Arbitration and Conciliation Act Section 12 — Grounds for challenge
CHAPTER III — Composition of arbitral tribunal
Civil
Summary
Sub-section (1) requires that when someone is approached about possibly being appointed as an arbitrator, they must disclose in writing any circumstances that could raise doubts about their independence or impartiality. This includes any past or present relationship, whether direct or indirect, with any party or with the subject-matter of the dispute, covering financial, business, professional, or other kinds of connections. It also requires disclosure of any circumstances that could affect their ability to devote enough time to the arbitration, particularly their ability to complete the entire process within twelve months. The first explanation clarifies that the grounds listed in the Fifth Schedule should be used to determine whether such circumstances exist, and the second explanation states that the disclosure must be made in the form specified in the Sixth Schedule.
Sub-section (2) requires an arbitrator, from the time of their appointment and throughout the arbitral proceedings, to disclose to the parties in writing any circumstances referred to in sub-section (1) without delay, unless the parties have already been informed of those circumstances.
Sub-section (3) states that an arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts about their independence or impartiality, or if the arbitrator does not possess the qualifications that the parties had agreed upon.
Sub-section (4) provides that a party may challenge an arbitrator whom they appointed or in whose appointment they participated only for reasons that the party becomes aware of after the appointment has been made.
Sub-section (5) states that, despite any prior agreement to the contrary, any person whose relationship with the parties, counsel, or the subject-matter of the dispute falls under any of the categories specified in the Seventh Schedule is ineligible to be appointed as an arbitrator. However, the proviso allows the parties to waive this ineligibility by an express written agreement, but only after a dispute has arisen between them.
Official Text
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(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 a period of twelve months.
Explanation1.—The grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator.
Explanation 2.—The disclosure shall be made by such person in the form specified in the Sixth Schedule.]
(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. 1[
(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.]