LAW RELATING TO ARBITRATION AND CONCILIATION

Purpose of Arbitration Act is to provide quick redressal to commercial dispute by private Arbitration. Quick decision of any commercial dispute is necessary for smooth functioning of business and industry. Internationally, it is accepted that normally commercial disputes should be solved through arbitration and not through normal judicial system. Hence, the need of Alternate ispute !esolution. "A !#. $here are four methods of A ! % negotiation, mediation, conciliation and arbitration. &'egotiation& is cheapest and simplest method. If it does not (ork, mediation through a mediator can be tried. If it does not (ork, conciliation and arbitration (ill be useful. Arbitration Act makes provision for conciliation and arbitration as A ! mechanisms. An arbitrator is basically a private judge appointed (ith consent of both the parties. )bject of arbitration is settlement of dispute in an e*peditious, convenient, ine*pensive and private manner so that they do not become the subject of future litigation bet(een the parties. Scheme of the Act % $he Act is divided in to follo(ing parts + " a# Part I % omestic arbitration. "b# Part II % ,nforcement of foreign a(ards. "c# Part III % -onciliation procedures. "d# Part I. % /upplementary provisions. "e# 0irst /chedule % -onvention on recognition and enforcement of foreign arbitral a(ard as per 'e( 1ork convention " f# /econd /chedule % Protocol on Arbitration clauses "g# $hird /chedule % -onvention on the e*ecution of foreign arbitral a(ards as per 2eneva -onvention. 3A4 5A/, )' 6'-I$!A3 7) ,3 3A4 % $he present Act is based on model la( drafted by 6nited 'ations -ommission on International $rade 3a(s "6'-I$!A3#, both on domestic arbitration as (ell as international commercial arbitration, to provide uniformity and certainty to both categories of cases. 7A$$,!/ ')$ !,0,!A53, $) A!5I$!A$I)' % -ertain matters (hich are not arbitrable are % 8 /uits for divorce or restitution of conjugal rights 8 $a*ation 8 'on%payment of admitted liability 8 -riminal matters. Arbitration Agreement % $he foundation of an arbitration is the arbitration agreement bet(een the parties to submit to arbitration all are certain disputes (hich have arisen or (hich may arise bet(een them. $hus, the provision of arbitration can be made at the time of entering the contract itself, so that if any dispute arises in future, the dispute can be referred to arbitrator as per the agreement. It is also possible to refer a dispute to arbitration after the dispute has arisen. Arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. $he agreement must be in (riting and must be signed by both parties. $he arbitration agreement can be by e*change of letters, document, tele*, telegram etc. 9section :;. Court must refer the matter to arbitration in some cases % If a party approaches court despite the arbitration agreement, the other party can raise objection. Ho(ever, such objection must be raised before submitting his first statement on the substance of dispute. /uch objection must be accompanied by the original arbitration agreement or its certified copy. )n such application the judicial authority shall refer the parties to arbitration. /ince the (ord used is <shall=, it is mandatory for judicial authority to refer the matter to arbitration. 9section >;. Ho(ever, once first statement to court is already made by the opposite party, the matter has to continue in the court. )nce an application is made by other party for referring the matter to arbitration, the arbitrator can continue (ith arbitration and even make an arbitral a(ard. APP)I'$7,'$ )0 A!5I$!A$)! % $he parties can agree on a procedure for appointing the arbitrator or arbitrators. If they are unable to agree, each party (ill appoint one arbitrator and the t(o appointed arbitrators (ill appoint the third arbitrator (ho (ill act as a presiding arbitrator. 9section ??"@#;. If one of the party does not appoint an arbitrator (ithin @A days, or if t(o appointed arbitrators do not appoint third arbitrator (ithin @A days, the party can request -hief

Bustice to appoint an arbitrator. 9section ??"C#;. $he -hief Bustice can authorise any person or institution to appoint an arbitrator. 9/ome High -ourts have authorised istrict Budge to appoint an arbitrator;. In case of international commercial dispute, the application for appointment of arbitrator has to be made to -hief Bustice of India. In case of other domestic disputes, application has to be made to -hief Bustice of High -ourt (ithin (hose jurisdiction the parties are situated. 9section ??"?D#; -HA33,'2, $) APP)I'$7,'$ )0 A!5I$!A$)! % An arbitrator is e*pected to be independent and impartial. If there are some circumstances due to (hich his independence or impartiality can be challenged, he must disclose the circumstances before his appointment. 