JAMIA MILLIA ISLAMIA

ARBITERATI ON
CLINICAL COURSE ASSIGNMENT

DAINA CHERIAN ROLL NO. 16

INTRODUCTION TO ALTERNATE DISPUTE RESOLUTION MECHANISM

It is now widely acknowledged that Justice delayed is Justice denied. It is of common knowledge that existing justice system is not able to cope up with the ever increasing burden of civil and criminal litigation. There is growing awareness that in the bulk of cases court action is not an appropriate recourse for seeking justice. e have no other choice but to immediately device effective !lternative "ispute #esolution $echanism to ease the present burden of judicial functioning. The primary object of !lternate "ispute #esolution $echanism is to provide cheap% simple% &uick and effective remedy. The !rbitration and 'onciliation !ct ())* has laid down the minimum standards% which are re&uired for an effective !lternative "ispute #esolution $echanism. +urther% the recent amendments of the 'ivil ,rocedure 'ode% ()-. will give a boost to !"#. /ection .)0(1 of ',' now deals with the settlement of disputes outside the court. !ll these efforts are aimed at securing the valuable right to speedy trial. !s guaranteed under !rt.2( of The 'onstitution of India% to the litigants. 3ur Judicial system has been under strong criticism due to its adversary character% the dilatory methodology and the high costs involved in delivery of justice(. "enial of access to justice is a product of both the delay and the increased cost associated with litigation. 4nfortunately we have inherited an archaic 5ritish judicial system with awesome% expensive% unnecessarily formal% dilatory and shrouded with mystery for the poor and the under privileged. The proceedings in the court are often in the language which the
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"elhi law times 6ol. '7 2--8% /peedy justice through !"# $echanism

poor and the disadvantaged litigant does not understand and thus does not know what is happening to his case. 9is ignorance% illiteracy and poverty and the court:s obscure complex% awesome dilatory and harassing procedures confuse and frighten the common man. 3nce the judicial process is engaged it seems to the disputants that the dispute has been taken out of their hands. The client comes to see his actions as dictated by the re&uirement of procedures. 9e sees the lawyers actions as representing not the clients own choices% but rather features of an autonomous proceeding. The outcome of dispute seems to have been determined not by the clients actions but by the autonomous operation of a system of rules% a mechanism of functional roles% or a ritual of ceremonial rules 2. The fact that judicial system is meant for we the people of India have almost become irrelevant. ;aw is being administered by courts for laws sake and not for justice. /mall man is often forgot and ignored. $oreover a decision through adversary litigation is not always <just:% because it is based on the evidence which can be concocted% the witnesses can be tutored and the facts distorted. It is a contest of skills between lawyers% the hired guns and so the result is not always satisfactory and just. 4nder adversary system search for truth is often over looked and whole attention is devoted to winning the case by hook or by crook% and the decision instead of satisfying the parties generates animosity between them. !dversary litigation disrupts <natural harmony: thought to exist human affairs% relies on coercion rather than moral persuasion and fosters litigiousness and shameless concern for one:s own interests rather than those of society. It has now been widely admitted that traditional adversarial process may not always be the best approach in dispute resolution.
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/emion. The ideology of !dvocacy= ,rocedural Justice !nd ,rofessional >thics.()?.

/o there is a great demand for alternative to adversarial court system. In other words an alternative dispute resolution movement has taken birth. The main objects of this alternative movement are= To relieve the court congestion as well as undue cost and delay= To enhance the community involvement in the dispute resolution process= To facilitate access to justice= To provide more effective dispute resolution. The advocates of !lternative "ispute #esolution movement are in search of alternatives that would advance the understanding of justice which are radically different from the justice as lawyers administer. They assume that justice is not something people get from the government but it is something people give to another.

CONCEPT AND PHILOSOPHY OF ALTERNATE DISPUTE RESOLUTION MECHANISM

Historical evolution of t e strate!" of Alternative Dis#ute Resolution S"ste$% !lternative "ispute #esolution /ystem: popularly known as <!"#/: is the new socioAlegal concept of ())-s. It is today being increasingly acknowledged in the field of law as well as in commercial sector. It is emerging as a separate and independent branch of legal discipline. It offers to resolve matters of litigants% whether in business course or otherwise% who are not able to start any process of negotiation and reach any settlement. !"#/ consists of several techni&ues being utiliBed to resolve disputes involving a structural process with the third party intervention. !"#/ avoids the rigidity and flexibility of traditional orthodox procedure. It can be considered as a consensual problem solving system. !"#/ now is growing and accepted tool of reform in dispute management. It is not intended to supplant altogether the traditional means of resolving disputes by litigation. In fact it offers an alternative option to litigation. !n alternative means the privilege of choosing one of the two things. It can be used in almost all contentious matters% which are capable of being resolved under law by agreement. <!"#/: is by no means a recent phenomenon though it has been organiBed on more scientific lines in recent times. There is long and old tradition in India of the encouragement of dispute resolution outside the formal legal system. The concept of parties settling their disputes by reference to a person
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The "elhi ;aw Times 6ol '7 2--8A

of their choice or Tribunals was very popular in ancient India. ;ong before Ding came to adjudicate on disputes between parties% such disputes were &uite peacefully decided by intervention of kulas 0familyEclan assemblies1% srenis 0guilds of men from same occupation1% ,arishads 0assemblies of learnes men who knew law1. +urther there was Fayaya ,anchayats at grass roots level before the advent of 5ritish /ystem of justice. These were all recogniBed systems of administration of justice and not merely alternative to the formal judicial system established by the /overeign G the feudal ;ords. !s regards the nature of proceedings% these institutions were very much similar to the !"# procedure% that is simple% informal and inexpensive. 3ver the years% largely due to the development of trade and commerce% !rbitration came to be recogniBed as an effective alternative to the formal judicial system. The arbitral system however tended to be more and more formaliBed on pattern of judicial adjudication in 'ourts. 'ourts interventions before% during and after !rbitration% made !rbitration as dilatory as the 'ourt system. hile% !rbitration continues to be the preferred option to 'ourt recourse generally in contractual disputes of commercial nature% it was considered useful to induce the litigants to other modes of !"# services in civil matters and in industrial disputes before they are referred for adjudication. !"#/ culminates in remedy in which there is minimum role of official authorities and there is maximum play of wholly private mechanism. 9owever% the institutional framework for providing !"# services is not yet fully developed.

$ackie have said that% Fow !"# is rapidly developing its own national institutions% experience and theoretical and practical development and at the same time offering a simple crossAborder dispute resolution approach8.

&USTICE THROU'H ADR

In its philosophical perception% !"# process is considered to be the mode in which the dispute resolution process is &ualitatively distinct from the judicial process. It is a process where disputes are settled with the assistance of a neutral third person generally of parties own choice. The neutral person is generally familiar with the nature of the dispute and the context in which such dispute normally arises. The proceedings in such cases are informal% devoid of procedural technicalities and are conducted by and large in the confidentiality of the subject matter of the dispute is maintained to a great extent. The decision making process aims at substantial justice% keeping in view the interests involved and the contextual realities. In substance the !"# process aims at rendering justice in the form and content% which not only resolves the dispute but also to resolve the conflict in the relationship of the parties. !"# is by no means a recent phenomenon% though it has been organiBed on more scientific lines% expressed in more clear terms and employed more widely in dispute resolution in recent years than before. The concept of parties settling their disputes by reference to a person or persons of their choice was well known to ancient India. ;ong before he king came to
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Darl $ackie % "avid $iles and 'irllian $arsh 'ommercial "espite #esolution 5utterworths ;ondon ())C p @

adjudicate on disputes between persons such disputes were &uite peacefully decided by the intervention of the Dulas% /ernis% ,arishads and such other autonomous bodies. 3ne of the bold and pragmatic initiatives taken by the Hovernment pursuant to the adoption of the ;iberaliBed economy policy with a view to integrate the Indian economy with global economy% was the enactment of the !rbitration and 'onciliation !ct ())* superseding the outdated and cumbersome !rbitration !ct ()8-. The new !ct has made drastic and refreshing changes in the law of arbitration and has introduced new concepts like conciliation to cut short delays and bring about &uicker settlement of commercial disputes. The new !ct has been codified on the lines of the $odel ;aw on International 'ommercial !rbitration as adopted by the 4nited Fations 'ommission on International Trade ;aw 04FI'T#!;1. 3ne of the most laudable objects of the new !ct is to minimise the role of the courts in the arbitration process. The ',' has also been amended w.e.f (st july% 2--2 to make !"# an integral part of the judicial process. The newly inserted section .) 0(1 in the ',' deals with the settlement of disputes outside the court in order to bring down the arrears of cases before the courts. In terms of new section .) of ',' where it appears to the court that there exists elements% which may be acceptable to the parties the court may formulate the terms of a possible settlement and refer the same for arbitration% conciliation% mediation or judicial settlement. hile upholding the validity of the ',' amendments in Sale$ A(vocates )ar Association *+ Union of In(ia,% the /upreme court had directed the constitution of an expert committee to formulate the manner in which section .) and other provisions introduced in ',' have to be in
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6i02--21/;T C()

operation. !lso to devise a model case management formula as well as rules and regulations which should be followed while taking recourse to alternative dispute redressal referred to in section .) of ','. Thus !"# techni&ues are extraAjudicial in character. They can be used in almost all contentions matters which are capable of being resolved under law by agreement between parties. They have been employed with very encouraging results in several categories of disputes especially civil% commercial% industrial and family disputes. These techni&ues have been shown to work across the full range of business disputes like banking% contract performance% performance% construction contracts% intellectual property rights% insurance% joint ventures% partnership differences% etc. !"# offers the best solution in respect of commercial disputes. 9owever% !"# is not intended to supplant altogether the traditional means of resolving disputes by means of litigation. It only offers alternative to litigation. There are a large number of areas like constitutional law and criminal law where !"# cannot substitute courts.

