Arbitration Law: Arbitrators Has To Disclose Potential Conflicts Of Interest: Supreme Court

In a groundbreaking decision, the Supreme Court of India has issued a ruling that emphasizes the crucial duty of arbitrators to disclose potential conflicts of interest. The judgment, delivered on October 19, 2023, by a bench comprising Hon'ble Justice S. Ravindra Bhat and Hon'ble Justice Aravind Kumar, addresses critical aspects of arbitration proceedings in India.

The judgment delves into the interpretation and application of various sections of the Arbitration and Conciliation Act, 1996, shedding light on the independence and impartiality of arbitrators. In a significant observation, the Court stated, "Arbitrators must meticulously adhere to their duty of disclosure, ensuring transparency and fairness in the arbitration process."

The ruling also draws parallels with international standards, citing the IBA Guidelines (International Bar Association Guidelines on Conflicts of Interest in International Arbitration) as a reference point for arbitrators' conduct. The Court noted, "The incorporation of IBA Guidelines underscores the importance of aligning Indian arbitration practices with global best practices."

One of the key highlights of the judgment is its comparison with the UK Supreme Court decision in Halliburton Company v Chubb Bermuda Insurance Ltd, 2021. The Court remarked, "The Halliburton decision serves as a guiding precedent, aligning the Indian arbitration landscape with international jurisprudence."

The judgment explores the statutory and non-statutory grounds for challenging arbitrators, providing clarity on when and how these grounds can be invoked. It underscores the significance of a robust and impartial arbitration process, stating, "The integrity of arbitration hinges on arbitrators' unwavering commitment to impartiality."

The decision also references various cases, including M/s. Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation Ltd., HRD, Bharat Broad Band, ONGC, and National Highways Authority of India & Ors. vs. Gayatri Jhansi Roadways Limited & Ors., to illustrate its legal reasoning.

This landmark ruling is expected to have far-reaching implications for arbitration in India, reinforcing the importance of transparency and fairness in dispute resolution. It sends a strong message to arbitrators to uphold their duty of disclosure, ultimately enhancing the credibility and effectiveness of arbitration proceedings in the country.

Date of Decision: 19 October 2023

CHENNAI METRO RAIL LIMITED ADMINISTRATIVE BUILDING    vs M/S TRANSTONNELSTROY AFCONS (JV) & ANR.     

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