9section ?D"?#;. Appointment of Arbitrator can be challenged only if "a# -ircumstances e*ist that give rise to justifiable doubts as to his independence or impartiality "b# He does not possess the qualifications agreed to by the parties. 9section ?D"@#;. Appointment of arbitrator cannot be challenged on any other ground.. $he challenge to appointment has to be decided by the arbitrator himself. If he does not accept the challenge, the proceedings can continue and the arbitrator can make the arbitral a(ard. Ho(ever, in such case, application for setting aside arbitral a(ard can be made to -ourt. If the court agrees to the challenge, the arbitral a(ard can be set aside. 9section ?@"E#;. $hus, even if the arbitrator does not accept the challenge to his appointment, the other party cannot stall further arbitration proceedings by rushing to court. $he arbitration can continue and challenge can be made in -ourt only after arbitral a(ard is made. Conduct of Arbitral Proceedings % $he Arbitral $ribunal should treat the parties equally and each party should be given full opportunity to present his case. 9section ?>;. $he Arbitral $ribunal is not bound by -ode of -ivil Procedure, ?FA> or Indian ,vidence Act, ?>:D. 9section ?F"?#;. $he parties to arbitration are free to agree on the procedure to be follo(ed by the Arbitral $ribunal. If the parties do not agree to the procedure, the procedure (ill be as determined by the arbitral tribunal. 3A4 )0 3I7I$A$I)' APP3I-A53, % 3imitation Act, ?FE@ is applicable. 0or this purpose, date on (hich the aggrieved party requests other party to refer the matter to arbitration shall be considered. If on that date, the claim is barred under 3imitation Act, the arbitration cannot continue. 9section C@"D#;. If Arbitration a(ard is set aside by -ourt, time spent in arbitration (ill be e*cluded for purpose of 3imitation Act. 9so that case in court or fresh arbitration can start;. 03,GI5I3I$1 I' !,/P,-$ )0 P!)-, 6!,, P3A-, A' 3A'26A2, % Arbitral $ribunal has full po(ers to decide the procedure to be follo(ed, unless parties agree on the procedure to be follo(ed. 9section ?F"@#;. $he $ribunal also has po(ers to determine the admissibility, relevance, materiality and (eight of any evidence. 9section ?F"C#;. Place of arbitration (ill be decided by mutual agreement. Ho(ever if the parties do not agree to the place, the same (ill be decided by tribunal. 9section DA;. /imilarly, language to be used in arbitral proceedings can be mutually agreed. )ther(ise, Arbitral $ribunal can decide. 9section DD;. /657I//I)' )0 /$A$,7,'$ )0 -3AI7 A' ,0,'-, % $he claimant should submit statement of claims, points of issue and relief or remedy sought. $he respondent shall state his defence in respect of these particulars. All relevant documents must be submitted. /uch claim or defence can be amended or supplemented any time 9section D@;. H,A!I'2/ A' 4!I$$,' P!)-,, I'2/ % After submission of documents and defence, unless the parties agree other(ise, the Arbitral $ribunal can decide (hether there (ill be oral hearing or proceedings can be conducted on the basis of documents and other materials. Ho(ever, if one of the parties requests, the hearing shall be oral. /ufficient advance notice of hearing should be given to both the parties. 9section DC;. 9$hus, unless one party requests, oral

hearing is not compulsory;. /,$$3,7,'$ 6!I'2 A!5I$!A$I)' % It is permissible for parties to arrive at mutual settlement even (hen arbitration is proceeding. In fact, even the $ribunal can make efforts to encourage mutual settlement. If parties settle the dispute by mutual agreement, the arbitration shall be terminated. Ho(ever, if both parties and the Arbitral $ribunal agree, the settlement can be recorded in the form of an arbitral a(ard on agreed terms. /uch Arbitral A(ard shall have the same force as any other Arbitral A(ard. 9section @A;. Arbitral Award % ecision of Arbitral $ribunal is termed as &Arbitral A(ard&. Arbitrator can decide the dispute ex aequo et bono "In justice and in good faith# if both the parties e*pressly authorise him to do so. 9section D>"D#;. $he decision of Arbitral $ribunal (ill be by majority. $he arbitral a(ard shall be in (riting and signed by the members of the tribunal. 9section DF;. $he a(ard must be in (riting and signed by the members of Arbitral $ribunal. 9section @?"?#;.. It must state the reasons for the a(ard unless the parties have agreed that no reason for the a(ard is to be given. 9section @?"@#;. $he a(ard should be dated and place (here it is made should be mentioned. -opy of a(ard should be given to each party. $ribunal can make interim a(ard also. 9section @?"E#;. Cost of Arbitration % -ost of arbitration means reasonable cost relating to fees and e*penses of arbitrators and (itnesses, legal fees and e*penses, administration fees of the institution supervising the arbitration and other e*penses in connection (ith arbitral proceedings. $he tribunal can decide the cost and share of each party. 