Introduction - Alternative Dispute Resolution is a term that refers to several different methods of resolving business-

related disputes outside traditional legal and administrative forums. These methodologies, which include various
types of arbitration and mediation, have surged in popularity in recent years because companies and courts became
extremely frustrated over the expense, time, and emotional toll involved in resolving disputes through the usual
avenues of litigation. "The opposing sides in litigation are attacked and demeaned at every opportunity during the
course of a lawsuit," pointed out Wayne Hoagland in Nation's Restaurant News. "The system is very expensive,
disruptive and protracted, and by its very nature it tends to drive the parties further apart, weakening their
relationships, often irreparably." ADR programs have emerged as an alternative, litigation-free method of resolving
disputes.
The entire globe of ADR can be further subdivided under two major subheads which are arbitration and mediation.
Arbitration is the procedure by which parties agree to submit their disputes to an independent neutral third party,
known as an arbitrator, who considers arguments and evidence from both sides, then hands down a final and binding
decision. In contrast to arbitration, mediation is a process whereby the parties involved utilize an out-side party to
help them reach a mutually agreeable settlement. Rather than dictate a solution to the dispute between the two
parties, the mediator—who maintains scrupulous neutrality throughout—suggests various proposals to help the two
parties reach a mutually agreeable solution.
In India the need to evolve alternative mechanisms simultaneous with the revival and strengthening of traditional
systems of dispute resolution have been reiterated in reports of expert bodies.
The reasons for the need for a transformation are not much in dispute. The inability of the formal legal system to
cope with the insurmountable challenge of arrears argues itself. The Parliamentary Standing Committee on Home
Affairs found that as of 2001, there were in 21 High Courts in the country, 35.4 lakh cases pending. Of the 618 posts
of High Court judges there were 156 vacancies as on January 1, 2000. The position in the subordinate courts was
even more alarming. There was a backlog of over 2 crore (20 million) cases for as long as 25 to 30 years. Of these,
there were over 1.32 crore (13.2 million) criminal cases and around 70 lakhs (7 million) civil cases. In its 120th Report
in 1988, the Law Commission of India had recommended that “the state should immediately increase the ratio from
10.5 judges per million of Indian population to at least 50 judges per million within the period of next five years.
“The recommendation is yet to be implemented.

The ADR mechanisms in India are also not in the smoothest of form and need urgent attention and thought. The
present essay seeks to analyze and suggest ways of improvement and implementation of the ADR mechanisms in
India keeping in mind the supremacy of the judiciary and the convenience of the parties involved.

What is ADR - The Alternative Dispute Resolution (ADR) mechanisms are largely out of court settlements aimed at
settling disputes in an amicable manner, which are free from strict procedural formalities and are cost effective. ADR
mechanisms have been mooted as a guiding light or to a large extent a panacea for all evils affecting the legal system.
It has been developed, primarily to ameliorate the present conditions existing in courts, which includes delay caused
due to docket explosion, procedurally and non-availability of a satisfied justice mechanism preventing the people to
opt for a better alternative. They have been the most widely discussed solution for this appalling. Since
independence the state has introduced various legislations and government initiatives even after which the alternate
mechanisms continue to be primarily commercial in nature and have not penetrated to the under privileged masses.
The different forms of ADR are - Arbitration, Conciliation and Mediation

ADR mechanisms are been legally recognized by the law and the courts are eager to encourage its use to solve the
problems affecting the system. The sanctity of ADR derives from the settlement agreement reached towards by the
parties who have consented to get their disputes resolved amicably through any of the techniques. In Arbitration
the final decision is called an Award which cannot be challenged before the courts except in certain exceptional
circumstances. In mediation and conciliation normally, the parties themselves agree upon a decision which is made
in writing which has the effect of a decree of the court. Thus, the agreement been reached upon a consensus
between the parties bind them and determine their rights and liabilities.
 Arbitration - Arbitration is a method of dispute settlement using private entities known as "arbitral tribunals".
Arbitral tribunals usually consist of either one or three arbitrators. The primary role of an arbitral tribunal is to apply
the law and make a dispute decision by administering a so-called "arbitral award".

In principle, arbitral awards are final and binding. They can only be challenged before a state court under exceptional
circumstances. For example, it applies to cases where the parties never validly agreed on arbitration. Arbitral awards
can be enforced in most countries worldwide.

Arbitration proceedings usually involve the following steps:

Any arbitration proceeding is based on a written agreement of the parties. They submit a given dispute to arbitration
instead of the state courts, this becomes the "arbitration agreement". Arbitration agreements can be found in the
majority of commercial contracts, particularly in contracts relating to international transactions.

In terms of procedure, arbitration provides the arbitrators and the parties with significant freedom and flexibility.
Parties may choose their arbitrators, the place of arbitration and / or the language of the proceedings. They may
also agree on how to structure and how to time their proceedings. However, the parties freedom is still somewhat
restricted. They may not deviate from the principles of fairness and equality, the right to be heard and the right to
be represented by a lawyer.

Two types of arbitration are available; institutional and ad-hoc. In institutional arbitration, the institution assumes
specific administrative functions, such as the servicing of briefs etc. The degree of involvement may vary from one
institution to another, but the dispute itself will always be solely decided by the arbitral tribunal. In ad-
hocproceedings, these administrative functions are either assumed by the tribunal itself or delegated to third parties.

Main benefits

 Arbitration is private.
Arbitral proceedings including oral hearings, these are not open to the public. Parties and arbitrators are often
bound by strict rules of confidentiality. Thus, business secrets and sensitive information can be protected from
the public, media and / or competitors.
 Arbitrators are experts.
Parties may freely choose their arbitrators as long as they are of an impartial and independent nature.
Arbitrators can be selected from different nationalities and professional fields. This guarantees the professional
and personal expertise of those who decide the dispute.
 Arbitral awards are enforceable.
Arbitral awards can be enforced in Germany and abroad. In many countries arbitral awards can be enforced
more easily than state court decisions. This is due to the 1958 New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards.
 Arbitration may save time and costs.
Tailor-made procedures and the absence of appellate and / or review proceedings provide the opportunity for
arbitration proceedings to be completed within a relatively short time. Further costs can be saved by choosing
a suitable language and / or venue which in turn avoids unnecessary translation and / or travel costs.
Advantages of ADR –

 Amicable settlement of disputes

 Speedy disposal of disputes
 Economical settlement
 Time saving mechanism
 Reduction of work load of regular courts
 Maintain confidentiality
 Freedom withdraws from parties
 Awards enforceable
 Arbitrators are exports having knowledge on subject matters
 Cost.
 Informality
 Privacy
 Control.
 when the subject matter of the dispute is highly technical, arbitrators with an
appropriate degree of expertise can be appointed (as you cannot “choose the judge”
in litigation)
 arbitration is often faster than litigation in court
 arbitration can be cheaper and more flexible for businesses
 arbitral proceedings and an arbitral award are generally non-public, and can be made
confidential
 because of the provisions of the New York Convention 1958, arbitration awards are
generally easier to enforce in other nations than court judgments
 in most legal systems, there are very limited avenues for appeal of an arbitral award.


