ELEMENTS OF NATURAL JUSTICE IN ARBITRATION
-By: Sunaina Jain
The Black Law Dictionary describes arbitration as a dispute settlement process involving one or more impartial third parties, agreed upon by the disputing parties and whose decision is binding. In order to understand the components of the term, the mechanism and award of arbitration is important and mandatory for a law that supplements a legal binding.
The first piece of legislation in India was in the form of the 1940 Arbitration Act on the pattern of the 1934 English Arbitration Act and remained in force until it was replaced by the 1996 new Arbitration and Conciliation Act. Not only did the Arbitration and Conciliation Act 1996 embody the basic features of arbitration, which are as less costly, reliable and effective Alternative Conflict Resolution tool, its outlook was also more detailed than the 1940 Arbitration Act.
The new Act established the term "international commercial arbitration," the qualification required for an arbitrator, the umpire system was abolished, Reduced the Court's interference in several respects, and also provided for the enforcement of foreign awards under the New York Convention and the Geneva Convention.
The Arbitration and Conciliation Act1996 thus made a significant contribution to the means of Alternative Dispute Resolution, and it remained so. However, a few gaps exist in the legislation; that in the context of Alternative Dispute Settlement, on occasions, may form a distinct part of the conflict. It is relevant to note Section 13 of the Act, which provides for the challenge procedure for removing an arbitrator from the tribunal.
Section 13 (3) of the Arbitration and Conciliation Act 1996
(3) Unless an arbitrator challenged under subparagraph (2) withdraws from his or her office or the other party objects to the appeal, the arbitral tribunal shall decide the appeal. It should be noted; that the arbitrator being challenged; stays in the arbitral tribunal and thus acts on his or her own merits as arbitrator; which is totally contrary to the concept of natural justice.
Jurists since the beginning of humanity have always treated equity as a synonym for natural justice and fairness is an important part of it. Nemo Judex 's theory in Causa Sua that no man is to be the judge of his own cause persists as one of natural justice's bedrocks. Under Section 13(3) of the Act, the arbitrator himself will adjudicate his own authority by being part of the tribunal, thereby raising questions as to prejudice and unequal justice to be practiced. The arbitrator 's jurisdiction on the grounds of bias has been defined by the Hon'ble Supreme Court in the case of Jiwan Kumar Lohia vs Durgadutt Lohia. The probability test of bias is whether a reasonable person, in possession of relevant information, would have found that bias was probable and whether the person concerned was likely to be willing to determine the matter only in a case.
There's a difference between true bias and obvious bias. Actual bias is rarely established but gives clear grounds for removal. In addition, there is a presumption of bias, which has been defined as obvious or implicit or imputed bias in different ways. In such a number of cases it is also emphasized that the claimant does not go so far as to imply that the arbitrator is in fact biased, but there is some sort of rational apprehension of bias.
Relevant to the current picture, there is definitely a strong and unambiguous apprehension of bias to be generated from the unusual circumstance, as the arbitrator is the judge of his own cause. The judge's best solution is not to look at his own mind, and ask himself frankly, though, I'm biased but to look at the party 's mind before him. It must therefore be perceived carefully that the arbitrator 's challenge to adjudicate his or her own competence is in no way a doubt or imputation to the character of the arbitrator, Alternatively, the presumption of partiality is the basis of appeal that resulted from a case. It must be recognized therefore that Section 13(2) is speculative and requires clarity.
Natural justice, as Salmond said, is justice in deed and fact, while legal justice is justice that is proclaimed and accepted by statute and implemented in court. He insists that natural justice is the ideal and the reality and is the more or less imperfect understanding and representation of legal justice. Therefore we can always correct the legal justice in order to be in harmony with the deed and truth of justice. With regard to Section 13 of the Arbitration and Conciliation Act, 1996, the need for an express provision arises, stating that the arbitrator challenged is not a party to the tribunal deciding his or her jurisdiction.
To conclude, it would be appropriate to conclude the lines of Lord Hewart C.J; it is of fundamental importance that justice should not only be done, but that it should be seen to be done manifestly and without doubt.
 AIR 1992 SC 188, 1992 (1) ARBLR 1 SC, 1991 ECR 577 SC, JT 1991 (4) SC 254, 1991 (2) SCALE 937, (1992) 1 SCC 56, 1992 (1) UJ 319 SC