NEPAL Law and Practice Contributed by: Purna Man Shakya, Prakrit Shrestha and Dechen Gurung, Reliance Law Firm
to court, for permission to remove them on one of six enumerated grounds: • clear bias or discrimination against a party; • improper conduct or fraud in the arbitration; • frequent mistakes or irregularities; • unexcused non-attendance or refusal to participate on more than three occasions apparently intended to delay the proceedings; • action contrary to natural justice; or • loss or absence of qualification required to act as an arbitrator. The challenged arbitrator must decide the application within 30 days, unless they voluntarily withdraw, and the other party must accept the grounds for removal. A complaint against that decision can be made to the High Court, whose ruling is final under Section 11 (4). Section 10 separately renders a person ineligible for appointment in the first place on largely overlapping grounds. 4.5 Arbitrator Requirements The Arbitration Act imposes a general, if not highly granular, statutory standard. Section 9 (2) requires an arbitrator, before taking the oath of office, to disclose any matter that could give rise to reasonable doubt as to their impartiality or independence, a duty mirrored in Rule 21 (a) of the NEPCA Rules, 2015. Section 11 (2)(a) separately allows removal where an arbitrator is “clearly seen” to have shown bias towards, or dis - criminated against, a party. The High Court, Patan has read this removal ground narrowly. In Constructora Sanjose SA Case (Registra - tion No 076-FJ-0037, 2020), the Court held that: • a collective, institutional decision of the tribunal does not itself amount to bias under Section 11 (2) (a); • a removal claim must be directed at a specific arbitrator, supported by clear grounds and evi - dence tied to that individual, rather than framed as a general challenge to dissolve the tribunal; and • a party dissatisfied with the tribunal’s collec - tive conduct has its remedy at the award stage, through a set-aside application under Section 30, rather than removal under Section 11.
This “clearly seen” threshold is narrower than the “jus - tifiable doubts” standard used internationally, and this case reinforces how targeted a removal claim must be to succeed. Commentators have increasingly called for NEPCA and the courts to supplement this standard with the International Bar Association (IBA) Guidelines on Conflicts of Interest, particularly its “traffic light” system, to bring Nepali practice closer to international expectations.
5. Jurisdiction 5.1 Challenges to Jurisdiction
Competence-competence is expressly recognised. Section 16 (1) of the Arbitration Act empowers the tri - bunal to determine its own jurisdiction as a threshold matter, before proceeding to the merits. This includes the power to rule on the validity of the underlying contract whenever a party contends that the contract from which the dispute arises is void. A party is not treated as having waived its right to raise a jurisdictional objection merely because it appointed, or agreed to the appointment of, an arbitrator (Section 16 (5)). The objection must nonetheless be raised no later than the deadline for filing objections to the claim under Section 14 (2) (Section 16 (4)). 5.2 Circumstances for Court Intervention Nepali courts may address the jurisdiction of an arbi - tral tribunal only within a narrow statutory channel and do so with marked reluctance. Section 39 of the Arbi - tration Act ousts the jurisdiction of the ordinary courts over any matter governed by the Act, leaving Section 16 (2) as the sole route by which a jurisdictional ruling may reach the courts. A party dissatisfied with the tribunal’s decision on its own jurisdiction under Section 16 (1) may appeal to the High Court within 30 days; the High Court’s deci - sion on that appeal is final, with no further avenue of appeal. This channel applies equally to positive and negative jurisdictional rulings, Nepali law provides no separate mechanism for reviewing a tribunal’s negative ruling, distinct from the general Section 16 (2) appeal; both
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