What is arbitration?
Arbitration is a way for parties to resolve disputes
outside of the court system, and without going to trial. In an
arbitration proceeding, an independent and neutral arbitrator
hears evidence from both parties, applies the relevant law,
and issues a decision known as an "award." Arbitration
decisions are binding.
Who are the arbitrators in arbitration proceedings?
Arbitrators are independent third-party individuals who
hear the evidence, apply the law, and decide the outcomes of
What types of disputes can be resolved in arbitration?
Almost any type of legal dispute can be settled in
arbitration, including those arising under commercial
contracts. When entering into a contract, the parties can
include an arbitration agreement clause providing that some or
all of the disputes that arise between the parties will be
resolved in arbitration.
How to enter into an Arbitration agreement ?
An Arbitration agreement may be in the form of Arbitration
clause in a contract or in the form of a separate agreement.
An Arbitration agreement has to be in writing.
The requirement as to Arbitration agreement being in writing
is fulfilled ;-
a) If the document is signed by the parties
b) If the Arbitration is entered into by exchange of letters,
telex, telegrams or other means of communication which provide
as a record of the agreement; or
c) An exchange of statements of claim and defense in which the
existence of the agreement is alleged by one party and not
denied by the other.
The reference in a contract to a document containing an
Arbitration clause constitutes an Arbitration agreement if the
contract is in writing and the reference is such as to make
that Arbitration clause part of the contract. The example of
such an Arbitration agreement may be given when the parties
simply agree “Arbitration; Bengal Chamber of Commerce and
Industry”. Similarly “Arbitration; London Chamber of Commerce
and Industries”. This agreement will import the entire rules
of the concerned chambers which are in writing in the contract
itself and the requirement of Law that the Arbitration
agreement has to be in writing will be fulfilled by
incorporation of the concerned rules of the concerned
chambers. Of course an Arbitration agreement should specify
the nature of disputes which are intended to be referred to
How to get Interim Reliefs in a case where there is an
Arbitration agreement ?
Under the 1940 Act an interim relief could be sought for
after commencement of the Arbitration reference.
This situation has been basically
altered and now as provided in section 9 of The Arbitration
and Conciliation Act, 1996. Interim relief may be sought by a
party before or during arbitral proceeding or anytime after
the making of the award. The nature of the Interim Relief that
may be asked for are enumerated as hereunder.
For the appointment of a guardian for a minor or a person of
unsound mind for the purposes of Arbitral proceedings; or
For an Interim measure of protection in respect of any of the
following matters, namely:-
the preservation, interim custody or sale of any goods which
are the subject matter of the arbitration agreement ;
Securing the amount in dispute in the Arbitration;
The detention, preservation or inspection of any property or
thing which is the subject-matter of the dispute in
arbitration, or as to which any question may arise therein and
authorising for any of the aforesaid purposes any person to
enter upon any land or building in the possession of any
party, or authorising any samples to be taken or any
observation to be made, or experiment to be tried, which may
be necessary or expedient for the purpose of obtaining full
information or evidence;
interim injunction or the appointment of a receiver;
such other interim measure of protection as may appear to the
court to be just and convenient.
This interim relief has to be asked from the court, which has
the same power for making interim orders as it has for the
purpose of and in relation to any proceedings before it. The
“court” means the principal civil court of original
Jurisdiction in a district and includes the High Court in
exercise of its ordinary original civil Jurisdiction, having
Jurisdiction to decide the questions forming the subject
matter of the Arbitration if the same had been the subject
matter of a suit, but does not include any civil court of a
grade inferior to such principal civil court of or any court
of small causes.
Under section 17 of the present Act the arbitral tribunal may
also at the request of the party, order a party to take any
interim measure of protection as the arbitral tribunal may
consider necessary in respect of the subject matter of the
dispute. The Arbitral tribunal may also require a party to
provide appropriate security in connection with a measure
ordered under sub-section 1 of Section 17 of the present Act.
This is a variation in the law that was existing under the old Act “ that is the
1940 Act “ the arbitrator could make an interim award but
there was no provision equivalent to Section 17 of the present
What can a party to an
Arbitration agreement do if the other party to the Arbitration
agreement institutes a suit in a Court of Law praying for
decision on matters, which are covered by the Arbitration
This situation very often used to arise and the other party
had no option but to make an application for the stay of the
suit under Section 34 of the old Act. If a party commenced a
suit and gave notice there of to the other side all further
proceedings in Arbitration would become void and ineffective
and the award made after such notice would have been void.
The 1996 Act has ameliorated the
situation to a great extent. It has been provided under
Section 8(3) that not with his tending the issue is pending
before the Judicial Authority, an Arbitration may be commenced
or continue an Arbitral award made. The further step that is
required is to make an application before the Judicial
Authority before which an action is brought in a matter which
is the subject of an Arbitration agreement and the court
shall, if a party so applies not later than when submitting
his first statement on the substance of the dispute, refer the
party to a Arbitration. This application as aforesaid shall
not be entertained unless it is accompanied by the original
Arbitration agreement or a duly certified copy thereof.
