EXPLAIN ARBITRATION PROCEDURE

1. INITIATION According to Section 4, arbitration agreement shall be in writing (signed document, exchange of letters, telexes, telegrams, or other means of telecommunications) and should provide record for agreement. Any Dispute can be referred to arbitration as mentioned in agreement but it should not be contrary to public policy or capable of determination by arbitration. If a party refuse to honour the arbitration agreement, the other party can apply to the courts for an order compelling the recalcitrant party to submit to the arbitration process in respect to section 5. According to section 23, party to arbitration agreement may appear before tribunal personally, or by agent, through an attorney of law. 2. APPOINTMENT OF ARBITRATORS Parties are free to determine the number of arbitrators, respect to section 6, if it is even number then the appointed arbitrators can jointly appoint additional arbitrator, who will act as a chairman. However, according section 7, High court has the capacity to appoint the arbitrators (minimum 3) when the parties fail to agree on common procedure or if the agreed procedure fails. Mandate of an arbitrator terminates if arbitrator unable to perform his functions, fails to act without delay, dies, withdraw from office, or if parties agree on termination as specified in section 8-9. According to section 13, arbitrator can order interim measures of protection to protect or secure the claim. 3. QUALITIES OF ARBITRATORS According to section 15 (1), arbitrator must deal the dispute in an impartial, practical, and expeditious manner. Arbitrator must afford all the parties an opportunity of presenting their respective cases and of examining all documents and other material furnished by the other party or by any other person [section 15 (2)]. 4. APPLICABLE LAW If it is a transactional contract, the UNCITRAL model law allow the parties to choose the substantive law. The sections 24(1), (2), (3) & (4) elaborate more on these.

5. VENUE As mentioned in section 16 (1), the parties may decide the venue by the agreement, if it is not, the arbitrator will decide it by considering the convenience of the parties and circumstances of the case. If agreement is contrary, the arbitration tribunal can meet at any place, which is appropriate for the parties (section 16(2)). 6. DECISION As in arbitration agreement, the arbitrator will make the decision, if not, the decision shall be majority of the arbitrators, failing majority, the arbitrator who is appointed by other arbitrator will make it, if agreement specify, chairman decision will be binding. 7. SUMMON AND OATH Party may apply to high court with the written consent of the arbitration tribunal for summons of witnesses. Section 20(1). According to section 22(2), Arbitrator is expressly empowered to administer the oath, unless otherwise agreed by the parties. 8. AMENDMENT TO RELIEF The Sri Lankan Arbitration act provides a valuable opportunity to introduce new prayers for relief only if it is falls within the scope of Arbitration agreement and not inappropriate to accept them, according to section 15 (4). 9. PROCEDURE According to section 17, the parties can agree on the procedure of arbitration tribunal, anyhow the arbitration tribunal has the power to determine the admissibility, relevance, and weight of any evidence. 10. EVIDENCE As given in section 22(1), unless otherwise agreed by parties, evidence is given by orally or in written or by affidavit to arbitration tribunal. 11. THE AWARD According to section 25 (1), the award is to be made in writing, and signed by arbitrators. Unless the prates agree or an agreed award, the reasons must be stated as defined in section 25(2).

12. CORRECTION As specified in the section 27, the correction can be made to award for an omitted matter up to certain limit. 13. COMPENSATION FOR ARBITRATORS Partly are severely and jointly liable for the compensation to arbitrators of their work and disbursement. Section 29(1). 14. ENFORCEMENT OF THE AWARDS According to section 31 (1), award can be enforced by high court on an application within one year after the expiry of 14 days of making the award. 15. SETTING A SIDE THE AWARD The award can be set a side by the High court on an application made with in 60 days on the ground like those laid down in UNCITRAL model Law.

What are the challenges to arbitration

1. Cost The cost of time and cost of the attorney and other legal fees are much more than cost of arbitration for large disputes, but for smaller cases this may be on the other way round. Courts are supported by taxpayers money and are practically free i.e. the fee for the judges and court premises. However, the compensation for the arbitrator and rent for the venue has to be paid by the relevant parties to the dispute. 2. Lack of legal expertise - While the advantage of arbitration is professional expertise but the challenge may be the legal expertise. The significant legal matters such as contract fraud and arbitration waiver are not within their professional expertise and should be handled by legal professionals 3. Lack of discovery In the legal system all the parties has to collect the evidence that are available against the other, but not in arbitration. 4. Legal aid Legal aid is not available for arbitrations, where as it is for litigation. 5. Legal challenge - Parties may try to challenge the legal validity of arbitration clause or frustrate the arbitration award. If most arbitration cases go to courts, then no point of conducting the arbitration, rather than litigation.

6. Characteristics of an arbitrator If the arbitrators are dependent and partiality, then the other party has to suffer a lot. 7. Less Clarity of Act - It is somewhat strange that the main provision as to pleadings section 15 (2) is not very elaborate and does not set out the contents of pleadings, time limits for the same and points of detailed nomenclature, such as statement of claim, defence, rejoinder etc. [In this respect, the Nepal Arbitration Act 1999 is much more specific]. However, the Sri Lanka Act is silent about the materiality of the evidence, a concept expressly mentioned in section 19 (4) of the Indian Act of 1996. Some points like trade usages in section 24 (4) are divergent to UNCITRAL model law. The production of documents, according to section 20(1), is criticised as lacking teeth. 8. Tends to formal court proceedings If the process moves towards formal proceedings, like in courts, then the actual desire of arbitration could not be achieved. 9. Setting a side an award - The award can be set a side by High Court on an application within 60 days and similar to those laid down in UNCITRAL model Law, section 32. Therefore, if the one party loses, the chances of setting side the award on appeal is limited. 10. Adhesion contacts Even though the courts tend to support the arbitration, the contracts categorised by the court as adhesion contracts tends to be exception.