It is pertinent to notice section 13 of the Act, which states the challenge procedure to remove an arbitrator from the tribunal.

Section 13 (3) states as follows:

“ (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.”

It is to be noted; that the arbitrator who is being challenged; remains in the arbitral tribunal and hence decides about his own competence as an arbitrator; which is completely against the principle of natural justice.

Equity has often been regarded as a synonym for natural Justice by jurists from the dawn of civilization and fairness is an integral part of it. The principle of “Nemo Judex in Causa Sua” that is “no man shall be the judge of his own cause” remains as one of the bedrocks of natural justice. Under section 13(3) of the Act the arbitrator himself would adjudicate his own competence by being part of the tribunal, thereby creating doubts of  biasness and unfair justice to be meted. It is to be noted that modern international arbitration requires the objective application of rules to facts and the exercise of bounded discretion to ensure that the process and the final outcome is warranted2. When adjudication is infected with partiality, it is not based upon reasoned application of applicable legal rules but rather on a decision maker’s personal relationships, preconceptions, objectives and interest. Thereby, clearly bending the rules of natural justice.

The test for competence of an arbitrator on the ground of biasness has been laid down by the Hon’ble Supreme Court, in the case of Jiwan Kumar Lohia v. Durgadutt Lohia.3

“The test of likelihood of bias is whether a reasonable person, in possession of relevant information would have thought that bias was likely and whether the person concerned was likely to be disposed to decide the matter only in a particular way.”

In the present scenario, the fact that a judge is adjudicating his own competence, certainly forms a reasonable ground for apprehension of bias. The Hon’ble Apex Court in Bihar State Mineral Development Corp. v. Encon Builders (I) Pvt. Ltd.4 while referring to Russell on Arbitration5, stated:

“A distinction is made betiween actual bias and apparent bias. Actual bias is rarely established but clearly provides grounds for removal. Moreover, there is a suspicion of bias, which has been variously described as apparent or unconscious or imputed bias. In such majority of cases it is often emphasized that the challenger does not go so far as to suggest the arbitrator is actually biased, rather some form of some objective apprehension of bias exists.

In relevance to the present picture, there is certainly a clear unambiguous apprehension of bias that is to be created out of the peculiar situation as the arbitrator becomes the judge of his own cause. It would be relevant to draw an analogy between a judge and an arbitrator, both individuals share certain functional similarities, which relate to independence of decision making and internal check on discretion. Therefore the foundation of fair, efficient and impartial nature of work is expected.

The proper approach for the judge is not to look at his own mind and ask himself, however, honestly, ‘am I biased?’ but to look at the mind of the party before him6. It is to be carefully perceived that the challenge to the arbitrator adjudicating his own competence is in no manner a doubt or imputation to the character of the arbitrator, instead it is the apprehension of biasness that forms the ground of appeal that has arisen from a situation. Hence it has to be acknowledged that section 13(2) is speculative and needs clarity.

As Salmond said “ Natural justice is justice in deed and in truth, while legal justice is justice declared and recognised by law and enforced in law courts. He maintains that natural justice is the ideal and the truth, of which legal justice is the more or less imperfect, realisation and expression.”7 Therefore, we can always correct the legal justice so as to be in consonance with justice in deed and truth. In regard to section 13 of the Arbitration and Conciliation Act, 1996 the need arises for an express provision, stating the challenged arbitrator not to be a part of the tribunal deciding his competence.

To conclude, the lines of Lord Hewart CJ would be aptly suited; “It is of fundamental importance that justice should not only be done but should manifestly and undoubtedly been seen to be done.”8 An arbitration is as good as an arbitrator, therefore any doubts raised to the process would only devalue the means and hence the legislation should make sure that express provisions clarify the state of things in the Arbitration and Conciliation Act, 1996.