Arbitration In IndiaNeutrality of Arbitrator and Party Autonomy: Two Inseparable Opposites in Arbitration

June 23, 20220


Arbitration is one of the most important and reliable mechanisms of Alternative Dispute Resolution. The concept of party autonomy lies in the basis of Arbitration.  Party autonomy is the backbone of Arbitration as a mechanism to resolve disputes.

The Hon’ble Supreme Court in the landmark judgment of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. [(2016) 4 SCC 126], observed that Party autonomy has been held to be the brooding and guiding spirit of Arbitration. The Arbitration and  Conciliation Act, 1996 (hereinafter referred to as the “Act”) considers the party autonomy as a foundational pillar of an Arbitral proceeding.

The Act grants party autonomy in choosing the procedure to be followed during  Arbitral proceedings.  If the parties have mutually consented to a particular manner in which the procedure of the Arbitration has to be conducted, then such an agreement shall be given effect exactly in the manner that the parties intended to in the agreement.

The principles of natural justice have to be followed even when a dispute is referred to as Arbitration. One of the key  considerations for the principles of natural justice is that each of the parties is kept at the same pedestal and none of them are prejudicially affected

For this purpose, the ideology of neutrality in Arbitration is increasingly gaining importance. While party autonomy is a power in the hands of the parties, neutrality is a limitation imposed on such power to ensure there is no bias towards a party. Therefore, this Blog aims to undertake a critical analysis of both these principles.


The guiding principle in determining the procedure to be followed in an International Arbitration is party autonomy.  The same principle is accepted and endorsed by Indian laws as well as international legislation and instruments such as the New York Convention and the United Nations Commission on International Trade Law (UNCITRAL) Model Law,  and other institutional rules.

 The modern laws of Arbitration across the globe recognize party autonomy, which means that the parties are free to choose the substantive law or rules that will apply to the dispute referred to as Arbitration. The contracting parties have the autonomy to choose, and subsequently, the autonomy to avoid an unfavourable or inappropriate law for Arbitration of the dispute. The Arbitral Tribunal is bound by the mutual decision of the parties made as a result of party autonomy. The parties can mutually decide the Institutional Rules to be applied, the procedure,  the seat and venue of Arbitration, and several other matters incidental to an Arbitral proceeding.

In India, the principle of party autonomy has been incorporated in various provisions of the Act.  Section 7 of the Act, provides the autonomy to the parties for the formation of an Arbitration Agreement and shall mutually decide the scope of the agreement.  Moreover, Section 10 of the Act, provides the liberty to decide the number of arbitrators to be appointed.

Section 11 of the Act grants the autonomy to choose the Arbitrator(s). In addition, the rules of procedure and the venue or seat of Arbitration can also be decided by the parties as per Section 19 and 20 of the Act.  Hence, it can be concluded that at every stage of the arbitral proceedings, the Act ensures party autonomy.


The concept of neutrality in the Act is mainly envisaged for the neutrality or impartiality of the Arbitrator(s). The idea of party autonomy and neutrality correlates where the parties’ choice of Arbitrator(s) is given priority and at the same time a neutral forum is available to the parties.

Section 11(1) of the Act provides that the sole Arbitrator can be appointed on the mutual consent of both the parties. In case the parties fail to appoint a Sole Arbitrator, Section 11(3) of the Act, provides for the appointment of a Presiding Arbitrator by the two Arbitrators appointed by each of the parties. These provisions are inculcated within the Act to ensure that a neutral Arbitral Tribunal is constituted.

Hence, it can be inferred that the concept of neutrality is envisaged in the Act to ensure that there is no preconceived notion regarding any party, and hence would not prejudice the position of the parties. This would ensure an efficient and effective dispute resolution through Arbitration.

In an Arbitration proceeding, if one of the parties is at a greater advantage as compared to the other, the other party would have concerns regarding the fairness of the proceedings as well as the award passed. Moreover, it has to be ensured that the Arbitrator appointed is not a related person to any of the parties nor has any substantial or material interest in the dispute.

