ARBITRATION ACT

ARBITRATION ACT

PAHUJA LAW ACADEMY

Lecture – 1 and 2

MAINS QUESTIONS

  1. Discuss Arbitration as a mode of ADR in the light of Constitution of India.

     

  1. Compare the Arbitration and conciliation Act 1940 and Arbitration and conciliation Act 1996.

     

  1. Arbitration and conciliation Act has minimized the supervisions of courts, highlighting the above statement explain the objectives of the Act.

     

  1. Write about the consequences if a party knowing the discrepancy in agreement yet proceeds with the arbitration.

     

  1. In a case, it was held that a postman endorsed on the envelope that the said party was not present at the addressed place and on the next date the addressee refused to receive the envelope and that was returned to the sender. Discuss the validity of such document.

     

PAHUJA LAW ACADEMY

Lecture – 1 and 2

ALTERNATE DISPUTE REDRESSAL

INTRODUCTION

• Alternative Dispute Resolution includes dispute resolution processes and techniques that act as a means for disagreeing parties to come to an agreement short of Litigation.

• It is a collective term for the ways that parties can settle disputes, with the help of a third party.

• It is an institution of dispute resolution that has been in existence and practiced in many civilized societies since time immemorial.

• The term “Alternative” in the ADR refers to something other than state-sponsored mechanisms for adjudication of dispute. It is also called “EXTERNAL DISPUTE RESOLUTION”.

ADR only offers an alternative option to litigation, it is intended only to supplement and not supplant the legal system.

 UNCITRAL MODEL: The acronym “UNCITRAL” stands for United Nations Commission on International Trade Law. It is a specialized commission of the United Nations created by Germany Assembly in December, 1996 with the aim of promoting the harmonization and unification of international trade law. All the laws of arbitration including the laws of recognition and enforcement of foreign awards are encoded in one Act. Adopting International Model Law has the further advantage of coming at par with universally applicable Arbitration laws which would be helpful in the growth of world trade.

• Arbitration – Sec2 (1) any arbitration whether or not administered by permanent arbitral institution.

• Conciliation – process whereby the parties to a dispute use a conciliator, who meets with the parties both separately and together in an attempt to resolve their differences.

• Mediation – is a dynamic, structured, interactive process where a neutral third party assists disputing parties in resolving conflict through the use of specialized communication and negotiation techniques.

• Lok –Adalat – is one of the Alternative dispute resolution mechanisms in India, it is a forum where cases pending or at pre litigation stage in a court of law are settled.

• Judicial settlement – an informal process in which a retired circuit court judge, trained in mediation and settlement conference skills, actively facilitates a process whereby parties in conflict may reach a mutually satisfactory resolution.

 

SCOPE OF ARBITRATION:

• The Parties can resolve it without getting involved will the strict technicalities of Court

• The procedure of resolving disputes outside Court without getting involved in technicalities is called Alternate Dispute Redressal [ADR]

• The advantage of ADR over Litigation are following:

    Promptness of resolution. A speedy relief is provided to the parties.

    Cost efficient

    Substantial cost saving

    Creative, business – driven solutions.

    Less technical as compared to Courts.

    Access to trained natural experts

    Flexibility and ability of the parties to adopt the process of their needs.

    Privacy and confidentiality

    Nominal diversion of management, time and energy.

• Earlier the objective of ADR were that only, but when they were applied result were much more Satisfying hence it became frequent in used.

 

RELATION BETWEEN ARBITRATION AND OTHER LAWS

CODE OF CIVIL PROCEDURE, 1908

Section 89 of the civil procedure which give the court the power of refer the dispute for settlement or conciliation was introduced with a purpose of amicable peaceful and mutual settlement between parties without intervention of the court.

Where it appears to the court that there exist elements of a settlement which may be acceptable of settlement and give them to the parties for their observation of after receiving the observation of the parties, the court may reformulate the term of a possible settlement and refer the same for

1. Arbitration

2. Mediation

3. Conciliation

4. Judicial settlement including settlement through Lok Adalat

 

ARBITRATION vs. LITIGATION

ARBITRATION

INTRODCUTION TO ARBITRATION:

• The term “Arbitration” has been derived from the nomenclature of Roman law.

• Arbitration has been defined as the “reference of a dispute or difference between not less than two parties , for determination , after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction. (Halsbury’s Laws of England)

• Arbitration is a form of alternative dispute resolution in which the two parties agree not to take their dispute to court, but instead to resolve the dispute by hiring an arbitrator to hear both sides.

• Section 2(1) (a), arbitration means “any arbitration whether or not administered by permanent arbitral tribunal”.

• The concept of arbitration is not new in India, apparently India, China, Italy claim to be the 1st where arbitration began.

• There were not specific Arbitration and Conciliation Act, not as comprehensives it is but there were different grades of it, in the name of Puga, Sreni, Kula, Panchayat.

 

PREAMBLE

WHEREAS the United Nations Commission on International Trade Law (UNCITRAL) has adopted the UNCITRAL Model Law on International Commercial Arbitration in 1985;

AND WHEREAS the General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice;

AND WHEREAS the UNCITRAL has adopted the UNCITRAL Conciliation Rules in 1980;

AND WHEREAS the General Assembly of the United Nations has recommended the use of the said Rules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliation;

AND WHEREAS the said Model Law and Rules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relations;

AND WHEREAS it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law and Rules;

It there has been a non – compliance with any provisions of part or with a similar requirement under the arbitration agreement and a party does not object at the early stage, he will be deemed have waived the objection and cannot raise it at later stage it in necessary for waiver to arise that the party should be aware of the non – compliance.

