Arbitration is a process of dispute resolution in which a neutral third party(the arbitrator) renders a decision after a hearing at which both opportunities have an opportunity to be heard. It is less time consuming and cheap as compared to litigation therefore, people mostly prefer arbitration over litigation to solve any dispute. Section 11 of the Arbitration and Conciliation Act 1996 deals with the issue of appointment of arbitrators according to which parties are free to appoint the arbitrator and also to decide the procedure for the appointment. Also if parties fail to act according to the subsection 2 then the parties are required to act according to sub-section 11(3).
Where the parties to dispute refer the matter to a person and such person holds a judicial inquiry in deciding that dispute and comes to a judicial decision, such a person is called ‘arbitrator’.A party by agreement may choose a sole arbitrator or number of arbitrators to form the ‘arbitral tribunal’. Also, as per the Arbitration and Conciliation 2019 Amendment Act, the Supreme Court and the High Court has the authority to form the arbitral institutions to appoint the arbitral tribunal. The rewards given by the arbitral tribunal are binding in nature and the parties are bound by it.
Unilateral appointment in the arbitration is a very debatable topic, it happens when there is an arbitration clause agreed to by both parties which automatically gives one party a significant right to designate the sole arbitrator or the panel of arbitrators. This right may be highly beneficial towards the party appointing the arbitrators. Unilateral appointment of arbitrator alone carries so many issues for example ‘neutrality of arbitrators’, as when a party has the power to designate the arbitrator the appointed arbitrator may be biased towards them.
The unbalanced distribution of duties and rights under the name of a unilateral arbitration clause is rooted in the unequal position of the parties to these agreements. Mostly it is seen that one of the parties which gets the power to appoint the arbitrator holds stronger bargaining power and is able to compel the other party to accept the proposed terms, although it might be unfavourable for that party. Unilateral appointments are inconsistent with the fundamental principle of arbitration that is mutual confidence in arbitrators. The main arguments used by the courts invalidating the unilateral arbitration clause include an unequal balance of the parties’ rights, lack of mutuality, potestative condition, etc. All could be attributed to the general principle of the parties’ equality or equal treatment.
Supreme Court of India, in a recent decision explained the provisions of Section 11 where it said that a person, who has an interest in the outcome of arbitration must not have the right to appoint a sole arbitrator. The Court also stated that where the arbitration agreement specifies the appointment procedure, then irrespective of whether the arbitration is by a sole arbitrator or by a three-member Tribunal, the Chief Justice or his designate will have the power under sub-section (6) of Section 11, if a party fails to act as required under the agreed procedure. Also, in the case of TRF Ltd. v Energo Engineering Projects Ltd, the honourable Supreme Court observed that in view of such an interpretation, a party would not be allowed to unilaterally appoint a sole arbitrator or to delegate such a power in that nominee. It would always be open to the opposite party to argue that such the person (including an official or an authority) having an interest in the dispute would be disentitled to appoint an arbitrator.
On the other hand, the concept of unilateral appointment is often validated with the help of the concept of party autonomy. Party autonomy is the foundational principle of an arbitration agreement, Unilateral appointment takes place when parties agree to the arbitration clause specifying the appointment procedure mentioned in the arbitration agreement. If a party has a problem regarding the unilateral appointment then why at first place it agrees to it in the agreement. Party autonomy strengthens the freedom of the parties as a fundamental principle of arbitration. When an arbitration agreement has come into existence the parties are bound by it.
It has been recognized by international conventions, UNCITRAL Model Law, New York Convention, Rules of International Chamber of Commerce (ICC),English Arbitration Act of 1996. The fact that both the parties gave consent in the form of agreement is a matter of great relevance. The arbitration agreement shows that both the parties voluntarily agreed for the arbitration clause. Also, when it comes to the independence and impartiality of the arbitrators it should not be on the assumption of bias.
