WHAT IS ADR

- Refers to dispute resolution mechanisms outside formal courts

- An unbiased third party, in good faith, assists parties to,
a. Communicate
b. Discuss differences
c. Reach a resolution

SECTION 7; ARBITRATION AGREEMENT

- Agreement to submit all or certain disputes arising from legal relationship to arbitration
- Submiision agreement or a arbitration agreement
- Arbitration Agreement has two-fold results:
a. Negative enforcement: meaning that courts are precluded from resolving the conflict
b. Positive enforcement: grants jurisdiction to the arbitrators

General Principles of Arbitration Agreement

1. Must meet the Essentials of a Contract: is a agreement enforceable under the law
2. Consensus ad idem: Section 29- agreements which are not certain or capable of being made
certain are void- therefore, the consent of the parties to arbitrate must be clear
3. Ouster of Jurisdiction: once arbitration agreed, cannot refer the matter to courts unilaterally
4. Doctrine of Seperability: even if in same contract, its still a separate agreement- legal fiction
under Section 16

Essentials

Key elements of Arbitration Agreement stated in the case Bihar State Mineral Dev. Corpn. v Encon
Builders (I) Pvt. Ltd
I: Must be in Writing

- Oral agreements are invalid in nature

- Section 7(4) defines what writing includes:
a. Signed document
b. Exchange of letters, telex, telegrams, emails
c. Exchange of claim and defence where existence alleged by one party and not denied by
other party
- Section 7(5): Reference to a different document containing arbitration clause: valid if
incorporated clearly [Vessel Baltic Conference v State Trading Coporation (bill of lading and
charter party agreement; absurdity, inconsistency, insensibility)]
- Rukmanibai Gupta v Collector: it has to be in writing, however, no format of arbitration
agreement- if intention to arbitrate can be inferred from the agreement itself, no need for the
terms “arbitrator/arbitration” to be present
- Trimex International FZE v Vendanta Aluminium: email exchange alone is also sufficient as an
arbitration agreement

II: Mutual and Clarity of Consent

- Agreement to arise out of mutual consent

- Intention to go to arbitration must be in clear terms- Can be ascertained through the words of
the agreement
- Mere use of the words “arbitration/arbitrator” does not make it an arbitration agreement if it
requires fresh consent of parties for reference to arbitration
- There should be a mandatory requirement for settlement of dispute by arbitration- phrases such
as ‘may resolve dispute by arbitration’ is not agreement
- K.K. Modi v. K.N. Modi: Mere desire to refer in future ≠ valid agreement

III: Legal Relationship

- Dispute must be in respect of a legal relationship, whether contractual or not

- Dispute must also be in regards to a legal matter
- Matters of spirituality or moral relations are not fit for arbitrations

IV: Legal Capacity

- The parties to the agreement shall have the capacity to enter into the contract
- Applies even if doctrine of separability applicable> as arbitration agreement is a separate
contract that must meet the essential of contract- otherwise void in nature

V: Arbitrable Subject Matter

- Must be an arbitrable subject-matter

- Rights in personam v right in rem: former arbitrable, latter is not
- Criminal matters are not arbitrable; restricted to civil matter

Stamping: In Re: Interplay Between Arbitration Agreements & Indian Stamp Act 1899

- SMS Tea Estate: unstamped yet valid

- NN Global: unstamped but held not valid
- Final position: non-stamping is a curable defect
- However, while the unstamped agreement is not admissible as evidence, does not mean that it
is invalid
- Pre-referal stage (section 8 + 11): prima facie existence of agreement; stamp duty calculation, et.
Done by upon appointment of arbitral tribunal under Section 16

SECTION 16(1)(A): DOCTRINE OF SEPERABILITY

- Arbitration clause = independent agreement from main contract

- Allegation that main contract is void / illegal / frustrated does NOT automatically void arbitration
clause
- Exception:
a. If fraud directly vitiates the arbitration agreement itself (not just the main contract)
b. Any contracts that are voidable by one party
- Enercon (India) v. Enercon GmbH: Arbitration clause survives dispute over contract validity

Kompetenz-Kompetenz [Section 16(1)(b)]

- Arbitral tribunal has power to rule on its OWN jurisdiction

- Tribunal can adjudicate objections to existence/validity of arbitration agreement
- Prevents 'oust jurisdiction by suing' tactic — tribunal proceeds; award later challenged under
s.34
- Objections to jurisdiction must be raised no later than submission of statement of defence
 COMMENCEMENT OF ARITRATION
EQUAL TREATMENT OF PARTIES [SECTION 18]

Two main statements of fair arbitration are:

a. Both parties must be treated equally, and be given equal opportunities to present their case
by way of statement of claims and defence (also under Section 23 + 24)
b. Arbitral tribunal must be independent + impartial as required under Section 12 of the Act-
ensures that complete justice is dispensed without causing prejudice to any party

Vengomma v Kesonna

- the other party was not given a chance of hearing and the decision was rendered ex-parte
- became an absolute ground for setting aside the award

SI Kapoor v Jagmohan

- the arbitral tribunal must conform to the principles of natural justice + provide equal treatment
to all parties

SECTION 19: DETERMINATION OF RULES OF PROCEDURE

- arbitral tribunal shall not be bound by rules of CPC or IEA

- however, if proposed arbitration is set forth as an institutional arbitration, there may be
separate bylaws which the parties need to abide by (Clause 1)
- in case the parties don’t determine any procedure the autonomy is granted to the arbitral
tribunal who can determine the procedure considers appropriate (clause 3)
- Madan Lal v Nadi Baksh- arbitral tribunal although not not bound must attempt to bound by the
procedures of the CPC, IEA to keep in line with PNJ

PLACE + DATE OF ARBITRATION [SECTION 20]

- parties are free to decide and agree upon the plcase of arbitration
- if fail to do so- arbitral tribunal will appoint a place which they consider appropriate keeping in
mind the convenience of<
a. consultation amongst its members
b. taking evidence
c. hearing witness
d. hearing experts

inspection of goods, documents or property

SECTION 21: NOTICE

a. Commencement of arbitral awards> on date notice received by respondents

b. Regenta Hotel v Hotel Grand Centre Point: Section 21 notice is the sole and exclusive trigger for
commencement- Practical impact: If s.9 interim order granted, arbitration 'commences' within
90 days IF Section 21 notice received in time — even if Section 11 petition filed late
c. Alpuro Building System v Ozone Overseas: mandatory to send notice before arbitration so that
both parties aware of the same
d. Malvika Mehta v JESS Construction: express mutual consent required for waiver of notice> mere
naming of arbitrator in agreement is not waiver

Section 22: Language

- Parties are free to choose language by themselves for the proceeding
- However, if they fail to agree upon language for arbitration the tribunal has to determine it
- Language chose will be used for written statements, hearings, arbitral award or any other
decision or communication regarding the arbitration by the arbitral tribunal

Section 23: Statement of Claim and Defence

- Help in adjudication of dispute between parties

- Once tribunal constituted> claimant to state facts supporting his issue + claim + relief sought>
respondent to state defence in counterclaim
- Section 23(3): Amendment: any parties can amend or supplement his claim, unless tribunal
considers it inappropriate
- Munshi Ram v Banwari Lal: arbitrator to allow amendment of pleadings where both parties
consent to rectify the mistake

SECTION 24: HEARING + WRITTEN PROCEEDINGS

- Tribunal shall decide whether to hold oral hearings for the presentation of evidence or would
the proceedings shall be conducted on the basis of document and written document
- Tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a
party, unless the parties have agreed that no oral hearing shall be held.
- Duty of the arbitral tribunal to ensure that proceedings are not delayed + timely manner.

SECTION 25: DEFAULT OF PARTY

- If any party does not submit claim + defense without showing sufficient cause, the party shall be
deemed to be in a default> proceedings are terminated
- If party fails to appear or produce documentary evidence> arbitra tribunal can continue
proceeding + make award based on evidence before it- however, sufficient tome to be given for
making appearance or submitting evidence

SECTION 26: EXPERT APPOINTED BY TRIBUNALS

- Tribunal can appoint experts as per the requirement or request of the parties- appointment can
be made of one or more experts for looking into specific matter
- Expert will prepare a report for that specific issue communicated to all parties

SECTION 27: COURT ASSISTANCE IN TAKING EVIDENCE

- Arbitral tribunal/party with the approval of arbitral tribunal may apply to court for assistance in
taking evidence
- Application to specify: name, address of parties + arbitrators, nature of claim, relief sought,
evidence to be obtained
- if the court is satisfied with the application - within its competence - execute the request by
ordering that the evidence be provided directly to the arbitral tribunal
- Lalit Nadhan v. ICSI - in normal course of the proceedings, the arbitral tribunal must not disallow
the party to approach the court for assistance in taking the evidence. However, if the tribunal
finds that the request has been made in a mala-fide manner and to abuse the process of the
court, then the permission shall be denied.

