{"id":2192,"date":"2022-08-03T06:07:39","date_gmt":"2022-08-03T06:07:39","guid":{"rendered":"https:\/\/ahujalawoffices.com\/alo\/?p=2192"},"modified":"2022-08-03T06:07:39","modified_gmt":"2022-08-03T06:07:39","slug":"independence-of-arbitrator","status":"publish","type":"post","link":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/2022\/08\/03\/independence-of-arbitrator\/","title":{"rendered":"Independence of Arbitrator"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tINTRODUCTION<\/strong>\n

\u2018Arbitration\u2019 refers to \u2018a procedure in which a\ndispute is submitted, by agreement of the\nparties, to one or more arbitrators who\nmake a binding decision on the dispute. In\nchoosing arbitration, the parties opt for a\nprivate dispute resolution procedure instead\nof going to court.\u2019\u2013 WIPO.<\/em><\/p>\n

Although arbitration is often referred to as\npart of the new wave of \u2018alternative\u2019 dispute\nresolution techniques, such as mediation, it\nis one of the oldest forms of dispute\nresolution. Arbitration was practised in\nancient Greece and Rome. The first English\nArbitration Act was passed in 1698.<\/p>\n

But there is always some debate about an\narbitrator’s objectivity when they make a\nruling or an award. Arbitrators are thought to\nhave an unconscious bias toward the parties\nsince they are familiar to counsel or parties\nand because they are typically chosen by the\nparties themselves. Each contesting party\nnames an arbitrator, which is a\ndistinguishing trait of arbitration, a rising\ntype of legal adjudication.<\/p>\n

However, some commentators claim that\narbitrators chosen by a party often exhibit\nbias in their favour.<\/p>\nSTATE OF INDEPENDENCE<\/strong>\n

Independence refers to objective and\nexternal manifestation of the relationship\nbetween the parties, counsels and coarbitrators.\nAn arbitrator shall not only be\nindependent but he shall also be perceived\nas independent by third parties.<\/p>\n

Impartiality of an arbitrator refers generally\nto the state of mind, subjective and abstract\nconcept which is difficult to measure and\ncan be deduced from his\/her external\nconduct. It entails an \u201cabsence of external\ncontrol\u201d as well as any \u201cbias and\npredisposition towards a party.\u201d The adage\n“with great power comes great\nresponsibility” is true in a sense that when\nparties are given the authority to choose the\narbitrators, it is assumed that they will act\nhonestly and responsibly.<\/p>\n

Taking reference from Cambridge dictionary,\nstate of being independent means you are\ncapable of taking your own decisions\nwithout getting influenced from others. It\ncan be referred to as a state of free mind. It\ndetermines your autonomy on state of\nthings and decisions you make. It also\nexcluded external control, which means you\nare able to excuse other people who try to\ndominate your decisions and control your\nfreedom of independence.<\/p>\n

The arbitrator must be viewed as being\nindependent by both the parties and the\nauthorities involved. Therefore, it makes\ncomplete sense that an arbitrator must not\nonly be unbiased but also be seen as\nindependent by a 3rd party. Arbitrator is\nobligated to act impartially toward the\nparties and refrain from acting in a way that\nserves the interests of just one of them. An\narbitrator’s job\/obligation calls for him to\nalways work in the best interests of justice.<\/p>\nLEGISLATURE ON THE INDEPENDENCE AND IMPARTIALITY OF ARBITRATORS<\/strong>\n

The Act does not specifically exclude any\ncategory of disputes as being non-arbitral,\ni.e. not amenable to arbitration, although, it\nis clear that an arbitral award will be set\naside or enforcement refused if the court\nfinds that the subject-matter of the dispute\nis not capable of settlement by arbitration\nunder the law for the time being in force.\nWhether or not a dispute is arbitral, depends\non:<\/p>\n

i.Whether the dispute can be resolved by a\nprivate forum chosen by parties, or it\npertains to an issue in rem (i.e. in relation to a\nright exercisable against the world at large,\nas contrasted from a right in persona, i.e. in\nrelation to an interest protected solely\nagainst specific individuals, in which case it\nwill fall within the domain of public fora;<\/p>\n

II.Whether there is any statutorily\nconstituted court or tribunal with exclusive jurisdiction i.to deal with such disputes, for\nexample rent control, insolvency etc., in\nwhich case the dispute will not be arbitral;<\/p>\n

ii.Whether in the facts of the case, the\ndispute is covered by the arbitration\nagreement and \/ or whether the dispute falls\nwithin the term of reference.<\/p>\n

The 246th Law Commission Report of India,\nwhich was published in 2014, noted, among\nother things, that the independence and\nimpartiality of arbitrators are essential\nqualities that cannot be compromised. The\nCommission also acknowledged that the\nAct’s flaw was the lack of a formula for\nidentifying conditions that raise “justifiable\nsuspicions.”<\/p>\n

