CAEFA

What We Do


Caefa covers the entire gamut of arbitration edicts including conducting arbitration; enforcement of awards; interim relief; challenging of award, et al. Caefa is a specialised division of a top-tier law firm, Brus Chambers for domestic and international arbitration work in India and outside India. CAEFA, specialises in arbitration representing client as solicitors in arbitration.

Collectively, CAEFA team have spent decades litigating, arbitrating, and successfully resolving international disputes in forums worldwide. Our consistent success stems from our attorneys' knowledge of international law, our experience in a wide range of disputes, and our expertise with the rules of arbitration. Our international arbitration lawyers are consistently retained by companies, associations, government entities, professionals and individuals because of our skill, professionalism and ability to meet the needs of our clients.

CAEFA has an outstanding global reputation for arbitration practice with a core team of international and domestic arbitration experts who are leaders in their field. They work with ease across a wide range of industry sectors and jurisdictions.

Arbitration is the forum of choice for resolving disputes in our main practice areas of commercial disputes. Arbitration has emerged as the preferred mechanism for many companies seeking to settle commercial disputes, particularly those with cross-border element. Our international arbitration group conducts arbitrations under the rules of all major institutions, as well as ad hoc arbitrations, in venues around the world.

CAEFA have one of the leading dedicated international arbitration practices. The group has a top-tier reputation for proficiency in handling the increasing sophistication of international arbitration and in responding to and shaping market practice. We have a core team of specialist arbitration lawyers who deal with a complex, high-value and international caseload of arbitrations from a broad client base. Clients include governments, state-owned entities, financial institutions and all major corporations, involved in all the following industry sectors. We also take instructions from major companies, foreign law firms and professional bodies. Brus Chambers has extensive experience and a global reputation of handling ship arrest and release and all other aspects of maritime matters and has dominated the Indian admiralty and shipping market.

CAEFA conduct every type of international and domestic arbitration but most frequently the Domestic arbitration under Indian Arbitration and Conciliation Act, 1996; ICC - International Chamber of Commerce, ICC International Court of Arbitration; LCIA - London Court of International Arbitration; SIAC - Singapore International Arbitration Centre; LMAA - London Maritime Arbitrators Association; HKIAC - Hongkong International Centre; SCC - Stockholm Chamber of Commerce; UNCITRAL - United Nations Commission on International Trade; BIMCO - The Baltic and International Maritime Council; CIETAC - China International Economic and Trade Arbitration Committee; GCC Arbitrations in the Gulf; JCAA - Japan Commercial Arbitration Association; ICDR - International Centre for Dispute Resolution; LSSA - Lloyds Standard Salvage and Arbitration; ICSID - International Centre for Settlement of Investment Disputes; Dubai Chamber of Commerce. We also handle a volume of high-value arbitrations under RSA, LSA, GAFTA, FOSFA, LMAA, London Metal Exchange, Lloyd's Open Form, ARIAS and other forums. Public international law is also relevant to our work concerning contract frustration, sovereign immunity, and international debt issues. Many of our high-value arbitrations are international trade-related. Our service also includes enforcement of foreign award, challenging arbitral award, interim relief from court, international and domestic litigation.


ABOUT CAEFA

key features

Who

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What

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Mission

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Specialised

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OUR TEAM

the one who leads

John

Ms. Binita Hathi

Practicing Partner & Arbitration Head

Attending to entire gamut of International and Domestic arbitration in India and outside India

Jane

Dr. Shrikant Hathi

Managing & Practicing Partner

Attending to entire gamut of International and Domestic arbitration in India and outside India

Mike

Mr. Uttam Hathi

Practicing Partner

Attending to entire gamut of International and Domestic arbitration in India and outside India

Dan

Ms. Afia SenGupta

Practicing Partner

Attending to entire gamut of International and Domestic arbitration in India and outside India

John

Mr. Pritish Das

Advocate

Attending to International Commercial Arbitration; Enforcement of Arbitral Award; Interim Relief from Court; International Commercial Litigation.

Jane

Ms. Poonam Das

Advocate

Attending to Domestic Arbitration; Enforcement of Arbitral Award Outside India; Challenging Arbitral Award; Domestic Commercial Litigation.

Mike

Ms. Monika Gothankar

Legal Researcher

Attending to International Arbitration; Domestic Arbitration; Enforcement of Arbitral Award Outside India; International Commercial Litigation.

Dan

Ms. Rajnandini Muduli

Legal Researcher

Attending to Domestic Commercial Arbitration; Enforcement of Arbitral Award in India and outside India; Interim Relief from Court; Domestic Commercial Litigation.

AREAS

within arbitration

John
Jane
Mike
Dan
John
Jane
Mike
Dan

SECTORS

specialised for arbitration

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Entertainment & Technology

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Infrastructure & Construction

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Oil, Gas & Energy

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How to reach us

CAEFA
(Division of Brus Chambers)
8, Rajabahadur Mansion, 3rd Floor,
Ambalal Doshi Marg, Fort, Behind BSE,
Mumbai 400001, India

Phone: +91-9403064040
Phone: +91-9769946864
Phone: +91-9769946865
HelpDesk: +91-22-22659969
Career: Click for info
Email: in@brus.in
HelpDesk: contact@brus.in

Directions to Caefa

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BILLING RATES

Our professional fees are mainly computed on hourly basis, blended hourly rates, some are customised on case to case basis or on fixed fee, retainer etc depending on client requirement or on the matter. All disbursements and tax where applicable are computed on actual unless the same is a package offer.

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FAQs on International Arbitration

What is arbitration?
Arbitration is an alternative to traditional litigation. Instead of a judge or panel of judges, one or more independent neutral third parties are appointed as the Arbitral Tribunal to resolve the parties' disputes. By choosing arbitration, the parties designate an Arbitral Tribunal in place of the courts.

How does arbitration differ from court litigation?
The proceedings are less formal and usually do not follow the stricter procedures and evidencing rules applied in court litigation. Arbitration is conducted in private conference rooms agreed between the parties and the arbitrator, while court litigation are held in court room or in judge's chamber. The award is binding and is enforceable by the civil courts.

Why is arbitration preferred over court litigation?
Arbitration is often quicker than the courts, particularly when no possibility for appeals (as is usually the case). This can also result in lower costs.

The proceedings are not public. The existence of the arbitration, the parties submissions, and the hearings can thus all remain confidential.

For highly technical or industry-specific disputes, the parties can agree to and appoint arbitrators with the desired background, experience and (technical) expertise for their industry or international context.

Arbitration allows parties to present and argue their dispute in a (neutral) language (such as English) rather than having to translate documents and use interpreters before the national courts of one of the parties. (International arbitrators are sometimes perceived to have greater impartiality than national judges in some parts of the world.)

Most importantly when there is no treaty between the countries of two parties in dispute, the United Nations Convention on Recognized Enforcement of Arbitral Awards offers a mechanism between more than 120 signatory countries worldwide to readily recognize and enforce arbitral awards from each others' countries. This is a major advantage over court litigation in such circumstances.

How does one agree to arbitration?
The parties to a contract can place an arbitration clause in their agreement which will come into effect in the event a dispute later arises. However, even if there is no contractual clause, once a dispute arises between 2 or more parties, they can agree to have it resolved by arbitration through a simple submission agreement. Under either approach, the agreement to arbitrate must generally be in writing and signed.

If parties have agreed to arbitrate, can a party still bring dispute before a civil court?
By agreeing to arbitrate, a party consents to replacing the ordinary court's jurisdiction with the private forum of arbitration. The courts should recognize this and not accept jurisdiction over the dispute if the other party involves the existence of the agreement to arbitrate. The courts at the place of arbitration do supervisory jurisdiction' to handle matters (other than resolving the merits of the dispute), such as enforcing the agreement to arbitrate, appoint (an) arbitrator(s) if needed, deciding challenges to arbitrators, supporting the Arbitral Tribunal with the court's compulsory powers (e.q. ordering the appearance of recalcitrant witnesses), and enforcing the Arbitral Tribunal's award.

Once an award has been rendered, what are the possibilities for enforcement and execution in India?
Code of Civil Procedure provides for procedure to enforce and execute final arbitral awards in India. Indian courts conduct a prima-facie review of (but not the contents of the decision) the award. Grounds for refusing enforcement or setting aside an award are quite limited.

What are the possibilities for enforcement and execution outside India?
The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and other treaties allow for the recognition and enforcement of arbitral awards from India in over 120 countries in all parts of the world, including most industrialized nations. The New York Convention requires national courts to recognize and enforce commercial arbitral awards rendered in other countries that have been signed to this treaty. There are limited grounds for refusing the enforcement of an arbitral award. As a result, the enforceability of an arbitral award is in most cases much wider and easier than that of a judgment rendered by a national court. 

What is the difference between institutional arbitration and ad hoc arbitration?
Ad hoc arbitration: Administrative Ad hoc arbitration is arbitration that is not administered by others and requires the parties to make their own arrangements for selection of arbitrator(s), and the arbitrator(s) to decide the applicable procedures and make administrative arrangements. Provided that parties are prepared to cooperate after the dispute arises, ad hoc proceedings can be more flexible, somewhat more economical and faster than an administered proceeding. However, failure of one or both of the parties to cooperate in facilitating the arbitration can result in an undue expenditure of time in resolving administrative issues. The UNICITRAL arbitration rules have been developed by the United Nations specifically for ad hoc arbitrations and provide a good framework for such non-administered cases.

Institutional arbitration: Institutional arbitration is arbitration that is administered by an arbitration service provider of international arbitrations. Internationally, the International Chamber of Commerce in Paris (ICC) Court of Arbitration enjoys wide recognition throughout the world and is often chosen for the administration of international arbitrations, although numerous other institutes provide comparable services (such as the London Court of Independent Arbitration, and the Stockholm Chamber of Commerce). Both the ICC and the NAI offer standard rules and procedures, administrative assistance, pools of qualified arbitrators, selected by field of (technical and/ or legal) expertise, appointment of arbitrators and facilities to hold and conduct the proceedings. For these services, an administration fee will apply, which varies, depending upon several factors including the amount in dispute.

Arbitration practice and customs vary from jurisdiction to jurisdiction. The contents of this FAQ is intended to provide general information on the subject matter. Specialist advice from a properly qualified advisor should be sought before relying on any of the foregoing information.

FAQs on Domestic Arbitration

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 arbitration disputes. 

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 Arbitration. 

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 Act.

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 agreement ?
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 presiding Arbitrator.

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 made.

What is the procedure for challenging the appointment of an Arbitrator ?
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 Arbitral award.

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 fees.

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 Arbitration ?
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 respondent.

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 consideration, the 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 documents.

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 (Section 30).

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 awards.

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 Convention ?
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 lies ?
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)

FAQs on Domestic Arbitration (contd)


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 case; or

(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 was made.

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 court.

(a) the original award or a copy thereof, duly authenticated in the manner required the law of the country in which it was made;

(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 Awards ?
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, and
(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 44).

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 respondent.

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 thinks proper.

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 Arbitration agreement?
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. (Section 42)

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 cost ?
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 Court?
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 Section 34.

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 aside.

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 the parties.

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 the Court.

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 the award.

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 award.

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 Tribunal 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 copy thereof;
(b) the names and addresses of the parties to the arbitration agreement;
(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 77)

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 such observations.

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 them respectively.

The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties. (Section 73)

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 parties ?
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 separately.

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 the parties.
(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 conciliator ?
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 party.
(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 jointly.

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 conciliator or
(b) the parties may agree that the appointment of one or more conciliators be made directly by such an institution or person.

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 dispute.
(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).

ALL ABOUT ARBITRATION

Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the courts. The dispute will be decided by one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), which renders the "arbitration award". An arbitration award is legally binding on both sides and enforceable in the courts.

Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. In certain countries such as the United States, arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts and may include a waiver of the right to bring a class action claim. Mandatory consumer and employment arbitration should be distinguished from consensual arbitration, particularly commercial arbitration.

Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that one party imposes on the other, in which the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding. Non-binding arbitration is similar to mediation in that a decision cannot be imposed on the parties. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbiter remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. By one definition arbitration is binding and non-binding arbitration is therefore technically not arbitration.

Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed, or legislation has decreed, will be final and binding. There are limited rights of review and appeal of arbitration awards. Arbitration is not the same as: judicial proceedings (although in some jurisdictions, court proceedings are sometimes referred as arbitrations), alternative dispute resolution (ADR), expert determination, mediation (a form of settlement negotiation facilitated by a neutral third party).

