Grounds and Procedure for Challenging Appointment of Arbitrator

The grounds and procedure for challenging an arbitrator are designed to protect the integrity of the proceedings. In India, these are primarily governed by Sections 12 and 13 of the Arbitration and Conciliation Act, 1996.

1. Grounds for Challenge (Section 12)

An arbitrator’s appointment can be challenged only if specific circumstances exist that jeopardize the fairness of the arbitration.

A. Justifiable Doubts as to Independence or Impartiality

This is the most common ground. It applies if there are circumstances—such as a past or present relationship with a party, their counsel, or the subject matter—that might make the arbitrator biased.

• The Fifth Schedule: This schedule lists categories that serve as a guide to determine if "justifiable doubts" exist.

• The Seventh Schedule: This list is more stringent. If an arbitrator falls under any category in the Seventh Schedule (e.g., they are an employee or consultant of one party), they are ineligible to act as an arbitrator unless the parties waive this in writing after the dispute has arisen.

B. Lack of Required Qualifications

A challenge can be made if the arbitrator does not possess the qualifications previously agreed upon by the parties (e.g., if the agreement required a retired judge but an advocate was appointed).

Note: A party can challenge an arbitrator they appointed (or participated in appointing) only for reasons they become aware of after the appointment was made.

2. Procedure for Challenge (Section 13)

The Act provides a specific timeline and method to ensure the challenge does not unnecessarily stall the proceedings.

Step 1: Internal Procedure Agreement

Parties are free to agree on a procedure for challenging an arbitrator. If they haven't agreed on one, the statutory procedure under Section 13 applies.

Step 2: Submission of Written Statement

A party who intends to challenge an arbitrator must, within 15 days of becoming aware of the constitution of the tribunal or the grounds for challenge, send a written statement of the reasons for the challenge to the arbitral tribunal.

Step 3: Decision by the Tribunal

The tribunal itself decides on the challenge, unless:

• The challenged arbitrator withdraws from office.

• The other party agrees to the challenge.

Step 4: Continuation of Proceedings

If the challenge is not successful (i.e., the tribunal rejects the challenge), the tribunal must continue the arbitral proceedings and make an arbitral award. The Act does not allow for an immediate appeal against a rejected challenge to prevent delays.

Step 5: Post-Award Remedy

If the challenge was rejected and the tribunal eventually passed an award, the aggrieved party can then move the court under Section 34 to set aside the award on the grounds that the arbitrator was biased or lacked jurisdiction.