Corporate Lawyer: A person cannot act as an arbitrator if he has represented as a counsel any party or its partners; SC.

Supreme Court of India

Justice A S Bopanna and Justice R Banumathi

The SC {Vinod Bhaiyalal Jain and Others versus Wadhwani Parmeshwari Cold Storage Private Limited} holds that the arbitrations provisions as contained in section 12 of the Act, even prior to the amendment on 23rd of October 2015, would cast an obligation for disclosure on the arbitrator.

It was held that when there is a reasonable basis for anyone to make a claim that in the present circumstances the arbitrator would not be fair to them, even if not biased, it could no doubt be only a perception of the party. Be it so, no room should be given for even such a feeling, more particularly, when in the matter of arbitration the very basis is that the parties get the opportunity of nominating a judge of their choice in whom they have trust and faith, alike in a normal course of litigation where they do not have such choice.

As in the present case, the arbitrator appointed had represented one of the partners of the respondent, therefore, it was held that the arbitral award was rightly set aside by the District Judge under Section 34 of the Act. And the High Court committed error of law while allowing the Appeal, and setting aside the order of the learner District Judge. Therefore, after setting aside the order of the High Court, and reaffirming the order of the District Judge, the parties were given liberty to avail their remedy in arbitration in accordance with law, and the appeal was accordingly allowed by the SC.