27. Independence, therefore, as used in the statute means nothing more than deciding for oneself. Impartiality is lack of bias: the ability to decide without tilting to one side on considerations other than the merits of the case. Arbitral independence and impartiality is precisely this: to decide 'without fear or favour, affection or ill-will', words familiar to us all.
28. Therefore, counsel having accepted a brief from a particular attorney, advocate-on-record or lawyer for some other client is not per se a disqualification or ineligibility. The disqualification connection must be between the arbitrator-counsel and the litigant. That this is of the essence is obvious from Item 3 of the two schedules -- in a given case, where the law firm or lawyer is itself or himself the client, the arbitrator cannot function as such in an arbitration where that very law firm or lawyer is also engaged, though for some other party; for the arbitrator in question would then have before him a party for whom he is engaged.
IN THE HIGH COURT OF BOMBAY
Notice of Motion (L) No. 453 of 2017 and Arbitration Petition (L) No. 150 of 2017
Decided On: 02.03.2017
Sheetal Maruti Kurundwade Vs. Metal Power Analytical (I) Pvt. Ltd. and Ors.
Hon'ble Judges/Coram:
G.S. Patel, J.
Citation: 2017(6) MHLJ 642
1. This Petition is filed under Section 9 and Sections 12(3) and 12(5) of the Arbitration & Conciliation Act, 1996 ("the Arbitration Act"). The Petitioner is the Respondent or opposite party in an arbitration. The 1st Respondent is the claimant. The Notice of Motion seeks ad-interim reliefs in terms of the Petition. By consent, I have taken up the Petition itself for hearing and final disposal. Mr. Lulia for the Petitioner says he has no objection since he is canvassing a question of law and statutory interpretation.
2. The Petition raises a narrow but important point under the Arbitration Act after its 2015 amendment. The question is about the scope and purport of the newly introduced provisions regarding the appointment of arbitrators and challenges to their continuance. Sections 12(1), 12(3), 12(5) and item 3 of Schedule VII of the amended Arbitration Act fall for consideration. Specifically, whether an arbitrator should stand disqualified or be removed in these circumstances, viz.: the arbitrator is a practicing counsel; he is briefed by various law firm in different matters; one such law firm is the one engaged by one of the parties to the arbitration; the counsel himself has never been briefed by that, or any other, law firm for that particular party, or any of the parties to the arbitration; the arbitrator clarifies in writing that he has never been briefed to appear for that particular party, though he is sometimes briefed in other matters by the law firm in question. Mr. Lulia would have it that the fact that the arbitrator, in his practice as counsel, receives with irregular periodicity briefs from the law firm representing a party to the arbitration is sufficient to disqualify him from acting as an arbitrator. It matters not, he says, that the counsel has never acted for that particular client. The counsel is on the 'payroll' of the law firm. Mr. Lulia says he urges no bias against the present arbitrators; he only says that such an appointment is contrary to the amended Act.
3. The facts are few. Respondent No. 1 to this Notice of Motion and Petition is the claimant before the arbitral tribunal. Joined as Respondent No. 2 is an Advocate of our Court of many years standing, Mr. Snehal Shah. He was appointed the presiding Arbitrator. Respondent No. 3 is Mr. Farhan P Dubash, another Arbitrator. Respondent No. 4 is one Vs. Bhadkamkar, the third member of the arbitral panel. The application is directed against Mr. Shah and Mr. Dubash in the following circumstances. The Petitioner, Sheetal Maruti Kurundwade, was appointed as a Trainee Calibration Engineer by the 1st Respondent company on 11th August 2011. She worked there for five years and resigned on 19th March 2016. The company filed Arbitration Petition No. 1061 of 2016 under Section 9 of the Arbitration Act on 12th August 2016. On 30th August 2016, SJ Kathawalla J granted ad-interim relief restraining the Ms. Kurundwade from disclosing confidential information, that being the subject matter of the 1st Respondent's Section 9 Petition.
