Can a New Arbitrator be appointed after the award is set aside?

In a recent case, the Calcutta High Court recently decided whether a Court can appoint a different Arbitrator to one who had passed the award challenged when award-debtor and award-holder that both of them desired it.

Hon’ble Justice Moushami Bhattacharya referred to Section 43(4) of the Act that states that all redressal doors should be kept open and from Section 89 of CPC that encourages the Court to participate in forming of settlement terms.

The Bench further stated that the Act doesn’t curtail the power of a court to mould the relief in fit cases provided that the relief is not contrary to law.

The Court also discussed how provisions of the Act for arbitrator’s appointment u/s 11 and u/s 34(4) would not apply to the question before it. The Bench opined that as both the provisions will not apply in the instant case, a new arbitrator should be chosen to decide the case afresh.

In this context, the Bench adopted the principle of party autonomy. It stated that the Arbitration Act ensures party autonomy at all levels, from dispute resolution to the process of challenging the award. Therefore the freedom of parties to decide the next course should be preserved in the instant case.

After going through the facts of the case, the Court set aside the order citing bias. The Court noted that the respondent had engaged the arbitrator in the past as a counsel, then an instance of bias cannot be ruled out.

Pointing to Section 12(1)(a) of the Act requires an arbitrator to disclose any direct or indirect relationship with parties or the subject matter.

The Bench concluded that the fundamental objective was to ensure that the arbitrator was independent and impartial. In the instant case, the facts fall directly within safeguards mentioned in Section 12; therefore the award in question should be set aside and proceed to appoint a new arbitrator.

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