Disadvantages of ADR –
disclosure of documents may be more limited in arbitration

1. if arbitration is binding, both sides give up their right to an appeal. That means
there is no real opportunity to correct what one party may feel is an erroneous arbitration
decision.
2. If the matter is complicated but the amount of money involved is modest, then the
arbitrator’s fee may make arbitration uneconomical. It may be cheaper to try the
case before a judge in General District Court, where medical evidence can be presented
by affidavits instead of paying the doctor to testify. However, the amount that can be
awarded in that court is currently limited to $15,000.00.
3. Rules of evidence may prevent some evidence from being considered by a judge
or a jury, but an arbitrator may consider that evidence. Thus, an arbitrator’s decision
may be based on information that a judge or jury would not consider at trial.
4. If certain information from a witness is presented by documents, then there is no
opportunity to cross-examine the testimony of that witness.
5. Discovery may be more limited with arbitration. In litigation, Discovery is the process
of requiring the opposing party — or even a person or business entity who is not a party
to the case – to provide certain information or documents. As a result, many times
arbitration is not agreed to until after the parties are already in litigation and discovery is
 completed. By that time, the opportunity to avoid costs by using arbitration may be
diminished.
6. If arbitration is mandatory or required by a contract, then the parties do not have
the flexibility to choose arbitration only when both parties agree. Mandatory
arbitration allows one party to force the other party to use arbitration. In situations where
the arbitrator is reliant on one party for repeat business [1], then the potential for abuse
is present and the advantage of impartiality is lost [2].
7. The standards used by an arbitrator are not clear, although generally the arbitrator is
required to follow the law. However, sometimes arbitrators may consider the “apparent
fairness” of the respective parties’ positions instead of strictly following the law, which
would result in a less favorable outcome for the party who is favored by a strict reading
of the law. Although this issue has been present since antiquity (Aristotle said “? an
arbitrator goes by the equity of a case, a judge by the law, and arbitration was invented
with the express purpose of securing full power for equity.” [3], this consideration is often
overlooked in evaluating the applicability of arbitration.

Inability to Appeal. As a general and practical rule, the arbitrator’s

decision cannot be appealed. Only in certain limited situations, such as
when the arbitrator exceeded his or her authority or upon proof of
corruption, fraud or undue influence, will an arbitrator’s decision be
reviewed by a district court. This can be especially troubling given that an
arbitrator generally has more discretionary and decision-making power
than a judge or jury. Therefore, the binding nature of the decision and the
general lack of ability to seek recourse from an incorrect decision make
the consequences of the arbitration more profound.

Lack of Formal Discovery. Although the lack of a full fledge formal

discovery process in arbitration proceedings may result in decreased
costs, it can also mean that the parties (or one party in particular) may
not have all of the information necessary to fully evaluate the case.
Therefore, a party may present its case to an arbitrator without being
privy to all of the pertinent facts that could have been revealed had more
formal discovery, such as interrogatories, requests for production and
depositions, been conducted.

Discretion of the Arbitrator. An arbitrator may make his or her

decision without issuing any written opinion or explanatory statement.
Furthermore, since arbitrations are private and so infrequently reviewed
by courts, the lack of transparency in the decision-making process may
leave room for bias in arbitration proceedings.

Rising Costs. Although arbitrations are typically going to be less

expensive than litigation, the cost of arbitration is on the rise, making
 arbitration often more expensive than other ADR proceedings.

 arbitration agreements are sometimes contained in ancillary agreements, or in small print in other
agreements, and consumers and employees sometimes do not know in advance that they have
agreed to mandatory binding pre-dispute arbitration by purchasing a product or taking a job
 if the arbitration is mandatory and binding, the parties waive their rights to access the courts and
have a judge decide the case
 in most arbitration agreements, the parties are required to pay for the arbitrators, which adds an
additional layer of legal cost that can be prohibitive, especially in small consumer disputes
 in some arbitration agreements and systems, the recovery of legal costs is unavailable, making it
difficult or impossible for consumers or employees to get legal representation; however most
arbitration codes and agreements provide for the same relief that could be granted in court
 if the arbitrator or the arbitration forum depends on the bigger party for repeat business, there
may be an inherent incentive to rule against the consumer or employee
 there are very limited avenues for appeal, which means that an erroneous decision cannot be
easily overturned
 although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling
their schedules for hearing dates in long cases can lead to delays
 in some legal systems, arbitral awards have fewer enforcement remedies than judgments;
although in the United States, arbitration awards are enforced in the same manner as court
judgments and have the same effect
 arbitrators are generally unable to enforce interlocutory measures against a party, making it
easier for a party to take steps to avoid enforcement of an award, such as the relocation of assets
offshore
 rule of applicable law is not necessarily binding on the arbitrators, although they cannot disregard
the law.
 disclosure of documents may be more limited in arbitration
 unlike court judgments, arbitration awards themselves are not directly enforceable; a party
seeking to enforce an arbitration award must resort to judicial remedies
 although grounds for attacking an arbitration award in court are limited, efforts to enforce the
award can be fiercely fought, thus necessitating legal costs that negate the perceived economic
incentive to arbitrate the dispute in the first place.

Brief History of Arbitration Law in India

Arbitration has a long history in India. In ancient times, people often voluntarily submitted their disputes to a group
of wise men of a community—called the panchayat—for a binding resolution.
Modern arbitration law in India was created by the Bengal Regulations in 1772, during the British rule. The Bengal
Regulations provided for reference by a court to arbitration, with the consent of the parties, in lawsuits for accounts,
partnership deeds, and breach of contract, amongst others.
Until 1996, the law governing arbitration in India consisted mainly of three statutes:
(i) the 1937 Arbitration (Protocol and Convention) Act,

(ii) the 1940 Indian Arbitration Act, and

(iii) the 1961 Foreign Awards (Recognition and Enforcement) Act.

The 1940 Act was the general law governing arbitration in India along the lines of the English Arbitration Act of 1934,
and both the 1937 and the 1961 Acts were designed to enforce foreign arbitral awards (the 1961 Act implemented
the New York Convention of 1958).
The government enacted the Arbitration and Conciliation Act, 1996 (the 1996 Act) to modernize the outdated 1940
Act. The 1996 Act is a comprehensive piece of legislation modelled on the lines of the UNCITRAL Model Law. This
Act repealed all the three previous statutes (the 1937 Act, the 1961 Act and the 1940 Act).6 Its primary purpose was
to encourage arbitration as a cost-effective and quick mechanism for the settlement of commercial disputes. The
1996 Act covers both domestic arbitration and international commercial arbitration.