Advantages and disadvantages
Parties often seek to resolve disputes through arbitration because of a number of perceived potential advantages over judicial proceedings. Companies often require arbitration with their customers, but prefer the advantages of courts in disputes with competitors:

In contrast to litigation, where one cannot "choose the judge",arbitration allows the parties to choose their own tribunal. This is especially useful when the subject matter of the dispute is highly technical: arbitrators with an appropriate degree of expertise (for example, quantity surveying expertise, in the case of a construction dispute, or expertise in commercial property law, in the case of a real estate dispute) can be chosen.

Arbitration is often faster than litigation in court.

Arbitral proceedings and an arbitral award are generally non-public, and can be made confidential.

In arbitral proceedings the language of arbitration may be chosen, whereas in judicial proceedings the official language of the country of the competent court will be automatically applied.

Because of the provisions of the New York Convention 1958, arbitration awards are generally easier to enforce in other nations than court verdicts.

In most legal systems there are very limited avenues for appeal of an arbitral award, which is sometimes an advantage because it limits the duration of the dispute and any associated liability.

Some of the disadvantages include:
Arbitration agreements are sometimes contained in ancillary agreements, or in small print in other agreements, and consumers and employees often do not know in advance that they have agreed to mandatory binding pre-dispute arbitration by purchasing a product or taking a job.

If the arbitration is mandatory and binding, the parties waive their rights to access the courts and to have a judge or jury decide the case.

If the arbitrator or the arbitration forum depends on the corporation for repeat business, there may be an inherent incentive to rule against the consumer or employee

There are very limited avenues for appeal, which means that an erroneous decision cannot be easily overturned.

Although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays.

In some legal systems, arbitration awards have fewer enforcement options than judgments; although in the United States arbitration awards are enforced in the same manner as court judgments and have the same effect.

Arbitrators are generally unable to enforce interlocutory measures against a party, making it easier for a party to take steps to avoid enforcement of member or a small group of members in arbitration due to increasing legal fees, without explaining to the members the adverse consequences of an unfavorable ruling.

Discovery may be more limited in arbitration or entirely nonexistent.

The potential to generate billings by attorneys may be less than pursuing the dispute through trial.

Unlike court judgments, arbitration awards themselves are not directly enforceable. A party seeking to enforce an arbitration award must resort to judicial remedies, called an action to "confirm" an award.

Arbitrability
By their nature, the subject matter of some disputes is not capable of arbitration. In general, two groups of legal procedures cannot be subjected to arbitration:

Procedures which necessarily lead to a determination which the parties to the dispute may not enter into an agreement upon: Some court procedures lead to judgments which bind all members of the general public, or public authorities in their capacity as such, or third parties, or which are being conducted in the public interest. For example, until the 1980s, antitrust matters were not arbitrable in the United States. Matters relating to crimes, status and family law are generally not considered to be arbitrable, as the power of the parties to enter into an agreement upon these matters is at least restricted. However, most other disputes that involve private rights between two parties can be resolved using arbitration. In some disputes, parts of claims may be arbitrable and other parts not. For example, in a dispute over patent infringement, a determination of whether a patent has been infringed could be adjudicated upon by an arbitration tribunal, but the validity of a patent could not: As patents are subject to a system of public registration, an arbitral panel would have no power to order the relevant body to rectify any patent registration based upon its determination.

Some legal orders exclude or restrict the possibility of arbitration for reasons of the protection of weaker members of the public, e.g. consumers. Examples: German law excludes disputes over the rental of living space from any form of arbitration, while arbitration agreements with consumers are only considered valid if they are signed by either party, and if the signed document does not bear any other content than the arbitration agreement.

Arbitration agreement
Arbitration agreements are generally divided into two types:

Agreements which provide that, if a dispute should arise, it will be resolved by arbitration. These will generally be normal contracts, but they contain an arbitration clause

Agreements which are signed after a dispute has arisen, agreeing that the dispute should be resolved by arbitration (sometimes called a "submission agreement")

The former is the far more prevalent type of arbitration agreement. Sometimes, legal significance attaches to the type of arbitration agreement. For example, in certain Commonwealth countries (not including England and Wales), it is possible to provide that each party should bear their own costs in a conventional arbitration clause, but not in a submission agreement.

In keeping with the informality of the arbitration process, the law is generally keen to uphold the validity of arbitration clauses even when they lack the normal formal language associated with legal contracts. Clauses which have been upheld include:

"arbitration in London - English law to apply"
"suitable arbitration clause"
"arbitration, if any, by ICC Rules in London"

The courts have also upheld clauses which specify resolution of disputes other than in accordance with a specific legal system. These include provision indicating:

That the arbitrators "must not necessarily judge according to the strict law but as a general rule ought chiefly to consider the principles of practical business"

"internationally accepted principles of law governing contractual relations"

Agreements to refer disputes to arbitration generally have a special status in the eyes of the law. For example, in disputes on a contract, a common defence is to plead the contract is void and thus any claim based upon it fails. It follows that if a party successfully claims that a contract is void, then each clause contained within the contract, including the arbitration clause, would be void. However, in most countries, the courts have accepted that:

A contract can only be declared void by a court or other tribunal; and

If the contract (valid or otherwise) contains an arbitration clause, then the proper forum to determine whether the contract is void or not, is the arbitration tribunal.

Arguably, either position is potentially unfair; if a person is made to sign a contract under duress, and the contract contains an arbitration clause highly favourable to the other party, the dispute may still referred to that arbitration tribunal. Conversely a court may be persuaded that the arbitration agreement itself is void having been signed under duress. However, most courts will be reluctant to interfere with the general rule which does allow for commercial expediency; any other solution (where one first had to go to court to decide whether one had to go to arbitration) would be self-defeating.

Comparative law
Nations regulate arbitration through a variety of laws. The main body of law applicable to arbitration is normally contained either in the national Private International Law Act (as is the case in Switzerland) or in a separate law on arbitration (as is the case in England and Jordan). In addition to this, a number of national procedural laws may also contain provisions relating to arbitration.

United States
The Federal Arbitration Act (FAA) of 1925 established a public policy in favor of arbitration. For the first six decades of its existence, courts did not allow arbitration for "federal statutory claims" through a bright-line "nonarbitrability" doctrine, but in the 1980s the Supreme Court of the United States reversed and began to use the act to require arbitration if included in the contract for federal statutory claims. Although some legal scholars believe that it was originally intended to apply to federal courts only, courts now routinely require arbitration due to the FAA regardless of state statutes or public policy unconscionability determinations by state courts. In consumer law, standard form contracts often include mandatory predispute arbitration clauses which require consumer arbitration. Under these agreements the consumer may waive their right to a lawsuit and a class action. In 2011, one of these clauses was upheld in AT&T Mobility v. Concepcion.

Several arbitration organizations exist, including the American Arbitration Association and JAMS. The National Arbitration Forum also conducts arbitrations, but it no longer conducts consumer arbitrations pursuant to a consent decree entered into in 2009 because of evidence that it had been biased toward, and had incentives that favored, credit card companies over cardholders. The AAA was also asked to exit the business., but has not done so.

International
History
The United States and Great Britain were pioneers in the use of arbitration to resolve their differences. It was first used in the Jay Treaty of 1795, and played a major role in the Alabama Claims case of 1872 whereby major tensions regarding British support for the Confederacy during the American Civil War were resolved. At the First International Conference of American States in 1890, a plan for systematic arbitration was developed, but not accepted. The Hague Peace Conference of 1899, saw the major world powers agreed to a system of arbitration and the creation of a Permanent Court of Arbitration. President William Howard Taft was a major advocate. One important use came in the Newfoundland fisheries dispute between the United States and Britain in 1910. In 1911 the United States signed arbitration treaties with France and Britain.

Arbitration was widely discussed among diplomats and elites in the 1890-1914 era. The 1895 dispute between the United States and Britain over Venezuela was peacefully resolved through arbitration. Both nations realized that a mechanism was desirable to avoid possible future conflicts. The Olney-Pauncefote Treaty of 1897 was a proposed treaty between the United States and Britain in 1897 that required arbitration of major disputes. The treaty was rejected by the U.S. Senate and never went into effect.

American Secretary of State William Jennings Bryan (1913.1915) worked energetically to promote international arbitration agreements, but his efforts were frustrated by the outbreak of World War I. Bryan negotiated 28 treaties that promised arbitration of disputes before war broke out between the signatory countries and the United States. He made several attempts to negotiate a treaty with Germany, but ultimately was never able to succeed. The agreements, known officially as "Treaties for the Advancement of Peace," set up procedures for conciliation rather than for arbitration. Arbitration treaties were negotiated after the war, but attracted much less attention than the negotiation mechanism created by the League of Nations.

International agreements
By far the most important international instrument on arbitration law is the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, usually simply referred to as the "New York Convention". Virtually every significant commercial country is a signatory, and only a handful of countries are not parties to the New York Convention.

Some other relevant international instruments are:

The Geneva Protocol of 1923
The Geneva Convention of 1927 
The European Convention of 1961
The Washington Convention of 1965 (governing settlement of international investment disputes)
The Washington Convention (ICSID) of 1996 for investment arbitration
The UNCITRAL Model Law on International Commercial Arbitration of 1985, (revised in 2006).
The UNCITRAL Arbitration Rules (providing a set of rules for an ad hoc arbitration)

International enforcement
It is often easier to enforce arbitration awards in a foreign country than court judgments. Under the New York Convention 1958, an award issued in a contracting state can generally be freely enforced in any other contracting state, only subject to certain, limited defenses. Only foreign arbitration awards are enforced pursuant to the New York Convention. An arbitral decision is foreign where the award was made in a state other than the state of recognition or where foreign procedural law was used. In most cases, these disputes are settled with no public record of their existence as the loser complies voluntarily, although in 2014 UNCITRAL promulgated a rule for public disclosure of investor-state disputes.

Virtually every significant commercial country in the world is a party to the Convention while relatively few countries have a comprehensive network for cross-border enforcement of judgments their courts. Additionally, the awards not limited to damages. Whereas typically only monetary judgments by national courts are enforceable in the cross-border context, it is theoretically possible (although unusual in practice) to obtain an enforceable order for specific performance in an arbitration proceeding under the New York Convention.

Article V of the New York Convention provides an exhaustive list of grounds on which enforcement can be challenged. These are generally narrowly construed to uphold the pro-enforcement bias of the Convention.

Government disputes
Certain international conventions exist in relation to the enforcement of awards against states.

The Washington Convention 1965 relates to settlement of investment disputes between states and citizens of other countries. The Convention created the International Centre for Settlement of Investment Disputes (or ICSID). Compared to other arbitration institutions, relatively few awards have been rendered under ICSID.

The Algiers Declaration of 1981 established the Iran-US Claims Tribunal to adjudicate claims of American corporations and individuals in relation to expropriated property during the Islamic revolution in Iran in 1979. The tribunal has not been a notable success, and has even been held by an English court to be void under its own governing law.

Arbitral tribunal
The arbitrators which determine the outcome of the dispute are called the arbitral tribunal. The composition of the arbitral tribunal can vary enormously, with either a sole arbitrator sitting, two or more arbitrators, with or without a chairman or umpire, and various other combinations. In most jurisdictions, an arbitrator enjoys immunity from liability for anything done or omitted whilst acting as arbitrator unless the arbitrator acts in bad faith.

Arbitrations are usually divided into two types: ad hoc arbitrations and administered arbitrations.

In ad hoc arbitrations, the arbitral tribunals are appointed by the parties or by an appointing authority chosen by the parties. After the tribunal has been formed, the appointing authority will normally have no other role and the arbitration will be managed by the tribunal.

In administered arbitration, the arbitration will be administered by a professional arbitration institution providing arbitration services, such as the LCIA in London, or the ICC in Paris, or the American Arbitration Association in the United States. Normally the arbitration institution also will be the appointing authority. Arbitration institutions tend to have their own rules and procedures, and may be more formal. They also tend to be more expensive, and, for procedural reasons, slower.

Duties of the tribunal
The duties of a tribunal will be determined by a combination of the provisions of the arbitration agreement and by the procedural laws which apply in the seat of the arbitration. The extent to which the laws of the seat of the arbitration permit "party autonomy" (the ability of the parties to set out their own procedures and regulations) determines the interplay between the two.

However, in almost all countries the tribunal owes several non-derogable duties. These will normally be:

to act fairly and impartially between the parties, and to allow each party a reasonable opportunity to put their case and to deal with the case of their opponent (sometimes shortened to: complying with the rules of "natural justice"); and
to adopt procedures suitable to the circumstances of the particular case, so as to provide a fair means for resolution of the dispute.

