Scope and importance of section 11
Section 11 of Arbitration and Conciliation Act 1996 deals with appointment of arbitrator when parties fail to agree. In practice many complications arise because parties are forced into arbitration without proper consent on arbitrator. When arbitration clause is silent on appointment and one party approaches Chief Justice or his designate under section 11, the power is no longer merely administrative. Over the years Apex Court has clarified scope to avoid unnecessary litigation at appointment stage. The issue is complicated because wrong approach at this stage can have drastic implications for litigants. Therefore understanding what Chief Justice can decide and what must be left to arbitral tribunal is very important for effective dispute resolution.
Three categories of issues under section 11
In National Insurance Co. Ltd. v. Boghara Polyfab Pvt Ltd 2009 (1) SCC 267, Supreme Court categorized issues for section 11. First category must be decided by Chief Justice or designate. This includes whether application is before appropriate High Court, whether there is arbitration agreement, and whether applicant is party to that agreement. Second category may be decided by Chief Justice or left to tribunal. This includes whether claim is barred by limitation or whether parties have settled rights by final payment. Third category must be left exclusively to arbitral tribunal. This includes whether claim falls within arbitration clause and merits of claim. This classification helps avoid overlap and delays.
Jurisdictional fact: existence of arbitration agreement
The key jurisdictional fact is existence of arbitration agreement. As held in Boghara Polyfab and followed in A.P. Tourism Development Corpn. Ltd. v. Pampa Hotels Ltd. 2010 (5) SCC 425, Chief Justice or designate must decide whether arbitration agreement exists and whether applicant is party to it before appointing arbitrator. This cannot be left to arbitrator at threshold stage under section 11. The reason is simple. Without arbitration agreement, there is no jurisdiction to appoint arbitrator. Therefore courts must examine this issue first to prevent misuse of section 11.
Effect of sbp and boghara polyfab decisions
In SBP & Co. v. Patel Engg. Ltd. 2005 (8) SCC 618, Supreme Court held that scope of section 11 is judicial and not administrative. Due to prospective overruling, appointments made before 26-10-2005 remain valid and objections go to arbitrator under section 16. For applications filed after 26-10-2005, Chief Justice must decide jurisdictional issues. In Alva Aluminium Ltd. Bangkok v. Gabriel India Ltd. Arbitration Petition No.2 of 2010, Justice S. Thakur reiterated this position. Thus law is now settled that existence and validity of arbitration agreement is decided at appointment stage, while other objections can be raised before tribunal under section 16.
Conclusion
Section 11 arbitration and conciliation act 1996 requires careful application. Chief Justice or designate must decide existence of arbitration agreement and parties to it, but should leave merits and scope of claim to tribunal. This balance prevents forced arbitration and unnecessary litigation while respecting autonomy of arbitral process. Reforms are still needed to make appointment process faster and clearer, but Boghara Polyfab and SBP provide proper framework for 2010.