The Arbitration Act, 1940, dealt with only domestic arbitration. Under the 1940 Act, intervention of the court was
required in all the three stages of arbitration, i.e. prior to the reference of the dispute to the arbitral tribunal, in the
duration of the proceedings before the arbitral tribunal, and after the award was passed by the arbitral tribunal.
Before an arbitral tribunal took cognizance of a dispute, court intervention was required to set the arbitration
proceedings in motion. The existence of an agreement and of a dispute was required to be proved. During the
proceedings, the intervention of the court was necessary for the extension of time for making an award. Finally,
before the award could be enforced, it was required to be made the rule of the court.
While the 1940 Act was perceived to be a good piece of legislation in its actual operation and implementation by all
concerned - the parties, arbitrators, lawyers and the courts, it proved to be ineffective and was widely felt to have
become outdated.

The Arbitration and Conciliation Act, 1996 - The 1996 Act, which repealed the 1940 Act, was enacted to provide
an effective and expeditious dispute resolution framework, which would inspire confidence in the Indian dispute
resolution system, attract foreign investments and reassure international investors in the reliability of the Indian
legal system to provide an expeditious dispute resolution mechanism.

The 1996 Act has two significant parts - Part I provides for any arbitration conducted in India and enforcement of
awards thereunder. Part II provides for enforcement of foreign awards. Any arbitration conducted in India or
enforcement of award thereunder (whether domestic or international) is governed by Part I, while enforcement of
any foreign award to which the New York Convention or the Geneva Convention applies, is governed by Part II of
the 1996 Act.

The 1996 Act contains two unusual features that differed from the UNCITRAL Model Law. First, while the UNICITRAL
Model Law was designed to apply only to international commercial arbitrations, the 1996 Act applies both to
international and domestic arbitrations. Second, the 1996 Act goes beyond the UNICITRAL Model Law in the area of
minimizing judicial intervention.

The changes brought about by the 1996 Act were so drastic that the entire case law built up over the previous fifty-
six years on arbitration was rendered superfluous. Unfortunately, there was no widespread debate and
understanding of the changes before such an important legislative change was enacted. The Government of India
enacted the 1996 Act by an ordinance, and then extended its life by another ordinance, before Parliament
eventually passed it without reference to a Parliamentary Committee—a standard practice for important
enactments. In the absence of case laws and general understanding of the Act in the context of international
commercial arbitration, several provisions of the 1996 Act were brought before the courts, which interpreted the
provisions in the usual manner.

The Law Commission of India prepared a report on the experience of the 1996 Act and suggested several
amendments.15 Based on the recommendations of the Commission, the Government of India introduced the
Arbitration and Conciliation (Amendment) Bill, 2003, in Parliament for amending the 1996 Act.16 It has not been
taken up for consideration. In the meantime, Government of India, the Ministry of Law and Justice, constituted a
Committee popularly known as the 'Justice Saraf Committee on Arbitration', to study the implications of the
recommendations of the Law Commission of India contained in its 176th Report and the Arbitration and Conciliation
(Amendment) Bill, 2003. The Committee submitted its report in January 2005.

Types of Arbitration Practice - Institutional Arbitration and Ad Hoc Arbitration

Arbitrations conducted in India are mostly ad hoc. The concept of institutional arbitration, though gradually
creeping in the arbitration system in India, has yet to make an impact. The advantages of institutional
arbitration over ad hoc arbitration in India need no emphasis and the wide prevalence of ad hoc arbitration
has its ramifications in affecting speedy and cost- effectiveness of the arbitration process.
There are a number of advantages of institutional arbitration over ad hoc arbitration in India, some of which
are discussed below:

• In ad hoc arbitration, the procedures must be agreed upon by the parties and the arbitrator. This
requires co-operation between the parties and involves a lot of time. When a dispute is in existence, it is
difficult to expect cooperation among the parties. In institutional arbitration, on the other hand, the
procedural rules are already established by the institution. Formulating rules is therefore no cause for
concern. The fees are also fixed and regulated under rules of the institution. • In ad hoc arbitration,
infrastructure facilities for conducting arbitration pose a problem and parties are often compelled to resort
to hiring facilities of expensive hotels, which increase the cost of arbitration. Other problems include getting
trained staff and library facilities for ready reference. In contrast, in institutional arbitration, the institution
will have ready facilities to conduct arbitration, trained secretarial/administrative staff, as well as library
facilities. There will be professionalism in conducting arbitration.

• In institutional arbitration, the arbitral institutions maintain a panel of arbitrators along with their profile.
The parties can choose the arbitrators from the panel. Such arbitral institutions also provide for specialized
arbitrators. These advantages are not available to the parties in ad hoc arbitration.

• In institutional arbitration, many arbitral institutions such as the International Chamber of Commerce (ICC)
have an experienced committee to scrutinize the arbitral awards. Before the award is finalized and given to
the parties, the experienced panel scrutinizes it. As a result, the possibilities of the court setting aside the
award is minimal, because the scrutiny removes possible legal/technical flaws and defects in the award.
This facility is not available in ad hoc arbitration, where the likelihood of court interference is higher.

• In institutional arbitration, the arbitrators are governed by the rules of the institution, and they may be
removed from the panel for not conducting the arbitration properly. In ad hoc arbitration, the arbitrators are
not subject to such institutional removal sanctions. • In the event the arbitrator becomes incapable of
continuing as arbitrator in an institutional arbitration, substitutes can be easily located and the procedure
for arbitration remains the same. This advantage is not available in an ad hoc arbitration, where one party
(whose nominee arbitrator is incapacitated) must re-appoint the new arbitrator. This requires co-operation
of the parties and can be time consuming.

• In institutional arbitration, as the secretarial and administrative staffs are subject to the discipline of the
institution, it is easy to maintain confidentiality of the proceedings. In ad hoc arbitration, it is difficult to expect
professionalism from the secretarial staff.

Inspite of the numerous advantages of institutional arbitration over ad hoc arbitration, there is currently an
overwhelming tendency in India to resort to ad hoc arbitration mechanisms. This tendency is
counterproductive, since there is considerable scope for parties to be aggrieved by the functioning of ad
hoc tribunals. An empirical survey will reveal that a considerable extent of litigation in the lower courts deals
with challenges to awards given by ad hoc arbitration tribunals.

Some of the arbitral institutions in India are the Chambers of Commerce (organized by either region or
trade), the Indian Council of Arbitration (ICA), the Federation of Indian Chamber of Commerce and Industry
(FICCI), and the International Centre for Alternate Dispute Resolution (ICADR)

CRITICAL ANALYSIS OF THE SUCCESS OF ARBITRATION UNDER THE 1996 ACT

The 1996 Act was brought on the statute book as the earlier law, the 1940 Act, did not live up to the
aspirations of the people of India in general, and the business community in particular. Even though the
1996 Act was enacted to plug the loopholes of 1940 Act, the arbitral system that evolved under it led to its
failure. The main purpose of the Act was to provide a speedy and efficacious dispute resolution mechanism
to the exis ting judicial system, marred with inordinate delays and backlog of cases. But an analysis of the
arbitration system, as practiced under the 1996 Act, reveals that it failed to achieve its desired objectives.

