Professional Documents
Culture Documents
Till 24th Jan 1996, the law of Arbitration was contained in the Arbitration Act,1940.
The Arbitration (Protocol and Convention) Act and the Foreign Awards (Recognition and
enforcement) Act,1961. Recently, the law of Arbitration has been consolidated and
amended on the lines of UNCITRAL Model Law of International Commercial Arbitration
and UNCITRAL Conciliation Rules, under the new Arbitration & Conciliation Act,1996,
which came into force w.e.f. 25th Jan,1996. This Act has repealed the aforesaid three
enactments though the pending arbitral proceedings would continue to be governed by
the repealed enactments, unless otherwise agreed by the parties. The Act apart from
providing the domestic as well as international commercial arbitration provides for a
greater autonomy in the arbitral process while at the same time limits the role of
judiciary. The law on arbitration places the country’s dispute resolving mechanism at par
with internal community to do more business with India. The Act has eliminated court
intervention in arbitration proceedings and the final award, by narrowing the scope for
challenging arbitration proceedings and the final award, by narrowing the scope for
challenging arbitration and by obviating the requirement for ratification of arbitral
awards.
The new law of arbitration applies to the whole of India. To the State of Jammu and
Kashmir, while the provisions relating to enforcement of foreign awards apply in full,
other provisions apply insofar as they relate to international commercial arbitration.
DOMESTIC ARBITRATION
WHO MAY BE APPOINTED? The arbitrator is an extra judicial court or the parties’ own
choice. There are no hard a fast rules as to the qualifications of an arbitrator. Thus, the
parties may appoint as arbitrator, whomsoever they please, however incompetent or
unfit, to arbitrate on their dispute. However, it is in the interest of all the parties that the
arbitrator is person of integrity and intelligence, known for his impartial behavior,
rational judgment and competence.
DUTIES OF ARBITRAL TRIBUNAL: The parties may agree pm the proceedings. In the
absence of such agreement, the arbitral tribunal may conduct the proceedings in the
manner it considers appropriate and shall be empowered to determine the admissibility,
relevance, materially and weight of any evidence. The tribunal shall not be bound by the
Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. The place of arbitration
and the language to be used shall be as agreed between the parties or as determined by
the arbitral tribunal.
STATEMENT OF CLAIMS AND DEFENCES: The claimant shall submit the statement of
claim stating:-
i) The facts supporting his claim,
ii) The points at issue, and
iii) The relief or remedy sought.
The respondent shall submit the statement of defense stating his defense in
respect of these particulars. The statement of claim and defense shall be filed by the
respective parties within the time agreed upon by the parties or as specified by the
arbitral tribunal. The statement shall be supported by relevant documents or may
include reference to such document / evidence. If the statement of claim is not
furnished, the arbitral tribunal shall terminate the proceedings. If, however, the
statement of defense is not furnished, the proceedings shall be continued and decided
on merits.
ARBITRAL PROOCEEDINGS: The parties are free to agree as to how the proceedings of
the arbitral tribunal shall be conducted. In the absence of any such agreement, the
arbitral tribunal shall decide whether to hold oral hearing for presentation of evidence or
for oral argument, or whether to conduct the proceedings on the basis of documents and
other materials. Unless oral hearing has been specifically excluded by agreement, the
arbitral tribunal shall hold oral hearings at an appropriate stage, on the request of a
party. The parties shall be given sufficient advance notice of any hearing or meeting of
the arbitral tribunal. All statements, documents or other information furnished by a party
or any expert report or evidentiary document relied upon by the arbitral tribunal shall be
communicated to the parties. If a party fails to appear on oral hearing or to produce
documentary evidence, the proceedings shall be continued and decided on merits.
APPOINTMENT OF EXPERT: The arbitral tribunal may appoint one or more experts,
unless there is a contrary agreement between the parties. The expert may be required to
report on specific issues. The tribunal may direct a party to furnish any relevant
information, documents, etc., to the expert.
ASSISTANCE OF COURT: The arbitral tribunal or a party with the approval of the
tribunal, my apply to the court for assistance in taking evidence.
RULE OF MAJORITY: Unless otherwise agreed by the parties, in case of three or more
arbitrators, the decision of the arbitral tribunal shall be made by a majority. However, if
authorized by the parties or all the arbitrators, a question of procedure may be decided
by the presiding arbitrator.
ARBITRAL AWARD: An arbitral award shall be made in writing and shall be signed by
the members of the arbitral tribunal. The award shall state its date and place of
arbitration. The arbitral award shall state the reasons upon which it is based, unless the
parties have agreed that no reasons are to be given or in case of award on a settlement
between the parties. A signed copy of the award shall be delivered to each party. The
arbitral tribunal may make an interim arbitral award on any matter with respect to which
a final award shall be made later. Where the award is for payment of money the tribunal
may order for payment of interest, at a reasonable rate for the specified period, unless
there is an agreement to the contrary. If the award does not make any direction on
interest, the sum directed to be paid under the award shall carry interest @ 18% p.a.
from the date of the award to the date of payment. The arbitral tribunal may make order
as to costs as well. The arbitral award shall be final and binding on the parties and
persons claiming under them respectively.
SETTING ASIDE AN AWARD: An application for setting aside an arbitral award may be
made before the court, by a party within three months of receipt of the award by him.
The court may set aside an award on the following grounds:
1. A party was under some incapacity;
2. The arbitration agreement is not valid under the law;
3. The party making the application was not given proper notice of the appointment of
an arbitrator or of the arbitral proceedings or was otherwise unable to present his case.
4. The award deals with a dispute not contemplated by or beyond the scope of the
submission to arbitration.
5. The composition of the arbitral tribunal or the arbitral proceedings was not in
accordance with the agreement or with the law;
6. The subject – matter of the dispute is not capable of settlement by arbitration under
the law; or
7. The arbitral award is in conflict with the public policy of India.
APPEAL: An appeal shall lie before the court, against the following orders:-
1. Granting or refusing to grant any measure under Section 9
2. Setting aside or refusing to set aside an arbitral award under Section 34, and
3. Granting or refusing to grant an interim measure of protection under Section 17.
No second appeal shall lie against the appellate order of the court, except,
however, that an appeal may be made to the Supreme Court.
ENFORCEMENT OF CERTAIN FOREIGN AWARDS: Part II dealing with enforcement of
foreign awards consists of two chapters. Chapter I relate to New York Convention Awards
and Chapter II deal with Geneva Convention Awards. ‘Foreign Award’ has been defined
to mean an award on difference between persons arising out of legal relationships,
whether contractual or not and considered as commercial under the law in force in India,
and made in pursuance of an agreement in writing for arbitration to be governed either
by the New York Convention or by the Geneva Convention, in the territory of notified
foreign state. Where a commercial dispute covered by an arbitration agreement to which
either of the convention applies, arises before a judicial authority in India, it shall at the
request of a party be referred to arbitration. Any foreign award which is enforceable
under this part shall be binding and may be relied upon by parties by way of defense, set
off or otherwise in any legal proceedings in India. The party applying for the enforcement
of a foreign award shall, produce the original award or a duly authenticated copy thereof,
the original arbitration agreement or a certified copy thereof, and evidence to prove that
the award is a foreign award.
Sections 48 and 57 contain the conditions for enforcement of a foreign award and
thus set out the grounds on which the enforcement may be refused. If the court is
satisfied that the foreign award is enforceable, the award shall be deemed to be a
decree of the court. An appeal shall lie against the order or court refusing to refer the
parties to arbitration or refusing to enforce a foreign award.