Arbitration is an out-of-court dispute resolution method where parties appoint one or more

arbitrators to decide the matter. It involves a simplified trial without rigid evidence rules, and
hearings are private. The Arbitration and Conciliation Act, 1996 governs all forms of arbitration in
India, and the arbitral award is binding like a court order.
An arbitration agreement is a written contract where parties agree to submit disputes to arbitration.
Defined under Section 7 of the Arbitration and Conciliation Act, 1996, it applies to existing or future
disputes within a defined legal relationship. The form of the agreement (separate or embedded in a
contract) is not critical.
Essentials for Enforcing Arbitration Clauses:
1. The contract must be in writing.
2. The reference to the arbitration clause should be clear, indicating it's part of the contract.
3. The terms must be unambiguous.
4. The clause should reflect the parties' intent to resolve disputes via arbitration.
5. The clause should not conflict with other contract terms.
6. It must be severable, surviving even if the main contract becomes invalid.
For independent agreements, they must meet valid contract criteria.
types of arbitration:
1. Ad Hoc Arbitration: The parties handle everything themselves without involving an
arbitration institution. They choose arbitrators and decide how the process will work. It's
commonly used in India.
The Enrica Lexie case (Italy v. India)
The Enrica Lexie case involved two Italian marines who, on 15th February 2012, shot and
killed two Indian fishermen off the Indian coast, mistaking them for pirates. India and Italy
entered into arbitration under UNCLOS. The Permanent Court of Arbitration (PCA) ruled that
the Italian marines had immunity from Indian criminal prosecution as state officials, but Italy
was required to compensate India. The agreed compensation for the deaths and damages
was INR 100 million (₹10 crores).
2. Institutional Arbitration: A professional arbitration organization manages the process. They
provide rules, a list of arbitrators, and help with administration. Examples include the
London Court of International Arbitration and the Singapore International Arbitration Centre.
3. Domestic Arbitration: Both parties are from the same country, and the arbitration happens
in that country. For example, two Indian companies settling a dispute in India.
4. International Arbitration: At least one party is from another country. This type of arbitration
is used for cross-border disputes.
5. Emergency Arbitration: This is for urgent cases where a party needs immediate protection,
like stopping the destruction of evidence. It’s not fully recognized by Indian law yet, but
some Indian arbitration centers offer it.
1. Seat of Arbitration
The seat of arbitration refers to the legal jurisdiction where the arbitration is based. It
determines the laws and procedures applicable to the arbitration. In most cases, the arbitration
agreement will specify the seat. If not, the arbitral tribunal can decide the seat based on
convenience and circumstances, as per Section 20 of the Arbitration and Conciliation Act, 2015.
Bharat Aluminium Co. Ltd. v. Kaiser Aluminium Technical Service Inc. (BALCO case, 2012):
In this landmark case, the Supreme Court of India held that if parties to an arbitration
agreement select a foreign seat of arbitration, the laws of that country will apply to the
arbitration process, and Indian courts will not have jurisdiction to intervene under Part I of
the Arbitration and Conciliation Act, 1996. However, the 2015 amendment to the Act made
an exception, allowing Indian courts to provide interim relief (Section 9) or assist in evidence
(Section 27) even if the arbitration is seated abroad, unless parties explicitly agree otherwise.
 PASL Wind Solutions (P) Ltd. v. GE Power Conversion (India) (P) Ltd. (2021):
The Supreme Court in this case emphasized party autonomy and ruled that two Indian
parties can choose a foreign seat of arbitration. This decision upheld the parties' freedom to
select a seat outside India for arbitration, even though both parties are Indian, allowing them
to benefit from the procedural laws of another country.
2. Venue of Arbitration
The venue of arbitration refers to the location where arbitration hearings take place, which may
differ from the seat. While the seat determines the applicable laws, the venue is simply the
geographical place of proceedings. Arbitration can take place at any venue, but the governing
laws depend on the seat of arbitration.
3. Arbitrability of Subject Matter
Arbitrability refers to whether a dispute can be settled through arbitration. Some matters, like
criminal offenses or family disputes, cannot be arbitrated and must be handled by the courts.
The legislature (Section 2(3)) and judiciary (Section 34(2)(b)(i)) decide which matters are non-
arbitrable.
 Vidya Drolia Case (2020): The Supreme Court clarified that only disputes involving private
rights are arbitrable. Public rights or matters of public interest are non-arbitrable.
 Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (2011):
In this case, the Supreme Court established a test for determining whether a dispute is
arbitrable. It ruled that only disputes involving private rights and obligations that can be
settled by arbitration are arbitrable. Public rights or issues involving rights in rem (i.e.,
against the world, like property rights) typically cannot be arbitrated. This case set important
boundaries for what kinds of disputes could be resolved through arbitration in India.
4. Arbitral Award
An arbitral award is the decision or order issued by an arbitral tribunal. It must be in writing,
signed, and contain reasons unless waived by the parties. The award is enforceable like a court
decree unless challenged within the timeframe under Section 34 of the Arbitration Act.
5. Foreign Arbitral Award
A foreign arbitral award is granted in international commercial arbitrations and recognized under
the New York Convention (1958) or Geneva Convention (1927). It can be enforced in India under
Part II of the Arbitration Act if certain conditions, like finality and compliance with public policy,
are met.
Related Cases:
 BALCO Case (2012): Indian courts cannot intervene in foreign-seated arbitrations, reinforcing
the principle that the seat determines the applicable procedural laws.
 PASL Wind Solutions (2021): Two Indian parties are free to choose a foreign seat, respecting
the principle of party autonomy.
 Vidya Drolia (2020): Defined the boundaries of arbitrable and non-arbitrable disputes,
establishing that matters involving public interest are non-arbitrable.
 Booz Allen (2011): Laid down tests for determining whether a subject is arbitrable, focusing
on whether the dispute is a private right and whether the arbitration agreement covers it.