Speedy Justice - Arbitration in India is rampant with delays that hamper the efficient dispensation of
dispute resolution. Though the 1996 Act confers greater autonomy on arbitrators and insulates them
from judicial interference, it does not fix any time period for completion of proceedings. This is a
departure from the 1940 Act, which fixed the time period for completion of arbitration proceedings.
The time frame for completion of the arbitration proceedings was done away with, on the
presumption that the root cause of delays in arbitration is judicial interference, and that granting
greater autonomy to the arbitrators would solve the problem. However, the reality is quite different.
Arbitrators, who are mostly retired judges, usually treat the arbitration proceedings in the same
manner as traditional litigations, and are willing to give long and frequent adjournments, as and when
sought by the parties.
Although the scope of judicial intervention under the 1996 Act has been curtailed to a great extent,
courts through judicial interpretation have widened the scope of judicial review, resulting in the
admission of large number of cases that ought to be dismissed at the first instance. Moreover, the
parties usually approach arbitration with a similar mindset as for litigation, with the result that awards
invariably end up in courts, increasing the timeframe for resolution of the disputes. Parties also abuse
the existing provision that allows 'automatic stay' of the execution of the awards on mere filing of an
application for challenge of the awards. So, the objective of arbitration as a mechanism for speedy
resolution of disputes gets obstructed due to obtrusive delays.

Cost-Effectiveness Arbitration is generally considered cheaper over traditional litigation and is one
of the reasons for parties to resort to it. However, the ground realities show that arbitration in India,
particularly ad hoc arbitration, is becoming quite expensive vis-à-vis traditional litigation. A cost
analysis on arbitration vis-à-vis litigation will throw light on the higher cost of arbitration over
litigation. This is a crucial factor which weighs against developing a cost- effective quality arbitration
practice in India. The following paragraphs analyze the cost of arbitration and litigation.
 Conciliation

Conciliation is an alternative out-of-court dispute resolution instrument.

Like mediation, conciliation is a voluntary, flexible, confidential, and interest-based process. The
parties seek to reach an amicable dispute settlement with the assistance of the conciliator, who acts
as a neutral third party.

The main difference between conciliation and mediation proceedings is that, at some point during
the conciliation, the conciliator will be asked by the parties to provide them with a non-binding
settlement proposal. A mediator, by contrast, will in most cases and as a matter of principle, refrain
from making such a proposal.

Conciliation is a voluntary proceeding, where the parties involved are free to agree and attempt to
resolve their dispute by conciliation. The process is flexible, allowing parties to define the time,
structure and content of the conciliation proceedings. These proceedings are rarely public. They are
interest-based, as the conciliator will when proposing a settlement, not only consider the parties'
legal positions, but also their; commercial, financial and / or personal interests.
Like in mediation proceedings, the ultimate decision to agree on the settlement remains with the
parties.

Conciliation is a dispute resolution technique where a neutral conciliator works with opposed parties
to help them find common ground and to identify the strengths and weaknesses in their positions. In
Massachusetts, conciliators are attorneys, and for court purposes, must have at least three years of
experience.

Main benefits

 Conciliation ensures party autonomy.

The parties can choose the timing, language, place, structure and content of the conciliation
proceedings.
 Conciliation ensures the expertise of the decision maker.
The parties are free to select their conciliator. A conciliator does not have to have a specific
professional background. The parties may base their selection on criteria such as; experience,
 professional and / or personal expertise, availability, language and cultural skills. A conciliator should
be impartial and independent.
 Conciliation is time and cost efficient.
Due to the informal and flexible nature of conciliation proceedings, they can be conducted in a time
and cost-efficient manner.
 Conciliation ensures confidentiality.
The parties usually agree on confidentiality. Thus, disputes can be settled discretely, and business
secrets will remain confidential.

Advantages of conciliation -

 The conciliator is normally a legal expert in the disputed field

 The process is private so no risk of damage to reputation
 The parties reserve the right to go to court if they are not happy with the outcome
 The process is flexible with a time and date set to suit the parties
 Suitable if parties are entrenched
 Cheaper than taking the dispute to court
 The process is informal, so parties should not feel out of their comfort zone
 Held in private, Confidentiality is maintained.
 Informal, Simple procedures are followed.
 There is no time delay.
 The expenses are very low when compared to others
 No lengthy proceedings, time and money savings.
 The conciliator is a technical person and his decision will be superior compared to civil court judge
 There is consent by both the parties and therefore the settlement is final and enforceable.
 The conciliator is normally a legal expert in the disputed field
 The process is private so no risk of damage to reputation
 The parties reserve the right to go to court if they are not happy with the outcome
 The process is flexible with a time and date set to suit the parties
 Suitable if parties are entrenched
 Cheaper than taking the dispute to court
 The process is informal, so parties should not feel out of their comfort zone

Disadvantages -
 The process is not legally binding
 No decision is guaranteed at the end
 The process could be considered too informal, so parties may not take it seriously
 No appeals
 No legal aid
 He is not a legally qualified person
 Since simple procedure is followed there is high probability of injustice being delivered.
 The process is not legally binding
 No decision is guaranteed at the end
 The process could be considered too informal so parties may not take it seriously

Mediation

Mediation is an informal, but structured settlement procedure. A mediator is employed to facilitate and
assist parties in reaching an amicable dispute settlement.

The main characteristics of mediation are that it provides; a voluntary, non-binding, confidential and interest-
based procedure. Parties are free to terminate mediation at any time after the first meeting. No decision
can be imposed on the parties involved, and they may or may not agree upon a negotiated settlement. The
confidentiality principle assures that any options the parties discuss will not have consequences beyond
the mediation process. Interest-based procedure means that the criteria established to reach resolution
does not solely adhere to the law, instead it can include considerations concerning financial, business and
personal interests as well.

The role of the mediator is to assist the parties in reaching a negotiated agreement. Unlike an arbitrator,
the mediator is not a decision-maker. In a facilitative mediation, the mediator merely assists the parties
in their communication and negotiations. In an evaluative mediation, the mediator also provides a non-
binding assessment of the dispute.
Main benefits

In general, mediation can be applied to all sorts of disputes. One of the main benefits of mediation is that
the parties can agree to consider a broad range of aspects, especially concerning commercial and business
interests. The process is flexible and can be tailored to the individual needs of parties. However, mediation
might not be the right instrument to resolve a dispute, especially if for example; the parties need a precedent,
or if one party seeks public vindication, or if one or both parties require a neutral (legal) opinion.

