Module 3:

Arbitration, Conciliation and ADR (Alternative Dispute Resolution) system

Arbitration

Definition

• Arbitration is a powerful means of resolving disputes between the organization and

its employees. It is a process in which an independent third party analyses the
bargaining situation, listens to both parties and collects necessary data and make
recommendations which are binding on the parties concerned. Arbitration is proved
successful in resolving disputes between labour and management. The parties
themselves establish arbitration and decision is acceptable to them. The decision
taken by the arbitrator is accompanied by a written opinion providing reasons
supporting the decision. Further, the procedure is comparatively expeditious than
courts and tribunals. However, the process is a bit expensive, and if there is a
mistake in selecting an arbitrator, the judgement becomes arbitrary.
• Arbitration is a procedure in which a dispute is submitted to an arbitrator for
resolution. The decision of the arbitrator could be binding on the dispute. Hence,
arbitration serves as a method for two parties to resolve a dispute through a private
dispute resolution procedure instead of going to court.
Scopes
• Arbitration laws have been enacted in India to provide an effective and fast dispute
resolution framework, to improve the Indian dispute resolution system. The
advantages of arbitration are speedy dispute resolution and cost-effectiveness.
• Fast dispute resolution: Arbitrations are typically much faster than dispute
resolution through courts, as dates for arbitration can be obtained much faster than
court dates.
• Cost-Effectiveness: Since arbitration is much faster than court dispute resolution,
the cost associated with the dispute resolution is lower.
Types of Arbitration
• In India, there are two types of arbitration, ad-hoc arbitration or institutional
arbitration.
• In an ad-hoc arbitration, the procedures for arbitration have to be agreed upon by
the parties and the arbitrator. This could be an issue in most cases, as there is a
 dispute between the parties and cooperation on arbitration might not happen. Also,
ad-hoc arbitration could have legal or technical flaws and defects in the award, as
the arbitration procedures are not standardized. Hence, the likelihood of court
interference is higher in ad-hoc arbitration.
• In institutional arbitration, the procedural rules are already established by the
arbitration institution. Hence, the formulating of procedures and rules is not
required, as the arbitration framework is already in existence. Also, arbitration
institutions have experienced arbitrators and a committee to review all arbitral
awards. Hence, the possibility for a court to set aside the award by an arbitration
institution is minimal.
Arbitration Institutions in India
Some of the arbitral institutions in India are:

• Chambers of Commerce (organized by either region or trade)

• Indian Council of Arbitration (ICA)
• Federation of Indian Chamber of Commerce and Industry (FICCI)
• International Centre for Alternate Dispute Resolution (ICADR)
• LCIA India
Distinction between laws of the Arbitration Act, 1940 and Arbitration Act, 1996
• Arbitration was first introduced formally as legislation in 1940 in India. It was then
amended in 1996 to incorporate the provisions of the Model Law as per UNCITRAL. This
article will study the key differences between the two versions of the law.
Arbitration Act 1940
• The first formal arbitration was introduced under British rule on 11 March 1940, known
formally as the Act 1940.’ The Act was instrumental in settling several disputes and was
considered the binding authority in several cases. But there were criticisms concerning the
law. The main point of contention was that the law distinguished between an application
for setting aside an award and an application for a decision that the award was a nullity.
This meant that it does not legally exist and contemplates that an application for setting
aside an award may be made under Section 30, and an application of that award is a nullity
under Section 33. Further, it was also observed that the said Act fails to recognize that the
arbitration will fail in case of the non-existence and invalidity of an agreement.
• The Act was also silent about the shortcomings inherent in private contracts between
individuals. The provisions for filing awards differed from High Court to High Court. The
 lack of provisions prohibiting an arbitrator from resigning during the arbitration
proceedings exposed the parties to heavy losses, particularly where the arbitrators acted
mala fide or partially. Another observation was that if an arbitrator appointed by the court
dies during the arbitration proceedings, there was no other provision for the appointment
of a new arbitrator. This discrepancy was a glaring one.
Arbitration Act 1996
• With the globalization of the Indian economy and the increase in international trade, Act
of 1940 came under heavy scrutiny as it didn’t have the bandwidth to settle international
trade disputes. So the Act was replaced by The Arbitration and Conciliation Act 1996,
which came into force on 22 August 1996. The main agenda for reform was to provide a
speedy solution to disputes between the parties and limit judicial intervention. It was meant
to address the rising number of cases in international and domestic commercial arbitration
and conciliation. It was also to make the arbitral tribunal fail, provide them reasons to pass
awards, minimize the role of courts, and enforce the arbitral award as the court’s decree.
• There were a few cases of dispute between the parties where the applications were filed
before the enactment of the 1996 Act, but the arbitrators were appointed after the
enactment. In such a scenario, the arbitrators and the parties also agreed that the new Act
would govern the proceedings for the said dispute.
• The Act of 1996 consolidated and amended laws of Arbitration, International
Commercial Arbitration and also for enforcement of Foreign Arbitral Awards. Initially, it
was held that the court could pass interim orders under Section 9 of the Act, where Section
9 makes provisions for two stages. In the first stage, the court can pass an order during
arbitral proceedings. In the second one, the court can pass an order before the
commencement of arbitral proceedings.
The Arbitration Act, 1940 Vs. Arbitration Act, 1996
• The basic difference between the Acts of 1940 and the 1996 Act is that in the former Act,
one party could commence proceedings in court by making an application under Section
20 for the appointment of an arbitrator and simultaneously could also make an application
for interim relief under the Schedule read along with Section 41(b) of the 1940 Act. The
latter does not contain any provision similar to Section 20 of the 1940 Act. However, the
court can pass orders even before the commencement of the arbitration proceedings.
• Another difference is that in the former Act, there was no requirement to give reasons for
an award until and unless agreed upon by the parties to the arbitration. However, in the
 latter Act, the award has to be given with reasons which minimize the court’s
interpretation.

UNCITRAL model law

United Nations Commission on International Trade Law, established in 1966 is related to International
Commercial Arbitration and Conciliation, International Sale of Goods (CISG), international security and
so on and so forth.
• Focusing on the Arbitration aspect of the law, it has been brought into effect to guide all nations
across the globe to improve their arbitral framework. The Model law encompasses all steps in
Arbitration: formation of the arbitration agreement, the composition, and jurisdiction of the arbitral
tribunal and the extent of court intervention in the recognition and enforcement of the arbitral
award. The law highlights that most nations have concurrent views about major aspects of
international commercial arbitration having diverse legal systems. The UNCITRAL Model Law
has synchronized the common law and civil law provisions on Arbitration.
• The Model Law empowers the parties to choose the rules of law that will be applicable regarding
the substance/facts of the dispute and henceforth, they do not have to choose a specific legal system
of any country. Generally, recognized principles and phrases make the Model law more convenient
and versatile. The UNCITRAL Model serves as a good framework for domestic arbitration as it
incorporates all the relevant and key provisions which make sure that the arbitration process runs
smoothly. The Model Law recognizes five main principles that govern international
commercial arbitration. They are:

• Party Autonomy

Arbitration allows parties substantial control over the process that will be
used to resolve their conflicts. Arbitration provides an unbiased platform where
both parties believe that they will get a fair hearing. Additionally, the parties
have the flexibility to alter the dispute resolution process to their needs and
requirements and choose an arbitrational well-versed with the field of law in
which subject- matter of the dispute lies.