4. The Petitioner's contract with the 1st Respondent had an arbitration clause. The 1st Respondent invoked arbitration. On 11th November 2016, the 1st Respondent nominated Mr. Dubash to act as an Arbitrator and called on the present Petitioner to nominate her Arbitrator of choice. She responded on 24th November 2016, nominating the 3rd Respondent, Mr. Bhadkamkar. On 9th December 2016, the Advocates for the 1st Respondent, M/s. Hariani & Co, wrote to both Mr. Dubash and Mr. Bhadkamkar asking them to jointly nominate a third arbitrator. A copy of this letter was sent to Mr. Lulia for the Petitioner.
5. On 21st December 2016, Mr. Dubash wrote to Mr. Shah saying that he and Mr. Bhadkamkar had jointly nominated him, Mr. Shah, as the presiding Arbitrator and requested Mr. Shah to fix a preliminary hearing in the matter. A copy of this letter was sent to the Petitioner's Advocate as well.
6. On 23rd December 2016, Mr. Shah conveyed his acceptance of his appointment as the presiding Arbitrator and fixed a meeting on 6th January 2017 at 12.30 p.m. This meeting was rescheduled. It was finally held on 10th January 2017. The three members of the arbitral tribunal passed directions on that date.
7. On 31st January 2017, Mr. Lulia wrote to Mr. Shah and Mr. Dubash asking whether they had in their professional capacities as counsel been engaged by M/s. Hariani & Co, who were on record for the 1st Respondent throughout. Paragraph 2 of that letter is also important because in this the present Petitioner is supposed to have instructed Mr. Lulia to say that she could not meet the expenses of the three-member arbitral tribunal and she sought instead the appointment of a sole arbitrator.
8. On 31st January 2017, Mr. Shah wrote to Mr. Lulia saying that although he had been briefed by M/s. Hariani & Co in other matters as a practising counsel of the Bombay High Court, he had never appeared for the Claimant (the present 1st Respondent), Metal Power Analytical (India) Pvt. Ltd. at any time. A copy of this letter is at page 44 of the Petition. On 1st February 2017, Mr. Dubash too responded to Mr. Lulia in very similar terms. He too confirmed that as counsel he was briefed by several law firms, including M/s. Hariani & Co. Some of those were even pending at that time. He had, however, not appeared for the Claimants at any time nor had he appeared for M/s. Hariani & Co in any personal engagement for the firm. The firm had also not done any personal work for Mr. Dubash. A copy of this letter is at page 45 of the Petition.
9. Mr. Lulia responded on 2nd February 2017 saying that because Mr. Shah and Mr. Dubash had accepted briefs from M/s. Hariani & Co, both were ineligible for appointment as Arbitrators. In default, the present Petitioner threatened to take proceedings.
10. On 7th February 2017, the 1st Respondent filed its statement of claim and compilation of documents before the tribunal. On 9th February 2017, M/s. Hariani & Co offered inspection to Mr. Lulia. On 14th February 2017, the Petitioner filed this Petition assailing the appointment of Mr. Shah and Mr. Dubash. I will pass over the other correspondence regarding inspection as that is not material for my purposes today. The Petitioner then filed the present Notice of Motion and has moved it for ad-interim reliefs.
11. Section 12 of the Arbitration Act was amended by the Amendment Act 3 of 2016, with effect from 23rd October 2015. This is how Section 12 now reads:
"S. 12 Grounds for Challenge
(1) 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; and
(b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months.
(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.
(3) An arbitrator may be challenged only if--
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.
(5) Notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing:
Provided further that this sub-section shall not apply to cases where an arbitrator has already been appointed on or before the commencement of the Arbitration and Conciliation (Amendment) Ordinance, 2015."
