Arbitration- a study
ADR means Alternate Dispute which includes various methods of settling a dispute without
getting into the intracities of the court. It is a method where parties try to resolve their
disputes privately in front of a third person expert. The decision is binding on the parties like
the decision of the court. This works on the principle of natural justice, legal aid and speedy
trails as mentioned under Article 39-A and Section 89 CPC provides settling disputes through
arbitration
Arbitration and Conciliation Act 1996 covers international and domestic arbitration. The act
is divided into 4 parts: -
Part 1 (section 2-43) – Applies to the place of arbitration in India. The award granted
is treated as a domestic award
Part 2 (section 44-60)- Enforcement of foreign awards
Part 3 (section61-81)- Conciliation
Part 4 (Section 82-86)- Supplementary provisions
It contains the following schedules as well: -
Schedule 1- Convention on the recognition of foreign awards of arbitration
Schedule 2- Protocol to be followed on arbitration award clauses
Schedule 3 convention for the execution of foreign award of arbitration
Arbitration is an alternative to litigation in courts and is advantageous as it provides
flexibility and confidentiality.
According to section 8 of the act talks about the power of any judicial body to refer a case to
arbitration and it must be followed by an agreement. The SC in p. Anand Gajapati Raju v/s
PVG Raju 2000 gave certain requirements:
An agreement must be there
A party must bring an action in court against others
The subject matter must be same as in arbitration
One party demands arbitration in court
Cases not referred to arbitration: -
Winding up proceedings of any company (Haryana telecom ltd v/s Sterlite Industries
1999)
Disputes that have to be determined by any particular tribunal as the law may provide
Proceedings related to insolvency
Guardianship matters
Succession issues
Disputes related to immovable property
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Any criminal case
Proceedings under section 145 of CPC
ARBITRATION TRIBUNAL
Composition: -
Section 10 of the Act authorises the parties to determine the number of arbitrators to settle
their disputes provided that the number of arbitrators should be an odd number.
In cases where the parties are unable to do so then there will be 1 sole arbitrator
Appointment: -
Section 11 of the Act talks about the appointment of the Arbitrator
Requirements are:
Party must give proper notice of the appointment to the other party, if not then the
appointment is held invalid
A person appointed must be duly informed and should give his consent and the
consent must be obtained before finalising his appointment
In cases where the parties fail to appoint an arbitrator within 30 days of the request for
arbitration then the appointment will be done by the Chief Justice or any person authorised by
him but with prior request of the parties.
Termination: -
Section 14 and 15 of the Act states the ground for termination: -
If he is not able to perform his duties without undue delay (whether de facto or de
jure)
Withdraw/terminated by the parties
On his termination, a substitute arbitrator will be appointed under Section 15
Jurisdiction: -
According to section 16 of the Act which provides that the Tribunal will act within its
jurisdiction.
If the Tribunal has no jurisdiction, a plea will be raised but no later than when the statement
of defence is submitted.
Also, in case a party is not satisfied with the award, it can make an application to set it aside
under section 34.
ARBITRAL AWARD
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Final determination of a claim or a counter-claim awarded by the arbitral tribunal
Written and duly signed by the members of the tribunal u/s 31
Section 31 gives power to the tribunal to make interim awards for any matter.
Under section 32, the tribunal/arbitrator is empowered to amend or correct or remove any
errors of any kind within 30 days.
Note: The tribunal cannot exceed their jurisdiction beyond whatever is mentioned
Type: -
Interim Award:
Additional Award:
Settlement Award:
Final Award:
Recourse against Award: -
As per Section 34 of the Act, if a party is not satisfied with the award, they can make an
application to set aside the award granted by the tribunal provided that the application must
be made within 3 months from the date of the arbitral award was made.
Grounds:
Incapacity of the parties
No Arbitration agreement
Non compliance with the due process
Tribunal not complying with its jurisdiction
The subject matter cannot be decided by arbitration
Fraud/ corruption
Under Section 37, if a person is not satisfied with the order passed by the tribunal, they can
appeal to the court. However, there is no provision for a second appeal once an appeal has
been made. In case of Pandey and co. Builders Pvt. Ltd Versus State of Bihar (2007), it was
held that the appellant authority in any case which is referred to arbitration must be decided
within the definition of court u/s 2 of the Act
FOREIGN AWARD
Foreign awards can be defined as awards issued in foreign jurisdiction. They are governed by
various international treaties, conventions and respective national laws. It refers to those
awards which are issued country other than where the enforcement takes place.
Foreign awards fall under the preview of various laws, specific legislations and international
conventions to facilitate their recognition and application across countries.
Arbitration and Conciliation Act 1996 defines foreign awards in section 44.
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In the case of Serajuddin and co. versus Michale Golodez and ithers (1959) the Calcutta High
Court laid down necessary restrictions and conditions aligning with the term “Foreign
arbitration”, such as:
A foreign party is involved
Arbitration is held in a foreign land
Arbitration is conducted by foreign arbitrators
Foreign laws are applied to the arbitration
Chapter 1 Part II of the Act talks about the enforcement of New York convention Awards
from section 44 to 52.
Section 45 establishes that the court has the power to refer parties to arbitration only when the
agreement that contains the arbitration clause is not void
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