• Separability

The arbitration clause in a contract is independent, that is it survives even

in the termination or invalidity of the main contract. This ‘staying alive’ feature
of the Arbitration clause is referred to as the principle of separability. According
 to the Arbitration and Conciliation Act,1996, having been modeled on
UNCITRAL Model Law, an arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate agreement.

• Competence-competence

It is necessary that the arbitration tribunal has the competence to rule on

its own jurisdiction and make decisions about the outlines of its own
jurisdiction. The benefit of this principle is that it enables the arbitrators to rule
on their own jurisdiction as is widely recognized by various international
conventions on statutes on international arbitration.

• Territorial Principle
Each jurisdiction has the power to regulate people and events within its
borders, while no jurisdiction is capable of controlling people and events
outside its borders. However, territoriality alone is insufficient to determine the
applicability of the law when there are people and events spanning various
jurisdictions.

• Enforceability
In international transactions, it is necessary to ensure that the decision
resolving the dispute is enforceable in all the countries affected by the
transaction, preferably in all countries where the losing party has its assets so
that they can be attached to satisfy the credit of the winning party.
Arbitration and expert determination

• The procedure for expert determination is considerably less formal than arbitration. It may
simply consist of submissions to the expert by both parties, sometimes with a ‘right of
reply’ and with the expert then issuing their determination.
• As with arbitration, expert determination is governed by the agreement to appoint
them. Here however neither AA 1996 nor any other Act rescues parties who have not put
their minds to equipping the expert with everything that they need to make a binding
determination.
• The expert determination provision should contain all of the following:
 o The types of disputes that will go to expert determination.
o An agreement that the expert is an expert not an arbitrator.
o The number of experts, usually one.
o The body who is to nominate the expert or less often the named experts.
o A requirement that the expert provides a written determination, usually within
an agreed timescale.
o A provision to deal with what happens if the expert dies or becomes incapable.
o Procedural rules (number of submissions, etc.) or a provision stating that the
expert can dictate these.
o Requirements that the parties produce evidence for the expert.
o Agreement as to whether or not the expert can award interest or costs.
o An agreement that the expert’s determination will be final and binding, usually
in the absence of manifest error or fraud, sometimes also in the absence of
compliance with natural justice or provided that they act fairly.
Arbitration and expert determination are the most common alternative dispute resolution
procedures. They are found in very many contracts, for example disputes in relation to the
following:

• rent reviews under leases;

• service charges under leases;
• land values under option agreements;
• square footage calculations of completed units under agreements for lease;
• calculation of overage;
• share valuations and completion accounts in share sales;
• works under agreements for lease; and
• partnership and shareholder disputes.
When choosing between arbitration and expert determination
• Arbitration may give you a better-quality process and decision, with support from
Arbitration act 1996 when things go wrong. It does however take time and will be more
expensive. Arbitration is suitable for disputes where the evidence is less straight
forward or legal issues are more complex.
• An expert’s determination is quick and cheap but might be wrong and perverse. It all
comes down to the quality of expert and the parties need to focus on appointing an
 appropriate expert. Expert’s decisions are very useful in determining disputes where
there is a single issue which a particular professional is well qualified to determine.

Extent of judicial intervention

International commercial arbitration

• The Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(New York, 1958), better known as the New York Convention, is one of the most
important United Nations treaties in the area of international trade law and the
cornerstone of the international arbitration system. Under the New York
Convention, States undertake to give effect to an agreement to arbitrate, and to
recognize and enforce awards made in other States. In 2006, a Recommendation
regarding the interpretation of articles II(2) and VII(1) was adopted and in 2016, the
UNCITRAL Secretariat Guide on the New York Convention was published.

• UNCITRAL adopted the first edition of the Notes on Organizing Arbitral

Proceedings in 1996 and the second in 2016. The Notes list and describe matters
relevant to the organization of arbitral proceedings, to be used in a general and
universal manner. The UNCITRAL Arbitration Rules, which were initially adopted
in 1976 and first revised in 2010, provide a comprehensive set of procedural rules
for the conduct of arbitral proceedings and are widely used in both ad hoc and
institutional arbitrations. On both occasions, Recommendations were made to assist
arbitral institutions and other interested bodies that envisaged using the Rules with
following the text and substance. In 2013, the Rules were further amended to
incorporate the UNCITRAL Rules on Transparency in Treaty-based Investor-State
Arbitration, application of which is promoted by United Nations Convention on
Transparency in Treaty-based Investor-State Arbitration (New York, 2014) or the
Mauritius Convention on Transparency. Article 8 of the Rules on Transparency
creates the Repository of published information. In 2017, the Mauritius Convention
on Transparency entered into force. The Convention has created a novel and
efficient mechanism that supplements existing investment treaties (concluded prior
to April 2014) with respect to transparency related obligations.

• The UNCITRAL Model Law on International Commercial Arbitration was adopted

in 1985 and amended in 2006. It constitutes a sound basis for the desired
 harmonization and improvement of national laws, covering all stages of the arbitral
process.

Arbitration agreements – essential and kinds, validity, reference and interim measures by court

• Section 7 of the Arbitration and Conciliation Act of 1996 defines arbitration agreement
as an agreement by the parties to refer to arbitration all or some disputes which have
arisen or will arise on a future date between them with reference to a defined legal
relationship, whether contractual or not. A doctor’s relationship with his patient or a
lawyers with his client are both examples of relations that are legal but not necessarily
contractual.
• An Arbitration agreement is made by any two parties entering into a contract by which
any disputes arising between them with regard to the contract agreement is to be
resolved, without going to the Courts and with the help of an Arbitrator. The agreement
should mention who should select the arbitrator, regarding what kind of dispute the
Arbitrator should give decision, the place of arbitration, etc.
• The parties need to sign the Arbitration Agreement and the decision shall be binding
on the parties. If you are a party to any contract and if you wish to resolve any disputes
with the help of an Arbitrator, without going to court, then you should make this
agreement.
• Arbitration agreement is like a contingent contract, meaning thereby that these
agreements come into being or become enforceable contingent to the happening of a
dispute between the parties. It is only enforceable in case there arises a dispute between
the parties.
Essentials of Arbitration Agreement
The existence of a dispute is an essential condition for arbitration. Where parties have
effectively settled their disputes, they cannot refute the settlement and invoke an arbitration
clause.
• Written Agreement
An arbitration agreement must be in writing. As per Section 7 (4) of the Act,
arbitration agreement is considered to be in writing, if it is contained in:
1. A document signed by the parties;
2. An exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement; or
3. An exchange of statements of claim and defence in which the existence of
the agreement is alleged by one party and not defined by another.
• Intention
Intention of the parties is of prime importance. No form has been
prescribed for an arbitration agreement and nowhere has it been mentioned that
terms like arbitration, arbitrator are essential prerequisites in an arbitration
agreement. According to a leading case law in this subject, the intention of the
 parties to refer their dispute to arbitration should be clearly discernible from the
arbitration agreement.
• Signature
An arbitration agreement needs to be signed by the parties. The
agreement may be in the form of a signed document by both the parties
containing all the terms or it may also be a signed document by one party which
contains the terms and an acceptance signed by the other party. It will suffice if
one party puts his signature in the written submission and the other party accepts
it.
Interim Measures under Arbitration & Conciliation Act
Arbitration and Conciliation Act is effective and interrogative part of Alternative
dispute resolution system accepted universally. Arbitration and Conciliation Act 1996 repealed
old Arbitration Act existing in India and incorporated law relating to domestic arbitration,
international commercial arbitration and law relating to conciliation. The new Act was enacted
on the lines of the United Nations commission on International Trade Law (UNCITRAL) for
ensuring a fair and efficient settlement of disputes in an international commercial contract.
Whenever there is an ambiguity in arbitration matters, our Courts have relied on UNCITRAL
rules for interpretation and application of the provisions of new act.