 

Section 5: JUDICIAL INTERVENTION

This section clearly bars the jurisdiction of court to interfere in arbitration proceeding. Except provided in part 1, it is provided in following case: Section 8, 9, 11, 14(2), 27, 34, 37, 39(2).

1) Section 8 – making reference in a pending suit

2) Section 9 – passing interim orders

3) Section 11 – appointment of arbitration

4) Section 14(2) – terminating mandate of arbitration

5) Section 27 – court assistance in taking evidence

6) Section 37 – setting aside an award

7) Section 37 – entertaining appeals against certain orders

8) Section 39(2) – directing delivery of awards

 

PAHUJA LAW ACADEMY

Lecture – 1 and 2

PRELIMINARY QUESTIONS

  1. Arbitration is akin to :

(a) Panchayat

(b) Lok Adalats

(c) Both (a) and (b)

(d) None of the above.

  1. The most commonly used mechanism of ADR are :

I) Negotiation

II) Lok Adalats

III) Mediation

IV) Settlement conciliation

(a) II and IV

(b) I and II

(c) I, II, III and IV

(d) I and IV

  1. Arbitration and Conciliation are coursed under Arbitration and conciliation Act 1996, whereas Mediation and Lok Adalat are coursed under :

(a) Legal services Authority Act 1987

(b) Personal negotiation

(c) Probation of Offenders Act

(d) It is also coursed under arbitration and conciliation Act.

  1. All of the following are advantages of arbitration except:

(a) Arbitration is more efficient, although more expensive, than litigation

(b) Parties have more control over the process of dispute resolution through arbitration

(c) The parties can choose someone to serve as the arbitrator who has expertise in the specific subject matter of the dispute

(d) All of the above are advantages of arbitration

  1. The Alternative Dispute Resolution Act:

(a) Requires that in all district courts, civil litigants must consider the use of an alternative dispute resolution process at an appropriate stage in the litigation

(b) Gives each district court the choice whether to require alternative dispute resolution

(c) Attempts to impress upon parties and courts the advantages of alternative dispute resolution

(d) All of the above.

  1. ADR refers to

(a) Alternative Dispute Redressal

(b) Alternate dispute Redressal

(c) Alternative Dispute Resolution

(d) Alternate Dispute research

  1. The parties in the arbitration process decide jointly on the Arbitrator

(a) True

(b) False

  1. An arbitrator is bound by the technical and strict rules of evidence and procedure but he must conform to the rules of natural justices.

(a) True

(b) False

  1. An litigation proceeds according to civil and criminal proceeding whereas Arbitration proceed according to _____

(a) Civil and criminal

(b) only Criminal

(c) Only civil.

  1. Arbitration formality are

a) Quasi- judicial

b) Judicial

c) Both

d) None of the above

PAHUJA LAW ACADEMY

Lecture – 3

Arbitration Agreement

MAINS QUESTIONS

  1. Write a short note on the interim measures provided under section 9 of the arbitration and conciliation Act.
  1. Will the court refer the parties of a suit to arbitration who are not contracting parties to the arbitration agreement?
  1. Discuss and define the essentials of an arbitration agreement under the arbitration and conciliation Act.
  1. How will you distinguish the expert determination and arbitration? Support with relevant case law.
  1. “Success of an arbitration proceeding depends upon the underlying arbitration clause”. In the statement, explain what are the ingredients of a good arbitration clause.

 

PAHUJA LAW ACADEMY

Lecture – 3

SECTION 7: ARBITRATION AGREEMENT

• An arbitration agreement is a written contract in which two or more parties agree to settle a dispute outside of court.

• The arbitration agreement is ordinarily a clause in a larger contract. The dispute may be about the performance of a specific contract, a claim of unfair or illegal treatment in the workplace, a faulty product, among other various issues. People are free to agree to use arbitration concerning anything that they could otherwise resolve through legal proceedings.

• The expression “arbitration agreement” is defined by section 2(1)(b) to mean an agreement referred to in sec. 7. The definition of arbitration agreement is made Comprehensive. It not only gives the essentials of arbitration agreement but also explains the same.

• “Arbitration agreement” under Arbitration and conciliation Act 1996,means “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a legal relationship , whether contractual or not.

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SECTION 8: POWER TO REFER PARTIES TO ARBITRATION

Ingredients

Note: It shows the judicial intervention as given under section-5.

i. Subject — the court can refer parties to arbitration only on to the cause which are subject to the agreement. This shows the extend upto which a subject matter can be referred by court.

ii. Shall — it is not a discretion of the court rather it is mandatory for the court to refer such a matter to arbitrations.

iii. When does it become the duty of the court?

   • When the application is made not later than the 1st statement.

   • Section 8(2) the court can entertains the application, only when it is accompanied with Original Agreement or Certified Copy

Section 8(3): It empowered the arbitral tribunal to start off arbitration and if already commenced can continue arbitration and also can make award, it is not the point that an application under section 8(1) is pending before the court.

The main object of this sub section is to discourage deserters instead push them to their agreement to arbitration.

 

SECTION 9: INTERIM MEASURE ETC. BY THE COURT

This section provides that the court can grant interim measures during the continuity of an arbitration proceeding.