Characteristics

 Voluntary and non-binding procedure

 Confidential procedure
 Interest based negotiations
Advantage of Mediation –

 The process is voluntary

 It saves a lot of time and money
 The process is relatively cheap - the average cost of mediation is £3120
 It reflects the interests of the disputing parties making the process equal and fair
 Relationships are preserved which is especially important within family and business disputes
 Mediation is actively encouraged under the Civil Procedure Rules
 All parties retain the right to go to court if they are not happy with the outcome
 Cheaper than courts
 Less formal
 Doesn't have to follow the law
 Encourages co-operation
 Avoids adversarial courtroom
 Maintains working relationships
 Both parties maintain a sense of control
 Agreements more likely to last as they are a compromise
 Highly successful - 80%

Disadvantages of Mediation -

 The process is not legally binding unless it is drawn up by a lawyer which costs more money and
defeats the point of ADR
 It is not an appropriate method if the parties are entrenched
 Parties have no access to legal aid
 The mediator is not necessarily an expert in the disputed field so there could be an element of lack of
expertise
 The process could be considered too informal and the parties may not take it seriously
 No guarantee matter will be resolved
 Won't work without co-operation and compromise
 Settlements (compensation) lower than in court
 Agreements cannot be enforced, so no pressure to stick to it
 Could go on for a long time without settlement
 Bullying exercise if untrained mediator
Is Conciliation Different From Mediation or Arbitration?

Mediation and arbitration are also forms of alternative dispute resolution. They are all very similar in that
they act as an alternative or as a supplement to the standard trial process. However, conciliation is different
from mediation as well as arbitration in many aspects.

For example, conciliation is different from the arbitration process because conciliation is not legally binding
on the parties. The conciliator generally has no authority to request evidence, make any binding legal
decisions, call upon witnesses, or issue awards to the parties. In contrast, arbitration is much more formal
and can be legally binding upon the parties.

Conciliation is also different from mediation. With conciliation, in the focus is to have the parties be
reconciled, often through them making compromises or concessions. In mediation, the mediator simply
guides the discussion between the parties, who may still be unwilling to make a compromise on some
issues.

Also, in conciliation, the parties do not meet each other face to face across a table in the same room as
they do in mediation. The meetings with the conciliator are usually done separately during the conciliation
process.

What is negotiation?

Negotiation has been defined as any form of direct or indirect communication whereby parties who have
opposing interests discuss the form of any joint action which they might take to manage and ultimately
resolve the dispute between them. Negotiations may be used to resolve an already-existing problem or
to lay the ground work for a future relationship between two or more parties.
Negotiation has also been characterized as the “preeminent mode of dispute resolution, which is hardly
surprising given its presence in virtually all aspects of everyday life, whether at the individual, institutional,
national or global levels. Each negotiation is unique, differing from one another in terms of subject matter,
the number of participants and the process used.
Given the presence of negotiation in daily life, it is not surprising to find that negotiation can also be applied
within the context of other dispute resolution processes, such as mediation and litigation settlement
conferences.

Characteristics of a negotiation

Voluntary: No party is forced to participate in a negotiation. The parties are free to accept or reject the
outcome of negotiations and can withdraw at any point during the process. Parties may participate directly
in the negotiations or they may choose to be represented by someone else, such as a family member,
friend, a lawyer or other professional.
Bilateral/Multilateral: Negotiations can involve two, three or dozens of parties. They can range from two
individuals seeking to agree on the sale of a house to negotiations involving diplomats from dozens of
States (e.g., World Trade Organization (WTO)).
Non-adjudicative: Negotiation involves only the parties. The outcome of a negotiation is reached by
the parties together without recourse to a third-party neutral.
Informal: There are no prescribed rules in negotiation. The parties are free to adopt whatever rules they
choose, if any. Generally they will agree on issues such as the subject matter, timing and location of
negotiations. Further matters such as confidentiality, the number of negotiating sessions the parties commit
to, and which documents may be used, can also be addressed.
Confidential: The parties have the option of negotiating publicly or privately. In the government context,
negotiations would be subject to the criteria governing disclosure as specified in the Access to Information
Actand the Privacy Act (see confidentiality section). For general information on the privileged nature of
communications between solicitor and client during the course of negotiations, please refer to the
Department of Justice Civil Litigation Deskbook.
Flexible: The scope of a negotiation depends on the choice of the parties. The parties can determine not
only the topic or the topics that will be the subject of the negotiations, but also whether they will adopt a
positional-based bargaining approach or an interest-based approach.

Advantages of negotiation

 In procedural terms, negotiation is probably the most flexible form of dispute resolution as it
involves only those parties with an interest in the matter and their representatives, if any. The
parties are free to shape the negotiations in accordance with their own needs, for example,
setting the agenda, selecting the forum (public or private) and identifying the participants. By
ensuring that all those who have an interest in the dispute have been consulted regarding
their willingness to participate and that adequate safeguards exist to prevent inequities in the
bargaining process (i.e., an imbalance in power between the parties), the chances of reaching
an agreement satisfactory to all are enhanced.
 Like any method of dispute resolution, negotiation cannot guarantee that a party will be
successful. However, many commentators feel that negotiations have a greater possibility of
a successful outcome when the parties adopt an interest-based approach as opposed to a
positional-based approach. By focusing on their mutual needs and interests and the use of
mechanisms such as objective standards, there is a greater chance of reaching an agreement
that meets the needs of the parties. This is sometimes referred to as a “win-win” approach.
 Negotiation is a voluntary process. No one is required to participate in negotiations should
they not wish to do so.
 There is no need for recourse to a third-party neutral. This is important when none of the
parties wants to involve outside parties in the process, e.g., the matter to be discussed or the
dispute to be resolved may be highly sensitive in nature.
 Unlike the outcomes of certain adjudicative processes, e.g., the courts, the outcome of a
negotiation only binds those parties who were involved in the negotiation. The agreement
must not, of course, be contrary to Canadian law (e.g., an agreement to commit a crime would
be illegal and thus void for public policy reasons).
 If the parties are negotiating in good faith, negotiation will provide the parties with the
opportunity to design an agreement which reflects their interests.
 Negotiations may preserve and, in some cases, even enhance the relationship between the
parties once an agreement has been reached between them.
 Opting for negotiation instead of litigation may be less expensive for the parties and may
reduce delays.

Disadvantages of negotiation

 A particular negotiation may have a successful outcome. However, parties may be of unequal
power and the weaker party(ies) may be placed at a disadvantage. Where a party with an
interest in the matter in dispute is excluded or inadequately represented in the negotiations,
the agreement's value is diminished, thereby making it subject to future challenge. In the
absence of safeguards in the negotiating process, the agreement could be viewed by a
participant or others outside the process as being inequitable, even though the substance of
the agreement may be beyond reproach.
 A successful negotiation requires each party to have a clear understanding of its negotiating
mandate. If uncertainty exists regarding the limits of a party's negotiating authority, the party
will not be able to participate effectively in the bargaining process.
 The absence of a neutral third party can result in parties being unable to reach agreement as
they be may be incapable of defining the issues at stake, let alone making any progress
towards a solution.
 The absence of a neutral third party may encourage one party to attempt to take advantage
of the other.
 No party can be compelled to continue negotiating. Anyone who chooses to terminate
negotiations may do so at any time in the process, notwithstanding the time, effort and money
that may have been invested by the other party or parties.
 Some issues or questions are simply not amenable to negotiation. There will be virtually no
chance of an agreement where the parties are divided by opposing ideologies or beliefs which
leave little or no room for mutual concessions and there is no willingness to make any such
concessions.
 The negotiation process cannot guarantee the good faith or trustworthiness of any of the
parties.
 Negotiation may be used as a stalling tactic to prevent another party from asserting its rights
(e.g., through litigation or arbitration).

