What is Section 14 of Arbitration and Conciliation Act

Section 14. Failure or impossibility to act on the part of Arbitrator

CHAPTER III
Composition of arbitral tribunal of Arbitration and Conciliation Act, 1996

Section 14. Failure or impossibility to act

[(1) The mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator, 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, 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.

Scope of Section 14 of Arbitration and Conciliation Act, 1996

Party interested in removal of Arbitrator shall file a petition under Section 14 of the Act, if it is found that she/he is disqualified on the basis of grounds (relationships) stated in the Seventh Schedule. Once covered he becomes de jure disqualified to continue to act as arbitrator under Section 14(1) (a) of Arbitration and Conciliation Act, 1996.

When an arbitrator is disqualified on the basis of the grounds stated in Section 12(5) read with Schedule Seven then lot of time shall be spent in challenging such termination under Section 13. Further if such challenge does not succeed, then the party will have to wait for the passing of final award to be passed and challenge the same under Section 34. Hence, if an arbitrator is de jure ineligible under Section 12(5) read with Seventh Schedule of the act then termination can be sought under Section 14(1) (a) directly by filing an application before the Court

In case titled WEST HARYANA HIGHWAYS PROJECTS PVT. LTD V NATIONAL HIGHWAYS AUTHORITY OF INDIA, 2017 Latest Caselaw 2389 Del a petition was filed before Delhi High Court under Section 14 of the Arbitration and Conciliation Act, 1996 for termination of the Arbitrator appointed by the Respondent on grounds of ineligibility as stated in Section 12(5) read with Schedule Seven of the Act. The Court framed a question of law as to whether a party can approach court directly under Section 14 of Arbitration and Conciliation Act for removal of arbitrator on grounds stated in Section 12(5) along with Schedule Seven of the Act.

Bench held, the Seventh Schedule is essentially a subset of the Fifth Schedule of the Act. The grounds indicated in the Fifth Schedule would indicate circumstances giving rise to justifiable doubts as to the independence or impartiality of an arbitrator; it is not necessary that such grounds would render the arbitrator ineligible to act. The Fifth Schedule is only to serve as a guide for the disclosure to be made by an arbitrator. The schematic interpretation of Section 12(1) read with Section 13 of the Act indicates the legislative intent that in such cases, the challenge must be considered by the arbitral tribunal and an unsuccessful challenge before the arbitral tribunal must not be permitted to interdict the arbitral proceedings.

It was ruled that the learned Arbitrator due to being on panel of advisers of the Respondent shall be terminated and a new arbitrator shall be appointed by the Respondent within a period of 30 days. On failure to appoint within specified period, the Petitioner shall be free to approach the Court for the same.