These can be two situations

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A PARTY TO AN ABRITRATION MAY APPLY TO A COURT FOR THE FOLLOWING INTERIM MEASURES

• The appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceeding.

• An interim measure of protection in respect of “the prevention or interim custody or sale of any goods which are the subject matter of arbitration, securing the amount in dispute in the arbitration, the detention, inspection which is the subject matter of the dispute in arbitration etc.

APPLIACABILITY OF SECTION 9 TO ARBITRATION HELD OUTSIDE INDIA

Provision of section 9 will be attracted even in case of “international commercial arbitration” where the conditions contemplated in part I including those stated in Sec 2(2) providing for applicability of part I when place of arbitration is in India are satisfied. Provision of section 9 will be attracted in case where one of the parties is a foreigner but the place of arbitration agreed is India and the applicable law is Indian law.

 

PAHUJA LAW ACADEMY

Lecture – 3

PRE QUESTIONS

  1. Which of the following section of Arbitration and Conciliation Act deals with Arbitration Agreement:

(a) Section 6

(b) Section 7

(c) Section 8

(d) Section 9

  1. Which of the following is not an essential ingredient of a valid Arbitration agreement

(a) The agreement must be registered

(b) The agreement must be in writing

(c) There should be an animus arbitrandi

(d) The parties must be ad idem.

  1. The validity and effect of the Arbitration Agreement ie to decide the arbitrability of the claims is to be decided by

(a) Court

(b) Umpire

(c) Arbitrator

(d) Any of the above.

  1. Which of the following Section of Arbitration and conciliation Act , appoints arbitrator for Domestic Arbitration.

(a) High court appoints

(b) supreme court appoints

(c) civil court

(d) Party shall appoint arbitrator

  1. Arbitration agreement by incorporating implies

(a) Incorporating the rules of the some arbitration conducting institution like rules of international chamber of commerce.

(b) Arbitration by ecprey conduct

(c) Arbitration by implied conduct

(d) All of the above.

  1. In which of the following cases it was held that the agreement specifying even number of arbitrators does not render the arbitration agreement invalid

(a) Jiwan Kumar Lohia v. Durga Dutt Lohia

(b) K.K. Modi v. K.M. Modi

(c) Both of the above

(d) None of the above.

  1. An arbitration agreement must relates to

(a) Past disputes

(b) Present disputes

(c) Present. Or future disputes

(d) All of the above

  1. An arbitration agreement

(a) must be in writing and signed by both parties

(b) Must be in writing only

(c) Must be in corporated in a formal agreement executed by both the parties

(d) All of the above.

  1. Which is incorrect statement: arbitration agreement should be in writing

a) Arbitration agreement should be in writing

b) Arbitration agreement can be in the form of separate agreement

c) The act does not require that it should be sign be both the parties

d) None of the above

  1. Which is incorrect statement?

a) Arbitration agreement is a kind of contract

b) Parties to the arbitration must be legal person

c) Arbitration agreement recognize verbal agreement

d) Both (b) and (c) are incorrect

PAHUJA LAW ACADEMY

Lecture – 4, 5

ARBITRAL TRIBUNAL AND ITS JURISDICTION COMPOSITION OF ARBITRAL TRIBUNAL (SECTION 10 – 15)

MAINS QUESTIONS

  1. X and Y entered into a contract. Dispute arose. As per the arbitration agreement clause both appointed their arbitrator. The two arbitrators thus appointed started the proceeding in which both the parties participated till end. The award was made and pronounced. After the announcement of award, X challenges the composition of arbitral tribunal as against the provisions of section 10 & 11 of arbitration and conciliation act 1996. Discuss the above case.
  1. Highlighting the facts of MMTC LTS. V STERLITE INDUSTRIES LTD. Discuss the validity of arbitration agreement providing for arbitration by two arbitrators.
  1. Describe the procedure outlined for appointment of arbitrators with reference to the relevant case.
  1. Whether an arbitrator agreement providing for arbitration by two arbitrator is valid?
  1. Write a short note on the Proceeding of Challenge highlighting the relevant case.

 

PAHUJA LAW ACADEMY

Lecture – 4, 5

ARBITRAL TRIBUNAL AND ITS JURISDICTION COMPOSITION OF ARBITRAL TRIBUNAL (SECTION 10 – 15)

SECTION 10: NUMBER OF ARBITRATORS

• Parties to determine the no. of Arbitrations.

• Proviso— such no. shall not be even.

• Before the enactment of 1996 Act— even no. in Arbitrator’s appoint was allowed, where there could be equal diff. of opinion, there was umpire system. Act of 1996, abolishes the umpire system.

 

Arbitration by two Arbitrators (even number of arbitrators)

• If the even number of arbitrators have been appointed or where even number of arbitration have participated and have given award and no objection is raised by the parties during the proceedings of the arbitral tribunal regarding the composition within the limitation period as prescribed in section 16(2) of the Act, it shall be presumed as waiver of objection under section 4. Then, such an award given by even number of arbitrators shall be treated as valid and enforceable provided there is no other deficiency apt in rendering the award as invalid or void.

Arbitration agreement providing for three arbitrators:

• Section 11(3): of the Act provides that the appointment of arbitrator in case the arbitration agreement provides for three arbitrators, each party shall appoint one arbitrator each and two arbitrators each party shall appoint one arbitrator each and two appointed arbitrator shall appoint presiding arbitrator.