ADR AS A TECHNI-UE
!lternative "ispute #esolution consists of several techni&ues being utiliBed to resolve disputes involving a structural process with third party intervention. !"# system avoids the rigidity and inflexibility of traditional and orthodox procedures. It is not to supplement method of resolving disputes through litigation. In fact it offers only alternative option to litigation. Techni&ue of !"# is an effort to design workable and fair alternative to our traditional judicial system. These techni&ues have been developed on scientific lines by some leading 4niversities and !"# 'entres in the 4/!% 4D% 'anada and !ustralia. In fact !"# has emerged as a significant movement in these countries and has helped not only to reduce cost and time taken for resolution of disputes% but also to provide a less formal and less complicated forum for various types of disputes. !lternative "ispute #esolution 0!"#1 is the hot new socioAlegal concept of the ())-s. >veryone is espousing it% becoming an expert in it and lauding it as the panacea for all of the languishing victims of our overpriced% inefficient and intransigent legal system. The alternative in the !"# refers to something other than /tateA sponsored mechanisms foe adjudication of disputes. The dispute resolution reference in !"# is somewhat misleading. The /tate mechanisms do not #esolve anything in the sense of a commercial resolutions or ac&uiescence in the result% but make adjudication so it is resolved only in the sense of finality. In the +ar >ast countriesAspecially in 'hina% !ustralia and Japan G conciliation has been a preferred method for resolving disputes. The 4nited
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/tates has seen rapid evolution and growth of various !"# procedures. In ().-% (. states in !merica had same type of dispute resolution programme (- years later% i.e. by the year ())- all C- states and the "istrict of 'olumbia had at least one such programme. 5y ())@% there were more than (%2-courtArelated !"# programmes nationwide% handling the entire categories of civil suits. $any% if not most of these% are administered by part of the judicial machinery% and they are referred to as <court annexed:. In some /tates% the re&uirement of law is that all civil litigants use !"# before trying to access the courts. In the /tates of Heorgia and 'olorado% it has been proposed that lawyers be re&uired as a part of their professional obligation to counsel clients about the availability and use of !"# procedures. 4nder the 'ivil Justice #eform !ct of ())-% the !merican 'ongress has encouraged all federal courts to have some !"# policy or programme in place by the end of ())@ to help reduce civil case backlog and delay.

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ADR AND ITS 'RO.IN' POPULARITY

!"# is now a growing and accepted tool of reform in dispute management in !merican and >uropean commercial communities. !"# can be considered as a cooperative problem solving system. !"# is an alternative to adjudication% for example court annexed arbitration or court annexed conciliation% but it may be complimentary to the court procedures. There was a time when civil litigation was considered to be time consuming and costly method of dispensing justice and commercial people preferred to resort to arbitration. Fow !"# has become popular and desirable in many parts of the world as it is effective% cost efficient and speedy form of dispute resolution. It has been observed that !"# is able to produce better outcomes than the traditional courts because= "ifferent kinds of disputes may re&uire different kinds of approaches which may perhaps be not available in the courts +actor for resorting !"# techni&ues to resolve the dispute is direct involvement and intensive participation by the parties in the negotiations to arrive at a settlement. !dvantage of accepting !"# is the intervention of a skilled neutral !dviser which is arriving at a settlement. The principles of natural justice% e&uity and reasonableness always favors the !"# proceedings and conclusion arrived at.

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AD*ANTA'ES OF ADR
It can be used at any time even when a case is pending before a court of law. It can be used to reduce the number of contentious issues between the parties and it can be terminated at any stage by any of the disputing parties. It can provide a better solution to dispute more expeditiously and at less cost than regular litigation. It helps in keeping the dispute a private matter and promotes creative and realistic business solutions% since parties are in control of !"# proceedings. The !"# is flexible and not governed by the rigours of rules or procedures. The freedom of parties to litigation is not affected by !"# proceedings. >ven a failed !"# proceedings is never a waste either in terms of money or time spent on it% since it helps parties to appreciate each other:s case better The !"# can be used with or without a lawyer. ! lawyer% however% plays a very useful role in identification of contentious issues% position of strong and weak points in a case rendering advice during negotiations and overall presentations of his clients case. !"# helps in reduction of work load of courts and thereby helps them to focus attention on other cases.

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 The !"# procedure permits to choose materials neutrals who are specialists in the subject matter of the dispute.

ADR/ REASONS )EHIND ITS SUCCESS

In spite of the fact that the !"# techni&ue being employed by the courts% arbitrators% conciliators and mediators do not guarantee settlement of disputes% it has been found that such techni&ues do in practice lead to a building settlement have failed% the !"# techni&ues succeed in achieving the results. The main objective of !"# procedure is to involve the parties to come together to achieve a settlement. !"# procedures create a formal sitting to bring advisers and clients together for a serious attempt at resolving a problem.* !"# intensifies the objective of settlement. The credibility of the process is linked to the scale of acceptance of !"# recognition of it by lawyers and clients. The 9ong Dong International !rbitration 'entre% most probably the largest arbitration service centre in !sia% has held the view that arbitration as compared to litigation has become very popular for resolving the disputes. /imilarly conciliation and mediation find an increasing measure of support in future. In addition to certain common combinations of usage of the primary process known as hybrid process% there are other !"# systems attached to the courts and judicial system% which are as follows= Fegotiation !djudication
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Darl $ackie and "avid $iles% commercial dispute and !"# practice guide% ;ondon% 5utterworths% ())C.% p(2

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 $ediation and 'onciliation 'oncilio A!rbitration 'ourt Gannexed arbitration Judicial settlement conferences /ettlement weeks $ini trial !rbitration +ew of the above types !"# are not applicable or not in practiced in Indian court of law due to difference of approach towards applicability of law and its usage. +rom the above types of !"# only mediation and conciliation I !rbitration is put into implementation and has also being codifies into an !ct as The !rbitration and 'onciliation !ct% ())*. This act provides us the method of !rbitration% its usage and mode of applying for !rbitration% !rbitration agreement% arbitral tribunal% its powers and functions% its jurisdiction% conduct and proceedings.

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TYPES OF ALTERNATI*E DISPUTE RESOLUTION SYSTEM

!lternative "ispute #esolution is an attempt to devise machinery which should be capable of providing an alternative to conventional methods of resolving disputes. Techni&ue of !"# is an effort to design workable and fair alternative to our traditional judicial system. The main objective of !"# is involve the parties to come together to achieve a settlement. !"# procedures create a formal setting to bring advisors and clients together for a serious attempt to resorting disputes?. These techni&ues have been developed on scientific lines by some leading 4niversities and !"# 'enters in 4./.!% 4.D.% 'anada and !ustralia. In fact% !"# emerged as a significant movement in these countries and has helped reducing cost and time taken for dispute resolution and provides less formal and less complicated forum for various types of disputes. <!lternative "ispute #esolution: mechanism is intended to cover <Fegotiation:% <$ediation: and <!djudication: and an array of hybrid procedures including <$edA!rb: <;ast 3ffer !rbitration 0$>"3;!1%: <$iniATrial%: and <Feutral >valuation.: In this research paper !rbitration will be discussed in detail further.

,.F 5hagwati% judicial /ystem on the 6erge of collapse. The Indian >xpress% January 2- ())C p @

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AR)ITRATION AS A METHOD OFADR

"ifferent !"# mechanisms exist for resolving disputes outside the 'ourts. The choice of the !"# method largely depends on the nature of the dispute and relation of the parties. 3ne of the motivations for !"# methods is the empowerment of the individuals to resolve their own disputes. The common !"# methods of resolving disputes are arbitration% conciliation% mediation% negotiation% 'onsumer +orums% etc. ! brief description of !rbitration as a method of !lternate dispute $echanism is discussed below= !rbitration is the supreme method for resolving and adjudicating commercial disputes. It is a procedure in which the dispute is submitted to one or more !rbitrators% for adjudication% who resolve the dispute. The decision is given in the form of an award. The main objects of arbitration are speed% economy% convenience and simplicity of procedures. It encourages healthy relationship between the parties. The !rbitration !ct% ()8- was full of complicated procedures and practices. 'ourts were the supervisors of the arbitration proceedings and could interfere at any stage. The parties to arbitration were left at the whims and fancies of the lawyers and 'ourts. The 4nited Fations 'ommission on International Trade ;aw 04F'IT#!;1 adopted the ;aw on International 'ommercial !rbitration. The Indian Hovernment also aligned its !rbitration ;aw with the 4F'IT#!; model law in the form of the !rbitration and 'onciliation !ct% ())*. The ())* !ct is a selfAcontained 'ode. Its object is to restore the party autonomy by giving right to appoint !rbitrators to the parties. It also makes provision for an
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arbitral procedure% which is fair% efficient and capable of meeting the needs of the specific arbitration. It also minimiBes the supervisory role of 'ourts in the arbitration process. It further provides that the final arbitral award is to be enforced in the same manner as any 'ourt decree. The !ct also aims to comprehensively cover international and commercial arbitration. The ())* !ct has given paramount importance to party autonomy by accepting the intention of parties as a platform for dispute resolution. Thus% what law will be applicable will depend on the intention of parties. +or instance in Del i Trans#ort Cor#oration Lt(+ *+ Rose A(vertisin! 8, the /' observed that by virtue of /ection .C of the ())* !ct% the !rbitration !ct% ()8- stands repealed. 9owever% it is always open to the parties to agree to which law will continue to govern their relationship. The parties agreed to be governed by the law as in force at the time. /ection .C021 of the ())* !ct recogniBes such an agreement between the parties. The conduct of the arbitration proceedings and the participation of the parties therein show that the parties acted under the ())* !ct. >ven the !rbitrator proceeded on that understanding and gave his award in pursuance of the ())* !ct. In N+S+ Na"a0 *+ State of 'oa)% the /upreme 'ourt held that the language used in various /ections of the !rbitration !ct gives options to the parties to opt for the procedure as per their agreement during the arbitral proceedings before the !rbitrator. /o if there is an agreement between the parties with regard to the procedure to be followed by the !rbitrator% the !rbitrator is re&uired to follow the said procedure. 9owever% this would not mean that in appeal parties can content that the appellate procedure should be as per their agreement. The appellate

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III 02--21 /;T2(8 III02--@1/;T C8@