Arbitral awards
Although arbitration awards are characteristically an award of damages against a party, in many jurisdictions tribunals have a range of remedies that can form a part of the award. These may include:

payment of a sum of money (conventional damages)
the making of a "declaration" as to any matter to be determined in the proceedings
in some jurisdictions, the tribunal may have the same power as a court to:

order a party to do or refrain from doing something ("injunctive relief")
to order specific performance of a contract
to order the rectification, setting aside or cancellation of a deed or other document.

In other jurisdictions, however, unless the parties have expressly granted the arbitrators the right to decide such matters, the tribunal's powers may be limited to deciding whether a party is entitled to damages. It may not have the legal authority to order injunctive relief, issue a declaration, or rectify a contract, such powers being reserved to the exclusive jurisdiction of the courts.

Challenge
Generally speaking, by their nature, arbitration proceedings tend not to be subject to appeal, in the ordinary sense of the word. However, in most countries, the court maintains a supervisory role to set aside awards in extreme cases, such as fraud or in the case of some serious legal irregularity on the part of the tribunal. Only domestic arbitral awards are subject to set aside procedure.

In American arbitration law there exists a small but significant body of case law which deals with the power of the courts to intervene where the decision of an arbitrator is in fundamental disaccord with the applicable principles of law or the contract. However, this body of case law has been called into question by recent decisions of the Supreme Court.

Unfortunately there is little agreement amongst the different American judgments and textbooks as to whether such a separate doctrine exists at all, or the circumstances in which it would apply. There does not appear to be any recorded judicial decision in which it has been applied. However, conceptually, to the extent it exists, the doctrine would be an important derogation from the general principle that awards are not subject to review by the courts.

Costs
The overall costs of arbitration can be estimated on the websites of international arbitration institutions, such as that of the ICC, the website of the SIAC and the website of the International Arbitration Attorney Network. The overall cost of administrative and arbitrator fees is, on average, less than 20% of the total cost of international arbitration.

In many legal systems - both common law and civil law - it is normal practice for the courts to award legal costs against a losing party, with the winner becoming entitled to recover an approximation of what it spent in pursuing its claim (or in defense of a claim). The United States is a notable exception to this rule, as except for certain extreme cases, a prevailing party in a US legal proceeding does not become entitled to recoup its legal fees from the losing party.

Like the courts, arbitral tribunals generally have the same power to award costs in relation to the determination of the dispute. In international arbitration as well as domestic arbitrations governed by the laws of countries in which courts may award costs against a losing party, the arbitral tribunal will also determine the portion of the arbitrators' fees that the losing party is required to bear.

Nomenclature
As methods of dispute resolution, arbitration procedure can be varied to suit the needs of the parties. Certain specific "types" of arbitration procedure have developed, particularly in North America.

Judicial Arbitration is, usually, not arbitration at all, but merely a court process which refers to itself as arbitration, such as small claims arbitration before the County Courts in the United Kingdom.

Online Arbitration is, a form of arbitration that occurs exclusively online. There is currently an assumption that online arbitration is admissible under the New York Convention and the E-Commerce Directive, but this has not been legally verified. Since arbitration is based on a contractual agreement between the parties, an online process without a regulatory framework may generate a significant number of challenges from consumers and other weaker parties if due process cannot be assured.

High-Low Arbitration, or Bracketed Arbitration, is an arbitration wherein the parties to the dispute agree in advance the limits within which the arbitral tribunal must render its award. It is only generally useful where liability is not in dispute, and the only issue between the party is the amount of compensation. If the award is lower than the agreed minimum, then the defendant only need pay the lower limit; if the award is higher than the agreed maximum, the claimant will receive the upper limit. If the award falls within the agreed range, then the parties are bound by the actual award amount. Practice varies as to whether the figures may or may not be revealed to the tribunal, or whether the tribunal is even advised of the parties' agreement.

Binding Arbitration is a form of arbitration where the decision by the arbitrator is legally binding and enforceable, similar to a court order.

Non-Binding Arbitration is a process which is conducted as if it were a conventional arbitration, except that the award issued by the tribunal is not binding on the parties, and they retain their rights to bring a claim before the courts or other arbitration tribunal; the award is in the form of an independent assessment of the merits of the case, designated to facilitate an out-of-court settlement. State law may automatically make a non-binding arbitration binding, if, for example, the non-binding arbitration is court-ordered, and no party requests a trial de novo (as if the arbitration had not been held).

Pendulum Arbitration refers to a determination in industrial disputes where an arbitrator has to resolve a claim between a trade union and management by making a determination of which of the two sides has the more reasonable position. The arbitrator must choose only between the two options, and cannot split the difference or select an alternative position. It was initiated in Chile in 1979. This form of arbitration has been increasingly seen in resolving international tax disputes, especially in the context of deciding on the Transfer Pricing margins. This form of arbitration is also known (particularly in the United States) as Baseball Arbitration. It takes its name from a practice which arose in relation to salary arbitration in Major League Baseball.

Night Baseball Arbitration is a variation of baseball arbitration where the figures are not revealed to the arbitration tribunal. The arbitrator will determinate the quantum of the claim in the usual way, and the parties agree to accept and be bound by the figure which is closest to the tribunal's award.
Such forms of "Last Offer Arbitration" can also be combined with mediation to create MEDALOA hybrid processes (Mediation followed by Last Offer Arbitration).

History
England
Arbitration in its common law form developed in England; in the Middle Ages, tribunals such as the Courts of the Boroughs, of the Fair and of the Staple arose as the Royal Courts were not designed for trade disputes, and trade with foreigners was otherwise unenforceable. In the mid-16th century, common law courts developed contract law and the Admiralty court became accessible for disputes with foreign merchants, broadening the venues for trade disputes. Courts became suspicious of arbitration; for example, in Kill v. Hollister (1746), an English court ruled that the arbitration agreement could 'oust' courts of law and equity of jurisdiction. Merchants, however, retained provisions to settle disputes among themselves, but tension between the arbitration proceedings and courts eventually resulted in the Common Law Procedure Act 1854 which provided for the appointment of arbitrators and umpires, allowed courts to 'stay proceedings' when a disputant filed a suit despite an agreement to arbitrate, and provided a process for arbitrators to submit questions to a court. Later, the Arbitration Act 1889 was passed, followed by other Arbitration Acts in 1950, 1975, 1979 and 1996. Arbitration Act 1979 in particular limited judicial review for arbitration awards.

United States
Arbitration was common in the early United States, with George Washington serving as an arbiter on an occasion. The United States had a notable difference from England, however, in that unlike England, its courts generally did not enforce executory agreements (binding predispute agreements) to arbitrate. This meant that prior to an award, a claimant could sue in court even if they had contractually agreed to settle disputes by arbitration. After the award, courts reviewed the judgment, but generally deferred to the arbitration, although the practice was not consistent.

The lack of enforcement of predispose agreements led to the Federal Arbitration Act of 1925, with New York leading with a state law enforcing predispose agreements. In 1921, the American Bar Association drafted the Federal Arbitration Act based on the New York law, which was passed in 1925 with minor changes. In the next decade, the American Arbitration Association promoted rules and facilitated arbitrations through appointments.

THE ARBITRATION AND CONCILIATION ACT, 1996

INDIA
Arbitration and Conciliation Act, 1996


1. Short title, extent and commencement.-
(1) This Act may be called the Arbitration and Conciliation Act, 1996.

(2) It extends to the whole of India:

Provided that Parts I, III and IV shall extend to the State of Jammu and Kashmir only in so far as they relate to international commercial arbitration or, as the case may be, international commercial conciliation.

Explanation.-In this sub-section, the expression 'international commercial conciliation' shall have the same meaning as the expression 'international commercial arbitration' in clause (f) of sub-section (1) of section 2, subject to the modification that for the word 'arbitration' occurring therein, the word 'conciliation' shall be substituted.

(3) It shall come into force on such date as the Central Government may, by notification in the official Gazette, appoint. (Came into force on 22-8-1996 vide G.S.R. 375 (E), dated 22nd August, 1996)


2. Definitions.-
(1) In this Part, unless the context otherwise requires,-

(a) 'arbitration' means any arbitration whether or not administered by permanent arbitral institution;

(b) 'arbitration agreement' means an agreement referred to in section 7;

(c) 'arbitral award' includes an interim award;

(d) 'arbitral tribunal' means a sole arbitrator or a panel of arbitrators;

(e) '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, or any Court of Small Causes;

(f) 'international commercial arbitration' means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is-

(i) an individual who is a national of, or habitually resident in, any country other than India; or

(ii) a body corporate which is incorporated in any country other than India; or

(iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or

(iv) the Government of a foreign country;

(g) 'legal representative' means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting;

(h) 'party' means a party to an arbitration agreement.

Scope

(2) This Part shall apply where the place of arbitration is in India.

(3) This Part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration.

(4) This Part except sub-section (1) of section 40, sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder.

(5) Subject to the provisions of sub-section (4), and save in so far as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto.

Construction of references

(6) Where this Part, except section 28, leaves the parties free to determine a certain issue, that freedom shall include the right of the parties to authorise any person including an institution, to determine that issue.

(7) An arbitral award made under this Part shall be considered as a domestic award.

(8) Where this Part-

(a) refers to the fact that the parties have agreed or that they may agree, or

(b) in any other way refers to an agreement of the parties, that agreement shall include any arbitration rules referred to in that agreement.


(9) Where this Part, other than clause (a) of section 25 or clause (a) of sub-section (2) of section 32, refers to a claim, it shall also apply to a counter-claim, and where it refers to a defence, it shall also apply to a defence to that counter-claim.

comments

International Commercial Arbitration: Scope of

Where at least one of the parties is an individual having nationality of another country other than India or a body corporate which is incorporated in any country other than India or an association or a body of individuals whose central management and control is exercised in any country other than India or the government of a foreign country, the same would be a case of international commercial arbitration. The respondent here in is a body corporate which is incorporated in a country other than India and therefore, in terms of the aforesaid definition the present admittedly is a case of international commercial arbitration; Dominant Offset Pvt. Ltd. v. Adamovske Strojirny A.S., 1997 (2) Arb LR 335.

3. Receipt of written communications.-
(1) Unless otherwise agreed by the parties,-

(a) any written communication is deemed to have been received if it is delivered to the addressee personally or at his place of business, habitual residence or mailing address, and

(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.

(2) The communication is deemed to have been received on the day it is so delivered.

(3) This section does not apply to written communications in respect of proceedings of any judicial authority.

4. Waiver of right to object.-
A party who knows that-

(a) any provision of this Part from which the parties may derogate, or

(b) any requirement under the arbitration agreement,has not been omplied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.

5. Extent of judicial intervention.-
Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.

Comments

Interim relief-Grant of

In the present case, it was held that courts in India have no power to issue interim order under section 9 of the Act in the matter when arbitration is held at a place outside India. If court is not having jurisdiction to pass any interim order, in such cases, inherent powers not to be exercised, to confer jurisdiction upon itself. To exercise any inherent power court must have jurisdiction over the proceedings before it; Marriat International Inc. v. Ansal Hotels Ltd., 2000 (3) Arb LR 369.

6. Administrative assistance.-
In order to facilitate the conduct of the arbitral proceedings, the parties, or the arbitral tribunal with the consent of the parties, may arrange for administrative assistance by a suitable institution or person.

7. Arbitration agreement.-
(1) In this Part, 'arbitration agreement' means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in-

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) 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.

COMMENTS

Competence of Arbitrator

The arbitrator is competent to decide the objection on its own jurisdiction whether appointed as per the terms of the agreement within the provisions of section or appointed under the provisions of section 11; State of Jharkhand v. R.K. Construction (Pvt.) Ltd ., AIR 2006 Jhar 98.

What constitute an arbitration agreement, well settled principles in respect thereof In regard to what constitutes an arbitration agreement, the well settled principles are-

(i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and an willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to arbitration and not merely contemplate the possibility of going for arbitration. Where there is merely a possibility of the parties agreeing to arbitration in future, as contrasted from an obligation to refer disputes to arbitration, there is no valid and binding arbitration agreement.

(ii) Even if the words 'arbitration' and 'arbitral tribunal (or arbitrator)' are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause relating to settlement of disputes, it does not detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are: (a) The agreement should be in writing, (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal, (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it. (d) The parties should have agreed that the decision of the Private Tribunal in respect of the disputes will be binding on them.

(iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to Arbitration, it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically excludes any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the Authority will not be final and binding on the parties, or that if either party is not satisfied with the decision of the Authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement.

(iv) But mere use of the word 'arbitration' or 'arbitrator' in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as 'parties can, if they so desire, refer their disputes to arbitration' or 'in the event of any dispute, the parties may also agree to refer the same to arbitration' or 'if any disputes arise between the parties, they should consider settlement by arbitration' in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that 'if the parties so decide, the disputes shall be referred to arbitration' or 'any disputes between parties, if they so agree, shall be referred to arbitration' is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if and when a dispute arises. Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the disputes arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future; Jagdish Chander v. Ramesh Chander, (2007) 5 SCC 719.

8. Power to refer parties to arbitration where there is an arbitration agreement.-
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration

may be commenced or continued and an arbitral award made.

Comments

Appointment of Arbitrator

It is not duty of court to adjourn a matter to enable parties to report to court about appointment of Arbitrator and then make reference; Pawan Sharma v. Tarkeshwar Shah, AIR 2007 (NOC) 156 (HP).

Expression-First statement on the substance of the dispute

The expression 'first statement on the substance of the dispute' contained in sub-section (1) of section 8 must be contra-distinguished with the expression 'written statement'. It employs submission of the party to the jurisdiction of the judicial authority. What is, therefore, needed is a finding on the part of judicial authority that the party has waived his right to invoke the arbitration clause. If an application is filed before actually filing the first statement on the substance of the dispute, the party cannot be said to have waived his right or acquiesced himself to the jurisdiction of the court; Rashtriya Ispat Nigam Ltd. v. Verma Transport Company, AIR 2006 SC 2800.

Jurisdiction of Civil Court

(i) The language of section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator; P. Anand Gajapathi Raju v. P.V.G. Raju (Dead), 2000 (4) SCC 539.

(ii) Mere existence of arbitration clause in agreement does not bar jurisdiction of Civil Court automatically; Mahesh Kumar v. Rajasthan State Road Transport Corporation, AIR 2006 Raj 56.

Power of Court to appoint Arbitrator

Power of Court to refer parties for arbitration would and must necessarily include, imply and inhere in it the power and jurisdiction to appoint Arbitrator also; Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., Kochi, AIR 2007 (NOC) 233 (Ker).

Scope and object

Scope and object of section 8 of the Arbitration and Conciliation Act, 1996 and section 34 of the Arbitration Act, 1940 is different. Therefore, these two respective provisions of different Acts have no application to deprive the party of the legitimate right to invoke section 8 of the Arbitration and Conciliation Act to have the matter relating to the disputes referred to arbitration, in terms of the arbitration agreement; Kalpana Kothari v. Sudha Yadav, AIR 2001 SC 404.

9. Interim measures, etc. by Court.-
A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court-

(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters, namely:-

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) 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;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the court to be just and convenient,and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

Comments

Interim protection

A party or a person is entitled to interim protection if action of the other party is either in breach of the terms of the agreement or militates against equity, fair play or natural justice, otherwise not; Baby Arya v. Delhi Vidyut Board, AIR 2002 Del 50.

Pendency of any arbitral proceedings is not a pre-condition for an exercise of power by the court

Pendency of any arbitral proceedings is not a pre-condition for exercise of power by court. The court may grant interim relief before or during arbitral proceedings or at anytime after making of the arbitral award but before it is enforced; Globe Cogeneration Power Ltd. v. Sri Hiranyakeshi Sahkari Sakkere Karkhane Niyamit, AIR 2005 Kant 94.

Scope

Section 9 of the Arbitration and Conciliation Act, 1996, only deals with the interim measure by the court. Obviously it is not within the scope of this section to inquire into the claim and the counter-claim made by both the parties in regard to the custody of the articles beyond what has been admitted by the respondent; Narain Sahai Aggarwal v. Santosh Rani, 1997 (2) Arb LR 322.

10. Number of arbitrators.-
(1) The parties are free to determine the number of arbitrators, provided that such number shall not be an even number.

(2) Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of a sole arbitrator.

Comments

Number of arbitrators

The parties are at liberty to determine the number of arbitrators, but such number shall not be an even number. If the parties fail to provide for an odd number of arbitrators, the arbitral tribunal shall be constituted by a sole arbitrator; Sri Venkateshwara Construction Co. v. Union of India, AIR 2001 AP 284.

In the present case, a contract between the two parties M and S provided that each party shall nominate one arbitrator and the two arbitrators shall then appoint an umpire before proceeding with the reference. S invoked arbitration clause and appointed an arbitrator under the agreement after the 1996 Act came into force. It was contended by the M that the arbitration agreement provided for the appointment of two arbitrators while section 10(1) of the 1996 Act does not envisage the appointment of an even number of arbitrators and that the only remedy in such a case was by way of suit and not by arbitration. The Supreme Court held that there is nothing in section 7 to indicate the requirement of the number of arbitrators as a part of the arbitration agreement. Thus the validity of an arbitration agreement does not depend on the number of arbitrators specified therein. The number of arbitrators is dealt with separately in section 10 which is a part of machinery provision for the working of the arbitration agreement. It is, therefore, clear that an agreement specifying an even number of arbitrators cannot be a ground to render the arbitration agreement invalid under the 1996 Act. In view of the term in the arbitration agreement that the two arbitrators would appoint an umpire, the requirement of section 10(1) was satisfied. In other words, the arbitration agreement was not for an even number of arbitrators and section 10(2) was not attracted. The arbitration agreement was deemed to be one providing for three arbitrators; M.M.T.C. Ltd. v. Sterlite Industries (India) Ltd., AIR 1997 SC 605.

11. Appointment of arbitrators.-
(1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.

(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.

(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.

(4) If the appointment procedure in sub-section (3) applies and-

(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or

(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty 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.

(5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.

(6) Where, under an appointment procedure agreed upon by the parties,-

(a) a party fails to act as required under that procedure; or

(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or

(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure,a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

(7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justice or the person or institution designated by him is final.

(8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to-

(a) any qualifications required of the arbitrator by the agreement of the parties; and

(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.

(10) The Chief Justice may make such scheme1 as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him.

(11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request.

(12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to 'Chief Justice'' in those sub-sections shall be construed as a reference to the 'Chief Justice of India''.

(b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to 'Chief Justice' in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court.

Comments

'A party'-Meaning of

As per the Webiters Dictionary 'A party' in context of legal affairs is one of the litigants in legal proceeding, the plaintiff or defendant or a signatory to a legal instrument.

The Chambers Dictionary defines 'a party' as each of the individuals or groups concerned in a contract agreement, law suit, etc.

As per Oxford Dictionary the word 'parties' refers to a person or persons forming one side in an agreement or dispute.

Whartons Law Lexicon, 14th edition defines the word 'parties' as persons jointly concerned in any deed or act; litigants.

'Agreement'-Meaning of

As per Oxford Dictionary the word 'agreement' means an arrangement between the parties as to a course of action.

As per Wharton's Law Lexicon 'agreement' means a consensus of two or more minds in anything done or to be done.

Chambers Dictionary describes the word 'agreement' as a contract or term; a joint decision made after discussion.

Discretion for appointment of arbitrator

Exercise of discretion for appointment of same arbitrator even after forfeiture of right is improper; Suri Constructions v. State of Rajasthan, AIR 2006 Raj 53.

Scope

It is well settled that where an arbitrator is named in the arbitration agreement, the provisions of section 11 of the Act are not attracted and the court will not have jurisdiction to try and decide the petition filed by party for appointment of another arbitrator; Kamla Solvent v. Manipal Finance Corpn. Ltd., AIR 2001 Mad 440.

Under section 11, there is no provision fixing any time limit except under sub-section (5) which provides the time limit of 30 days from the receipt of the request from the party for appointment of an arbitrator. Under sub-section (6) no such time limit have been fixed. It is required under the procedure, a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment; Ansal Properties & Industries Ltd. v. Himachal Pradesh State Electricity Board, AIR 1997 Arb LR 11.

Existence of arbitration clause and validity of reference

The existence of the arbitration clause and the validity of reference shall only be decided by the Arbitrator. It is also within the domain of the Arbitrator to decide whether the claim of the petitioner has already been settled on full satisfaction; Navratandas & Co. (P) Ltd. v. Tata Iron & Steel Co., AIR 2006 Jhar 7.

--

1. See Appointment of Arbitrators by the Chief Justice of India Scheme, 1996, published in the Gazette of India, Extra., Pt. III, Sec. 1, dated 16th May, 1996.

12. Grounds for challenge.-
(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.

(2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.

(3) An arbitrator may be challenged only if-

(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or

(b) he does not possess the qualifications agreed to by the parties.

(4) 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 made.

13. Challenge procedure.-
(1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.

(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.

(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.

(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.

(6) Where an arbitral award is set aside on an application made under sub-section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees.

14. Failure or impossibility to act.-
(1) The mandate of an arbitrator shall terminate if-

(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and

(b) he withdraws from his office or the parties agree to the termination of his mandate.

(2) If a controversy remains concerning any of the grounds referred to inclause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate.

(3) If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12.

15. Termination of mandate and substitution of arbitrator.-
(1) In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate-

(a) where he withdraws from office for any reason; or

(b) by or pursuant to agreement of the parties.

(2) 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.

(3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal.

(4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.

16. Competence of arbitral tribunal to rule on its jurisdiction.-
(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,-

(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.

(3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

(4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.

(5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34.

Comments

Jurisdiction of Civil Court

During pendency of arbitration, civil court has no jurisdiction to entertain petition and decide nature of objections raised therein. Questions can be raised before and decided by arbitrator; State of Jharkhand v. Himachal Construction Co. Pvt. Ltd., AIR 2006 NOC 249 (Jhar).

Power of the arbitrator to decide jurisdiction

The Arbitrator himself in exercise of power conferred on him by or under section 16 can decide the question whether or not the arbitration clause in question was scored out at the time of agreement between the parties and as such, whether or not he has jurisdiction to decide the matter or adjudicate the dispute; State of Orissa v. Surendranath Kanungo, AIR 2004 Ori 153.

17. Interim measures ordered by arbitral tribunal.-
(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a 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.

(2) The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1).

18. Equal treatment of parties.-
The parties shall be treated with equality and each party shall be given a full opportunity to present his case.

19. Determination of rules of procedure.-
(1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).

(2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.

(3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.

(4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

20. Place of arbitration.-
(1) The parties are free to agree on the place of arbitration.

(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral 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, goods or other property.

21. Commencement of arbitral proceedings.-
Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

Comments

Object

Section 21 of the Act lays down that unless and otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by respondent; Y. Parthsarthy v. G.M., Railway Electrification, Allahabad, 1997 (2) Arb LR 347.

22. Language.-
(1) The parties are free to agree upon the language or languages to be used in the arbitral proceedings.

(2) Failing any agreement referred to in sub-section (1), the arbitral tribunal shall determine the language or languages to be used in the arbitral proceedings.

(3) The agreement or determination, unless otherwise specified, shall apply to any written statement by a party, any hearing and any arbitral award, decision or other communication by the arbitral tribunal.

(4) The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal.

23. Statement of claim and defence.-
(1) Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements.

(2) 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.

(3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it.

24. Hearings and written proceedings.-
(1) Unless otherwise agreed by the parties, the arbitral tribunal 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:

Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held.

(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property.

(3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.

25. Default of a party.-
Unless otherwise agreed by the parties, where, without showing sufficient cause,-

(a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings;

(b) the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant;

(c) a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it.

26. Expert appointment by arbitral tribunal.-
(1) Unless otherwise agreed by the parties, the arbitral tribunal may-

(a) appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal, and

(b) require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.

(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal 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.

(3) 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.

27. Court assistance in taking evidence.-
(1) The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the Court for assistance in taking evidence.

(2) The application shall specify-

(a) the names and addresses of the parties and the arbitrators;

(b) the general nature of the claim and the relief sought;

(c) the evidence to be obtained, in particular,-

(i) the name and address of any person to be heard as witness or expert witness and a statement of the subject-matter of the testimony required;

(ii) the description of any document to be produced or property to be inspected.

(3) 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 arbitral tribunal.

(4) The Court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it.

(5) 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 arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the Court.

(6) In this section the expression 'Processes' includes summonses and commissions for the examination of witnesses and summonses to produce documents.

