Refusing to appoint is a common delaying tactic, and the Act has a specific answer to it.
Step 1: the invocation notice
Under Section 21, arbitral proceedings commence on the date the respondent receives a request that the dispute be referred to arbitration. This notice matters more than people realise:
- It fixes the date for limitation purposes.
- It must identify the disputes, refer to the arbitration clause, and either propose an arbitrator or call on the other side to concur in one.
- Serve it in a way that gives proof of delivery, at the address in the contract.
Step 2: the 30 day window
Where the clause provides for party appointment, Section 11 gives the other side 30 days from receipt of the request to appoint their arbitrator, or for the two appointed arbitrators to agree on a presiding arbitrator. Failure at any of those steps opens the door to the court.
Step 3: the Section 11 application
Apply to the High Court for a domestic arbitration, or the Supreme Court for an international commercial arbitration. Following the 2015 and 2019 amendments and the decision in Vidya Drolia v. Durga Trading (2021), the court's examination at this stage is limited: it confines itself to the existence of the arbitration agreement, and leaves questions of arbitrability and merits to the tribunal, except where the claim is ex facie time barred or the dispute plainly non-arbitrable.
Appointing your own arbitrator too quickly can be a mistake where the clause names an officer of the other party, or gives one side the unilateral right to appoint. Following Perkins Eastman v. HSCC (2019), a person who is himself ineligible cannot appoint a sole arbitrator. If your contract has such a clause, do not go along with it. Say so in the notice and go to Section 11.
Practical points
- Keep the notice on record with proof of service; a Section 11 application without it is premature.
- Do not delay. Limitation applies to the Section 11 application itself as well as to the underlying claim.
- Consider proposing a sole arbitrator rather than a three-member tribunal for a modest claim. A three-member tribunal often costs more than the amount in dispute.