Arbitration

INTRODUCTION
• Arbitration is the mechanism to settle disputes between parties to a
contract, determined in a quasi-judicial manner
• The Arbitration and Conciliation Act 1996 provides legal frame work for
settlement of disputes by mutual settlement out side the court.
• Central Government may make rules for carrying out the provisions of this
act subjected to the approval of the Parliament.
• Arbitration is an arrangement agreed upon by the parties concerned to
refer the disputes to a third party for settlement.
• The arbitration tribunal can be a panel of arbitrators or a sole individual.
• Any written document or a clause in a contract for referring the dispute to
arbitration shall be an arbitration agreement.
• The parties to the contract will decide the constitution of arbitration
tribunal and mode of appointment as laid down in the contract agreement.
 OBJECTIVES OF ARBITRATION
• To cover both international & domestic arbitration & conciliation
• Tomake provisions for an arbitral procedure which is fair, efficient and
capable of meeting the needs of the arbitration
• To permit an arbitral tribunal to use mediation & conciliation to encourage
settlement of disputes
• Toprovide that a settlement reached by the parties as a result of
conciliation proceedings will have the same status and affect as an arbitral
award
• To provide that the arbitral tribunal gives reasons for its arbitral award
• To provide that every arbitral award is enforced in the same manner as if it
were a decree of the court
 PRINCIPAL CHARACTERISTICS
• Arbitration is consensual
• The parties are free to choose the arbitrator(s)
• Arbitration is neutral
• Arbitration is a confidential procedure
• The decision of the arbitral tribunal is final and easy to enforce

Advantages of Arbitration Disadvantages of

•Choice of Decision Maker (Arbitrator)
•Cost Effective & Efficient
Arbitration
•Privacy
•Court intervention is minimum
•Convenience
•Strict rules of CPC and Evidence Act are not
required to be followed, the Arbitrator is free
to frame his own procedure to conduct
arbitration proceedings
•Finality of Decision
•Unenforceability of the interlocutory
orders of Arbitrator
•Waiver of the right to access the court
•If there are multiple arbitrators in the
arbitration tribunal, delays can happen
due to juggling of their schedules for
fixing hearing dates
PROCESS OF ARBITRATION PROCEEDINGS

•Initiating Arbitration •Hearings

•Appointment of Arbitrator •Framing of Issues for determination
•Preliminary Meeting •Interchange of Evidence by way of Affidavits
•Filing of Statement of Claims & •Deposition of the Witnesses
other Pleadings •Passing of Award
 ARBITRATOR
Arbitrator The person who is appointed to determine the disputes is called the
arbitrator. Arbitrator(s) can be appointed by any of the following manners:
•By the parties as per agreed procedure
•Each party may appoint one arbitrator and then the third arbitrator is
appointed by the two arbitrators
•Appointment by the court

Challenge to appointment of an Arbitrator- an appointment of the arbitrator

can be challenged on the grounds of:
•his independence or impartiality; or
•He does not possess the requisite qualifications

The appointment of the arbitrator can be challenged by submitting a written

statement before the arbitration tribunal.
 POWERS & DUTIES OF ARBITRATOR
Powers
•Pass Interim Orders
•Decide the procedure of the
arbitration proceedings
•Termination of Proceedings
•Appoint an Expert
•Seek Court assistance in taking
evidence
•Correction in errors in,
interpretation of, award
Duties
•To see his appointment is in order
•Adjudicate the matter timely
•Act judicially & impartially
•Declare in writing any
circumstances likely to give rise to
doubts as to his impartiality
•Encourage settlement
and •Shall not misconduct
•Pass a final award
 ARBITRATION AWARD
• Arbitration award will be decided as per the substantive law in force in
India taking into account the terms of contract and usage of trade
• If the parties arrive at a settlement agreement and request the tribunal to
give award accordingly and if tribunal has no objection it may give award
accordingly which will have the same effect of the award.
• The arbitral award is issued under the signature of all or majority of
arbitrators on the basis of the decision or stating it as mutually agreed
upon by the parties. Signed copy shall be delivered to all parties.
• The award is binding on all the parties. Award is enforceable as if it were
a decree of the Court.
 APPOINTMENT OF ARBITRATOR
• The arbitrator has to be appointed within 30 days of such request by any
party.
• In case of failure to comply the above, the Chief Justice of the High Court
shall appoint suitable arbitrator as per the request of the party.
• If the appointed arbitrator fails to perform, the court may replace him by a
suitable arbitrator as per the request of the party.
• The appointed arbitrator shall disclose any circumstances likely to occur
to give doubt about his impartiality.
• The party to the dispute also can challenge the appointment of the
arbitrator on the above count.
• The mandate of an arbitrator ends without proceedings starts or in the
course of proceedings when
• He is not able to perform
• He withdraws
• Parties agrees to terminate him
 PROCEEDINGS
• Proceedings of the arbitration commences from the date of receipt of
communication by the respondents, for reference of the matter to the
arbitration.
• The parties shall be treated equally and shall be given full opportunity to
present their case.
• The procedure, place of hearing, time limit for production of documents /
evidence etc can be agreed upon by the parties or otherwise decided by the
arbitrator.
• The arbitration procedure need not follow the Civil court procedures or
evidence act, but shall ensure the principles of natural justice.
• The tribunal shall decide its own jurisdiction.
• The parties can counter if the tribunal exceeds its authority.
• The arbitral tribunal may appoint an expert/institution to examine and to give
expert report.
• If the respondent fails to communicate his defense or fails to appear for oral
hearing / fails to produce documents, tribunal shall not treat it as admission
by the defaulting party but proceed with the evidences before it and make
award.
ARBITRATION COST
• The tribunal may direct the parties to deposit an amount towards cost etc. as
decided by it during the course of proceedings.
• The tribunal shall fix the cost of arbitration, the fee of arbitration, for witness,
administrative charges, fees for experts etc.
• It decides cost payable by the each party and also decides the cost payable to
one party by the other.
CONCLUDING THE PROCEDURE
• On issuance of award arbitration proceedings are terminated.
• The tribunal is empowered to issue corrections to the Clerical errors set in the
award issued, without effecting the decision concluded
 REVIEW BY COURT
• However the Court may set aside arbitral award on application by the
parties in time, if
• The party was under incapacity to participate in the arbitral proceedings
• Arbitration agreement is invalid
• Non-receipt of proper notice of arbitral proceedings, non adoption of
proper procedure, partiality shown by the Tribunal or exceeding the
Jurisdiction by the Tribunal on examining the case in detail.