(Emphasis added)
12. Mr. Lulia's submission is that the wording of Section 12(1)(a), read with Sections 12(3) and 12(5) and item 3 of the VIIth Schedule would operate to automatically disqualify both Mr. Shah and Mr. Dubash because, as practicing counsel, they are briefed by M/s. Hariani & Co. It is wholly irrelevant, he says, that M/s. Hariani & Co have never briefed either Mr. Shah or Mr. Dubash for the 1st Respondent in any matter. He also readily concedes that neither Mr. Shah nor Mr. Dubash have some general or non-specific retainer for a recurring fee from M/s. Hariani & Co to accept their briefs or to give their briefing priority. He also agrees that there is no material to show that either of them ever appeared for the 1st Respondent either on M/s. Hariani & Co's brief or that of any other firm. His submission, as I understand it, is that Mr. Shah's and Mr. Dubash's association as practising counsel of this Court with a law firm is sufficient render them both ineligible as arbitrators in any matter where M/s. Hariani & Co appear for one of the parties. He supports this submission by reference to the Seventh Schedule to this Act. That Schedule is directly relatable to Section 12(5). Mr. Lulia draws attention to one of the nineteen items in that Schedule, i.e., Item 3 which reads as follows:
"SEVENTH SCHEDULE:
3. The arbitrator currently represents the lawyer or law firm acting as counsel for one of the parties."
(Emphasis added)
13. Mr. Lulia would have it that Mr. Dubash and Mr. Shah on account of having been briefed in the past by (and perhaps currently holding briefs from) M/s. Hariani & Co, both "represent the lawyer or law firm", i.e., M/s. Hariani & Co. This was something they both ought to have disclosed. The non-disclosure is, in his submission, direct violation of Section 12(1)(a) and renders both of them ineligible.
14. Mr. Tamboly submits that no great analysis is required to reject this application. It is, in his submission, thoroughly misconceived. He also points out that it is not maintainable because the procedure for challenging the appointment of an arbitrator is the one set out in Section 13 of the Act. That process and procedure must be followed. What the Petitioner has done is to by-pass Section 13 altogether and come directly to Court. She must first make the application, he submits, before the arbitral panel and obtain a ruling. If the arbitral panel disagrees with her only then can she maintain such an application in Court and that too only in accordance with Section 34.
15. Section 13 read thus:
"S. 13. Challenge Procedure
(1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.
(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of Section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.
(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with Section 34.
(6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees."
16. Mr. Lulia's response to this is that he has demanded that both Mr. Shah and Mr. Dubash step down. Neither has responded. There is, therefore, no question of forcing the Petitioner to go before a tribunal of this composition. It is in those circumstances that he has filed this Petition.
17. I will put aside this argument under Section 13 for the time being although I do agree with Mr. Tamboly that this process of bypassing a statutory provision is not one that should be readily accepted. I do so only because I believe the point that Mr. Lulia raises is one that we are increasingly likely to see in the days ahead. More and more, Courts appoint practising Advocates in ad hoc arbitrations. Some practising Advocates are also empanelled with arbitration institutes and forums, and serve in institutional arbitrations. The point that Mr. Lulia attempts to make seems to me to strike at the very root of professional independence. It questions the very basis on which our system functions.
18. Mr. Lulia is at pains to point out that he is not alleging bias against either Mr. Shah or Mr. Dubash. He is merely saying that they are statutorily disqualified. This is disingenuous. The statutory provisions I quoted earlier are all directed to one goal: the elimination of bias. When the statute endeavours to ensure arbitral 'independence' and 'impartiality' and speaks of 'justifiable doubts', what it seeks to do is to eliminate any 'reasonable apprehension of bias', whether Mr. Lulia alleges this or not.
