When Arbitrator Is An Officer Of The Industry

Section 12. Grounds for challenge.

(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.

(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub section (1) unless they have already been informed of them by him.

(3) An arbitrator may be challenged only if-

(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or

(b) he does not possess the qualifications agreed to by the parties.

(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons, of which he becomes aware after the appointment has been made.

Section 13. Challenge procedure.

(1) Subject to sub- section (4), the parties are free to agree on a procedure for challenging an arbitrator.

(2) Failing any agreement referred to in sub- section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in subsection (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.

(3) Unless the arbitrator challenged under sub- section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub- section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.

(5) Where an arbitral award is made under sub- section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.

(6) Where an arbitral award is set aside on an application made under sub- section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees.

COMMENTS: (1) As per section 12(4) of the Arbitration and Conciliation Act, 1996 (‘the Act’) a party may challenge EVEN AN ARBITRATOR APPOINTED BY HIM, only for reasons, of which he becomes aware after the appointment has been made.

(2) If a challenge under the procedure under sub-section 13(2) is not successful, and IF THE PARTY IS DISTRUSTFUL OF THE INTEGRITY OF THE ARBITRATOR, the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.

(3) If the accusation of the party is material and genuine, there is every possibility that the award would be set aside. Because, as per section 12(1) the Arbitrator is OBLIGED TO DISCLOSE IN WRITING ANY CIRCUMSTANCES LIKELY TO GIVE RISE TO JUSTIFIABLE DOUBTS AS TO HIS INDEPENDENCE OR IMPARTIALITY from the time of his appointment; and further throughout the arbitral proceedings as per section 12(2) of the Act.

 

Note: the views expressed are my personal and a view point only.

 

Author:

Narendra Sharma,

Consultant (Legal)

E-mail: nkdewas@yahoo.co.in

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