Union of India vs. Reliance Industries Limited and Ors.

The case of Union of India v. Reliance Industries Limited and Others. is an authority on the jurisdiction of the Delhi High Court with matters about Sections 12, 13, 14, and 15 of the Arbitration and Conciliation Act, 1996. Section 12 of the Arbitration and Conciliation Act, 1996 reads as follows: 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 likely to give rise to justifiable doubts as to his independence or impartiality. (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 subsection (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 Section 13, which governs the procedure for challenge, reads as follows: 13. Challenge procedure. – (1) Subject to subsection (4), the parties are free to agree on a procedure for challenging an arbitrator. (2) Failing any agreement referred to in subsection (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 subsection (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal. (3) Unless the arbitrator is challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitrate 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 subsection (5), the court may decide as to whether the arbitrator who is challenged is entitled to any fees. Section 14 is the main bone of contention in this case and stands as the most important piece of statute concerned with this case. It is regarding the termination of an arbitral mandate and specifies the conditions wherein the mandate terminates. It reads as follows: 14. Failure or impossibility to act. – (1) The mandate of an arbitrator shall terminate if- (a) He becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and (b) He withdraws from his office or the parties agree to the termination of his mandate. (2) If a controversy remains concerning any of the grounds referred to in clause (a) of sub section (1), a party may, and unless otherwise agreed by the parties apply to the court to decide on the termination of the mandate. (3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12. Section 15 details the additional reasons for which the mandate of an arbitrator can be terminated. 15. Termination of mandate and substitution of arbitrator. - (1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate- (a) Where he withdraws from office for any reason; or (b) By or pursuant to agreement of the parties. (2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3) Unless otherwise agreed by the parties, where an arbitrator is replaced under subsection (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal. (4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal. The aforementioned sections are concerned with the grounds of challenging an arbitral mandate, the procedure for challenging it, and the termination of the mandate of an arbitrator if the arbitrator is de jure/de facto unable to discharge their functions. The petitioners brought their case to the notice of the Delhi High Court and pleaded termination of the arbitrator on grounds of serious partiality and favoritism.