• If one of the parties fails to appoint its arbitrator or the appointed arbitrator fails to appoint third arbitrator within 30 days from their appointment, one of the parties may approach High court in whose jurisdiction the cause of action arose or the subject matter fails, for appointment of the arbitrator.

• SECTION 11(3A) inserted in 2019: The Supreme Court and the High Court shall have the power to designate, arbitral institutions, from time to time, which have been graded by the Council under section 43-I.

• In respect of those High Court jurisdictions, where no graded arbitral institution are available, then, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institution and any reference to the arbitrator shall be deemed to be an arbitral institution for the purposes of this section.

• The arbitrator appointed by a party shall be entitled to such fee at the rate as specified in the Fourth Schedule.

• The Chief Justice of the concerned High Court may, from time to time, review the panel of arbitrators.

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Section 11(11): If more than 2 HCs were requested for appointment of Arbitrator: The HC to whom the 1st request was made will appoint.

Note: The appointment by the Supreme Court or High Court is final and no appeal shall lie against it.

Section 11(8): Qualifications of Arbitrator (indirect): High court or Supreme court will have due regards to it

i. Expert

ii. Independent

iii. Impartial

SECTION 11(9): In the case of appointment of sole or third arbitrator in an International commercial arbitration, may appoint an arbitrator of any nationality other than the nationalities of the parties where the parties where the parties belong to different nationalities.

SECTION 11 (13): An application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the arbitral institution within a period of thirty days from the date of service of notice on the opposite party.

SECTION 11 (14): The arbitral institution shall determine the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal subject to the rates specified in the Fourth Schedule.

SECTION 12: CHALLENGES TO ARBITRATION

• Grounds for challenge.—

(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.

(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.

(3) An arbitrator may be challenged only if—

(a) Circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or

(b) He does not possess the qualifications agreed to by the parties.

(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

• They do not confer to straight power on the court. Section 12 casts a duty upon a would be arbitration to disclose in writing in there is anything which gives rise to justification doubt as to his independence & impartiality.

SECTION 13: PROCEEDING OF CHALLENGE

• The Act gives freedom to the parties to settle by agreement the procedure by which the arbitrators in question would be challenged.

• If there is no agreement on the point or the parties have failed to agree, then the procedure to be followed is that party wishing to present the challenged has to inform the arbitral Tribunal of the matter, within the period of 15 days, after becoming aware of the constitution of the tribunal or after becoming aware of the circumstances refer to in section 12(3).

• It the challenges is not successful the tribunal shall continue with the proceeding and make an award. The party who challenged the arbitration may challenge the award also and make an application for setting aside in accordance with Section 34.

• If no challenge is made within the prescribed time specified by the agreement, if any or within 15 days where procedure prescribed in section 13(2) is applicable, the right to challenge would be deemed to have waived.

• If the award in set aside, the court can consider whether the arbitration should be entitled to his remuneration or not.

• If the challenge is successful the mandate of the arbitrator would be terminated.

 

SECTION 14: TERMINATION OF MANDATE OF ARBITRATOR (failure or impossibility to Act)

• The mandate of arbitration is the sanction to conduct arbitral proceedings and making of award. For termination of mandate under section 14(1) it is essential that two conditions must be fulfilled

(a) there should be de jure or de facto inability or failure to act without undue delay for any other reason and

(b) either the arbitrator should himself withdraw from his office or both the parties together agree to terminate his mandate.

SECTION 15: TERMINATION OF MANDATE AND SUBSTITUTION OF ARBITRATOR

• In addition to section 13 and 14, the mandate of a arbitrator shall terminate

a) when he withdraw from the office or,

b) by or pursuant to agreement of the parties

• When the mandate of arbitrator terminates, a substituted arbitrator shall be appointed.

• The rules for the appointment shall be the same as they were in the appointment of arbitrator being replaced.

• Unless by agreed by the parties,

a) when the arbitrator is replaced, any hearing previously held may be repeated at the discretion of tribunal.

b) an order made by the tribunal prior to the replacement shall not be invalid.

JURIDICTION OF THE ARBITRAL TRBUNALS (SECTION 16-17)

SECTION 16: COMPETENCE OF ARBITRAL TRIBUNAL TO RULE ON ITS OWN JURISDICTION

• Section 16 of the Act deals with the competence of the arbitral tribunal on its jurisdiction.

• Jurisdiction means the power to decide.

• The arbitral tribunal is empowered to:

a) Rule on its own jurisdiction (Section 16)

b) Pass order for interim measures. (Section 17)

• It is contemplated in the 1996 Act that Arbitral Tribunal may not proceed with Arbitration without deciding the issue of its own jurisdiction.

• If once a plea is rejected, it would continue with the arbitral proceedings and make the award.

• The option left with the aggrieved party is to participate in the proceeding and wait till making of arbitral award to move the court under 34. For setting aside of award. Thus, the ultimate control over such matters is exercised by the courts.

• Section 16 (a) lays down that “an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. Thus, the “arbitral clause” has been accorded an independent status and its existence has been secured even when the arbitral agreement which contains it is adjudged null and void.

• Under section 16, the arbitral tribunal is conferred full powers to decide on its jurisdiction, namely the scope of arbitration and the scope of its authority.

 

SECTION 17: POWER OF ARBITRAL TRIBUNAL TO ORDER INTERIM MEASURES

• The powers of Arbitral Tribunal to grant interim measure are given under section 17.

