Section 12 of the Arbitration and Conciliation Act, 1996 requires every person approached to act as arbitrator to disclose in writing any circumstances likely to give rise to justifiable doubts about their independence or impartiality, and any circumstances affecting their ability to complete the arbitration within the required time. This duty continues throughout the proceedings.
The Fifth Schedule to the Act lists circumstances that may give rise to justifiable doubts — for example, business relationships with a party, prior involvement in the case, or close relationships with counsel. A party may challenge an arbitrator on these grounds, or if the arbitrator lacks qualifications the parties agreed on.
Section 13 sets the procedure. Unless the parties have agreed otherwise, the challenging party must send a written statement of reasons to the tribunal within 15 days of becoming aware of the constitution of the tribunal or of the circumstances giving rise to the challenge. If the arbitrator does not withdraw and the other party does not agree to the challenge, the tribunal decides it.
If the challenge is rejected, the arbitration continues and the tribunal makes its award. The challenging party can then raise the issue in an application to set aside the award under Section 34.
The practical lesson is to act promptly. Raising bias concerns late, after participating without objection, weakens the challenge considerably and can be treated as a waiver.