9911796707
TMI Blog2017 (3) TMI 1911X X X X Extracts X X X X X X X X Extracts X X X X ..... 12(5) and item 3 of Schedule VII of the amended Arbitration Act fall for consideration. Specifically, whether an arbitrator should stand disqualified or be removed in these circumstances, viz.: the arbitrator is a practicing counsel; he is 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Analytical Pvt Ltd & Ors briefed by various law firm in different matters; one such law firm is the one engaged by one of the parties to the arbitration; the counsel himself has never been briefed by that, or any other, law firm for that particular party, or any of the parties to the arbitration; the arbitrator clarifies in writing that he has never been briefed to appear for that particular party, though he is sometimes briefed in other matters by the law firm in question. Mr Lulia would have it that the fact that the arbitrator, in his practice as counsel, receives with irregular periodicity briefs from the law firm representing a party to the arbitration is sufficient to disqualify him from acting as an arbitrator. It matters not, he says, that the counsel has never acted for that particular client. The counsel is on the "'payroll"' of the law firm. Mr Lulia says he urges no bias a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that date. 7. On 31st January 2017, Mr Lulia wrote to Mr Shah and Mr Dubash asking whether they had in their professional capacities as counsel been engaged by M/s Hariani & Co, who were on record for 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Analytical Pvt Ltd & Ors the 1st Respondent throughout. Paragraph 2 of that letter is also important because in this the present Petitioner is supposed to have instructed Mr Lulia to say that she could not meet the expenses of the three-member arbitral tribunal and she sought instead the appointment of a sole arbitrator. 8. On 31st January 2017, Mr Shah wrote to Mr Lulia saying that although he had been briefed by M/s Hariani & Co in other matters as a practising counsel of the Bombay High Court, he had never appeared for the Claimant (the present 1st Respondent), Metal Power Analytical (India) Pvt Ltd at any time. A copy of this letter is at page 44 of the Petition. On 1st February 2017, Mr Dubash too responded to Mr Lulia in very similar terms. He too confirmed that as counsel he was briefed by several law firms, including M/s Hariani & Co. Some of those were even pending at that time. He had, however, not appeared for the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. (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: Provided further that this sub-section shall not apply to cases where an arbitrator has already been appointed on or before the commencement of the Arbitration and Conciliation (Amendment) Ordinance, 2015." (Emphasis added) 12. Mr Lulia"'s submission is that the wording of Section 12(1)(a), read with Sections 12(3) and 12(5) and item 3 of the VIIth Schedule would operate to automatically disqualify both Mr Shah and Mr Dubash because, as practicing counsel, they are briefed by M/s Hariani & Co. It is wholly irrelevant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 13 read thus: "S. 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 sub-section (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. 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Analytical Pvt Ltd & Ors (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the words of Section 12 themselves. In sub-clause (a) of sub-section (1) of Section 12 the words used are "likely to give rise to justifiable doubts as to his independence or impartiality". The entire purpose of Section 12 is thus to ensure impartiality and independence, i.e., freedom from bias. Section 12(1)(a) also speaks of an arbitrator"'s relationship with one of the parties. It then describes the types of disqualifying associations. They may be professional, financial, business or of any other kind (and which seems to me to imply that the words are illustrative, not exhaustive). This association must, however, be with the one of the parties, and it must be such as to give rise, within the meaning of Section 12(3) of a justifiable doubt as to the arbitrator"'s impartiality or independence. 20. Mr Lulia"'s emphasis is, I suspect, more on Section 12(5) and its use of the phrase 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Analytical Pvt Ltd & Ors 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 arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial income therefrom. RELATIONSHIP OF THE ARBITRATOR TO THE DISPUTE 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 previous involvement in the case. 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Analytical Pvt Ltd & Ors ARBITRATOR"'S DIRECT OR INDIRECT INTEREST IN THE DISPUTE 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. Explanation 1.The term "close family member" refers to a spouse, sibling, child, parent or life partner. Explanation 2.The term "affiliate" encompasses all companies in one group of companies including the parent company. Explanation 3.For the removal of doubts, it is clarified that it may be the practice in certain specific kinds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement in the case without the arbitrator being involved himself or herself. 7. The arbitrator"'s law firm currently has a significant commercial relationship with one of the parties or an affiliate of one of 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, another arbitrator or any of the counsel in the same arbitration. 27. A lawyer in the arbitrator"'s law firm is an arbitrator in another dispute involving the same party or parties or an affiliate of one of the parties. 28. A close family member of the arbitrator is a partner or employee of the law firm representing one of the parties, but is not assisting with the dispute. 