An arbitrator is person selected by mutual consent of the parties to settle the matters in controversy between them. A person appointed to adjudicate the difference is called an arbitrator. An arbitrator is a tribunal chosen by the consent of the parties.
Any person who enjoys the confidence of the parties may be selected as an arbitrator. Every person is free to choose his own judge for the settlement of any matter in controversy, and the judge so chosen, if accepted by the opposite party, becomes an arbitrator. They may choose an arbitrator by lot or in any other way. If they an incompetent or unfit person, that is their own affair.
An arbitrator should be a person who stands indifferent between the parties. He should have no interest direct or remote in the subject-matter of the controversy or in the parties. Any person who is under any legal disability by virtue of statutory provision or by reason of public policy cannot act as an arbitrator. An arbitration agreement appointing a supreme head of the state as an arbitrator would be against public policy and hence void at its inception.
Appointment of an arbitrator by the parties
The parties may by agreement appoint whomsoever they please to arbitrate on their dispute. They may appoint a single arbitrator or two arbitrators and an umpire or two or more arbitrators without any umpire. The parties may appoint an arbitrator in the following ways:
1) An arbitrator may be named in the arbitration agreement, or
2) He may not be named at all, or
3) It may be agreed that the arbitrator shall be appointed by a third party who shall be named in the agreement.
Powers of Arbitrator and Umpire
Section 13 lays down the powers of arbitrators or umpire. It is subject to the agreement of the parties. But they cannot be compelled to exercise those powers. This section is applicable to statutory arbitration as well. The various powers are as under :
(1) To administer oath to parties and witnesses appearing before him;
(2) To state a special case for the opinion of the court on any question of law or state the award in the form of a special case for the opinion of the court;
(3) To make the award conditional or in the alternative;
(4) To correct in an award any clerical mistake or error arising from any accidental slip or omission;
(5) To administer any party interrogatories.
In addition to the statutory powers given above, there are some implied and incidental powers, such as:
a) Power to obtain legal assistance.
b) Power to delegate authority limited to the performance of acts of ministerial character
c) Power to award interest
d) Power to award costs
e) Power to allow payment by installments
f) Power to allow amendment of the plaint.
The arbitrators have no power:
1) To allow withdrawal of the reference
2) To receive or realize monies
3) Alter the terms of arbitration agreement
4) Award damages otherwise than in accordance with law.
Duties of Arbitrator or Umpire
1. Duty to follow rules of natural justice :
An arbitrator must observe the rules of natural justice. He must act in a judicial manner. His enquiry should not be slip-shod but full and complete. He must give due notices and maintain proper record of the proceedings. He ought not hear one side in the absence of the other side. Any departure from the rules of natural justice is sure to vitiate the award.
2. Duty to act fairly to both parties :
The arbitrator must act fairly to both parties. He must not favor one party more than another, or do anything for one party which he does not do for another.
3. Duty not to delegate :
An arbitrator must not delegate his duties to a third person, or to a co-arbitrator. Since one who has an authority to do an act for another, must do it himself and cannot delegate to another. This rule is, however, subject to the exception that an arbitrator may delegate to another the performance of an act of ministerial character only.
4. Duty to decide according to law :
It is duty of an arbitrator, in the absence of a provision to the contrary, to decide the question according to legal rights of the parties and not according to what he may consider to be fair and reasonable under the circumstances. If an arbitrator decides honestly, through wrongly, he is not guilty of misconduct. But deliberate disregard of law in matters of arbitration is misconduct.
5. Duty not to exceed his authority :
An arbitrator cannot go beyond the scope of his authority. He derives his authority from the arbitration agreement. He cannot take upon himself an authority which is not conferred by the submission. If the arbitrators go beyond the scope of reference and decide a dispute not referred to them, the award is bad.
6. Duty to decide all matters referred :
It is the duty of the arbitrator to decide all the matter referred to him. Where he omits to decide some of the important questions referred the award is bad. A partial award is invalid and should be remitted for reconsideration.
7. Duty to act together :
When there are several arbitrators, all must act together. The presence of all the arbitrators at all the meetings is essential to the validity of the award. Omission on the part of the arbitrators to act together amounts to misconduct.
8. Duty not to accept hospitality :
An arbitrator should not accept hospitality from one of the parties, if the invitation is given with the intention of inducing him to act unfairly. But merely dining or lunching with one of the parties and his witness in the absence of other will not invalidate an award.