Section 13 – Challenge procedure

This section establishes the framework for challenging the appointment of the Arbitrator in the Arbitration Proceedings.

This section gives the power to the parties to establish their own procedures for challenging an arbitrator which highlights the principle of party autonomy in arbitration, where the parties have significant control over the process.

If the parties haven’t agreed on a challenge procedure, the following steps apply:

• A party proposing to challenge an arbitrator must send a written statement of the reasons for the challenge to the arbitral tribunal within 15 days. This 15-day period starts when the party becomes aware of the formation of the arbitral tribunal, or when they become aware of any circumstances that give rise to justifiable doubts about the arbitrator’s independence or impartiality as referred in Section 12(3) of the Arbitration & Conciliation Act, 1996.
• Unless the challenged Arbitrator withdraws or the other party agrees to challenge, the Arbitral Tribunal itself will decide on the challenge proposed by the party.
• If the Arbitral Tribunal determines that the challenge lacks merit and is based solely on personal preferences, the arbitral tribunal will continue with the arbitration proceedings and make an arbitral award which ensures that the arbitration process continues without undue delay.
• Now when the arbitral award has been made by the tribunal, then the party challenging the arbitrator may make an application for setting aside the arbitral award under section 34 of the Arbitration & Conciliation Act, 1996.
• and, Where the Arbitral Award is set aside, the Court may decide as to whether the arbitrator who is challenged is entitled to any fees for the Arbitration proceedings conducted before him.

The Hon’ble Supreme Court in the case of HRD Corporation (Marcus Oil and Chemical Division) Vs. GAIL (India) Limited has clarified that if a challenge to an arbitrator’s appointment is unsuccessful under Section 13, the arbitral tribunal can proceed with the arbitration and make an award. The challenging party retains the right to object to the award under Section 34 of the Act. The Court emphasized that the grounds for challenging an arbitrator’s appointment are distinct from those for challenging an arbitral award.

 

Disclaimer: This blog is for informational purposes only and does not constitute any legal advice. Readers should seek expert legal counsel before taking any action based on the content.