Conflicts of disinterest
By Soli J Sorabjee , Sr Advocate Supreme Court of India IN THE INDIAN EXPRESS NOV 19,2009
Impartial administration of justice is the hallmark of a democratic society based on the rule of law. One of its essential requirements is that there should be no bias or real apprehension of bias in a judge while adjudicating disputes between the parties. Partiality or bias can arise, for example, if the judge has kinship or cordial relations with one of the parties to the litigation. In that event the judge is conscientiously embarrassed and therefore decides to recuse himself from the case irrespective of the consent or “no objection” from the parties about his continued participation.
What is the position where a judge holds shares in a company which is a litigant before the court? At one time according to legal thinking in England the judge was automatically disqualified from hearing the case. This view was based on a 19th-century case of Dimes in which orders of the Lord Chancellor were set aside on the ground of bias because he had shareholding in the company which was a litigant before him and, more importantly, there was no disclosure of his financial interest. The decision in Dimes has been substantially diluted as is clear from the recent judicial trend in the United Kingdom, in Australia, in New Zealand and in South Africa, according to which the mere presence of financial interest does not necessarily lead to automatic disqualification of the judge unless the judge has a direct pecuniary interest in the outcome of the litigation. An Australian court has aptly observed, “The Dimes principle is not attracted simply by showing that a judge (or juror) owns a parcel of shares in a company whose pecuniary interests are in issue. If, as in the present case, the litigation could not possibly affect the value of the shares, then it cannot be said that the judge has a direct pecuniary interest in the outcome of the litigation.”
The current legal position is admirably summed up in the classic treatise De Smith’s Judicial Review (6th edition): “The rule of automatic disqualification for pecuniary or proprietary interests is a misnomer, and might be more accurately considered a rule of automatic disclosure. This is because the parties may waive the offer of the decision-maker to recuse himself. In addition, some financial or proprietary interests have been held to be subject to the de minimis rule and not invoke automatic disqualification where the interest is ‘so small as to be incapable of affecting the decision one way or another’.” Thus it has been held in England that “disqualification will not attach if the connection between the pecuniary interests of the decision-makers and the issue before them is very tenuous”. Indeed some commentators and jurists have opined that automatic disqualification doctrine is “mechanistic” and “smacks of abdication”.
The thrust of the House of Lords judgment in Pinochet II was non-disclosure by one of the members of the Bench, Lord Hoffman, of his links with the party which participated in the case. This is apparent from the observations of Lord Browne-Wilkinson that “the mere fact of his interest is sufficient to disqualify him unless he has made sufficient disclosure”.
The Bangalore Principles of Judicial Conduct 2002 highlight the said legal position. Clause 2.5.3 states that a judge should disqualify himself or herself from participating in any proceeding “where the judge, or a member of the judge’s family, has an economic interest in the outcome of the matter in controversy”. When does an economic interest disqualify a judge? Commentary on Clause 2.5 by the Judicial Integrity Group (Vienna 2007) with judicial experts from 35 countries states it is in cases where the judge or a member of his family is in a position to gain or lose financially as a result of the decision. For example, if as a company judge he has to decide whether a company in which he holds shares should be wound up. In that contingency, the judge should recuse himself because he has an economic interest in the outcome of the matter.
However a judge does not personally stand to gain or lose financially if he decides that the company in which he holds shares is liable to pay excise duty at a particular rate or that it is covered by an exemption notification under the Income Tax Act or that the company has infringed the trademark of another person. In such cases a judge cannot feel any embarrassment in deciding the case. But lest one of the parties may have an apprehension of bias the judge should make disclosure of his financial interest at the commencement of the hearing and if there is unequivocal no objection from all parties the judge should proceed with the hearing. Express statement of no objection amounts to waiver and, as the Judicial Integrity Group points out, in most countries it is competent to the parties to make a formal waiver of any issue of impartiality. Our Supreme Court has as far back as 1957 held that there can be a waiver in respect of alleged bias of a judge or a decision-maker.
For decades the practice in the high courts and the Supreme Court has been that judges can proceed with the hearing of a case if after disclosing their financial interest parties have expressed their no objection. This is in keeping with the Supreme Court judges’ resolution. In the bank nationalisation case judges disclosed their shareholding in some of the banks, to which the eminent counsel appearing for the government stated that they had no objection to the Bench hearing the matter. In the Bombay high court Chief Justice Chagla disclosed his shareholding in TISCO, no party or lawyer objected, including Sir Jamshedji Kanga, the doyen of the Bombay Bar. The case was heard and ultimately decided against TISCO.
If the judicial conscience is clear and there is disclosure of interest and unequivocal no objection by all the parties judges, as sturdy judicial sentinels, must discharge their function uninfluenced by misinformed criticism, media hype or gratuitous advice of distinguished senior counsel. Recusal from a case out of abundant caution or hypersensitivity tends to hamper the effective administration of justice because of the delay and costs incurred by recusal as pointed out by the distinguished Lord Bingham. It can also pave the way for sophisticated forum shopping, which tendency must be curbed.
The writer is a former attorney general for India
Impartial administration of justice is the hallmark of a democratic society based on the rule of law.