Notwithstanding that an application has been made under
sub-section 8(1) before the Judicial Authority and that the
issue is pending before the Judicial Authority, an arbitration
may be commenced or continue and an arbitral award made
How and what number of Arbitrators are to be appointed ?
The parties are free to determine the number of arbitrators,
provided that such numbers shall not be an even number.
Feeling the determination referred to by the parties, the
Arbitral Tribunal shall consist of a sole Arbitrator. If the
procedure for appointment of Arbitrator or Arbitrators is not
agreed, in an Arbitration with three arbitrators each party
shall appoint an arbitrator and the two appointed arbitrators
shall appoint the third arbitrator who shall act as the
In case a party fails to appoint his Arbitrator within 30 days
from the receipt of the request to do so from the other party
or the two appointed Arbitrators fail to agree on the third
Arbitrator within 30 days from the date of their appointment,
the appointment shall be made upon request of a party, by the
Chief Justice or any person or institution designated by him.
In an Arbitration with a sole Arbitrator if the parties fail to
agree on the Arbitrator within 30 days from receipt of request
by one party from the other party to so agree, the appointment
shall be made upon request of the party by the Chief Justice
or any person or institution designated by him. This applies
in cases where the agreement on the appointment procedure does
not provide other means for securing their appointments. The
appointment made by the Chief Justice is final.
Can a party challenge the appointment of an Arbitrator?
Yes, if circumstances exist that give rise to justifiable
doubts as to the Arbitrator's independence or impartiality, or
if he does not possess the qualification agreed to by the
parties. A party may challenge an Arbitrator appointed by him,
or in whose appointment he has participated only for reasons,
of which he becomes aware, after the appointment has been
What is the procedure for challenging the appointment of an
The parties are free to agree on a procedure for
challenging the appointment of an Arbitrator. Failing any
agreement as aforesaid, a party who intends to challenge an
Arbitrator shall, within 15 days after becoming aware of the
constitution of the Arbitral Tribunal, or after becoming aware
of any circumstances for challenging the appointment of any
Arbitrator, send a return statement of the reasons for the
challenge to the Arbitral Tribunal. Unless the Arbitrator so
challenged withdraws from his office, or the other party agrees
to the challenge, the Arbitral Tribunal shall decide on the
challenge. If the challenge is not successful, the Arbitral
Tribunal shall continue the Arbitral proceedings and make an
Where an Arbitral award is made in a case where there was
unsuccessful challenge to the appointment of the Arbitrator,
the party challenging the Arbitrator can make an application for
setting aside such an Arbitral award in accordance with
Section 34 of the Act of 1996. Where an Arbitral award is set
aside on an application made for challenging the
appointment of an Arbitrator, the Court may decide as to
weather the Arbitrator who is challenged is entitled to any
What is to be done in case of failure or impossibility to
act on the part of the Arbitrator or any of the Arbitrators ?
The power and authority of an Arbitrator shall terminate if he
becomes de jure or de facto unable to perform his functions or
for other reasons fails to act without undue delay and he
withdraws from his office or the parties agree to the
termination of his mandate.
If a controversy remains concerning inability of the
Arbitrator to perform his functions or his failure to act
without undue delay, a party may, unless otherwise agreed by
the parties, apply to the court to decide on the termination
on the mandate.
Where the mandate of an Arbitrator terminates a substitute
Arbitrator shall be appointed according to the rules that were
applicable to the appointment of the Arbitrator being
replaced. Section 12 to 15 of the Act of 1996 deal with the
matters relating to grounds of challenge the procedures of
challenge of an Arbitrator, failure or impossibility to act by
the Arbitrator, substitution of the Arbitrator and the
procedure to be followed in case of substituted Arbitrator in
the further conduct.
What is the procedure for conduct of Arbitral proceedings ?
The Law provides that the parties shall be treated with
equality and each party shall be given full opportunity to
present his case. The Arbitral Tribunal shall not be bound by
the court civil procedure 1908 or the Indian evidence Act,
1872. Subject to the above rules the parties are free to agree
on the procedure by the Arbitral Tribunal in conducting its
proceedings. In absence of any agreement as to the procedure
to be followed, the Tribunal may, subject to the rules laid down
above, conduct the proceedings in the manner it considers
appropriate. The powers of the Arbitral Tribunal include the
power to determine the admissibility, relevance, materiality
and weight of any evidence.
What happens if either of the
parties commits default in course of the conduct of the
If the claimant fails to communicate his statement of claim,
the Arbitrator shall terminate the proceedings, unless
otherwise agreed by the parties.
If the respondent fails to communicate his statement of
defense within the prescribed time without showing sufficient cause and unless
otherwise agreed, the Arbitrator shall continue the proceeding
without treating the failure in itself as an admission of the
allegations by the claimant.
If a party fails to appear at an oral hearing or to produce
documentary evidence, then the Arbitrator may continue the
proceedings and make the award on the evidence before it.
What is the procedure generally to be followed in an
Arbitration proceeding ?