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procedure would be governed as per the statutory provisions and parties have no right to change the same. It must be noted that party autonomy presupposes the existence of an arbitration agreement. There may be a situation where the parties had not entered into an arbitration agreement. To meet such situations /ection .) of ',' can be invoked. In Sale$ A(vocates )ar Association *+ UOI10 the /c has observed that the reason for inserting /ection .) has been to try and see that all the cases which are filed in the 'ourt need not necessarily be decided by the 'ourt itself. Deeping in mind the law delays and the limited number of Judges% which are available% it has now become imperative to resort to !"# mechanism as contemplated by /ection .). There is a re&uirement that the parties to the suit must indicate the form of !"#% which they would like to resort to during the pendency of the tiral of the suit. If the parties agree to arbitration% then the provisions of the !rbitration and 'onciliation !ct% ())* will apply and that will go outside the stream of the 'ourt. In Su0an"a Hol(in!s Pvt+ Lt(+ *+ &a"es H+ Pan("a 11 the /' dealt with the &uestion that when there is no provision for party referring the dispute to arbitration% whether such a course is possible under /ection . of the !ct. 'ourt held that it would be difficult to give an interpretation to /ection . under which bifurcation of the cause of action is possible. /uch bifurcation of suit in two parts% one to be decided by the !rbitration Tribunal and other to be decided by the 'ivil 'ourt would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the
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0/upra1 III 02--@1 /;T ()8

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cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different +orums. +urther the /' observed that /ection .)% ',' cannot be resorted to for interpreting /ection . of the !ct as it stands on a different footing and it would be applicable even in cases where there is no arbitration agreement for referring the dispute for arbitration. +or that purpose the 'ourt has to apply its mind to the condition contemplated under /ection .)% ',' and even if application under /ection . of the !ct is rejected% the 'ourt is re&uired to follow the procedure prescribed under the said /ection. !rbitration has become an increasingly popular method for resolving disputes between parties from different jurisdictions. 9owever% it is not viable to use arbitration in constitutional matters% matrimonial matters% insolvency issues% taxation matters and welfare legislation. !rbitration has also been found unsuitable for criminal matters and cases dealing with public policy.

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CODE OF ETHICS
For Ar1itrators
6arious arbitral organiBations% chambers of commerce and agencies have been making efforts to prescribe code of ethics for arbitrators% mediators and neutrals. ! joint committee consisting of a /pecial 'ommittee of !merican !rbitration !ssociation and a special committee of the !merican !rbitration !ssociation and a special committee of the !merican 5ar !ssociation drafted code of ethics for arbitrators. This code was accepted% approved and recommended by both the organiBations in ()??. This code% though sponsored by the two associations% can be adopted and implemented by way of guidance in all types of commercial arbitration. The guidelines are briefly given below= (. !n !rbitrator should uphold the integrity and fairness of the arbitration processJ 2. !n !rbitrator should disclose any interest or relationship likely to affect impartiality or which might create an appearance of partiality or biasJ @. !n !rbitrator in communicating with the parties should avoid impropriety or the appearance of improprietyJ 8. !n !rbitrator should conduct the proceedings fairly and diligentlyJ

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C. !n !rbitrator should make decisions in a just% independent and deliberate mannerJ *. !n !rbitrator should be faithful to the relationship of trust and confidentiality inherent in that officeJ and ?. !n !rbitrator should observes ethical considerations relating to arbitrator appointed by one party.

For I$#artial T ir( Parties

The /tate 5ar of Texas !lternative "ispute #esolution 'ommittee proposed ethical guidelines and standard of practice for impartial parties in the /tate of Texas. It consists of five principles as given below= ,rinciple I= !n impartial third party shall uphold the integrity and fairness of the !lternative "ispute #esolution process. ,rinciple II= !n impartial third party shall disclose any interst or relationship likely to affect impartiality or which might create an appearance of partiality or bias. ,rinciple III=!n impartial third party shall avoid impropriety or the appearance of improprietyJ ,rinciple I6=!n impartial third party shall conduct the proceedings fairly and diligently. ,rinciple 6= !n impartial third party shall be faithful to the relationship of trust and confidentiality inherent in that position.

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For Me(iators
The /pecial 'ommittees of !merican !rbitration !ssociation and !merican bar !ssociation and !merican 5ar !ssociation and the /ociety of ,rofessionals in "ispute #esolution issued the following model standards of conduct for mediators on !pril 2.% ())C. I. /elfA"etermination= ! mediator shall recogniBe that mediation is based on the ,rinciple of selfAdetermination by the parties. II. Impartiality= ! mediator shall conduct the mediation in an impartial manner. III. 'onflicts of Interest= ! mediator shall disclose all actual and potential conflicts of interest reasonably to the parties= !fter disclosure% the mediator shall decline to mediate unless all parties choose to retain the mediator. The need to protect against conflicts of interest governs conduct that occurs during and after the mediation. I6. 'ompetence= ! mediator shall mediate only when the mediator has the necessary &ualification to satisfy the reasonable expectations of the parties. 6. 'onfidentiality= ! mediator shall maintain the reasonable expectations of the parties with regard to confidentiality.

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6I.

Kuality of the ,rocess=

mediator

shall

conduct

the

mediation fairly% diligently% and in a manner consistent with the principle of selfAdetermination by the parties.

.HAT IS AR)ITRATION A'REEMENT2

"efinition under /ectionA? 'hapter II of the !rbitration and 'onciliation !ct% ())* reads as follows= Ar1itration a!ree$ent+3 0(1 In this ,art% Larbitration agreementL means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship% whether contractual or not+ 021 !n arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement+ 0@1 !n arbitration agreement shall be in writing+ 081 !n arbitration agreement is in writing if it is contained in3 0a1 ! document signed by the partiesJ 0b1 !n exchange of letters% telex% telegrams or other means of telecommunication which provide a record of the agreementJ or 0c1 !n exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other+ 0C1 The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract+ T e ot er #rovisions re!ar(in! ar1itration a!ree$ent are (iscusse( as follo4s/
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The following are the provision dealing with arbitration agreement= 5+ Po4er to refer #arties to ar1itration 4 ere t ere is an ar1itration a!ree$ent+6 0(1 ! judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall% if a party so applies not later than when submitting his first statement on the substance of the dispute% refer the parties to arbitration+ 021 The application referred to in sub3section 0(1 shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof+ 0@1 Fotwithstanding that an application has been made under sub3section 0(1 and that the issue is pending before the judicial authority% arbitration may be commenced or continued and an arbitral award made+ 7+ Interi$ $easures etc+ 1" Court6 ! party may% before% or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section @*% apply to a court3 0i1 +or the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedingsJ or 0ii1 +or an interim measure or protection in respect of any of the following matters% namely=3 0a1 The preservation% interim custody or sale of any goods which are the subject matter of the arbitration agreementJ 0b1 /ecuring the amount in dispute in the arbitrationJ 0c1 the detention% preservation or inspection of any property or thing which is the subject3matter of the dispute in arbitration% or as to which any &uestion may arise therein and authoriBing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party% or authoriBing any samples to be taken or any observation to be made% or
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experiment to be tried% which may be necessary or expedient for the purpose of obtaining full information or evidenceJ 0d1 Interim injunction or the appointment of a receiverJ 0e1 /uch other interim measure of protection as may appear to the 'ourt to be just and convenient% !nd the 'ourt shall have the same power for making orders as it has for the purpose of% and in relation to% any proceedings before it+

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COMPOSITION OF AR)ITRAL TRI)UNAL

The following provisions under The !rbitration and 'onciliation !ct ())* deals with the composition of !rbitral Tribunal= 89+ Nu$1er of ar1itrators. M 0(1 the parties are free to determine the number of arbitrators% provided that such number shall not be an even number. 021 +ailing the determination referred to in subAsection 0(1% the arbitral tribunal shall consist of a sole arbitrator. 88+ A##oint$ent of ar1itrators. M 0(1 ! person of any nationality may be an arbitrator% unless otherwise agreed by the parties. 021 /ubject to subAsection 0*1% the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. 0@1 +ailing any agreement referred to in subAsection 021% in an arbitration with three arbitrators% each party shall appoint one arbitrator% and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. 081 If the appointment procedure in subAsection 0@1 applies andM 0a1 ! party fails to appoint an arbitrator within thirty days from the receipt of a re&uest to do so from the other partyJ or 0b1 The two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment% The appointment shall be
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made% upon re&uest of a party% by the 'hief Justice or any person or institution designated by him. 0C1 +ailing any agreement referred to in subAsection 021% in an arbitration with a sole arbitrator% if the parties fail to agree on the arbitrator within thirty days from receipt of a re&uest by one party from the other party to so agree the appointment shall be made% upon re&uest of a party% by the 'hief Justice or any person or institution designated by him. 0*1 here% under an appointment procedure agreed upon by the parties%A 0a1 ! party fails to act as re&uired under that procedureJ or 0b1 The parties% or the two appointed arbitrators% fail to reach an agreement expected of them under that procedureJ or 0c1 ! person% including an institution% fails to perform any function entrusted to him or it under that procedure% ! party may re&uest the 'hief Justice or any person or institution designated by him to take the necessary measure% unless the agreement on the appointment procedure provides other means for securing the appointment. 0?1 ! decision on a matter entrusted by subAsection 081 or subAsection 0C1 or subAsection 0*1 to the 'hief Justice or the person or institution designated by him is final. 0.1 The 'hief Justice or the person or institution designated by him% in appointing an arbitrator% shall have due regard toA 0a1 !ny &ualifications re&uired of the arbitrator by the agreement of the partiesJ and 0b1 3ther considerations as are likely to secure the appointment of an independent and impartial arbitrator. 0)1 In the case of appointment of sole or third arbitrator in an international commercial arbitration% the 'hief Justice of India or the person or institution
2.

designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. 0(-1 The 'hief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by subAsection 081 or subAsection 0C1 or subAsection 0*1 to him. 0((1 here more than one re&uest has been made under subAsection 081 or subAsection 0C1 or subAsection 0*1 to the 'hief Justices of different 9igh 'ourts or their designates% the 'hief Justice or his designate to whom the re&uest has been first made under the relevant subAsection shall alone be competent to decide on the re&uest. 0(21 0a1 here the matters referred to in subAsections 081% 0C1% 0*1% 0?1% 0.1 and 0(-1 arise in an international commercial arbitration the reference to L'hief JusticeL in those subAsections shall be construed as a reference to the L'hief Justice of IndiaL. 0b1 here the matters referred to in subAsections 081% 0C1% 0*1% 0?1% 0.1 and 0(-1 arise in any other arbitration% the reference to L'hief JusticeL in those subAsection shall be construed as a reference to% the 'hief Justice of the 9igh 'ourt within whose local limits the principal 'ivil 'ourt referred to in clause 0e1 of subAsection 0(1 of section 2 is situate and% where the 9igh 'ourt itself is the L'ourt referred to in that clause% to the 'hief Justice of that 9igh 'ourt. 8:+ 'roun(s for c allen!e.M0(1 hen 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. 021 !n arbitrator% from the time of his appointment and throughout the arbitral proceedings% shall% without delay% disclose to the parties in writing
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any circumstances referred to in subAsection 0(1 unless they have already been informed of them by him. 0@1 !n arbitrator may be challenged only ifA 0a1 'ircumstances exist that give rise to justifiable doubts as to his independence or impartiality% or 0b1 9e does not possess the &ualifications agreed to by the parties. 081 ! 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. 8%+ C allen!e #roce(ure+ 6 0(1 /ubject to subAsection 081% the parties are free to agree on a procedure for challenging an arbitrator. 021 +ailing any agreement referred to in subAsection 0(1% a party who intends to challenge an arbitrator shall% within fifteen days becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in subAsection 0@1 of section (2% send a written statement of the reasons for the challenge to the arbitral tribunal. 0@1 4nless the arbitrator challenged under subAsection 021 withdraws from his office or the other party agrees to the challenge% the arbitral tribunal shall decide on the challenge. 081 If a challenge under any procedure agreed upon by the parties or under the procedure under subAsection 021 is not successful% the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. 0C1 here an arbitral award is made under subAsection 081% the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section @8.

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0*1

here an arbitral award is set aside on an application made under subA

section 0C1% the 'ourt may decide as to whether the arbitrator who is challenged is entitled to any fees. 8;+ Failure or i$#ossi1ilit" to act. M 0(1 The mandate of an arbitrator shall terminate ifM 0a1 9e becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delayJ and 0b1 9e withdraws from his office or the parties agree to the termination of his mandate. 021 If a controversy remains concerning any of the grounds referred to in clause 0a1 of subsection 0(1% a party may% unless otherwise agreed by the parties% apply to the 'ourt to decide on the termination of the mandate. 0@1 If% under this section or subAsection 0@1 of section (@% an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator% it shall not imply acceptance of the validity of any ground referred to in this section or subAsection 0@1 of section (2. 8,+ Ter$ination of $an(ate an( su1stitution of ar1itrator+6 0(1 In addition to the circumstances referred to in section (@ or section (8% the mandate of an arbitrator shall terminate.M 0a1 021 here he withdraws from office for any reasonJ or here the mandate of an arbitrator terminates% a substitute arbitrator 0b1 5y or pursuant to agreement of the parties. shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

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0@1 4nless otherwise agreed by the parties% where an arbitrator is replaced under subAsection 021% any hearings previously held may be repeated at the discretion of the arbitral tribunal. 081 4nless otherwise agreed by the parties% an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not b invalid solely because there has been a change in the composition of the arbitral tribunal.

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CONDUCT OF AR)ITRAL TRI)UNAL

The following sections deals with the conduct of !rbitral proceedings under chapterA6 of The !rbitration and 'onciliation !ct ())* as follows= 85+ E<ual treat$ent of #arties.MThe parties shall be treated with e&uality and each party shall be given a full opportunity to present his case. 87+ Deter$ination of rules of #roce(ure .M0(1 The arbitral tribunal shall not be bound by the 'ode of 'ivil ,rocedure% ()-. 0C of ()-.1 or the Indian >vidence !ct% (.?2 0( of (.?21. 021 /ubject to this ,art% the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. 0@1 +ailing any agreement referred to in subAsection 021% the arbitral tribunal may% subject to this ,art% conduct the proceedings in the manner it considers appropriate. 081 The power of the arbitral tribunal under subAsection 0@1 includes the power to determine the admissibility% relevance% materiality and weight of any evidence. :9+ Place of ar1itration.M0(1 The parties are free to agree on the place of arbitration.

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021 +ailing any agreement referred to in subAsection 0(1% the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case% including the convenience of the parties. 0@1 Fotwithstanding subAsection 0(1 or subAsection 021% the arbitral tribunal may% unless otherwise agreed by the parties% meet at any place it considers appropriate for consultation among its members% for hearing winners% experts or the parties% or for inspection of documents% goods or other property. :8+ Co$$ence$ent of ar1itral #rocee(in!s.M4nless otherwise agreed by the parties% the arbitral proceedings% in respect of a particular dispute commence on the date on which a re&uest for that dispute to be referred to arbitration is received by the respondent. ::+ Lan!ua!e+6=(1 The parties are free to agree upon the language or languages to is used in the arbitral proceedings. 021 +ailing any agreement referred to in subAsection 0(1% the arbitral tribunal shall determine the language or languages to be used in the arbitral proceedings. 0@1 The agreement or determination% unless otherwise specified% shall apply to any written statement by a party% any hearing and any arbitral award% decision or other communication by the arbitral tribunal. 081 The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the languages agreed upon by the parties or determined by the arbitral tribunal. :%+ State$ents of clai$ an( (efense.M0(1 ithin the period of time agreed upon by the parties or determined by the arbitral tribunal% the claimant shall state the facts supporting his claim% the points at issue and the relief or remedy sought% and the respondent shall state his defense in respect
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of these particulars% unless the parties have otherwise agreed as to the re&uired elements of those statements. 021 The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit. 0@1 4nless otherwise agreed by the parties% either party may amend or supplement his claim or defense during the course of the arbitral proceedings% unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it. :;+ Hearin!s an( 4ritten #rocee(in!s+6=(1 4nless otherwise agreed by the parties% the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument% or whether the proceedings shall be conducted on the basis of documents an other materialsJ ,rovided that the arbitral tribunal shall hold hearings% at an appropriate stage of the proceedings% on a re&uest by a party% unless the parties have agreed that no oral hearing shall be held. 021 The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents% goods or other property. 0@1 !ll statements% documents or other information supplied to% or applications made to% the arbitral tribunal by one party shall be communicated to the other party% and any expert report orevidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties. :,+ Default of a #art".M4nless% otherwise agreed by the parties% where% without showing sufficient cause%AA
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0a1 The claimant fails to communicate his statement of claim in accordance with subAsection 0(1 of section 2@J the arbitral tribunal shall terminate the proceedingsJ 0b1 The respondent fails to communicate his statement of defense in accordance with subsection 0(1 of section 2@J the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimantJ 0c1 ! party fails to appear at an oral hearing or to produce documentary evidenceJ the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it. :>+ E?#ert a##ointe( 1" ar1itral tri1unal .M0(1 unless% otherwise agreed by the parties% the arbitral tribunal mayAA 0a1 !ppoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal% and 0b1 #e&uire a party to give the expert any relevant information or to produce% or to provide access to% any relevant documents% goods or other property for his inspection. :@+ Court assistance in ta0in! evi(ence.M0(1 the arbitral tribunal% or a party with the approval of the arbitral tribunal% may apply to the 'ourt for assistance in taking evidence. 021 The application shall specifyM 0a1 The names and addresses of the parties and the arbitrators. 0b1 The general nature of the claim and the relief soughtJ 0c1 The evidence to the obtained% in particular%M 0i1 The name and address of any person to be heard as witness or expert witness and a statement of the subjectAmatter of the testimony re&uiredJ

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0ii1 The description of a document to be produced or property to be inspected. 0@1 The 'ourt may% within its competence and according to its rules on taking evidence% execute the re&uest or ordering that the evidence be provided directly to the arbitral tribunal. 081 The 'ourt may% while making or order under subAsection 0@1% issue the same processes to witnesses as it may issue in suits tried before it. 0C1 ,ersons failing to attend in accordance with such process% or making any other fault% or refusing to give their evidence% or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings% shall be subject to the like disadvantages% penalties and punishments by order of the 'ourt on the representation of the arbitral tribunal as they would incur for the like offences is suits tried before the 'ourt. 0*1 In this section the expression L,rocessesL includes summonses and commissions for the examination of witnesses and summonses to produce documents+

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CONSTITUTION OF THE AR)ITRAL TRI)UNAL

The constitution or appointment of an arbitral tribunal is typically the first step in an arbitration procedure. The procedure is usually set in motion through the re&uest for% or notice of% arbitration filed by the claimant to the respondent or to an arbitration institution. "epending on the applicably rules% the setting up of the arbitral tribunal may be handled by an arbitration institution% by the parties themselves or by a /tate court. This process% compounded with the normally re&uired payment of a partial advance on costs before the proceedings can start% may take only a few weeks in accelerated proceedings where parties cooperate diligently. In most international arbitrations% it will usually last one to four months.

A##oint$ent of Ar1itrators
. o a##oints t e ar1itrator=sA If parties choose% or have chosen% institutional arbitration for settling their disputes% they should bear in mind that the matter of the constitution of the arbitral tribunal may differ from one arbitral institution to another. /ome institutions give full autonomy to the parties to designate the arbitrator of

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their choice. 3thers restrict the parties: choice to a list of arbitrators kept by the institution. >ven if the parties are given the freedom to <propose: the arbitrator of their choice% the arbitral institution will generally supervise the appointment process. /upervision often implies that the appointment of the arbitrator or arbitrators% including partyAappointed arbitrators% is effectively made by the arbitral institution. T e ar1itratorsB in(e#en(ence The arbitral institution will typically draw the arbitrator:s attention to the re&uirement of independence visANAvis the parties. /ome institutions will re&uire the arbitrators to confirm in writing that they are% and will remain% independent of the parties% and to disclose any fact or circumstance which might raise doubts regarding their independence in the eyes of the parties. This is the case as far as the I'' International 'ourt of !rbitration is concerned. Thus% a potential arbitrator in an I'' proceeding will have to disclose any relationship heEshe has% or may have had% with any of the parties% not only with the party that has nominated himEher as arbitrator. !lso% an arbitrator should usually disclose any relationship% in particular professional% heEshe has% or may have had in the past% with any of the lawyers acting for the parties in the arbitration. /upervision by the arbitral institution generally implies that the institution may refuse to appoint an arbitrator% or to confirm the choice of an arbitrator proposed by a party% if it considers that the arbitrator is not independent visANAvis the parties. 5efore taking a decision not to appoint or confirm an arbitrator% the arbitral institution will generally
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give to those concerned by such decision the opportunity to express their views.