Award including Form and content, Grounds for setting aside an award,

Arbitral awards have a special status under international law by reason of the 1958 Convention on
the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).
Pursuant to the New York Convention, arbitral awards made in the territory of one contracting
state shall be recognised as binding and enforced in another contracting state, subject only to the
limited grounds for refusal of recognition and enforcement set out in Article V of the Convention.

Given this special status, the form and content of an arbitral award is clearly important. This
chapter considers the following issues:

• the form of an arbitral award – types of arbitral awards and formal requirements under
the New York Convention and selected national laws;
• the content of an arbitral award – best practice regarding the contents of arbitral awards,
as compared with mandatory requirements under selected national laws and arbitration
rules; and
• the effect of an arbitral award – finality, the possibility of challenges to arbitral awards,
the limited possibility of appeals to arbitral awards, and enforcement.
The form of an arbitral award

Arbitral award or arbitration award

To start with, which term is more appropriate – arbitral award or arbitration award?
The New York Convention uses ‘arbitral award’, as do the United Nations Commission on
International Trade Law (UNCITRAL) Model Law and the UNCITRAL Arbitration Rules.
However, many sets of arbitration rules, including those under the International Chamber
of Commerce (ICC), the London Court of International Arbitration (LCIA), the
International Centre for Dispute Resolution (ICDR), the Stockholm Chamber of
Commerce (SCC) and the Singapore International Arbitration Centre, simply use the term
‘award’. The English Arbitration Act also mainly uses the term ‘award’, although the long
title of the Act refers to ‘arbitration awards’ and the term ‘arbitral award’ appears in
Sections 2(b) and 81(c).

Thus, the correct term is ‘arbitral award’, but the terms ‘arbitration award’ and
‘award’ may also be used.

Types of arbitral awards

As is stated in Article 1(1), the New York Convention applies to ‘the recognition
and enforcement of arbitral awards made in the territory of a State other than the State
where the recognition and enforcement of such awards are sought, and arising out of
differences between persons, whether physical or legal’. Article 1(1) adds that the
Convention also applies to ‘arbitral awards not considered as domestic awards in the State
where their recognition and enforcement are sought’. Further, Article 1(2) provides that
the term ‘arbitral awards’ ‘shall include not only awards made by arbitrators appointed for
each case but also those made by permanent arbitral bodies to which the parties have
submitted’.

Thus, distinctions can be made between several different types of awards, including the following:

• A ‘domestic award’ is an arbitral award made within the territory of a state.

• A ‘foreign award’ is an arbitral award made – or deemed to be made – in the territory
of another state. For example, if the legal place (or seat) of arbitration is London, the
 arbitral tribunal may nevertheless decide to sign the award in another country for
reasons of convenience. Nevertheless, the award will be treated as having been made at
the seat pursuant to Section 53 of the English Arbitration Act 1996.[3]
• An ‘interim award’ (or ‘provisional award’) is an award that is subject to a final
determination at a later stage (see, for example, Section 39 of the English Arbitration
Act). Since Article V(1)(e) of the New York Convention requires an arbitral award to
have become binding, an interim award is generally considered to be unenforceable.
However, some US courts have held that an interim order by an arbitral tribunal, or
even by an emergency arbitrator, could be enforced as an award if it finally and
definitely disposed of a self-contained issue.[4]
• A ‘partial award’ determines only part of the claims in dispute between the parties.
• An ‘agreed award’ is an arbitral award entered into by agreement of the parties and the
arbitral tribunal, recording the result of a settlement.
It is important to differentiate between an arbitral award and other decisions or orders within an
arbitration since it is only awards that can be enforced internationally under the New York
Convention, and domestically under national arbitration laws. Although arbitral awards are
generally clearly indicated as being awards, it should be noted that the nomenclature used by the
arbitral tribunal is not determinative.

Formal requirements for an arbitral award

International conventions generally do not set out any formal requirements in

relation to awards. However, the New York Convention imposes an implied written
requirement by providing in Article IV that ‘the party applying for recognition and
enforcement shall supply: (a) he duly authenticated original award or a duly certified copy
thereof’.

Requirements in relation to formalities are primarily set out in national arbitration laws or in
applicable arbitration rules. Thus, for example:

• many national arbitral laws, including the UNCITRAL Model Law (Article 31),
provide that the award shall be made in writing, shall be signed by the arbitrator or
arbitrators, and shall state the date of the award and the place of arbitration;[5] and
• it is also often provided that the arbitral tribunal must state the reasons on which the
award is based.[6] This matter is considered in more detail below.
Some national arbitration laws, such as the English Arbitration Act 1996 (Section 52(1)), expressly
provide that the parties are free to agree on the form of the award.

Signature

Although not strictly necessary under the New York Convention, in practice it is a fundamental
requirement that an award should be signed.

In the case of a three-person tribunal with arbitrators in different countries, it is necessary to allow
sufficient time for the final agreed award to be couriered between the respective arbitrators to
obtain their respective signatures. The arbitrators should also ensure that there is a sufficient
number of originals – generally, one original per party, one for each of the arbitrators, and one for
the arbitral institution, where applicable.

Although it is usual for all the arbitrators to sign the award – and that is so even when there is a
dissenting opinion – it can happen that a dissenting arbitrator refuses to sign the award. The
solution in such a situation is usually for the majority to sign the award, or at least the chair or
presiding arbitrator, provided an explanation is given for the missing signature.[7]
The place of the award should be stated as being the legal place, or seat, of arbitration, even if the
award is actually signed in a different place. This is important, since the legal seat determines the
nationality of the award for the purposes of the New York Convention.

Reasons

As noted above, many arbitration laws and rules require arbitrators to state the reasons on which
an award is based.[8]
However, note, for example, that the Swedish Arbitration Act of 1999 does not require any reasons
to be given, although the SCC Rules do impose this requirement.

The requirement to give reasons is generally stated to be non-mandatory, but where there is such
a requirement and the parties agree to dispense with it, it is important for there to be clear evidence
of such an agreement and for this to be clearly recorded in the award itself.

See further below, under ‘Minimum requirements’, for further discussion on what may be regarded
as sufficient reasoning.

