India: Government Appointed Arbitrator: Law Of Bias

Last Updated: 3 March 2016

It has been a common norm that Government, while contracting, resorts to arbitration agreements wherein Government nominated persons are majorly given the role to adjudicate as arbitrators. Inclusion of such arbitrators has been looked with an apprehension of bias in the recent past. The present article focuses on the Law of bias, highlighting the test of bias particularly in case of Government nominated arbitrators.

Law of Bias:

The Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "1996 Act") supplants the Arbitration Act, 1940.1 It is seeded on the UNCITRAL Model Law for International Commercial Arbitration2, which was drafted in 1985 after years of deliberation on a system of uniform code for harmoniously dealing with arbitration on international scale.3 UNCITRAL Model Law for International Commercial Arbitration, 1985 which forms part and parcel of Part I of the 1996 Act provides for the grounds on which an arbitrator can be challenged under Article 12. It particularly stipulates independence and impartiality of arbitrator as grounds for challenging the arbitrators, besides qualification of the arbitrators as agreed to by the parties.

Section 124 of the 1996 Act is a copy of the Model Law. Article 13 of the Model Law is similar to Section 135 of the 1996 Act in as much as it provides the procedure for challenging the arbitrator. Article 13 states that the Courts can intervene if the challenge to an arbitrator gets rejected by the arbitral tribunal. However, the 1996 Act does not provide any such remedy to approach the Courts in such cases. Section 13 does not empower the Court to interfere with the findings on the arbitral tribunal on its own independence and impartiality. It only prescribes recourse under section 34 of the 1996 Act after the award has been made by the tribunal.6 A perusal of Section 34 of the 1996 Act provides that it is only under the consideration of public policy that an award be challenged after it is made under section 13(4).

Test of Bias

Bias is to be adjudged from the perspective of a reasonable intelligent man and its determination can differ on case to case basis.7 Catena of cases has held that there must be real likelihood of bias and not merely a suspicion of bias.8 The standard of proof to prove bias is based on availability of cogent evidence.9 Mere imagination of a ground cannot be an excuse for apprehending bias.10 Though it is difficult to prove actual bias, if proved, actual bias would lead to an automatic disqualification. Actual bias denotes an arbitrator who allows a decision to be influenced by partiality or prejudice and thereby deprives the litigant of the fundamental right to a fair trial by an impartial tribunal.11

Government Appointed Arbitrators: Real Likelihood of Bias

The 1996 Act casts a duty on the Courts to appoint arbitrators who are impartial and independent in their demeanour if the parties fail in the appointment of arbitrators.12 Such being the case, the Apex Court has held that in appointing an arbitrator it can deviate from the mandate of the arbitration agreement.

Earlier, the Apex Court has not dithered to hold that if the named arbitrator is a government employee, it is not ipso facto a ground to raise presumption of bias.13The Apex Court in various decisions including Union of India v. M.P. Gupta14 and Ace Pipeline Contract v. Bharat Petroleum15 has taken the view that in contracts with a Government corporation/statutory body/ Government company, the practice of incorporating a named arbitrator who is an employee of the corporation, is not ipso facto a ground to raise a presumption of bias, or partiality, or lack of independence on his part.

Deviating from the stand taken formerly, the Apex Court in the case of Denel Proprietary Ltd. v. Bharat Electronics Ltd. and anr.16 held where arbitrator named in the clause is Managing Director of a party, he may not be in a position to act independently and so cannot be appointed by the Courts, even if that implies deviation from the terms of the arbitration agreement. The Apex Court in this case placed reliance on para 45 of Indian Oil Corpn. Ltd. v. Raja Transport (P) Ltd., wherein it was held that "ignoring the named arbitrator/arbitral tribunal and nominating an independent arbitrator shall be the exception to the rule, to be resorted for valid reasons". This stand was again reiterated in the case of Bipromasz Bipron Trading Sa v. Bharat Electronics Ltd.17, wherein the Apex Court held that "Court can deviate from agreed procedure where there is reasonable apprehension of bias".