C allen!es of ar1itrators If a fact or circumstance arises in the course of the procedure% which may raise doubts regarding the independence of an arbitrator% the arbitral institution will generally decide on any challenge that may be raised by any of the parties. The decisions taken by arbitral institutions with respect to the constitution of an arbitral tribunal or the arbitrators: replacement% as with any other decisions taken by arbitral institutions% are of an administrative nature. ! party may decide to attack the decision of the arbitral institution before the appropriate /tate court. 9owever% such attacks are not very effective% because /tate courts in most jurisdictions will not issue orders to interrupt arbitral proceedings% pending their own decision on the challenge. /uch attacks are also unusual% since they would go against the spirit and letter of the arbitration agreement% whereby parties have conferred the arbitral institution with the necessary powers to administer the procedure.

In t e conte?t of a( oc ar1itration

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If parties have not provided for an arbitral institution to administer the procedure% they will have to deal with the constitution process of the arbitral tribunal themselves% or put the matter before a /tate court. hile parties enjoy a great deal of freedom in ad hoc arbitration to organiBe the constitution of the arbitral tribunal according to their own wishes% they should bear in mind that difficulties may be encountered if one of the parties is unwilling to participate at the time the dispute arises. ! party 0usually the defendant1 in an ad hoc arbitration may% for example= #efuse or fail to select an arbitrator in the case where a threeAmember arbitral tribunal must be constituted #efuse to participate in the selection of the sole arbitratorJ or #efuse to participate in the selection of the chairman of the arbitral tribunal. In such circumstances% the other party 0usually the claimant1 in the arbitration% will need to call upon a /tate court for the appointment of an arbitrator. This will certainly take more time than would be the case if an arbitral institution were to decide on the matter. Therefore% in some as hoc arbitrations% parties provide that an arbitral institution will act as appointing authority i.e. will be called upon to appoint one or more arbitrators% or to make the appointment on behalf of a defaulting party. The costs for appointments vary greatly% depending on the institution.

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PO.ERSC DUTIES AND &URISDICTION OF THE AR)ITRAL TRI)UNAL

Po4ers an( li$itations of t e ar1itral tri1unal The powers of an arbitral tribunal are those that the parties have conferred upon the arbitral tribunal in order that it can fulfil its task. These powers can be granted explicitly in the arbitration agreement or implicitly through reference to institutional or other rules 0e.g. 4F'IT#!; !rbitration #ules1. These powers are conferred within the limits of the applicable law% which in turn are generally those of the law of the place of arbitration% or the law applicable to the arbitration agreement G if this law is different from that applicable at the place of arbitration. Two specific powers and uni&ue features of international arbitration% i.e. Kompetenz-Kompetenz and the power to rule over a dispute when the particular contract containing the arbitration agreement is invalid G both of which have been developed through case law G will be analyBed in section ' below under <Jurisdiction of the arbitral tribunal. In !eneral
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!rbitral tribunals generally dispose of the following powers= ,lace of arbitration= To fix the place of arbitration% unless the place has been agreed by the parties or decided by an arbitral institutionJ ;anguage0s1 of the arbitration= To determine the language or languages of the arbitration% unless the parties have agreed thereon= Time limits= to fix the calendar for the procedure% including the setting and extending of time limits for the filing of submission by the partiesJ 9earings= to organiBe hearings and site visitsJ itnesses= to hear witnessesJ >xperts= to appoint expertsJ !pplicable law= to determine the law applicable to the

procedure and the merits of the dispute% unless the parties have agreed thereon. If the parties have expressly conferred these powers on the arbitral tribunal 0which is only in very few cases1% the arbitrators may decide as amiable compositeur. 9ere the arbitral tribunal is authoriBed% when applying a specific law% to derogate from a strict application of the law if it considers that such strict application would lead to an unjust result% or to decide ex acquo et bono+ Conservator" $easures
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!rbitral tribunals% in response to a re&uest by a party% often order interim measures of protection before issuing an award. These may include= 3rders re&uiring a party to allow access to premises to inspect particular goods% property or documentsJ $easures to avoid loss or damage% such as an order to a contractors to continue construction of the works despite its claim that it is entitled to suspend the worksJ and

$easures to facilitate later the enforcemenet of the award% such as attachments of physical property or bank accounts% or orders for depositing in a joint bank account the amount in dispute.

>ven if an arbitrator is entitled to make such orders under the applicable national law or relevant arbitration rules% it often does not have the compelling force. This is unlike% for example% a /tate authority with respect to the blocking or seiBure of certain assets belonging to a third party% held in trust by a bank. !ccording to some national arbitration laws% if the order is contained in an award% judges may hesitate over% or refuse to grant enforcement to% an arbitral award containing such measures.

Duties of an ar1itral tri1unal The duties of an arbitral tribunal may flow from the parties agreement% from the applicable law or% as the case may be% from the applicable rules 0institutional or ad hoc1 of arbitration.

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The essential duty of the arbitral tribunal is to be render a decision that will dispose of the parties: dispute.

Due #rocess !s a general principle% under any law and under any institutional rule% an arbitral tribunal has the duty to respect the rules of due process of law. The arbitral tribunal will have to uphold e&uality in the treatment given to all parties% to act in an impartial manner and ensure that the parties have been given sufficient opportunities to submit and defend their views and respond to the views of the other party. /ome institutions provide% in this regard% a <code of conduct: or a <code of ethics: of arbitrators.

Ter$s of reference some institutional rules provide that the arbitral tribunal% before it instructs on the matter% must establish terms of reference. This re&uires a procedural document% which contains the names and addresses of the parties and the arbitrators% and sets out a summary of the elements of the case% the claims of the parties% the issues to be determined% the applicable law 0if agreed1 and all relevant particulars relating to the procedure.

Reasone( a4ar(

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,arties or applicable laws and rules may determine that the decision must specify the reasons on which it is based% and that the decision must be rendered within a specific time limit. It is now general practice in international arbitrations to issue awards that are <reasoned:.

&uris(iction of t e ar1itral tri1unal hen the parties have agreed to submit their dispute to arbitration% they confer jurisdiction on the arbitral tribunal to determine the dispute. /tate courts will therefore not have jurisdiction to decide the dispute% unless the arbitration clause is null and void or unless the parties have revoked the arbitration agreement.

&uris(iction of State courts not totall" e?clu(e( The jurisdiction given to the arbitral tribunal to determine the issues at stake does not exclude% however% the possibility that /tate courts may be called upon to take certain measures prior to the arbitration proceedings% or even during the arbitral process% e.g. conservatory or provisional measures. To call upon /tate courts for such measures will not be considered as a waiver of the arbitration clause.

Do$#etenE3Do$#etenE If a party should contest the jurisdiction of the arbitral tribunal% while raising a plea for lack of validity of the arbitration agreement% the arbitral tribunal
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will have the power to decide on its own jurisdiction. This is generally known as the principle of DompetenBADomptenB. The decision on jurisdiction will be taken by the arbitral tribunal% in either its interim or its final award.

&uris(iction u# el( even if contract is null an( voi( In the event that an arbitral tribunal considers the contract in which the arbitration agreement is contained to be nonAexistent% or null and void% this does not result in the arbitration agreement itself becoming nonAexistent% or null and void. It is a wellAknown principle in international arbitration that the arbitration agreement is <autonomous: and <severable: from the remaining provisions of the contract. 'onse&uently% the arbitral tribunal will continue to have jurisdiction to determine the respective rights and obligations of the parties and to adjudicate their claims and pleas% even if the contract itself may be nonAexistent% or null and void. !ny decision rendered by an arbitral tribunal regarding its own jurisdiction is% however% generally subject to control by /tate courts at the place where it has been made.

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AR)ITRATION PROCEEDIN'S
'eneral #rinci#le 3ne of the essential features of arbitration% as distinct from procedures before /tate courts% is the flexibility of the procedure. In arbitration proceedings% parties can avail themselves of the freedom to tailor the proceedings in accordance with their wishes and needs% within the limits of the relevant applicable laws. The arbitral tribunal generally will have to take into account the wishes and desiderate of the parties in the conduct of the procedure. It will% however% also pay particular attention to the mandatory provisions and public policy re&uirements at the place of arbitration% which must not be violated. !ny violation of such provisions may jeopardiBe the enforcement and recognition of the arbitral award. ,arties are free to agree on the law applicable to the substance and on the law applicable to the arbitration procedure. They are free to determine the language in which the arbitration will be conducted% the language0s1 in which documents may be submitted% the methods of taking of evidence and the calendar of the procedure.
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Proce(ural re!ulations (eci(e( 1" t e ar1itral tri1unal +ailing an agreement of the parties% while duly considering the desiderate of the parties and after having given an opportunity to the parties to express their views% the arbitral tribunal will decide on the points that follow=

Lan!ua!e=sA In what language0s1 will the arbitration be conducted% if this has not been already stipulated by the partiesO The arbitral tribunal will generally take into account the language of the contract in determining what language the arbitration will be conducted in. if% however% parties have used other languages in their correspondence either prior or subse&uent to the signing of the contract% the arbitral tribunal may find a basis for accepting that documents be submitted in other languages. Ti$in! 9ow much time will the parties have for filing submissions in the arbitrationO 5efore fixing a timetable for the procedure% the arbitral tribunal should consult the parties about the time they may need% and whether they wish to file a rejoinder in a second or third round of submissions. The calendar for the submissions will be fixed as early as possible in the procedure and will set the pace of the procedure. The arbitral tribunal will have to ensure that the calendar is respected by the parties. It will be empowered to refuse submissions that are filed late.

