Is there any Right of Representation by Counsel in an Arbitration Proceeding?

In what can be considered as an important issue for arbitration jurisprudence in India, constitutionality of the clause 15.22 of Multi-Commodity Exchange of India Ltd (MCX) has been challenged before the Madras High Court (Source: The Hindu, The Business Standard and The New Indian Express newspapers).[1] The issue is important since the impugned clause prohibits the parties to represent themselves by counsel, attorney or advocate in an arbitration proceeding.[2] Clause 15.22 of the by-law reads as:

“...15.22 Appearance by Counsel, Attorney or Advocate not permitted

In arbitral proceedings, the parties to the dispute shall not be permitted to appear by counsel, attorney or advocate.”

In the present petition, it has been contended that the impugned clause violates the right to avail the legal assistance in an arbitration proceedings. It was further contended that any award, which is made without allowing the petition to appear by a legal counsel before the arbitration proceedings, can be challenged under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). Under Section 34 of the Arbitration Act, an arbitral award may be set aside by the court if the party can show that it could not present the case. This comes down to the question whether, in the absence of a counsel or attorney or advocate, it can be said that the concerned party was not able to present its case before the arbitral tribunal.

So far as criminal matters are concerned, there can be a right to be defended by the legal practitioner of one’s choice. Under Article 22(1) of the Constitution of India, 1950 (“Constitution”) provides this right to every arrested person. Further, Article 14 of the International Covenant on Civil and Political Rights, 1966 (“ICCPR”) provides that in any determination of a criminal charge, a person shall be entitled to defend himself in person or through legal assistance of his own choosing. However, the situation is not the same when it comes to the cases of other nature.

Audi alteram partem, which is a recognised element of the principle of natural justice, stipulates that a fair hearing should be provided to each of the parties in a given matter.[3] There is, however, a difference between ‘no opportunity’ and ‘no fair hearing’, i.e., an order will be invalid if the same has been passed after giving ‘no opportunity’ to a person to present his case. However, in a case where rule of fair hearing has been violated, the validity of order will depend on whether prejudice has been caused to the concerned person.[4]

In Dinesh Chandra v. High Court of Madhya Pradesh, it was held by the Supreme Court of India (“Supreme Court”) that the right to engage a legal practitioner for defence is not a must.[5]In this case, there was a departmental inquiry against a judicial officer whereby he was denied to seek assistance of a legal practitioner. However, in this case, Court came to the conclusion that no prejudice has been caused to the appellant since he himself was competent to defend. Or, he could have approached any other senior judicial officer for assistance. The Court also emphasised the fact that the appellant has taken part in the proceeding without challenging the order whereby the disciplinary authority declined the request of an advocate’s assistance. An important point which has to be seen in this case was that the appellant was a judge himself, i.e., he was a person who is expected to be well versed with legal problems.

In another case, Port of Bombay v. Dilipkumar Raghavendranath Nadkarni,[6] Supreme Court was of the opinion that a reasonable opportunity would not be granted to a person if he is stopped from taking assistance of legal practitioner when the presenting-cum-prosecuting officer was a legal practitioner. In case of an enquiry, there is only one party which presents its case. In such a situation, if one, who is not familiar with law, presents the case before a legal practitioner, then it cannot be said that a fair hearing has been provided.

In an arbitration proceeding, the situation is difference from a departmental inquiry. Here, there are two parties who have conflicting claims and who present their case before the arbitral tribunal. In Mallikarjun v. Gulbarga University, it was held by the Supreme Court that principle of natural justice inheres in an arbitration proceeding. It does not matter whether such principles have specifically been recorded in the arbitration agreement. Non-compliance with such principles of natural justice would render the arbitration award as invalid.[7]It is because of this fact that Section 34 of the Arbitration empowers a court to set aside an award if the principles of natural justice have not been followed.

The principles of natural justice are for checking arbitrary exercise of power by the state and its functionaries.[8] Though there is no direct involved of state in arbitration proceeding, the same does have a legal sanction of the state. In an arbitration proceeding, parties consent to submit their dispute before a tribunal which different from traditional court system. The main purpose behind arbitration is to have a mechanism where parties are free to get their matters resolved according to their convenience. Since courts interferes an arbitral award as less as possible, it is important that a party gets a chance to present the case properly. In Impex Corporation & Ors v. Elenjikal Aquamarine Exports Ltd,[9] High Court of Kerala set aside the arbitral award on the ground that the same has violated the principle of natural justice. In this case, the situation was difference since the violation of principle of natural justice was based on the fact that the concerned party was not served with notices.

The present case before the Madras High Court,  where the core of this problem has been challenged, is very important for those interested in arbitration law. This case will decide whether a prejudice is present when a person is not able to represent himself by a counsel. Because, if there is no such prejudice, then it would be difficult to uphold the contention of the petitioner. We will keep posting updates of this case. 

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[1] http://www.thehindu.com/todays-paper/tp-national/commodity-futures-exchange-bylaw-challenged-in-high-court/article5081309.ece (Report from The Hindu), http://www.business-standard.com/article/pti-stories/hc-stays-proceeding-pending-before-mcm-113083100758_1.html (Report from Business Standard), Report from the New Indian Express

[2] For accessing MCX by-laws and rules, follow this link - http://www.mcxindia.com/investorrelations/legal/legal.htm

[3] Also See State of Punjab v. K.R. Erry, (1973) 1 SCC 120, 126 (Where a body or authority is judicial or where it has to determine a matter involving rights judicially because of express or implied provision, the principle of natural justice audi alteram partem applies)

[4] State Bank of Patiala v. S.K. Sharma, (1996) 3 SCC 364, 389

[5] Dinesh Chandra Pandey v. High Court of M.P., (2010) 11 SCC 500

[6] Bombay v. Dilipkumar Raghavendranath Nadkarni, (1983) 1 SCC 124; Also see C.L. Subramaniam v. Collector of Customs, (1972) 3 SCC 542

[7] Mallikarjun v. Gulbarga University, (2004) 1 SCC 372 at page 379

[8] Sahara India (Firm) (1) v. CIT, (2008) 14 SCC 151 at page 161

[9] Impex Corporation & Ors v. Elenjikal Aquamarine Exports Ltd, AIR 2008 Ker 119, 2008 (2) ARB LR 560 (Kerala)