Other formal requirements under some national laws

In addition to the above-mentioned requirements, some national laws impose others that are
required to be followed for arbitral awards made in that particular seat of arbitration. For example:

• In Sweden, the Swedish Arbitration Act of 1999 provides that an award must contain
clear instructions as to what must be done by a party who wishes to challenge the award:
o if the award concludes the proceedings without a determination on the
merits; and
o as regards challenges to the amount of compensation awarded to the
arbitrators (see Sections 36 and 41 of the Act); and
• In Scotland, Rule 51 of Schedule 1 to the Arbitration (Scotland) Act 2010 provides as
a default rule that the award should state whether any previous provisional or part award
has been made (and the extent to which any previous provisional award is superseded
or confirmed).
It is always important for arbitrators to check for any specific rules that may apply in the applicable
seat of arbitration or under the applicable arbitration rules.

Time limits

National arbitration laws usually do not set out a time limit for rendering an award in international
arbitrations.

However, some arbitration rules provide for time limits. For example, the 2021 ICC Rules provide
that the arbitral tribunal shall render its final award within six months of the date of the terms of
reference (Article 31(1)). However, the ICC Court may extend the time limit on its own initiative
or following a reasoned request for an extension from the arbitral tribunal. The 2017 SCC Rules
have a similar provision, setting out a time limit of six months from the date when the case was
referred to the arbitral tribunal (Article 43).

The 2014 ICDR Rules state that the arbitral tribunal shall make every effort to deliberate and
prepare the award as quickly as possible after the hearing and, unless otherwise agreed by the
parties, specified by law, or determined by the ICDR administrator, no later than 60 days after the
closing of the hearing (Article 30(1)).

A time limit from the outset of the proceeding has the advantage of putting time pressure not only
on the arbitral tribunal but also on the parties, for the award to be rendered within a reasonable
time. This can be coupled with a general obligation on all participants to act efficiently, with
potential costs consequences on a party that fails to do so.[9] Nevertheless, it is common for the
six-month time limit under both the ICC and SCC Rules to be extended, at least in larger cases.
The purpose of a time limit between the closing of a case and the issue of an award is to impose
efficiency and discipline on the arbitrators. It also helps to ensure that the parties will not have to
wait too long after the hearing to receive the award, and that the arbitrators will consider the
evidence and arguments while the case is still fresh in their minds. Some institutions penalise
arbitrators for delays in issuing an award.

On the other hand, institutions are generally careful to ensure that time limits are extended where
necessary, either at the request of the arbitral tribunal or on the institution’s own initiative, since
there is a clear risk that an award that is issued after such a deadline would be liable to be set aside.

In the rare circumstances that the arbitration agreement provides a deadline without the possibility
of an extension, the arbitral tribunal needs to ensure that it complies with the respective deadline.
However, national arbitration laws may provide a statutory possibility for a time limit to be
extended. For example, Section 50(1) of the English Arbitration Act provides that ‘[w]here the
time for making an award is limited by or in pursuance of the arbitration agreement, then, unless
otherwise agreed by the parties, the court may in accordance with the following provisions by
order extend that time’.

Delivery of the award to the parties

National arbitration laws usually require that an arbitral award should be communicated to the
parties without delay. For example, Section 31 of the Swedish Arbitration Act provides that ‘[t]he
award shall be delivered to the parties immediately’.

Section 55(2) of the English Arbitration Act provides that, in the absence of any other agreement
between the parties, ‘the award shall be notified to the parties by service on them of copies of the
award, which shall be done without delay after the award is made’. Similar provisions can be found
in most institutional rules.

In most cases, it is the chair of the arbitral tribunal that delivers the award to the parties. However,
under some institutional arbitration – notably under the ICC, LCIA and ICDR Rules[10] – it is the
institution that delivers the award.
Traditionally, arbitral awards have been delivered to the parties by courier, but this can give rise
to the unfortunate situation that one party might receive the award several days in advance of
another party, if the parties are situated on different continents. To avoid such a situation, it is
common for arbitral tribunals to deliver the award to the parties initially by email, with the
originals to follow by courier.

It is good practice for arbitral tribunals to ask parties to acknowledge receipt of the award. This is
important not only to ensure that the award has been duly delivered, but also for the purpose of
calculating time limits for any corrections, or for possible applications to set aside the award.

Under English law, the arbitral tribunal has the power to withhold delivery of the award pending
full payment of its fees and expenses, although a party can ask the English court to intervene in
this situation.[11] Conversely, Section 40 of the Swedish Arbitration Act expressly states that the
arbitrators may not withhold the award pending payment of compensation. In institutional
arbitration, the arbitral institution invariably ensures that the requisite fees and costs have been
paid in good time prior to the delivery of the arbitral award.
Correction of the award

Arbitration laws and rules generally provide that either a party may apply to the arbitral tribunal
for correction of any clerical, computational or typographical error within a set time limit, typically
within 30 days from the date of the award. It is also generally possible for a party to ask for an
interpretation of a specific part of the award within the same time limit. Moreover, if the arbitral
tribunal has failed to rule on any claim presented to it, a party may ask for an additional award in
respect of that claim. These powers can also generally be exercised by the arbitral tribunal on its
own initiative.[12]
It should be noted, however, that the powers of the arbitral tribunal to correct or supplement the
arbitral award cannot be used to alter the substance of the award to any extent.

The content of an arbitral award

In considering the content of an arbitral award, it is important to distinguish between international

best practice on the one hand and, on the other hand, the minimum content that may be deemed
necessary for the award to be considered to be valid and enforceable pursuant to the applicable
arbitration law at the seat of arbitration.

Since there are good policy reasons for arbitral awards to be enforceable, the minimum
requirements are generally set at a very low level. Nevertheless, international arbitration would
not be acceptable as a system of international dispute resolution if arbitrators and arbitral
institutions were content to abide by such minimum requirements.
International best practice

International arbitration is inherently flexible, and it is right and proper that there should also be
flexibility in relation to the style of drafting of arbitral awards.

Guidelines on the proper drafting of arbitral awards

Nevertheless, it has become increasingly common for arbitral institutions and other organisations
to publish guidelines for arbitrators on the proper drafting of arbitral awards. These guidelines
include:

• ICC Award Checklist;

• IBA Toolkit for Award Writing;
• Chartered Institute of Arbitrators Practice Guideline on Drafting Arbitral Awards – Part
I (General), Part II (Interest); and
• many private initiatives from law firms and other bodies in different jurisdictions.
It can be suggested that an arbitral award should, at the very least, include the following sections:

• details of the parties and their counsel;

• the procedural history;
• details of the applicable contract, including the arbitration agreement;
• details of the background facts and circumstances;
• the claims and arguments advanced by each party;
• a list of issues, where appropriate;
• the arbitral tribunal’s detailed reasoning regarding jurisdiction, where applicable;
• the arbitral tribunal’s detailed reasoning regarding the substantive merits of the case,
dealing with each disputed issue in turn; and
• the operative part of the award.
Minimum requirements

Formal requirements

As noted above, there are various formal requirements under most national laws and arbitration
rules that generally need to be complied with.

