Arbitrator impartiality and prior professional ties can justify setting aside an award when disclosure and recusal are not made.

Prior conduct showing acceptance of an arbitration arrangement can defeat a later challenge that no consensus ad idem existed on the arbitration clause, especially where the party had earlier sought appointment of an independent arbitrator. An arbitrator's prior appearance as counsel for one party in another matter may create justifiable doubts about independence or impartiality, and Section 12 of the Arbitration and Conciliation Act, 1996 requires disclosure of such circumstances. Where objections were raised and the arbitrator nevertheless continued, the award was liable to be set aside. The result was restoration of the order invalidating the award.

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Issues: (i) Whether the appellants were precluded from challenging the arbitration clause after having earlier sought appointment of an independent arbitrator; (ii) Whether the arbitrator's prior role as counsel for one of the parties in another matter created a disqualifying conflict requiring setting aside of the award.

Issue (i): Whether the appellants were precluded from challenging the arbitration clause after having earlier sought appointment of an independent arbitrator.

Analysis: The prior request for appointment of an independent arbitrator showed that the appellants had accepted the existence of an arbitration arrangement and were only disputing the named arbitrator. In that situation, the contrary contention that there was no consensus ad idem regarding the arbitration clause could not be sustained.

Conclusion: The challenge to the arbitration clause was rejected.

Issue (ii): Whether the arbitrator's prior role as counsel for one of the parties in another matter created a disqualifying conflict requiring setting aside of the award.

Analysis: The arbitrator had appeared as counsel for one of the parties in another case, and this circumstance existed when the dispute was brought before him. Under the disclosure regime in Section 12 of the Arbitration and Conciliation Act, 1996, circumstances giving rise to justifiable doubts as to independence or impartiality had to be disclosed. The record also showed that objections were raised before the arbitrator, yet he proceeded with the matter instead of recusing himself. In these circumstances, the award could not be sustained, and the order setting it aside was justified.

Conclusion: The arbitrator should not have continued, and the award was rightly set aside.

Final Conclusion: The High Court's order restoring the arbitral award was set aside, and the trial court's order invalidating the award was restored, leaving the parties free to pursue arbitration in accordance with law.

Ratio Decidendi: An arbitrator must disclose and refrain from acting where a prior professional association with a party gives rise to justifiable doubts as to independence or impartiality; failure to recuse in such circumstances can justify setting aside the award.

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