Firstly, the claimant is to file within the period of time
agreed upon by the parties or determined by the arbitrator, a
statement of facts supporting his claim, the points at issue
and the relief or remedy sought and the respondent thereafter
shall state his defense in respect of and in answer to the
statement of claim, unless the parties have otherwise agreed.
The parties may submit with their statements all documents
they consider to be relevant or may add a reference to the
documents or other evidence they will submit.
Unless otherwise agreed by the parties, either party may amend
or supplement his claim or defense during the course of the
arbitral proceedings, unless the arbitrator considers it
inappropriate to allow the amendment or supplement having
regard to the delay in making it. Unless otherwise agreed by
the parties the Arbitrator shall decide whether to hold oral
hearings for the presentation of evidence or for oral argument
or whether the proceedings shall be conducted on the basis of
documents and other materials. However it has been provided
that the Arbitrator 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.
The parties shall be given sufficient advance notice of any
hearing and of any meeting of the Arbitrator for the purposes
of inspection of documents, goods or other property.
All statements, documents or other information supplied to or
application made to the Arbitrator by one party, shall be
communicated to the other party and any expert report or
evidentiary document on which the Arbitrator may rely in
making his decision shall, be communicated to the parties.
When does the Arbitration commence ?
Unless otherwise agreed by the parties, the Arbitration
proceedings commence on the date on which a request for the
dispute to be referred to Arbitration is received by the
What would be the place of Arbitration ?
The parties are free to agree on the place of Arbitration.
Failing any agreement between the parties, the place of
Arbitration shall be determined by the Arbitral Tribunal
having regard to the circumstances of the case, taking into
convenience of the parties.
Notwithstanding the above rules, the Tribunal may, unless
otherwise agreed by the parties, meet at any place it
considers appropriate for consultation among its members, for
hearing witnesses, experts or the parties, or for inspection
of documents, or goods or other property.
How would a panel of
Arbitrators decide the case ?
Unless otherwise agreed by the parties, any decision of the
Arbitral tribunal shall be made by a majority of all its members.
If authorized by the parties or all the members of the panel
of Arbitrators, questions of procedure may be decided by the
presiding Arbitrator. (Sec.29)
What is the Law applicable in case of Arbitrations within
India and in case on International Commercial Arbitration ?
In an Arbitration other than an International Commercial
Arbitration, the Arbitral Tribunal (Arbitrator/Arbitrators)
shall decide the disputes in accordance with the substantive
Law for the time being in force in India;
In International Commercial Arbitration :-
(i) the dispute is to be decided in accordance with the Law as
agreed by the parties to be applicable to the dispute.
(ii) Such agreed Law or legal system as agreed to be
applicable shall be construed unless otherwise expressed, as
directly referring to the substantive Law of that country and
not to its conflict of Laws rules;
(iii) Failing any agreement as to the Law applicable by the
parties, the Arbitrator shall apply the rules of Law it
considers to be appropriate, given all the circumstances
surrounding the dispute.
In all cases the Arbitrator shall decide in accordance with
the terms of the contract and shall take in to account the
usages of the trade applicable to the transaction.
How Court assistance may be taken in taking evidence ?
The Arbitrator being a private Tribunal cannot or does not
have the authority or power to issue summons to witnesses or
to require anyone to produce documents. The Law however as
provided in Section 27 of the Act of 1996 gives the Arbitral
Tribunal, or a party with the approval of the Arbitral Tribunal,
the power to apply to the court for assistance in taking
evidence. The application has to be made giving the
particulars as mentioned in Section 27 of the Act of 1996 and
the manner in which the Courts' assistance is required mainly
for calling witnesses or expert witnesses or a statement of the
subject matter of the testimony required or the description of
any document to be produced or property to be inspected.
The Court may, within its competence and according to its
rules on taking evidence, execute the request by ordering that
the evidence be provided directly to the Arbitrator.
The Court may issue the same processes to the witnesses as it
may issue in suits tried before it.
Persons failing to attend in accordance with such process, or
making any other default or refusing to give their evidence or
guilty of any contempt to the Arbitrator during the conduct of
Arbitration proceedings, shall be subject to the disadvantages, penalties and punishments by the order of the
court on the representation of the Arbitrator as they would
incur for the like offences in suits tried before the court.
The expression processes include summonses and commissions for
the examination of witnesses and summonses to produce the
Can the Arbitrator appoint an expert ?
Yes, unless otherwise agreed by the parties, the
Arbitrator may appoint one or more experts to report to him on
specific issues to be determined by the Arbitral tribunal and require a party,
to give the expert any relevant information or to produce or
to provide access to any relevant document, goods or other
property for his inspection.
Unless otherwise agreed by the parties, if a party so requests
or if the Arbitrator considers it necessary, the expert shall
after delivery of his written or oral report, participate in
an oral hearing where the parties have the opportunity to put
questions to him and to present expert witnesses in order to
testify on the points at issue.
Unless otherwise agreed by the parties the expert shall on the
request of a party make available to that party for
examination all documents, goods or other property in the
possession of the expert with which he was provided in order
to prepare his report.
What are the duties of the
Arbitrator after the award is made ?
The Arbitrator has to provide a signed copy of the award to each party and
deliver the same to them [Section 31(5)].