9section @?">#;. If the parties refuse to pay the costs, the Arbitral $ribunal may refuse to deliver its a(ard. In such case, any party can approach -ourt. $he -ourt (ill ask for deposit from the parties and on such deposit, the a(ard (ill be delivered by the $ribunal. $hen -ourt (ill decide the costs of arbitration and shall pay the same to Arbitrators. 5alance, if any, (ill be refunded to the party. 9section @F;. Intervention by Court % )ne of the major defects of earlier arbitration la( (as that the party could access court almost at every stage of arbitration % right from appointment of arbitrator to implementation of final a(ard. $hus, the defending party could approach court at various stages and stall the proceedings. 'o(, approach to court has been drastically curtailed. In some cases, if an objection is raised by the party, the decision on that objection can be given by Arbitral $ribunal itself. After the decision, the arbitration proceedings are continued and the aggrieved party can approach -ourt only after Arbitral A(ard is made. Appeal to court is no( only on restricted grounds. )f course, $ribunal cannot be given unlimited and uncontrolled po(ers and supervision of -ourts cannot be totally eliminated. A!5I$!A$I)' A-$ HA/ ).,!%!I I'2 ,00,-$ % /ection H of Act clarifies that not(ithstanding anything contained in any other la( for the time being in force, in matters governed by the Act, the judicial authority can intervene only as provided in this Act and not under any other Act.. Conciliation % Part III of the Act makes provision for conciliation proceedings. In conciliation proceedings, there is no agreement for arbitration. In fact, conciliation can be done even if there is arbitration agreement. $he conciliator only brings parties together and tries to solve the dispute using his good offices. $he conciliator has no authority to give any a(ard. He only helps parties in arriving at a mutually accepted settlement. After such agreement they may dra( and sign a (ritten settlement agreement. It (ill be signed by the conciliator. Ho(ever after the settlement agreement is signed by both the parties and the conciliator, it has the same status and effect as if it is an arbitral a(ard. -onciliation is the amicable settlement of disputes bet(een the parties, (ith the help of a conciliator.

)00,! 0)! -)'-I3IA$I)' % $he conciliation proceedings can start (hen one of the parties makes a (ritten request to other to conciliate, briefly identifying the dispute. $he conciliation can start only if other party accepts in (riting the invitation to conciliate. 6nless there is (ritten acceptance, conciliation cannot commence. If the other party does not reply (ithin @A days, the offer for conciliation can be treated as rejected. 9section ED; All matters of a civil nature or breach of contract or disputes of movable or immovable property can be referred to conciliation. Ho(ever, matters of criminal nature, illegal transactions, matrimonial matters like divorce suit etc. cannot be referred to conciliation. Enforcement of Foreign Awards % $he foreign a(ards (hich can be enforced in India are as follo(s + % "a# 'e( 1ork convention a(ard "made after ??th )ctober, ?FEA# "b# 2eneva convention a(ard % made after D>th Buly, ?FDC, but before the concerned 2overnment signed the 'e( 1ork convention. /ince most of the countries have signed 'e( 1ork convention, normally, 'e( 1ork convention a(ards are enforceable in India. 'e( 1ork convention (as drafted and kept in 6nited 'ations for signature of member countries on D?st ecember, ?FH>. ,ach country became party to the convention on the date on (hich it signed the convention. Party (hich intends to enforce a foreign a(ard has to produce the arbitral a(ard and agreement of arbitration 9original or its certified copy; to the district court having jurisdiction over the subject matter of the a(ard. 9section C:;. $he enforcement of a(ard can be refused by court only in cases specified in section C>. )ther(ise, the foreign a(ard is enforceable through court as if it is a decree of the court. 9section CF;. If the court declines to enforce the arbitral a(ard, appeal can be made to the court (here appeal normally lies from the district court. Ho(ever, no further appeal can be made "e*cept appeal to /upreme -ourt# % "section HA#. 9Probably, the aggrieved party may be able to approach International -ourt of Bustice, as the convention is an international convention, signed by many of the member countries;. )ne advantage of foreign a(ard, according to foreign parties, is that Indian courts come into picture only at the time of implementation of a(ard. $he courts can refuse to implement the a(ard only on limited grounds.