If an award does not follow the applicable formal requirements, it may be subject to annulment at
the seat of the arbitration since these requirements are usually mandatory. Arguably, it could also
be an argument for non-recognition in other jurisdictions, although Article V of the New York
Convention does not set out such a basis for non-recognition. In practice, however, these formal
requirements rarely create any problems – and when errors do occur, it is generally possible for
the errors to be corrected as noted above (see ‘Correction of the award’).

Reasons

If there is a requirement under the arbitration law or the applicable arbitration rules, or both, to
give reasons, the question arises as to whether a failure to give reasons for all or part of the decision
constitutes a valid ground for seeking to set aside the award.

Courts generally set a rather low standard for the requirement to give reasons, partly because of
the general policy requirement to ensure that arbitral awards are generally enforceable, and partly
because it is recognised that arbitrators are not required to be legally trained and it would therefore
be wrong to impose the same standards as may be required of a judge.

In the English case Bremer Handelsgesellschaft mbH v. Westzucker GmbH (No. 2),[13] Lord Justice
Donaldson stated:
All that is necessary is that the arbitrators should set out what, in their view of the evidence, did or
did not happen and should explain succinctly why, in the light of what happened, they have reached
their decision and what that decision is. Where [an] . . . award differs from a judgment is that the
arbitrators will not be expected to analyse the law and the authorities. It will be quite sufficient
that they should explain how they reached their conclusion.

Similarly, in Navigation Sonamar Inc v. Algoma Steamships Limited,[14] an attempt to set aside an
arbitral award for lack of reasons was refused, taking account not only what was expressly stated
but also what was implicit in the award. The court held that the arbitrators could not be criticised
for expressing themselves as commercial men and not as lawyers.
In the Soyak II case,[15] the Swedish Supreme Court decided that only a total lack of reasons would
be sufficient to constitute grounds to set aside an award. This was a case under the SCC Rules in
which one of the parties sought to set aside the award on the basis of a lack of reasons. The Supreme
Court stated, inter alia, as follows:
There can be different reasons for a provision in the arbitration agreement that the award should
contain reasons. In the absence of more precise provisions concerning what should be included in
the reasons, the parties can also have more or less extensive expectations regarding how the arbitral
tribunal should explain its decision-making. However, the question of what the parties with or
without justification expected and what can be said to be good practice among arbitrators must be
distinguished from whether the arbitral tribunal’s reasoning is so lacking that it constitutes a
ground for setting aside the award.

The provision of sufficient reasoning in an arbitral award constitutes a guarantee of legal certainty,
since it forces the arbitral tribunal to analyse the legal issues and the evidence. However, the value
of having full reasoning for the outcome must be balanced, as regards set-aside grounds, against
the interest of having finality. Determination of a challenge to an arbitral award does not provide
room to judge the substance of the arbitral tribunal’s decisions. For that reason, and since a
qualitative judgment of the reasoning would give rise to significant difficulties in drawing the line
between procedure and substance, it follows that only a total lack of reasons, or reasons that in the
circumstances must be considered to be so insufficient that they can be equated with a lack of
reasons, can be sufficient to constitute a procedural irregularity. On the other hand, where there is
such a serious procedural irregularity, it can be presumed that the lack of reasons has affected the
outcome of the award.[16]

Scrutiny

The ICC

It is one of the main distinguishing features of ICC arbitration that the ICC Court scrutinises the
award as to form before it is issued. Article 34 of the 2021 ICC Rules provides that ‘[b]efore
signing any award, the arbitral tribunal shall submit it in draft form to the Court’.

Article 34 goes on to state that ‘[t]he Court may lay down modifications as to the form of the award
and, without affecting the arbitral tribunal’s liberty of decision, may also draw its attention to
points of substance’.

Thus, the purpose of the scrutiny process is to ensure that the award follows the formal
requirements set out in the ICC Rules. In practice, the ICC Court makes proposals for
modifications to the award in almost every case. In 2012, the Court approved 483 of 491 awards
after making some amendments. Only eight awards were approved without any comment from the
Court. In 59 cases, the Court requested that the award be resubmitted to the Court for potential
approval.[17]
Other institutional rules

Other institutional rules have taken inspiration from the ICC scrutiny. The China International
Economic and Trade Arbitration Commission (CIETAC) has a light form of scrutiny; Article 51
of the 2015 CIETAC Rules provides that CIETAC ‘may bring to the attention of the arbitral
tribunal issues addressed in the award on the condition that the arbitral tribunal’s independence in
rendering the award is not affected’. Thus, CIETAC may raise issues for the arbitral tribunal to
consider, but the arbitral award is not formally subject to approval.

The Danish Institute of Arbitration also has a light form of scrutiny. Article 28 of the 2013 Rules
provides that the Secretariat ‘may propose modifications as to the form of the award and without
affecting the Arbitral Tribunal’s jurisdiction, draw its attention to other issues, including issues of
importance to the validity of the award and its recognition and enforcement’, but it is stressed that
the responsibility for the contents of the award lies exclusively with the arbitral tribunal.

The German Arbitration Institute’s 2018 Arbitration Rules also include provision for scrutiny of
the award (Article 39.3).

The effect of an arbitral award

Finality

One of the main features of arbitration as opposed to domestic litigation is that arbitration is
generally a single-instance procedure, without recourse to any substantive appeal on the merits.

England provides a notable exception, since Section 69 of the English Arbitration Act allows for
an appeal on a point of law subject to leave of the court. However, it should be noted that this
provision is generally applicable only in ad hoc arbitration; institutional arbitration, such as under
the ICC or LCIA Rules, generally excludes any appeal on the merits.[18]
All awards that finally decide either some or all of the issues referred to the arbitral tribunal by the
parties are ‘final’ in relation to those issues. However, the term ‘final award’ is reserved for those
awards that conclude the arbitration proceeding by finally deciding on all the outstanding issues.
A final award in that sense renders the arbitral tribunal functus officio. In other words, the final
award completes the mandate of the arbitral tribunal.
It is common that the parties set out in the arbitration agreement that the award shall be ‘final and
binding’. Further, Article III of the New York Convention provides that ‘[e]ach Contracting State
shall recognize arbitral awards as binding and enforce them in accordance with the rules of
procedure of the territory where the award is relied upon’. National laws and arbitration rules also
generally provide that the award will be final and binding on the parties.

What ‘finality’ really means will depend on the grounds for setting aside awards at the seat of
arbitration, and on the enforcement regime at any place where the arbitral award is sought to be
enforced. If the state where the award is made and the state where enforcement is sought have
ratified the New York Convention, finality usually entails that enforceability of the award may be
refused only if there is a serious procedural irregularity or if the award is contrary to public policy.
The arbitration laws of New York Convention contracting states generally replicate the rules for
recognition and enforcement of foreign arbitral awards as set out in the Convention.

Enforcement of foreign awards – New York and Geneva Convention Awards

Under the Arbitration and Conciliation (Amendment) Act, 2015. There are two avenues
available for the enforcement of foreign awards in India, viz., the New York Convention and
the Geneva Convention, as the case may be.

