ADR
Foram Ma’am
Sections in Brief and Case Laws
Section 28
Rules applicable to substance of dispute
• Place of arbitration – India
• Arbitrations other than ICA- conducted in accordance with law in force in india
• For ICA-
1. According to rules designated by parties made applicable to the dispute
2. The rules of law decided by parties shall be substantive law instead of
conflict of law rules
3. Where parties have not designated any law, the tribunal itself designates
appropriate rules of law- Only done through parties’ authorisation
• At the time of passing award, tribunal must take into account contractual terms and
trade usages
• Seat- the seat of arbitration defines the curial law or procedural law governing the
arbitration and also determines which courts will exercise supervisory jurisdiction
over such arbitration.
• Venue- defines the geographical place where such arbitration is conducted and is not
associated with either the curial law or the jurisdiction of courts.
• An arbitration proceeding can be seated even at a neutral venue which in the classical
sense of the term may not have the jurisdiction to entertain a dispute i.e. the cause of
action may not have arisen at that place. This would not invalidate the seat of
arbitration and the courts exercising supervisory jurisdiction over such "seat" would
have jurisdiction to exercise powers vested under the Act.
1. Bharat Aluminium Company (BALCO) v Kaiser Aluminium Technical Service
The Supreme Court analysed the concept of "Seat" and "Venue" at length and held
that both the concepts are different. The Court clarified that the "Seat" of arbitration is
the center of gravity of the arbitration i.e. the place where the arbitration is anchored
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whereas the "Venue" is merely the geographical location where such arbitration
meetings are conducted.
2. Roger Shashoua v Mukesh Sharma
The Shashoua principle states that when an agreement expressly designates the venue
without any express reference to seat, combined with a supranational body of laws
and no significant contrary indicia, the inexorable conclusion is that the venue is
actually the seat of arbitration. This principle was also acknowledged and adopted by
the Supreme Court in Enercon India.
3. Union of India v. Hardy Exploration and Production (India) Inc.
Deviated from shashoua
The Supreme Court held that Kuala Lumpur is not the seat of arbitration. The Court
declared that the word place cannot be used as seat. A venue does not automatically
become a seat. It requires a positive act and something concomitant attached to it.
Similarly, a place becomes a seat when one of the condition precedent is satisfied. It
does not ipso facto assume the status of a seat.
Section 29
Decision making by panel of arbitrators
• Where there are multiple arbitrators, majority decision shall be taken
Section 29A
Time limit for arbitral award
• Award to be passed within 1 year from receipt of notice by arbitrators of their
appointment (refereed to as “entering reference”)
• Where award passed within 6 months- arbitrator entitled to additional fees
• The period of one year can be extended up to 6 months on parties’ consent- one party
needs to apply for such extension- whether such extension will be granted will depend
on
• when award is not passed within the time limit, the mandate of the arbitrator expires.
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• When period is extended, one or all the arbitrators can be substituted by the court and
they shall resume from the stage the previous arbitrators left it with the evidence and
material already on record.
• When arbitrators are appointed, the reconstituted tribunal shall continue from where it
was left off
• Court can impose any actual or exemplary costs upon the parties
Section 29B
Fast track procedure
• Parties can decide to resolve their dispute through fast-track procedure
• While deciding dispute through fast-track process, parties can decide upon sole
arbitrator
• Process of fast-track resolution-
1. Decide the matter on basis of documents, pleadings and submissions
filed by parties w/o oral hearing
2. Tribunal can call for any further information or clarification from the
parties
3. Oral hearing can be done by request from party or if tribunal deems fit
4. Technical formalities while taking oral hearing can be avoided and
most expeditious process is adopted
• Limitation period for passing award- six months from tribunal entering reference
Section 30
Settlement
• Arbitral tribunal encourages settlement using mediation, conciliation or any other
procedure
• If parties settle, arbitration proceeding is terminated and settlement is recorded by
tribunal in the form of arbitral award in accordance with s. 31
• It shall be treated as any other arbitral award in terms of status and effect
Section 31
Form and contents of arbitral award
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• To be made in writing and signed by parties
• Where there are more than one arbitrator, majority arbitrators can sign
• Tribunal should give reasons on which award is based
• Reason is not reqd to be given if parties agree not to give reasons and if it has been
passed under circumstances of settlement u/s 30.