What should be the contents of the award ?
The former Law on the point did not require the
Arbitrators to give any reasons for their award, unless of
course the Arbitration agreement itself required reasons to be
given by the Arbitrator.
With the coming into force of the 1996 Act, an Arbitrator has
to give the reasons in the award for his decision, unless the
parties have agreed that no reasons are to be given or the
award is an award on agreed terms under Section 30.
The award shall state its date and the place of Arbitration as
determined in accordance with Section 20 of the 1996 Act and
the award shall be deemed to have been made at that place.
[Section 31(3) and(4)].
What should be the form of an award?
An award has to be in writing and the same has to be
signed by the Arbitrator or Arbitrators. However if there are
more than one Arbitrator, the signatures of the majority of
all the members of the Tribunal shall be sufficient, so long as
the reason for any omitted signature is stated (Section 31).
Can the Arbitrator encourage settlement of the disputes or
may use mediation, conciliation or other procedures during the
proceedings of Arbitration ?
Yes, he can do so and it is not incompatible with an
Arbitration agreement. If the matter is settled and if
requested by the parties and not objected to by the Arbitral
Tribunal, record the settlement in the form of an award on
agreed terms. An award on agreed terms shall be made in
accordance with Section 31 and shall state that it is an
award. An award on agreed terms shall have the same status and
effects as any other award on the substance of the dispute
What happens if Chapter 1 of
Part II relating to New York Convention Awards applies? Does
Chapter 2 relating to Geneva Convention Awards also apply ?
It may be noted that there are two chapters in part II
relating to foreign awards and the enforcement thereof.
Chapter 1 relates to New York Convention Awards. And Chapter 2
relates to Geneva Convention Awards. Chapter 2 relating to
Geneva Convention Awards shall not apply in relation to
foreign awards to which Chapter 1 relating to New York
Convention Awards applies. (Section 52). Both these
conventions cover mutually exclusive areas relating to foreign
The Geneva Convention ( covered in Sections 53 to 60 of the
1996 Act) contains practically similar provisions as those
relating to New York Convention Award (Sections 44 to 52 of
the said Act). Hence no further questions need be framed
relating to Geneva Convention Awards.
What happens if a party institutes an action in a matter in
respect of which the parties have made an agreement referred
to in Section 44, that is, the chapter relating to the
enforcement of certain foreign awards under the New York
In such cases the court shall at the request of one of the
parties or any person claiming through or under him, refer the
parties to arbitration, unless it finds that the said
agreement is null and void, inoperative or incapable of being
performed. (Section 45)
From which orders made under chapter 1 of Part II an appeal
An appeal shall lie from the order refusing to –
(a) refer the parties to arbitration under section 45
(b) enforce a foreign award under section 48,
No second appeal shall lie from an order passed in appeal, but
nothing shall affect or take away any right to appeal to the
Supreme Court. (Section 50)
What is the position of a foreign award, after the court is
satisfied that the award is enforceable ?
Where the court is satisfied that the foreign award is
enforceable under chapter 1 of part II, the award shall be
deemed to be a decree of that court. (Section 49)
What are the grounds on which the enforcement of a foreign
award may be refused ?
Enforcement of a foreign award may be refused at the
request of the party against whom it is invoked, only if that
party furnishes to the court proof that –
(a) the parties to the agreement referred to in Section 44
were, under the law applicable to them, under some incapacity,
or the said agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon,
under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given
proper notice of the appointment of the arbitrator or of the
arbitral proceedings or was otherwise unable to present his
(c) the award deals with a dispute not contemplated by or
not falling within the terms of the submission to arbitration,
or it contains decisions on matters beyond the scope of the
submission to arbitration:
However it has been provided that, if the decisions on matters
submitted to arbitration can be separated from those not so
submitted, that part of the award which contains decisions on
matters submitted to arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral
procedure was not in accordance with the agreement of the
parties, or, failing such agreement, was not in accordance
with the law of the country where arbitration took place; or
(e) the award has not yet become binding on the parties, or
has been set aside or suspended by a competent authority of
the country in which, or under the law of which, that award
Enforcement of an arbitral award may also be refused if the
court finds that –
(a) the subject-matter of the
dispute is not capable of settlement by arbitration under
the law of India; or
(b) the enforcement of the award
would be contrary to the public policy of India.
Explanation – Without prejudice to the generality of clause
(b) of this section, it is hereby declared, for the avoidance
of any doubt, that an award is in conflict with the public
policy of India if the making of the award was induced or
affected by fraud or corruption.
If an application for the setting aside or suspension of the
award has been made to a competent authority referred to in
clause (e) above, the court may, if it considers
it proper, adjourn the decision on the enforcement of the
award and may also, on the application of the party claiming
enforcement of the award, order the other party to give
suitable security. (Section 48)
What evidence has to be produced at the time of applying
for the enforcement of a foreign award ?
The party applying for the enforcement of a foreign award
shall, at the time of the application, produce before the
(a) the original award or a copy thereof, duly authenticated
in the manner required the law of the country in which it was
(b) the original agreement for arbitration or a duly certified
copy thereof; and
(c) such evidence as may be necessary to prove that the award
is a foreign award.