19. For Mr. Lulia to say that Mr. Dubash or Mr. Shah, because they hold briefs from M/s. Hariani & Co in other matters, 'represent' that law firm is in my view complete misdirection and a misreading of the statute. When a counsel appears on an attorney's brief, he does not represent the law firm that briefs him. The law firm briefs counsel to appear on behalf of a litigant. The whole of Section 12 and the Seventh Schedule is intended only to one purpose -- to ensure that there is not only no bias but that there is no reasonable apprehension of bias. This is borne out by the words of Section 12 themselves. In sub-clause (a) of sub-section (1) of Section 12 the words used are "likely to give rise to justifiable doubts as to his independence or impartiality". The entire purpose of Section 12 is thus to ensure impartiality and independence, i.e., freedom from bias. Section 12(1)(a) also speaks of an arbitrator's relationship with one of the parties. It then describes the types of disqualifying associations. They may be professional, financial, business or of any other kind (and which seems to me to imply that the words are illustrative, not exhaustive). This association must, however, be with the one of the parties, and it must be such as to give rise, within the meaning of Section 12(3) of a justifiable doubt as to the arbitrator's impartiality or independence.
20. Mr. Lulia's emphasis is, I suspect, more on Section 12(5) and its use of the phrase
any person whose relationship with the parties or counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator
Clearly, this is must be read with the VIIth Schedule. That lists some 19 different matters. Item 3, quoted above, is only one of them.
21. Prudence dictates we should consider the VIIth Schedule as a whole and all its other items:
THE SEVENTH SCHEDULE
[See section 12(5)]
ARBITRATOR'S RELATIONSHIP WITH THE PARTIES OR COUNSEL
1. The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party.
2. The arbitrator currently represents or advises one of the parties or an affiliate of one of the parties.
3. The arbitrator currently represents the lawyer or law firm acting as counsel for one of the parties.
4. The arbitrator is a lawyer in the same law firm which is representing one of the parties.
5. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration.
6. The arbitrator's law firm had a previous but terminated involvement in the case without the arbitrator being involved himself or herself.
7. The arbitrator's law firm currently has a significant commercial relationship with one of the parties or an affiliate of one of the parties.
8. The arbitrator regularly advises the appointing party or an affiliate of the appointing party even though neither the arbitrator nor his or her firm derives a significant financial income therefrom.
9. The arbitrator has a close family relationship with one of the parties and in the case of companies with the persons in the management and controlling the company.
10. A close family member of the arbitrator has a significant financial interest in one of the parties or an affiliate of one of the parties.
11. The arbitrator is a legal representative of an entity that is a party in the arbitration.
12. The arbitrator is a manager, director or part of the management, or has a similar controlling influence in one of the parties.
13. The arbitrator has a significant financial interest in one of the parties or the outcome of the case.
14. The arbitrator regularly advises the appointing party or an affiliate of the appointing party, and the arbitrator or his or her firm derives a significant financial income there from.
RELATIONSHIP OF THE ARBITRATOR TO THE DISPUTE
15. The arbitrator has given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties.
16. The arbitrator has previous involvement in the case. ARBITRATOR'S DIRECT OR INDIRECT INTEREST IN THE DISPUTE
17. The arbitrator holds shares, either directly or indirectly, in one of the parties or an affiliate of one of the parties that is privately held.
18. A close family member of the arbitrator has a significant financial interest in the outcome of the dispute.
19. The arbitrator or a close family member of the arbitrator has a close relationship with a third party who may be liable to recourse on the part of the unsuccessful party in the dispute.
Explanation 1.--The term "close family member" refers to a spouse, sibling, child, parent or life partner.
Explanation 2.--The term "affiliate" encompasses all companies in one group of companies including the parent company.
Explanation 3.--For the removal of doubts, it is clarified that it may be the practice in certain specific kinds of arbitration, such as maritime or commodities arbitration, to draw arbitrators from a small, specialised pool. If in such fields it is the custom and practice for parties frequently to appoint the same arbitrator in different cases, this is a relevant fact to be taken into account while applying the rules set out above.'
(Emphasis added)
22. The words "currently represents the lawyer or law firm" does not and cannot mean "holds a brief as independent counsel". It covers, at best, a situation where the law firm itself is a 'client' and is represented by that counsel. This sometimes happens, as for instance, in cases before a regulatory or licensing body such as the Bar Council, or perhaps before a tax authority. There have been, too, cases of law firms having to litigate in regard to their premises. Item 3 covers that kind of situation alone. It does not and cannot extend to regular briefing of counsel, especially when the counsel in question has never been briefed for the party on whose behalf the law firm appears in the arbitration.
