About the Author: Lakshay Sharma is a Student of the University of Petroleum and Energy Studies, Dehradun.
INTRODUCTION
The rise of the corporate and the rise in disputes requires the need for a new form of dispute resolution method called arbitration which allows the parties to resolve conflicts in a faster way. It has been playing a significant role in resolving conflicts in international trade and contracts. Arbitration form of dispute resolution offering speed, economic efficiency and making binding and enforceable judgements internationally[1]. Impartiality is a very important feature which needs to be present to maintain the credibility of the integrity of arbitration. Arbitration judgment could be very important in society as it also deals with public functions in cases of investment treaties happening between the government and investors arbitration judgment could affect a lot of people. Arbitrators have a major obligation to maintain impartiality not only to the parties but to the complete network of people who are going to be affected by investment security. Arbitrators need to have high ethical standards and impartiality. The arbitration process requires it to be completely transparent, which is essential and also becoming a growing concern due to the third-party funding process which could affect the impartiality of arbitration tribunals[2] creating a need to maintain the public trust in the capability of arbitration as a dispute resolution method.
THE FOUNDATION OF IMPARTIALITY IN ARBITRATION
Impartiality in arbitration is comparable to a judgement in a court to serve justice making biased judgments could lead to injustice. Similarly, it is a very important part of the arbitration process to maintain the integrity of the proceedings[3] which is necessary for the success of the voluntary arbitration and private dispute resolution method[4] and maintaining fairness and transparency and fairness of judgment is very much required.
Arbitration is based on the trust of the parties in the arbitrators for the impartiality of proper dispute resolutions. Impartiality is an abstract idea of biases which depends on the working of the mind[5].
ETHICAL OBLIGATIONS OF ARBITRATORS: GLOBAL STANDARDS
The arbitration centres have already set clear requirements of impartiality in their codes and conducts in the arbitrational institutes like in ICC has given in its rules article 11(1) stating that “Every arbitrator must be and remain impartial and independent of the parties involved in the arbitration”[6] and LCIA rules mention that the “ All arbitrators shall be and remain at all times impartial and independent of the parties, and none shall act in the arbitration as advocate for or authorised representative of any party. No arbitrator shall advise any party on the parties’ dispute or the conduct or outcome of the arbitration.”[7] these rules aim to establish the conduct in international arbitration making them responsible for ensuring fairness in the judgement. International Bar Association guidelines have started things on if there is a conflict of interest and it is the obligation of the arbitrators[8] and these rules are used as guidelines widely[9]. Though there all the institution has similar rules and consensus, their application enforcement and competence vary across the jurisdictions creating a requirement for harmonizing the enforcement.
A conflict of interest may arise when there is unduly influenced by a secondary interest which leads to compromise of their main responsibilities[10]. Majorly the reason for these monetary reasons and sometimes non-monetary could affect the decision-making behaviour[11] and in arbitration, the reason for this could be third-party findings which could affect the fairness of the process[12] or sometimes due to information could lead to biased decisions and less fairness[13].
ETHICAL FRAMEWORK IN INDIAN ARBITRATION
In India, arbitration is governed by the Arbitration and Conciliation Act, but the act gives the parties to power to decide the place, arbitrator, number of arbitrators commencement of arbitral proceedings procedures and practices and language of arbitrations and consequences and the way of deciding the arbitral tribunal.
Section 12 of the act allows the grounds to challenge the arbitrator for impartiality and requires the arbitrators to disclose it “When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances,—(a)such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality”[14]. The arbitrators are required to be transparent to parties anytime if they could affect their impartiality throughout the arbitration process.
This has been taken in many judicial proceedings in which the court said that it is required to give proper and equal treatment as a necessary foundation for the arbitration “The requirement of procedural fairness constitutes a fundamental basis for the integrity of the arbitral process. Fair and equal treatment of the parties is a non-derogable and mandatory provision, on which the entire edifice of the alternate dispute resolution mechanism is based”[15] and the 246th Report, the Law Commission of India has focused on impartiality and neutrality as per international standards and also follow natural justice.