If the award or agreement to be produced under sub-section (1)
is in a foreign language, the party seeking to enforce the
award shall produce a translation into English certified as
correct by a diplomatic or consular agent of the country to
which that party belongs or certified as correct in such other
manner as may be sufficient according to the law in force in
India. (Section 47)
Is a foreign award within the meaning of New York
Convention, binding ?
Any foreign award which would be enforceable under Chapter
1 of Part II shall be treated as binding for all purposes on
the persons as between whom it was made, and may accordingly
be relied on by any of those persons by way of defence, set
off or otherwise in any legal proceedings in India and any
references in Chapter 1 Part II of the said Act of 1996, to
enforcing a foreign award shall be construed as including
references to relying on an award. (Section 46)
What is a foreign award under the New York Convention
Part II of The Arbitration and Conciliation Act, 1996,
Chapter 1 deals with New York Convention Awards. Unless the
context otherwise requires, ‘foreign award’ means an award on
differences between persons arising out of legal
relationships, whether contractual or not, considered as
commercial under the law enforced in India, made on or after
11th October, 1960 –
(a) in pursuance of an agreement in writing for arbitration to
which the Convention set forth in the First Schedule applies,
(b) in one of such territories as the Central Government,
being satisfied that reciprocal provisions have been made may,
by notification in the Official Gazette, declare to the
territories to which the said Convention applies. (Section
The term ‘First Schedule’ refers to the New York Convention on
the recognition and enforcement of foreign arbitral awards.
Does the limitation Act apply to an Arbitration?
Yes, the limitation Act 1963 applies to Arbitration as it
applies to the proceedings in court. For the purposes of
Limitation Act 1963 the Arbitration shall be deemed to have
commenced on the date on which a request for that dispute to
be referred to Arbitration is made by the claimant and received by the
Where an Arbitration agreement to submit a future dispute to
Arbitration provides that any claim to which agreement applies
shall be barred, unless some step to commence Arbitration is taken
within a time fixed by the agreement and a dispute arises to
which the agreement applies. The court, if it is of opinion
that in the circumstances of the case undue hardship would
otherwise be caused, and not withstanding that the times of
fixed has expired, may on such terms if any as the justice of
the case may require, extend the time for such period as it
Where the court orders that the arbitral award be set aside,
the period between the commencement of the Arbitration and the
date of the order of the court shall be excluded in computing
the time prescribed by the Limitation Act, for the
commencement of the proceedings (including Arbitration) with
respect to the dispute so submitted.
Which Court will have Jurisdiction in a case where an
application has already been made with respect to an
Notwithstanding anything contained elsewhere in the Act
or in any other law for the time being in force, where with
respect to an Arbitration agreement any application has been made in the court, that court alone shall have
jurisdiction over the arbitral proceedings and all subsequent
applications arising out of that agreement and the arbitral
proceedings shall be made in that court and in no other court.
What is the position in case of insolvency of a party ?
Where the contract so provides and where the receiver in
insolvency adopts the contract, the Arbitration agreement
shall be enforceable by or against him so far as it relates to
any such dispute.
Where a person who has been adjudged an insolvent, before
the commencement of the insolvency proceedings, became a party
to an Arbitration agreement, and any matter to which the
agreement applies, is required to be determined in connection
with, or for the purposes of, the insolvency proceedings,
than, any other party or the receiver may apply to the
judicial authority having Jurisdiction in the insolvency
proceedings, for an order directing that the mattering
question shall be submitted to Arbitration and the judicial
authority may make an order accordingly. (Section 41) .
Does an Arbitration agreement stand discharged by death of
party thereto ?
No, and in case of death of a party, the same is
enforceable by or against the legal representative of the
deceased. Similarly the mandate of an Arbitrator shall not be
terminated by the death of any party by whom he was appointed.
Nothing is this Section shall affect the operation of any law,
by virtue of which, any right of action is extinguished by
death of a person. (Section 40).
Does the Arbitrator have a lien on the award and deposit as
to costs ?
Unless otherwise agreed, the Arbitrator shall have a lien
on the award for any unpaid costs of the Arbitration.
If in any case, the Arbitrator refuses to deliver its award
except on payment of costs, demand by him, the Court may, on
an application in this behalf, order that the Arbitrator shall
deliver the award to the applicant on payment into Court by
the applicant of the costs demanded, and shall after such
inquiry, if any, as it thinks fit, further order that out of
the money so paid into Court there shall be paid to the
Arbitrator by way of costs such sum as the court may consider
reasonable and that the balance of the money if any, shall be
refunded to the applicant. (Section 39).
Can the Arbitrator Tribunal ask for deposit on account of
Yes, it can do so and fix the amount of the deposit or
supplementary deposit as the case may be, as an advance for
the cost and in a case where there is a counter claim it may
fix separate amount of deposit for the counter claim.
The deposit shall be payable in equal share by the parties.