23. I should, I believe, also consider the Vth Schedule, one linked to Section 12(1)(a), enumerating illustrative grounds sufficient to raise justifiable doubts about the independence and impartiality of arbitrators:
THE FIFTH SCHEDULE
[See section 12 (1)(a)]
The following grounds give rise to justifiable doubts as to the independence or impartiality of arbitrators:
ARBITRATOR'S RELATIONSHIP WITH THE PARTIES OR COUNSEL
1. The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party.
2. The arbitrator currently represents or advises one of the parties or an affiliate of one of the parties.
3. The arbitrator currently represents the lawyer or law firm acting as counsel for one of the parties.
4. The arbitrator is a lawyer in the same law firm which is representing one of the parties.
5. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration.
6. The arbitrator's law firm had a previous but terminated involvement in the case without the arbitrator being involved himself or herself.
7. The arbitrator's law firm currently has a significant commercial relationship with one of the parties or an affiliate of one of the parties.
8. The arbitrator regularly advises the appointing party or an affiliate of the appointing party even though neither the arbitrator nor his or her firm derives a significant financial income therefrom.
9. The arbitrator has a close family relationship with one of the parties and in the case of companies with the persons in the management and controlling the company.
10. A close family member of the arbitrator has a significant financial interest in one of the parties or an affiliate of one of the parties.
11. The arbitrator is a legal representative of an entity that is a party in the arbitration.
12. The arbitrator is a manager, director or part of the management, or has a similar controlling influence in one of the parties.
13. The arbitrator has a significant financial interest in one of the parties or the outcome of the case.
14. The arbitrator regularly advises the appointing party or an affiliate of the appointing party, and the arbitrator or his or her firm derives a significant financial income therefrom.
RELATIONSHIP OF THE ARBITRATOR TO THE DISPUTE
15. The arbitrator has given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties.
16. The arbitrator has previous involvement in the case.
ARBITRATOR'S DIRECT OR INDIRECT INTEREST IN THE DISPUTE
17. The arbitrator holds shares, either directly or indirectly, in one of the parties or an affiliate of one of the parties that is privately held.
18. A close family member of the arbitrator has a significant financial interest in the outcome of the dispute.
19. The arbitrator or a close family member of the arbitrator has a close relationship with a third party who may be liable to recourse on the part of the unsuccessful party in the dispute.
PREVIOUS SERVICES FOR ONE OF THE PARTIES OR OTHER INVOLVEMENT IN THE CASE
20. The arbitrator has within the past three years served as counsel for one of the parties or an affiliate of one of the parties or has previously advised or been consulted by the party or an affiliate of the party making the appointment in an unrelated matter, but the arbitrator and the party or the affiliate of the party have no ongoing relationship.
21. The arbitrator has within the past three years served as counsel against one of the parties or an affiliate of one of the parties in an unrelated matter.
22. The arbitrator has within the past three years been appointed as arbitrator on two or more occasions by one of the parties or an affiliate of one of the parties.
23. The arbitrator's law firm has within the past three years acted for one of the parties or an affiliate of one of the parties in an unrelated matter without the involvement of the arbitrator.
24. The arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration on a related issue involving one of the parties or an affiliate of one of the parties.
RELATIONSHIP BETWEEN AN ARBITRATOR AND ANOTHER ARBITRATOR OR COUNSEL
25. The arbitrator and another arbitrator are lawyers in the same law firm.
26. The arbitrator was within the past three years a partner of, or otherwise affiliated with, another arbitrator or any of the counsel in the same arbitration.
27. A lawyer in the arbitrator's law firm is an arbitrator in another dispute involving the same party or parties or an affiliate of one of the parties.
28. A close family member of the arbitrator is a partner or employee of the law firm representing one of the parties, but is not assisting with the dispute.
29. The arbitrator has within the past three years received more than three appointments by the same counsel or the same law firm.