• Award shall have date and place of arbitration and it would be deemed to have been
passed there and then
• After passing of award, a copy is delivered to each party
• An interim award can also be passed during the proceeding which can help in passing
final award
• Where award is for payment of money, award shall note such sum along with interest
rate and duration of interest and on what amount such interest is to be calculated
Section 32
Termination of proceeding
• Grounds for termination-
1. Passing of final award
2. Passing of order by tribunal
• Grounds for passing of order for termination-
1. Claimant withdraws claim, except when tribunal recoginses proper
justification from opposite party to obtain final settlement
2. parties agree on the termination of the proceeding
3. continuation of proceeding becomes unnecessary
• termination of proceedings would lead to termination of mandate of arbitrator
Section 33
CORRECTION AND INTERPRETATION OF AWARD; ADDITIONAL AWARD
- A party may request corrections of computation, clerical, or typographical errors
within 30 days of receiving the award unless otherwise agreed.
- A party may request interpretation of a specific part of the award if agreed by the
parties.
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- The tribunal must correct errors or provide interpretation within 30 days of receiving
a justified request.
- The tribunal may correct errors on its own within 30 days of the award.
- A party may request an additional award for omitted claims within 30 days of
receiving the award.
- The tribunal must issue an additional award within 60 days if the request is justified.
- The tribunal may extend the time for corrections, interpretations, or additional
awards if necessary.
Section 34
Application to set aside award
• On application by party to set aside arbitral award
• Grounds for set aside-
1. Party’s incapacity
2. Party did not have proper knowledge of proceedings
3. Agreement was not valid under law
4. Point of dispute was beyond scope of arbitration agreement
5. The composition of tribunal was in a way that was in contradiction to what
was decided by the parties
6. Subject matter is non arbitrable
7. Arbitral award is against public policy
• Public policy includes-
1. Award passed by fraud or corruption
2. Award contravenes fundamental policy of Indian law
3. Goes against basic understanding of morality and justice
• Fundamental policy- not decided on the merits of dispute
• All kinds of arbitration not being ICA also fall under S. 34 is the award is PATENTLY
ILLEGAL on the face of it
• What are not grounds-
1. Erroneous application of law
2. Reappreciation of evidence
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• Limitation period for application- Within 3 months from receiving copy of award.
Extension of 30 days can be granted if court sees sufficient cause
• On receiving application, court may adjourn proceedings and give opportunity to
tribunal to resume arbitration and do something to eliminate the ground for setting
aside the award.
• Before filing application, notice to opposite party should be given. Affidavit
confirming sending of such notice shall also be attached by the applicant
• Period for disposition of application- One year from date of sending of notice to
opposite party.
• S.34 tries to limit judicial intervention as the court is bound by the grounds mentioned
in this section to adjudge the setting aside of the award
• Court cannot judge the case on the merits of the case and only limited to where the
findings are capricious, arbitrary or perverse.
• Coourt cannot penalise opposite party even if they have committed fraud
• S.34 is limited to awrads passed in india
• Only applicable to Indian-seated arbitrations
4. MMTC Ltd. Vs. Vedanta Ltd.
As far as interference with an order made under Section 34, as per Section 37, is concerned,
it cannot be disputed that such interference under Section 37 cannot travel beyond the
restrictions laid down under Section 34. In other words, the Court cannot undertake an
independent assessment of the merits of the award, and must only ascertain that the exercise
of power by the Court under Section 34 has not exceeded the scope of the provision. Thus, it
is evident that in case an arbitral award has been confirmed by the Court under Section
34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and
slow to disturb such concurrent findings.
5. Bharat aluminium vs Kaiser aluminium technical service
The court finally held in a foreign-seated international commercial arbitration, no application
for interim relief would be maintainable under Section 9 or any other provision, as the
applicability of Part I of A&C Act is limited to all arbitrations which take place in India.
6. Associate builders vs DDA
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We are at a complete loss to understand how this can be done by any court under the
jurisdiction exercised under Section 34 of the Arbitration Act. As has been held above, the
expression "justice" when it comes to setting aside an award under the public policy ground
can only mean that an award shocks the conscience of the court. It cannot possibly include
what the court thinks is unjust on the facts of a case for which it then seeks to substitute its
view for the Arbitrator's view and does what it considers to be "justice". With great respect to
the Division Bench, the whole approach to setting aside arbitral awards is incorrect.
