By Azeez Nazar Sabri
The main objective of the Arbitration law is to provide
speedy, inexpensive and fair trial by an Impartial Tribunal. Arbitration law
gives autonomy to the parties and limits the intervention of the court.
Since the Arbitration Act give
autonomy to the parties to appoint the Arbitrator(s), the independence and
Impartiality of an Arbitrator is indispensable as an independent and impartial
mind is essential in the exercise of the judicial power.
Section 12 of the Arbitration and
Conciliation Act, 1996 has been amended in 2015 Amendment. This amendment has
been made with a view to ensure the independence and impartially of the
Arbitrators. The amendment provision identifies the “Circumstances” which give
rise to “Justifiable doubts” about the independence and impartially of the
Arbitrator. The fifth Schedule to the Act enumerates the grounds which may give
rise to justifiable doubts of this nature. Similarly, Seventh Schedule
stipulates those circumstances which would attract the provisions of Sub-section
(5) of Section 12, which makes person ineligible to be appointed as an
arbitrator.
Following amendments have been
made in sub-section (1) & (5) of Section 12.
Subsection (1)
When a person is approached in connection with his possible
appointment as an arbitrator, he shall disclose in writing any circumstances,-
a) Such as the
existence either direct or indirect, of any past or present relationship with
or interest in any of the parties or in relation to the subject- matter in
dispute, whether financial, business, professional or other kind, which is
likely to give rise to justifiable doubts as to his independence or
Impartiality: and
b) which are likely to affect his ability to devote
sufficient time to the arbitration and in particular his ability to complete
the entire arbitration within period of twelve months.
Explanation 1: The ground stated in the fifth Schedule shall
guide in determining to the justifiable doubts as to the independence or
impartially of an arbitrator.
Subsection (5)
Notwithstanding any
prior agreement to the contrary, any person whose relationship, with the
parties or counsel or the subject-matter of the dispute, falls under any of the
categories specified in the Seventh Schedule shall be ineligible to be
appointed as an arbitrator.
Provided that parties may, subsequent to disputes having
arisen between them, waive the applicability of this Sub-section by an express
agreement in writing.
The Seventh Schedule
The Seventh Schedule specified the following categories of the
Arbitrator relationship with the parties or counsel, which disqualifies a
person for the position of arbitrator.
1. The arbitrator is an employee, consultant, advisor or has
any other past or present business relationship with the party.
2. The arbitrator currently represents or advises one of the
parties or an affiliate of one of the parties.
3. The arbitrator currently represents the lawyer or law
firm acting as counsel for one of the parties.
4. The arbitrator is a lawyer in the same law firm which is
representing one of the parties.
5. The arbitrator is a manager, director or part of the management,
or has a similar controlling influence, in an affiliate of one of the parties
if the affiliate is directly involved in the matters in dispute in the
arbitration.
6. The arbitrator’s law firm had a previous but terminated involvement
in the case without the arbitrator being involved himself or herself.
7. The arbitrator’s law firm currently has assigned commercial
relationship with one of the parties or an affiliate of one the parties.
8. The arbitrator regularly advises the appointing party or
an affiliate of the appointing party even though neither the arbitrator nor his
or her firm derives a significant financial income therefrom.
9. The arbitrator has a close family relationship with one
of the parties and in the case of companies with the persons in the management and
controlling the company.
10. A close family member of the arbitrator has a
significant financial interest in one of the parties or an affiliate of the one
of the parties.
11. The arbitrator is a legal representative of an entity
that is a party in the arbitration.
12. The arbitrator is a manager, director or part of the
management, or has a similar controlling influence in one of the parties.
13. The arbitrator has a significant financial interest in
one of the parties or the outcome of the case.
14. The arbitrator regularly advises the appointing party or
an affiliate of the appointing party, and the arbitrator or his or her firm
derives a significant financial income therefrom.
15. The arbitrator has given legal advice or provided an
expert opinion on the dispute to a party or an affiliate of one of the parties.
16. The arbitrator has previously involvement in the case.
17. The arbitrator holds shares, either directly or
indirectly, in one of the parties or an affiliate of one of the parties that is
privately held.
18. A close family member of the arbitrator has a significant
financial interest in the outcome of the dispute.
19. The arbitrator or a close family member of the
arbitrator has a close relationship with a third party who may be liable to
recourse on the part of the unsuccessful party in the dispute.
The close family member mentioned in the seventh schedule
refers to a spouse, sibling, child, parent or life partner. “Affiliate”
encompasses all companies in one group of companies including the parent
company.
If the above circumstances/ grounds exist then a person
shall not be illegible to be appointed as an arbitrator. If he does not
disclose the above circumstance at the time of his appointment, his appointment
can be challenged by the aggrieved party.
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