RELATIONSHIP BETWEEN ARBITRATOR AND PARTY AND OTHERS INVOLVED IN THE ARBITRATION
30. The arbitrator's law firm is currently acting adverse to one of the parties or an affiliate of one of the parties.
31. The arbitrator had been associated within the past three years with a party or an affiliate of one of the parties in a professional capacity, such as a former employee or partner.
OTHER CIRCUMSTANCES
32. The arbitrator holds shares, either directly or indirectly, which by reason of number or denomination constitute a material holding in one of the parties or an affiliate of one of the parties that is publicly listed.
33. The arbitrator holds a position in an arbitration institution with appointing authority over the dispute.
34. The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties, where the affiliate is not directly involved in the matters in dispute in the arbitration.
Explanation 1.--The term "close family member" refers to a spouse, sibling, child, parent or life partner.
Explanation 2.--The term "affiliate" encompasses all companies in one group of companies including the parent company.
Explanation 3.--For the removal of doubts, it is clarified that it may be the practice in certain specific kinds of arbitration, such as maritime or commodities arbitration, to draw arbitrators from a small, specialised pool. If in such fields it is the custom and practice for parties frequently to appoint the same arbitrator in different cases, this is a relevant fact to be taken into account while applying the rules set out above.
(Emphasis added)
24. The emphasized portions make it plain that the association of the arbitrator must be proximate, not remote. Schedule V contemplates various scenarios. Item 3 of this Schedule is exactly the same as Item 3 of the VIIth Schedule. Items 4 and 25 of the Vth Schedule disqualify partners of a law firm from acting as arbitrators where their law firm represents one of the parties in arbitration. The reason is so obvious it needs no great explanation. Item 29 is interesting, and it says that where a person is repeatedly appointed as an arbitrator, this is justifiable doubt. The point is that Schedule V is linked to Section 12(1)(a), and this mandates a disclosure by the arbitrator. Whether or not falling afoul of the Vth Schedule is an automatic disqualification even if disclosed is not something I am called on to decide in this matter, though it does appear that the non-disclosure is fatal, but the disclosure, if accepted and waived, would not result in a disqualification. Section 12(5) speaks of ineligibility and it is linked to the VIIth Schedule; but the proviso to that sub-section again contemplates a possible waiver.
25. At the broadest level, no arbitrator should be involved in any manner with one of the parties to the dispute or a partner with a lawyer or law firm appearing in the arbitration, or representing the law firm or lawyer personally.
26. A law firm's briefing of counsel in other, unrelated matters is on a very different footing. In our profession it very often happens that on a given day a law firm will brief counsel for one client and on the very next day, or perhaps later that very day, will brief another counsel against the first. At no point in their regular practice do counsel appear 'for' the law firm that briefs them, leaving aside cases where the briefing lawyer or law firm is itself the litigant. In-house counsel or counsel who receive a fee-paid general retainer or salary from a law firm stand on a different footing. We are here concerned with independent counsel, those in the profession who in the course of their daily practice receive briefs from many attorneys, law firms or individual practitioners. This is a remnant of the 'dual system', now abolished, and a central feature of that system, one that continues to this day in practice, is the independence of counsel. They accept briefs from multiple attorneys (often on the same day at the same time in different courts). They are not always briefed at every stage of the case, nor is there any rule that they perform the same functions at every stage: a counsel may lead at one stage, and at another may take second chair to a senior. None of this is backed by statute, but hinges on traditions of long standing. This independence manifests itself in different ways. We have seen counsel withdrawing -- sometimes in court itself -- because their clients give them fresh instructions contrary to previous ones conveyed to court. In Mumbai at least, counsel from the same chambers often oppose each other in court and there is never a doubt raised about their professional independence. We have, too, in this city an acceptance of a junior counsel being briefed against the senior whose chamber he or she has joined. No one sees this as anything but the fiercest independence; indeed, seniors consider it a badge of honour to be opposed (the more vigorously the better) by their own juniors, for there is perhaps no better indicator of a briefing attorney's confidence in the capability, integrity and independence of a junior counsel than to field him against his own senior.
