The Bombay High Court recently issued a ruling on the appointment of an arbitrator in a dispute between Quess Corp and Net Core Cloud Pvt. Ltd. The petitioner, Quess Corp, sought to terminate the mandate of the Sole Arbitrator appointed by the court, alleging that the arbitrator had previously represented the counsel for the respondent in several matters before various forums. The petitioner argued that this made the arbitrator ineligible to continue as arbitrator.
The court concluded that there was no clash of interest involved in this case, as the disqualification connection, contemplated under item 3 of schedule VII of the Arbitration and Conciliation Act, 1996, must be between the arbitrator and the litigant. Thus, where the arbitrator had accepted a brief from the respondent’s counsel for some other client, the same would not amount to per se disqualification or ineligibility.
The court further noted that the appointment of an arbitrator can only be challenged if circumstances exist that give rise to justifiable doubts as to his independence or impartiality or if he does not possess the qualifications agreed to by the parties. In this case, the petitioner did not follow the procedure contemplated under the law for challenging the appointment on the ground of incorrect disclosure by the Sole Arbitrator.
The court’s decision clarifies that an arbitrator who has acted as a counsel and represented the advocate representing the opposite party in an unrelated matter for some other client does not necessarily create a conflict of interest. The ruling is consistent with the objective of the Arbitration and Conciliation Act, 1996, which is to promote arbitration as a means of resolving disputes in an impartial and efficient manner.
It is worth noting that the appointment of an arbitrator is a crucial aspect of the arbitration process, and parties should exercise due diligence in selecting an arbitrator who is independent and impartial. The law provides for certain circumstances that give rise to justifiable doubts regarding an arbitrator’s independence or impartiality, and parties should be vigilant in identifying and addressing these issues before or during the arbitration process.
In conclusion, the Bombay High Court’s ruling provides clarity on the circumstances that give rise to justifiable doubts regarding an arbitrator’s independence or impartiality. The court’s decision underscores the importance of selecting an arbitrator who is independent and impartial and following the proper procedures for challenging an arbitrator’s appointment.