• It is very strange that Section 17 although permits Arbitral tribunal to pass interim order, it does not give any power to Tribunal to enforce its order.

• The provisions of Section 17 are similar in effect to the provisions of section 9 which empowers the courts, but there is no conflict between the provisions of these two sections.

• The difference between section 9 and section 17 can be summarized as:Section 9 provides for the making of an order for interim measures by the court in respect of arbitration. Section 17 empowers the arbitral tribunal to order a party to the reference to take interim measures of protection in respect of the subject matter of the dispute.

• An arbitral Tribunal, not being a judicial authority/court cannot itself enforce the orders regarding interim measures and a party who wants to enforce such orders shall have to approach the court. The interim measures are different from the “Interim award” which is intended to be effective during the pendency of the arbitration, till the final award is given.

 

PAHUJA LAW ACADEMY

Lecture – 4, 5

ARBITRAL TRIBUNAL AND ITS JURISDICTION COMPOSITION OF ARBITRAL TRIBUNAL (SECTION 10 – 15)

PRE QUESTIONS

  1. The qualification of Arbitrator will have due regards to it

a) Expert

b) Impartial

c) Independent

d) All of the above

  1. Arbitral Tribunal can decide

a) Whether a matter referred to it comes within the scope and ambit of arbitration

b) About the validity of the contract which embodies the arbitration clause

c) Both (a) and (b) are correct

d) Only (a).

  1. Section 9 permits an application being filled before the commencement of arbitral proceedings but does not give any indication how much before.

a) True

b) False.

  1. Section 11 of the Arbitration and Conciliation Act deals with _____

a) Waiver of “right to object”

b) Number of Arbitrators

c) Appointment of arbitrators

d) None of the above

  1. The principle of waiver would not apply in case of denial of

a) Justice

b) Absence of agreement

c) Illegal agreement

d) All of the above

  1. In which of the following cases it was held that “where arbitration clause in agreement is silent and only one arbitrator should be appointed.”

a) Sime Darby Engineering SDN BHD v Engineering India Ltd.

b) State of U.P v Sh. Padam Singh

c) State of U.P V Tipper Chand

d) State of U.P V Haripada Santra

  1. The parties are given the choice to agree between them, subject to some regulation by law

a) Number of Arbitrators to be appointed .

b) The procedure of appointment of arbitrator.

c) Both (A) and (b)

d) Only B.

  1. The parties to the arbitration agreement shall appoint arbitrator within:

a) 30 days

b) 15 days

c) 12 days

d) 45 days

  1. For the termination of the mandate must of arbitrator, it is essential that following conditions must be fulfilled:

a) There should be de jure or failure to act without undue delay for any other reason

b) The arbitrator should himself withdraw from his office or both the parties together agree to terminate his mandate.

c) Both (a) and (b)

d) Either (a) or (b)

  1. Section 16 of the Arbitration and Conciliation Act provides

a) Interim measures by the court.

b) Competence of arbitral tribunal to rule on its jurisdiction

c) Grounds for challenges

d) Equal treatment of parties.

PAHUJA LAW ACADEMY

Lecture – 6

ARBITRATION PROCEEDINGS (SECTION 18-27)

MAINS QUESTIONS

  1. “An arbitrator must not receive information from one side which is not disclosed to the other, whether the information is given orally or in the shape of documents” Comment.
  1. “Every arbitrator is authorized by the nature of his office, to proceed ex parte for good cause. The arbitrator is to judge for himself of the discretion of the exercise of this power “Comment.
  1. Highlight the provisions of Section 20 and explain the consequences if parties fails to decide the place of arbitration.
  1. Is the arbitration proceeding governed by the code of civil procedure?
  1. Is it mandatory for arbitral tribunal to grant sufficient opportunity by way of advance notice regarding meetings for hearing, inspection of good, documents and other property?

 

PAHUJA LAW ACADEMY

Lecture – 6

ARBITRATION PROCEEDINGS (SECTION 18-27)

SECTION 18: EQUAL TREATMENT OF PARTIES

The arbitral tribunal should treat the parties with equality and give each party a full opportunity to present his case. Arbitral tribunals are final judges of law and fact chosen by the parties who agree to abide by their determination.

The principles of natural justice enunciate certain basic postulates of fair procedure:

• “NEMO JUDEX IN CAUSA SUA” which means that the adjudicating authority should act fairly without bias and in judicial temper. The Arbitrator should be disinterested, independent, and impartial.

• “AUDI ALTERAM PARTEM” means that the parties should be given proper and adequate notice and opportunity for hearing and stating their case and disputing the claim or to contradict the case of the opposite parties.

• Reasoned decision should be given since a party is entitled to know the reasons for the decision.

• The adjudicating authority should not hear one side or accept receive evidence behind the back of or in the absence of the other side affected by such evidence the opportunity of meeting and answering it.

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SECTION 21: COMMENCEMENT OF ARBITRAL TRIBUNAL

• The determination of the date of commencement of arbitral proceeding is for purpose of limitation.

• It is open to parties to agreement to determine date of commencement of the proceeding. In the absence of such an agreement, Section 21 provides such date shall be the date which a request is received by one party from the other to make a reference of the dispute to arbitration.

• Under Section 21, the date of service of notice to appoint an arbitrator will not be the date of commencement of the proceedings.