Enforcement under the New York Convention

• Sections 44 to 52 of the Arbitration and Conciliation (Amendment) Act, 2015 deals

with foreign awards passed under the New York Convention.
• The New York Convention defines "foreign award" as an arbitral award on
differences between persons arising out of legal relationships, whether contractual
or not, considered as commercial under the law in force in India, made on or after the
11th day of October, 1960.
o In pursuance of an agreement in writing for arbitration to which the
Convention set forth in the First Schedule applies, and
o In one of such territories as the Central Government, being satisfied that
reciprocal provisions have been made may, by notification in the Official
Gazette, declare to be territories to which the said Convention applies.

• From the abovementioned conditions, it is clear that there are two pre-requisites for
enforcement of foreign awards under the New York Convention. These are:
o The country must be a signatory to the New York Convention.
o The award shall be made in the territory of another contracting state
which is a reciprocating territory and notified as such by the Central
Government.
• Section 47 provides that the party applying for the enforcement of a foreign award shall, at
the time of the application, produce before the court (a) original award or a duly
authenticated copy thereof; (b) original arbitration agreement or a duly certified copy
thereof; and (c) any evidence required to establish that the award is a foreign award. As per
the new Act, the application for enforcement of a foreign award will now only lie to High
Court.
• Once an application for enforcement of a foreign award is made, the other party has the
opportunity to file an objection against enforcement on the grounds recognized under
Section 48 of the Act. These grounds include:
 a. the parties to the agreement referred to in section 44 were, under the law applicable
to them, under some incapacity, or the said agreement is not valid under the law to
which the parties have subjected it or, failing any indication thereon, under the law
of the country where the award was made; or
b. the party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitral proceedings or was otherwise unable
to present his case; or
c. the award deals with a difference not contemplated by or not falling within the
terms of the submission to arbitration, or it contains decisions on matters beyond
the scope of the submission to arbitration: Provided that, if the decisions on matters
submitted to arbitration can be separated from those not so submitted, that part of
the award which contains decisions on matters submitted to arbitration may be
enforced; or
d. the composition of the arbitral authority or the arbitral procedure was not in
accordance with the agreement of the parties, or, failing such agreement, was not
in accordance with the law of the country where the arbitration took place; or
e. the award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law of
which, that award was made.
f. the subject-matter of the difference is not capable of settlement by arbitration under
the law of India; or
g. the enforcement of the award would be contrary to the public policy of India.

• The Amendment Act has restricted the ambit of violation of public policy for international
commercial arbitration to only include those awards that are: (i) affected by fraud or
corruption, (ii) in contravention with the fundamental policy of Indian law, or (iii) conflict
with the notions of morality or justice.
• It is further provided that if an application for the setting aside or suspension of the award
has been made to a competent authority, the Court may, if it considers it proper, adjourn
the decision on the enforcement of the award and may also, on the application of the party
claiming enforcement of the award, order the other party to give suitable security.
• Section 49 provides that where the Court is satisfied that the foreign award is enforceable
under this Chapter, the award shall be deemed to be a decree of that Court.

B. Enforcement under the Geneva Convention

• Sections 53-60 of the Arbitration and Conciliation (Amendment) Act, 2015 contains
provisions relating to foreign awards passed under the Geneva Convention.
• As per the Geneva Convention, "foreign award" means an arbitral award on differences
relating to matters considered as commercial under the law in force in India made after the
28th day of July, 1924.

a. in pursuance of an agreement for arbitration to which the Protocol set forth in the
Second Schedule applies, and
b. between persons of whom one is subject to the jurisdiction of some one of such
Powers as the Central Government, being satisfied that reciprocal provisions have
been made, may, by notification in the Official Gazette, declare to be parties to the
Convention set forth in the Third Schedule, and of whom the other is subject to the
jurisdiction of some other of the Powers aforesaid, and
 c. in one of such territories as the Central Government, being satisfied that reciprocal
provisions have been made, by like notification, declare to be territories to which
the said Convention applies, and for the purposes of this Chapter, an award shall
not be deemed to be final if any
d. proceedings for the purpose of contesting the validity of the award are pending in
any country in which it was made.[2]

• Section 56 provides that the party applying for the enforcement of a foreign award shall, at
the time of the application, produce before the court (a) original award or a duly
authenticated copy thereof; (b) evidence proving that the award has become final and (c)
evidence to prove that the award has been made in pursuance of a submission to arbitration
which is valid under the law applicable thereto and that the award has been made by the
arbitral tribunal provided for in the submission to arbitration or constituted in the manner
agreed upon by the parties and in conformity with the law governing the arbitration
procedure. As per the new Act, the application for enforcement of a foreign award will now
only lie to High Court.
• The conditions for enforcement of foreign awards under the Geneva Convention are
provided under Section 57 of the Arbitration and Conciliation Act, 1996. These are as
follows:

a. the award has been made in pursuance of a submission to arbitration which is valid
under the law applicable thereto;
b. the subject-matter of the award is capable of settlement by arbitration under the law
of India;
c. the award has been made by the arbitral tribunal provided for in the submission to
arbitration or constituted in the manner agreed upon by the parties and in
conformity with the law governing the arbitration procedure;
d. the award has become final in the country in which it has been made, in the sense
that it will not be considered as such if it is open to opposition or appeal or if it is
proved that any proceedings for the purpose of contesting the validity of the award
are pending;
e. the enforcement of the award is not contrary to the public policy or the law of India.

• The Amendment Act has restricted the ambit of violation of public policy for international
commercial arbitration to only include those awards that are: (i) affected by fraud or
corruption, (ii) in contravention with the fundamental policy of Indian law, or (iii) conflict
with the notions of morality or justice.
• However, the said section lays down that even if the aforesaid conditions are fulfilled,
enforcement of the award shall be refused if the Court is satisfied that-

a. the award has been annulled in the country in which it was made;
b. the party against whom it is sought to use the award was not given notice of the
arbitration proceedings in sufficient time to enable him to present his case; or that,
being under a legal incapacity, he was not properly represented;
c. the award does not deal with the differences contemplated by or falling within the
terms of the submission to arbitration or that it contains decisions on matters beyond
the scope of the submission to arbitration: Provided that if the award has not
covered all the differences submitted to the arbitral tribunal, the Court may, if it
thinks fit, postpone such enforcement or grant it subject to such guarantee as the
Court may decide.
 • Furthermore, if the party against whom the award has been made proves that under the law
governing the arbitration procedure there is any other ground, entitling him to contest the
validity of the award, the Court may, if it thinks fit, either refuse enforcement of the award
or adjourn the consideration thereof, giving such party a reasonable time within which to
have the award annulled by the competent tribunal.
• Section 58 provides that where the Court is satisfied that the foreign award is enforceable
under this Chapter, the award shall be deemed to be a decree of the Court.