SECTION 29: TIMEFRAME OF ARBITRATION PROCEEDINGS

- Section 29A: Introduced by an amendment in 2015, sets a time limit for making the arbitral
award (within 12 months from the date of appointment of arbitrators)
- Section 29B: Allows for an extension of time with the consent of the parties or by court order
SECTION 34: SET ASIDE
- Provides ground on which award can be set aside:
a. Party to arbitration was under incapacity
b. Arbitration agreement is not valid under law
c. Party was not given proper notice of appointment of arbitrator or of arbitral proceedings
d. Arbitral award deals with dispute not contemplated by or falling within the terms of the
submissions to the arbitration
 APPOINTMENT OF ARBITRATOR
SECTION 10: Number of Arbitrators

- Parties are free to determine the number of arbitrators, provided that it is not an even number
- If parties are unable to agree, then a sole arbitrator is appointed
- Exception: Narayan Lohia v Nikunj Lohia: the requirement of even number of arbitrators is
directory, not mandatory- cannot render a award void by itself if no objection raised by any
party + two arb can appoint third one who shall act as presiding arbitrator/ can appoint third arb
when conflict in opinion to not render the obj of arb void

Section 11: Appointment of Arbitrator

(1): person of any nationality can be arb, unless agreed by parties

(2) parties free to agree on procedure for appointment

(3) if failing (2), each party shall appoint 1 arb> and the 2 appointed arb shall appoint a 3 rd arb who
acts as presiding arb

(4) if (3) appointment applies and-

a. Party fails to appoint arb within 30 days from receipt of request from other party
b. Two appointed arb fail to agree on 3rd arb within 30 days of appointment
The appointment shall be made upon request of party> by SC in case of ICA or HC in case of
other arb, as the case may be

(5) if failing (2) in an arb with sole arb- the party fail to agree for appointment within 30 days of
request from other party> appointment made upon request by HC/HC

(6) where appointment procedure agreed but:

a. parties fail to act as required
b. parties, or the two arb fail to reach agreement expected of them under the procedure
c. person, including institution fail to perform function entrusted to them under that
procedure
then appointment made upon request of party by SC/HC

(6A) [omitted]

(6B) designation of person/institution appointed by SC/HC shall not be of delegated judicial

powers

(7) [omitted]

(8) The tribunal shall before appointing an arbitrator seek a disclosure in writing from prospective
arbitrator in terms of Section 12(1) + have due regard to-
a. qualifications required for arbitrator by agreement of parties
b. disclosures + other considerations required to secure appointment of independent +
impartial arbitrator

(9) In ICA> the SC may appoint an arbitrator of different nationality from the parties

Malaysian Airline System v STIC Travel: Issue: whether neutrality required appointment of foreign
arbitrator> held: directory in nature, not mandatory

(10) [omitted]
(11) If application for appointment by SC/HC/Parties made to different arbitral institutions then the
institution where the first request was filed gets jurisdiction

(12) [skip]

(13) Application for appointment of arbitrator to be decided in 30 days from date of service of notice
to the opposite party

(14) Arbitration institution determines arb fee + manner of payment (subject to Schedule IV)

BSNL v Subash Chandra- where procedure for appointment agreed by parties the courts function is
to only implement the agreed procedure

Section 12: Grounds for Challenge of Appointment

(1) when person is approached in connection of possible appointment as an arbitrator he shall

disclose in writing the circumstances-
a. existence or direct/indirect, present/past relationship/interest in any of parties to the
dispute
which is likely to affect his independence or impartiality to the suit
b. which likely to affect ability to devote sufficient time to the arbitration + complete entire
arbitration within period of 12 months
(2) must disclose these circumstances unless already informed
(3) Arbitrator can be challenged only if-
a. Circumstances exist to give rise to justifiable doubts as to his independence
b. Does not possess qualifications agreed by parties

Anuptech Equipment Pvt Ltd. v. Ganpati Cooperative Housing Society Ltd - if by any reason the
appointed arbitrator fails to possess the qualification agreed by the parties in the arbitration
agreement, the very appointment of such arbitrator will be void ab initio as well as the
arbitration proceedings would be totally null and void including any order passed.
(4) Arbitrator appointment can be challenged by a party only in regards to circumstances revealed
to him post appointment
(5) Any arbitrator having relationship specified in Schedule 7, with any of the parties to the
dispute, shall be ineligible to be appointed as an arbitrator
Parties may waive this by aexpress agreement in writing

Flaherty v National Greyhound racing club

The test for Apparent bias involves two stage process.

a. "First the court must ascertain all the circumstances which have bearing on suggestion that
the Tribunal was bias
b. Secondly, it must ask itself whether those circumstances would lead a fair minded and
informed observer to conclude that there is a real possibility that The Tribune was biased."

HRD Corporation v GAIL

- Challenge against certain arbitrators on the ground that: previous relationship> raised doubt
about impartiality
- Question: whether automatically disqualified or merely created possibility of apprehension of
bias
- Distinguished between Schedule V and Schedule VII: justifiable doubt + creates automatic
ineligibility
- Has to look at third party test: would a fair impartial third person would have reason to believe
arbitrators are biased

TRF Ltd. v. Energo Engineering (2017):

- Agreement between parties that MD of Enerco would be arbitrator in case of dispute arising out
of contract
- post 2015 amendment (addition of VII Schedule), MD being a key personnel of the party is
disqualified
- upon disqualification, the MD attempted to nominate a arbitrator→ Court held: CANNOT
delegate nomination power (what cannot be done directly cannot be done indirectly)

Perkins Eastman v. HSCC India

- tried to overstep the Schedule VII barrier giving the power to a sole party to appoint the sole
arbitrator
- court held that> ANY party with interest in outcome CANNOT unilaterally appoint sole arbitrator
— even if appointee is independent; right to challenge + court appoints fresh arbitrator

Central Organisation for Railway Electrification v. CORE I

- railways said that the arbitrator would be chosen from panel provided by them> the panel
consisted of retired railway officers
- Therefore, even though parties chose, the PSU controlled who could be chosen
- Held: A 3-judge bench upheld the clause. Reasoning: the private party still had some choice,
therefore appointment was not strictly unilateral.

Core II

- 5 judge constitution bench overruled the earlier agreement

- Held that such a clause for appointment is invalid as:
a. Gov + PSU bound by constitutional fairness even in commercial countracts [Article 14]
b. By appointing partial judges> Section 18 of A&C Act violated from the start
- Prospective application (Article 142): Only affects NEW appointments after judgment date —
protects ongoing/completed arbitrations

Voestalpine Schienen GmbH v. Delhi Metro Rail Corpn Ltd.:

- DMRC to maintain a panel of arbitrators from which other party had to choose
- Isse: whether panel-based appointment compromised neutrality
- It was held at Independent and impartiality to different concepts impartiality> subjective +
independence> objective
- The Supreme Court did not completely invalidate panel systems. However, it said:
a. the panel must be broad-based,
b. genuinely neutral,
c. not dominated by serving employees of one party.

Section 13: Challenge to Arbitrator

(1) Parties can agree to procedure for challenge arbitrator

(2) However, if such thing not done, a party who intends to challenge an arbitrator shall within 15
days after becoming aware of constitution of the arbitral tribunal or of the reasons in Section 12
shall send a WS of reasons for challenge to arbitral tribunal
(3) Unless arbitrator challenged withdraws or other party agrees to the challenge, the arbitral
tribunal shall decide on the challenge
(4) If challenge under procedure agreed upon by party or challenges conducted through (2) is not
successful then the arbitral tribunal shall continue arbitral proceedings and make arbitral award
(5) Where arbitral award made under (4) the party challenging the arbitrator may make can
application for setting aside such arbitral award in accordance with Section 34
(6) Where award set aside> court to decide as to whether arbitrator challenged is entitled to any
fee

Section 14: Failure or Impossibility to Act

(1): The arbitrator’s mandate is terminated and substituted if-

a. de jure or de facto unable to perform function + fails to act without undue delay
b. withdraws from his office or parties agree to terminated

(2) if dispute remains in terms of (1)(a)> party may apply to court to decide on termination of
arbitrator’s mandate

(3) Withdrawal of arbitrator under Section 13(3) or party agrees to termination> then it does not
acceptance of ground under Section 12(3)

