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Introduction
Arbitration is a process in which a dispute is
submitted to an impartial outsider who makes a
decision which is usually binding on both the
parties.
Basics
The arbitrator enforces his own point of
view on the contending parties and the
opinions of the participants are not given
any predominance.
Arbitration is a judicial process
The award of the arbitrator is binding
and rests on equity and justice, i.e., there
is no scope for compromise
Introduction
Definition:
Arbitration is an alternative to legal action in the courts,
in order to settle an unresolved dispute.
Explanation:
• It is legal
• It is popular
• It is easier than a judicial process
Terminologies:
• Arbitrator : The person appointed with agreement from the parties.
• Arbitral tribunal: A group of arbitrators.
• Award : The final decision of the arbitrator.
Brief History:
• Predates formal courts
lements of Valid Arbitration Agreement
• Legal Contract
The parties must be capable of entering into a legally binding
contract,
• Written Agreement
The agreement, whenever possible, should be in writing.
• Signed
It must be signed by the parties concerned.
• Matters Clearly Stated
It must state clearly those matters which will be submitted to
arbitration.
• No Illegal Content
It must not contain anything that is illegal.
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Selecting Arbitrator
Criteria for selecting an Arbitrator
• Mutual Consultation
Arbitration can only take place if both the parties have agreed to it. Both the
parties have mutually consult each other and agree on selecting an
arbitrator(S). Unlike in judicial courts.
• Neutral
The arbitrator should be a neutral person. Independent from the parties. And
should be biased towards one party or individual.
• Qualified & Experienced
The arbitrator should be sufficiently qualified and experienced in the matter of
dispute. He/She might not be having enough knowledge about the judicial
matters.
DUTIES OF ARBITRATOR
To administer oath to the parties and witness
appearing
To act judicially and impartially
To put necessary interrogatories to any party to
the dispute
To determine by and to whom the costs of
reference and the award shall be paid
To award interest
To fix amount, mode and time of payment
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Contd.
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Advantages of Arbitration
Choice of decision maker with expertise
Speed
Lower-cost
Flexible
Confidentiality
Less formal than court
Preservation of business relationships
Disadvantages of Arbitration
Limited recourse
Uneven playing field
Lack of transparency
Cost: parties pay for arbitrator and agency
Limited rights of appeal, fewer means to
challenge award
Lack of formal discovery
Main Types of Arbitration
1) VOLUNTARY ARBITRATION
2) COMPULSORY ARBITRATION
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VOLUNTARY ARBITRATION
Voluntary arbitration
implies that the two
contending parties, unable to
compose their differences by
themselves agree to submit the
conflict/dispute to an impartial
authority, whose decision they
are ready to accept.
Essentials of voluntary arbitration
The voluntary submission of dispute to an
arbitrator
The subsequent attendance of witnesses and
investigations
The enforcement of an award may not be
necessary and binding
Voluntary arbitration may be specially needed
for disputes arising under agreements
/contracts
Compulsory Arbitration
Institutional Arbitration
Statutory Arbitration
Foreign Arbitration
(1) Ad-hoc Arbitration:- When a dispute or
difference arises between the parties in course of
commercial transactions.This arbitration is agreed
to get justice for the balance of the un-settled part of
the dispute only.
(2) Institutional Arbitration: There is
prior agreement between the parties that in case of
future differences or disputes arising between the
parties during their commercial transactions, such
differences or disputes will be settled by arbitration
as per clause provide in the agreement.
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(3) Statutory Arbitration: It is mandatory
arbitration which is imposed on the parties by operation
of law. In such a case the parties have no option as such
but to abide by the law of land.
(4) Domestic or International
Arbitration: Arbitration which occurs in India and
have all the parties within India is termed as Domestic
Arbitration. An Arbitration in which any party belongs to
other than India and the dispute is to be settled in India is
termed as International Arbitration.
(5) Foreign Arbitration: When arbitration
proceedings are conducted in a place outside India and
the Award is required to be enforced in India, it is termed
as Foreign Arbitration.
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Arbitration in india
Indian council of arbitration (1965)
Abide Arbitration and Conciliation Act, 1996
Comprehensive legal framework
95% arbitration is of type ad-hoc
India No. 2 in arbitration cases reaching Singapore
centre
Mumbai to have India's first International Arbitration
Centre soon
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Construction disputes;
Change of project’s scope, shortage of manpower and technical
resources, lack of planning and finance management, to name a
few. Delays (and even rampant delays) are clear and present risks for
infrastructure projects in India. Causing many types of construction
disputes. legal disputes between developers and executing agencies
(contractors) related to time overruns appear to have been
increasing over the past few years. The genesis of such disputes is
usually the delay clause in the contract itself – which imposes stiff
legal ramifications upon the party responsible for the delay. the
need of the hour is honest and transparent dealing between the
parties to a project contract – not only through careful contract
mechanisms, but also by realistic project management. While it is
undeniable that external factors beyond control of both parties do
play a major role in delays,
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There may be only one contract, if the work is small in
magnitude. Or, there may be a number of contracts, where the
project is a large one - a case of "horizontal multiplicity". If the
contract is a complex one, then there may be an hierarchy of
contractors, involving several "sub-contractors". That can be
called an instance of "vertical multiplicity". But, whatever the
nature and magnitude of the contract involved, it is obvious that
the transaction is a consensual one, intended to have "defined
legal consequences". In terms of the Arbitration and Conciliation
Act, 1996, it is a "defined legal relationship", which is contractual
in nature. It is in this respect, that the law of contracts becomes
very relevant.