28. Rules applicable to substance of dispute.-
(1) Where the place of arbitration is situate in India,-

(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;

(b) in international commercial arbitration,-

(i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute;

(ii) any designation by the parties of the law or legal system of a given country 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 designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.

(2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it to do so.

(3) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.

29. Decision making by panel of arbitrators.-
(1) Unless otherwise agreed by the parties, in arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members.

(2) Notwithstanding sub-section (1), if authorised by the parties or all the members of the arbitral tribunal, questions of procedure may be decided by the presiding arbitrator.

Comments

Power to award interest

Where the arbitrator has awarded interest from the date of the award till the date of payment, disallow interest from the date of the decree or determine a different rate at which the interest is to be paid or confirm the grant of interest as awarded in the award. In the instant case, the arbitrator is entitled to grant pre-reference, pendente lite and future interest, however, the claimant did not claim any pre-reference interest in proceedings before the arbitrator in the present facts and circumstances could not have granted interest from the date the arbitrator entered upon the reference by sending notice to the claimant and respondent on 26-4-1991 to the date of award at the rate of 15% p.a. on the amounts awarded; State of Orissa v. B.N. Agarwal, AIR 1997 SC 925.

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

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

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

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

Comments

Settlement

When the arbitrator, having been invested with the jurisdiction to decide the arbitrability of certain claims has committed error of jurisdiction in not considering the arbitrability of the claims and passed a non-speaking award granting certain lump sum amount, it is difficult to give acceptance to the award made by the umpire; Tamil Nadu Electricity Board v. Bridg

31. Form and contents of arbitral award.-
(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal.

(2) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated.

(3) The arbitral award shall state the reasons upon which it is based, unless-

(a) the parties have agreed that no reasons are to be given, or

(b) the award is an arbitral award on agreed terms under section 30.

(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place.

(5) After the arbitral award is made, a signed copy shall be delivered to each party.

(6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award.

(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on 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 date on which the award is made.

(b) A sum directed to be paid by an arbitral 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.

(8) Unless otherwise agreed by the parties,-

(a) the costs of an arbitration shall be fixed by the arbitral tribunal;

(b) the arbitral tribunal shall specify-

(i) the party entitled to costs,

(ii) the party who shall pay the costs,

(iii) the amount of costs or method of determining that amount, and

(iv) the manner in which the costs shall be paid.

Explanation.-For the purpose of clause (a), 'costs' means reasonable costs relating to-

(i) the fees and expenses of the arbitrators and witnesses,

(ii) legal fees and expenses,

(iii) any administration fees of the institution supervising the arbitration, and

(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award.

Comments

Power to award interest

Arbitrator has power to award interest at all four stages. It was held that the direction to pay interest from date of award cannot be faulted under section 31(7); T.P. George v. State of Kerala, AIR 2001 SC 816.

32. Termination of proceedings.-
(1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section (2).

(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where-

(a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute,

(b) the parties agree on the termination of the proceedings, or

(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.

(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings.

33. Correction and interpretation of award; additional award.-
(1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties-

(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;

(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

(2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award.

(3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award.

(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award.

(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request.

(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub-section (5).

(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section.

Comments

Scope-Enlargement of

It is seen that by express agreement between the parties, arbitrability of the claim for refund of the hire charges was referred to arbitration and T came to be appointed as arbitrator and entered upon that reference. But when claim was made, he enlarged the dispute unilaterally without there being any agreement by the appellant. Infact they objected to the enlargement of the scope of the arbitration. Since arbitrator went on adjudicating the disputes, they were left with no option but to participate in the proceedings as the claims were pressed for and parties submitted to the jurisdiction of the arbitrator. Therefore, it did not amount to acquiescence. The arbitrator went out of their way to declare that whatever amount in addition was due from respondent No. 1 upon the bahikhatta account was remitted having regard to his labour and poverty and the whole unspecified amount found due against respondent No. 2 was remitted in full in view of his labour and poverty. It was contended that the award was decided outside the authority of the arbitrators. It was held that the arbitrators had clearly misdirected themselves and had exceeded the scope of their authority and the award was, therefore, set aside; Union of India v. G.S. Atwal & Co., AIR 1996 SC 2965.

34. Application for setting aside arbitral award.-
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section

(2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if-

(a) the party making the application furnishes proof that-

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral 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:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not

in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that-

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

Explanation.-Without prejudice to the generality of sub-clause (ii) 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 or was in violation of section 75 or section 81.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section

33, from the date on which that request had been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), 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 arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

Comments

Arbitration Court cannot interfere on the ground of award being erroneous

The arbitration court cannot interfere with the award on the ground that the award is erroneous if the award is otherwise proper. It is not open to the arbitration court to re-appreciate reasonableness of reasons in the arbitral award; Union of India v. Pam Developments P. Ltd., AIR 2004 NOC 353 (Cal).

Award based on account of overlooking contents

The award made by the arbitrator was partially vitiated on account of overlooking the contents of the document brought to his notice and therefore, to that extent the award should have been modified by the High Court. Virtually allotment of land was not in recognition of any statutory entitlement but was only by way of compassion; State of Karnataka v. Siddaiah, AIR 2001 SC 397.

Court must not look to the reasonableness of reasons

Where an arbitrator passed a non-speaking award granting certain lumpsum amount and award did not contain any decision or arbitrability of the claims, such award is liable to be set aside; Tamil Nadu Electricity Board v. Bridge Tunnel Constructions, AIR 1997 SC 1376.

Interference with arbitral award

While considering legality and validity of award, High Court cannot substitute its own findings as if sitting in appeal over award. High Court has no jurisdiction to interfere with award; Ram Prasad Sharma v. Jharkhand State Housing Board, AIR 2006 NOC 258 (Jhar).

Limitations

It is axiomatic that the arbitrator being a creative of the agreement must operate within the four corners of the agreement and cannot travel beyond it. More particularly, he cannot award any amount, which is ruled out or prohibited by the terms of the agreement. In the present case, the agreement between the parties clearly says that in measuring the built up area, the balcony areas should be excluded. The arbitrators could not have acted contrary to the said stipulation and awarded any amount to the appellant on that account; New India Civil Erectors (P) Ltd. v. Oil and Natural Gas Corporation, AIR 1997 SC 980.

Right to get an award set aside is statutory

The right to file an application under section 34 to set aside an award is statutory and the same is unconditional and unqualified; The Supdtg. Engineer (Highway & Rural Works), Chennai v. D.G. Deivasigamani, AIR 2005 Mad 59.

35. Finality of arbitral awards.-
Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.

36. Enforcement.-
Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court.

37. Appealable orders.-
(1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees 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 arbitral award under
section 34.

(2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal.-

(a) accepting the plea referred in sub-section (2) or sub-section (3) of section 16; or

(b) granting or refusing to grant an interim measure under section 17.

(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.

Comments

Determination of forum of appellate court

Forum of appellate court must be determined with reference to definition of court in section 2(1)(e) of the Act. If a High Court does not exercise the original Civil Jurisdiction, it would not be a 'Court' within the meaning of the said provision; Pandey & Co. Builders Pvt. Ltd. v. State of Bihar, AIR 2007 SC 465.

Maintainability

A second appeal against the order of arbitral tribunal is not maintainable under this section; Cref Finance Ltd. v. Puri Construction Ltd., AIR 2001 Del 414.

38. Deposits.-
(1) The arbitral tribunal may fix the amount of the deposit or supplementary deposit, as the case may be, as an advance for the costs referred to in sub-section (8) of section 31, which it expects will be incurred in respect of the claim submitted to it:

Provided that where, apart from the claim, a counter-claim has been submitted to the arbitral tribunal, it may fix separate amount of deposit for the claim and counter-claim.

(2) The deposit referred to in sub-section (1) shall be payable in equal shares by the parties:

Provided that 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 arbitral tribunal may suspend or terminate the arbitral proceedings in respect of such claim or counter-claim, as the case may be.

(3) Upon termination of the arbitral proceedings, the arbitral tribunal 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.

39. Lien on arbitral award and deposits as to costs.-
(1) Subject to the provisions of sub-section (2) and to any provision to the contrary in the arbitration agreement, the arbitral tribunal shall have a lien on the arbitral award for any unpaid costs of the arbitration.

(2) If in any case an arbitral tribunal refuses to deliver its award except on payment of the costs demanded by it, the Court may, on an application in this behalf, order that the arbitral tribunal shall deliver the arbitral 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 arbitral tribunal 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.

(3) An application under sub-section (2) may be made by any party unless the fees demanded have been fixed by written agreement between him and the arbitral tribunal, and the arbitral tribunal shall be entitled to appear and be heard on any such application.

(4) The Court may make such orders as it thinks fit respecting the costs of the arbitration where any question arises respecting such costs and the arbitral award contains no sufficient provision concerning them.

40. Arbitration agreement not to be discharged by death of party thereto.-
(1) An arbitration agreement shall not be discharged by the death of any party thereto either as respects the deceased or as respects any other party, but shall in such event be enforceable by or against the legal representative of the deceased.

(2) The mandate of an arbitrator shall not be terminated by the death of any party by whom he was appointed.

(3) Nothing in this section shall affect the operation of any law by virtue of which any right of action is extinguished by the death of a person.

41. Provisions in case of insolvency.-
(1) Where it is provided by a term in a contract to which an insolvent is a party that any dispute arising thereout or in connection therewith shall be submitted to arbitration, the said term shall, if the receiver adopts the contract, be enforceable by or against him so far as it relates to any such dispute.

(2) Where a person who has been adjudged an insolvent had, before the commencement of the insolvency proceedings, become 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, then, if the case is one to which sub-section (1) does not apply, any other party or the receiver may apply to the judicial authority having jurisdiction in the insolvency proceedings for an order directing that the matter in question shall be submitted to arbitration in accordance with the arbitration agreement, and the judicial authority may, if it is of opinion that, having regard to all the circumstances of the case, the matter ought to be determined by arbitration, make an order accordingly.

(3) In this section the expression 'receiver' includes an Official Assignee.

42. Jurisdiction.-
Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a 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.

Comments

Execution proceedings

Application for execution proceedings made at place D, residing place of judgment debtor, while award was passed at place I. Held that decree cannot be executed unless and until court at place I transfer decree to court at place D; Computer Sciences Corporation India Pvt. Ltd. v. Harishchandra Lodwal, AIR 2006 MP 34.

Jurisdiction of Court

Section 42 provides that notwithstanding anything contained elsewhere in this part or in any other law for the time being in force, where with respect to an arbitrator agreement any application under this part has been made in a 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. As already stated in the present case that the petitioner-company is a consortium partner with S Co. and L&T Ltd. and the three companies are equally liable and the contracts were executed by S as the leader of the consortium. The Bank guarantees which are subject matter before the High Court of Delhi. The leader of consortium S had already approached the High Court of Delhi as such according to section 42, all subsequent applications arising out of the arbitration agreement and arbitral proceedings shall have to be made in the High Court of Delhi and no other Court had jurisdiction to entertain such applications. Thus, the Court of the District Judge; Jaipur City had no jurisdictions to entertain the application submitted under section 11(6) read with section 8; Sirojexport Co. Ltd. v. Indian Oil Corpn. Ltd., AIR 1997 Raj 120.

43. Limitations.-
(1) The Limitation Act, 1963 (36 of 1963), shall apply to arbitrations as it applies to proceedings in Court.

(2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred in section 21.

(3) Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings 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 notwithstanding that the time so 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 thinks proper.

(4) Where the Court orders that an 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, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted.

44. Definition.-
In this Chapter, unless the context otherwise requires, 'foreign award' means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960-

(a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and

(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 be territories to which the said Convention applies.44. Definition.-In this Chapter, unless the context otherwise requires, 'foreign award' means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960- (a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and (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 be territories to which the said Convention applies.

45. Power of judicial authority to refer parties to arbitration.-
Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, 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.

Comments

Null and void agreement

In the absence of any serious challenge to the commercial contract or to the arbitration agreement, it has to be found that the agreement was valid, operative and capable of being performed and that there are disputes between the parties with regard to the matters agreed to be referred to arbitration; State of Orissa v. Klockner & Co., AIR 1996 SC 2140.

Referral is mandatory

A judicial authority does not have discretion for refusing to refer the parties to arbitration. Section 45 of the 1996 Act uses the mandatory expression 'shall' and makes it obligatory upon the judicial authority to refer the parties to arbitration, if conditions specified therein are fulfilled. Stay of suit is mandatory if the conditions specified in section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 are fulfilled; State of Orissa v. Klockner & Co., AIR 1996 SC 2140.