UNCITRAL Arbitration Rules & Model Law:

The UNCITRAL Arbitration Rules provide a flexible framework for parties to govern their
arbitration. These rules, adopted by the UN, can be modified by mutual agreement of the
parties. The UNCITRAL Model Law serves as a guide for countries to adopt or reform their
arbitration laws, ensuring they meet international standards. It covers everything from
arbitration agreements to the enforcement of arbitral awards.
Advantages of Arbitration:
1. Fair Process: Parties can choose impartial arbitrators, ensuring fairness.
2. Timely: Flexible, less formal rules lead to faster dispute resolution.
3. Cost-Effective: Faster proceedings save on legal fees.
4. Private: Confidential process avoids public exposure.
5. Binding: Arbitral awards are final and enforceable, like court decrees.
6. Simple Procedure: Easier to reach an agreement with simpler rules.
7. Reduces Court Burden: Eases congestion in courts, leaving them free for urgent cases.
Disadvantages of Arbitration:
1. No Appeals: Awards are final, with limited grounds for challenge.
2. Evidence Rules: Lack strict rules for admissibility, leading to potential misuse of evidence.
3. No Cross-Examination: Weakens credibility without court-like scrutiny.
4. Inconsistency: Varying rules across countries can lead to unfair outcomes.
5. Lack of Transparency: Public entities can avoid accountability behind closed doors.

Qualifications of Arbitrators:
 It does away with the qualifications of the arbitrators under 8th Schedule of the Arbitration
and Conciliation Act, 1996 which specified that the arbitrator must be:
An advocate under the Advocates Act, 1961 with 10 years of experience, or
An officer of the Indian Legal Service.
The qualifications for accreditation of arbitrators is proposed to be prescribed by regulations
to be framed by an arbitration council to be set up.

Section3. Receipt of Written Communications

 (1) Written communications are considered received if:
o (a) Delivered personally or to the recipient's business, residence, or mailing address.
o (b) If no address can be found after reasonable inquiry, it is deemed received if sent
to the last known address via registered letter or a method providing delivery proof.
 (2) The communication is deemed received on the day of delivery.
 (3) These rules do not apply to communications regarding judicial proceedings.
Section 4. Waiver of Right to Object
 A party that is aware of non-compliance with provisions or requirements of the arbitration
agreement but continues with the arbitration without promptly raising an objection will be
considered to have waived their right to object.
Section 5. Extent of Judicial Intervention
 Courts cannot intervene in matters governed by this arbitration part except in situations
explicitly allowed by these provisions.
Section 6. Administrative Assistance
 To facilitate arbitration proceedings, parties or the arbitral tribunal (with party consent) may
seek administrative assistance from a suitable institution or person.
Section 7. Arbitration Agreement
 (1) Definition: An arbitration agreement is a mutual understanding between parties to
resolve disputes through arbitration, applicable to current or future disputes related to a
defined legal relationship (contractual or otherwise).
 (2) Forms: It can take the form of:
o An arbitration clause within a contract.
o A separate standalone agreement.
 (3) Written Requirement: The arbitration agreement must be in writing.
 (4) Forms of Written Agreement: An arbitration agreement is considered in writing if it exists
in:
o (a) A document signed by the parties.
 o (b) An exchange of communications (letters, telex, telegrams, electronic
communications) that record the agreement.
o (c) An exchange of statements of claim and defense, where one party claims the
existence of the agreement and the other does not deny it.
 (5) Reference in Contracts: If a contract references a document containing an arbitration
clause, it constitutes an arbitration agreement as long as the contract is in writing and the
reference effectively incorporates the arbitration clause into the contract.
Section 8 Power to Refer Parties to Arbitration
1. Court Referral to Arbitration: A court must refer parties to arbitration if one party requests it
before submitting their first statement, provided a valid arbitration agreement exists.
2. Submission of Agreement: The application must include the original or certified arbitration
agreement; if the other party holds it, the court can be asked to order its submission.
3. Arbitration Continuation: Arbitration can proceed even if the matter is pending before the
court.
Booz-Allen and Hamilton Inc. vs. SBI Home Finance Ltd. (2011)
The Supreme Court held that a suit to enforce a mortgage by sale is non-arbitrable as it
involves rights in rem. It established the "Booz-Allen Test" to determine arbitrability,
requiring disputes to be capable of settlement through arbitration, covered by an arbitration
agreement, and referred to arbitration by the parties.
Bharat Aluminum Co. vs. Kaiser Aluminium Technical Service Inc. (2012)
The Supreme Court ruled that Part I of the Arbitration and Conciliation Act, 1996, applies
only to arbitrations held in India, clarifying that foreign arbitral awards cannot be set aside by
Indian courts, as they only apply to domestic awards.