POWERS OF ARBITRATOR

An arbitrator is person selected by mutual consent of the parties to settle the matters in
controversy between them. A person appointed to adjudicate the difference is called an arbitrator.
An arbitrator is a tribunal chosen by the consent of the parties.

Any person who enjoys the confidence of the parties may be selected as an arbitrator. Every
person is free to choose his own judge for the settlement of any matter in controversy, and the
judge so chosen, if accepted by the opposite party, becomes an arbitrator. They may choose an
arbitrator by lot or in any other way. If they an incompetent or unfit person, that is their own affair.

An arbitrator should be a person who stands indifferent between the parties. He should have no
interest direct or remote in the subject-matter of the controversy or in the parties. Any person who
is under any legal disability by virtue of statutory provision or by reason of public policy cannot act
as an arbitrator. An arbitration agreement appointing a supreme head of the state as an arbitrator
would be against public policy and hence void at its inception.

Appointment of an arbitrator by the parties

The parties may by agreement appoint whomsoever they please to arbitrate on their dispute. They
may appoint a single arbitrator or two arbitrators and an umpire or two or more arbitrators without
any umpire. The parties may appoint an arbitrator in the following ways:

1) An arbitrator may be named in the arbitration agreement, or

2) He may not be named at all, or

3) It may be agreed that the arbitrator shall be appointed by a third party who shall be named in the
agreement.
Powers of Arbitrator and Umpire
Section 13 lays down the powers of arbitrators or umpire. It is subject to the agreement of the parties.
But they cannot be compelled to exercise those powers. This section is applicable to statutory
arbitration as well. The various powers are as under :

(1) To administer oath to parties and witnesses appearing before him;

(2) To state a special case for the opinion of the court on any question of law or state the award in the
form of a special case for the opinion of the court;

(3) To make the award conditional or in the alternative;

(4) To correct in an award any clerical mistake or error arising from any accidental slip or omission;

(5) To administer any party interrogatories.

In addition to the statutory powers given above, there are some implied and incidental
powers, such as:

a) Power to obtain legal assistance.

b) Power to delegate authority limited to the performance of acts of ministerial character

c) Power to award interest

d) Power to award costs

e) Power to allow payment by installments

f) Power to allow amendment of the plaint.

The arbitrators have no power:

1) To allow withdrawal of the reference

2) To receive or realize monies

3) Alter the terms of arbitration agreement

4) Award damages otherwise than in accordance with law.

Duties of Arbitrator or Umpire

1. Duty to follow rules of natural justice:

An arbitrator must observe the rules of natural justice. He must act in a judicial manner. His enquiry
should not be slip-shod but full and complete. He must give due notices and maintain proper record
of the proceedings. He ought not hear one side in the absence of the other side. Any departure from
the rules of natural justice is sure to vitiate the award.
2. Duty to act fairly to both parties :
The arbitrator must act fairly to both parties. He must not favor one party more than another, or do
anything for one party which he does not do for another.
3. Duty not to delegate :

An arbitrator must not delegate his duties to a third person, or to a co-arbitrator. Since one who has
an authority to do an act for another, must do it himself and cannot delegate to another. This rule is,
however, subject to the exception that an arbitrator may delegate to another the performance of an
act of ministerial character only.

4. Duty to decide according to law :

It is duty of an arbitrator, in the absence of a provision to the contrary, to decide the question
according to legal rights of the parties and not according to what he may consider to be fair and
reasonable under the circumstances. If an arbitrator decides honestly, through wrongly, he is not
guilty of misconduct. But deliberate disregard of law in matters of arbitration is misconduct.

5. Duty not to exceed his authority :

An arbitrator cannot go beyond the scope of his authority. He derives his authority from the
arbitration agreement. He cannot take upon himself an authority which is not conferred by the
submission. If the arbitrators go beyond the scope of reference and decide a dispute not referred to
them, the award is bad.

6. Duty to decide all matters referred :

It is the duty of the arbitrator to decide all the matter referred to him. Where he omits to decide some
of the important questions referred the award is bad. A partial award is invalid and should be
remitted for reconsideration.

7. Duty to act together :

When there are several arbitrators, all must act together. The presence of all the arbitrators at all the
meetings is essential to the validity of the award. Omission on the part of the arbitrators to act
together amounts to misconduct.

8. Duty not to accept hospitality :

An arbitrator should not accept hospitality from one of the parties, if the invitation is given with the
intention of inducing him to act unfairly. But merely dining or lunching with one of the parties and
his witness in the absence of other will not invalidate an award.
SETTINNG ASIDE THE AWARD

Arbitration Award

What are the Essential elements of an Arbitral award?

According to the Arbitration and Conciliation Act, 1996 an Arbitral Award:

 Shall be in writing;
 Shall be signed by members of Arbitral Tribunal;
 Shall state the reasons on which the Award is based;
 Date and place of arbitration;

The Act provides that after passing the Award, a signed copy of the Award shall be
delivered to each party. The Tribunal if required can also pass an interim arbitral
award.

Correction and Interpretation of Arbitral Award- Section 33 of the Act deals with the
correction and interpretation of Arbitral award. It provides that the Tribunal may
correct the award within 30 days from the receipt of award. If the Tribunal finds the
request for correction to be reasonable, then it shall make a correction or interpretation
of a specific point or part of the award within 30 days of the receipt of request.
However, if the Tribunal deems it necessary it can also extend the period of time
within which it will make correction in the Award or interpretation of the Award.

SETTING ASIDE OF ARBITRAL AWARD

Section 34 of the Act provides for setting aside of an Arbitral Award by the Court.
The Act provides a comprehensive list of circumstances under which an Arbitral
Award can be set aside by the Court and they are:

1. The party is under some incapacity;

 2. Arbitration agreement between the parties is not valid;
3. Lack of notice of appointment of arbitrator or of holding of arbitral
proceeding;
4. Arbitral award deals with a dispute not contemplated by or not falling
within the terms of the submission to arbitration or it contains decisions on
matters beyond the scope of submission of arbitration;
5. Composition of arbitral tribunal or arbitral procedure was not in
accordance with the agreement of the parties;
6. The Court finds that the subject matter of the dispute is not capable of
settlement by arbitration under the Law;
7. The Award conflicts with the Public Policy

ENFORCE FOREIGN AWARD

Difference between domestic and foreign award

The term “domestic award” is used to distinguish it from “international award” and a
“foreign award”. A “foreign award” may be regarded as a domestic award in the
country in which it is made. The Act is intended to give different treatments to awards
made in India and those made outside India. Part I of the Act applies to “international
arbitrations” which are seated in India and all “domestic arbitrations”. In the case of a
domestic award a ‘challenge’ to the award can be made under section 34 of the Act
whereas no ‘challenge’ proceeding is contemplated for a foreign award. On the other
hand a foreign award is one which is made in an arbitration proceedings seated
outside India. Normally, the term “foreign award” gains significance only for the
purposes of enforcement in a country other than its country of origin.