Now when it comes to the concept of party autonomy the people who are against unilateral appointments often argue that any quasi-judicial process which includes arbitration process must be in accordance with the principle of natural justice, in the case of arbitration the neutrality of arbitrators that is independence and impartiality is crucial to the entire process. Law commission, also stated that the principles of impartiality and independence cannot be discarded at any stage of the proceedings, specifically at the stage of the constitution of the Arbitral Tribunal, it would be disconsonant to say that party autonomy can be exercised in complete disregard of these principles — even if the same has been agreed before to the disputes having arisen between the parties.
There are certain minimum levels of independence and impartiality that are required for the arbitral process regardless of the parties’ apparent agreement. A sensible law cannot, for instance, permit the appointment of an arbitrator who is himself a party to the dispute, or who is employed by (or similarly dependent on) one party, even if this is what the parties agreed. The Commission hastens to add that Mr P.K. Malhotra, the ex officio member of the Law Commission suggested having an exception for the State, and allow State parties to appoint employee arbitrators. The Commission is of the opinion that, on this issue, there cannot be any distinction between State and non-State parties.
The concept of party autonomy cannot be lengthened to a point where it negates the very basis of having impartial and independent adjudicators for resolution of disputes. When the party appointing an adjudicator is the State, the duty to appoint an impartial and independent adjudicator is that much more ponderous — and the right to natural justice cannot be said to have been shelved only on the basis of a “prior” agreement between the parties at the time of the contract and before arising of the disputes.
“Independence and impartiality of the arbitrator are the hallmarks of any arbitration proceedings. One of the fundamental principles of natural justice is the rule against bias which is applied to all judicial and quasi-judicial proceedings. It is for this reason that notwithstanding the fact that relationship between the parties to the arbitration and the arbitrators themselves are contractual in nature and the source of an arbitrator’s appointment is surmised from the agreement entered into between the parties, notwithstanding the same non-independence and non-impartiality of such arbitrator (though contractually agreed upon) would impart him ineligible to conduct the arbitration.
The genesis behind this rationale is that even when an arbitrator is appointed in terms of the contract and by the parties to the contract, he is independent of the parties. Functions and duties require him to rise above the partisan interest of the parties and not to act in, or so as to further, the particular interest of either party. Therefore, an arbitrator must be independent of parties as well as impartial as after all, he has an adjudicatory role to perform. The United Kingdom Supreme Court has appealingly highlighted this aspect in Hashwani v. Jivraj in the following words:
“. … the dominant purpose of appointing an arbitrator or arbitrators is the impartial resolution of the dispute between the parties in accordance with the terms of the agreement and, although the contract between the parties and the arbitrators would be a contract for the provision of personal services, they were not personal services under the direction of the parties.”
To conclude we can say that unilateral appointments in the arbitration are a very debatable topic which has its both pros and cons. Parties during an agreement should be well aware of the arbitration clause mentioned in the agreement. This procedure of appointment is unnerving in the field of arbitration. Although hon’ble Courts has made various attempts to deal with the issue of unilateral appointments, it is the duty of arbitrators and the parties to uphold the right to a fair and equal opportunity.
 Black’s Law Dictionary.
 Arbitration and Conciliation Act, 1996 §11(2).
 Arbitration and Conciliation Act, 1996 §11(3).
 Satyendra Kumar v Hind contr. Ltd. AIR 1852 Bom.227
 Arbitration and Conciliation Act, 1996 §2(1)d.
 Perkins Eastman Architects DPC v HSCC (India) Ltd. [Arbitration Application No. 32/2019 decided on November 26, 2019]
 Arbitration and Conciliation Act, 1996 §11.
 Arbitration and Conciliation Act, 1996 §11(6).
 Model law, art.28, (2006) UNCITRAL Arbitration Rules art 35,2010.
 New York Convention, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, (1958).
 8 I.C.C. Rules of Arbitration, art 17.1., (2017).
 Prakhar Singh Chauhan, &“Siddhant Bhasin”, Bias of Arbitrator and the Need for a Real Danger Test in India, 35,37, (2018).
 Law Commission Report, No. 246. Para 53 to 60.
 Voestapline Schienen Gmbh v. Delhi Metro Rail Corpn. Ltd, (2019) S.C.C. OnLine S.C. 1517.
 Hashwani v. Jivraj (WLR p. 1889, para 45).