Jammu and Kashmir and Ladakh Amendments (Sections 8A and 8B)

1. Referral to Mediation/Conciliation: Courts may refer parties to mediation or conciliation if
settlement opportunities exist during cases under Sections 9, 11, 34, or 37.
2. Court’s Role in Mediation: The court ensures the settlement is voluntary, lawful, and
enforceable as an arbitral award under Section 36.
Section 9 Interim Measures by the Court
1. Interim Protection: A party may seek interim measures like the preservation of goods,
securing amounts in dispute, or injunctions before or during arbitration.
2. Guardianship Appointment: The court may appoint a guardian for minors or those of
unsound mind during arbitration.
3. Commencement of Arbitration: Arbitration must begin within 90 days of the court granting
interim relief unless an extension is granted.
4. Court’s Limited Role: After an arbitral tribunal is constituted, the court will only intervene if
tribunal remedies are inadequate.
Section 10 Number of Arbitrators
1. Parties’ Freedom: Parties can agree on the number of arbitrators, but the number must be
odd.
2. Default Provision: If parties don’t agree on the number, the tribunal will consist of a sole
arbitrator.

Section 11 Appointment of Arbitrators

1. Nationality of Arbitrators: Parties can appoint arbitrators of any nationality, unless
otherwise agreed.
2. Mutual Agreement on Procedure: Parties are free to agree on the procedure for appointing
arbitrators.
3. Dispute on Appointment: If parties can't agree, they may approach the Supreme Court or
High Court to appoint arbitrators.
4. Three-Arbitrator Tribunal: In the absence of an agreement, each party appoints one
arbitrator, and the two arbitrators appoint the third (presiding) arbitrator.
5. Failure to Appoint: If a party fails to appoint an arbitrator within 30 days, the Supreme Court
or High Court can make the appointment.
6. Court’s Role: Courts only examine the existence of an arbitration agreement while
considering appointment applications.
7. Appointment for International Arbitration: In international commercial arbitration, the
Supreme Court may appoint an arbitrator of a different nationality from the parties.
8. Expeditious Disposal: Appointment applications should be resolved within 60 days.
9. Arbitrator’s Disclosure: Courts must obtain a written disclosure from prospective arbitrators
to ensure independence and impartiality.
Bharat Aluminum Co. vs. Kaiser Aluminium Technical Service Inc. (2012)
The Supreme Court ruled that Part I of the Arbitration and Conciliation Act, 1996, applies
only to arbitrations held in India, clarifying that foreign arbitral awards cannot be set aside by
Indian courts, as they only apply to domestic awards.

Section 11A Power of Central Government to Amend Fourth Schedule

1. Amendment Power: The Central Government can amend the Fourth Schedule by notification
in the Official Gazette.
2. Parliamentary Oversight: Any proposed amendment must be laid before both Houses of
Parliament for 30 days.
3. Approval or Modification: If both Houses disapprove or suggest modifications, the
amendment will not be issued or will be modified as per Parliament's decision.
M.M. Aqua Technologies Ltd vs. Wig Brothers Builders Ltd. (2001)
The Delhi High Court ruled that there was no arbitration agreement between the petitioner
and the second respondent since there was no assignment of the contract or agreement for
 payments. As a result, the arbitrator could not be appointed to resolve disputes involving
non-signatories.