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Hearin!s an( evi(ence !re the parties entitled to a hearingO in support of their caseO hat evidence may the parties deliver ho is to decide whether a particular witness

should be heardO If the parties are from a background of different legal system and have different views as to the extent of taking evidence and the power given to evidence% the arbitral tribunal should decide the matter% after having consulted the parties. It will take care not to choose a method of taking evidence which the parties are not used to and which does not fully guarantee the rights of defence of the parties and e&ual treatment given to them+ It is generally admitted that% if a party wishes to be heard by the arbitral tribunal% the tribunal will organiBe an oral hearing. ! refusal by the arbitral tribunal to organiBe a hearing may be considered by /tate courts as a violation of due process and the right to be heard% and may lead the /tate court to refuse recognition or enforcement of the arbitral award. Fote that !rticle 6.(0b1 of the ()C. Few Pork 'onvention on the #ecognition and >nforcement of +oreign !rbitral !wards states that a court may refuse to recogniBe an arbitral award if% the party against whom the award is invoked wasQ unable to present his case.: Hearin! If no party has asked for an oral hearing% the arbitral tribunal is not obliged to organiBe one G but it may still do so. +urthermore% it may also decide to determine the issues on the basis only of the documents submitted by the parties% if it considers these documents sufficient. hen it organiBes a hearing% the arbitral tribunal will make sure that sufficient time is given to each of the parties to argue its case. It may also
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ask &uestions of the parties with a view to clarifying certain points. In doing so% however% the tribunal will avoid giving any impression of partiality or implying anything regarding a decision on the substance which it may already have in mind.

.itnessesC ver1ati$ transcri#ts !n arbitral tribunal may decide to hear witnesses% either on its own motion or at the re&uest of one of the parties% on specific points submitted to its scrutiny. !n arbitral tribunal may also decide to organiBe a site visit% either on its own motion or at the re&uest of one of the parties% in order to familiariBe itself with the facts being discussed in the arbitration. hen it hears witnesses% the arbitral tribunal is generally free to choose an appropriate method% unless otherwise agreed by the parties. It may itself ask &uestions of witnesses. It may also leave the initiative to the parties to examine and crossAexamine witnesses% in accordance with the desiderata of the parties. itness statements may also be prepared prior to the testimonies% in the interests of efficiency and speed. The tribunal will be well advised to make a protocol of the meeting. In complicated matters% parties may ask for verbatim transcripts of the oral testimonies. ,arties and arbitrators should know that verbatim transcripts re&uire particular organiBation% with either tapeArecording or handwritten notations% and may end up being cumbersome and expensive. E?#erts

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!n arbitral tribunal may% on its own motion or at the re&uest of one of the parties% decide to appoint an expert with the duty to establish a report on specific technical points. If expertise is ordered by the arbitral tribunal% it will be well advised to allow the parties the opportunity to provide their comments to the expert on the technical points and also to take cogniBance of the expertRs findings. !s a general rule% the final decision regarding the issue to be determined will be taken by the arbitral tribunal% not by the expert. The expertRs findings will% nevertheless% serve as a useful basis for guiding the arbitral tribunal through the technical points.

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THE LA. APPLICA)LE TO THE AR)ITRATION A'REEMENT

T e <uestion of t e vali(it" of t e ar1itration a!ree$ent +or an arbitration agreement to be effective% it should in the first place be valid. The &uestions here are% valid in what regardO and pursuant to what lawO It is worth noting that the term <arbitration agreementR can refer to two kinds of agreement= The arbitration clause% which is incorporated in the contract signed between the partiesJ and The submission agreement% which parties may make at time when II dispute arises% and in the event that they have provided an arbitration clause in their contract. In civilAlaw countries% both terms are precisely defined. in +rench% the arbitration clause is specifically called la clause compromissoire% whereas the submission agreement is called le compromise d: arbitrage. the validity of an arbitration agreement is crucially important. Henerally% the legal principles to be applied are those used in determining the validity of an
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ordinary commercial contractJ indeed% the arbitration agreement will generally be set out in an arbitration clause% which is itself part of an ordinary commercial contract. The arbitration clause is normally governed by the same law as the rest of the contract and its validity will be examined under that law. 9owever% it is not impossible 0though most unusual1 for the arbitration clause to be governed by one law while the rest of the contract is governed by another. /ome special features distinguish an arbitration agreement from other types of agreements. These special features relate to capacity and applicable law. !rbitrability and capacity are two major features of arbitration that may bring into &uestion the validity of an arbitration agreement from its very roots. 5oth the re&uirements of arbitrability and capacity should be complied with% in order to have a valid arbitration agreement. The features are% however% governed by different applicable laws. The issue of determined under the law applicable to the party whereas the issue of arbitrability may be determined under different laws% including the Rlaw of the country of enforcement.

Raisin! t e issue of Fvali(it" of t e clauseF at t e start of an ar1itration It is fairly common for the matter of the validity of an arbitration agreement to be raised by one of the parties at one stage or another during the course of arbitration proceedings.

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!t the start of an arbitration procedure% a party may seek to challenge a submission to arbitration% while invoking that the arbitration agreement is invalid. Typically% the party against whom the arbitration procedure is introduced will be the one to make the challenge. It may be made to the arbitral tribunal itself or to a court of competent jurisdiction. here parties have provided in their contract to settle their disputes by institutional arbitration% the arbitral institution may% pursuant to the applicable rules of arbitration% decide whether or not it agrees to the arbitration being set in motion on the basis of the clause in the contract. Henerally% this decision is of an administrative nature. The legally binding decision will always be for the arbitral tribunal to take% pursuant to the wellAestablished principle of Kompetenz-Kompetenz, described earlier. If an institution should decide not to set an arbitration in motion% holding either that there is no arbitration clause or that the clause does not refer to the arbitral institution% the dissatisfied party may claim recourse to a /tate court at the place where the arbitral institution is located. /hould the arbitral tribunal decide that the contract containing the arbitration clause is invalid% or null and void under the applicable law, this decision does not mean that the arbitration clause itself is invalid or null and void. This principle% known as the <severability: of arbitration clauses% is widely recogniBed in various national laws on arbitration.

Raisin! t e issue of Fvali(it" of t e clauseF at t e en( of an ar1itration

CC

!t the end of the arbitral proceedings% any &uestion as to the validity of the arbitration agreement will normally be raised in the context of= award and to have it set asideJ or !n action by the losing party before /tate courts to challenge the award and to have it set asideJ or. !n action against recognition and enforcement of the award. Typically% the unsuccessful party in the arbitration will attempt to deny the validity of the arbitration agreement% while the successful party will naturally attempt to uphold it. If no choice of law is made by the parties with respect to the arbitration agreement A which is the standard situation A the validity of the agreement may have to be decided under its proper law% or under the law of the place of arbitration% or the law of the place of enforcement. Indeed% even if an arbitral tribunal decides that the arbitration agreement is valid under its proper law% the &uestion of validity could be examined by the /tate court. This will be at the enforcement stage under the law prevailing at the place of enforcement of the award. +urthermore% if a /tate court is seiBed with a motion to set aside the award% this /tate court% which will be a /tate court at the place of arbitration% will examine the validity of the arbitration agreement under the law prevailing at the place of arbitration.

Ar1itra1ilit"

C*

The fulfillment of the re&uirement of arbitrability means that the subject matter that is in dispute must be capable of settlement by arbitration. If the subject matter is not arbitrable% the arbitration agreement remains without effect. The rules determining arbitrability may differ from one country to another% from one legal system to another. The arbitrators should take these differences into consideration when determining an issue relating to arbitrability. The concept of arbitrability is in effect a public policy limitation upon the scope of arbitration as a method for the settlement of disputes. >ach /tate may decide% in accordance with its own public policy considerations% which matters may be settled by arbitration% and which may not. 9owever% since arbitrators must take into account the public policy considerations of the country where enforcement or recognition of the award will be sought A and since this may be any country in the world where the unsuccessful party has assets A they often have to focus on matters that most /tates consider not capable of being settled by arbitration. These fre&uently include disputes on competition law and antiAtrust matters% matrimonial status% bankruptcy% and certain intellectual property rights. Fonetheless% there are some signs of evolution. In this respect% it should be noted that arbitral case law and doctrine of law% in >urope and in the 4nited /tates% are beginning to recogniBe that matters of competition law arising out of international contracts may be settled by arbitration A albeit with certain limitations. The Few Pork 'onvention on the #ecognition and >nforcement of +oreign !rbitral !wards% of June ()C.% states in !rticle 62 that=

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#ecognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that= a1 The subject matter of the difference is not capable of settlement by arbitration under the law of that countryJ $oreover% an arbitral award can be set aside if it has decided upon a subject who is not arbitrable. ! motion for setting aside might be filed against an arbitral award on the basis of lack of arbitrability% as laid down in many national laws and in !rticle @8 021 of the 4F'IT#!; $odel ;aw on International 'ommercial !rbitration of ().C% which states that= The arbitral award may be set aside by the 'ourt specified in article * only if= 0b1 the court finds that= 0i1 the subject matter of the dispute is not capable of settlement by arbitration under the law of this /tateJ

Ca#acit" The fulfilment of the re&uirement of capacity means that the parties to the contract must have the legal capacity to enter into that contract. +or example= 'an a sales representative sign an arbitration clause on behalf of the sellerO If the $inister of ,ublic orks signs a construction contract stating Rapproved and signedR% does this represent simply an administrative authoriBation to go ahead% or an indication
C.

that the country or the $inistry will be bound by the contractO

If a party does not have that capacity% the contract is invalid. The rules determining the capacity of a party are not uniform and they may differ from one country to another% and from one legal system to another. The arbitrators should take into consideration these differences when determining an issue relating to capacity. +or a natural person% capacity relates mainly to the age at which a person can be bound and this will essentially depend on hisEher nationality and on the laws of the country of which heEshe is a national. +or a company% capacity will be determined by the law applicable in the country in which it is incorporated. In general terms% the rules that determine whether a party may enter into an arbitration clause will be the same as those that determine whether a party has the capacity to enter into any form of contract. This normally means that persons such as minors% bankrupts and those of unsound mind are incapable of entering into a contract. If a party is lacking capacity to enter into an arbitration agreement% the recognition and enforcement of the arbitral award may be refused at the re&uest of the party against whom it is invoked. This principle is laid down in the Few Pork 'onvention on the #ecognition and >nforcement of +oreign !rbitral !wards of June ()C.. !rticle 6 (.a1 of the 'onvention states that recognition and enforcement of the award may be refused% at the re&uest of the party against whom it is invoked% only if that party furnishes

