Repetitive Appointment of Arbitrators: The Impact on Arbitration in India and U.K

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Arbitration is a popular form of alternative dispute resolution in India, with a well-established legal framework governing its practice. However, ensuring the independence and impartiality of arbitrators is crucial to the integrity of the arbitration process. In the case of HRD Corporation (Marcus Oil and Chemical Division) v. Gail (India) Limited, [(2018) 12 SCC 471] the Hon’ble Supreme Court of India interpreted the repetitive appointment of arbitrators and its impact on arbitration in India.

Sections 12, 13, and 14 of the Arbitration and Conciliation Act, 1996, and the schedules govern the procedure for challenging the appointment of an arbitrator. The Court held that an arbitrator who had been appointed by a party or its affiliates on two or more occasions in the past three years may not be disqualified if they were impartial and independent on the earlier arbitrations. The nominated arbitrator should disclose any circumstances that may give rise to justifiable doubts as to their independence or impartiality.

The HRD Corporation case arose from a contract between HRD Corporation and GAIL for the supply of wax produced at GAIL’s plant in Uttar Pradesh. Three arbitrations were initiated when disputes arose between the parties, and the same tribunal was selected by the parties for the first two arbitrations. In the third arbitration, the same tribunal was appointed, but due to the sudden demise of one of the judges, a replacement judge was appointed. In the fourth arbitration, GAIL nominated a judge who had been appointed by them previously, leading to HRD Corporation challenging the appointment under the fifth schedule of the 1996 Act. The Supreme Court held that the appointment was valid, as the nominated arbitrator had disclosed his previous appointments and had acted impartially and independently on those occasions.

In the UK, the Halliburton case ( Halliburton Company (Appellant) v Chubb Bermuda Insurance Ltd [2020] UKSC 48) the UK Supreme Court delivered a judgment which is the most significant decision on English arbitration law. The case involves a claim made by Halliburton against Chubb under the excess liability insurance policy for its offshore services in the Deepwater Horizon project. The dispute was brought to London-seated ad hoc arbitration, and the parties could not agree on the selection of the presiding arbitrator. The English High Court appointed Kenneth Rokison QC, who had previously acted in arbitrations involving Chubb. After accepting the appointment, Mr Rokison subsequently accepted two more appointments in arbitrations related to the same incident without disclosing it to Halliburton. Halliburton asked Mr Rokison to resign, but he refused, arguing that he had been independent and impartial throughout. Halliburton then made an application to remove Mr Rokison, but it was unsuccessful in the lower courts, prompting an appeal to the Supreme Court. The Supreme Court clarified the test for assessing arbitrator impartiality and highlighted the importance of arbitrator impartiality in English-seated arbitration. The decision has set a new standard for arbitrator impartiality in England and Wales, but Halliburton’s arbitrator challenge was not successful. The Supreme Court has clarified the assessment of arbitrator conflicts and the test for apparent bias. The Supreme Court emphasised that impartiality was a cardinal duty for arbitrators, and the correct legal test for apparent bias was whether a fair-minded and informed observer would conclude that there was a real possibility that the tribunal was biased. The decision has helped to reaffirm the importance of impartiality in English-seated arbitration and to strengthen the integrity of the process.

The Halliburton decision has far-reaching implications for arbitration in England and provides much-needed clarity on the assessment of arbitrator conflicts. It is significant for a broad range of arbitral institutions and organisations, as it will help to maintain the reputation of arbitration as a reliable and impartial dispute resolution mechanism.

In conclusion, the cases of HRD Corporation v. Gail (India) Limited and Halliburton Company v. Chubb Bermuda Insurance Ltd have underscored the importance of arbitrator independence and impartiality in arbitration proceedings. The nominated arbitrators should disclose any previous appointments, and act impartially and independently. The decisions in these cases will shape the future of arbitration in India and England, respectively, and help to maintain the integrity of the arbitration process.