Section 15: Termination of Mandate and Substitution of Arbitrator

(1): In addition to circumstances in Section 13 + 14> mandate of arbitrator shall terminate if:
a. where he withdraws from office for any reason
b. by or pursuant to agreement of parties

(2) when mandate of arbitrator terminated> substitute arbitrator to be appointed in acc with
procedure for appointment of arbitrator

(3) where arbitrator is substituted> previous hearing may be repeated at the discretion of the
arbitral tribunal

(4) no previous order/ruling of the tribunal made prior to substitution of arbitrator shall not be
invalid solely because there has been a change in composition of arbitral tribunal
 COURT INTERFERENCE
- main objective: minimise the supervisory role of courts in arbitral process
- courts have minimal scope in arb proceedings
- three ways intervention:
a. Before proceedings: Section 5, 8
b. During proceedings- Section 9
c. After proceedings- Section 11

Before Proceedings

Section 5: Judicial Interference

- Extent of judicial intervention statutorily allowed under Section 5 of the A&C Act is analougous
to Article 5 of the UNCITRAL Model Law
- Section 5 provides that judicial intervention is only allowed to the extent provided by the act
- Alcove Industries Ltd v Oriental Structural Engineers Ltd - Object of the Act is to see that the
proceedings come to a finality without the intervention of the court, unless intervention is
warranted by law.
Section 8: Reference to Arbitration
- Refers to domestic arb- party involved in court proceedings can receive a reference of their
dispute to arb
- As per Section 8 of the Act, all judicial authorities are mandatorily required to refer the parties to
the arbitration.
The essentials laid down under Section 8 of the 1996 Act in order to refer parties to the arbitration
[Anand Gajapathi Raju v PVG Raju]:
a. there is an arbitration agreement
b. a party to the agreement brings an action in the Court against the other
c. the subject matter of the action is the same as the subject matter of the arbitration
agreement
d. the other party moves the Court for referring the parties to arbitration before it submits his
first statement on the substance of the dispute.
Ashok Thapar v Tarang Exports: once parties intend to refer certain dispute to arb + have the same
in arb agreement> then any dispute pertaining to the contents of the agreement is to be referred to
the arbitrator even though arb agreement is mutually terminated
Hindustan Petroleum Corporation Ltd. v. M/s Pink City Midway Petroleum- In this case SC held that
the jurisdiction of Civil Court is barred after an application under Section 8 of the Act is made for
arbitration.
Scope of Judicial Authority> wide in nature- includes district, state and national commission under
the Consumer Protection Act [Air Engineers Pvt Ltd v NK Modi]
Section 11: Appointment of Arbitrator
- court intervention> sub-section (4) (5) (6)> last resort to ensure that proceedings occur in
efficient manner
Section 14: Failure to Perform Duty
- court decides in case in dispute of whether de facto/de jure incapacity or non-performance of
duties without undue delay> final measure
During Proceedings
Section 27: Court Assistance in Taking Evidence
- Arbitral tribunal/party with approval of arbitral tribunal can apply to court for assistance in
taking evidence
- Application to specify: name, address of parties + arbitrator, nature of claim, relief sought,
evidence
- If court satisfied + within its competence> execute the request by providing evidence to the
arbitral tribunal
- Lalit Nadhan v ICSI- can stop request of party if done for mala-fide purpose + to abuse the
process of court

After Proceedings

Section 34: Grounds of Setting Aside

- This Section lays down the permissible grounds upon which an arbitral award can be challenged.
The Court doesn’t entertain appeal over arbitral awards - testament to the limited scope of
judicial intervention that is statutorily allowed.
- Sections 34 lays down the permissible grounds for setting aside an arbitral award.
a. party was under some incapacity
b. the arbitration agreement is not valid
c. 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
d. the arbitral award deals with a dispute not falling within the terms of the submission to
arbitration (severable award)
e. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with
the agreement of the parties
f. subject-matter of the dispute is not capable of settlement by arbitration
g. arbitral award is in conflict with the public policy of India (contravention with the
fundamental policy of Indian law/ conflict with the most basic notions of morality or justice/
award was induced or affected by fraud or corruption)

NHAI v. M. Hakeem (2021): No Power to Modify

- The Supreme Court categorically held that under Section 34, courts do not have the power to
modify arbitral awards, as doing so would cross the boundary of permissible judicial
interference.
- The Court clarified that under Section 34, the court does not act as an appellate authority for
factual findings, evidence, or questions of law dealt with by the arbitral tribunal.

Whether Additional Grounds Can be Used

Question arose as to whether there is a need to raise additional grounds for setting aside arbitral
awards. The SC in State of Maharashtra v. M/s. Hindustan Construction Company Ltd took note of
this question and said that presently including additional grounds would mean increasing the scope
of judicial intervention and that would be contrary to the intent behind the 1996 Act

Ssangyong Engineering & Construction Co. Ltd. v. NHAI (2019)

An award can be set aside on the ground of patent illegality if:
a. Contravention of the Arbitration Act itself (e.g. arbitrator gives no reasons for the award —
violates S.31(3))
b. Arbitrator's interpretation of the contract is perverse / irrational / not even a possible view

Patel Engineering v. NEEPCL

 The Supreme Court confirmed the Ssangyong position and explained sub-head (2) in more detail.
Patent illegality for a domestic award now means:
a. The decision is perverse or so irrational that no reasonable person would have arrived at it,
b. the construction of the contract is something no fair or reasonable person would take,
c. the view of the arbitrator is not even a possible view.
 INTERIM MEASURES
Section 9: Interim Measures of Protection
When Available: A party may apply to court for interim measures BEFORE, DURING, or AFTER arbitral
proceedings (but before enforcement under Section 36).
Types of Interim Measures Available
a. Appointment of a guardian for a minor or person of unsound mind for the purposes of
arbitral proceedings
b. Preservation, interim custody or sale of goods which are the subject-matter of the
arbitration agreement
c. Securing the amount in dispute in the arbitration
d. Detention, preservation or inspection of any property which is the subject-matter of the
dispute, including authorising any person to enter land/buildings, take samples, make
observations, or try experiments
e. Interim injunction or appointment of a receiver
f. Such other interim measure of protection as may appear just and convenient
Section 9(2): If court passes an interim order BEFORE commencement of arbitral proceedings,
arbitration must be commenced within 90 DAYS from the date of such order (or within such further
time as the court may determine).
Section 9(3): Once the Arbitral Tribunal is constituted, the Court shall NOT entertain a Section 9
application UNLESS the court finds that circumstances exist which may not render the remedy under
Section 17 (tribunal's own interim powers) efficacious.
NOTE: The hierarchy is: Once the Tribunal is constituted, parties must first go to the TRIBUNAL
(Section 17) for interim relief. Court jurisdiction under Section 9 is then only a last resort if the
Section 17 remedy is inadequate.
Section 17 - Interim Measures by the Arbitral Tribunal
Scope: Covers the same categories of interim relief as Section 9. A party may, DURING arbitral
proceedings, apply to the Arbitral Tribunal for interim measures.
KEY FEATURE - 2015 Amendment: Post the 2015 amendment, any order issued by the Arbitral
Tribunal under Section 17 is DEEMED TO BE AN ORDER OF THE COURT for all purposes and is
enforceable under the Code of Civil Procedure, 1908 in the same manner as a court order.
Section 9 vs Section 17 - Quick Comparison
a. Section 9 (Court): Available before arbitration begins, during, and after (before enforcement).
Wider enforcement machinery through the courts.
b. Section 17 (Tribunal): Only available DURING arbitral proceedings. Post-2015 amendment: has
the same enforceability as a court order under the CPC. Preferred route once the Tribunal is
constituted.
 FOREIGN AWARDS ENFORCEMENT

SECTION 44: FOREIGN AWARD

1. There must be an arbitral award
2. Settling a dispute arising out of a commercial legal relationship
3. Agreement in writing
4. Arbitral award passed by a reciprocating territory declared by the CG in an official gazette
Can Arbitral Award by 2 Indian Parties in Foreign Seat be Considered Foreign Award?