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to the competent authority where the recognition and enforcement is sought proof that= the parties to the agreement were% under the law applicable to them% under some incapacity% or the said agreement is not valid under the law to which the parties have subjected it or% failing any indication thereon% under the law of the country where the award was made. The issue of capacity of a party to enter into an arbitration agreement is often raised with respect to /tates or /tate entities that have signed a contract providing that disputes will be settled by arbitration. hile in many countries there is no restriction on the /tate or its agencies entering into an arbitration agreement% there are some where the /tate or its agencies are prohibited from entering into an arbitration agreement in domestic matters% or where they can do so only with special authoriBation. !rbitral awards tend to uphold the principle that a /tate which signs an arbitral agreement is estopped from alleging that it had not the right to do so. The principle that legal persons of public law have the right to conclude valid arbitration agreements in international contracts is no longer contested in most >uropean countries since this principle was laid down in the >uropean 'onvention on International 'ommercial !rbitration% signed in Heneva on 2( !pril ()*( under the auspices of the 4nited Fations >conomic 'ommission for >urope 0!rticle II.( of that 'onvention1. For$ !part from &uestions of capacity and arbitrability% validity of an arbitration agreement sometimes also depends on the form in which it is made.

*-

CASE LA.S
.ellin!ton Associates lt(. 6. Dirit Me ta(2

It is a case where sections ?% (( and (* were discussed. /ection ? of the !ct in sub clause 0(1 defines by using word <means: an agreement by the parties to submit to arbitration. Thus it postulates an agreement which necessarily or rather mandatory re&uires the appointment of arbitratorEarbitrators. 9owever in the clause in the agreement the words used are may be referred. In clause 8 of the agreement it is stated that% in case of dispute the civil courts at 5ombay are to be approved by way of the parties that arbitration is to be the sole remedy. 'lause C of the agreement is not a firm or mandatory arbitration clause and it postulates a fresh agreement between the parties that they will go to arbitration. M"sore Construction Co$#an" 6+ Darnata0a Po4er Cor#oration li$ite((@ /ection ? of the !ct defines an arbitration agreement to mean 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 defined legal relationship whether contractual or not. /ection ? is well illustrated. It is a mode of settlement of disputes not through the forum of a civil court but
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through the forum of arbitration. /o it is the intention of the parties to submit the disputes for resolution to the arbitrator0s1 and be bound by the award made by the arbitrator. If such intention is not there then it is not an agreement. It is not to prevent litigation or dispute but an agreement to refer the disputes to the arbitrator for resolving it. /uch agreement may be by a clause in the agreement or by a separate arbitration agreement. The arbitration agreement must spell out the attributes of an arbitration agreement such as i. ii. iii. #eference of disputes to private forum >n&uiry by the private forum giving due opportunity to both the parties and% The decision of the forum is final and binding. There being no such attributes% there is no arbitration agreement.

RanGeet Co$1ine *+ )+N D anna(8

The rules of construction and interpretation of arbitration agreement are the same as apply to agreements generally. It is normal judicial approach that the interpretation constructs the agreement and not destroys it. The court gives effect to the intention of the parties gathered from the contract as a whole and not as pick and choose.
M+M A<ua Tec nolo!ies Li$ite( *+ .i! )rot ers )uil(ers an(

En!ineers Lt((C

(8 (C

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*2

In this case the court referred to section 20(1 0b1 and section ? of the !ct. /ubA section 081 lays down the criteria for a valid arbitration agreement and 0a1% 0b1 and 0c1 of sub section 081 and section 0?1 of the !ct. This definition initiated with the word means exhibits clearly that for the purpose of this !ct% legal inspiration and guidance has to be taken when the issue what is arbitration agreement% arises.
Le?icon Finance Li$ite( *+ Union of In(ia(*

The issue is that if the contract is void what shall be the fate of arbitration clause in a void contract. ill it perish or surviveO The arbitration clause is an agreement independent of each other terms of the contract. >ven if the contract is declared null and void by the !rbitral Tribunal it shall not entail ipso jure the invalidity of the !rbitration clause. It exists independently and it can be enforced. H"t ro Po4er Cor#oration lt(+ 6+ Del i Transco Lt(+C8@ In this case agreement was disputed G /ingle 5ench Judge of the 9igh 'ourt rejected the application filed under section (( of the !ct and the 9igh 'ourt dismissed the writ petition filed under article 22* of the constitution of India. The apex court held that the 9igh 'ourt was under misconception of law and wrongly held that the disputes are not referable to arbitration. hether the letters and exchange of correspondence between the parties pursuant to FIT can constitute a contract and an arbitration can be read into terms of section ?081 0b1 of the !ct is itself a dispute which the jurisdiction

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of the tribunal to rule on its jurisdiction. There is an arbitration clause and the disputes deserved to be referred to arbitration.

S an0ar Sealin! S"ste$s P+ lt( *+ &ain Motor Tra(in! Co.(.

In an agreement for supply of goods provides that any dispute arising in relation to this agreement will be settled by arbitration of a neutral person agreed to by the both the parties. The clause also states that courts in ' will have exclusive jurisdiction in the event of any legalEjudicial proceedings. The said clause shows that it was not the intention of parties that arbitration is to be the sole remedy. It only suggests that they can also resort to arbitration if they wish. The court followed !I# 2--- /' (@?) and held that clause 2@! in the agreement is not a firm or mandatory arbitration clause compelling the parties to the only recourse of arbitration. It was further held by the court that the expression neutral person agreed to by both uncertain. ho is the neutral person and how the consensus to be arrived at between the parties is also not clear. In view of the vagueness and uncertainty in identifying a neutral person% it is impossible to give effect to clause 2@!.
Countr"si(e )uil(ers an( Develo#ers *+ RaGes Du$ar )ansal ()

There is a clause in the agreement for reference to arbitrator. There is also a clause in the agreement that jurisdiction of civil court shall not be ousted. It means that jurisdiction of civil courts% whenever such jurisdiction is relevant or necessary for settlement of disputes is not ousted. It cannot be interpreted
(. ()

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to have obliterated main clause of arbitration. #efusal to refer matter arbitrator by relying on such clause is improper.

Derra#la"a$ Panc a"at Union *+ A0ila2-

It is a peculiar case. ! minor girl suffered serious burn injuries when boiling tar came into contact with her exposed skin. /he through her natural guardian filed a writ petition claiming compensation. The learned single judge appointed an arbitrator to determine the compensation. The retired "istrict judge appointed as arbitrator% through arbitration proceedings passed an award and filed in the 9igh 'ourt where the writ petition had already been closed after the appointment of arbitration. The writ petition was received and the award was allowed with some modification in the date of award of interest. In writ appeal the "ivision 5ench disapproved the order of the learned single judge that the appointment of arbitrator in the absence of arbitration agreement is hit by section ? of the !rbitration and 'onciliation !ct ())* as laid down by the /upreme 'ourt in Ta$il Na(u Electricit" )oar( *+ Su$at i2(. +urthermore when the negligence is disputed the learned single judge would have not appointed and directed the arbitrator to determine compensation while dealing with writ petition under !rticle 22* of the 'onstitution of India. 9owever the "ivision 5ench did not interfere with the compensation awarded.
Dr+ S+H &affer" 6. Mo(ern In(ustrial Enter#rise In(ore22

22( 22

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The parties entered into agreement to sell having arbitration clause. /ale deed was executed by the vendor and transaction was completed by parting with consideration. /ale deed also contained arbitration clause. The issue was that as the sale deed is signed by only one of the parties it cannot be said that there was no arbitration clause. The court referred to section ? of the !ct and in particular subAclause 8 0b1 0c1 and held that arbitration agreement can be presumed. 5oth the parties were directed to submit panel of three persons out of which arbitrator can be appointed.
State of & ar0an( v+ R+D+ Construction Pvt+ lt(2@

In this case various sections of the !ct of ())* were referred. The arbitrator was appointed as per procedure contained in arbitration clause no.C2 forming part of the contract. The arbitrator is competent to decide the objection on its own jurisdiction as provided under section (* of the !ct. The appointment of an arbitrator is within the parameter of sections ? and (( of the act which can be perceived by the arbitrator. This was challenged by a writ petition. The court held that the arbitrator. This was challenged by a writ petition. The court held that the arbitrator was appointed as per procedure and the arbitrator is competent to decide the objection whether appointed as per the terms of the arbitration agreement within the provisions of section ? or appointed under the provisions of sections (( of the act and further held that writ application does not lie against a private party raising a grievance against the appointment of arbitrator as per the arbitration agreement.