The legal position discussed above was again reiterated in the case of Denel Proprietary Ltd. v. Govt. of India, Ministry of Defence18, wherein the Apex Court again sat to adjudicate on the issue that whether the appointment of Government nominated arbitrator leads to apprehension of bias. The Apex Court held that "it is true that in normal circumstances while exercising jurisdiction under Section 11(6), the Court would adhere to the terms of the agreement as closely as possible. But if the circumstances warrant, the Chief Justice or the nominee of the Chief Justice is not debarred from appointing an independent arbitrator other than the named arbitrator". The Apex Court, thereafter, appointed an independent arbitrator by holding that "I have examined the facts pleaded in this case. I am of the opinion that in the peculiar facts and circumstances of this case, it would be necessary and advisable to appoint an independent arbitrator. In this case, the contract is with Ministry of Defence. The arbitrator Mr. Satyanarayana has been nominated by DGOF, who is bound to accept the directions issued by the Union of India. Mr. Satyanarayana is an employee within the same organization. The attitude of the Respondents towards the proceeding is not indicative of an impartial approach. In fact, the mandate of the earlier arbitrator was terminated on the material produced before the Court, which indicated that the arbitrator was biased in favour of the Union of India. In the present case also, Mr. Naphade has made a reference to various notices issued by the arbitrator, none of which were received by the Petitioner within time. Therefore, the Petitioner was effectively denied the opportunity to present his case before the Sole Arbitrator. Therefore, the apprehensions of the Petitioner can not be said to be without any basis".

Taking a note on the aspect that majorly government contracts provide for selection of an arbitrator from amongst the employees, the Apex Court in the case of Union of India v. M/S Singh Builders Syndicate,19 advised that the government and statutory bodies should try to phase out arbitration clauses which name employees as arbitrators.


It is evident from the case laws that Government nominated arbitrators in Government contracts are seen with an apprehension of bias. Therefore, the Court has rightly objected to their appointment so that the dispensation of justice in the arbitration process can become a reality. In two such cases, where our firm was representing a foreign supplier, we got an independent arbitrator appointed from the Supreme Court on the ground that Government nominated arbitrators may not be in a position to act independently and so cannot be appointed by the Courts, even if that implies deviation from the terms of the arbitration agreement. The cases dealt by our firm have paved the way for mooting amendments in the Arbitration and Conciliation Act, 1996. In fact, in the proposed amendments to the Arbitration and Conciliation Act, 1996, the Law Commission while appreciating the stance taken by Courts has observed that "The concept of party autonomy cannot be stretched to a point where it negates the very basis of having impartial and independent adjudicators for resolution of disputes. In fact, when the party appointing an adjudicator is the State, the duty to appoint an impartial and independent adjudicator is that much more onerous – and the right to natural justice cannot be said to have been waived only on the basis of a "prior" agreement between the parties at the time of the contract and before arising of the disputes".


1. See generally, Section 85, Arbitration and Conciliation Act, 1996.

2. See generally, Preamble, Arbitration and Conciliation Act, 1996.

3. Howard M. Holtzmann and Joseph E. Nuehaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration, 1989.

4. See generally, Section 12, Arbitration and Conciliation Act, 1996.

5. See generally, Section 13, Arbitration and Conciliation Act, 1996.

6. See generally, Section 13(5), Arbitration and Conciliation Act, 1996.

7. Halsbury's Law of England, 4th Edition, vol.2, p. 282, para 551.

8. Mineral Development Ltd. v. State of Bihar, AIR 1960 SC 468.

9. Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant, (2001) 1 SCC 182.

10. Ladli Construction Company Pvt. Ltd. v. Punjab Police Housing Corporation Ltd. and ors., (2012) 4 SCC 609.

11. Mineral Development v. Encon Builders (I)(P) Ltd., (2003) 7 SCC 418.

12. See generally, Section 11(8), Arbitration and Conciliation Act, 1996.

13. Indian Oil Corpn. Ltd. v. Raja Transport (P) Ltd., (2009) 8 SCC 520.

14. (2004) 10 SCC 504.

15. (2007) 5 SCC 304.

16. (2010) 6 SCC 394 (This case was fought by Rajani, Singhania and Partners).

17. (2012) 6 SCC 384.

18. (2012)2SCC759 (This case was fought by Rajani, Singhania and Partners).

19. (2009) 4 SCC 523.

This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Contact the Author?
Click here to email the Author
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Other India Advice Centres
Insolvency and Restructuring
More Advice Centers
Useful Resources
Legal updates from Singhania & Partners
Based in New Delhi, the main objective of ICA is to promote amicable, quick and inexpensive settlement of commercial disputes by means of arbitration, conciliation, regardless of location.
The Chartered Institute of Arbitrators (CIArb) is a leading professional membership organisation representing the interests of alternative dispute practitioners worldwide.
Upcoming Events
The firm regularly participates in or hosts a number of legal events.
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.