Article 11 of CIArb also says that, \u201cWhen a\nperson is approached in connection with his\nor her possible appointment as an arbitrator,\nhe or she shall disclose any circumstances\nlikely to give rise to justifiable doubts as to\nhis or her impartiality or independence\u201d.<\/p>\n

These same principles are incorporated in\nIndian legislation related to arbitration in\nsection 12 of the related act by the virtue of\nthe Arbitration and Conciliation\n(Amendment) Act, 2015. Article 12 specifies\nthat either direct or indirect connection with\nparties or subject matter of the dispute\nmakes it difficult for the person to be\nappointed as arbitrator.<\/p>\n

In addition to that, there exists 7th schedule,\nwhich is based on IBA guidelines,[1] that lay\ndown certain criteria or circumstances which\ncan bar any person to be appointed as\narbitrator or raise any claim against any such\narbitrator if any circumstance is fulfilled.<\/p>\n

These are some of the prohibited\ncircumstances. As per section 12 (5) of the\nArbitration Act, 2015, if any person who is to\nbe appointed as arbitrator, falls under any\ncategory as specified under 7th schedule\nthen such person shall not be appointed as\narbitrator. However this could be waived off if\nparties agree in writing.<\/p>\nJUDICIAL PRECEDENTS W.R.T. INDEPENDENCE OF ARBITRATOR:<\/strong>\nTrf Ltd v. Energo Engineering Projects Ltd<\/em>\n

The court observed that when a law\n\/authority declares a person ineligible to be\nappointed as an arbitrator, it also disentitles\nthat person to nominate any person to be\nappointed as an arbitrator. Further, in case of\nHRD Corporation Ltd., apex court held that if\nany circumstance under 7th schedule exists,\nit makes the person ineligible to be\nappointed as arbitrator.<\/p>\nBharat Brodband Network v. United Telecom Limited<\/em>\n

The Court held that \u201cSection 26 of the\nAmendment Act, 2015 makes it clear that the\nAmendment Act, 2015 shall apply in relation\nto arbitral proceedings commenced on or\nafter 23.10.2015. Indeed, the judgment itself\nset aside the order appointing the arbitrator,\nwhich was an order dated 27.01.2016, by\nwhich the Managing Director of the\nrespondent nominated a former Judge of\nthis Court as sole arbitrator in terms of clause\n33(d) of the Purchase Order dated 10.05.2014.\nIt will be noticed that the facts in the present\ncase are somewhat similar. The APO itself is\nof the year 2014, whereas the appointment\nby the Managing Director is after the\nAmendment Act, 2015, just as in the case of\nTRF Ltd. (supra). Considering that the\nappointment in the case of TRF Ltd. (supra)\nof a retired Judge of this Court was set aside\nas being non-est in law, the appointment of\nShri Khan in the present case must follow\nsuit.\u201d<\/p>\nCentral Organization for Railway v. M\/s Eci Spic Smo Mcml(Jv)<\/em>\n

The Court held that when the agreement\nspecifically provides for appointment of\nArbitral Tribunal consisting of three\narbitrators from out of the panel of serving or\nretired Railway Officers, the appointment of\nthe arbitrators should be in terms of the\nagreement as agreed by the parties. That\nbeing the conditions in the agreement between the parties and the General\nConditions of the Contract, the High Court\nwas not justified in appointing an\nindependent sole arbitrator ignoring Clauses\n64(3)(a)(ii) and 64(3) of the said contract.<\/p>\nMonica Khanna & Ors. v. Mohit Khanna &<\/em>\nAnr.<\/em>\n

The Hon\u2019ble Delhi High Court observed that\narbitrator should be independent of parties\nand should maintain integrity in order to\nensure justice and fair adjudication of\ndisputes between the parties without any\ninfluence.<\/p>\nCONCLUSION<\/strong>\n

Biases cannot be eradicated by rules and\nregulations but only by a conscious mind\nwhich fulfils duty or is willing to fulfil its duty\nand thus this fear of biases raises a doubt on\nimpartiality and independence of arbitrators.\nIn case of Reliance Industries Ltd. v. Union Of\nIndia, apex court observed that with respect\nto neutrality, impartiality, independence of\narbitrators, it is important that no doubts on\nsuch principles are raised.<\/p>\nArticle by\nT.S. AHUJA\n(Managing Partner)\nM\/S Ahuja Law Offices\n\nA – 219 , Defence Colony,\nNew Delhi – 110024\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

INTRODUCTION \u2018Arbitration\u2019 refers to \u2018a procedure in which a dispute is submitted, by agreement of the parties, to one or […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"disabled","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[24],"tags":[],"class_list":["post-2192","post","type-post","status-publish","format-standard","hentry","category-independence-of-arbitrator"],"_links":{"self":[{"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/posts\/2192","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/comments?post=2192"}],"version-history":[{"count":0,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/posts\/2192\/revisions"}],"wp:attachment":[{"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/media?parent=2192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/categories?post=2192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ahujalawoffices.com\/ahujalawoffices\/wp-json\/wp\/v2\/tags?post=2192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}