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**

 Tata Finance lt(+ *+ Su$it D a$sera28

It is case under sections . and (( of the !ct of ())*. The defendant filed an application that the plaintiff filed a suit for injunction without serving noticeE without calling upon defendant to appointment arbitrator in terms of the agreement. That the defendant is not exercising his power under relevant clause of the agreement for appointment of arbitration. Instead the defendant sought to refer dispute for arbitration under section .0(1. The apprehension of the petitioner is that may be deprived of the power to appointment the arbitrator. The court held that if section . is read with section (( then it is clear that the judicial court can ask the parties to get the appointment though court which means to follow the procedure as provided under section (( of the !ct.
)al Disan )ansal *+ Pra$it )ansal2C

Three persons formed a partnership with the object of carrying out glass work and the partnershipAdeed contained a clause which provides that in case of dispute among the parties the matter first shall have right to recourse at the court of law. ! suit was filed for permanent injunction restraining the defendant from interfering in the running and working and necessary affairs of the firm. !n application was filed by the defendant to dismiss the suit as the same is barred under the provisions of the !rbitration and 'onciliation !ct ())* in view of arbitration clause. The said application was rejected by the court and hence this revision petition. The court found that there was no re&uest to refer the matter to the arbitration as per arbitration clause and also rejected the revision petition as the ingredients of section . are not satisfied.
28 2C

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 Tos an( Sons =In(iaA lt( 6+ Ha##" Tea Co$#an" Pvt+ lt(2* The parties entered into an agreement whereby the petitioner lent and advanced diverse sums of money to the respondent for smooth running of the Tea >state. !s the money was not repaid n terms of the agreement the petitioner initially approached the civil court by filing a suit as also applied under 3rder @) of the 'ode of 'ivil ,rocedure suppressing the arbitration clause in the agreement. The petitioner also moved the criminal court as against the "irectors of the company. ;ater on realising the petitioner the petitioner filed an application for withdrawal of the suit on the ground that arbitration proceedings have initiated and are pending. The respondents filed on application revoking the appointment of the arbitrator on the ground of his inactivity in the matter. The court heard the arguments and orders as follows= i. ii. iii. The appointment of the arbitrator is revoked as he is not willing to proceed with the reference. The appointment of the arbitrator during the pendency of suit was otherwise proper in view of section .0@1 of the !ct. The petitioner is given liberty to take appropriate steps for appointment of a new arbitrator in accordance with the provisions of the !ct ())*.
Ma es 4ari )rot ers Li$ite( *+ Air#orts Aut orit" of In(ia lt(2?

It is an application for dismissal of suit or alternatively the suit may be permanently stayed. The application was filed on the ground that there exists
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an arbitration agreement between the parties. The arbitration clause consists two significant aspects i. ii. /ettlement of disputes through arbitration% and "elhi 'ourt shall have exclusive jurisdiction over the same.

It is case of termination of contract. 9owever it clearly appears that some cause falls within the ambit of the jurisdiction of civil court and some cause of action falls within the sway of arbitration. /ince two separate proceedings are not permissible% the whole matter may be tried by the court. S$iline Rus i(a *+ N+ Ra$es
2.

It is a case of pertaining to sections . and ) of the !ct and section 880c1 and 0g1 of the ,artnership !ct ()@2. /erious disputes arose between the applicants and respondents in the conduct of ,artnership business. !llegations and counter allegations were leveled by against each other. There was an application under section ) of the !rbitration !ct for interim injunction. The court held that it cannot restraint applicants from carrying on business and further held that it is imperative that arbitration proceedings ought to be commenced to adjudicate disputes and whether the partnership can be dissolved can also be looked into by the arbitrator.
Sun(ara$ Finance Li$ite( *+ NEPC In(ia Li$ite(2)

The court is this case dealt with section ) of the !ct of ())* stating that it corresponds to !rticle ) of the 4FI'T#!; $3">; ;! . The important point in this decision is that the court had jurisdiction to entertain an
2. 2)

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application under section ) either before arbitral proceedings or during arbitral proceedings or after the making of the arbitral award but before it is enforced in accordance with section @* of the !ct.
Delta

Construction S"ste$s Lt( H"(era1a( *+ Sentrans

In(ustries Li$ite(@The court has said that the power under section ) in all its force must be available to the extent applicable till the award becomes enforceable. !fter the award becomes enforceable the provisions of 3rder 2( of the 'ode of 'ivil ,rocedure are applicable as the award becomes a decree and can be executed as a decree.
)al Dis an A!ar4al 'lass In(ustries Li$ite( *+ Union of In(ia@(

It is a contract for supply of gas. The respondent disconnected the gas supply without initiating arbitral proceeding in spite of order of the court. !pplication seeking interim order before commencement of arbitral proceedings is maintainable. 'ivil court is empowered to grant restoration of supply under section ).
'lo1e 'eneration Po4er Lt(+ *+ Sri Hiran"a0es i Sa a0ari

Sa00ere Dar0 ana Ni"a$atC San0es 4arC Darnata0a@2 In this case the court referred to section 8(0b1 of the !ct ()8- and then explained section ) of the !ct ())*% the court may on application by the party grant interim relief before or during arbitral proceedings or at any
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time making of the arbitral award but before it is enforced. Thus% under section ) of the !ct ())* a party can make application for grant of interim reliefs of protection as provided therein not only during the arbitral proceedings but even before the commencement of arbitral proceedings and the court shall have the same power for making orders as it has for the purpose of and in relation to any proceedings before it.
S ree Ra$ Mills Lt(+ Mu$1ai *+ Dal#ataru Construction

Overseas Pvt+ Lt(@@ It is a case challenging the validity of the interim order passed under section ) granting injunction during pendency of arbitral proceedings. The arbitral was yet to go into claims of the developer. The court held that it will be in interest of justice that subjectAmatter of dispute available for developer was not alienated% encumbered or transferred during pendency of proceedings. The owner of the property was directed to maintain status quo.

M+*iGa"anara"anan *+ M+ Pra1 a0aran@8 It is held that once it is found that subjectAmatter of an arbitration agreement is same as the subjectAmatter of action before the court and order is passed% the proceedings of the suit has necessarily to end.
Union of In(ia *+ *+S+ En!ineerin! =PA Lt(.@C

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These appeals are directed against the judgment and order passed by the 9igh 'ourt of !ndhra ,radesh and held that when the general manager did not appoint the arbitral tribunal within @- days of the receipt of notice or before the party approached the 9igh 'ourt for appointment of arbitrator% it is the discretion of the 9igh 'ourt in such a case that they can appoint any #ailway 3fficer or they can appoint any 9igh 'ourt Judge according to given situation.
M+*+*+ Sat"anara"ana Contractor *+ Union of In(ia@*

It:s a case of failure on the part of the contractor to make demand for arbitration within time prescribed in term of clause of Heneral 'onditions of 'ontract which forms part of the agreement. 9eld% that the contractor is not entitled to relief of appointment of arbitrator and even more so when most of his claims were overlapping and state claims.
N+ Ga"ala?$i *+ R+ *eeras4a$i@?

It is held that if a party fails to file the pleadings within the time stipulated by the arbitrator and arbitral proceedings are terminated the same would not amount to treating the party with e&uality and the same does not amount to giving full opportunity to the party to present his case. 5ut if the arbitrator ignoring the basic object of the !ct% i.e. expeditious justice and perennially goes adjourning the matter for completion of pleadings% it can certainly be a situation where unfairness would be meted to the other party if the proceedings are not terminated.

@* @?

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 Sulai0 a Cla" Mines *+ Al# a Cla"s@.

The issue before the court was whether for procedural violation% can an arbitral award be set aside under section @8 of the !ct ())* and conse&uences thereof. The arbitrator was appointed with consent of the parties and the arbitrator made the award which was challenged on various grounds. The court upheld one ground of challenge that the procedure as contemplated in the !ct was not compiled with and the proceedings conducted by the second respondent was in violation of section (. of the !ct and also violation of mandatory provision of section 280@1 of the !ct and thus the award is liable to set aside under section @8021 and 0b1 of the !ct. !ggrieved by the order this $.+.! was filed and the main consideration before the 9igh 'ourt was procedural irregularities. The 9igh 'ourt went through the record and the statutory provisions regarding the procedure to be adopted covered by sections (.% ()% 2- and 28 of the !ct and held that the award has been rightly set aside.
Sri *en0ates 4ara Construction Co+ *+ Union of In(ia@)

!pplicability of the new act does not depend either on the date of the execution of the contract or the date of completion of the work or the date of the preparation of the bill or on the date when cause of action has arisen to raise claims. If the arbitral provisions of the old !ct ()8- shall apply. If the arbitral proceedings have commenced after the new !ct shall apply. This is what section .C reads with section 2( of the !ct ())* clearly shows.

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 Continental Construction Lt(

*+ C ief En!ineer =consA N+E+

Rail4a"C 'ora0 #ur%8The clause in the contract agreement was that the !rbitration !ct ()8- the rules therein and any statutory modification would apply to the arbitration proceedings. The 'ourt discussed the distinction between modification and repeal on this basis of distinction the court held that arbitration proceedings have already commenced in ())C and hence it shall be governed under the provisions of the !rbitration !ct ()8-.

8-

)* 02--21 ";T .)@

?8

CONCLUSION
;aw and system of justice are not like anti&ue to be taken down% dusted% admired and put back on the shelf% but are like a vigorous tree% which has its roots in history and takes on a new graft and puts out new sprouts. This implies that law and justice should be stable% but not standstill. ith the passage of time there has been tremendous change in the nature of society% it is moving from real space to virtual space. In this fast changing environment the traditional concept of dispute resolution through litigation is proving to be insufficient. The arrears of cases pending before the various 'ourts are enormous despite all the efforts done by the 'ourts to dispose them off. The need of an !"# mechanism has been felt at all the levels of society. The Hovernment and the judiciary are encouraging outAofA'ourt settlement of disputes. 9owever% the !"# in India is in its infancy. This is so because in India people prefer to litigate rather than opt for arbitration% conciliation% mediation% etc. the extent of intervention by 'ourt was so extensive that in most of the cases% it took much more time than regular 'ourt proceedings. 9owever% the !rbitration and 'onciliation !ct% ())* has brought about much simplicity and the provisions aim at minimiBing the intervention by the 'ourts. The latest amendments in ',' provide powers to the 'ourts to
?C

direct parties to arbitration%

conciliation% mediation% ;ok !dalats% etc.%

which offer fast track settlement of disputes. This step is big leap by the Indian Hovernment in the regime of !"#. The /upreme 'ourt upholding the constitutional validity of these ',' amendments has also directed the setting up of a committee to suggest a model case management formula as well as rules and regulations to be followed while taking recourse to disputes resolution. There would be a considerable reduction in the burden of the judiciary if the commercial and other disputes are settled through !"# methods. The Hovernment is also trying to spread awareness amongst the public in general% and the business entrepreneurs in particular% about the distinct advantages of the !"# mechanism to bring about a change in their mindset. The establishment of permanent ;ok !dalats is a very good and effective move adopted for disputes resolution. +urther% certain efforts are also being made for resolving disputes arising in the Internet regime. $ore and more parties are approaching disputeAresolving institutions for getting their disputes resolved. Thus% concept of !rbitration is emerging with a new look% which is participative and promising.

?*

??