Section 12 Grounds for Challenge

1. Disclosure by Arbitrator: A potential arbitrator must disclose any relationships or interests
with the parties that may raise doubts about their independence or impartiality.
2. Impartiality and Availability: The arbitrator must also disclose if they cannot devote
sufficient time to the arbitration, particularly regarding completing it within 12 months.
3. Ongoing Disclosure: Arbitrators must continue disclosing any new relevant circumstances
during the proceedings.
4. Guiding Grounds: The Fifth Schedule outlines grounds for determining impartiality, and the
Sixth Schedule provides the format for disclosures.
5. Grounds for Challenge:
1. Independence/Impartiality: If there are justifiable doubts regarding the arbitrator's
independence or impartiality.
2. Qualifications: If the arbitrator does not meet the qualifications agreed upon by the
parties.
6. Timing of Challenge:
1. A party can challenge an arbitrator they appointed or were involved in appointing, but
only if they become aware of the reasons after the appointment.
7. Ineligibility:
1. Any arbitrator whose relationship with the parties or the dispute falls under the
Seventh Schedule is ineligible for appointment, regardless of prior agreements.
2. Waiver by Agreement: Parties can waive this ineligibility through an express
agreement in writing after a dispute has arisen.

Section 13 -Challenge Procedure

1. Agreement on Procedure:
o Parties are free to agree on their own procedure for challenging an arbitrator.
2. Challenge Without Agreement:
o In the absence of an agreed procedure, a party can send a written statement of the
reasons for challenging the arbitrator within 15 days of becoming aware of the
tribunal's constitution or the grounds for the challenge (as per Section 12).
3. Tribunal Decision:
o If the arbitrator does not withdraw and the other party does not agree, the arbitral
tribunal will decide on the challenge.
4. Continuation of Proceedings:
o If the challenge is unsuccessful, the tribunal continues proceedings and can issue an
arbitral award.
5. Setting Aside the Award:
o The party can apply to set aside the award under Section 34 if dissatisfied with the
tribunal's decision on the challenge.
Section 14- Failure or Impossibility to Act

1. Termination of Mandate:
o An arbitrator’s mandate ends if:
 They become legally (de jure) or factually (de facto) unable to perform their
duties.
  They withdraw or both parties agree to end their mandate.
2. Court Involvement:
o If there’s a controversy regarding the arbitrator’s ability to act, a party can apply to
the court for resolution.
3. Substitute Arbitrator:
o A new arbitrator will be appointed following the same procedure used to appoint the
original arbitrator.
4. Validity of Previous Decisions:
o Unless agreed otherwise, any orders or rulings made by the tribunal before replacing
the arbitrator remain valid.

Section 15: Termination of Mandate and Substitution of Arbitrator

1. The mandate of an arbitrator shall terminate in addition to the circumstances referred to in

Sections 13 and 14 if:
o (a) The arbitrator withdraws from office for any reason.
o (b) There is an agreement by the parties to terminate the mandate.
2. Upon termination of the mandate, a substitute arbitrator shall be appointed according to the
rules that were applicable to the appointment of the replaced arbitrator.
3. Unless otherwise agreed by the parties, if an arbitrator is replaced, any previous hearings may
be repeated at the discretion of the arbitral tribunal.
4. Unless otherwise agreed by the parties, an order or ruling made by the arbitral tribunal prior
to the replacement of the arbitrator shall not be invalid solely due to the change in the
composition of the tribunal.

Section 16-Competence of Arbitral Tribunal to Rule on its Jurisdiction

1. Authority to Decide Jurisdiction:

o The arbitral tribunal can rule on its own jurisdiction, including objections to the
validity of the arbitration agreement.
2. Independence of Arbitration Clause:
o An arbitration clause within a contract is treated as a separate agreement, meaning if
the contract is declared void, the arbitration clause remains valid.
3. Raising Pleas:
o A plea that the tribunal lacks jurisdiction must be raised no later than the submission
of the statement of defense. A party can still raise the plea even if they appointed or
participated in appointing the arbitrator.
4. Exceeding Authority:
o Pleas about the tribunal exceeding its authority must be raised as soon as the issue
arises. The tribunal may admit late pleas if the delay is justified.
5. Tribunal's Decision:
o If the tribunal rejects a jurisdiction plea, it will proceed with the case and issue an
arbitral award.
6. Challenging the Award:
o A party can challenge the award under Section 34 if they disagree with the tribunal’s
decision on jurisdiction.