 

SECTION 19: DETERMINATION OF RULES OF PROCEDURE

Determinations of rules of procedure are as follow:

• The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).

• Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.

• Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.

• The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

 

SECTION 22: LANGUAGE

The parties are free to agree upon the language or languages to be used in the arbitral proceedings.

• Failing any agreement referred to in sub-section (1), the arbitral tribunal shall determine the language or languages to be used in the arbitral proceedings.

• The agreement or determination, unless otherwise specified, shall apply to any written statement by a party, any hearing and any arbitral award, decision or other communication by the arbitral tribunal.

• The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal.

 

CONDUCT OF ARBITRAL PROCEEDINGS

SECTION 23: STATEMENT OF CLAIM AND DEFENCE

• The written submissions in the form of statement of claim and defence in arbitral proceedings are akin to pleadings in a civil action.

• There should be full particularization of claims.

• If any claim is omitted from the statement of claim, the claimant runs the risk of a successful plea by the respondent at a later stage that the arbitral tribunal has no jurisdiction to determine the particular claim.

• The statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing, of their appointment.

 

SECTION 24: HEARING AND WRITTEN PROCEEDINGS

• It is mandatory for the arbitral tribunal to grant sufficient opportunity by way of advance notice regarding meetings for hearings, inspection of goods, documents and other property.

• It is for the Arbitral tribunal to decide about the quality and quality of evidence in a given arbitral reference.

 

SECTION 25: DEFAULT OF THE PARTIES

• This section provided the provisions to deals with the default of the parties.

• It lays down that in case of claimant failing to communication his claim, the arbitral tribunal shall terminate the proceeding without making any award.

• The respondent fails to communicate his statement of defence in accordance with sub section (1) of section 23; the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant.

• A party fails to appear at an oral hearing or to produce documentary evidence; the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it.

 

SECTION 26: APPOINTMENT OF EXPERT

The arbitral tribunal may appoint an expert for his assistance and can make request to the court for recording of evidence. The Arbitral Tribunal may appoint an expert for recording on specific issue. It can direct the parties to provide the access to the expert of documents, goods or other properties for his inspection in their possession.

The Expert is required to stand the examination in an oral hearing along with the documents he had relief upon in his report. In an oral hearing, the parties have the opportunity to put questions to expert and to present their own expert witnesses in order to tesitify on the point at issue. There is, however no provision for supply of copy of expert’s report to a party on request.

 

SECTION 27: ASSISTANCE OF COURT

Arbitral tribunal may take the assistance of professionals having specialized knowledge, skill and expertise in various fields. Since individual arbitrators are appointed by parties more because of their confidence in their sense of justice, independence and impartiality than of their technical ability it is, therefore, permissible to take assistance in technical matters, in so far as it is necessary for discharging their duties as arbitrators but they cannot delegate the burden of deciding any issue in the case.

 

PAHUJA LAW ACADEMY

Lecture – 6

ARBITRATION PROCEEDINGS (SECTION 18-27)

PRE QUESTIONS

  1. In which of the following section it is provided that “The date of service of notice to appoint an arbitrator will not be the date of commencement of the proceeding”

a)Section 23

b) Section 21

c) section 24

d) section 20

  1. The parties are given the liberty to decide by mutual agreement as to what language or languages are to be used in the arbitral proceeding” , it is provided under

a) Section 21

b) Section 22

c) Section 23

d) Section 24

  1. Which of the following sections of the Act of 1996 lay down the procedure to be followed in the conduct of the arbitral proceedings:

a) Section 18 to 27

b) Section 22 to 27

c) Section 23 to 28

d) Section 24 to 29

  1. If the parties fails to agree on the place of arbitration , who among the following can decide the place of arbitration

a) Arbitral tribunal

b) Civil court judges

c) High court or supreme court judges as the case may be

d) Any of the above.

  1. The power of arbitral tribunal under section 19(4) includes the power to determine the admissibility, relevance, materiality and weight of any evidence

a) True

b) False

  1. In the Section 27 (6) the expression “Processes” includes

a) Summonses to produce documents

b) Commissions for the examination of witness

c) Both a and b

d) Either A or b

  1. If a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal cannot continue the proceedings and delay the arbitral award.

a) True

b) False

  1. The arbitral tribunal has the jurisdiction to

a) Award interest on the whole or part of the money

b) Award interest on the whole of the money only

c) Award interest on part of money only

d) Either (b) or (c)

  1. During the arbitral proceeding the arbitral tribunal

a) Can make interim award

b) Many require a party to provide appropriate security

c) Both (a) and (b)

d) Either (a) and (b)

  1. The arbitral tribunal has the jurisdiction to rule

a) On its own jurisdiction

b) On objection as to the existence of the arbitration agreement

c) On the objection as to the validity of the arbitration agreement

d) All of the above

PAHUJA LAW ACADEMY

LECTURE – 7

(SEC. 28-34, 35-37)

MAINS QUESTIONS

  1. Explain the rules for termination of arbitral proceedings.
  1. Under which conditions does the mandate of an arbitrator terminates.
  1. Discuss the scope of court’s intervention in the arbitration process under the act of 1996, with the help of relevant case law.
  1. Elucidate the grounds under which arbitral award may be challenged by an application of a party and by the suo-motu action of the court.
  1. The court cannot make a roving and sifting investigation of the record and proceedings before the arbitrator and constitute itself a regular court of appeals from the award. Discuss.