46. When foreign award binding.-
Any foreign award which would be enforceable under this Chapter 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 this Chapter to enforcing a foreign award shall be construed as including references to relying on an award.

47. Evidence.-
(1) The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court-

(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;

(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.

(2) 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.

Explanation.-In this section and all the following sections of this Chapter, '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 over the subject-matter of the award 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, or any Court of Small Causes.

Comments

Production of documents at the time of application

An application for enforcement of award accompanied by Xerox copy of original award certified to be true copy by International Chamber of Commerce was filed and subsequently before delivery of judgment the said copy was duly authenticated as required under law, it was held that it would not be said that the application was made without the original award or the copy of the award; Renusagar Power Co. Ltd. v. General Electric Co., AIR 1985 SC 1156.

48. Conditions for enforcement of foreign awards.-
(1) 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 case; or

(c) the award deals with a difference 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:

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 the 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 was made.

(2) Enforcement of an arbitral award may also be refused if the Court finds that-

(a) the subject-matter of the difference 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.

(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) 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.

Comments

Awarded has been set aside

An interim award was made at London by an arbitral tribunal constituted by the international Chamber of Commerce. The agreement was made at New Delhi and agreement was governed by the law in force in India. Court held that the law expressly choosen by the parties in respect of all matters arising under their contract, which must necessarily include the agreement contained in the arbitration clause, being Indian law and the exclusive jurisdiction of the courts in Delhi having been expressly recognised by the parties to the contract in all matters arising under it, and the contract being most intimately associated with India, the proper law of arbitration and the competent courts are both exclusively Indian, while matters of procedure connected with the conduct of arbitration are left to be regulated by the contractually chosen rules of the ICC to the extent that such rules are not in conflict with the public policy and the mandatory requirements of the proper law and of the place of arbitration; National Thermal Power Corpn. v. Singer Co., AIR 1993 SC 998.

Enforcement of foreign award

For enforcement of a foreign award, there is no need to take separate proceedings such as one for deciding enforceability of award to make rule of court or decree and other to take up execution thereafter; Fuerst Day Lawson Ltd. v. Jindal Export Ltd., AIR 2001 SC 2293.

Invalidity of the arbitration agreement

A foreign award will not be enforced if it is proved by the party against whom it is sought to be enforced that the parties to the agreement were, under the law applicable to them, under some incapacity, or, the agreement was not valid under the law to which the parties have subjected it, or, in the absence of any indication thereon, under the law of the place of arbitrations; or there was no due compliance with the rules of fair hearing; or the award exceeded the scope of the submission to arbitration; or the composition of the arbitral authority or its procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the place of arbitration; or the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority or the country in which, or under the law of which, that award was made. The award will not be enforced by a court in India if it is satisfied that the subject matter of the award is not capable of settlement by arbitration under Indian law or the enforcement of the award is contrary to the public; National Thermal Power Corpn. v. Singer Co., AIR 1993 SC 998.

49. Enforcement of foreign awards.-
Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court.

Comments

Court is required to record its satisfaction that a foreign award is enforceable

Before proceeding to execute a foreign award as a decree of a court, the court is required to record its satisfaction that such a foreign award is enforceable. This, however, does not mean that court cannot pass any interim order in order to protect interest of person applying for enforcement and execution of a foreign award; Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd., AIR 2004 Cal 142.

50. Appealable orders.-
(1) 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, to the court authorised by law to hear appeals from such order.

(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.

51. Saving.-
Nothing in this Chapter shall prejudice any rights which any person would have had of enforcing in India of any award or of availing himself in India of any award if this Chapter had not been enacted.

52. Chapter II not to apply.-
Chapter II of this Part shall not apply in relation to foreign awards to which this Chapter applies.

53. Interpretation.-
In this Chapter 'foreign award' means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924,-

(a) in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies, and

(b) between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and

(c) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter an award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made.

54. Power of judicial authority to refer parties to arbitration.-
Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, on being seized of a dispute regarding a contract made between persons to whom section 53 applies and including an arbitration agreement, whether referring to present or future differences, which is valid under that section and capable of being carried into effect, shall refer the parties on the application of either of them or any person claiming through or under him to the decision of the arbitrators and such reference shall not prejudice the competence of the judicial authority in case the agreement or the arbitration cannot proceed or becomes inoperative.

55. Foreign awards when binding.-
Any foreign award which would be enforceable under this Chapter 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 this Chapter to enforcing a foreign award shall be construed as including references to relying on an award.

56. Evidence.-
(1) The party applying for the enforcement of a foreign award shall, at the time of application, produce before the Court-

(a) the original award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made;

(b) evidence proving that the award has become final; and

(c) such evidence as may be necessary to prove that the conditions mentioned in clauses (a) and (c) of sub-section (1) of section 57 are satisfied.

(2) Where any document requiring 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.

Explanation.-In this section and all the following sections of this Chapter, '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 over the subject-matter of the award 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, or any Court of Small Causes.

57. Conditions for enforcement of foreign awards.-
(1) In order that a foreign award may be enforceable under this Chapter, it shall be necessary that-

(a) the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto;

(b) the subject-matter of the award is capable of settlement by arbitration under the law of India;

(c) the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure;

(d) the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition or appeal or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending;

(e) the enforcement of the award is not contrary to the public policy or the law of India.

Explanation.-Without prejudice to the generality of clause (e), 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.

(2) Even if the conditions laid down in sub-section (1) are fulfilled, enforcement of the award shall be refused if the Court is satisfied that-

(a) the award has been annulled in the country in which it was made;

(b) the party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case; or that, being under a legal incapacity, he was not properly represented;

(c) the award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that if the award has not covered all the differences submitted to the arbitral tribunal, the Court may, if it thinks fit, postpone such enforcement or grant it subject to such guarantee as the Court may decide.

(3) If the party against whom the award has been made proves that under the law governing the arbitration procedure there is a ground, other than the grounds referred to in clauses (a) and (c) of sub-section (1) and clauses (b) and (c) of sub-section (2) entitling him to contest the validity of the award, the Court may, if it thinks fit, either refuse enforcement of the award or adjourn the consideration thereof, giving such party a reasonable time within which to have the award annulled by the competent tribunal.

58. Enforcement of foreign awards.-
Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of the Court.

59. Appealable orders.-
(1) An appeal shall lie from the order refusing-

(a) to refer the parties to arbitration under section 54; and

(b) to enforce a foreign award under section 57, to the court authorised by law to hear appeals from such order.

(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.

60. Saving.-
Nothing in this Chapter shall prejudice any rights which any person would have had of enforcing in India of any award or of availing himself in India of any award if this Chapter had not been enacted.

61. Application and scope.-
(1) Save as otherwise provided by any law for the time being in force and unless the parties have otherwise agreed, this Part shall apply to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto.

(2) This Part shall not apply where by virtue of any law for the time being in force certain disputes may not be submitted to conciliation.

62. Commencement of conciliation proceedings.-
(1) The party initiating conciliation shall send to the other party a written invitation to conciliate under this Part, briefly identifying the subject of the dispute.

(2) Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate.

(3) If the other party rejects the invitation, there will be no conciliation proceedings.

(4) If the party initiating conciliation does not receive a reply within thirty 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 the other party accordingly.

63. Number of conciliators.-
(1) There shall be one conciliator unless the parties agree that there shall be two or three conciliators.

(2) Where there is more than one conciliator, they ought, as a general rule, to act jointly.

64. Appointment of conciliators.-
(1) Subject to sub-section (2),-

(a) in conciliation proceedings with one conciliator, the parties may agree on the name of a sole conciliator;

(b) in conciliation proceedings with two conciliators, each party may appoint one conciliator;

(c) 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.

(2) 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 conciliator; or

(b) the parties may agree that the appointment of one or more conciliators be made directly by such an institution or person:

Provided 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 a sole or third conciliator, shall take into account the advisability of appointing a conciliator of a nationality other than the nationalities of the parties.

65. Submission of statements to conciliator.-
(1) 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 party.

(2) The conciliator may request each party to submit to him a 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, documents and other evidence to the other party.

(3) At any stage of the conciliation proceedings, the conciliator may request a party to submit to him such additional information as he deems appropriate.

Explanation.-In this section and all the following sections of this Part, the term 'conciliator' applies to a sole conciliator, two or three conciliators as the case may be.

67. Role of conciliator.-
(1) The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute.

(2) 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 the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties.

(3) 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.

(4) The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons therefor.

67. Role of conciliator.-
(1) The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute.

(2) 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 the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties.

(3) 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.

(4) The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons therefore.

68. Administrative assistance.-
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.

69. Communication between conciliator and parties.-
(1) 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 separately.

(2) 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.

70. Disclosure of information.-
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:

Provided that when a party gives any information to the conciliator subject to a specific condition that it be kept confidential, the conciliator shall not disclose that information to the other party.

71. Co-operation of parties with conciliator.-
The parties shall in good faith co-operate with the conciliator and, in particular, shall endeavour to comply with requests by the conciliator to submit written materials, provide evidence and attend meetings.

72. Suggestions by parties for settlement of dispute.-
Each party may, on his own initiative or at the invitation of the conciliator, submit to the conciliator suggestions for the settlement of the dispute.

73. Settlement agreement.-
(1) When it appears to the conciliator that there exist elements of a settlement which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit them 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 such observations.

(2) If the parties reach agreement on a settlement of the 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.

(3) When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively.

(4) The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties.

75. Confidentiality.-
Notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement.

76. Termination of conciliation proceedings.-
The conciliation proceedings shall be terminated-

(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 of 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.

77. Resort to arbitral or judicial proceedings.-
The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject-matter of the conciliation proceedings except that a party may initiate arbitral or judicial proceedings where, in his opinion, such proceedings are necessary for preserving his rights.

78. Costs.-
(1) Upon termination of the conciliation proceedings, the conciliator shall fix the costs of the conciliation and give written notice thereof to the parties.

(2) For the purpose of sub-section (1), 'costs' means reasonable costs relating to-

(a) the fee and expenses of the conciliator and witnesses requested by the conciliator with the consent of the parties;

(b) any expert advice requested by the conciliator with the consent of the parties;

(c) any assistance provided pursuant to clause (b) of sub-section (2) of section 64 and section 68;

(d) any other expenses incurred in connection with the conciliation proceedings and the settlement agreement.

(3) The costs shall be borne equally by the parties unless the settlement agreement provides for a different apportionment. All other expenses incurred by a party shall be borne by that party.

79. Deposits.-
(1) The conciliator may direct each party to deposit an equal amount as an advance for the costs referred to in sub-section (2) of section 78 which he expects will be incurred.

(2) During the course of the conciliation proceedings, the conciliator may direct supplementary deposits in an equal amount from each party.

(3) If the required deposits under sub-sections (1) and (2) are not paid in full by both parties within thirty days, the conciliator may suspend the proceedings or may make a written declaration of termination of the proceedings to the parties, effective on the date of that declaration.

(4) Upon termination of the conciliation proceedings, the conciliator shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the parties.

80. Role of conciliator in other proceedings.-
Unless otherwise agreed by the parties,-

(a) the conciliator shall not act as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute that is the subject of the conciliation proceedings;

(b) the conciliator shall not be presented by the parties as a witness in any arbitral or judicial proceedings.

81. Admissibility of evidence in other proceedings.-
The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute that is the subject of the conciliation proceedings,-

(a) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute;

(b) admissions made by the other party in the course of the conciliation proceedings;

(c) proposals made by the conciliator;

(d) the fact that the other party had indicated his willingness to accept a proposal for settlement made by the conciliator.

82. Power of High Court to make rules.-
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions, not inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removing the difficulty:

Provided that no such order shall be made after the expiry of a period of two years from the date of commencement of this Act.

(2) Every order made under this section shall, as soon as may be after it is made, be laid before each House of Parliament.

83. Removal of difficulties.-
(1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions, not inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removing the difficulty:

Provided that no such order shall be made after the expiry of a period of two years from the date of commencement of this Act.

(2) Every order made under this section shall, as soon as may be after it is made, be laid before each House of Parliament.

84. Power to make rules.-
(1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act.

(2) Every rule made by the Central Government under this Act shall be laid, as soon as may be, after it is made before each House of Parliament while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

85. Repeal and savings.-
(1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed.

(2) Notwithstanding such repeal,-

(a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force;

(b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act.

