Supreme Court Upholds Impartiality: Ineligible Persons Barred from Nominating Arbitrators
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The Supreme Court has reinforced the principle of 'Nemo Judex in Causa Sua', ruling that individuals ineligible to act as arbitrators cannot nominate others to the role. This judgment strengthens the integrity of Alternative Dispute Resolution (ADR) by ensuring independence and preventing unilateral control over the tribunal's composition.
In a significant boost to the Alternative Dispute Resolution (ADR) framework, the Supreme Court of India has reinforced the fundamental legal maxim 'Nemo Judex in Causa Sua'—the principle that no one should be a judge in their own cause. The Court ruled that an individual who is ineligible to act as an arbitrator under the Arbitration and Conciliation Act, 1996, is also legally barred from nominating another person as an arbitrator.
The judgment centers on Section 12(5) of the Act, read with the Seventh Schedule, which lists categories of relationships (such as employees, consultants, or advisors) that render a person ineligible to be an arbitrator due to potential bias. The Court clarified that the power to nominate an arbitrator is an extension of the power to adjudicate. Therefore, if the 'source' of the appointment is disqualified by law, any nomination flowing from that source is equally tainted. This prevents a situation where one party, often a dominant entity like a government department or a large corporation, unilaterally controls the composition of the arbitral tribunal through its senior officials.
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