In India, the concept of neutrality and impartiality of the Arbitrator is stipulated under Section 12 of the Act. The Arbitration and Conciliation (Amendment) Act, 2015 inserted Section 12(5), according to which the nominated Arbitrator would be ineligible for an appointment if he falls into any category as mentioned in Schedule VII of the Act.

Furthermore, the disclosures regarding impartiality and neutrality have to be given by the Arbitrator as per Schedule V of the Act. The Arbitration and Conciliation (Amendment) Act, 2019 inserted Schedule VIII, which provides the qualifications and experience of the Arbitrator that can be appointed and also states the general norms that would be applicable. Thus, the aforementioned provisions ensure the neutrality and impartiality of the Arbitrator.

The mandate of impartiality and neutrality of the Arbitrator has been laid down in  International Conventions like the New York Convention, 1958, the UNCITRAL Model Law, the London Court of International Arbitration Rules, 1998, the Singapore International Arbitration Centre Rules, 2016, etc.


Judicial precedents of various courts have also given prime importance to the impartiality and neutrality of the Arbitrators.

The  Supreme Court in  PASL Wind Solution v. GE Power Conversion [2021 SCC OnLine SC 331], held that the doctrine of party autonomy is the guiding Grundnorm of Arbitration laws across jurisdictions. Moreover, the principle of party autonomy gives fundamental freedom to the parties to govern the Arbitration proceedings as per their will.

Similarly, in Centrotrade Minerals & Metal Inc. v. Hindustan Copper Ltd.,[ (2017) 2 SCC 228] and  Union of India v. U.P. State Bridge Corpn. Ltd., [(2015) 2 SCC 52], the Supreme Court held that the Act gives the parties the autonomy to enter into an agreement as to choose the Tribunal and even the procedure of the Tribunal. Moreover, the agreement shall be construed in the way the parties have intended to.

Section 12(5) of the Act read with Schedule VII of the Act renders an Arbitrator ineligible for appointment. The Supreme Court in HRD Corporation v. GAIL (India) Limited [Civil Appeal No. 11126 of 2017] held that the neutrality and impartiality of the Arbitrator have to be construed squarely considering Schedule V and Schedule VII of the Act. Moreover, the ineligibility of the Arbitrator is a ground for challenging the award under Section 34 of the Act.

Similarly, the  Supreme Court in TRF Limited v. Energo Engineering Projects Limited [(2017) 8 SCC 377] held that the independence, impartiality, and neutrality of an Arbitrator is a statutory mandate. Hence, impartiality would prevail over the party autonomy in case of a conflict.

Subsequently,  the  Supreme Court in Perkins Eastman Architects DPC v. HSCC (India) Limited [2019 S.C.C. Online SC 1517], observed that the parties have a fundamental right and autonomy to appoint the Arbitrator of their choice. However, autonomy has to be exercised without compromising the independence, impartiality and neutrality of the Arbitrator. The party autonomy cannot be exercised such that a partial and biased Arbitrator is appointed.

Similar reasoning was adopted by the  Supreme Court in Voestalpine GmbH v. Delhi Metro Rail Corporation (DMRC) [(2017) 4 SCC 665] wherein it was held that the doctrine of party autonomy and the idea of independence, impartiality, and neutrality of the Arbitrator have to be given equal importance. None of these concepts can be suppressed in order to uphold the other.


The concept of neutrality of the Arbitrator as well as the doctrine of party autonomy form the fundamental of basis Arbitration law. Hence, it is important to harmonise both the principles during the conduct of Arbitration proceedings. It is pertinent to ensure that none of the principles are violated, and at the same time, both the principles are followed in their true sense.

Both the Indian laws and International Institutional Rules have incorporated the concepts of party autonomy and neutrality as core elements of the rules applicable for the conduct of Arbitral proceedings.

However, the judicial precedents reflect that some ambiguity still exists to date in construing and applying both the concepts in Arbitral proceedings. A proper balance of the principles ensuring both exist hand in hand has to be maintained, and the view taken by the judiciary has to be followed in its true sense by all the parties involved in Arbitration.

-Team AMLEGALS, assisted by Mr. Alay Raje (Intern)

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