 

PAHUJA LAW ACADEMY

LECTURE – 7

(SEC. 28-34, 35-37)

The Act provides certain guidelines which are required to be followed by arbitral tribunal in making the arbitral tribunal.

PICTURE01

 

SECTION 28: RULES APPLICABLE TO SUBSTANCE OF DISPUTE

• This section provides that lex loci shall be applicable to dispute for the determination of substantive rights and liabilities of the parties.

• These rules are applicable only where the place of arbitration is situated in India other than an international commercial arbitration.

• The expression “substance of dispute” means merits of the case as opposed to procedure to be followed.

• Where the place of arbitration is situated in India:

a) In Domestic Arbitration, the Arbitral Tribunal shall decide the dispute in accordance with the substantive law for the time being in force in India.

b) In International Commercial Arbitration:

o The Tribunal shall decide the dispute in accordance with the law designated by the parties as applicable to the substance of the dispute.

o Failing any designation of the law by the parties, the Arbitral Tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.

 

SECTION 29: DECISION MAKING BY PANEL OF ARBITRATORS

• This section provides that “any decision” of the Arbitral Tribunal may be made by a majority of all its members unless the parties have agreed otherwise.

• The expression “majority of all the members” mean the majority of all the members constituting the arbitral tribunal and not merely those present and attending the arbitration proceedings.

• This is to be noted that decision by majority of all the members is not necessary for deciding questions of procedure.

• Questions of procedure may be decided by the presiding arbitrator alone if he is so authorized by the parties or by all the members of the arbitral tribunal.

 

SECTION 29A: TIME LIMIT FOR ARBITRAL AWARD

• In order to make the arbitration process quicker the 2015 Amendment Act has added Section 29A and Section 29B. Section 29A again amended in 2019.

• The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings.

• The award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavour may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings.

• If the award is made within a period of six months, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.

• The award is not made within the period specified then arbitrator(s) shall terminate.

• If the court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then it may order reduction of fees arbitrator(s) by not exceeding five percent for each of such delay.

 

SECTION 29B: FAST TRACK PROCEDURE

• The parties to an arbitration agreement, may, at any stage either before or at the time of appointment of arbitral tribunal, agree in writing to have their dispute resolved by fast track procedure.

• The parties to the arbitration agreement, while agreeing for resolution of dispute by fast track procedure, may agree that the arbitral tribunal shall consist of a sole arbitrator who shall be chosen by the parties.

SECTION 30: SETTLEMENT

• This provision provides an opportunity to the parties to arrive at a settlement during the conduct of arbitral proceeding under the new policy.

• The arbitral Tribunal is not only required to arbitrate the matter but he has been given the discretion to put forth before the parties to the dispute the acceptable settlement.

• The conciliatory efforts made by the arbitral tribunal and the admissions made by the parties before it cannot be questioned in the court of law nor the settlement can be called as a witness with respect to the conciliation and settlement .

• The must be noted that the Arbitral Tribunal is not bound to record the settlement if he has any abjection against it , for instance, where he finds that the settlement so arrived at is unconscionable or not proper for any justifiable reason.

PICTURE02

 

SECTION 33: CORRECTION AND INTERPRETATION OF AWARD, ADDITIONAL AWARD

The mandate of Arbitral Tribunal terminates with the making of Award. However, the Arbitral Tribunal can resume the proceeding for the limited purposes like:

• Making an additional award on the issue left undecided

• Giving interpretation on specific issues in award

• Making correction in the award.

Correction:

It may be made as to any computation errors, any computation errors, any clerical or typographical errors or any other error of a similar in an arbitral award; provided when

• A party to the reference with notice to the other party requests the Arbitral Tribunal to correct such errors

• Such a request is made within thirty days from receipt of the arbitral award unless the parties have agreed to any other period.

• The arbitral tribunal considers such request to be justified, if all the conditions are fulfilled the arbitral tribunal shall make the correction within 30 days from the receipt of the request.

Interpretation:

The arbitral tribunal may be approached through the request of a party to give an interpretation of a specific point or part of the arbitral award provided

• There is an agreement between the parties for doing so and a party with notice to the other party requests the arbitral tribunal to give interpretation,

• Such request is made within 30 days from the receipt of the arbitral award unless the parties have agreed to any other period in this regard, the time limit of 30 days may be extended if necessary by the Arbitral Tribunal himself.

Additional Award: The arbitral tribunal is empowered to make an additional award in respect of the claims already presented to it in the arbitral proceedings but omitted from the arbitral award provided:

• A party with notice to the other party requests the arbitral tribunal to make an additional award; there is no contrary agreement between the parties to the reference.

• Such award is made within 30 days from receipt of the arbitral award and the arbitral tribunal considers the request to be justified.

SECTION 34: APPLICATION FOR SETTING ASIDE ARBITRAL AWARD

• Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3). Arbitration award may be settled only if cases given in sub section 2 of the Act.

• An application for setting aside may not be made after three months have elapsed from the date on which die party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had bow disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

• On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

• An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

• An application under this section shall be disposed of expeditiously, and in any event , within a period of one year from the date on which the notice referred to in sub section (5) is served upon the other party.

SECTION 35: FINALITY OF ARBITRAL AWARD

Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.

SECTION 36: ENFORCEMENT

• Where the time for making an application to set aside the tribunal award under section 34 has expired, then subject to the provisions of sub section (2) such award shall be enforced in accordance with the provision of Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court.