COMPARING INDIA WITH GLOBAL PRACTICES
Indian laws of disclosure in arbitration are governed by section 12 of the Arbitration and Conciliation Act it is a requirement that arbitrators need to follow not only as per section 12 of the act but also as per the 6th schedule of the act. Singapore and London are globally known as the centres for arbitration laws due to their robust legal framework and solid infrastructure constantly updating their laws for the best international standards it is very fast and also working on streamlining the process. Rules the risk of unequal treatment, the SIAC President can intervene to constitute an independent and impartial tribunal. This may include revoking the appointment of any arbitrators as per Article 17.3 of the SIAC Rules 2016. It has been taken in guidelines of the ICC “Arbitrators shall address all participants in an international arbitration courteously and impartially. Arbitrators shall not employ hostile, demeaning or humiliating terms in written or oral communications with participants in international arbitration” IBA has given IBA Rules of Ethics for International Arbitrators has given element of bias and LCIA and SIAC have the authority to sanction misconduct by arbitrators and party representatives, ensuring accountability and maintaining the integrity of the arbitration process.
CONCLUSION
In arbitration, impartiality is of the most importance to a fair arbitral award which will maintain the system’s integrity and many international laws and jurisdictions have many regulations and guidelines for maintaining impartiality. India is also enhancing in this field, but it is facing many challenges from the lack of comprehensive guidelines, inconsistent enforcement, potential conflicts of interest, limited transparency, and inadequate mechanisms for addressing breaches. It requires constant updates and continuous education, open dialogue, collaboration among stakeholders, robust reporting mechanisms, and recognition of ethical conduct. This is necessary for maintaining the legitimacy of arbitral decisions and maintaining trust in Indian arbitration.
References:
[1] Dilyara Nigmatullina, ‘The Combined Use of Mediation and Arbitration in Commercial Dispute Resolution: Results from an International Study’ (2016) 33(1) Journal of International Arbitration <https://discovery.researcher.life/article/the-combined-use-of-mediation-and-arbitration-in-commercial-dispute-resolution-results-from-an-international-study/bfb6bfad0f05394484cc80de74711848> accessed 09 February 2025
[2] Valentina Frignati, ‘Ethical Implications of Third-Party Funding in International Arbitration’ (2016) 32(3) Arbitration International 505 <https://discovery.researcher.life/article/ethical-implications-of-third-party-funding-in-international-arbitration/bc078032c48330e1b1f6ab28a50929e6> accessed 09 February 2025
[3] Ibid
[4] James DD Smith, ‘Mediator Impartiality: Banishing the Chimera’ (1994) 31(4) Journal of Peace Research 445 <https://discovery.researcher.life/article/mediator-impartiality-banishing-the-chimera/a0765e6fa1823026811301d0ebd10984> accessed 09 February 2025
[5] Datuk Sundra Rajoo, ‘Importance of Arbitrators’ Ethics and Integrity in Ensuring Quality Arbitrations’ (2013) 6 Contemporary Asia Arbitration Journal <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2397659> accessed 09 February 2025
[6] The International Chamber of Commerce Rules of Arbitration 2021, r 11(1)
[7] London Court of International Arbitration 2020, r 5.3
[8] Muxammadiyev Sindorbek Bobirjon o’g’li, ‘Complexities of International Arbitrator Liability: A Comparative Analysis and the Case for Qualified Immunity’ (2023) 1(5) International Journal of Law and Policy <https://discovery.researcher.life/article/complexities-of-international-arbitrator-liability-a-comparative-analysis-and-the-case-for-qualified-immunity/6265c07b695b3054ae21f1e2e1624347> accessed 12 February 2025
[9] GarB Born, ‘International Commercial Arbitration’, United Nations Commission on International Trade Law (UNCITRAL) Yearbook (1988)
[10] William W Stead, ‘The Complex and Multifaceted Aspects of Conflicts of Interest’ (2017) 317(17) JAMA 1765 <https://discovery.researcher.life/article/the-complex-and-multifaceted-aspects-of-conflicts-of-interest/09ca263dd8c33dc29d842449448921a9> accessed 12 February 2025
[11] Paul A Komesaroff et al., ‘Conflicts of Interest: New Thinking, New Processes’ (2019) 49(5) Internal Medicine Journal 574 <https://discovery.researcher.life/article/conflicts-of-interest-new-thinking-new-processes/5d689ba8102a3b4a92d07f81fd2c565f> accessed 12 February 2025
[12] Frignati (n 2)
[13] James Konow, ‘Blind Spots: The Effects of Information and Stakes on Fairness Bias and Dispersion’ (2005) 18 Social Justice Research 349 <https://doi.org/10.1007/s11211-005-8566-6> accessed 12 February 2025
[14] The Arbitration and Conciliation Act 1996, s 12(1)(a)
[15] Union of India & Anr v Vedanta Ltd & Ors AIRONLINE 2021 DEL 603