Comments

Agreement providing arbitration under the provisions of the Arbitration Act, 1940

By section 85 of the Act of 1996, the earlier Act of 1940 was repealed and the only exception is provided in sub-section (2) of said section where a proceeding which had commenced when the Act of 1940 was in force and continued even after coming into force of Act of 1996 and all the parties thereto agreed that the old Act of 1940 shall apply to the said proceeding. Where the agreement was made in the year 2000, and the suit filed in the year 2003 when the Act of 1940 had already been repealed by the Act of 1996, parties cannot take the help of the exception provided in sub-section (2) of the Act of 1996; Rajan Kumar Verma v. Sachchidanand Singh, AIR 2006 Pat 1.

Enforcement of Foreign award

The foreign award given after the commencement of the Arbitration and Conciliation Act, would be governed by that Act, although the proceedings of arbitration had commenced prior to enforcement of the Arbitration and Conciliation Act, 1996; Fuerst Day Lawson Ltd. v. Jindal Export Ltd., AIR 2001 SC 2293.

86. Repeal of Ordinance 27 of 1996 and Saving.-
(1) The Arbitration and Conciliation (Third) Ordinance, 1996 (27 of 1996) is hereby repealed.

(2) Notwithstanding such repeal, any order, rule, notification or scheme made or anything done or any action taken in pursuance of any provision of the said Ordinance, shall be deemed to have been made, done or taken under the corresponding provisions of this Act.

THE FIRST SCHEDULE
(See section 44)

CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

ARTICLE I

1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.

2. The term 'arbitral awards' shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.

3. When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It may also declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration.

ARTICLE II

1. Each Contracting State shall recognise an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration.

2. The term 'agreement in writing' shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative and incapable of being performed.

ARTICLE III

Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.

ARTICLE IV

1. To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply-

(a) the duly authenticated original award or a duly certified copy thereof;

(b) the original agreement referred to in article II or a duly certified copy thereof.

2. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.

ARTICLE V

1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that-

(a) the parties to the agreement referred to in article II 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 arbitration proceedings or was otherwise unable to present his case; or

(c) the award deals with a difference 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; 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 recognised and 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 the 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 was made.

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that-

(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of that country; or

(b) the recognition or enforcement of the award would be contrary to the public policy of that country.

ARTICLE VI

If an application for the setting aside or suspension of the award has been made to a competent authority referred to in article V(1)(e), the authority before which the award is sought to be relied upon 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.

ARTICLE VII

1. The provisions of the present Convention shall not affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral awards entered into by the Contracting States nor deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.

2. The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the extent that they become bound by this Convention.

ARTICLE VIII

1. This Convention shall be open until 31st December, 1958 for signature on behalf of any Member of the United Nations and also on behalf of any other State which is or hereafter becomes member of any specialised agency of the United Nations, or which is or hereafter becomes a party to the Statute of the International Court of Justice, or any other State to which an invitation has been addressed by the General Assembly of the United Nations.

2. This Convention shall be ratified and the instrument of ratification shall be deposited with the Secretary-General of the United Nations.

ARTICLE IX

1. This Convention shall be open for accession to all States referred to in

article VIII.

2. Accession shall be effected by the deposit of an instrument of accession with the Secretary-General of the United Nations.

ARTICLE X

1. Any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible. Such a declaration shall take effect when the Convention enters into force for the State concerned.

2. At any time thereafter any such extension shall be made by notification addressed to the Secretary-General of the United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary-General of the United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned, whichever is the later.

3. With respect to those territories to which this Convention is not extended at the time of signature, ratification or accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent of the Governments of such territories.

ARTICLE XI

In the case of a federal or non-unitary State, the following provisions shall apply:-

(a) with respect of those articles of this Convention that come within the legislative jurisdiction of the federal authority, the obligations of the federal Government shall to this extent be the same as those of Contracting States which are not federal States;

(b) with respect to those articles of this Convention that come within the legislative jurisdiction of constituent States or provinces which are not, under the constitutional system of the federation, bound to take legislative action, the federal Government shall bring such articles with a favourable recommendation to the notice of the appropriate authorities of constituent States or provinces at the earliest possible moment;

(c) a federal State Party to this Convention shall, at the request of any other Contracting State transmitted through the Secretary-General of the United Nations, supply a statement of the law and practice of the federation and its constituent units in regard to any particular provision of this Convention, showing the extent to which effect has been given to that provision by legislative or other action.

ARTICLE XII

1. This Convention shall come into force on the ninetieth day following the date of deposit of the third instrument of ratification or accession.

2. For each State ratifying or acceding to this Convention after the deposit of the third instrument of ratification or accession, this Convention shall enter into force on the ninetieth day after deposit by such State of its instrument of ratification or accession.

ARTICLE XIII

1. Any Contracting State may denounce this Convention by a written notification to the Secretary-General of the United Nations. Denunciation shall take effect one year after the date of receipt of the notification by the Secretary-General.

2. Any State which has made a declaration or notification under article X may, at any time thereafter, by notification to the Secretary-General of the United Nations, declare that this Convention shall cease to extend to the territory concerned one year after the date of the receipt of the notification by the Secretary-General.

3. This Convention shall continue to be applicable to arbitral awards in respect of which recognition or enforcement proceedings have been instituted before the denunciation takes effect.

ARTICLE XIV

A Contracting State shall not be entitled to avail itself of the present Convention against other Contracting States except to the extent that it is itself bound to apply the Convention.

ARTICLE XV

The Secretary-General of the United Nations shall notify the States contemplated in article VIII of the following:-

(a) signatures and ratifications in accordance with article VIII;

(b) accessions in accordance with article IX;

(c) declarations and notifications under articles I, X and XI;

(d) the date upon which this Convention enters into force in accordance with article XII;

(e) denunciations and notifications in accordance with article XIII.

ARTICLE XVI

1. This Convention, of which the Chinese, English, French, Russian and Spanish texts shall be equally authentic, shall be deposited in the archives of the United Nations.

2. The Secretary-General of the United Nations shall transmit a certified copy of this Convention to the States contemplated in article XIII.

THE SECOND SCHEDULE
(See section 53)

PROTOCOL ON ARBITRATION CLAUSES

The undersigned, being duly authorised, declare that they accept, on behalf of the countries which they represent, the following provisions:-

1. Each of the Contracting States recognises the validity of an agreement whether relating to existing or future differences between parties subject respectively to the jurisdiction of different Contracting States by which the parties to a contract agree to submit to arbitration all or any differences that may arise in connection with such contract relating to commercial matters or to any other matter capable of settlement by arbitration, whether or not the arbitration is to take place in a country to whose jurisdiction none of the parties is subject.

Each Contracting State reserves the right to limit the obligation mentioned above to contracts which are considered as commercial under its national law. Any Contracting State which avails itself of this right will notify the Secretary-General of the League of Nations in order that the other Contracting States may be so informed.

2. The arbitral procedure, including the constitution of the Arbitral Tribunal, shall be governed by the will of the parties and by the law of the country in whose territory the arbitration takes place.

The Contracting States agree to facilitate all steps in the procedure which require to be taken in their own territories, in accordance with the provisions of their law governing arbitral procedure applicable to existing differences.

3. Each Contracting State undertakes to ensure the execution by its authorities and in accordance with the provisions of its national laws of arbitral awards made in its own territory under the preceding articles.

4. The Tribunals of the Contracting Parties, on being seized of a dispute regarding a contract made between persons to whom Article I applies and including an Arbitration Agreement whether referring to present or future differences which is valid in virtue of the said article and capable of being carried into effect, shall refer the parties on the application of either of them to the decision of the Arbitrators.

Such reference shall not prejudice the competence of the judicial tribunals in case the agreement or the arbitration cannot proceed or becomes inoperative.

5. The present Protocol, which shall remain open for signature by all States, shall be ratified. The ratification shall be deposited as soon as possible with the Secretary-General of the League of Nations, who shall notify such deposit to all the Signatory States.

6. The present Protocol will come into force as soon as two ratifications have been deposited. Thereafter it will take effect, in the case of each Contracting State, one month after the notification by the Secretary-General of the deposit of its ratification.

7. The present Protocol may be denounced by any Contracting State on giving one year's notice. Denunciation shall be effected by a notification addressed to the Secretary-General of the League, who will immediately transmit copies of such notification to all the other Signatory States and inform them of the date on which it was received. The denunciation shall take effect one year after the date on which it was notified to the Secretary-General, and shall operate only in respect of the notifying State.

8. The Contracting States may declare that their acceptance of the present Protocol does not include any or all of the under-mentioned territories: that is to say, their colonies, overseas possessions or territories, protectorates or the territories over which they exercise a mandate.

The said States may subsequently adhere separately on behalf of any territory thus excluded. The Secretary-General of the League of Nations shall be informed as soon as possible of such adhesions. He shall notify such adhesions to all Signatory States. They will take effect one month after the notification by the Secretary-General to all Signatory States.

The Contracting States may also denounce the Protocol separately on behalf of any of the territories referred to above. Article 7 applies to such denunciation.

THE THIRD SCHEDULE
(See section 53)

CONVENTION OF THE EXECUTION OF FOREIGN ARBITRAL AWARDS

Article 1.-(1) In the territories of any High Contracting Party to which the present Convention applies, an arbitral award made in pursuance of an agreement, whether relating to existing or future differences (hereinafter called 'a submission to arbitration') covered by the Protocol on Arbitration Clauses opened at Geneva on September 24th, 1923, shall be recognised as binding and shall be enforced in accordance with the rules of the procedure of the territory where the award is relied upon, provided that the said award has been made in a territory of one of the High Contracting Parties to which the present Convention applies and between persons who are subject to the jurisdiction of one of the High Contracting Parties.

(2) To obtain such recognition or enforcement, it shall, further, be necessary-

(a) that the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto;

(b) that the subject-matter of the award is capable of settlement by arbitration under the law of the country in which the award is sought to be relied upon;

(c) that the award has been made by the Arbitral Tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure;

(d) that the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition, appeal or pourvoi en cassation (in the countries where such forms of procedure exist) or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending;

(e) that the recognition or enforcement of the award is not contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon.

Article 2.-Even if the conditions laid down in Article 1 hereof are fulfilled, recognition and enforcement of the award shall be refused if the court is satisfied-

(a) that the award has been annulled in the country in which it was made;

(b) that the party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case; or that, being under a legal incapacity, he was not properly represented;

(c) that the award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration.

If the award has not covered all the questions submitted to the arbitral tribunal, the competent authority of the country where recognition or enforcement of the award is sought can, if it thinks fit, postpone such recognition or enforcement or grant it subject to such guarantee as that authority may decide.

Article 3.-If the party against whom the award has been made proves that, under the law governing the arbitration procedure, there is a ground, other than the grounds referred to in Article 1(a) and (c), and Article 2(b) and (c), entitling him to contest the validity of the award in a Court of Law, the Court may, if it thinks fit, either refuse recognition or enforcement of the award or adjourn the consideration thereof, giving such party a reasonable time within which to have the award annulled by the competent tribunal.

Article 4.-The party relying upon an award or claiming its enforcement must supply, in particular-

(1) the original award or a copy thereof duly authenticated, according to the requirements of the law of the country in which it was made;

(2) documentary or other evidence to prove that the award has become final, in the sense defined in Article 1(d), in the country in which it was made;

(3) when necessary, documentary or other evidence to prove that the conditions laid down in Article 1, paragraph (1) and paragraph (2) (a) and (c), have been fulfilled.

A translation of the award and of the other documents mentioned in this Article into the official language of the country where the award is sought to be relied upon may be demanded. Such translations must be certified correct by a diplomatic or consular agent of the country to which the party who seeks to rely upon the award belongs or by a sworn translator of the country where the award is sought to be relied upon.

Article 5.-The provisions of the above Articles shall not deprive any interested party of the right of availing himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.

Article 6.-The present Convention applies only to arbitral awards made after the coming into force of the Protocol on Arbitration Clauses opened at Geneva on September 24th, 1923.

Article 7.-The present Convention, which will remain open to the signature of all the signatories of the Protocol of 1923 on Arbitration Clauses, shall be ratified.

It may be ratified only on behalf of those Members of the League of Nations and Non-Member States on whose behalf the Protocol of 1923 shall have been ratified.

Ratification shall be deposited as soon as possible with the Secretary-General of the League of Nations, who will notify such deposit to all the signatories.

Article 8.-The present Convention shall come into force three months after it shall have been ratified on behalf of two High Contracting Parties. Thereafter, it shall take effect, in the case of each High Contracting Party, three months after the deposit of the ratification on its behalf with the Secretary-General of the League of Nations.