PASL Wind Solutions Pvt Ltd v GE Power Conversion India Pvt Ltd
- Seat of arbitration: Zurich
- Institutional rules: ICC arbitration.
- An award was passed in favour of GE.
- PASL argued before Indian courts that: Since both parties were Indian, they could not choose a
foreign seat, and therefore the award could not be treated as a foreign award.
- Reasoning:
a. Party autonomy is fundamental
b. No prohibition in Indian law
c. Foreign seat= foreign award
d. Not against public policy
- Even if you have foreign seat> can seek interim relief in foreign courts

Serajuddin and Co. v. Michael Golodetz,

the Calcutta High Court observed that the term “foreign arbitration” would also include arbitrations where
one of the parties belongs to a country which has not ratified the Geneva Convention. The Court went on to
examine the decisions where the terms “foreign arbitration” and “foreign award” were used and concluded
that they were used in connection with the following:
- arbitrations in foreign lands;
- foreign arbitrators;
- application of foreign law; and
- foreign nationals.
IN THE GIVEN CASE one party was Indian and the other an American citizen, the Court was of the view that it
satisfied the characteristics of a foreign arbitration.
SECTION 45: REFERENCE OF PARTY TO ARBITRATION

- If judicial authority has a dispute regarding a subject matter covered by a NY Convention

arbitration agreement shall refer parties to arbitration
- Unless the agreement is prima facie:
a. Null and void
b. Inoperative
c. Incapable of being performed
- Meaning if prima facie valid agreement> refer to arbitration (does not look into merits of the
agreement)

Shin-Etsu Chemicals Co Ltd v Akash Optifibre

- Parties had technical collaboration agreement with foreign arbitration clause

- Dispute arose- party filed a civil suit in India> other invoked Section 45 to refer matter to
arbitration- opposing party challenged the validity of arb agreement
- Question: scope of judicial inquiry under Section 45
- Court must conduct a prima facie examination> cannot undertake detailed determination of
validity of agreement
- If prima facie agreemen correct> must refer to court> therefore, reference to arbitration is
mandatory

Chloro Controls India Pvt Ltd v Severn Trent Water Purification

Facts: Complex international transaction with multiple agreements — some with arbitration clauses,
others without. Disputes arose involving both signatories and non-signatories to arbitration
agreements. Foreign party sought reference under S.45 including non-signatories.

Issue: (1) Can non-signatories be referred to arbitration under S.45? (2) Does 'any person claiming
through or under' extend to non-signatories? (3) Can multiple interconnected agreements be
treated as a single arbitrable transaction?

Judgment: Supreme Court held that S.45's phrase 'any person claiming through or under' is broad
enough to include non-signatories if there is a sufficient legal or commercial connection. The 'Group
of Companies Doctrine' was applied. A 'composite transaction' doctrine was recognized —
interconnected agreements can be sent to a single arbitral forum even if not all contain arbitration
clauses.

Legal Principle: (1) GROUP OF COMPANIES DOCTRINE: A non-signatory within the same corporate
group, who participated in negotiation or performance, can be bound by the arbitration agreement.
(2) COMPOSITE TRANSACTION DOCTRINE: Where agreements form a single economic transaction,
all disputes go to one arbitral forum to prevent fragmentation.

SECTION 46: BINDING ON PARTIES

- The arbitral award is binding on all parties in the arbitration + any person through or under him
- Can be used in defence, set-off or in any other manner in proceedings in India

SECTION 47: EVIDENCE REQUIRED FOR ENFORCEMENT

The applicant seeking enforcement shall produce:

a. Original award or duly authenticated copy
b. Original agreement or certified copy
c. Proof that it is foreign award> if in foreign language, then a certified English translation is
required

Explanation: The High Court having original jurisdiction over the subject matter; or if no original
jurisdiction, the High Court with appellate jurisdiction over subordinate courts. This is a key
definitional point.

SECTION 48: CONDITIONS FOR ENFORCEMENT [GROUNDS FOR REFUSAL]

Clause (1): Enforcement of award may be refused, if party against whom award made proves that

a. the party to the agreement were under incapacity under their applicable law
 the arbitration agreement is not valid under the law of the country to which the parties
subjected it or the law of the country where arbitral award made
b. no proper notice to the arbitrator appointment or the arbitration proceedings> therefore.
Unable to present his case to the tribunal
c. the award deals with a subject matter which is not contemplated or falling within the
submissions made to the arbitral tribunal
d. composition of arbitral tribunal was not in accordance with parties agreement or the law of
the country where the arbitration took place
e. award is not yet binding, or
has been set aside or suspended
by a competent authority of the country under whose law the award was made

Incapacity/Invalid Agreement; Improper Notice; Excess of Jurisdiction; Procedural Irregularity;

Binding Award

Clause (2): Enforcement of Award may be refused, if court proves that

a. the subject matter of the dispute is not capable of being settled by arbitration under the law of
India
b. enforcement of the award is contrary to the public policy of India (defined narrowly under
Explanation 1 and 2)

Explanation I: Public Policy [F FB]

An award is in conflict with public policy only if:
a. award was induced by fraud/corruption or was in violation of Section 75 or 81
(confidentiality provisions)
b. it in contravention with fundamental policy of Indian law
c. it is in conflict with basic notions of morality or justice

Explanation II: Fundamental Policy of Indian Law

- test for this does not require review of merits of the dispute
- prevents courts from using ‘public policy’ to re-litigate the matter

Clause (3): Adjournment Pending Challenge at Seat

- If an application to set aside or suspend the award has been made to a competent authority in
the country of the seat, the Indian court may adjourn enforcement proceedings.
- It may also order the party resisting enforcement to provide suitable security.
SCOPE OF PUBLIC POLICY
- Model law or NY convention of public policy
- Article V of NYC refers to the ‘public policy of that country> indicates the interpretation of public
policy is determined from the perspective of the jurisdiction where recognition or enforcement
is sought
Renusagar Power Co. v General Electric Co.

- Indian Comp with US Comp for equipment supply- foreign arbitral award passed in favour of US>
Indian comp resisted enforcement citing violation of Indian foreign exchange law + public policy
- IssueL meaning + scope of public policy for refusing enforcement of foreign award
- Mere statutory ciolation, is no public policy violation> SC gave Narrow interpretation:
a. Fundamental policy of Indian law
 b. Against interest of India
c. Basic notion of justice or morality

ONGC v Saw Pipes

- Section 34 is before finality is obtained; Section 48 is after finality obtained

- To Section 34> added new criteria for domestic cases> public policy is now:
a. Fundamental policy of india
b. Interest of india
c. Basic notion of morality and justice
d. Patent illegality> illegality to go to the root of the matter, not for trivial matters
- Did not clarify whether it would apply to Section 48 or not

Shri Lal Mahal Ltd. v. Progetto Grano Spa.

- Patent illegality cannot apply to Section 48

- Foreign and domestic enforcement are different

2015 Amendment

- Inserted Section 34(2A) to reinforce what was stated in Shri Lal Mahal v Progetto Grano Spa

📋 Vijay Karia v Prysmian Cavi e Sistemi SRL (2020) — Supreme Court [RECENT]

Facts: Indian shareholders' agreement with foreign investors (Prysmian group), arbitration clause
with London seat. Award passed in Prysmian's favour. Karia resisted enforcement citing violations of
FEMA, public policy; also challenged award at the London seat (with limited success).

Issue: (1) Scope of judicial interference under S.48; (2) Whether Indian courts can re-examine
merits; (3) What is the public policy threshold; (4) Effect of failed challenge at seat on enforcement
in India.

Judgment: Pro-enforcement judgment. Indian courts CANNOT act as appellate authorities over
foreign awards — no re-assessment of evidence, no re-interpretation of contracts. Public policy
must be 'shockingly unjust' — the 'SHOCKING THE CONSCIENCE' test. FEMA violations alone do not
satisfy public policy. Failure/pendency of challenge at seat does not bar enforcement in India (only
actual setting aside/suspension does).

Legal Principle: (1) 'Shocking the Conscience' Test: Refusal justified only where enforcement would
be so unjust it shocks the court's conscience — a VERY HIGH threshold. (2) S.48 is not an appellate
review mechanism. (3) Pendency of challenge at seat ≠ ground for refusal; actual setting aside is
required.

Section 49: Decree of Arbitral Award

- If the court deems award proper> may be enforced as if it’s a decree of the court itself

Section 50: Appeal

- The courts can only entertain appeal against

a. Refusal for referral to arbitration
b. Setting aside of award
- No second appeal lies> right to appeal to SC is preserved

Section 51: Savings Clause

- If any other convention or domestic procedure opted into> the same is preferred

Section 52: Conflict

- If NYC applies to a dispute> then Geneva Convention cannot apply

- Done to prevent conflict between application of the conventions

GENEVA CONVENTION

Section 53: Foreign Award

- Dispute arising out of commercial legal relationship

- Between parties from different nationalities
- Where the award obtained is final in nature
- From a reciprocating country as notified in the official gazette by the Central Government

Section 54: Reference of Parties

-
DOMESTIC AWARD
 SEAT V VENUE V PLACE OF ARBITRATION

- Determines:
a. Which court exercises supervisory jurisdiction
b. What procedural law applies
c. Whether Indian courts can grant interim relief under part 1
d. Grounds for setting aside award

TERM MEANING LEGAL CONSEQUENCES

SEAT Juridical/legal home of arbitration — the (i) Determines supervisory court; (ii)
'centre of gravity' or situs. It is a legal concept, Governs curial/procedural law; (iii)
not merely a geographical location. Determines applicability of Part I of A&C
Act; (iv) Grounds jurisdiction for
challenge/set-aside of award

VENUE Physical location where hearings take place; No automatic legal consequences. May
chosen for convenience of parties, witnesses, be elevated to seat status if:
or arbitrators. A logistical concept.
(a) no other seat designated, AND (b)
other positive indicia present (Shashoua
principle).