Distinction between conciliation, negotiation/mediation and arbitration

Definition of Conciliation:

Conciliation can be described as the method adopted by the parties for resolving the dispute,
wherein the parties out of their free consent appoint an unbiased and disinterested third party, who
attempts to persuade them to arrive at an agreement, by way of mutual discussion and dialogue.
Conciliation is characterized by the voluntary will of the parties who want to conciliate the dispute.
Its basic component is confidentiality in which the parties and the conciliator are not permitted to
share or disclose to the external party, anything associated with the proceedings.
The conciliator plays an advisory role, wherein he/she suggests potential remedies to the problem.
The conciliation process completes with a settlement between the parties which is final and binding
upon the parties.

Definition of Arbitration:
 Arbitration is a powerful means of resolving disputes between the organization and its employees.
It is a process in which an independent third party analyses the bargaining situation, listens to both
parties and collects necessary data and make recommendations which are binding on the parties
concerned. Arbitration is proved successful in resolving disputes between labour and management.
The parties themselves establish arbitration and decision is acceptable to them. The decision taken
by the arbitrator is accompanied by a written opinion providing reasons supporting the decision.
Further, the procedure is comparatively expeditious than courts and tribunals. However, the
process is a bit expensive, and if there is a mistake in selecting an arbitrator, the judgement
becomes arbitrary.

Definition of Mediation:

Mediation is a negotiation process. Mediation is a form of alternate dispute resolution, wherein

parties mutually appoint an independent and impartial third party, called as the mediator who helps
the parties in reaching an agreement which is mutually accepted by the parties concerned.

Mediation is a systematic and interactive process, which employs negotiation techniques to assist
the parties in finding the best possible solution to their problem.

Basis for Arbitration Conciliation Mediation

Comparison

Meaning Arbitration is a dispute Conciliation is a method of Mediation is a

settlement process in which an resolving dispute wherein an process of resolving
impartial third party is appointed independent person helps the issues between
to study the dispute and hear parties to arrive at the parties wherein a
both the parties to arrive at a negotiated settlement. third party assist
decision binding on both the them in arriving at
parties. an agreement.
Enforcement An arbitrator has the power to A conciliator does not have The decision made
enforce his decision. the power to enforce his by the mediator is
decision. not enforceable like
an arbitral award.

Regulated by The Arbitration and Conciliation Arbitration and Conciliation Code of Civil
Act, 1996 Act, 1996 Procedure, 1908

Prior Required Not Required Not Required

Agreement

Available for Existing and future disputes. Existing disputes. Existing disputes.

Example Damages in case of breach of Resolving disputes between Commercial

contract, matters of the right to contractors and transactions in
the office, time barred claims subcontractors etc. patents, trademark
etc. licenses, Joint
ventures and R & D
Contracts, music
and film contracts
etc.

As a facilitator, mediator attempts to facilitate discussion and build an agreement between the
parties with an aim to settle the dispute. The decision made by the mediator is not binding like an
arbitral award.

Confidentiality, resort to judicial proceedings, costs

Confidentiality is considered as one of the key reasons why parties choose to go for arbitration for
settlement of their disputes as they do not want their disputes to be a topic of public discussion.
Considering the detailed documents and information that parties exchange in an arbitration, the
idea is to protect the sensitive information, trade secrets, intellectual property which may be
subject-matter of an arbitration as its disclosure may result in irreparable loss. For the foregoing
reason, arbitration proceedings are kept confidential. But is confidentiality practically possible?
What is the legal basis of confidentiality? What is its scope and what are the implications if it is
breached by a party? In this article the author will shed light on Section 42-A which was introduced
by the amendment of 2019 to the Arbitration and Conciliation Act, 1996.

Section 75 of the Arbitration and Conciliation Act, 1996 states that the parties shall keep
confidential all matters relating to the conciliation. However, the said provision is not applicable
to arbitration proceedings and applies only to conciliation proceedings. Even though there was no
statutory mandate in the 1996 Act, there was an implied duty of confidentiality for various reasons
including protection of sensitive information or intellectual property, etc., reputation of parties in
public, protection from potential claims in similar matters, no intervention of unrelated parties, etc.
In 2019, for the first time, a provision relating to confidentiality was incorporated in the Act based
on the recommendation of Justice B.N. Srikrishna Committee submitted a report and gave certain
suggestions for making arbitration more robust in India. The said recommendation was accepted
and a provision has now been introduced by Arbitration and Conciliation (Amendment) Act,
2019 that expressly mentions the duty of confidentiality and reads as follows:
o 42-A. Confidentiality of information.— Notwithstanding anything contained in
any other law for the time being in force, the arbitrator, the arbitral institution and
the parties to the arbitration agreement shall maintain confidentiality of all arbitral
proceedings except award where its disclosure is necessary for the purpose of
implementation and enforcement of award.
o It is noteworthy that Section 42-A is a non obstante clause which means that it
deprives the parties of their autonomy and this provision supersedes any other law.
As per the language of the section, the only exception to confidentiality is when the
disclosure of the arbitral record is done for the limited purpose of implementation
and enforcement of award.
Section 42-A: Myth or reality?
o As per the language of Section 42-A, only the award can be disclosed for the limited
purpose of its implementation and enforcement. Surprisingly, the language of the
section does not talk about disclosure of the award for the purpose of challenge to
the arbitral award under Section 34 of the Act. It is not uncommon for parties to
approach the court under Section 29-A for extension of time period for passing of
an award. In that case, the relevant record of arbitration is often filed along with the
application for extension. Thus, there seems to be a practical problem in
implementation of Section 42-A considering the fact that it is a non obstante clause
and only permits disclosure of award that too for implementation and enforcement
of award. Let us take some other scenarios, where a party is seeking interim
measures under Section 9 from the court, a party files an application for termination
or substitution of the arbitrator under Sections 14 and 15 or files an appeal under
Section 37 against an order of the tribunal, even in these cases the arbitral record is
filed before the court, that makes Section 42-A impractical and otiose.
Confidentiality v. Transparency
o Often this issue has been a topic of discussion as to whether transparency is more
important or confidentiality. It can be argued that the general public has more faith
in the court proceedings as there is transparency involved in the process and the
court proceedings are accessible to the general public whereas arbitral proceedings
are private and are not accessible to third parties. Neither the proceedings nor the
award passed by the arbitrator is accessible to any third party. Whereas the
judgment of the court is pronounced in open court and available for public.
Moreover, transparency ensures fairness and builds the trust of stakeholders in
arbitration. Parties often complain that there is no accountability on part of the
 arbitrator as the proceedings take place in a closed room and as a result, the
credibility of arbitrators is often challenged in court. For the said reasons, many
people opine that arbitral awards be published as it will cement the faith of the
parties in arbitration and at the same time there will be a development of
jurisprudence in arbitration. Arbitrators will be careful while passing awards as they
would be concerned about their public image and quality of arbitral awards will be
maintained. Publication of awards will make it easier for parties to nominate an
arbitrator based on his reputation. However exciting the idea of transparency may
sound but it cannot be ignored that confidentiality is one of the key features which
makes arbitration attractive to parties as a mode of dispute resolution thereby,
making it difficult to implement the idea of publication of awards.
Privacy and Confidentiality
o Sometimes privacy and confidentiality are used interchangeably when in fact these
two concepts are different. Privacy in arbitral proceedings would mean that no third
party can enter the arbitration proceedings and cannot witness the same as these
proceedings take place in a private set-up in a closed room. In other words, privacy
only means that arbitration proceedings cannot be attended by a third party who is
not a party to the dispute except the counsels, witnesses and the arbitrator.
Confidentiality on the other hand means that the content, documents, information
which is adduced during the proceeding and the award are to be kept confidential
and cannot be published or disclosed by any party.