27. Independence, therefore, as used in the statute means nothing more than deciding for oneself. Impartiality is lack of bias: the ability to decide without tilting to one side on considerations other than the merits of the case. Arbitral independence and impartiality is precisely this: to decide 'without fear or favour, affection or ill-will', words familiar to us all.
28. Therefore, counsel having accepted a brief from a particular attorney, advocate-on-record or lawyer for some other client is not per se a disqualification or ineligibility. The disqualification connection must be between the arbitrator-counsel and the litigant. That this is of the essence is obvious from Item 3 of the two schedules -- in a given case, where the law firm or lawyer is itself or himself the client, the arbitrator cannot function as such in an arbitration where that very law firm or lawyer is also engaged, though for some other party; for the arbitrator in question would then have before him a party for whom he is engaged.
29. As I noticed earlier, whether Mr. Lulia says this or not, the foundation of his case is rooted in an apprehension of bias. That is not dependent on his client's averments or his submissions, and I must give him and his client due credit for that correctness and fairness. The rule against bias may, I think, be traced to well-established principles in administrative law, and, specifically the rules against a pecuniary bias and a personal bias. In Craig's Administrative Law, 1 it is said:
The Courts have long insisted that any pecuniary interest disqualifies the decision-maker, be he high or low. ... The Courts have consistently held that if there was a pecuniary interest, it was not necessary to go on to consider reasonable suspicion or real likelihood of basis. It is therefore important to establish what will constitute a pecuniary interest. Blackburn J held that any pecuniary interest however small will be sufficient. Some qualification is however required to the breadth of this statement. If the pecuniary interest is not personal to the decision maker, then the matter will fall to be considered as a challenge on the grounds of favour. Moreover, if the alleged pecuniary interest is extremely remote or based on contingencies that are unlikely to materialize then the matter will similarly be treated as a challenge on the grounds of favour. Subject to these qualifications, the prohibition of pecuniary interest seems to be an absolute one and is not further qualified by any requirement that the interest be substantial.
30. Reference is often made in this context to the decision of the House of Lords in Dimes v. Grand Junction Canal, [1852] 3 HLC 759. reversing a decision of the Lord Chancellor, Lord Cottenham, as he held shares in the company in question. It was held that the principle that no man may be a judge in his own cause is sacred. The rule -- nemo judex in re sua or in causa sua -- is as fundamental as it is ancient2. BL Jones in Garner's Administrative Law, 7th edition, quotes Lord Denning MR's decision in R. v. London Rent Assessment Panel Committee, exp Metropolitan Properties Co. (FGC) Ltd. [1969] 1 QB 577, as providing a neat conflation of the 'reasonable suspicion' and 'real likelihood' tests of bias:
In considering whether there was a real likelihood of bias, the Court does not look at the mind of the justice himself or at the mind of the chairman of the tribunal, or whoever it may be, who sits in a judicial capacity. It does not look to see if there was a real likelihood that he would, or did, in fact favour one side at the expense of the other. The court looks at the impression which would be given to other people. Even if he was as impartial as could be, nevertheless if right-minded persons would think that, in the circumstances, there was a real likelihood of bias on his part, then he should not sit.
31. Wade in Administrative Law draws a distinction between genuine and fanciful cases: 3
The Court of Appeal ... protested against the tendency to impeach judicial decisions 'upon the flimsiest pretexts of bias', and against 'the erroneous impression that it is more important that justice should appear to be done than should in fact be done'. Similarly, a deputy High Court judge was not disqualified because the solicitors' firm of which he was a partner was, without his knowledge, involved in related litigation. Neither was a judge disqualified in a case where one party's solicitors were already acting for the judge in relation to his will. And a judge who was the director of a property company, which was the landlord of one of the parties, was not disqualified. The judge did not know of this link but even if he had known, there could in the circumstances, 'not be a real danger of bias. The interest was so minimal that no reasonable and fair-minded person sitting in court would have considered there was a real as opposed to a fanciful danger of a fair trial not being possible.'.
