ARBITRATION

PRESENTATION BY:
ABHISHEK PACHOLI
AMBIKA BAJPAI
ANKITA KHEMKA
CHARUL MISHRA
FALGUN JAIN
ISHANI GOGOI
JASSICA CHATWAL
KRISHN MATHUR
MONIKA AGARWAL

Definition
The process by which the parties under a contract get their disputes and
differences settled through the intervention of an impartial person or a
committee of experts in a judicial manner is known as the arbitration.
The impartial person or persons are known as the arbitrators.
The proceedings of arbitration are controlled in India by the provisions
of the Arbitration Act of 1940.

Arbitrator and Referee

It sometimes happens that the parties to a suit agree to honour the
statement made by the referee. In this case the referee makes only the
statement or pronounces his opinion from the facts and data available to
him .The court of law then decides the case and gives judgement on the
basis of the contents made by the referee.

Matters for reference to arbitration

The matters which can be referred to the arbitration under the provisions of
the Act can be summarized as follows:
All disputes except those of criminal nature
Matrimonial disputes under certain circumstances
Pure questions of law and fact including questions of territorial jurisdiction
The matters pertaining to a protection of private rights under civil
litigation etc.
Following are the matters which can not be referred to the arbitration under
the provisions of the Act:
Disputes which are purely criminal
Insolvency proceedings
Lunacy proceedings
References for illegal transactions
Suit for divorce

Kinds of arbitration
1) ARBITRATION WITHOUT INTERVENTION OF A COURT:
The arbitration without intervention of a court arises from the
execution of an arbitration agreement.
Only in exceptional circumstances, the court may set aside the award
of an arbitrator.
After the award by the arbitrator is declared, the parties concerned can
apply for a decree on the award, same as any other decree of a court
of law.
2) ARBITRATION WITH INTERVENTION OF A COURT WHERE THERE IS
NO SUIT PENDING:
This section of the act gives an alternative right to the parties to an
arbitration agreement.
Following are the conditions to be fulfilled for taking advantage of this
section:
a) The Arbitration agreement between the parties must be valid and it
should have been entered between them before the instituion of
any suit.
b) A dispute or a difference must have arise to which the arbitration
agreement applies.
c) The dispute or a difference must be of such type that a valid

3) ARBITRATION IN SUITS:
When a suit is pending is pending before a court and when the parties
desire to settle the same through arbitration before the judgment is
pronounced , they can apply for the same and in such cases the court
may refer the matter to an arbitrator ,appointed in such a manner as may
be agreed upon between the parties

CONDITIONS FAVOURABLE FOR

ARBITRATION

a) The amount of compensation or other questions of assessment of

liability are to be determined.
b) The disputes are to be settled on fair and just grounds of give and
take policy
c) The disputes involved are simple and straightforward .
d) The settlement of disputes requires considerable technical
knowledge as compared to that of law

ARBITRATOR
An arbitrator is a judge chosen by the parties and employed by them with
power and privilege to decide the matter of dispute between them.
Following are the qualities of an arbitrator :
1. He must act fairly and honestly in the arbitration proceedings throughout
the reference.
2. He must have a clear idea about contractual obligation in general
because he cannot ignore the contents or obligations of the contract.
3. He must not follow his award to be influenced by for settlement of
disputes between the parties before him.
4. He should have a working knowledge of law.

TYPES OF ARBITRATOR :
5.
6.

7.

Sole arbitrator : Unless clearly mentioned in agreement the reference is

only to sole arbitrator.
Joint arbitrator : When each party to the arbitration agreement appoints
one arbitrator the proceedings of arbitration are conducted by the joint
arbitrators. If the number of joint arbitrators is odd, the award given by
the majority of joint arbitrators prevail.
Umpires : The term umpires is used to denote arbitrator appointed by
the two appointed arbitrators, one by each party to the agreement. Thus,
when the reference for arbitration is made to an even number of
arbitrators, it will be necessary for the appointed arbitrators to appoint

Following are the four different ways of appointing arbitrators by the

parties:
1.
2.
3.
4.

