5 July 2023 9:30 AM GMT
The Delhi High Court has ruled that the inclusion of the arbitrator’s name in the “Hall of Fame” of a website created by him, based upon the fact that he had denied the maximum number of complaints under the “.IN Domain Name Dispute Resolution Policy” (INDRP), gives rise to a justifiable apprehension as to his neutrality. The court was dealing with a petition filed...
The Delhi High Court has ruled that the inclusion of the arbitrator’s name in the “Hall of Fame” of a website created by him, based upon the fact that he had denied the maximum number of complaints under the “.IN Domain Name Dispute Resolution Policy” (INDRP), gives rise to a justifiable apprehension as to his neutrality.
The court was dealing with a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), challenging the arbitral award passed by the Arbitrator under INDRP while adjudicating the claim for transfer of a disputed domain name.
The bench of Justice Prateek Jalan remarked that the fact that the Arbitrator appeared in the category of “Arbitrators who have denied most INDRP complaints: 4 (four)” in the “Hall of Fame” on the website, was not a general comment on the applicable law or policy. The same was a specific indication on how such cases should be finally decided, the court said. It added that by doing so, the Arbitrator had expressed a view that denial of INDRP complaints is per se a positive achievement, without reference to the applicable law, policy, or evidence.
The court further held that as far as factual findings are concerned, it is not open to an arbitral tribunal to conduct independent research to supply evidence which an absent party has not placed before it in the arbitral proceedings.
The petitioner, Microsoft Corporation, made a complaint before the National Internet Exchange of India (NIXI) against the registration of a disputed domain name by the respondent, Zoai Founder, which incorporated the term “Zoai”. Microsoft, who is the owner of various trademarks, including the trademark “Zo”, claims to have launched an artificial intelligence chatbot in December, 2016, named “Zo”. The NIXI appointed an Arbitrator in terms of INDRP to adjudicate the dispute between the parties relating to the disputed domain name.
The Arbitrator passed an ex-parte award declining Microsoft’s claim for transfer of the disputed domain name. The same was challenged by Microsoft by filing a petition under Section 34 of the A&C Act before the Delhi High Court.
Microsoft claimed that the award was vitiated by bias in view of the insertion of the Arbitrator’s name in the “Hall of Fame” on the website www.indrp.com. Microsoft contended that the said web page had, in fact, been established, and was maintained by the Arbitrator. Microsoft added that the Arbitrator appeared in the category of “Arbitrators who have denied most INDRP complaints: 4 (four)” in the “Hall of Fame” on the said website. It argued that such a comment by the Arbitrator showed a distinct predisposition to deny INDRP complaints, such as the one made by Microsoft.
Microsoft further pleaded that the Arbitrator had undertaken independent research, both on factual and legal aspects, in the arbitral proceedings while adjudicating its claim. Microsoft claimed that the said materials were never put before it.
Per contra, the respondent, Zoai Founder, contended that the said comment made by the Arbitrator on the website can, at best, be taken as a general view on law or policy, adding that the same did not evidence bias. It further argued that the comments of an arbitrator on a website, which may have been made even after the award was pronounced, cannot justify the setting aside of an award on the ground of bias.
The court perused the affidavit filed by the Arbitrator before the court in which he had categorically stated that the domain name “www.indrp.com” has been owned by him since prior to being empanelled as an arbitrator with NIXI.
After referring to a catena of judgments of the Supreme Court, the court said that an award can be set aside on the grounds of “apparent” bias or propensity to decide one way rather than the other. The court concluded that the Arbitrator’s inclusion of his own name in the said “Hall of Fame”, based on his decisions against the complainants in four INDRP disputes, does give rise to a justifiable apprehension as to his neutrality.
The bench said that in State of West Bengal and Ors. vs Shivananda Pathak and Ors., (1998) 5 SCC 513, the Supreme Court even while upholding the test of predisposition, prejudice, and bias, noted that the pre-conceptions about general questions of policy and discretion may not be sufficient to invalidate a judicial adjudication. The court, however, added, “Although the question has not been conclusively decided in the said judgement, even from this perspective, in my view, the present case crosses the permissible latitude available to an arbitrator.”
The court ruled that the inclusion of the name of the Arbitrator in the “Hall of Fame” was based upon the fact that he had denied the maximum number of INDRP complaints. “This is not a general comment on applicable law or policy, but a specific indication on how such cases should be finally decided,” the court said, adding that the Arbitrator had expressed a view that denial of INDRP complaints is per se a positive achievement, without reference to the applicable law, policy, or evidence. “The very least that a litigant is entitled to expect is that an arbitrator would be agnostic to the result of the arbitral proceedings, whatever his or her predisposition may be on particular points which arise for adjudication,” the bench remarked.
The court further added that the fact that the Arbitrator had decided cases in favour of complainants did not find mention on the website established by him. “It appears to me quite evident that, in the opinion of the learned Arbitrator, denying complaints is a more laudable achievement,” the court said.
The bench further dismissed the contention of the respondent that certain developments subsequent to the publication of the award, cannot vitiate the award.
“It may be that facts relating to an arbitrator’s status or conduct, for example conflict of interests, relationship with one of the parties, or even evidence of fraud or misconduct, are discovered after the award has been passed. In a given case, it may be that such information was deliberately withheld from the aggrieved party,” the court held. Thus, it ruled that no universal rule can be laid down that an award cannot be challenged on grounds which were discovered after it was made.
The bench also concluded that Microsoft’s plea that the Arbitrator had drawn factual and legal conclusions from the materials accessed by him, without Microsoft’s knowledge, was uncontroverted. “The learned Arbitrator has clearly indicated that no hearings were held. Therefore, there was no opportunity to put this material to the petitioner,” the court said, adding that the conclusion reached by the Arbitrator in the award was based on a Google search and independent research of the Arbitrator.
“As far as factual findings are concerned, I am of the view that it is not open to an arbitral tribunal to conduct independent research to supply evidence which an absent respondent has not cared to place before it,” the court ruled. It added: “The principle that an arbitrator should not rely upon evidence which he/she has gathered– at least, without putting it to the affected party – is, in fact, an aspect of fairness, and of giving the party an opportunity to be heard in terms of Section 18 of the Act.”
The court thus allowed the petition and set aside the award.
Case Title: Microsoft Corporation vs Zoai Founder
Citation: 2023 LiveLaw (Del) 555
Counsel for the Petitioner: Mr. Ashim Sood, Ms. Anditya, Ms. Jasleen Kaur, Advocates.
Counsel for the Respondent: Mr. Vishal Bakshi, Ms. Kanchan Vashisht, Mr. Pradeep Shukla, Advocates.
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