Section 17-Interim Measures Ordered by Arbitral Tribunal

1. Application for Interim Measures:

o A party can apply to the tribunal for interim protection during arbitral proceedings.
This can include:
 Appointing a guardian for a minor or a person of unsound mind.
 Preservation, custody, or sale of disputed goods.
  Securing amounts in dispute.
 Inspection, detention, or preservation of property related to the dispute.
 Granting interim injunctions or appointing a receiver.
 Any other protective measure deemed just and convenient.

2. Tribunal’s Powers:
o The tribunal has the same powers as a court in ordering interim measures during
arbitral proceedings.
3. Enforcement of Orders:
o Orders issued by the tribunal under this section are treated as court orders and are
enforceable under the Code of Civil Procedure, 1908, just like any court order.

Section 18: Equal Treatment of Parties

 All parties in arbitration must be treated equally and provided with full opportunities to
present their cases.

Section 19: Determination of Rules of Procedure

1. The arbitral tribunal is not bound by the Code of Civil Procedure, 1908 or the Indian
Evidence Act, 1872.
2. Parties are free to decide the procedural rules for arbitration.
3. If the parties do not agree, the tribunal can decide the procedure.
4. The tribunal has the authority to determine the admissibility, relevance, materiality, and
weight of evidence.
Section 20: Place of Arbitration

1. The parties are free to decide on the arbitration venue.

2. If the parties cannot agree, the tribunal will determine the place, considering the
circumstances and convenience.
3. The tribunal can meet at any location for consultations, hearings, or inspections unless the
parties agree otherwise.

Section 21: Commencement of Arbitral Proceedings

 Arbitration proceedings start when the respondent receives the request for arbitration unless
agreed otherwise by the parties.

Section 22: Language

1. Parties can agree on the language(s) to be used in proceedings.

2. In the absence of an agreement, the tribunal decides the language.
3. The chosen language applies to all written statements, hearings, awards, and other
communications.
4. The tribunal can require translations of documents into the agreed or determined language(s).

Section 23: Statements of Claim and Defense

1. The claimant must present the facts supporting their claim, issues, and relief sought. The
respondent must present their defense, within the agreed or tribunal-determined timeframe.
2. Both parties can submit supporting documents or reference evidence.
3. Parties can amend or supplement their claims or defenses unless the tribunal considers the
delay unjustified.
4. The process must be completed within six months of the tribunal receiving notice of
appointment.
Section 24: Hearings and Written Proceedings

1. The tribunal decides whether to hold oral hearings or base the proceedings on documents,
unless the parties agree otherwise. Oral hearings must be held if requested by a party.
2. The tribunal should conduct hearings day-to-day and avoid unnecessary adjournments. Costs
can be imposed for adjournments without sufficient cause.
3. Parties should be notified in advance of hearings or inspections, and all statements and
documents must be communicated to all parties.

Section 25: Default of a Party

1. If the claimant fails to submit their claim, the tribunal can terminate the proceedings.
2. If the respondent fails to submit their defense, the tribunal continues the proceedings without
treating the failure as an admission, but the respondent may lose their right to submit a
defense.
3. If a party fails to appear at hearings or produce evidence, the tribunal may continue and make
its decision based on available evidence.

Section 26: Expert Appointed by Arbitral Tribunal

1. The tribunal can appoint experts to report on specific issues and may require parties to
provide relevant information.
2. Experts must participate in oral hearings if requested, allowing parties to question them and
present expert witnesses.
3. Experts must provide access to documents, goods, or property used for their report if
requested by a party.

Section 27: Court Assistance in Taking Evidence

1. The tribunal or a party (with tribunal approval) can seek the court’s assistance in obtaining
evidence.
2. The application to the court must include the names and addresses of the parties and
arbitrators, a description of the claim, and the evidence sought.
3. The court can order evidence to be provided directly to the tribunal.
4. The court can issue summonses and commissions to witnesses or for document production.
5. Failure to comply with the court's processes can lead to penalties as in regular court
proceedings.

Section 28- Rules Applicable to Substance of Dispute

1. Location in India:
o Non-International Commercial Arbitration: Governed by Indian substantive law.
o International Commercial Arbitration:
 Decision based on law designated by the parties.
 Designation of a country's law refers to its substantive law, not conflict of
laws.
 In absence of designation, the tribunal applies appropriate laws based on
circumstances.
2. Ex Aequo et Bono: The tribunal can only decide this way if expressly authorized by the
parties.
3. Contract Terms: The tribunal must consider contract terms and applicable trade usages.