Article 9.-The present Convention may be denounced on behalf of any Member of the League or Non-Member State. Denunciation shall be notified in writing to the Secretary-General of the League of Nations, who will immediately send a copy thereof, certified to be in conformity with the notifications, to all the other Contracting Parties, at the same time informing them of the date on which he received it.

The denunciation shall come into force only in respect of the High Contracting Party which shall have notified it and one year after such notification shall have reached the Secretary-General of the League of Nations.

The denunciation of the Protocol on Arbitration Clauses shall entail, ipso facto, the denunciation of the present Convention.

Article 10.-The present Convention does not apply to the colonies, protectorates or territories under suzerainty or mandate of any High Contracting Party unless they are specially mentioned.

The application of this Convention to one or more of such colonies, protectorates or territories to which the Protocol on Arbitration Clauses opened at Geneva on September 24th, 1923, applies, can be effected at any time by means of a declaration addressed to the Secretary-General of the League of Nations by one of the High Contracting Parties.

Such declaration shall take effect three months after the deposit thereof.

The High Contracting Parties can at any time denounce the Convention for all or any of the Colonies, Protectorates or territories referred to above. Article 9 hereof applied to such denunciation.

Article 11.-A certified copy of the present Convention shall be transmitted by the Secretary-General of the League of Nations to every Member of the League of Nations and to every Non-Member State which signs the same.





The Arbitration and Conciliation Act 1996 is an Act that regulates domestic arbitration in India. It was amended in 2015.

The Government of India decided to amend the Arbitration and Conciliation Act, 1996 by introducing the Arbitration and Conciliation (Amendment) Bill, 2015 in the Parliament. In an attempt to make arbitration a preferred mode of settlement of commercial disputes and making India a hub of international commercial arbitration, the President of India on 23 October 2015 promulgated an Ordinance (Arbitration and Conciliation (Amendment) Ordinance, 2015) amending the Arbitration and Conciliation Act, 1996. The Union Cabinet chaired by the Prime Minister, had given its approval for amendments to the Arbitration and Conciliation Bill, 2015


2015 Amendment
The following are the salient features of the new ordinance, introduced in 2015:

The first and foremost amendment introduced by the ordinance, is with respect to definition of expression ' Court '. The amended law makes a clear distinction between an international commercial arbitration and domestic arbitration with regard to the definition of 'Court'. In so far as domestic arbitration is concerned, the definition of "Court" is the same as was in the 1996 Act, however, for the purpose of international commercial arbitration, 'Court' has been defined to mean only High Court of competent jurisdiction. Accordingly, in an international commercial arbitration, as per the new law, district court will have no jurisdiction and the parties can expect speedier and efficacious determination of any issue directly by the High court which is better equipped in terms of handling commercial disputes.

Through the amendment, a proviso to Section 2(2) has been added which envisages that subject to the agreement to the contrary, Section 9 (interim measures), Section 27(taking of evidence), and Section 37(1)(a), 37(3) shall also apply to international commercial arbitration, even if the seat of arbitration is outside India, meaning thereby that the new law has tried to strike a kind of balance between the situations created by the judgments of Bhatia International and Balco v. Kaiser. Now Section 2(2) envisages that Part-I shall apply where the place of arbitration is in India and that provisions of Sections 9, 27, 37(1) (a) and 37 (3) shall also apply to international commercial arbitration even if the seat of arbitration is outside India unless parties to the arbitration agreement have agreed to the contrary.

Section 8, which deals with 'Reference of parties to the dispute to arbitration', was amended. In Section 8, which mandates any judicial authority to refer the parties to arbitration in respect of an action brought before it, which is subject matter of arbitration agreement . The sub-section(1) has been amended envisaging that notwithstanding any judgment, decree or order of the Supreme Court or any court, the judicial authority shall refer the parties to the arbitration unless it finds that prima facie no valid arbitration agreement exists. A provision has also been made enabling the party, who applies for reference of the matter to arbitration, to apply to the Court for a direction of production of the arbitration agreement or certified copy thereof in the event the parties applying for reference of the disputes to arbitration is not in the possession of the arbitration agreement and the opposite party has the same.

Lastly Section 9, dealing with 'Interim Measures' was also amended. The amended section envisages that if the Court passes an interim measure of protection under the section before commencement of arbitral proceedings, then the arbitral proceedings shall have to commence within a period of 90 days from the date of such order or within such time as the Court may determine. Also, that the Court shall not entertain any application under section 9 unless it finds that circumstances exist which may not render the remedy under Section 17 efficacious.

The Arbitration and Conciliation Act, 1996 ('Act') has been amended by the Arbitration and Conciliation (Amendment) Ordinance, 2015 ('Ordinance'), promulgated by the President of India on October 23, 2015.

The Ordinance has introduced significant changes to the Act and seeks to address some of the issues, such as delays and high costs, which have been affecting arbitrations in India.

The Ordinance is an attempt to make arbitration a preferred mode for settlement of commercial disputes and to make India a hub of international commercial arbitration. With the amendments, arbitrations in India are sought to be made more user-friendly and cost effective. The major changes brought about by the Ordinance are summarized in this update.

Interim Measures
The Ordinance introduces a paradigm shift in the mode and method of grant of interim measures in an arbitration proceeding.

Recent judicial decisions (Bharat Aluminum Co v. Kaiser Aluminum Technical Services, Supreme Court (2012) 9 SCC 552) had held that Part I of the Act (which, inter alia, includes provisions on seeking interim reliefs before a Court in India) would not apply to foreign seated arbitrations. The Ordinance has inserted a proviso to section 2 of the Act, whereby, sections 9, 27 and clause (a) of sub-section (1) and sub-section (3) of Section 37 (all falling in Part I of the Act) have been made applicable to international commercial arbitrations, even if the place of arbitration is outside India. As a result a party to an arbitration proceeding will be able to approach Courts in India for interim reliefs before the commencement of an arbitration proceeding, even if the seat of such arbitration is not in India.

Importantly, under the newly inserted section 9(3), a Court cannot, as a matter of course, entertain an application for interim measure once an arbitral tribunal has been constituted, unless the Court finds that circumstances exist which may not render the remedy available under section 17 of the Act, i.e. approaching the arbitral tribunal for interim measures, efficacious. The intention of the Legislature is to limit the involvement of Courts in an arbitration proceeding thereby making such proceedings swift and effective.

Another important change introduced by the Ordinance is the power of an arbitral tribunal to grant interim reliefs. Though the original section 17 of the Act afforded an arbitral tribunal the power to grant interim measures, it definitely did lack the saber- tooth. In this regard the Supreme Court of India had held that though section 17 of the Act gave an arbitral tribunal the power to pass interim orders, but the same could not be enforced as an order of a Court (M/s. Sundaram Finance v. M/s. NEPC India Ltd., AIR 1999 SC 565, and M.D. Army Welfare Housing Organisation v. Sumangal Services Pvt. Ltd., AIR 2004 SC 1344). The Ordinance has substituted section 17 by a new section which ensures that an order passed by an arbitral tribunal under section 17 will now be deemed to be an order of the Court and shall be enforceable under the Code of Civil Procedure, 1908. Moreover, as discussed above, once the arbitral tribunal is constituted, all applications seeking interim measures would now be directed to it and not the Court.

Strict Timelines
The Ordinance brings about some strict timelines in completion of arbitration proceedings. Proceedings before Courts have also been made time-bound.

Commencing arbitration proceedings after obtaining an interim order from a Court
In order to discourage litigants who obtain an interim order under section 9 of the Act, but do not commence arbitration proceedings, a timeline of 90 (ninety) days to commence arbitration proceedings after obtaining an order under section 9 of the Act has been introduced.

Application to set aside an arbitral award
An application to set aside an arbitral award under Section 34 of the Act has to be disposed of by the Court within a period of 1 (one) year from its filing.

Application for appointment of an arbitrator
The Ordinance provides that the Chief Justice of the High Court or the Chief Justice of the Supreme Court of India, in an application for appointment of an arbitrator, can only confine themselves to ascertaining that a valid arbitration agreement exists. Such application is required to be disposed of within a period of 60 (sixty) days.

Completion of arbitration proceedings
As far as arbitration proceedings are concerned, newly introduced section 29A of the Act mandates completion of arbitration proceedings within a period of 12 (twelve) months of entering into a reference. Amended section 12 of the Act now requires an arbitrator to make a specific disclosure if there are circumstances which would affect his ability to complete the arbitration proceeding within the period of 12 (twelve) months.

Further, amended section 24 of the Act now empowers the arbitrator to impose exemplary costs on a party that seeks an adjournment before the arbitral tribunal without citing sufficient cause.

The parties to an arbitration may, however, by consent, extend the period for making an arbitration award for a further period not exceeding 6 (six) months. In case of expiry of the extended period, the mandate of the arbitral tribunal will stand terminated, unless a Court grants a further extension of the period, upon an application of the parties to the arbitration proceeding. When the Court grants an extension of time as above, it may substitute some or all of the arbitrators.

Fast Track Arbitrations
The Ordinance introduces a fast track arbitration proceeding.

Newly introduced section 29B of the Act provides for an option whereby the parties to an arbitration agreement may mutually decide to appoint a sole arbitrator who decides the dispute on the basis of written pleadings, documents and submissions. Oral hearing and technical formalities may be dispensed with for the sake of an expeditious disposal. An award has to be rendered within a period of 6 (six) months of entering into a reference.

Challenging an Award
Public Policy
Section 34 of the Act provides that an arbitral award may be set aside if it is contrary to 'public policy'.

The Supreme Court of India in ONGC v. Saw Pipes (2003) had expanded the test of 'public policy' to mean an award that violates the statutory provisions of Indian law or even the terms of the contract in some cases. Such an award would be considered as 'patently illegal' and therefore in violation of public policy. This interpretation practically afforded the losing party an opportunity to re-agitate the merits of the case. Though in a very recent judgment, the Supreme Court noted that while the merits of an arbitral award can be scrutinized when a challenge is made on grounds that an arbitral award has violated 'public policy, there were limitations as to the extent to which, such a re-evaluation can be conducted.

The Ordinance, however, clarifies that an award will be in conflict with the public policy of India, only in certain circumstances, such as if the award is induced or affected by fraud or corruption, or is in contravention with the fundamental policy of Indian law, or is in conflict with the most basic notions of morality or justice. Further, the Ordinance provides that a determination of whether there is a contravention with the fundamental policy of Indian law cannot entail a review of the merits of the dispute. This amendment seeks to limit the re-appreciation of the merits of the dispute at the stage of challenge to the award before the Court.

Hence, the Legislature has fundamentally reduced the scope of the inquiry by the judiciary into the question of violation of 'public policy'.

Patent illegality
Another amendment brought about by the Ordinance is that an arbitral award can be set aside by a Court if the award is vitiated by patent illegality appearing on the face of the award.

However, an award cannot be set aside merely on the ground of an erroneous application of law or by re-appreciation of evidence.

Stay on enforcement of an award
The Ordinance provides that the mere filing of an application challenging an arbitration award would not automatically stay the execution of the award. The execution of an award will only be stayed when the Court passes any specific order of stay on an application by a party to the proceeding.

Ensuring Impartiality of an Arbitrator
The Ordinance gives foremost importance to the impartiality of an arbitrator. Original Section 12 of the Act necessitated an arbitrator to disclose in writing circumstances likely to give rise to justifiable doubts as to his independence or impartiality. The Ordinance specifies in elaborate detail the circumstances which may lead to such justifiable doubts. The newly inserted fifth schedule of the Act lists 34 (thirty four) such grounds which shall act as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. It is now important to see how proximate the arbitrator is to a party to the proceeding and/or the party's lawyer.

Arbitration Fees
In a very significant step, the Ordinance provides a cap on the fees to be paid to an arbitrator, barring international commercial arbitrations and institutional arbitrations. The amendment to Section 11 of the Act empowers the concerned High Court to frame rules to determine the fees of the Arbitral Tribunal and the mode of such payment. The rates specified in the newly inserted fourth schedule have to be considered.

The Definition of 'Court'
Original Section 2(e) of the Act provided a single definition of 'Court', which meant a District Court, or the High Court exercising its ordinary original civil jurisdiction, as the case may be. The Ordinance, however, bifurcates the definition and clearly specifies that unlike other arbitrations, in case of international commercial arbitrations, only a High Court exercising its ordinary original civil jurisdiction will qualify as a 'Court'.