• When an application to set aside the arbitral award is made in the court under section 34 , the filling of such an application shall not be render the enforceability of award, unless the court grants an order of stay of the operation.

• Upon filling of an application, under sub section 2 for stay of the operation of the arbitral award, the court may subject to such conditions as it may deem fit , grant stay of the operation of such award for reasons to be recorded in writing .

SECTION 37: APPEALABLE ORDER

1. Notwithstanding anything contained in any other law for the time being in force, an appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the older, namely :-

o granting or refusing to grant any measure under section 9;

o setting aside or refusing to set aside an arbitral award under section 34.

2. Appeal shall also lie to a court from an order of the arbitral tribunal-

o accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or

o granting or refusing to grant an interim measure under section 17.

3. No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.

 A second appeal against the order of arbitral tribunal is not maintainable under this section.

 Forum of appellate court must be determined with reference to definition of court in section 2(1)(e) of the Act . If High court does not exercise the original civil jurisdiction, it would not be a “court” within the meaning of the said provision.

SECTION 42: JURISDICTION

Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.

Section 42A and Section 42B inserted in 2019.

SECTION42A: CONFIDENTIALITY OF INFORMATION

Notwithstanding anything contained in any other law for the time being in force, the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award.

SETION42B: PROTECTION OF ACTION TAKEN IN GOOD FAITH

Suit or other legal proceedings shall not lie against the arbitrator for anything which is in good faith done or intended to be done under this Act or the rules or regulations made thereunder.

SECTION 43: LIMITATION

• The Limitation Act, 1963 shall apply to arbitration as it applies to proceedings in court.

• PART 1A (ARBITRATION COUNCIL OF INDIA)- SECTION 43A TO 43M INSERTED IN 2019

• The aims to establish an independent body called Arbitration Council of India (ACI) for promotion of arbitration, mediation, conciliation and other alternative dispute redressal mechanisms.

• ACI’s functions would include framing policies for grading arbitral institutions and accrediting arbitrators, making policies for establishment, operation and maintenance of uniform professional standards for all alternate dispute redressal matters, and maintaining a depository of arbitral awards made in India and abroad.

• As per Section 43B of the Act, the Arbitration Council of India will have perpetual succession and a common seal, with power, subject to the provisions of the Act, to acquire, hold and dispose of property, both movable and immovable, and to enter into contract. It can sue or be sued.

• The government, in consultation with the Chief Justice of India, will appoint the chairperson of the ACI. The chairperson has to be a judge of the Supreme Court or Chief Justice of a high court or a judge of a high court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration.

• In the case of international commercial arbitration, appointments will be made by the institution designated by the Supreme Court.

• In case of high court jurisdictions, where no graded arbitral institution is available, Chief Justice of the concerned high court may maintain a panel of arbitrators to discharge functions and duties. An application for appointment of an arbitrator is required to be disposed of within 30 days.

• For domestic arbitration, appointments will be made by the institution designated by the concerned high court.

• The Act seeks to remove time restriction for international commercial arbitrations and says tribunals must try to dispose of international arbitration matters within 12 months.

 

PAHUJA LAW ACADEMY

LECTURE – 7

(SEC. 28-34, 35-37)

PRE QUESTIONS

  1. Arbitration and conciliation Act provides certain guidelines which are required to be followed by arbitral tribunal in making arbitral award which are provided in

(a) section 28 to 32

(b) section 27 to 30

(c) section 28 to 30.

(d) section 29 and 30.

  1. The arbitral tribunal has no power to allow any amendment which would have the effect of altering the terms of the submission or introducing a fresh dispute or striking out any substantial ground of claim presented to him.

(a) True

(b) False

  1. Which of the following is permitted by the Act of 1996

(a) Request to the court for recording of evidence

(b) Ex parte proceedings

(c) Appointment of expert.

(d) All of the above.

  1. Which of the following is not necessary in an arbitral award , as laid down in section 31 of the Act of 1996

(a) It must award interest.

(b) It must be written

(c) It must be determined on principles of natural justice

(d) It shall state reasons upon which it is based.

  1. Termination of arbitral proceedings is provided for in which section of the Act of 1996

(a) Section 34

(b) section 33

(c) section 32

(d) section 31

  1. Mark the correct statement :

(a) The parties can agree not to have recourse against the award.

(b) section 34 is a mandatory provision and parties to the arbitration agreement are not permitted to derogate from it.

(c) Both a and b

(d) only A.

  1. An arbitral award may be set aside by the court only if :

(a) court on its own ie. Suo motu may set aside the award in certain cases

(b) An application for setting aside, is moved by the party along with the proof to substitute the grounds for assailing the arbitral award.

(c) Both a and B are correct

(d) Only a is correct.

  1. In which of the following section provides “Settlement and award on agreed terms” :

(a) Section 29

(b) Section 30

(c) Section 34

(d) Section 31

  1. Violation of the principles of the natural justice is a ground of setting aside of an arbitral award. Which of the following is not such a granted

(a) No bias on the part of arbitrator

(b) Inability to present in case before tribunal

(c) Lack of notice of the arbitral proceeding

(d) Lack of notice of appointment of arbitrator.

  1. Incapacity of a party as a ground of setting aside award contemplates

(a) Legal incapacity

(b) Physical incapacity

(c) Both (a) and (b)

(d) Only (a)

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