Conduct of Arbitral Proceeding: Section 18 of Arbitration and Conciliation Act | Law Optional Notes for UPSC PDF Download

Section 18 of Arbitration and Conciliation Act: Equal Treatment of Parties

Statement

• The parties are to be treated equally, with each party having a complete opportunity to present their case.

Principles of Natural Justice

The fundamental requirements of a fair hearing include:

• Each party must receive notice of the hearing's place, date, and time.
• Each party must have a reasonable chance to be present throughout the hearing.
• Each party must have a fair opportunity to present statements, documents, evidence, and arguments supporting their case.
• Each party must be provided with statements, documents, and evidence presented by the other side.
• Each party must have a fair opportunity to cross-examine the opposing party's witnesses and respond to the arguments made.

In the case of O'Reily vs. Mackman (1983), Lord Diplock emphasized the importance of fair hearing. The right to hear and respond to allegations is crucial in any legal system. The principle 'Nemo Judex in Causa Sua Potest' applies when addressing the appearance or possibility of injustice.

Arbitration Principles and Natural Justice

• Arbitrators are not bound by technical rules but must adhere to principles of natural justice.
• Natural justice dictates that affected parties should have the right to be present during evidence presentation, suggest cross-examination, and respond to evidence.
• Wazir Chand Karam Chand vs. Union of India (1989) emphasized the importance of following legal procedures.

Principles of Arbitration by Mustil and Boyd

• Each party should be given a fair chance to present their case.
• Both parties must understand and have the opportunity to challenge each other's cases.
• Equal treatment should be provided to all parties in presenting and examining cases.

Defected Proceedings in Arbitration

• In legal matters involving arbitration, if there are any issues or mishandling by the arbitrator during the proceedings, the court has the authority to invalidate the arbitral award. The arbitrator holds a crucial judicial role and must adhere to principles of equity and good conscience.
• For instance, in the case of Spac and Co. vs. National Building Constructing Corporation (1989), any irregularity or action by the arbitrator that goes against the fundamental principles of fairness and justice can be considered misconduct.

Principles of Natural Justice

• Although arbitrators are not strictly bound by courtroom rules, their procedures should align with the principles of natural justice. This means that arbitrators must ensure a fair process for all parties involved.
• For example, if a party fails to participate in arbitral proceedings despite being notified, the arbitrator may proceed ex-parte, but this should not violate the principles of natural justice.

Denial of Natural Justice

• In situations where natural justice is denied, such as in Union of India vs. Mehta Teja Singh (1983), where crucial reports are not considered or shared leading to an unfair outcome, the arbitration proceedings can be deemed as misconduct.
• Similarly, in Mohidin Sahib vs. Ramaswami Chetti (1921), if information is shared improperly or without opportunity for verification, it can be considered misconduct unless all parties are aware and agree to the process.

Irregular Procedures and Consent

• Arbitrators should avoid improper procedures like obtaining information from one party in the absence of others. However, if all parties involved, including any legal guardians, consent to such procedures, the irregularity may be considered acceptable.
• For example, in the case of Chintalapudi Sanyasirao vs. Chintalapudi Venkatrao (1923), it was noted that a minor's guardian cannot waive the minor's right to object to irregular procedures without proper consent.