Under section 34 of The Arbitration and Conciliation Act, 1996, an arbitrator's award that violates the concept of natural justice may be challenged in court and set aside. When a party challenges an arbitral award based on a breach of natural justice, the party must show which rule of natural justice was violated, how was it broken, and how was the violation of natural justice related while making an award.
THE PRINCIPLES OF NATURAL JUSTICE
Every matter that may be significant to the dispute settlement has the right to be adequately heard by all parties. The arbitrator must treat all parties fairly and provide them with an equal chance to present and reply to their arguments. The arbitrator should not make a ruling based on information that hasn't been presented to him or disputed in front of him.
The two primary considerations that support this practice are: (i) the need to recognise the arbitral process' autonomy by encouraging finality so that its efficiency as an alternative dispute resolution process is not jeopardised; and (ii) acknowledge that when the parties chose arbitration, they accepted a minimal right of recourse to the courts.
The fact that the arbitrator does not refer every matter to the parties for submissions is not always grounds for dispute. Only if the contested decision reveals a significant departure from the parties' submissions, or involves the arbitrator receiving extraneous evidence, or adopts a view wholly at odds with the established evidence or adopts a view wholly at odds with the based evidence adduced by the parties, or arrives at a conclusion unequivocally rejected by the parties as trivial or irrelevant, may it be overturned.
The party contesting the award must demonstrate that a reasonable litigant in his position could not have predicted the likelihood of the sort of reasoning shown in the award. To settle a disagreement, the parties will advocate for opposed approaches. The arbitrator does not have to choose between the two options. He may select a middle road as long as it is based on the facts submitted to him. He is not obligated to consult the parties on his thought processes before completing his award unless it is a significant deviation from what has been submitted to him. Each case requires its unique factual matrix to be resolved. Only substantial violations of natural justice that have genuinely created bias should be addressed by an award, which should be construed liberally.
NON-VIOLATION OF NATURAL JUSTICE PRINCIPLES
Suppose the arbitrator has provided the claimants and respondent with several chances to present their allegations, counterclaims, and evidence if the claimant or responder fails to provide their claims or evidence despite the arbitrator's several reminders. The arbitrator's award does not seem to be contrary to natural justice principles. The same cannot be contested under section 34 of The Arbitration and Conciliation Act, 1996, because the claims or chance to be heard were not provided.
Suppose the parties agree to obey the arbitrator's judgment, but they don't allow him the authority to reach his conclusions in whatever way he wants. In that case, he must obey the natural justice standards. However, where the parties have given the arbitrator complete authority to decide the matter in any way they see fit, including taking evidence from one party behind the other's back and conducting private investigations, such an agreement is valid, and the award cannot be set aside based on a violation of natural justice principles.
A judge is adjudicating his competence in the current circumstances is undoubtedly a valid basis for suspicion of bias. When referring to Russell on Arbitration, the Hon'ble Apex Court remarked in Bihar State Mineral Development, Corp. v. Encon Builders (I) Pvt. Ltd: Actual prejudice is seldom proven, but it is evident that it is grounds for dismissal. Furthermore, there is a suspicion of bias, defined in different ways as obvious, unconscious, or assumed prejudice. In the vast majority of instances, it is stressed that the challenger does not go so far as to allege that the arbitrator is genuinely prejudiced but rather that the challenger has some objective suspicion of prejudice.
In terms of the current circumstances, there is undoubtedly a clear, unequivocal suspicion of bias that will arise from the odd circumstance in which the arbitrator becomes the judge of his claim.
The right way for the judge is to look at the person's mind in front of him, not at his mind, and ask himself, honestly, am I prejudiced. As a result, it is important to recognise that the challenge to the arbitrator adjudicating his competence is not based on any question or imputation of the arbitrator's character but rather on suspicion of bias that has emerged from a circumstance. As a result, Section 13(2) must be recognised as speculative and need clarification.
In arbitral procedures, the idea of natural justice must be developed. Once the award has been made, the parties shall refrain from introducing any hollow, procedural, or technological mistakes. Arbitration's goal is to quickly and efficiently settle a disagreement. The courts have a difficult time resolving cases. The party shall be given access to the lawsuit, which should lead to genuine prejudice.
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. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre shall not be responsible for any errors caused due to human error or otherwise.