ARBITRATION

P R E S E N TAT I O N BY:
GROUP 6

N I K I TA K H A N D E LW A L ( 2 4 )

NILAKSHI TOTLA (25)

NISHTHA DUA (26)

N I S H T H A G U L AT I ( 2 7 )

NITIN VERMA (28)

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
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 arbitration can be enforced
for it.
After bearing the application made by parties, the court passes suitable orders.
The appointment of arbitrator can be done jointly by the parties or one arbitrator by each
party or by the court.
 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. Sole arbitrator : Unless clearly mentioned in agreement the reference is only to sole
arbitrator.
6. 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.
7. 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 an umpire. If the arbitrator s are equally divided in their opinions, award by the
umpires shall, unless the arbitration agreement provides otherwise prevail.
Following are the four different ways of appointing arbitrators by the parties:

1. A person may be designated as an arbitrator either by name or as the holder of a

particular office.
2. 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.
3. The agreement may provide for the name or holder of any post who in turn will
appoint arbitrator or arbitrators.
4. 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. To refer for opinion of the court:

May refer a special case for securing opinion of court, w.r.t :
a. A question of law,
b. 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 to alter or change the terms of arbitration agreement.
No power to decide whether the arbitration agreement is valid or not.
No power to declare an ex-gratia payment by subsiding the legal right of the party.
No power to grant damages for matters which are illegal.

Scope of Umpire’s 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. All the essential requirements of a valid contract should be satisfied by the arbitration
agreement.
2. It is very important to make out from the agreement that the parties intend to submit to
the arbitration.
3. The agreement must be in writing
4. The court may declare an arbitration agreement a valid one though not signed by one of
the parties
5. Agreement must be to refer a difference or difference to the arbitration.
6. 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
7. The differences may be present or future and thus , the arbitration agreement mentions
the disputes which have occurred or are likely to be occurred in future
8. It is not essential to name the arbitrator in the agreement .An arbitrator can be
designated by post. However, care should be taken to see that the clause pertaining to
the appointment of the arbitrator is not uncertain and vague
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
8. The arbitrator tries to go beyond scope of references.
9. The conduct of arbitrator is such that the arbitration proceedings are unnecessarily
delayed.
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 proceeds to decide his
award in the matter.

Award by an arbitrator
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