator can record the settlement in the form
of an arbitral award.
 FUNCTIONS AND RESPONSIBILITIES
OF AN ARBITRATOR

1. Independence and Impartiality

• Section 12 of the Act provides that at the time of appointment, an arbitrator a
person requires to disclose in writing any circumstances likely to give rise to
justifiable doubts as to his independence or impartiality.

• It further states that this duty continues even post appointment and an arbitrator
shall, without delay, disclose to the parties in writing if any circumstances
arise which may likely to give rise to justifiable doubts as to his independence
or impartiality.
• Section 12 impose a duty on arbitrators to be independent
and impartial. They must disclose any conflict of interest
that might affect their neutrality.

• In case of Steel Authority of India v. British Marine, it was

held that an arbitrator must disclose any personal interests that
may affect their objectivity.
 2. Conducting Hearings (Section 24)

• The arbitrator is responsible for conducting arbitration hearings where both

parties present their case, submit evidence, and make arguments.

• Hearings can be oral or based on documents, depending on the agreement

between the parties or the arbitrator’s decision.
 3. Fair Conduct of Proceedings

• Arbitrators must ensure both parties are treated equally and given an opportunity
to present their case, as mandated by Section 18.

• This includes providing sufficient notice of hearings and sharing any evidence or
submissions made by one party with the other party.

• This is part of the arbitrator’s duty to uphold principles of natural justice.

 4. Decision Based on Law

• An arbitrator must decide disputes according to the applicable substantive

law, as required under Section 28.

• They are also expected to respect trade customs or usages relevant to the
dispute.
 5. Making the Final Award (Section 31)

• After considering the evidence and arguments, the arbitrator makes a

final decision, known as the arbitral award.

• The award must be in writing, signed by the arbitrator(s), and should

include reasons for the decision unless the parties agree otherwise.
 6. Impose Award Interest and Costs (Sections 31(7) and 31A)

• The arbitrator can award interest on sums that are payable as part of the final
award, both before and after the award is made.

• They also have the power to allocate the costs of arbitration (legal fees, expert
costs, etc.) between the parties as they deem appropriate.
 7. Termination of Proceedings

• Under Section 32, an arbitrator can terminate proceedings once the final
award is made, or if further proceedings become unnecessary, such as when
parties settle the matter.
 8. Interpreting the Award (Section 33)

• After the award is made, the arbitrator can interpret or correct the award if
either party requests it and both parties agree.

• This could include correcting clerical errors or providing clarification on

certain points in the award.
 LIMITATION ON THE
ARBITRATOR’S POWERS
• The Arbitration and Conciliation Act, 1996, outlines the powers and
limitations of arbitrators in India.
• While arbitrators are granted significant authority to resolve disputes,
there are specific limitations that govern their powers to ensure fairness,
impartiality, and adherence to norms.
 (Section 34): Application for setting aside arbitral award
Although the arbitrator has wide discretion, their award can be challenged in
court if it is against the public policy of India. This includes awards that
violate fundamental legal principles, morality, or justice.
Legal Limits
• The arbitrator cannot exceed their mandate or the scope of the arbitration
agreement. If they do, their decision could be set aside by the court.
Judicial Review
• While the arbitrator’s award is final, it can be subject to limited judicial
review. The courts can intervene to set aside an award under specific
circumstances (like if the arbitrator was biased or exceeded their
authority).
2. Section 16:
This section provides that arbitrators can rule on their own jurisdiction but must
do so within the framework established by the arbitration agreement. If
challenges arise regarding their jurisdiction, they must resolve these issues
without overstepping their authority.

3. Section 17:
While arbitrators have the power to grant interim measures, they are not bound by
the strict procedures of the Code of Civil Procedure (CPC) or the Indian Evidence
Act. However, they must act judiciously and cannot exceed their mandate or issue
orders that are beyond what is necessary for preserving rights during arbitration.
4. Section 27:
This section allows arbitrators to seek assistance from courts in taking
evidence or enforcing orders but does not grant them powers
equivalent to those of a court for contempt or punishment. The
enforcement of such award must still rely on judicial mechanisms.