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Sources of the law
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There may be only one contract, if the work is small in
magnitude. Or, there may be a number of contracts, where the
project is a large one - a case of "horizontal multiplicity". If the
contract is a complex one, then there may be an hierarchy of
contractors, involving several "sub-contractors". That can be
called an instance of "vertical multiplicity". But, whatever the
nature and magnitude of the contract involved, it is obvious that
the transaction is a consensual one, intended to have "defined
legal consequences". In terms of the Arbitration and Conciliation
Act, 1996, it is a "defined legal relationship",which is contractual
in nature. It is in this respect, that the law of contracts becomes
very relevant.
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the law of contracts
certain aspects of the law of contracts acquire special
relevance in the context of construction contracts. So do
some aspects of the law of dispute resolution and the law
of arbitration (as will be dealt with, presently). In
particular, in a construction contract, the number of
persons interested in its successful completion would be
large. Hence, the number of persons who can benefit
from prompt and peaceful settlement of disputes, is also
correspondingly large.
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Nature of Construction projects and problems involved
special features of the construction industry can be thus enumerated:
(a) The industry itself is a specialised one, with its own patterns and
practices.
(b) Planning and execution of a construction project involves numerous
parties and organisations, who must work in unison -
though temporarily. A small
deviation (real or alleged) affects numerous parties.
(c) A construction project is a continuous one, usually spread over a
number of years. A dispute that operates as an
impediment at any single stage may upset the entire time-table, unless the
dispute is speedily resolved.
(d) Some of the problems that arise in the working of the project are not
foreseeable or, even if they are foreseeable, their
magnitude may not be foreseeable. If litigation is resorted to, then such
problems may increase (rather than resolve) the
tension generated by the emergence of various problems.
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Proper approach
When a legal question arises pertaining to a construction contract, one
has first to study and apply the provisions or rules of the general
law of contracts, and then to see whether any special or peculiar approach
(in applying those rules) is needed, in the light of the fact that
one is concerned with a construction contract. And, of course, the specific
terms of the particular contract under consideration have to be
kept in mind.
Categories of dispute resolution
Resolution of disputes comprises:
(a) resolution without litigation, (b) resolution through litigation,
and (c) resolution through alternative dispute resolution.
The term "Alternative Dispute Resolution" ( ADR ) in its wider
sense, can include arbitration also
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Central Government Act
THE ARBITRATION AND CONCILIATION ACT, 1996
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Administrative assistance.—In order to facilitate the conduct of the arbitral
proceedings, the parties, or the arbitral tribunal with the consent of the parties,
may arrange for administrative assistance by a suitable institution or person
Arbitration Agreement : _“arbitration agreement” 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. It may be in the form of an arbitration clause in a contract or in
the form of a separate agreement.
An arbitration agreement shall be in writing. a document signed by the parties;
The parties are free to determine the number of arbitrators, provided that such
number shall not be an even number for finding a solution to their dispute.
An arbitrator may be challenged only if-(a) circumstances exist that give rise to
justifiable doubts as to his independence or impartiality, or (b) he does not
possess the qualifications agreed to by the parties.
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Order of Reference
The Order of Reference in arbitration is an Agreement drawn
between the disputing parties referring the matter for Adjudication
by an Arbitrator, after the actual dispute has arisen. It contains the
names of the Arbitrators, details of the specific dispute & a time
limit within which the Arbitrators should declare the award.
The difference between an Agreement of Arbitration & an Order of
Reference is that, the former is executed before any dispute takes
place & does not contain any names of the Arbitrators and the
latter is actually the submission prepared after the disputes have
arisen, containing all the details about the same.
“Submission to Arbitration” means submitting both the Agreement
for Arbitration & the Order of Reference. to the selected
Arbitrators for their Judgment of the Case.
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Arbitration Procedure
The Arbiration can be with or without the intervention of the Court. In the former case, a
regular suit is required to bring the arbitration agreement on to the records of the Court. While
in the later Case, No suit is Required to be filed to bring the Arbitration agreement on to the
records of the Court.
When the intervention of the court is not there, Each party appoint his own arbitrator & the
proceedings are conducted. In such cases, there is a likelihood of some differences between the
two arbitrators during the course of proceedings or at the time of declaration of award (
Judgement) and if these differences are not resolved, the proceedings will never come to an
end. Hence both the Arbitrators appoint a third Arbitrator known as an UMPIRE and to whom
all differences between the arbitrators are referred for his decision. & the same is Final &
binding on both the Parties.
When the proceedings are required to be conducted with the intervention of the court, The
court with the arbitration agreement to be filed and an order of reference to the arbitrators who
may be suggested by the parties are appointed by the Court. Unless otherwise expressly
provided in the arbitration agreement about the appointment of two or more arbitrators, the
court may appoint ONE arbitrator for the complete proceedings & he is known as SOLE
ARBITRATOR.
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An arbitration award (or arbitral award);
It is a determination on the merits by an arbitration
tribunal in an arbitration, and is analogous to a judgment
in a court of law.
Although arbitration awards are characteristically an award of damages against a
party, tribunals usually have a range of remedies that can form a part of the award.
the tribunal may order the payment of a sum of money (conventional damages)
the tribunal may make a "declaration" as to any matter to be determined in the
proceedings
in most jurisdictions, the tribunal has the same power as a court to:
order a party to do or refrain from doing something ("injunctive relief")
to order specific performance of a contract
to order the rectification, setting aside or cancellation of a deed or other
document.
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THANK YOU
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