Section 48 of the Act is akin to Article V of the New York Convention. An application
for enforcement of a foreign award can be resisted by a party on limited grounds
stipulated in section 48 of the Act. Thus, no ‘challenge’ proceedings or proceedings to
annul the award can be brought against a foreign award in India under the Act
notwithstanding the governing law of the contract is Indian law . Foreign awards
sought to be enforced in India cannot be challenged on merits in Indian courts. In an
enforcement proceeding, the court may refuse to enforce the foreign award on
satisfactory ‘proof’ of any of the grounds mentioned in section 48(1), by the party
resisting the enforcement of the award. The said section sets out the defenses open
to a party resisting enforcement of a foreign award .

Enforcement of Arbitral Award– Section

36 of the Act provides that if the time for making
application to set aside an award under Section 34 has expired or the application has
been refused then the Award shall be enforced under the Code of Civil Procedure in
the same manner as a decree of a Court.

The Arbitration and Conciliation Act, 2015, (hereinafter referred to as the "Act") has been
enacted with a view to monitor the arbitral proceeding being conducting at domestic as well as
international levels. The Act regulates the enforceability of foreign awards.

The award enforceable under Part II of the Act is binding upon the parties thereto. Such award
would not be enforceable as per the provisions of Section 48 of the Act, if at the time it was
passed

1. either party is under some incapacity;

2. either party was not given any proper notice regarding the appointment of the Arbitrator;
3. the award itself comprises of decisions beyond the scope of the Arbitration;
4. the agreed procedure for Arbitration was not followed;
5. the award is set aside/ suspended by the competent authority before its enforcement;
6. the subject-matter of the dispute is not capable of settlement by arbitration under the
laws of India;

7. the enforcement of the award would be contrary to the public policy of India.

In a recent judgement dated January 31, 2018, in the case of Daiichi Sankyo Company Limited
vs. Malvinder Mohan Singh and Ors.1, the Delhi Court discussed the enforceability of foreign
award.

Brief facts
M/s. Daiichi Sankyo Company Limited (hereinafter referred to as "Daiichi Sankyo") purchased
the total stake of Singh brothers in Ranbaxy Limited for INR 1,980,000,000 under the share
purchase and subscription agreement. Disputes arose between the parties when Daiichi Sankyo
alleged fraud and concealment of facts. As agreed between the parties the dispute was referred
for Arbitration at Singapore whereby an award of INR 35,620,000,000 was passed in favor of
Daiichi Sankyo who filed the petition for the enforcement of the said award.

Singh Brothers challenged the enforcement of the said award because of the following reasons:
 1. falling within the preview of non-enforceable awards as per Section 48 of the Act;
2. Damages being contrary to Section 19 of the Contract Act, 1872 (hereinafter referred to
as "Contract Act");
3. Consequential damages awarded were beyond the jurisdiction of the Arbitral Tribunal;
4. Claims were barred by limitation;
5. Interest on awarded damages amounts to awarding of multiple damages;
6. Award against minors is not enforceable.

Judgement
The High Court of Delhi vide judgement dated January 31, 2018, upheld the enforceability of the
award with the exception of non-applicability of the provisions of the said award on minors.

Ratio
The Court discussed the applicability of foreign awards in accordance with the provisions of Part
II of the Act and arrived at the below stated conclusions:

1. Applicability of Section 48 of the Act – It was observed that the enforceability of

foreign award could only be refused if the same is against the fundamental policy of
India, interest of India or justice/ morality. The Act does not give an opportunity to have a
"second look" at the foreign award at the stage of enforcement. Review of foreign award
on merit is not permissible. While considering the enforceability of foreign awards, the
Courts do not exercise appellate jurisdiction. Since the case does not fall within the
purview of any of the conditions stated under Section 48 of the Act, the said award was
held enforceable.
2. Damages contrary to Section 19 of the Contract Act – It was held that according to
the provisions of Section 19 of the Contract Act, the party should be placed in the same
position in which they would have been if the representations made were true. Since
losses were suffered by Daiichi owing to fraudulent actions of the Singh Brothers,
damages awarded were not contrary to Section 19 of the Contract Act.
3. Consequential damages were beyond the jurisdiction of the Arbitral Tribunal – It
was observed that the damages awarded could be said to be beyond the jurisdiction of
the Arbitral Tribunal as consequential damages are to be considered in view of punitive,
exemplary, multiple damages and not the losses.
4. Claims were barred by limitation – It was held that the Court could not go into the
finding of the Arbitral Tribunal. Therefore, the findings that limitation period commences
only when the party could have with reasonable diligence discovered claimable action
against the opposite party. The Court while rejecting the said contention, observed that
the findings of the Arbitral Tribunal could not be held contrary to the fundamental policy
of Indian law.
5. Interest on awarded damages amounts to awarding of multiple damages – It was
observed that there was no absolute bar on award of interest by the way of damages
and that the same was permissible if usage/ contract/ provision of law justified such
interest.
 6. Award against minors is not enforceable – It was held that minor could not be held
guilty of perpetuating fraud either by himself or through agent and any such act
committed by the natural guardian could not bind him/ her. Fundamental policy in India
seeks to protect the interests of the minor.

Conclusion
Enacted with the aim of facilitating the mechanism of dispensing justice, the Act encourages
settlement of disputes through alternate dispute resolution mechanism. While covering the
aspect of domestic arbitrations, the Act also covers the validity and binding effect of the foreign
seated arbitrations. The Court vide the said judgement seeks to repose the faith in the
enforceability of foreign arbitral awards

ARBITRATION PROCEEDINGS –

Commercial arbitration is the process of resolving business disputes between or among

transnational parties through the use of one or more arbitrators rather than through the
courts. It requires the agreement of the parties, which is usually given via an arbitration
clause that is inserted into the contract or business agreement. The main objective of
having an arbitration proceeding is to solve the dispute as fast as possible, which also
has a binding effect, without going to the Court of law and getting engaged in the long-
drawn judicial procedure.

Arbitration proceedings in India are conducted under the Arbitration and Conciliation
(Amendment) Act, 2015 (the Act). The Act is based on the UNCITRAL model law. This
ensures that there is a certain level of uniformity in the law.

India is a party to the New York Convention. It has exercised both the reciprocity and
commerciality reservations. However, notification is required in the official Gazette in
relation to each specific country. Not all countries that have ratified the New York
Convention have been notified in the official Gazette of Government of India.

TYPES OF ARBITRATION PROCEDURE: There are two main types of arbitration

procedures. These are:

 Ad- Hoc Arbitration

 Institutional Arbitration

1. AD-HOC ARBITRATION
 Ad-Hoc Arbitration can be defined as a procedure of arbitration where a tribunal will
conduct arbitration between the parties, following the rules which have been agreed by
the parties beforehand or by following the rules which have been laid down by the
tribunal, in case the parties do not have any agreement between them.