PLACE Term used in S.20 of the A&C Act, 1996. Used Courts interpret contextually. 'Place of
synonymously with both 'seat' and 'venue' — arbitral proceedings' may or may not be
deliberately or inadvertently ambiguous. seat. Context + surrounding clause
language is determinative.

KEY CASES

Roger Shashoua v Mukesh Sharma

- Arbitration agreement designated London as venue> provided ICC Rules as procedural law but
no seat was provided
- Held that If seat not provided, but venue is provided> then venue is upgraded to become the
seat

Bharat Aluminium Co. v Kaiser Aluminium Technical Services (BALCO)

- Foreign-seated arbitration> issue whether part I of A&C Act (domestic award) would apply to
proceedings outside india
- Held: Part I applies only to arbitrations seated in India> for foreign seated arbitrations, Part II
applies; word ‘only in Section 2(2) justifies this intent
- BALCO PRINCIPLE: Seat = territorial touchstone for Part I. No seat in India = No Part I jurisdiction for Indian
courts (subject to the 2015 Amendment proviso for ICA).

Union of India v Hardy Exploration and Production Inc

- Kuala lumpur> venue; UNCITRAL Model Law> seat

- Is kuala lumpur the juridical seat of arbitration?
- Held> no kuala lumpur is not seat
- HARDY TEST: Venue ≠ Seat automatically. Something more — a positive act or concomitant
indication (designation of procedural law or institutional framework)— is required. This is
STRICTER than Shashoua and is in tension with it.

BGS SGS Soma v NHPC

- When an arbitration clause says arbitration “shall be held” at a particular place, that
place is generally treated as the seat of arbitration, unless there are strong contrary
indications.

Three Laws Applicable to International Agreement

LAW GOVERNS ALSO CALLED

Proper law of the main Substantive rights and obligations of the Lex causae / Governing
contract parties under the contract itself law of contract

Proper law of the Validity, scope, interpretation, and Lex arbitri / Law of the
arbitration agreement enforceability of the arbitration clause arbitration agreement

Curial / procedural law Conduct of the arbitral proceedings — Lex fori / Law of the
procedure, evidence, timelines, powers of seat / Curial law
the Tribunal

Which Law Governs the Arbitration Agreement

If parties do not choose which law governs arbitration agreement, competing positions exist saying
a. Law of main contract: arbitration agreement is governed by main contract
Reason: arbitration agreement is part of the contract> party intent to carry
b. Law of seat: arbitration agreement are governed by law of the seat
Reason: arbitration is a process> should be governed by procedural home
 CONCILIATION

Section 61: Conciliation

- Part III of the A&C Act governs conciliation

- Governs disputes arising out of legal relationship, whether contractual or not
- This part does not apply where by the virtue of law for the time being in force certain disputes
may or may not be submitted

Section 62: Commencement of Conciliation Proceedings

- The party initiating conciliation to send to other party a written invitation to conciliate,
identifying the subject of dispute
- Conciliation to commence when other party accepts the invitation in writing
- If the other party rejects the invitation> no conciliation proceedings
- If party initiating the conciliation does not receive any response within 30 days from the date of
invitation> assume that invitation rejected and can elect to inform the same to the opposite
party in writing

Section 63: Number of Conciliators

- There shall be one conciliator unless parties agree there shall be two or three conciliators
- When there is more than one> shall elect together

Section 64: Appointment of Conciliator

- Where,
a. There is one> parties agree on the name of sole conciliator
b. There is two> each party appoints one
c. There is three> each party appoints one- third one elected together
- Parties may elect to enlist assistance of institution or person in connection with the appointment
of conciliator-
a. Party may request institution or person to recommend names of suitable individuals
b. Party may agree that appointment of one or more conciliators to be done directly by the
institution or person

Section 65: Submission of Statement

- Upon appointment, the conciliator may request each party to submit to him a brief written
statement describing the general nature of the dispute + points of issue> send copy to other
party
- The conciliator can request each party to submit further written statement of his position facts
and grounds in support + documents + evidence that party deems appropriate> shall send copy
of statement to other party
- At any stage> the conciliator may request party to submit to him such additional information as
required

Section 66: Flexibility

- Conciliator is not bound by CPC and IEA

Section 67: Role of Conciliator

- Assist parties in independent and impartial manner> in attempt to reach amicable settlement
- Should be guided by principles of objectivity, fairness and justice, considering> rights and
obligations of parties + circumstances of dispute
- Can conduct the proceedings in manner he considers appropriate> taking into account
circumstances + wishes of the party> to reach speedy settlement
- Conciliator may at any stage of proceedings make proposal for settlement of dispute> need not
be in writing + need not be accompanied by statement of reasons

Section 68: Administrative Assistance

- To facilitate conduct of conciliation> the parties or conciliator with consent of parties arrange for
administrative assistance by person or institution

Section 69: Communication b/w Conciliator and Parties

- Conciliator may invite parties to communicate> orally or in writing; together or individually

- Unless place of meeting agreed> conciliator to determine the same after consultation with
parties

Section 70: Disclosure of Information

- If any factual information provided to the conciliator in regards to the dispute from a party> shall
disclose the substance of that information to the other party> provides opportunity to the other
party to present explanation in regards to the same
- If confidential information> do not disclose that information

Section 71: Cooperation of Parties

- Parties to cooperate with conciliator + comply with the requests by the conciliator

Section 72: Suggestions by Parties for Settlement

- Each party may> on their own initiative or at invitation of conciliator submit to the conciliator
suggestions for the settlement of dispute

Section 73: Settlement Agreement

- When concilliaor believes there exists elements for settlement which is acceptable to the
parties> he shall formulate the terms of possible settlement + submit the same to the parties for
observations> post that the conciliator may reformulate the terms in accordance with the
observations made
- If parties reach agreement> can draw up settlement agreement themselves or can seek the help
of or request the conciliator to draw up the agreement
- Upon signing the settlement agreement> the terms of the agreement are final and binding on
the parties and any party through or under them
- Conciliator to authenticate the agreement + furnish copy to the parties

Section 74: Status and Effect of Settlement Agreement

- Has the effect of an arbitral award under Section 30

Section 75: Confidentiality

- Conciliator + parties to keep confidential all matters relating to the proceedings + the
agreement> unless required by law
- Except where its disclosure is necessary for implementation + enforcement
Section 76: Termination of Conciliation Proceedings

a. Settlement agreement between parties

b. Written declaration by the conciliator, upon consulation with the parties> that conciliation
proceedings are no longer justified
c. Written declaration by the parties to the conciliator
d. Written declaration from party to party and conciliator

Section 77: Resort to Arbitral or Judicial Proceedings

- Cannot resort to arbitral or judicial proceedings during the course of conciliation in respect of
subject matter of dispute of conciliation
- Exception: proceedings are necessary for preserving his rights

Section 80: Role of Conciliator in Other Proceedings

- Cannot be counsel, representative or arbitrator in proceedings

- Cannot be presented by the parties as witness in any arbitral or judicial proceedings

Section 81: Admissibility of Evidence in Other Proceedings

- Cannot rely on stuff in conciliation as evidence

Section 61: Concilliation

Section 62: Commencement

Section 63: Number

Section 64: Appointment

Section 65: Submission of WS

Section 66: Flexibility

Section 67: Role of Concilliator

Section 68: Administrative Assisstance

Section 69: Communicate

Section 70: Disclosure of Information

Section 71: Cooperation of Parties

Section 72: Suggestions for Settlement Agreement

Section 73: Settlement Agreement

Section 74: Status + Effect of Agreement

Section 75: Confidentiality

Section 76: Termination

Section 77: Resort to Arbitral/Judicial Proceedings

Section 80: In future proceedings

Section 81: Admissbility of evidence

CASES

Haresh Thakur v State of Maharashtra AIR 2000 SC.