32. I will accept that the statutory enunciation we have before us eliminates even the smallest interest -- it is not a question of degree. But that interest must not be too remote, nor fanciful. The case here is not of either Mr. Shah or Mr. Dubash ever having appeared for the 1st Respondent on M/s. Hariani & Co's brief, but of them ever having been briefed by M/s. Hariani & Co at all, a very different thing. No law or principle demands this level of distancing. The Arbitration Act speaks of 'justifiable doubt'. I would venture to suggest that this lies somewhere between the test of 'real likelihood' and a 'fanciful apprehension'. The situations set out in the Vth and VIIth Schedules seem to me to indicate that when a doubt is expressed it must not be on a remote or far-fetched extrapolation.
33. Perhaps the following passage from David Pannick's Judges might lend some useful perspective.
"Occasionally a litigant objects to the involvement of a particular judge on the ground that previous judgments cause the litigant to doubt whether the judge would decide the case impartially. In 1978 Lord Denning acceded to such an application. He said that 'if the Church of Scientology felt that its case would be a little disturbed by his sitting on it, that was the last thing he would wish to do and he would see that it came before a court in which his Lordship was not sitting'. In 1984 Lord Chief Justice Lane stood down from the court of three judges assigned to hear a case concerning the use of road blocks by the police to prevent striking miners reaching picket lines. Counsel for the miners had argued that Lord Lane would be influenced by comments he had made, adverse to the miners' legal claim to conduct such activities, in a previous case. Lord Lane said that he could see no reason why he should not hear the case, but that he was willing to stand down. The case was heard and decided in favour of the police, by the other two judges.
Lord Denning and Lord Lane were over-generous in their response to these applications. Judges are there to decide cases, not to excuse themselves whenever a litigant doubts, without cause, the judicial qualities of those assigned to sit in judgment. Litigants should not be encouraged to treat judges like members of a jury whom they can challenge off the case, with or without cause. Some litigants have met with a harsher judicial response in this respect. In 1975 a US District Court female judge refused to accede to the request of a Defendant in a sex discrimination case that she should disqualify herself on the ground of bias because she was of the same sex as the Plaintiff and had argued civil rights cases as a lawyer before her appointment to the Bench. A barrister charged with professional misconduct was similarly unsuccessful in his complaint that a disciplinary tribunal, 'the majority of the members of which are practising barristers, is incapable of considering fairly a charge of misconduct brought against a fellow barrister'.
...
Because judges live in society, they are bound to be affected by the result of many cases that come before the courts. In one of A.P. Herbert's Misleading Cases, Sir Ethelred Rutt KC persuaded three Court of Appeal judges that neither they nor any other judges could properly hear an income-tax appeal because the judiciary, being paid by the Crown, had a direct interest in increasing the sums due to the Inland Revenue. In the non-fictional Court of Appeal, a rather more realistic approach is necessarily taken when the legality of a policy of cheaper public transport in London was challenged in the Court of Appeal in 1981, Lord Denning explained that
"all three members of this court are interested on all sides. We are all fare-paying passengers on the tubes and buses and benefit from the 25 per cent cut in fares. My wife and I also have the benefit of senior citizens to travel free. We are all ratepayers in the area of Greater London and have to pay the increase in rates [to cover the revenue lost by reducing the fares]. No objection is taken by any party to our hearing the case. Any Court of Appeal would be likewise placed."
34. As lawyers and judges, we are trained to question, to enquire and to demand proof according to law. Ours is a profession of scepticism, not a practice of suspicion.
35. In my view, this application and the Petition are wholly without foundation in fact or law. The Notice of Motion and the Petition stand dismissed. No costs.
1Paul Craig, Administrative Law, 6th Edition.
2Dr Bonham's case, decided by Lord Coke is of 1610.
310th edition, pp. 385-386. The internal citations have been omitted for clarity.
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