Provided where one party fails to pay his share of the
deposit, the other party may pay that share. Provided further
that where the other party also does not pay the aforesaid
share in respect of the claim or the counter claim, the
Arbitrator may suspend or terminate the proceedings in respect
of such claim or counter claim, as the case may be.
Upon termination of the proceedings, the Arbitrator shall
render an accounting to the parties of the deposits received
and shall return any unexpended balance to the party or
parties as the case may be. (section 38)
In what cases a party can go in appeal from an order of the
An appeal shall lie from the following orders (and from no
others) to the Court authorized by Law to hear appeals from
original decree of the Court passing the order namely:-
(a) Granting or refusing to grant any measure under Section 9.
(b) Setting aside or refusing to set aside an award under
An appeal shall also lie to a court, from an order granting or refusing to
grant an interim measure under Section 17 to a Court. (It is
to be remembered that Section 17 relates to interim measures
to be granted by an Arbitrator).
No second appeal shall lie from an order passed in appeal
under this section that is Section 37, but nothing in this
section shall affect or take away any right to appeal to the
Supreme Court. (Section 37).
Is there any other alternative to uphold the award, after
the making of the application for setting aside the same and
before decision thereon by the Court ?
Yes, on receipt on an application for setting aside the
award the Court may where it is appropriate and it is so
requested by a party, adjourn the proceedings for a period of
time determined by it, in order to give the Arbitrator an
opportunity to resume the proceedings or to take such other
action as in the opinion of the Arbitrator will eliminate the
grounds for setting aside the award. [Section 34(4)].
This is a new concept in the Law of Arbitration. In cases where
it is appropriate and it is so requested by a party the Court
may give an opportunity to the Arbitrator to resume the
proceedings and to take such other action as in the opinion of
the Arbitrator will eliminate the grounds for setting aside
the Arbitral award. This could not be done under the old Law.
Is there any limitation for making an application for
setting aside the award ?
An application for setting aside may not be made after 3
months have elapsed from the date on which the party making
that application, had received the Arbitral award or if a
request has been made for correction, interpretation or for
an additional award, then from the date on which that request had
been disposed of by the Arbitrator.
Provided that if the Court is satisfied that the applicant was
prevented by sufficient cause from making the application
within the set period of three months, it may entertain the
application within a further period of 30 days, but not thereafter,
in accordance with Section 34(3). This shows that the outer limit for
the Court to entertain an application for setting aside an
award is 60 days even after extension of time.
Can the party aggrieved make an application for setting
aside an award .
Yes, but the grounds are extremely limited. The party
making the application if it furnishes proof that the party was
under some incapacity, or that the arbitration agreement is
not valid under the Law or that the party making the
application was not given proper notice of the appointment of
the Arbitrator or of the Arbitration proceedings or was
otherwise unable to present his case. The award may be set
The other grounds for setting aside the award are that the
award deals with a dispute not contemplated while or not
falling within the terms of the submission to Arbitration, or
it contains decisions on matters beyond the scope of the
submission to Arbitration.
Provided always that if the decisions on matters submitted to
Arbitration can be separated from those not so submitted, only
that part of the award which contains decisions on matters not
submitted to Arbitration may be set aside.
If the composition of the Arbitration Tribunal or the
procedure followed was not in accordance with the agreement of
Apart from the above grounds for setting aside the award, the
award can be set aside if the subject matter of the dispute is
not capable of settlement by Arbitration under the Law for the
time being in force in India, or if the award is in conflict with the
public policy on India. If the award was procured by fraud or
corruption or was in violation of Section 75 or Section 81 the
award will be treated as in conflict with the public policy in
India-Section 34(1)and (2)
What are the legal consequences which follow the making of
the award ?
The award shall be final and binding on the parties and
persons claiming under them and where the time for making a
application to set aside the award under Section 34 has
expired or such application having been made and has been
refused, the award shall be enforced under the Code of Civil
Procedure, 1908 in the same manner as if it were a decree of
This is a significant departure from the old Law of
Arbitration. Under the old Law the procedure was that the
Arbitrator shall file the award and then the same will come
for judgment upon award and if an application for setting
aside the award has been made or disposed of and dismissed a
judgment and decree terms of the award will follow. This
procedure has given a go by and the present Law is that upon
the expiry of the time for making an application to set aside
the award or upon dismissal of such application is made the
award itself shall be enforced as a decree of Court. (Section
35 and 36).
Can the Arbitrator correct or interpret the award or make
an additional award ?
Yes, within 30 days from the receipt of the award, a party
with notice to the other party, may request the Arbitrator to
correct any computation errors, any clerical or typographical
errors or any other errors of a similar nature occurring in
If so agreed by the parties, a party with notice to the other
party, may request the Arbitrator to give an interpretation of
a specific point or part of the award.
If the Arbitrator considers a request made by any party to be
justified, it shall make the correction or give the
interpretation within 30 days from the receipt of the request
and the interpretation shall form part of the award. The
Arbitrator may suo moto correct any error as specified in Section 33, within 30 days from the date of the award.
