Can Arbitrator Be Held To Be Biased Against Party Who Did Not Accept Unilateral Increase In Fees? Supreme Court To Consider

If an arbitrator unilaterally increases his fees and if the same is accepted by one party and opposed by the other party, is there a likelihood of bias in the mind of the arbitrator against the party who opposed the increase of the fees?. The Supreme Court has decided to consider this issue.

Additional Solicitor General N Venkataraman raised this issue while appearing in an appeal on behalf of the Chennai Metro Rail Limited Administrative Building. The ASG  relied on the judgments in Union of India vs. Singh Builders Syndicate (2009) 4 SCC 523.and Oil and Natural Gas Corporation Ltd. vs. Afcons Gunanusa 2022LiveLaw (SC) 723.

Opposing the argument, Senior Advocate CA Sundaram relied on the HRD Corporation (Marcus Oil and Chemical Division) vs. Gail (India limited (Formerly Gas Authority of India Limited) (2018) 12 SCC 471 to submit that if a case of the parties is based on bias, then it will be covered under Section 13 of the Arbitration and Conciliation Act, 1996. The only stage at which this challenge can be raised is after the award is passed by the Tribunal. He further submitted that case of bias would not fall under Section 14 of the Act so as to automatically lead to termination of the mandate of an arbitrator.

A Bench of Justices BR Gavai and Aravind Kumar noted that the judgement in ONGC v Afcons was rendered by a 3-judge bench whereas the other judgments are rendered by a 2-judge bench. 

“In that view of the matter, we find that this issue requires to be considered and decided”, the Court observed in its order while adding that the matter requires the consideration expeditiously.

The Bench was apprised that CJI Chandrachud is constituting a special Bench for considering arbitration matters. This prompted the bench to pass the order.

Click Here To Read/Download Order