A person may be designated as an arbitrator either by name or as

the holder of a particular office.
Each party may choose one arbitrator and if there are two parties
to the agreement, the two appointed arbitrators may select an
umpire agreeable to both.
The agreement may provide for the name or holder of any post
who in turn will appoint arbitrator or arbitrators.
A panel of persons may be mentioned in the agreement and the
parties have to select sole arbitrator from this list of arbitrators.

POWER OF AN
ARBITRATOR
1. To administer oath :
.
Discretionary power to administer oath to the parties and witnesses
appearing before him.
.
Free to take evidence either on oath or otherwise; need not follow law of
evidence
2.
.
a.
b.
.

To refer for opinion of the court:

May refer a special case for securing opinion of court, w.r.t :
A question of law,
The award itself, wholly or in part.
Discretionary power

3.
.
.
.

To declare award:
Empowered to declare award, may even be conditional
Conditional award, performance linked with certain conditions
Alternative award ,incase the conditions of the conditional award not
fulfilled

4. To administer interrogatories :
.
Can administer to any party such interrogatories as deemed fit &
necessary.

5. To correct clerical errors :

Power to correct clerical error occurred accidentally

Once the award is declared, the authority of arbitrators ceases & only
under this section of the Act, they can change or modify errors
6. Implied powers :
a. Heir or legal representative of a party to arbitration agreement for
arbitration proceedings
b. Total cost of proceedings & manner in which it is to be shared by the
parties
c. Mode of payment and time of payment
d. Decide upon the withholding of final certificate by architect or engineer
e. Enlarge the time limit for declaring the award on application form or can
direct parties to apply to court for necessary enlargement of time limit
f.
Grant interest on amount of award for damages for a period between
date of submission and date of award.

DISABILITIES OF AN ARBITRATOR :

No power
No power
No power
the party.
No power

to alter or change the terms of arbitration agreement.

to decide whether the arbitration agreement is valid or not.
to declare an ex-gratia payment by subsiding the legal right of
to grant damages for matters which are illegal.

Scope of Umpires Authority :

An umpire is to be appointed when there are even number of
arbitrators.
Matters are referred to umpire when arbitrators disagree.
If arbitrators can only refer that part to umpire on which they differs.
The umpire has been given wide powers and it is understood that
once the matter is sent to an umpire
The authority of arbitrators ceases and the umpire in such case
can proceed as sole arbitrator and declare his awards accordingly.

Arbitration agreement
An arbitration agreement is defined as a written agreement to submit
present or future differences to the arbitration, whether an arbitrator is
named therein or not . it thus forms the base from which the arbitration
proceedings starts

Essentials of an arbitration agreement

1.
2.
3.
4.
5.
6.

7.

All the essential requirements of a valid contract should be satisfied by

the arbitration agreement.
It is very important to make out from the agreement that the parties
intend to submit to the arbitration.
The agreement must be in writing
The court may declare an arbitration agreement a valid one though not
signed by one of the parties
Agreement must be to refer a difference or difference to the
arbitration.
The arbitration act provides for difference or differences and not for
disputes
For example: x may have difference of opinion with y on any point ,
but at the same point x may not have any dispute with y for that
matter. Thus, the arbitration act covers practically all the matters to
which it can be applied
The differences may be present or future and thus , the arbitration
agreement mentions the disputes which have occurred or are likely to

Revocation of arbitration agreement:

By general rule of law , arbitration agreement once made cannot be
reverted. However the parties entering may insert suitable clause in
the agreement itself, mentioning certain circumstances for the
revocation of agreement.
The court of law may however grant permission for revocation of
arbitration agreement for fair reasons.
Following are the cases which are usually considered by court of law for
revocation :
1. The arbitrator acts in fraudulent collision with one of the parties to
the agreement.
2. The arbitrator has an interest in the subject matter of the
agreement and the parties come to know this fact after
arrangement is executed.
3. The arbitrator has delegated his functions to others.
4. When any party is not been given reasonable opportunity for being
heard.
5. The arbitrator is found to carry out enquiry behind the back of one
of the party under agreement.
6. When arbitrator is not properly admitting the evidence or when he
is erroneously rejecting the evidences.
7. When he knowingly or unknowingly goes wrong in point of law and
is about to commit a serious error of law

Process of Arbitration:
(i)

The arbitrator arranges for the preliminary meeting with claimant

and respondent.
-subject matter is discussed in general and necessary directions
are given to
parties concerned. He also declares name of umpire
& other relevant features for proceedings.