Unless otherwise agreed by the parties, a party with notice to
the other party, may request within 30 days from the receipt
of the award, to make an additional award as to claims
presented in the arbitration proceedings but omitted from the
If the Arbitrator considers the request made for additional
award to be justified, it shall make the additional award
within 60 days from the receipt of such request.
The Arbitrator may extend if necessary, the period of time
within which he shall make a correction, give an interpretation
or make an additional award. The correction and/or the
interpretation and/or the additional award shall form part of
the award (Section 33).
When does the Arbitration proceeding terminate ?
By the final award or when the claimant withdraws his
claim, or when the parties agree on the termination of the
proceedings or when the Arbitrator finds that the continuation
of the proceedings has for any other reason become unnecessary
or impossible. (Section 32).
What about the costs of Arbitration; who has to pay and to
what extent ?
Unless otherwise agreed by the parties, the cost of
Arbitration shall be fixed by the arbitrator. The Arbitral
shall specify the party entitled to cost, the party who shall
pay the cost the amount of cost or method of determining that
amount and the manner in which the cost shall be paid. Cost
means reasonable costs relating to the fees and expenses of
the Arbitrators and witnesses, legal fees and expenses, any
administration fees of the institution supervising the
Arbitration and any other expenses incurred in connection with
the proceedings and the award-Section 31(8).
What is the power of an Arbitrator to award interest ?
The Law on this point has been clarified by the Section
31(7). The Law says that unless otherwise agreed by the
parties wherein and so far an award where an award is for
payment of money the Arbitrator may include in the sum for
which the award is made, interests, at such rate as it deems
reasonable, for the whole or any part of the money, for the
whole or any part of the period between the date on which the
cause of action arose and the day on which the award is made.
Section 31(7)(a) gives the Arbitrator the full power to award
interest right from the date of accrual of the cause of action
until the date of the award at such reasonable rate as the
Arbitrator thinks fit and proper.
The other statutory provision is that the sum
directed to be paid by an award shall, unless the award
otherwise directs, carry interest at the rate of eighteen
per centum per annum from the date of the award to the date of
payment. This provision applies whether there is any provision
in the award or not for future interest from the date of the
award to the date of payment.
Does the Arbitrator have power to make an Interim award
with respect to any matter which the Arbitrator may make a
final award ?
Yes, the Arbitrator may at any time during the Arbitration
proceedings make an interim award on any matter with respect
to which it may make a final award- Section 31(6).
Is there any duty cast upon the
parties and the conciliator to keep the matters relating to
conciliations as confidential ?
Yes, the confidentiality also extends to the
settlement agreement except where its disclosure is necessary
for purposes of implementation and enforcement. (Section 75)
What is the procedure, if any, for submission of request to
the Chief Justice under subsection 4 or subsection 5 or
subsection 6 of Section 11 of the Act ?
A. Such request shall be made in writing to the Chief
Justice and shall be accompanied by :
(a) the original arbitration agreement or a duly certified
(b) the names and addresses of the parties to the arbitration
(c) the names and addresses of the arbitrators, if any,
already appointed ;
(d) the name and address of the person or institution, if any,
to whom or which any function has been entrusted by the
parties to the arbitration agreement under the appointment
procedure agreed upon by them;
(e) the qualifications required, if any, of the arbitrators by
the agreement of the parties;
(f) a brief written statement describing the general nature of
the dispute and the points at issue;
(g) the relief or remedy sought; and
(h) an affidavit, supported by the relevant documents, to the
effect that the condition to be satisfied under sub-section
(4) or sub-section (5) or sub-section (6) of section 11, as
the case may be, before making the request to the Chief
Justice has been satisfied.
Can a party or parties resort to arbitration or judicial
proceedings during the course of the conciliation proceedings
The parties shall not initiate, during the conciliation
proceedings, any arbitration or judicial proceedings in
respect of a dispute that is the subject matter of the
conciliation proceedings except that a party may initiate
arbitration or judicial proceedings where, in his opinion such
proceedings are necessary for preserving his rights. (Section
When do the conciliation proceedings terminate ?
The conciliation proceedings shall be terminated in the
following manner :-
a) By the signing of the settlement agreement by the parties
on the date of the agreement; or
b) By a written declaration of the conciliator, after
consultation with the parties to the effect that further
efforts at conciliation are no longer justified, on the date
of the declaration; or
c) By a written declaration of the parties addressed to the
conciliator to the effect that the conciliation proceedings
are terminated on the date of the declaration; or
d) By a written declaration by a party to the other party and
the conciliator, if appointed, to the effect that the
conciliation proceedings are terminated, on the date of the
declaration. (Section 76)
What is the status and effect of settlement agreement ?
The settlement agreement shall have the same status and
effect as if it is an arbitral award on agreed terms on the
substance of the dispute rendered by an arbitral tribunal
under Section 30. (Section 74)
How and in what manner a settlement is to be or may be
arrived at ?
When it appears to the conciliator that there exist
elements of settlement which may be acceptable to the parties,
he shall formulate the terms of a possible settlement and
submit the same to the parties for their observations. After
receiving the observations of the parties the conciliator may
reformulate the terms of a possible settlement in the light of
If the parties reach agreement on a settlement of a dispute,
they may draw up and sign a written settlement agreement. If
requested by the parties, the conciliator may draw up or assist
the parties in drawing up, the settlement agreement.
