HOW TO CHALLENGE APPOINTMENT OF ARBITRATOR
Section 12 gives the parties the right to challenge the appointment of an arbitrator under specific grounds such as:
- Circumstances exist that give rise to justifiable doubts as to the arbitrator’s independence or impartiality, or
- The arbitrator does not possess the qualifications agreed to by the parties.
The Amendment Act has made many changes in this Section. The importance of independence and impartiality by an Arbitrator is enforced via the Amendments. Section 12 specifies that a disclosure must be given by the Arbitrator with effect to not being connected professionally or personally to any of the parties, which can hamper the independence and impartiality of an arbitrator.
Grounds for Challenge
Absence of Independence and Impartiality
Section 12 provides 2 grounds for challenge, as earlier mentioned. Independence and impartiality is a debate worthy ground and the conduct of an arbitrator makes it complicated to prove one’s impartiality. It is important to prove that there were circumstances that arose that gave rise to justifiable doubts regarding an arbitrator’s independence and impartiality. An actual bias will be difficult to prove. But circumstances that can show imputed bias are enough to become a valid ground for challenge. To successfully carry out a challenge to the appointment of an arbitrator, the test of reasonable apprehension should be taken into consideration. The Court applies the principles of natural justice in accepting a challenge of this nature. Thus, a challenge needs to prove on the basis of facts, and the conduct of the arbitrator, the apprehension of a bias in a layman’s mind.
Schedule 5 has enumerated a few such circumstances as:
- Arbitrator’s relationship with the parties or counsel
- Relationship of the arbitrator to the dispute
- Arbitrator’s direct or indirect interest in the dispute
- Previous services for one of the parties or other involvement in the case
- Relationship between Arbitrator and another Arbitrator or counsel
- Relationship between Arbitrator and party and others involved in the arbitration etc.
Circumstances/ relationships which give rise to doubts about independence or impartiality of arbitrator and thus require disclosure
Specific grounds governing such relationships have been provided by the Act in the Fifth Schedule (inserted after the 2015 Amendment). The Arbitrator is bound to disclose in detail the circumstances and point out whether his appointment is covered under any of the grounds in the Fifth Schedule.
Section 12(1) of the Amended Act, as mentioned earlier, casts a duty on the Arbitrator to disclose at the earliest time when he is approached to be an arbitrator in any circumstances such as the existence of any legal and/or professional and/or personal relationship with any of the parties or their counsel. If the arbitrator does not disclose any above-mentioned vital information and is later found by either party, there is the likelihood of suspicion of concealment. In such a situation, any award that is made by the arbitrator is liable to be set aside.
These disclosure requirements should ideally be complied with by the arbitrator before the proceedings commence. However, under any situation that the circumstances change or these requirements are forgotten at the start; the arbitrator is well within his right to convey the disclosure during the proceedings. The duty of disclosure is a continuing duty that is applicable from commencement until completion of arbitration.
Circumstances that render the arbitrator ineligible to act as arbitrator
The Seventh Schedule of the Act specifies all the categories for ineligibility of appointment of the arbitrator. This has been introduced by the Amendment Act of 2015 and to a large extent has removed a lot of confusion with regards to S. 12 applications. However, if both the parties in writing want to waive off the applicability of the Seventh Schedule, then they are free to do so.
The process for such challenges is governed under Section 13. Section 13 provides for the procedure to challenge the arbitrator.
The changes thus made by the Amendment Act push for a transparent proceeding so that disqualification of arbitrators and conflicts of interest don’t derail the process.
The challenge to the arbitrator on the ground of non-possession of requisite qualifications
The appointed Arbitrator must contain the requisite qualifications required for the dispute. Special qualifications in complicated disputes can be provided in the arbitration agreement itself or can be mentioned in the Rules of the institutional arbitration incorporated in the proceeding. Again the duty to convey his qualifications or lack of it lies with the Arbitrator himself. He must clarify if he doesn’t have the qualifications that are mandated by the reference. If any of the parties find the arbitrator to not have sound qualifications for the concerned dispute, then that is a valid ground for the challenge of the arbitrator.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.