SECTION 29: Decision-Making by Panel of Arbitrators

1. Majority Rule: Decisions are made by a majority unless parties agree otherwise.
2. Presiding Arbitrator: May decide procedural questions if authorized.

SECTION 29A: Time Limit for Arbitral Award

 1. General Timeline:
o Non-International Commercial Arbitration: Award to be made within 12 months
from completion of pleadings.
o International Commercial Arbitration: Should be as quick as possible, ideally within
12 months.
2. Additional Fees: If the award is made within 6 months, arbitrators may receive additional
fees.
3. Extensions:
o Parties can extend the award period by up to 6 months.
o If the tribunal fails to make an award in the specified time, the arbitrator's mandate
terminates unless extended by the Court.
4. Court's Authority: The Court can replace arbitrators and impose costs if delays are due to
the tribunal.

SECTION 29B- Fast Track Procedure

1. Agreement for Fast Track: Parties can agree to a fast track procedure at any time.
2. Sole Arbitrator: May be appointed by mutual agreement.
3. Procedural Guidelines:
o Decisions based on written materials, without oral hearings unless requested.
o The tribunal can request additional information.
o Oral hearings may be held if deemed necessary.
4. Award Timeline: Must be made within 6 months of entering reference.

SECTION 30- Settlement

1. Encouragement of Settlement: The tribunal can facilitate mediation or conciliation.

2. Award on Settlement: If the parties settle, the tribunal may record this in an arbitral award.
3. Status of Settlement Award: It holds the same validity as other arbitral awards.

Food Corporation of India vs. Joginderpal (1989), the Supreme Court dealt with an
arbitration dispute arising from a contract between FCI and Joginderpal, who was tasked with
milling paddy. The arbitrator dismissed FCI's claim for penalties due to insufficient evidence
of losses and adjusted the compensation for undelivered rice, leading to challenges from both
parties.
The Court upheld the arbitrator's award, stating that the decision could not be set aside unless
the reasons were legally erroneous or unsustainable. It emphasized that arbitration should be
straightforward and fair, ensuring that justice is perceived as served. The rulings of the
Additional District Judge and the High Court, which supported the arbitrator's findings, were
also deemed justified.

SECTION 31-Form and Contents of Arbitral Award

1. Written Award: Must be signed by tribunal members.

2. Reasoning: Awards should include reasons unless agreed otherwise.
3. Date and Place: Must state the date and place of arbitration.
4. Delivery: A signed copy is to be delivered to each party.
5. Interim Awards: The tribunal can make interim awards during proceedings.

Guru Nanak Foundation vs. Rattan Singh & Sons (1981), the Supreme Court addressed
the jurisdictional authority under the Arbitration Act, 1940. The case involved a contract
with an arbitration clause where the original arbitrator was replaced. The Supreme Court
ruled that it had exclusive authority to handle the arbitration award since it had directed the
 proceedings, in line with Section 31(4), which mandates that the award be filed in the court
that referred the matter. This decision reinforces the court's role in maintaining the right to
appeal and managing all related arbitration issues.

Section 31A :Costs of Arbitration

1. Discretion on Costs: Courts or arbitral tribunals decide if costs are payable, their amount,
and timing.
2. General Rule: The losing party pays the winner's costs unless stated otherwise.
3. Factors for Costs: Conduct of parties, partial successes, and any unreasonable delays impact
cost decisions.

Section 32: Termination of Proceedings

1. Termination: Occurs through a final award or by the tribunal’s order.

2. Conditions for Termination:
o Claimant withdraws claim.
o Parties agree to terminate.
o Tribunal finds continuation unnecessary.
3. Mandate Termination: Ends with the termination of proceedings, subject to specific
sections.

Section 33: Correction, Interpretation, and Additional Award

1. Timeframe for Requests:

o Parties have 30 days from receiving the arbitral award to request corrections or
interpretations.
2. Types of Requests:
o Correction of Errors: A party can request corrections for:
 Computation errors
 Clerical or typographical errors
 Other similar errors
o Interpretation of the Award: If both parties agree, a party may request clarification
on specific points of the award.
3. Procedure:
o If the arbitral tribunal deems the request justified, it must:
 Make the correction or provide the interpretation within 30 days of the
request.
o Corrections and interpretations become part of the arbitral award.
4. Arbitral Tribunal's Initiative:
o The arbitral tribunal may also correct errors (as described in the first type of request)
on its own initiative within 30 days of issuing the award.
5. Additional Awards:
o A party may request an additional award for claims presented in the proceedings but
omitted from the original award, within 30 days of receipt of the award.
o If justified, the tribunal must make this additional award within 60 days of receiving
the request.
6. Extension of Time:
o The tribunal can extend the time for making corrections, interpretations, or additional
awards if necessary.
7. Application of Section 31:
 o The provisions regarding the form and contents of the arbitral award (Section 31)
apply equally to corrections, interpretations, and additional awards made under this
section.