When the parties sign the settlement agreement, it shall be
final and binding on the parties and persons claiming under
The conciliator shall authenticate the settlement agreement
and furnish a copy thereof to each of the parties. (Section
What are the other duties of the parties in a conciliation
proceeding to facilitate a conciliation ?
The parties shall, in good faith, cooperate with the
conciliator and in particular, shall endeavour to comply with
the requests by the conciliator, to submit written materials,
provide evidence and attend meetings.
The parties may on their own initiative or at the invitation
of the conciliator, submit to the conciliator suggestions for
the settlement of the dispute. (Sections 71 & 72)
Is the conciliator bound to disclose the information that
he receives to the other side ?
When the conciliator receives factual information
concerning the dispute from a party, he shall disclose the
substance of that information to the other party in order that
the other party may have the opportunity to present any
explanation which he considers appropriate. This is subject to
the Proviso that when a party gives any information to the
conciliator subject to a specific condition that it be kept
confidential, that conciliator shall not disclose that
information to the other party. (Section 70)
What about the communication between conciliator and
The conciliator may invite the parties to meet him or may
communicate with them orally or in writing. He may meet or
communicate with the parties together or with each of them
Unless the parties have agreed upon the place where meetings
with the conciliator are to be held, such place shall be
determined by the conciliator, after consultation with the
parties, having regard to the circumstances of the
conciliation proceedings. (Section 69)
Can the conciliator take administrative assistance from
other institutions or person ?
Yes, in order to facilitate the conduct of the
conciliation proceedings, the parties, or the conciliator with
the consent of the parties, may arrange for administrative
assistance by a suitable institution or person. (Section 68)
What is the role of the conciliator ?
(a) The conciliator shall assist the parties in an
independent and impartial manner in their attempt to reach an
amicable settlement of their dispute.
(b) The conciliator shall be guided by principles of
objectivity, fairness and justice, giving consideration to ,
among other things, the rights and obligations of the parties,
the usages of trade concerned and the circumstances surrounding
the dispute including any previous business practices between
(c) The conciliator may conduct the conciliation proceedings
in such a manner as he considers appropriate, taking into
account the circumstances of the case, the wishes the parties
may express, including any request by a party that the
conciliator hear oral statements, and the need for a speedy
settlement of the dispute. (Section 67)
What about the law applicable to the proceedings before the
As in the case of an arbitrator, the conciliator is also
not bound by the Code of Civil Procedure, 1908 or the Indian
Evidence Act. (Section 66)
What is the procedure to be followed before the conciliator
(a) The conciliator upon his appointment may request each
party to submit to him a brief written statement describing
the general nature of the dispute and the points at issue.
Each party shall send a copy of such statement to the other
(b) The conciliator may request each party to submit to him
further written statement of his position and the facts and
grounds in support thereof, supplemented by any documents and
other evidence that such party deems appropriate. The party
shall send a copy of such statement, document and other
evidence, to the other party.
(c) At any stage of the conciliation proceedings, the
conciliator may request a party to submit to him such
additional information as he thinks appropriate.
Any reference to conciliator in this part includes reference
to a sole conciliator, two or three conciliators as the case
may be. (Section 65)
What would be the number of conciliators and how they are
to be appointed ?
There will one conciliator unless the parties agree that
there shall be two or three conciliators. Where there is more
than one conciliator, they ought, as a general rule, to act
In conciliation proceedings with one conciliator, the parties
may agree on the name of a sole conciliator. In conciliation
proceedings with two conciliators, each party may appoint one
conciliator. In conciliation proceedings with three
conciliators, each party may appoint one conciliator and the
parties may agree on the name of the third conciliator who
shall act as the presiding conciliator.
Alternatively the parties may enlist the assistance of a
suitable institution or person in connection with the
appointment of conciliators, and in particular,
(a) A party may request such an institution or person to
recommend the names of suitable individuals to act as
(b) the parties may agree that the appointment of one or more
conciliators be made directly by such an institution or
This is subject to the provision that in recommending or
appointing individuals to act as conciliator, the institution
or person shall have regard to such considerations as are
likely to secure the appointment of an independent and
impartial conciliator and, with respect to sole or third
conciliator, shall take into account the advisability of
appointing a conciliator of a nationality other than the
nationalities of the parties. (Sections 63 & 64).
How is a conciliation proceeding commenced ?
(a) The party initiating conciliation shall send to the
other party a written invitation to conciliate under Part III
of the said Act, briefly identifying the subject of the
(b) The conciliation proceedings shall commence when the other
party accepts in writing the invitation to conciliate.
(c) If the other party rejects the invitation, there will be
no conciliation proceedings.
(d) If the party initiating conciliation does not receive a
reply within 30 days from the date on which he sends the
invitation, or within such other period of time as specified
in the invitation, he may elect to treat this as a rejection
of the invitation to conciliate and if he so elects, he shall
inform in writing to the other party accordingly. (Section 62).