Later,
The 2015 Amendment narrowed the scope for setting aside arbitral awards. Specifically,
the scope of public policy under Section 34 was limited to awards that:
i. were induced or affected by fraud or corruption,
ii. contravene the fundamental policy of Indian law, or
iii. conflict with the most basic notions of morality or justice.
Post-2015, the Supreme Court in:
7. Ssangyong Engineering & Construction Co. Ltd. v. NHAI
i. The scope of the public policy ground for setting aside awards was as per the 2015
Amendment.
ii. The prospective applicability of the 2015 Amendment.
8. Starcon India Ltd. Vs. Prasar Bharti
Court has power to set aside only a part of the award if the rest of the award is valid.
9. Hindustan Construction Co. Ltd. Vs UOI
s.34 proceeding must be a summary proceeding and not in the nature of a regular suit
10. Sohan Lal Gupta vs Asha Devi Gupta
• Parties’ convenience will not always be considered
• Party should be given proper knowledge of the proceeding
• Reasonable opportunity to be heard must be given
• Arbitrator has power to fix date and time of hearing and party must adhere
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11. Delhi Jal Board vs. reliable diesel Eng. Pvt. Ltd.
Party’s incapacity in the form of unsoundness of mind or age of minority would be sufficient
to set aside the award.
12. Parmeet Singh Chatwal vs. Ashwani Sahani
The Court held that the so-known clause that was mounted on the invoice was reproduced in
a very little font at the bottom of the invoice. Thus, it's uncertain that the petitioner even
detected that he was signing a document that has a clause and it cannot be concluded that
parties were ad idem. In light of the settled position of law, the Court analyzed the invoice
and putative clause contained in this. The Court commanded that a perusing of the invoice
shows that it's not clear on whether or not the Award debtor has signed the invoice or it's been
signed on his behalf by another entity.
13. ONGC vs Saw Pipes
• The term public policy should be interpreted liberally and should not be restrained.
• The aspect of patent illegality should be included in public policy
• Where there is a contract, the arbitral tribunal and the court are to act in accordance
with that and not beyond its terms.
14. I-Pay Clearing Services Private Limited v. ICICI Bank Limited
The Court found that the Award suffered from patent illegality because the SA failed to
record a sound finding and ignored crucial evidence. Here, however, the Court failed to
establish the nexus between ignoring crucial evidence and patent illegality. Since the SA
failed to consider crucial evidence on record, he did not apply his mind to the issue.
Therefore, the Award was said to be arbitrary and patently illegal, and it could not be
considered for remittal under Section 34(4) of the Act.
15. Renusagar Power Co. Ltd vs General Electric Co
• Sc held that narrow concept of public policy should be applied
• Contravention of Indian law alone would not attract the bar of public policy and
something more than contravention of law is required.
• Enforcement of foreign award was therefore held to be contrary to public policy if it
is contrary to fundamental policy or interests of india or justice or morality
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Section 36
ENFORCEMENT
• Expiry of time for setting aside application would make way for enforcement of
award under CPC
• Filing of application u/s 34 does not make award unenforceable unless stay order for
award is passed.
• Grounds for granting unconditional stay- arbitration agreement or making of award,
has been done through fraud or corruption.
• No grounds for setting aside makes the award final and binding
• The court executing the award has no power to modify or amend it
• Section 17 – methods of getting the award enforced-
1. Filing award in court
2. Getting a judgement or decree in relation to the award
16. National Building construction corporation ltd. Lloyd’s insulation india ltd
During pendency of s. 34 proceeding, court cannot enforce award
17. L&T Finance Ltd. Vs. Abhishek Talwar
Court enforcing the award should be one in whose jurisdiction the award had been passed. If
debtor does not have residence or place of business in that jurisdiction, decree gets
transferred to another court u/s 39.
18. Sundaram finance limited vs Abdul Samad
Court is not required to pass a decree for enforcement of an arbitral award because it is
deemed to be a decree itself.
19. Shin Etsu Chemical co. ltd vs. Aksh Otifibre ltd.
Court is only reqd to examine validity of arbitration agreement on a prima facie level. Any
finding related to the existence of such agreement is not binding on the arbitral tribunal.
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