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Role of Arbitrator in International Commercial Arbitration vis-a-vis the standards of independence and impartiality.

International Commercial Arbitration (ICA) is a complex and nuanced field, central to the resolution of cross-border commercial disputes. At the heart of this process is the arbitrator, a neutral third party whose role is multifaceted and carries significant responsibilities. This essay delves into the arbitrator's duties, responsibilities, and the standards of impartiality and independence required in ICA. It explores key principles, illustrated with relevant case laws, and underscores the importance of the arbitrator's role in ensuring a fair, efficient, and effective arbitration process. The essay will provide a comprehensive understanding of the arbitrator's role in ICA, contributing to the peaceful resolution of disputes in the international commercial arena.
  • Impartiality and Independence: The cornerstone of an arbitrator's role is their impartiality and independence. They must not favour any party and should avoid any real or perceived conflicts of interest. This is crucial to maintain the trust of the parties in the arbitration process and the enforceability of the arbitral award. The arbitrator must disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence. If such circumstances arise during the arbitration proceedings, they must be disclosed without delay. This principle was emphasized in the case of Enercon (India) Ltd. & Ors v. Enercon GmbH & Anr, (2014), where the court highlighted the importance of the arbitrator's duty to disclose any potential conflicts of interest.
     
  • Resolution of Dispute: The arbitrator's primary duty is to resolve the dispute. They do this by hearing evidence and arguments from both sides and then making a decision, known as an arbitral award. This award is usually final and binding on the parties. The arbitrator has the power to order pleadings, fix dates for hearings, grant postponements, order discovery, appoint experts, and more. They must conduct the proceedings in a manner that is fair, efficient, and expeditious. This is in line with the principle of procedural fairness, which is a fundamental aspect of arbitration.
     
  • Ensuring Due Process: The arbitrator has the duty to ensure due process. This means they must ensure that all parties are given a fair and equal opportunity to present their case. They must treat the parties with equality and ensure that each party has a full opportunity to present its case. Any failure to do so may result in the arbitral award being set aside. This principle was underscored in the case of State of Gujarat and Ors. v. Amber Builders (2020), where the Supreme Court of India emphasized the importance of the arbitrator's role in ensuring due process and providing a reasoned award.
     
  • Application of Proper Law: The arbitrator is required to apply the proper law to the dispute. This is usually the law chosen by the parties. If the parties have not chosen the law, the arbitrator will determine the law applicable to the substance of the dispute. This could be the law of the place of arbitration or the law of the place where the contract was made or is to be performed. This principle was highlighted in the case of Vijay Karia v. Prysmian Cavi E Sustemi Srl & Ors. (2020), where the Supreme Court of India dealt with the enforcement of foreign arbitral awards and emphasized the limited scope of intervention by courts in the arbitral process.
     
  • Providing a Reasoned Award: The arbitrator has the duty to provide a reasoned award. This means that the arbitrator must explain the reasoning behind their decision in the arbitral award. This is important for the parties to understand the basis of the decision and for any court that may be asked to enforce or set aside the award. This principle was reiterated in the case of M/s Dharmaratnakara Rai Bahadur v. M/s Bhaskar Raju & Brothers (2020), where the Supreme Court of India reiterated the principle of party autonomy in arbitration and held that the parties are free to agree on the procedure to be followed in the arbitration.
     
  • Standards of Impartiality and Independence: These are fundamental principles in arbitration. The International Bar Association (IBA) Guidelines state that every arbitrator should be impartial and independent of the parties at the time of accepting an appointment to serve and should remain so until the final award has been rendered or the proceedings have otherwise finally terminated. These standards are crucial to maintain the integrity of the arbitration process and to ensure the enforceability of the arbitral award.
Conclusion
In conclusion, the role of the arbitrator in ICA is multifaceted and carries significant responsibilities. They must navigate complex legal issues, manage the arbitration process, and make difficult decisions, all while maintaining the highest standards of impartiality and independence. Their role is critical to the success of the arbitration process and the resolution of international commercial disputes. The case laws discussed above illustrate the practical application of these principles and underscore the importance of the arbitrator's role in ICA.

The arbitrator's duties and responsibilities are not only legal but also ethical, requiring them to uphold the highest standards of professional conduct throughout the arbitration process. This ensures that the arbitration process is fair, efficient, and effective, leading to a resolution of the dispute that is acceptable to all parties involved. The role of the arbitrator in ICA is indeed a challenging one, but it is also a rewarding one, as it contributes to the peaceful resolution of disputes in the international commercial arena.

End-Notes:
  1. Arbitration and Conciliation Act, s 34.
  2. Enercon (India) Ltd. & Ors. v Enercon GmbH & Anr, AIR 2014 SC 3152.
  3. State of Gujarat and Ors. v Amber Builders 2020 (2) SCC 540.
  4. Vijay Karia v. Prysmian Cavi E Sustemi Srl & Ors., AIR 2020 SC 1807.
  5. Dharmaratnakara Rai Bahadur v M/s Bhaskar Raju & Brothers, AIR Online 2020 SC 212.
  6. IBA guidelines on conflicts of interest in ... Available at: https://www.ibanet.org/document?id=Guidelines-on-Conflicts-of-Interest-in-International-Arbitration-2024 (Accessed: 25 May 2024).

Written By: Abhinav Patel - Dr.Ram Manohar Lohia National Law University

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