29. The arbitrator has within the past three years received more than three appointments by the same counsel or the same law firm. RELATIONSHIP BETWEEN ARBITRATOR AND PARTY AND OTHERS INVOLVED IN THE ARBITRATION 30. The arbitrator"'s law firm is currently acting adverse to one of the parties or an affiliate of one of the parties. 31. The arbitrator had been associated within the past three years with a party or an affiliate of one of the parties 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Analytical Pvt Ltd & Ors in a professional capacity, such as a former employee or partner. OTHER CIRCUMSTANCES 32. The arbitrator holds shares, either directly or indirectly, which by reason of number or denomination constitute a material holding in one of the parties or an affiliate of one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te or a partner with a lawyer or law firm appearing in the arbitration, or representing the law firm or lawyer personally. 26. A law firm"'s briefing of counsel in other, unrelated matters is on a very different footing. In our profession it very often happens that on a given day a law firm will brief counsel for one client and on the very next day, or perhaps later that very day, will brief another counsel against the first. At no point in their regular practice do counsel appear "'for"' the law firm that briefs them, leaving aside cases where the briefing lawyer or law firm is itself the litigant. In-house counsel or counsel who receive a fee-paid general retainer or salary from a law firm stand on a different footing. We are here concerned with independent counsel, those in the profession who in 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Analytical Pvt Ltd & Ors the course of their daily practice receive briefs from many attorneys, law firms or individual practitioners. This is a remnant of the "'dual system"', now abolished, and a central feature of that system, one that continues to this day in practice, is the independence of counsel. They acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulia says this or not, the foundation of his case is rooted in an apprehension of bias. That is not dependent on his client"'s averments or his submissions, and I must give him and his client due credit for that correctness and fairness. The rule against bias may, I think, be traced to well-established principles in administrative law, and, specifically the rules against a pecuniary bias and a personal bias. In Craig"'s Administrative Law,1 it is said: The Courts have long insisted that any pecuniary interest disqualifies the decision-maker, be he high or low. The Courts have consistently held that if there was a pecuniary interest, it was not necessary to go on to consider reasonable suspicion or real likelihood of basis. It is therefore important to establish what will constitute a pecuniary interest. Blackburn J held that any pecuniary 1 Paul Craig, Administrative Law, 6th Edition. 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Analytical Pvt Ltd & Ors interest however small will be sufficient. Some qualification is however required to the breadth of this statement. If the pecuniary interest is not personal to the decision maker, then the matter will fall to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partner was, without his knowledge, involved in related litigation. Neither was a judge disqualified in a case where one party"'s solicitors were already acting for the judge in relation to his will. And a judge who was the director of a property company, which was the landlord of one of the parties, was not disqualified. The judge did not know of this link but even if he had known, there could in the circumstances, "'not be a real danger of bias. The interest was so minimal that no reasonable and fair-minded person sitting in court would have considered there was a real as opposed to a fanciful danger of a fair trial not being possible."'. 32. I will accept that the statutory enunciation we have before us eliminates even the smallest interest it is not a question of degree. But that interest must not be too remote, nor fanciful. The case here is not of either Mr Shah or Mr Dubash ever having appeared for the 1st Respondent on M/s Hariani & Co"'s brief, but of them ever having been briefed by M/s Hariani & Co at all, a very 5 10th edition, pp. 385-386. The internal citations have been omitted for clarity. 2nd March 2017 Sheetal Maruti Kurundwade v Metal Power Anal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had argued civil rights cases as a lawyer before her appointment to the Bench. A barrister charged with professional misconduct was similarly unsuccessful in his complaint that a disciplinary tribunal, "'the majority of the members of which are practising barristers, is incapable of considering fairly a charge of misconduct brought against a fellow barrister"'. Because judges live in society, they are bound to be affected by the result of many cases that come before the courts. In one of A. P. Herbert"'s Misleading Cases, Sir Ethelred Rutt KC persuaded three Court of Appeal judges that neither they nor any other judges could properly hear an income-tax appeal because the judiciary, being paid by the Crown, had a direct interest in increasing the sums due to the Inland Revenue. In the non-fictional Court of Appeal, a rather more realistic approach is necessarily taken when the legality of a policy of cheaper public transport in London was challenged in the Court of Appeal in 1981, Lord Denning explained that all three members of this court are interested on all sides. We are all fare-paying passengers on the tubes and buses and benefit from the 25 per cent cut in fares. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
