If parties to an arbitration have failed to agree , where they apply to the court and the court appoints an arbitrator , and one party alleges that the arbitrator is not impartial is this a matter of jurisdiction? If one is appointed an arbitrator and one party says that part of the matters agreed to be covered by the arbitration agreement is outside the scope of arbitration agreement is that a jurisdiction question?
Assuming that grounds have arisen to challenge an arbitrator and one of the parties wants to challenge or to ask for the removal of that arbitrator. How is this effected? The current arbitration Act in an effort to limit the numbers of avenues that one can use to challenge an arbitrator.
Section 13 imposes the arbitrator once approached to declare interest. S 13(3) an arbitrator may be challenged only if …. Or does not possess qualification agreed to
Section 14 a party may challenge an arbitrator appointed by him … only for reasons that he becomes aware after the appointment.
Case law on bias
The “Elissar” Case (1984) 2 Lloyds LR 84
What test do you apply when dealing with a question of whether an arbitrator is biased or not biased. That is suggested by Justice Ackner in “Elissar” case that in answering that question the test should be
“Do there exist grounds from which a reasonable person would feel that there was a real likelihood that the arbitrator could not or would not fairly determine the issue on the basis of the evidence and arguments to be adduced before him. It seems to me that that is the satisfactory way of expressing the objective test. To suggest that the mere lack of confidence which no reasonable person would in the relevant circumstances experience should be a basis for removal of an arbitrator seems to be quite unacceptable.”
The test here is one of a reasonable person and the existence of a real likelihood of bias. Mere lack of confidence is not sufficient.
The Bremer v. Ets Soules [1985] 1 Lloyds LR 84
This case was based on a provision where an arbitrator could be removed on grounds of misconduct. Mustill J. discussed what he considered to be 3 material situations
(i) Actual Bias;
(ii) Implied Bias;
(iii) Conduct that would have justified removal of an arbitrator.
Section 13 and 14 of the Arbitration Act are relevant provisions in this regard. Section 14 specifically deals with the challenge procedure where the impartiality of independence of an arbitrator arises. Section 14 (1) says that parties are free to agree on procedure and 14(2) says that if they don’t agree on procedure a party intending to challenge an arbitrator send a written statement of reasons for the challenge within 15 days after becoming aware of the composition of the Tribunal and if the arbitrator who has been challenged does not withdraw , then the Tribunal is required to make a decision on that challenge.
In practical terms there is a situation where a dispute has arisen and the parties do not agree on choice or arbitrator and the clause says that the institution will appoint and goes ahead and appoints and then you realise that the arbitrator has interest in the matter which he does not declare. This is what Section 14 is talking about.
You write to the arbitrator requesting him to withdraw to the office for the following reasons.
Section 14 (3) provides for the procedure if the challenge is not successful. The competent authority has been gazette. in other words if you ask the tribunal to make a decision on the challenge and they say they don’t consider that there are grounds for them to remove themselves , then one can go to court.
Mustill says there are 3 material situations in which the High Court has power to remove an arbitrator under Section 23 of the Arbitration Act 1950. (It is important to note that this decision was based on that Section)
Mustill says that
1. Where it is proved that the Arbitrator suffers from what may be called actual bias , then he may be removed; and what the complaining party needs to satisfy the court is that the arbitrator is predisposed to favour one party or conversely to act unfavourably towards him for reasons peculiar to that party. He then says that prove of actual bias entails prove that the arbitrator is in fact incapable of approaching the issues with the impartiality required.
2. Where the High Court may remove an arbitrator is where the relationship between the arbitrator and the parties or between the arbitrator and the subject matter of the dispute is such as to create an evident risk that the arbitrator has been or will in future be incapable of acting impartially. In this case prove of actual bias is not necessary. The concern here is the manifest risk of partiality. This is what is referred to as imputed bias.
3. Conduct which it is doubtful that can be raised under our section 13 is where the conduct of the arbitrator is through lack of talent , experience , diligence or incapability of conducting the reference in a manner in which the parties are entitled to expect.
Section 15 of the Act shall terminate if the parties agree to terminate his mandate. These are not grounds you can challenge under Section 13.