Ethics and Professional Responsibility in ADR

An arbitrator exercises a judicial function without holding judicial office, and a mediator hears in confidence what neither party would say in court. Both are chosen and paid by the parties, which is precisely why their obligations must be stated. Indian law now does so in terms: the Fifth, Sixth and Seventh Schedules to the Arbitration and Conciliation Act, 1996 regulate disclosure and disqualification, Section 18 requires equal treatment, Section 42A imposes confidentiality, and the Mediation Act, 2023 does the equivalent for mediation. Counsel appearing in these processes owe duties of their own.

The duties of the neutral in each process, and the duties counsel owe

1. Disclosure and Independence

1. Before appointment. Section 12(1) requires a person approached in connection with a possible appointment as arbitrator to disclose in writing any circumstance likely to give rise to justifiable doubts as to his independence or impartiality, and anything likely to affect his ability to devote sufficient time and to complete the arbitration within twelve months. The disclosure is made in the form of the Sixth Schedule and is guided by the Fifth.
2. During the reference. The duty is continuing. A relationship that arises after appointment must be disclosed as soon as it arises.
3. Disqualification. Section 12(5) with the Seventh Schedule makes certain relationships disqualifying notwithstanding any prior agreement, and the ineligibility can be waived only by an express agreement in writing made after the dispute has arisen.
4. In mediation. Section 10 of the Mediation Act, 2023 imposes the same obligation of disclosure on a person approached to act as mediator, and a party may object.
5. The international standard. The IBA Guidelines on Conflicts of Interest in International Arbitration, with their graded lists, are not law in India but are used in practice to decide what must be disclosed, and the Fifth and Seventh Schedules were drawn from them.

2. Conduct of the Process

• Equal treatment. Section 18 is mandatory and cannot be contracted out of. It requires equal time, equal access and a full opportunity to present the case, and it forbids receiving material from one party behind the back of the other.
• No delegation of the decision. The award must be the tribunal's own. An expert appointed under Section 26 assists; a tribunal that adopts his conclusions without applying its own mind exposes the award to challenge, and the same applies to a draft prepared by a secretary or by software.
• Diligence. Section 29A ties the award to a period, and permits the court on an extension application to reduce the arbitrator's fees by up to five per cent for each month of delay attributable to the tribunal.
• The mediator's position. Section 16 of the Mediation Act requires him to act independently and impartially and to impose nothing, Section 17 bars him from acting as arbitrator or counsel in the same dispute or being presented as a witness, and Sections 22 and 23 make what he learns confidential and inadmissible.

3. Fees

Fees are where most complaints against arbitrators arise, and the law has tightened. The Fourth Schedule supplies a model fee structure which operates where the High Court has framed rules for the purpose. The Supreme Court has held that an arbitral tribunal cannot unilaterally determine or revise its own fees, since a party cannot be bound by a charge it never agreed to; that the ceiling in the Fourth Schedule applies to each arbitrator individually rather than to the tribunal as a whole; and that for the purpose of computing fees the claim and the counterclaim are treated separately. The practical rule is that fees should be fixed in writing at the first procedural hearing, with the basis and the ceiling recorded.

4. The Duties of Counsel

5. Related Topics and Provisions