Section 34: Application for Setting Aside Arbitral Award

1. Recourse to Court:
o An application to set aside an arbitral award is the sole recourse to a court against
such an award, governed by subsections (2) and (3).
2. Grounds for Setting Aside the Award:
o The court may set aside an arbitral award if the applicant proves, based on the record,
that:
 Incapacity: A party was under some incapacity.
 Invalid Arbitration Agreement: The arbitration agreement is not valid
under applicable law.
 Notice Issues: The applicant was not properly notified about the appointment
of the arbitrator or the proceedings.
 Scope of the Award: The award addresses disputes not covered by the
arbitration agreement or exceeds its terms (separable decisions can be set
aside).
 Composition/Procedure Issues: The composition of the tribunal or
procedure was not in accordance with the parties' agreement or applicable
law.

3. Additional Grounds:
o The court may also set aside the award if:
 Non-arbitrable Subject Matter: The subject matter of the dispute is not
arbitrable under the law.
 Public Policy Conflict: The award conflicts with Indian public policy.
4. Public Policy Explained:
o An award is in conflict with public policy if:
 It was induced by fraud or corruption.
 It violates fundamental policies of Indian law.
 It contravenes basic notions of morality or justice.
o The review of fundamental policy does not involve a merits review of the dispute.
5. Patent Illegality (Section 34(2A)):
o For non-international commercial arbitrations, an award may be set aside if it is
tainted by "patent illegality" evident on its face. However, an erroneous application of
law or reappraisal of evidence is not grounds for setting aside.
6. Time Limit for Application:
o An application to set aside must be filed within three months of receiving the arbitral
award or after a request under Section 33 has been resolved.
o The court may allow a further 30-day period if satisfied the applicant was prevented
by sufficient cause from applying within the initial three months.
7. Court's Authority:
o Upon receiving the application, the court may adjourn proceedings to allow the
arbitral tribunal to address issues that may eliminate grounds for setting aside the
award.
8. Notice Requirement:
o An application must be filed only after issuing prior notice to the opposing party, and
must include an affidavit confirming compliance with this requirement.
9. Expeditious Disposal:
o Applications under this section must be disposed of quickly, within one year of the
notice being served on the other party.
 In the National Highways Authority of India v. M. Hakeem (2021) case, the Supreme
Court clarified that under Section 34 of the Arbitration and Conciliation Act, courts can only
set aside an arbitral award but cannot vary or modify it. This interpretation aligns with Article
34 of the UNCITRAL Model Law, reinforcing India's international arbitration obligations.
The court can partially set aside an award based on the doctrine of severability, allowing the
separation of flawed portions without altering the valid parts of the award.

Union of India vs. East Coast Boat Builders & Engineering Ltd. (1998) case, the Delhi
High Court addressed the arbitrability of government-related disputes. The Union of India had
a contract with East Coast that included an arbitration clause, but UOI objected to arbitration
over the dispute that arose. The arbitral tribunal ruled the dispute was arbitrable. The Court
affirmed that government disputes are arbitrable if they arise from subordinate rights in
commercial contracts. It highlighted that the Arbitration and Conciliation Act, 1996, while
influenced by the UNCITRAL Model Law, must be interpreted based on its own provisions,
allowing for arbitration to proceed.

Bharat Aluminum Co. vs. Kaiser Aluminium Technical Service Inc. (2012)
The Supreme Court ruled that Part I of the Arbitration and Conciliation Act, 1996, applies
only to arbitrations held in India, clarifying that foreign arbitral awards cannot be set aside by
Indian courts, as they only apply to domestic awards.

SECTION 35. Finality of Arbitral Awards

 Binding Nature: An arbitral award is final and binding on the parties involved and those
claiming under them, subject to the provisions of this part of the law.