In this case, the so called 'proposal' by the Conciliator was not signed by the parties, nor were its
terms disclosed to the parties by the Conciliator. As submitted by Sri Tulsi learned Sr. counsel
appearing for the appellant the report was sent by the Conciliator in a sealed cover to the High Court
directly. The appellant filed an objection against the report of the Conciliator setting out various
grounds of challenge. A Division Bench of the High Court rejected the objections raised against the
Conciliator's report.

SC observed

The learned judge in passing the impugned order failed to notice the apparent illegalities committed
by the conciliator in drawing up the so called settlement agreement, keeping it secret from the
parties and sending it to the Court without obtaining their signature on the same. The position is
well settled that if the statute prescribes a procedure for doing a thing, a thing has to be done
according to that procedure. Thus the order passed by the High Court confirming the settlement
agreement received from the conciliator is wholly unsupportable.”

Mysore Cements Ltd v. Svedala Barmac Ltd (2003) SCC

We find in spite of our careful scrutiny, serious deliberations and analysis of the materials on record,
particularly the Memorandum of Conciliation Proceedings and the Letter of Comfort, that either
taken individually or even together - they or any one of them cannot legitimately claim to be entitled
to or assigned the status of a settlement agreement within the meaning of Section 73, for purposes
of the Act. In our view, they fall short of the essential legal pre requisites to be satisfied for being
assigned any such status, despite our endeavour to view them with a liberal approach in the
background of the objects and purposes underlying conciliation, arbitration and alternative mode of
settlement of disputes.
 MEDIATION

SECTION 2(h): DEFINITION OF MEDIATION [Mediation Act, 2023]

“Mediation” includes any process — whether called mediation, pre-litigation mediation, online
mediation, community mediation, conciliation, or by any similar expression — whereby parties
attempt to reach an amicable settlement of their dispute with the assistance of a third person (the
mediator), who does not have the authority to impose a settlement.

Key Characteristics

- Party-driven: mediator facilitates, never decides

- Voluntary: no compulsion to settle
- Confidential: proceedings protected from disclosure
- Flexible: includes pre-litigation, online, community and institutional variants
- Non-adversarial: designed to preserve relationships

SECTION 4: MEDIATION AGREEMENT

What it is

A written agreement by or between parties (and anyone claiming through them) to submit all or
certain disputes — present or future — to mediation.

Forms it may take

- A mediation clause within a contract (e.g., “disputes shall first be referred to mediation”)
- A standalone/separate mediation agreement
- A reference in one agreement to another agreement containing a mediation clause (valid if in
writing and reference makes the clause part of the agreement)

Writing Requirement [S.4(3)] — satisfied if:

- Any document signed by the parties

- Exchange of communications/letters including electronic form
- Pleadings in a suit where one party alleges existence of mediation agreement and the other does
not deny it

Timing

- Can be entered before or after a dispute arises [S.4(5)]

International Mediation [S.4(6)]

- Must relate to a commercial dispute as defined in S.3(a)

SECTION 5: PRE-LITIGATION MEDIATION

Parties may, voluntarily and with mutual consent, attempt to settle disputes before filing any civil or
commercial suit/proceeding.

Key Rules
- Existence of a mediation agreement is NOT a prerequisite
- Commercial disputes of Specified Value: governed by Section 12A of the Commercial Courts Act,
2015 (mandatory pre-litigation mediation for commercial suits not seeking urgent interim relief)
- Applicable to notified tribunals (Central/State Government notification)

Who may conduct pre-litigation mediation

- Mediator registered with the Mediation Council of India

- Mediator empanelled by a court-annexed mediation centre
- Mediator empanelled by an Authority under the Legal Services Authorities Act, 1987
- Mediator empanelled by a recognised mediation service provider

Motor Accident Claims [S.5(6)-(8)]

- If Claims Tribunal cannot reach settlement under S.149, Motor Vehicles Act → shall refer parties
to mediation
- Settlement placed before Claims Tribunal for consideration
- Non-settlement → mediator sends non-settlement report to Claims Tribunal for adjudication

SECTION 6: MATTERS NOT FIT FOR MEDIATION [First Schedule]

Mnemonic: CRACK-TLS

- Criminal prosecutions
- Rights of rem (third-party rights, except matrimonial disputes involving a child’s interest)
- Anti-competitive conduct (Competition Act, 2002 proceedings)
- Constitutional matters / public law declarations against Government
- Klaimsof / against minors, persons with intellectual disabilities, mental illness, unsound mind
- Taxation disputes (direct/indirect taxes, penalties, refunds)
- Land acquisition and determination of compensation
- Securities/SEBI/SAT, Electricity Commissions, Petroleum Regulatory Board, TRAI proceedings

Exception

- Courts may refer compoundable offences (including matrimonial offences that are
compoundable) to mediation — outcome is NOT a court decree; considered further by court per
applicable law

Amendment Power

- Central Government may amend First Schedule by notification [S.6(2)]

SECTION 7: POWER OF COURT OR TRIBUNAL TO REFER PARTIES TO MEDIATION

- Court/tribunal may refer parties to mediation at ANY stage of proceedings

- Non-settlement of pre-litigation mediation under S.5(1) does NOT bar court reference
- Court may pass suitable interim order to protect any party’s interest upon such reference
[S.7(2)]
- Parties are NOT obliged to settle — the reference is not compulsion to reach an agreement
[S.7(3)]
SECTION 8: APPOINTMENT OF MEDIATOR

Nationality

- Person of any nationality may be appointed

- Foreign nationals: must possess qualification, experience and accreditation as specified by the
Council

Appointment Procedure — Step by Step

- Step 1: Parties free to agree on name + procedure

- Step 2: If no agreement → party seeking mediation applies to Mediation Service Provider (MSP)
- Step 3: MSP appoints within 7 days — either the agreed mediator or from its panel (with
consent)
- Step 4: Appointed mediator communicates willingness within 7 days of receiving appointment

Section 9: Preference of Parties

- MSP shall consider suitability and the preference of parties when appointing from panel

SECTION 10: CONFLICT OF INTEREST AND DISCLOSURE

Duty to Disclose (Before + During)

- Before mediation: mediator must disclose in writing any personal, professional, financial or
other circumstance that may constitute a conflict of interest or raise justifiable doubts as to
independence/impartiality
- During mediation: any newly arising conflict of interest must be disclosed without delay [S.10(2)]

Effect of Disclosure

- All parties may waive objection in writing → treated as consent to continue [S.10(3)]
- If any party wants replacement →
c. Institutional mediation: apply to MSP for termination of mediator’s mandate [S.10(4)(i)]
d. Other mediation: party may directly terminate mandate [S.10(4)(ii)]

SECTION 11: TERMINATION OF MANDATE OF MEDIATOR

MSP may terminate a mediator’s mandate on three grounds:

- (i) Application by a party under S.10(4)(i)

- (ii) Information received from participants/others about conflict of interest [only after hearing
the mediator and finding justifiable doubt as to independence/impartiality, with either party
desiring replacement]
- (iii) Mediator’s own withdrawal for any reason

SECTION 12: REPLACEMENT OF MEDIATOR

- Non-institutional (party-terminated under S.10(4)(ii)): parties may appoint another mediator
within 7 days
- MSP termination under S.11: MSP appoints another from its panel within 7 days

SECTION 13: TERRITORIAL JURISDICTION

- Mediation must be undertaken within the territorial jurisdiction of the competent court/tribunal
that would decide the dispute
- Exception: parties may consent to mediation at any place outside that jurisdiction OR by online
mediation
- Deeming Fiction: even if conducted outside jurisdiction or online — for enforcement, challenge
and registration — it is deemed to have occurred within the competent court’s territorial
jurisdiction

SECTION 14: COMMENCEMENT OF MEDIATION

- Where agreement exists: date on which the party receives notice from the initiating party to
refer to mediation
- Other cases — parties chose own mediator: date mediator gives consent to appointment
- Other cases — application to MSP: date of appointment of mediator by MSP

Significance: commencement date triggers the 120-day clock (S.18) and exclusion of limitation
period (S.29).

