The arbitration procedure or any means of dispute resolution is not absolved of the possibility of a civil liability arising out of it, especially one falling on the arbitrator or dispute resolving authority. In India and most other countries, the arbitrators enjoy immunity from being charged with any civil liability. However, the UNCITRAL statute has not commented on this practice, more so because the existence of such a guarantee for arbitrators has a set of pros and cons that are equally counteractive.
Purpose of Arbitral Immunity
The rationale behind enabling arbitrators to carry out their duties without the fear of an action suit being filed under them for civil liabilities is to help them act in an unbiased and fearless manner. This principle has been a part of arbitration law in India for as long as about 80 years now, ever since the adoption of the Arbitration Act, 1940 was done. Although the Indian law did follow suit of the English decisions, it has evolved regarding the matter, which is evident in the Arbitration & Conciliation Act of 1996, approximately three years ago.
Evolution of the Immunity Law
Through Section 42B of the amended Act, the arbitrators in India enjoy immunity from any suit or legal proceedings that may be initiated against them. However, the language of this article ensures that it only provides this immunity for duties done by the arbitrator in good faith or in consonance with the Act itself, such careful wording not only lays the grounds for fairness in terms of the rationale behind said protection but also leaves a grey area whereby the law acknowledges that the arbitrator can be acting against his or her duties or in plain lousy faith, in the occurrence of which, the law may forgo the rule of immunity.
The Srikrishna Committee first made the recommendation for using such language, but the issue begins with the fact that there is no list of acts that the court defines as good faith, which creates another grey area in the law.
While the primary purpose of setting aside such a law is well-intentioned in favour of the arbitrators, there is a certain ambiguity carried forward by the language of this provision, leaving it open to interpretation. What needs to be noted is the fact that the 2019 Amendment has allowed parties to arbitration cases to come forward and seek legal relief in cases where they have been wronged by any ill faith shown by the arbitrator of their case.
As seen in the article above, the law surrounding arbitral immunity needs modification and reparations, especially in terms of the lack of limitations and ambiguity contained therein. Hence, a balanced approach needs to be established, which works on the natural immunity that the arbitrators need and the free reins to parties of an arbitral case to approach higher judicial authorities when they have been wronged.
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