(ii) Claimant opens his case and submits all documents and he also
examines his witnesses who are cross-examined by the claimant &
same process is to be followed by claimant side also.
(iii) The respondent sums up his case then claimant replies and sums
up his case.
In this way arbitration proceedings comes to an end and arbitrator
Award
bytoan
arbitrator
proceeds
decide
his award in the matter.
An award by an arbitrator is a judgment by the private tribunal and hence, it
need not be in any precise form or it need not contain technical phraseology.

Following three aspects of an arbitration award will be briefly described :

1) Requirements of a valid award
2)Powers of court to modify award
3) Grounds for setting aside award

Requirements of a valid award:

In order that an award is valid in law, it should fulfill the following conditions:
i) It must be in writing.
ii) It must signed at any place either at top or at the bottom and it must be
conclusively evident that it was signed after it was written and not before.
iii) It must be signed with an object of making the award.

Powers of court to modify award :

It is observed once the arbitration award is declared, it becomes final . But
the court can modify such award under the following circumstances :
i) It appears that a part of award is upon matter which was not referred
to the arbitration and such part of it can be separated out without
affecting the decision on the matter referred to the arbitration.
ii) The award is imperfect in form or it contains obvious errors which can
be corrected without affecting the decision in the award.
iii) The award contains clerical mistakes or errors due to slip of pen.

Grounds for setting aside award :

The arbitration award is usually binding to the parties concerned. But the
court may set aside the arbitration award one or more of the following
grounds are established:
i)The arbitrator or umpire has misconduct himself or the proceedings.
ii)The award has been declared after the arbitration was superseded by the
court or that the arbitration itself has become legally invalid.
iii) The award has been improperly procured or is otherwise invalid .

Conditions favorable for arbitration

a) The amount of compensation or other questions of assessment of
liability are to be determined.
b) The disputes are to be settled on fair and just grounds of give and
take policy
c) The disputes involved are simple and straightforward .
d) The settlement of disputes requires considerable technical
knowledge as compared to that of law

Advantages of arbitration
1. By resort to arbitration, it is possible to avoid legal formalities,
delays and expenses which result from litigation.
2. In case of arbitration proceedings, the legal formalities,
technicalities and precedents are automatically avoided
3. The arbitration is a simple process and it can be carried out
speedily
4. The arbitration proceedings are conducted in private and not in
open as in case of the court of law
5. The dispute involving technical points or requiring experience of
particular trade or business can be submitted to arbitrators who
are experts for such type of work
6. The presentation of any piece of evidence in the arbitration
proceedings is not hampered by legal restrictions which normally
occur in the procedure of court of law
7. The time and place for conducting the arbitration proceedings can
be fixed to suit the convenience of the parties concerned

QDR ( QUICK DISPUT RESOLUTION) :

QDR has been formulated by The Association of Consulting Engineers
India in the interest of the industrial progress of the nation. The
QDR involves processes in which the parties retain the right to
decide upon the acceptance or otherwise of the outcome of their
dispute.
It excludes arbitration or litigation where a binding decision is
imposed on the parties by an arbitrator or a judge. In QDR a
neutral or independence agency is involved to facilitate the
settlement between the parties and help them to reach a
common acceptable ground.
Following are the advantages of QDR:
1. Better relationship between parties
2. Considerable savings in cost and time
3. Full participation of the parties
4. Getting an award which may be different from and better than
that of arbitration or litigation
5. Less job disruption.

THANK YOU