SECTION 15: CONDUCT OF MEDIATION

Core Principles

- Independent, neutral and impartial assistance to parties

- Guided by: objectivity, fairness, voluntariness, confidentiality and self-determination
- Must adhere to standards of professional and ethical conduct (as specified by Council)

Procedural Flexibility

- NOT bound by CPC, 1908 or Indian Evidence Act, 1872

- May hold joint or separate (caucus) sessions as frequently as deemed fit
- Language determined by mediator with consent of parties

SECTION 16: ROLE OF MEDIATOR

What the Mediator Does [S.16(1)]

- Facilitates voluntary resolution

- Communicates each party’s views to the other (to the extent agreed)
- Assists in identifying issues, advancing understanding, clarifying priorities
- Explores areas of settlement and generates options
- Emphasises that decision-making responsibility lies with the parties
What the Mediator Must NOT Do [S.16(2)] / S.17

- S.16(2): Must NOT impose any settlement or give assurance that mediation will result in
settlement — must inform parties of this expressly
- S.17(a): Must NOT act as arbitrator OR as representative/counsel of any party in subsequent
arbitral/judicial proceedings concerning the same dispute
- S.17(b): Parties must NOT present the mediator as a witness in any arbitral/judicial proceedings

SECTION 18: TIME LIMIT FOR COMPLETION OF MEDIATION

- Primary period: 120 days from the date fixed for first appearance before mediator
- Extension: further 60 days by mutual agreement of parties (total maximum = 180 days)

SECTION 19: MEDIATED SETTLEMENT AGREEMENT (MSA)

What it is

- Agreement in writing between some or all parties, settling some or all disputes, authenticated by
the mediator
- Terms may extend beyond the disputes specifically referred to mediation
- Explanation: A void agreement under the Indian Contract Act, 1872 is NOT a valid MSA

Procedure after signing

- Institutional mediation: signed MSA submitted to mediator → mediator authenticates →

forwards with covering letter to MSP + copy to parties
- All other cases: signed MSA submitted to mediator → mediator authenticates → copy to all
parties

Other points

- Parties may settle ANY disputes (subject matter of mediation) at ANY point during mediation
[S.19(4)]
- Includes online mediated settlement agreements [S.19(5)]
- Subject to S.26 (Lok Adalat proceedings not affected)

SECTION 20: REGISTRATION OF MEDIATED SETTLEMENT AGREEMENT

Scope

Applies to MSAs other than those reached in (i) court/tribunal-referred mediation, (ii) Lok Adalat
awards, or (iii) Permanent Lok Adalat final awards.

How

- Optional: at the choice of parties

- With: Authority constituted under Legal Services Authorities Act, 1987 OR any Central
Government-notified body
- Registered body issues a unique registration number
Time Limits

- Within 180 days of receiving the authenticated copy of MSA

- After 180 days: allowed on payment of additional fee prescribed by the Authority
- Registration authority must be within the territorial jurisdiction of the competent court

Important clarification

- Registration does NOT affect the right to enforce under S.27 or challenge under S.28

SECTION 21: NON-SETTLEMENT REPORT

If no agreement is reached within the time under S.18, or mediator is of view that no settlement is
possible:

- Institutional mediation: mediator submits non-settlement report in writing to MSP

- All other cases: mediator prepares report and provides signed copy to all parties

Key restriction

- Report shall NOT disclose the cause of non-settlement or any matter referring to the conduct of
parties during mediation

SECTION 22: CONFIDENTIALITY

Persons bound

Mediator, MSP, parties AND participants — all must keep confidential:

- Acknowledgements, opinions, suggestions, promises, proposals, apologies and admissions

- Acceptance/willingness to accept proposals
- Documents prepared solely for mediation
- Any other mediation communication

No audio/video recording permitted [S.22(2)]

- No recording by any party, participant, mediator or MSP — whether in-person or online

Bar on admissibility [S.22(3)]

- No party may rely on or introduce any mediation communication as evidence before any
court/tribunal (including arbitral tribunals)
- Court/tribunal shall not take cognizance of such evidence

Exception for research/training [S.22(4)]

- Mediator may compile/disclose general information for research, reporting or training purposes,
provided it does NOT identify any party, participant or specific dispute

Confidentiality does NOT apply to [S.23(2)]

- Threat/plan to commit an offence

- Information relating to domestic violence or child abuse
- Statements showing significant imminent threat to public health or safety
SECTION 23: ADMISSIBILITY AND PRIVILEGE AGAINST DISCLOSURE

No mediator, participant, expert, adviser or administrative person involved in mediation shall at any
time be permitted or compelled to:

- Disclose any mediation communication to any court/tribunal or adjudicatory proceeding

- State contents of any document, nature of parties’ conduct, content of negotiations, offers or
counter-offers

Exception

- Disclosure is NOT protected when sought to prove/disprove a claim of professional misconduct

or malpractice by the mediator based on conduct during mediation

SECTION 24: TERMINATION OF MEDIATION PROCEEDINGS

Mediation proceedings are deemed terminated on the earliest of:

- (a) Signing and authentication of the MSA

- (b) Written declaration by mediator (after consulting parties or otherwise) that further efforts
are no longer justified
- (c) Written communication by a party/parties to mediator + other parties expressing wish to opt
out of mediation
- (d) Expiry of time limit under Section 18 (120 days / extended 180 days)

SECTION 25: COST OF MEDIATION

- Cost (other than community mediation) shall be as specified by the Council

- Default rule: all costs including mediator’s fees and MSP charges borne equally by parties
- Parties may agree otherwise

SECTION 27: ENFORCEMENT OF MEDIATED SETTLEMENT AGREEMENT

- A signed and mediator-authenticated MSA is FINAL AND BINDING on the parties and all persons
claiming through them
- Enforced under CPC, 1908 as if it were a decree of a court
- May be relied upon by any party by way of defence, set-off or otherwise in any legal proceeding
- Subject to S.28 (challenge) — enforcement proceeds unless successfully challenged

SECTION 28: CHALLENGE TO MEDIATED SETTLEMENT AGREEMENT

Grounds (ONLY 4 — Mnemonic: F-C-I-M)

- (i) Fraud
- (ii) Corruption
- (iii) Impersonation
- (iv) Matter not fit for mediation under S.6

Forum

- Application to the court or tribunal of competent jurisdiction

Time Limit

- 90 days from the date of receiving the authenticated MSA

- Extension: further 90 days if sufficient cause shown (maximum 180 days total)

Note

- Challenge does NOT automatically suspend enforcement — enforcement proceeds subject to

challenge

SECTION 29: LIMITATION

- The period from commencement of mediation (S.14) until submission of non-settlement report
(S.21) OR termination (S.24) shall be EXCLUDED in computing the limitation period for related
proceedings
- This exclusion applies notwithstanding the Limitation Act, 1963 or any other law

SECTION 30: ONLINE MEDIATION

When

- May be conducted at any stage of mediation (including pre-litigation) with the written consent
of all parties

Modes

- Electronic form, encrypted email, secure chat rooms, video/audio conferencing — non-
exhaustive list

Requirements

- Integrity of proceedings must be maintained at all times

- Confidentiality of all mediation communications must be ensured
- Mediator must take appropriate steps to safeguard both

STAGES OF MEDIATION

I: Pre-Mediation

a. Setting the room:

b. Review the Case Material
c. Appropriate Appearance
d. Confirm the attendance: must have sufficient notice + reminder day before + if unavailable
must be informed prior

II: Mediation
Stage 1: Introduction: establish structure + ground rules

Mediator must:

a. Welcome parties
b. Introduce yourself as mediator
c. Explain mediation process
d. Describe role of mediator + party role
e. Affirm mediator is a neutral role
f. Ensure process is confidential
g. Commercial dispute> whether person representing corp is duly authorised

Stage 2: Joint Session: Meet with Both Parties to Determine Issues + Set Agenda

- Each party narrates their side of story without interruption

- Mediator> study the party, understand issue + interest to the dispute
- Must keep env of mediation controlled through techniques of communication
- Make list of critical issues for discussion
- Must create common ground for assisted negotiation between parties + brainstorm solutions

Section 3: Caucus: Separate Confidential Sessions with One Party at a Time

- Mediator to try discover hidden issues + interest + individual goals

- Meets party separately to extract confidential information
- Must try + gain confidence of each party by reaffirming that he is bound by confidentiality
- Must not share any confidential info obtained through caucus with other party unless voluntary
consent given
- Must understand the position of the parties

Stage 4: The Agreement: Parties Meet Together to Finalise Terms

- After evaluating alternative solutions to the dispute> the parties get together to clarify the terms
of the agreement
- Terms of agreement> clear, precise, yet comphrensive
- Agreement to specify date of performance + milestone + liquidated damages for non-
performance
- Must ensure parties understand the terms and are satisfied with the conditions
- May read it out loud> must be signed by the parties + mediator> registered

Stage 5: Closing- Willingness to go Ahead

- After agreement signed mediator to:

a. Thank parties on hard work
b. If no agreement> review progress + terms agreed upon

Phase III: Post-Mediation Phase

- If partial agreement> ask to reschedule follow-up to complete mediation

- If agreement accepted by one but rejected by other> can ask the mediator to talk to defaulting
party
- Solve questions of parties

CASES
 HYBRID AWARD

- Hybrid ADR process combining two mechanisms- mediation and arbitration into single
sequenced proceeding
- First mediation> then arbitration

Advantage:

a. it gives parties the opportunity to negotiate while providing the certainty of a final decision if
negotiations fail.
b. The mere imminence of binding arbitration creates powerful incentive for parties to settle
during mediation — practitioners confirm higher settlement rates in Med-Arb than in
standalone mediation.
 LEGAL FRAMEWORK

Section 19: Procedural Law

- parties are free to agree on the procedure to be followed by the arbitral tribunal
- statutory foundation for incorporating mediation procedures into an ongoing arbitration
- parties can by agreement design their own Med-Arb process. Party autonomy is the
cornerstone.