SECTION 36. Enforcement of Arbitral Awards

1. General Rule for Enforcement:

o Once the time for filing an application to set aside the arbitral award under Section 34
has expired, the award is enforceable in the same manner as a court decree, following
the provisions of the Code of Civil Procedure, 1908.
2. Effect of Application to Set Aside:
o The filing of an application to set aside an arbitral award does not, by itself, render
the award unenforceable. The award remains enforceable unless the court grants a
stay of its operation upon a separate application for that purpose.
3. Stay of Operation:
o Upon the filing of an application for a stay of the arbitral award's operation:
 The court may grant a stay subject to conditions it deems appropriate, with
reasons recorded in writing.
 In cases of an arbitral award for payment of money, the court must consider
provisions for granting a stay of a money decree as per the Code of Civil
Procedure, 1908.
4. Conditions for Unconditional Stay:
o If the court finds a prima facie case indicating that:
 The arbitration agreement or contract, which is the basis of the award, was
induced or affected by fraud or corruption, or
 The making of the award was tainted by fraud or corruption,
o The court shall stay the award unconditionally while the challenge under Section 34
is pending.
5. Clarification of Applicability:
o The provisions regarding the unconditional stay apply to all court cases arising from
or related to arbitral proceedings, regardless of whether the arbitral or court
 proceedings were initiated before or after the Arbitration and Conciliation
(Amendment) Act, 2015.
SECTION 37. Appealable Orders

1. General Provision for Appeals:

o Scope: Notwithstanding any other law in force, an appeal shall lie from the following
orders (and from no others) to the court authorized to hear appeals from original
decrees of the court passing the order:
 (a) Refusing to refer the parties to arbitration under Section 8.
 (b) Granting or refusing to grant any measure under Section 9.
 (c) Setting aside or refusing to set aside an arbitral award under Section 34.
2. Specific Appeals from Arbitral Tribunal Orders:
o An appeal shall also lie to a court from an order of the arbitral tribunal:
 (a) Accepting the plea referred to in sub-section (2) or sub-section (3) of
Section 16.
 (b) Granting or refusing to grant an interim measure under Section 17.
3. Limitation on Appeals:
o No second appeal shall lie from an order passed in appeal under this section.
However, nothing in this section shall affect or take away the right to appeal to the
Supreme Court.

SECTION 38. Deposits

1. Fixing Deposits:
o The arbitral tribunal may fix the amount of the deposit or supplementary deposit as an
advance for the costs referred to in sub-section (8) of Section 31, expected to be
incurred in respect of the claim submitted.
 Proviso: If a counter-claim has been submitted, separate deposits may be
fixed for the claim and counter-claim.
2. Payment of Deposits:
o The deposit shall be payable in equal shares by the parties.
 Proviso: If one party fails to pay their share, the other party may pay it.
 Further Proviso: If neither party pays their share, the arbitral tribunal may
suspend or terminate the proceedings concerning the claim or counter-claim.
3. Accounting and Return of Deposits:
o Upon termination of the arbitral proceedings, the arbitral tribunal shall account for the
deposits received and return any unexpended balance to the appropriate party or
parties.

SECTION 39. Lien on Arbitral Award and Deposits as to Costs

1. Lien for Unpaid Costs:

o The arbitral tribunal has a lien on the arbitral award for any unpaid arbitration costs.
2. Court Intervention for Award Delivery:
o If an arbitral tribunal refuses to deliver its award unless costs are paid, the court may
order the tribunal to deliver the award upon the applicant's payment into court. The
court will then determine reasonable costs to be paid to the arbitral tribunal, with any
balance refunded to the applicant.
3. Application by Any Party:
o Any party may apply under this provision unless fees have been fixed by written
agreement with the arbitral tribunal, which shall have the right to appear and be heard
in such applications.
4. Court Orders on Arbitration Costs:
 o The court may issue orders regarding arbitration costs where questions arise and the
arbitral award lacks sufficient provisions on those costs.

SECTION 40. Arbitration Agreement Not to be Discharged by Death of Party

1. Continuity of Arbitration Agreement:

o An arbitration agreement shall not be discharged by the death of any party, and it
shall be enforceable by or against the legal representative of the deceased.
2. Mandate of Arbitrator:
o The arbitrator's mandate shall not be terminated by the death of the appointing party.
3. Effect on Rights of Action:
o This section does not affect any law that extinguishes rights of action upon a person’s
death.

SECTION 41. Provisions in Case of Insolvency

1. Enforceability of Arbitration Terms:

o If a contract term mandates arbitration for disputes involving an insolvent party, it
shall be enforceable if the receiver adopts the contract.
2. Application for Arbitration in Insolvency Proceedings:
o If an insolvent party was a party to an arbitration agreement and the matter requires
resolution in connection with the insolvency proceedings, any party or the receiver
may apply to the judicial authority to direct arbitration in accordance with the
agreement.
3. Definition of Receiver:
o The term “receiver” includes an Official Assignee.

SECTION 42. Jurisdiction

1. Exclusive Jurisdiction of Court:

o If any application regarding an arbitration agreement is made in a court, that court
shall have exclusive jurisdiction over all proceedings and applications arising from
that agreement.