Stock exchange arbitration clauses are valid absent actual bias, and refusal of counsel alone does not establish arbitral bias.

An arbitration clause incorporated in approved stock exchange bye-laws was upheld as valid because the standing arbitration committee was part of the exchange's regulatory framework, consisted of experienced market participants, and allowed both sides input in the appointment process; no actual bias or legal disqualification was shown. The clause was also construed broadly to cover disputes arising out of the transactions covered by the contract note, not merely disputes predating it. Revocation of the appointed arbitrators' authority was refused where the parties had invoked and participated in the process. Refusal to allow counsel did not, by itself, establish bias, since permission for legal representation lay within the arbitrators' discretion.

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Issues: (i) Whether the arbitration clause was invalid because arbitrators could be chosen only from members of the stock exchange's arbitration committee; (ii) whether the arbitration clause was confined to disputes arising before the contract note; (iii) whether the petitioners were entitled to revoke the authority of the appointed arbitrators; and (iv) whether refusal to permit counsel in the arbitral proceedings showed bias.

Issue (i): Whether the arbitration clause was invalid because arbitrators could be chosen only from members of the stock exchange's arbitration committee.

Analysis: The arbitration scheme was traced to the special regulatory framework governing securities transactions and the approved bye-laws of the exchange. The committee was a standing body constituted under the exchange rules, the members were experienced in securities dealings, and the procedure allowed each side a say in the choice of arbitrators. No personal bias or disqualification was shown.

Conclusion: The arbitration clause was valid and was not liable to be struck down.

Issue (ii): Whether the arbitration clause was confined to disputes arising before the contract note.

Analysis: The contract note expressly referred all claims, differences and disputes arising out of the transactions to arbitration, and the wording was wide enough to include disputes relating to the transactions covered by the contract note as well as disputes arising prior to it.

Conclusion: The clause was not limited in the manner contended for by the petitioners.

Issue (iii): Whether the petitioners were entitled to revoke the authority of the appointed arbitrators.

Analysis: The arbitrators had been appointed in accordance with the bye-laws, and no tenable ground was shown for setting aside their authority. The petitioners had themselves invoked the arbitration mechanism and participated in it.

Conclusion: Revocation of the arbitrators' authority was refused.

Issue (iv): Whether refusal to permit counsel in the arbitral proceedings showed bias.

Analysis: The bye-laws vested discretion in the arbitrators to permit or decline legal representation. A refusal, without more, did not establish bias, and the apprehension of bias had to be judged on a reasonable and objective standard.

Conclusion: No bias was made out on this ground.

Final Conclusion: The challenge to the arbitral process failed on all substantive grounds and the proceedings were allowed to continue before the appointed arbitrators.

Ratio Decidendi: An arbitration clause incorporated in approved stock exchange bye-laws, providing for arbitration by a standing committee of exchange members, is valid unless actual bias or legal disqualification is shown, and a mere refusal to permit counsel does not by itself establish bias.

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