Arbitration is an alternate dispute resolution mechanism, which aims at resolving the commercial dispute between parties at an affordable cost and to save time. The main difference between a Court and an Arbitrator is that whereas the former is the creation of the State the latter is appointed by private parties (after agreeing to submit the commercial dispute to an Arbitrator, the parties fail to appoint an arbitrator, the arbitrator may be appointed by the intervention of the Court). Arbitration is controlled by the Arbitration and Conciliation Act, 1996. The main object of this act is to that there should be a minimum intervention in the arbitral proceedings.
Section 13 of the 1996 Act mentions a provision for a challenge to an arbitrator on the ground of lack of impartiality or lack of qualifications. The arbitrator can be challenged only on one of the following grounds:
- That situations exist which give rise to genuine doubts as to his impartiality
- That he does not possess the qualifications as agreed by the parties.
The appointment cannot be challenged on other grounds. The appointment of an arbitrator can be challenged only on these grounds or for those reasons which the party became aware after his appointment and if the party was aware of the grounds before the appointment, they cannot challenge the appointment on those grounds or reasons.
In Porter v. Magill. the question was raised about the test for apparent bias. “The question was whether the fair-minded and informed observer who has considered the facts would consider that there was a true possibility that the tribunal was biased.”
The test for apparent bias is a two-stage process. First, the court must discover all the circumstances which have an importance on the allegation that the tribunal was biased. Secondly, it must ask itself if those circumstances would lead a fair observer to conclude that there was a real possibility that the tribunal was biased. An allegation of bias must be decided on the facts and circumstances of the case including the nature of the issue to be decided.
Party’s challenge to his own arbitrator
An appointment of an arbitrator can be challenged by the party who appointed him but only for the reasons of which the party became aware after the appointment was made.