Resort to arbitral or judicial proceedings.

o Section 77: talk about resort to arbitral and judicial proceedings

The parties shall not initiate, during the conciliation proceedings, any arbitral or
judicial proceedings in respect of a dispute that is the subject- matter of the
conciliation proceedings except that a party may initiate arbitral or judicial
proceedings where, in his opinion, such proceedings are necessary for preserving
his rights. OR,

The parties shall not initiate any arbitral or judicial proceeding for the dispute while
ongoing conciliation proceedings. The arbitral or judicial proceedings can be
initiated only when it becomes necessary for the preservation of its rights.

Dispute Resolution Boards

o To avoid litigation, many construction contracts call for mediation or arbitration. But
there’s another form of alternative dispute resolution that’s especially effective in the
construction industry – the use of a Dispute Resolution Board or “DRB.”
o First, let’s note that a Dispute Resolution Board is not the absolute cure for all disputes in
the construction industry. Currently, DRBs are usually only used for massive projects.
They have been particularly helpful for highway and other large infrastructure projects, as
well as other projects that combine public and private resources — a project structure that’s
 commonly known as a P3 project. This means that the average contractor or specialty sub
may not ever end up on a project that’s big enough to warrant having a DRB in place.
o DRB is pretty much exactly what the name implies, that is, a board of individuals that
resolves disputes on construction projects. It can be anywhere from 1-3 people, though
conceivably a board could include many more individuals. They’re appointed before any
disputes arise – typically at the time of the contract. Also, these people typically aren’t
lawyers! Rather, they’re experts in the field for whatever project they’re used on. For a
project where a DRB is present, typically, an owner and the general contractor will agree
on who will serve on the DRB. Sometimes, both sides will nominate a member and then
the pair will appoint a third member.
o DRBs work for a number of reasons. First, they work because both parties agree to let a
neutral third party (the Dispute Resolution Board) either make a decision or
recommendation on how to resolve the dispute. You may be thinking “Wait, that’s just the
same as a mediator or arbitrator.” But hold on! DRBs are more involved.
o Beginning with the contracting stage, all the way through completion – the members of the
Dispute Resolution Board are involved and understand the ins and outs of the projects well
as the relationships of all parties. They typically even perform walk-throughs to check on
the job. Because the third party in this situation is simultaneously impartial and intimately
informed with the project, it’s easier to come to a fair result on disputes.
o The real magic with Dispute Resolution Boards is their preventative value. According to
the Dispute Resolution Board Foundation, 60% of projects utilizing a DRB have no
disputes at all. Further, 98% of the disputes that reach the Dispute Resolution Board don’t
go on to further litigation or arbitration.
o There are a number of factors that could move the needle in either direction here, but
importantly, utilizing Dispute Resolution Boards sets the tone from the start of a project.
Expectations are clear, and so is the method to resolve construction disputes.

Lok Adalat

• The term ‘Lok Adalat’ means ‘People’s Court’ and is based on Gandhian principles.

• As per the Supreme Court, it is an old form of adjudicating system prevalent in ancient
India and its validity has not been taken away even in the modern days too.
 • It is one of the components of the Alternative Dispute Resolution (ADR) system and
delivers informal, cheap and expeditious justice to the common people.

• The first Lok Adalat camp was organized in Gujarat in 1982 as a voluntary and conciliatory
agency without any statutory backing for its decisions.

• In view of its growing popularity over time, it was given statutory status under the Legal
Services Authorities Act, 1987. The Act makes the provisions relating to the organization

and functioning of the Lok Adalats.

Organization:
• The State/District Legal Services Authority or the Supreme Court/High Court/Taluk
Legal Services Committee may organize Lok Adalats at such intervals and places
and for exercising such jurisdiction and for such areas as it thinks fit.
• Every Lok Adalat organized for an area shall consist of such number of serving or
retired judicial officers and other persons of the area as may be specified by the agency
organizing.
• Generally, a Lok Adalat consists of a judicial officer as the chairman and a lawyer
(advocate) and a social worker as members.
• National Legal Services Authority (NALSA) along with other Legal Services
Institutions conducts Lok Adalats.
• NALSA was constituted under the Legal Services Authorities Act, 1987 which came
into force on 9th November 1995 to establish a nationwide uniform network for
providing free and competent legal services to the weaker sections of the society.
• The Legal Services Authorities Act, 1987 was amended in 2002 to provide for the
establishment of the Permanent Lok Adalats to deal with cases pertaining to the public
utility services.
Jurisdiction:
• A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or
settlement between the parties to a dispute in respect of:
o Any case pending before any court, or
o Any matter which falls within the jurisdiction of any court and is not brought
before such court.
• Any case pending before the court can be referred to the Lok Adalat for settlement if:
o Parties agree to settle the dispute in the Lok Adalat or one of the parties applies
for referral of the case to the Lok Adalat or court is satisfied that the matter can
be solved by a Lok Adalat.
o In the case of a pre-litigation dispute, the matter can be referred to the Lok Adalat
on receipt of an application from any one of the parties to the dispute.
• Matters such as matrimonial/family disputes, criminal (compoundable offenses) cases,
land acquisition cases, labor disputes, workmen’s compensation cases, bank recovery
cases, etc. are being taken up in Lok Adalats.
• However, the Lok Adalat shall have no jurisdiction in respect of any case or matter
relating to an offense not compoundable under any law.
Powers:
o The Lok Adalat shall have the same powers as are vested in a Civil Court under the
Code of Civil Procedure (1908).
o Further, a Lok Adalat shall have the requisite powers to specify its own procedure for
the determination of any dispute coming before it.
o All proceedings before a Lok Adalat shall be deemed to be judicial proceedings within
the meaning of the Indian Penal Code (1860) and every Lok Adalat shall be deemed to
be a Civil Court for the purpose of the Code of Criminal Procedure (1973).
o An award of a Lok Adalat shall be deemed to be a decree of a Civil Court or an order
of any other court.
o Every award made by a Lok Adalat shall be final and binding on all the parties to the
dispute. No appeal shall lie to any court against the award of the Lok Adalat.
Benefits:
o There is no court fee and if court fee is already paid the amount will be refunded if the
dispute is settled at Lok Adalat.
o There is procedural flexibility and speedy trial of the disputes. There is no strict
application of procedural laws while assessing the claim by Lok Adalat.
o The parties to the dispute can directly interact with the judge through their counsel which
is not possible in regular courts of law.
o The award by the Lok Adalat is binding on the parties and it has the status of a decree of
a civil court and it is non-appealable, which does not cause the delay in the settlement of
disputes finally.
Conclusion

o Lok Adalats can be functional at larger levels if people are willing and aware of its
advantages. Further, more provisions and innovative utilisation is needed that could
empower permanent lok adalats and are made supplementary form of litigation for people
who cannot or should not resort to courts.