Significance of Section 12 under Arbitration and Conciliation (Amendment) Act,2015
Independence, impartiality, and neutrality are the key aspects for a fair, just and unbiased arbitral proceedings. Arbitration and Conciliation (Amendment) Act, 2015 came into effect from 23rd October 2015. Its aim was to ensure the improved efficiency of commercial arbitration in the country. The amendment of 2015 gave special emphasis on independence and impartiality. The Arbitration and Conciliation (Amendment) 2019 also inserted an eight schedule prescribing the general norms and principles applicable to the arbitrator, emphasizing on the impartial decision or neutral stand decision for arbitral proceedings.
A specific provision in regards to impartiality and disclosure by the arbitrator was added under Section 12 of Arbitration and Conciliation Act, 2015. Under this provision, any person who has been approached for the appointment of an arbitrator by the disputant partiers must disclose all the facts in writing, any direct or indirect, about the past or present relationship with the parties, counsel or subject matter and the outcome of the arbitration which may be financial, professional, business or any other kind which may probably give rise to justifiable doubt so as to impartiality and independence which would also lead to the incapability to devote sufficient time for the arbitration and the arbitrator ‘s ability to accomplish and provide a decision to the parties within 12 months. The disclosure is necessary to be made by the arbitrator under the norms and conditions prescribed under the sixth schedule. Thus, it is the responsibility of the arbitrator to disclose all the facts before the commencement of the arbitration proceedings. On the basis of the disclosure made by the arbitrator, it would be determined whether any such circumstance exists or whether it falls under any of the grounds prescribed in the 5th or 6th Schedule.
The Supreme Court also laid several guidelines for effective implementation independence and impartiality of arbitrator while providing decisions to the disputant parties. Various judgments were provided by the Supreme Court to strengthen the provision of the Act for effective implementation. In the case of HRD Corporation Vs.GAIL (India) Ltd. the Hon’ble Supreme Court held that it was noticed that if the person falls under the category of Schedule Seven, it lies under the ineligibility for an appointment. Section 12(5) read with Seven Schedule makes it very clear that if the arbitrator falls under any of the categories mentioned under Seventh Schedule the arbitrator is considered as ineligible for the appointment as an arbitrator to the dispute and will be substituted by another arbitrator under Section 14(1) of the Act. On the contrary, if the disclosure falls under the Fifth Schedule and which leads to a raise of justifiable doubts, the arbitrator’s impartiality and independence can be challenged before the Arbitral Tribunal under Section 13 of the Act.
By analyzing the concept, it can be interpreted that independence and impartiality are the essential aspects for the appointment of an arbitrator and also resulting in a fair and unbiased decision to the dispute. Despite the efforts made for the implementation of the Act, it requires more effective measures to encourage and facilitate a better form of system.