Section 30: Settlement Agreement

(1) It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage
settlement of the dispute with the agreement of the parties> the arbitral tribunal may use
mediation, conciliation or other procedures at any time

(2) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate
the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record
the settlement in the form of an arbitral award on agreed terms.

(3) An arbitral award on agreed terms shall be made in accordance with section 31 and shall state
that it is an arbitral award.

(4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral
award on the substance of the dispute.

Features

1. flexibility + finality
2. finalty
3. saves time
4. additional discovery
5. incentivises collaboration

Process Flow

a. mediation phase
b. partial/full settlement
c. arbitration phase

Advantages

a. voluntary settlement> mediation

b. certainty
c. cost-efficient
d. time-saving
e. flexible

Key Concern — Impartiality & Award Contamination

The primary concern in Med-Arb arises when the same person serves as both mediator and
arbitrator. During mediation, the neutral may receive confidential or private communications from
each party individually (caucus). If that person then acts as arbitrator, there is a risk that the award is
influenced by confidential information the parties never intended to use as evidence. This is called
'award contamination'.
Types

1. Overlapping Med-Arb
2. Plenary Med-Arb
3. Braided Med-Arb
4. Optional Withdrawal Med-Arb

ARB-MED

- Converse of med-arb
- defining feature is that the arbitral award is prepared and sealed before mediation begins — it is
only revealed if mediation fails.

Process Flow

a. Arbitration is conducted: parties present evidence and argument in full.

b. The arbitrator prepares a complete binding award — but seals it (does not reveal it).
c. The parties proceed to mediation (the same or a different neutral may serve as mediator).
d. If mediation succeeds: the settlement agreement governs; the sealed award is never disclosed
and is effectively abandoned.
e. If mediation fails: the sealed arbitral award is unsealed and delivered to the parties as the
binding resolution.

Key Features

1. Settlement incentive> complete award exist, may perceive mediator suggestion as glimpse
of sealed award> creates incentive to reach agreement
2. Finality Guaranteed> as settlement or arbitration guaranteed
3. Time + Cost Efficiency> arbitrator already knows the issues from the arbitration phase, which
saves time if they also serve as mediator.
4. Combines the finality of arbitration with the relationship-preserving quality of mediated
settlement.
Parties & Nuetral
The parties themselves decide:

a. Who will serve as arbitrator.

b. Who will serve as mediator (this may or may not be the same person as the arbitrator).

Where the same person serves in both roles, they bring deep knowledge of the issues to the
mediation phase, saving both time and cost. However, this also introduces potential complications
(see concerns below).

Concerns

The primary concern in Med-Arb arises when the same person serves as both mediator and
arbitrator. During mediation, the neutral may receive confidential or private communications from
each party individually (caucus). If that person then acts as arbitrator, there is a risk that the award is
influenced by confidential information the parties never intended to use as evidence. This is called
'award contamination'.

Four Forms of Med-Arb

1. Overlapping Med-Arb
- arbitrator attends the mediation as a silent observer during plenary (joint) sessions, while only
the mediator engages privately with the parties.
- The arbitrator witnesses joint exchanges and reviews shared documents throughout the
mediation phase but has no access to private/confidential communications between parties and
the mediator.
- Adv: arbitrator — already familiar with the dispute — takes charge.
- Drawback: Parties tend to act cautiously and withhold candid information from the mediator,
fearing that it may colour the eventual arbitral award.
2. Plenary Med-Arb
- A single neutral follows accepted Med-Arb procedures, but is strictly prohibited from engaging in
any private (ex parte) communication with either party.
- The neutral relies exclusively on plenary (joint, formal) communication and document exchange.
- Eliminates concerns about award contamination since no private information is disclosed.
- Drawback: This format strikes at the very root of mediation jurisprudence. Mediation theory
holds that candid and honest private communication with the mediator is essential for
successful mediation. By prohibiting caucus, Plenary Med-Arb fundamentally weakens the
mediation phase.

2. Braided Med-Arb

- Uses a single neutral following both mediation and arbitration procedures.

- distinctive feature: ability to interrupt the arbitration phase with renewed mediation efforts —
- Most flexible form — allows dynamic interplay between both processes.
- Most closely mirrors the natural flow of many commercial disputes where parties' willingness to
settle fluctuates.
- Drawback: makes it difficult for parties to distinguish between suggestions as mediator (non-
binding guidance) and signals as arbitrator (indicative of the eventual award), creating subtle
coercion.

3. Optional Withdrawal Med-Arb

- Uses a single neutral with an opt-out provision — the disputing parties have the autonomy to
withdraw themselves from the process after the mediation phase concludes, before arbitration
begins.
- Protects the principle of voluntary participation in ADR.
- Preserves party autonomy throughout the process.
- Drawback: Undermines the core practical benefit of Med-Arb: guaranteed finality

ARB-MED

- converse of med-arb
- Defining feature: arbitral award is prepared and sealed before mediation begins

Process Flow

a. Arbitration is conducted: parties present evidence and argument in full.

b. The arbitrator prepares a complete binding award — but seals it (does not reveal it).
c. The parties proceed to mediation (the same or a different neutral may serve as mediator).
d. If mediation succeeds: the settlement agreement governs; the sealed award is never disclosed
and is effectively abandoned.
e. If mediation fails: the sealed arbitral award is unsealed and delivered to the parties as the
binding resolution.

Key Features

a. Settlement Incentive: know complete award exists- may perceive mediator suggestion as
glimpse of sealed award
b. Finality Guaranteed> either through award or settlement
c. Time + Cost efficiency> arb already aware of dispute
d. Combines the finality of arbitration with the relationship-preserving quality of mediated
settlement.

Concern + Parties

The parties themselves decide:

a. Who will serve as arbitrator.

b. Who will serve as mediator (this may or may not be the same person as the arbitrator).

Where the same person serves in both roles, they bring deep knowledge of the issues to the
mediation phase, saving both time and cost. However, this also introduces potential complications
(see concerns below).

a. Award contamination: The arbitrator/mediator cannot revise their sealed award based on
new insights or information gained during the mediation phase.
b. Perceived coercion: Parties may interpret mediator suggestions as signals of what the sealed
award contains.
c. Same-Nuetral Tension: same person two roles> difficult to differtiate

ARB-MED-ARB (AMA)

AMA is a refinement of the Arb-Med model, used prominently in Singapore's institutional practice. It
addresses certain gaps in the basic Arb-Med framework.

a. The claimant files a Notice of Arbitration; the respondent files a response.

b. An arbitral tribunal is constituted but immediately stays (pauses) the proceedings.
c. Parties attempt to settle by mediation.
d. If mediation succeeds: the arbitral tribunal enters a consent award (converting the
settlement into a binding award).
e. If mediation fails: the parties are referred back to the arbitral tribunal to complete the
arbitration.

AMA is notable because it allows successful mediation outcomes to be crystallised as consent

arbitral awards — enforceable under the New York Convention — rather than mere settlement
agreements.

OTHER HYBRID ADR MECHANISMS

Mini-Trial

- A private settlement technique outside the court system involving two levels of non-binding
evaluation:
 a. First level: A panel of senior business executives (with settlement authority but uninvolved in
the dispute) hears a condensed presentation and evaluates each side's strengths and
weaknesses.
b. Second level: A neutral third party provides a non-binding opinion or acts as
mediator/facilitator for the negotiation phase.
c. Off-the-record; result is non-binding; designed to produce a realistic assessment of likely
trial outcomes.

Fact-Finding

A neutral is appointed to find facts within a tightly defined area. Once facts are determined, parties
are expected to negotiate a settlement. The fact-finder's report is typically non-binding and may or
may not be admissible in subsequent proceedings (e.g. sexual harassment investigations).