Arbitration agreement validity and tribunal constitution: even-number clauses do not invalidate the agreement, and section 11 governs fallback appointment.
An arbitration agreement remains valid if it satisfies the statutory requirement of a written agreement to submit disputes to arbitration; the number of arbitrators is a separate machinery provision and does not affect validity merely because the clause initially contemplates an even number. Once each party appoints one arbitrator, the two appointed arbitrators must appoint the third, presiding arbitrator; if they do not do so within the prescribed time, the statutory appointment mechanism under section 11(4)(b) applies and the tribunal is completed through that process.
Issues: (i) whether an arbitration clause providing for nomination of two arbitrators and appointment of an umpire was invalid under the Arbitration and Conciliation Act, 1996 because it contemplated an even number of arbitrators; (ii) whether, after both parties had appointed their respective arbitrators, the appointment of the third arbitrator had to be made under section 11 of the Act.
Issue (i): Whether an arbitration clause providing for nomination of two arbitrators and appointment of an umpire was invalid under the Arbitration and Conciliation Act, 1996 because it contemplated an even number of arbitrators.
Analysis: The arbitration agreement satisfied section 7 because the statute treats arbitration agreement as the parties' written agreement to submit disputes to arbitration, while the number of arbitrators is separately regulated by section 10. The number of arbitrators is a machinery provision governing the working of the agreement and does not form an essential part of the validity of the arbitration agreement. The clause requiring each party to nominate one arbitrator and those arbitrators to appoint an umpire was therefore not rendered unenforceable merely because it contemplated an even-number arrangement at the initial stage.
Conclusion: The arbitration agreement was valid and enforceable, and the objection based on the even number of arbitrators failed.
Issue (ii): Whether, after both parties had appointed their respective arbitrators, the appointment of the third arbitrator had to be made under section 11 of the Act.
Analysis: Once each party had appointed one arbitrator, section 11(3) required the two appointed arbitrators to appoint the third arbitrator as the presiding arbitrator. If they failed to do so within the prescribed period, section 11(4)(b) empowered the Chief Justice or his nominee to make the appointment. Since the agreed procedure had not been completed by the two arbitrators, the statutory consequence under section 11 followed.
Conclusion: The third arbitrator had to be appointed under section 11(4)(b) by the Chief Justice of the High Court or his designate.
Final Conclusion: The appeal failed, and the statutory appointment mechanism for completion of the arbitral tribunal was directed to operate in accordance with the Act.
Ratio Decidendi: An arbitration agreement remains valid if it meets section 7, and the number of arbitrators is governed separately as a procedural machinery provision; once the agreed appointment procedure breaks down, section 11 controls the constitution of the arbitral tribunal.
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