2. INSTITUTIONAL ARBITRATION

In the case of Institutional Arbitration, the disputing parties submit their issue to an
institution that has been designated to administer the arbitrational process. The
institution then arbitrates the dispute according to the rules laid by them in front of the
parties. The institute selects a panel which administers the whole process.

All the institutes do not provide the same type of services. Some institute just provide
the rules on which the procedure will be based (London Maritime Arbtration
Association). Other provide a roster of arbitrators to the parties but do not appoint the
arbitrators themselves (Society of Maritime Arbitrators in New York).

Certain institutions administer the whole process of arbitration i.e. (International Court of
Arbitration of the International Chamber of Commerce).

CONFIDENTIALITY: There is no provision for confidentiality of arbitrations under Indian

law but an agreement on confidentiality may be included in the arbitration agreement.

HOW LONG DO ARBITRAL PROCEEDINGS USUALLY LAST?

This depends upon the arbitrators, the parties and also the complexity of the matter.
The 2015 Amendment aims to reduce the time consumed in arbitral proceedings, inter-
alia by specifying an upper limit of 1 year from the date of constitution of the arbitral
tribunal, for completion of proceedings and making of an award. Parties can consent to
extend this period by a further 6 months only, after which an application is required to
be made to the Court.

ENFORCEMENT:

DOMESTIC AWARD: An arbitral award is enforceable after the time for making an
application to set aside such an award has expired (90 days). However, the court may
grant a stay on the operation of the arbitral award on a separate application made for
that purpose. The party intending to enforce the award can file an execution petition
before the Civil Court. The award is enforced in the same manner as a decree of the
court under the Code of Civil Procedure, which provides the framework for the
execution of arbitral awards.

FOREIGN AWARD: A foreign arbitration award is enforceable in India under Part II of

the Arbitration Act, if it is passed in a jurisdiction/country governed by either the New
York Convention or the Geneva Convention. The process for enforcement of a foreign
award is similar to that of a domestic award. The Arbitration Act does not provide any
limitation for the enforcement of a foreign award.

Arbitration proceedings are not in complex in nature unlike in regular courts, it’s
pretty simple and easy. A party commences an arbitration proceeding by issuing
a notice in written to the other party of its intention to refer the matter
to arbitration. The respondent replies to the arbitration by filing answer against
the arbitration claim within stipulated time period specifying relevant facts and
available defences against the claim. Unless otherwise agreed by the parties,
Arbitration proceedings are deemed to be commenced on the date on which the
respondent receives such notice from the claimant. After the selection of
Arbitrators, parties meet in persons for the conduct of the hearing in front of
arbitrators. Lastly, after the examination of witnesses and evidences. The
arbitrator, in concluding stage, gives ‘award’ which is binding in nature. Conduct
of Arbitral proceedings are provided in Chapter V of Arbitration and Conciliation
Act, 1996.

Limitation on commencement of arbitral

proceedings
The Limitation Act, 1963 applies to all proceedings under Arbitration and
Conciliation Act, 1996 as it applies to proceedings in Indian courts, except to the
extent clearly keep out by the Arbitration and Conciliation Act. Any proceeding
under arbitration commenced after the limitation period (three years from the
date on which the cause of action arose) will be time-barred.

Equal treatment of Parties

Both the parties should be treated equally and equal opportunities should be given
to them to be heard and to present their case.
Rules of procedure in arbitration
There are no such rules on the procedure for conducting the arbitration
proceedings. The parties are free to agree on the procedure to be followed by the
arbitral tribunals in conducting its proceedings. If no such procedure agreed by
the parties, the tribunal is authorised to conduct the proceedings in such a
manner it considers appropriate.

The arbitral tribunal is expressly not bound to apply any provisions of the Civil
Procedure Code 1908 and the Evidence Act, 1872. If under arbitration agreement
it is mentioned, the arbitration is to be administered by arbitral institute, the rules
of that institution become part of the arbitration clause by implication. The rules
of arbitral tribunal includes power to determine the admissibility, relevance,
materiality and weight of any evidence.

Place of arbitration
The parties are free to agree on the place of arbitration as per their convenience.
In case failed to agree upon place of arbitration, the arbitral tribunal shall
determine the place of arbitration considering the circumstances of case including
convenience of the parties.

Language of proceedings
Parties are free to agree upon the language to be used in the arbitral proceedings.
If the parties fail to agree on any language then arbitral tribunal decides which
language to be used in the arbitral proceedings.

Statement of claim and defence

The claimant have to state the facts supporting their claim, raise the points at
issues and relief or remedy sought to the respondent within the time period
stipulated by the parties or determined by the arbitral tribunal and the respondent
replies filing an answer against the arbitration claim of claimant that specifies the
relevant facts and available defenses to the statement of claim.

A party can amend or supplement his claim and defence throughout arbitral
proceedings, unless the tribunal considers it unsuitable to allow the amendment
or supplement in respect of the delay in making it.

Hearings
The parties shall be given sufficient prior notice before any hearing and of any
meeting of arbitral tribunal for the inspection and verification of documents,
goods and property. 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 and other materials:

Arbitration and Conciliation (Amendment) Act,2015 requires the arbitral tribunal

at least, hold oral hearings for the presentation of evidences or for oral arguments
on a day-to-day basis, and not grant adjournments unless reasonable cause is
given.

All documents, statements and required information supplied, and application

made to the arbitral tribunal by the one party shall be communicated to the other
party and any evidentiary document or expert report on which an arbitral tribunal
can rely in making it decision shall also be communicated to the parties.

Default of a party
If claimant without providing sufficient cause fails to communicate his statement
of claim to the tribunal, the arbitral tribunal can terminate the proceedings with
immediate effects. But it is not the same in case of respondent if he fails to
communicate his statement of defence, the arbitral can continue the proceedings
without treating that failure in itself as an admission of alienations by the
claimant.

Evidences
The parties are free to agree on the rules of gathering and submitting evidences.
If they are not getting agree on these matters, the tribunal has the discretionary
power to determine how evidence may be gathered and submitted to it. The
arbitral tribunal can take both documentary and oral evidence on record. While
considering evidence tribunal required to observe the fundamental principle of
natural justice.

Court Assistance
Local courts can assist tribunals in arbitration proceedings. This includes the
power of providing interim order and appointment of arbitrator if the parties are
unable to agree on the appointment of arbitrator.

If a party makes any default, refuses to give evidence or guilty of contempt of

arbitral proceedings shall be subject to penalties or punishment by the order of
the court on the representation of arbitral tribunal.

Third party
In India, the question is yet to be answered whether the non signatory party
bound by arbitration agreement or not. Arbitral tribunals and courts take different
methods to bound non signatory parties to an arbitration agreement like “group
of companies” doctrine where a clear intent to bind such non signatory parties.
However, in Indowind Energy Ltd V. Wescare (India) Ltd (2010) the Supreme
court of India held a “third party not a signatory to an arbitration agreement
would not be bound by such agreement, even if some sort of nexus exists
between third party and transactions of questions.”