5. Section 32(2)(c):
This section limits an arbitrator’s ability to terminate proceedings only
when it becomes unnecessary or impossible to continue them.
Arbitrators cannot arbitrarily decide to end proceedings without valid
justification.
 Dani Wooltex Corporation & Ors. v. Sheil Properties Pvt. Ltd
(2024)

The Supreme Court ruled held that an arbitrator’s power under Section
32(2)(c) can only be exercised when it is unnecessary or impossible to
continue proceedings, reinforcing limitations on their powers.
 Facts
The appellant is a partnership firm, Dani Wooltex, which owns land in Mumbai.
The respondent is Sheil Properties, a private limited company engaged in real
estate development.

In 1993, a Development Agreement was executed allowing Sheil Properties to

develop a portion of Dani Wooltex’s property.

Dani Wooltex entered into an Memorandum of Understanding (MOU) with

Marico, agreeing to sell another portion of its property. Marico raised objections,
stating that any transaction between Dani Wooltex and itself would be subject to
the Agreement.
Disputes arose between Dani Wooltex and Sheil Properties, leading Sheil
to file a suit for specific performance of the MOU, which included Marico
as a party. A consensus was reached among the parties, and a senior
member of the Bar was appointed as the Sole Arbitrator.

The arbitral proceedings concerning Marico’s claim regarding enforcement

of MOU were heard first, resulting in an award in 2017. However, the
proceedings related to Sheil’s claim did not progress.
Arbitral Tribunal terminated the proceedings under Section 32(2)(c) of the
Arbitration and Conciliation Act in 2020, citing the continuation of proceedings
as unnecessary.

High Court Intervention:

Sheil Properties challenged the termination in the High Court, which set aside
the Arbitral Tribunal’s award.

This led Dani Wooltex to appeal to the Supreme Court.

 Reasoning and Judgment
The Supreme Court upheld the High Court’s decision.
• The Court clarified that Section 32(2)(c) can only be used to terminate arbitration
if:
• The arbitrator is convinced, based on evidence, that continuing the case is
unnecessary or impossible.

• Just because a party doesn’t ask for hearing dates doesn’t mean the case has
become unnecessary.

• The Court emphasized that it’s the arbitrator’s duty to set hearing dates, even if
parties don’t request them.
CHALLENGES FOR
ARBITRATORS
1. Judicial Interference

• Despite the statutory mandate for minimal court intervention, Indian courts
frequently interfere in arbitration proceedings.

• This interference can occur at various stages, including the appointment of

arbitrators and the enforcement of awards.

• For instance, recent Supreme Court decisions have set aside arbitral awards,
undermining the finality that arbitration aims to provide. Such judicial
actions create uncertainty and discourage parties from opting for arbitration
over traditional litigation.
2. Lack of Awareness and Trust
• There exists a general lack of awareness about arbitration among Indian
businesses and individuals.
• Many still prefer traditional court systems due to a lack of understanding of
arbitration’s advantages.
• This conventional mindset poses a barrier to the growth of arbitration as a
preferred dispute resolution mechanism.
3. Institutional Framework
• While institutional arbitration is gaining importance, there is still a lack
of strong infrastructure and support for arbitrators in India.
• The rise of specialized institutions like the Mumbai Centre for
International Arbitration (MCIA), The International Arbitration and
Mediation Centre (IAMC), Hyderabad are promising but, many
arbitrators still operate without adequate institutional backing or
resources, which can hinder their effectiveness.
Recent Reforms

• Judicial Restraint: Recent amendments aim to limit court interference in

arbitral proceedings and enhance the authority of arbitral tribunals.

• Time Efficiency in court: Recommendations have been made for fixed

timeframes for deciding applications related to arbitration references and
appeals against awards, which could streamline processes significantly.

• Technological Integration: Encouraging the use of technology in

arbitration proceedings is also part of ongoing reforms, which can enhance
efficiency and accessibility.