Arbitration

Arbitration

“Arbitration is the settlement of disputes and differences relating to civil matters (e.g., money, property or breach of contract) between one party and another in a judicial manner, by the decision of one or more persons, called arbitrators, appointed by the contending parties, without having recourse to a court of law”.

Arbitration agreement

Arbitration agreement is 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.”

Form of Arbitration Agreement:

1. An Arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

Form of Arbitration Agreement

• 2. It must be in writing. It shall be presumed to be in writing if it is contained in :

• (a) a document signed by both 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 party.

Arbitrator

A person who is appointed by the parties themselves by their mutual consent to act as a judge to decide their dispute out of court is called an ‘arbitrator’. The person so appointed must also give his consent to act as arbitrator.

Provisions regarding Appointment of Arbitrators:

(1) A person of any nationality

may be an arbitrator, unless

otherwise agreed by the parties.


• (2) The parties are free to agree

on a procedure for appointment

of an arbitrator or arbitrators.


• (3) If the parties fail to agree

on a procedure for appointment

of an arbitrator or arbitrators,

the following procedure shall apply.


• 3(a) 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.

• The presiding arbitrator has the same powers as the other two arbitrators.


• 3(b) If a party fails to appoint an arbitrator within 30 days from the receipt of a request to do so from the other party, or

• if the two appointed arbitrators fail to agree on a 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.


• 3(c) In an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within 30 days from receipt of a request by one party to 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.


• (4) Where under an appointment procedure agreed upon by the parties –

• (i) a party fails to act as required under the procedure or• (ii) the parties, or the two appointed arbitrators, fail to reach an

agreement expected of them under the procedure; or • (iii)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.

• The decision of the Chief Justice or his designate is final in all matters referred above.


• (5) In case of appointment of sole arbitrator 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.


• (6) Where more than one request has been made under the above provisions to the Chief Justice of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made shall alone be competent to decide on the request.


• (7) The reference to “Chief Justice” in all matters referred above shall be construed as a reference to the “Chief Justice of India” in case of international commercial arbitrations, and to the “Chief Justice of State High Court” in case of domestic arbitrations.

Powers of Arbitrators:

The powers and duties of the arbitrator will be governed by the arbitration agreement provided the same are not contrary to any provisions of law.

Some of the powers and duties are prescribed by law and by judicial decisions.

Powers of Arbitrators

1. To administer oath

to the parties and witnesses

appearing before him.


• 2. To refer matters of law

or the award

for the opinion of the court.


• 3. To correct in the award

any clerical mistake or error

arising from any accidental slip

or omission.


• 4. To put necessary interrogatories

to any party to the arbitration.


• 5. To award interest upto

the date of the award.


• 6. To determine

by and to whom

the costs of reference

and the award

shall be paid.


• 7. To allow payment by instalments.

• 8. To make an interim award.


• 9. To order for

the specific performance

of the contract.


• 10.To appoint experts

for his guidance on

questions of a scientific

or technical nature.


• 1. To administer oath to the parties and witnesses appearing before him.

• 2. To refer matters of law or the award for the opinion of the court.

• 3. To correct in the award any clerical mistake or error arising from any accidental slip or omission.

• 4. To put necessary interrogatories to any party to the arbitration.

• 5. To award interest upto the date of the award.


• 6. To determine by and to whom the costs of reference and the award shall be paid.

• 7. To allow payment by instalments.

• 8. To make an interim award.

• 9. To order for the specific performance of the contract.

• 10.To appoint experts for his guidance on questions of a scientific or technical nature.

Duties of Arbitrators:

• 1. To enter into the reference

with all reasonable dispatch

and make an award

within the prescribed time.


• 2. To act impartially,

as he holds a

quasi-judicial position.


• 3. To observe the rules of evidence

based on principles of natural justice.


• 4. Not to misconduct himself

or the proceedings in any way.


• 5. To act within

the scope of his authority

as per the arbitration agreement.


• 6. To disclose to the parties

before accepting the work of arbitration, if he has any interest

in the subject-matter of dispute

or in any party to the dispute.


• 7. Not to delegate his authority

to somebody else.


• 8. Not to make use of

his personal knowledge

unless authorised to do so.


• 9. To be present in

every meeting of the arbitrators,

in case there are any.


• 10.To give a final award

on all matters referred to him.

To sign the award and

make it available to the parties

to the arbitration agreement

within a reasonable time.


• 1. To enter into the reference with all reasonable dispatch and make an award within the prescribed time.

• 2. To act impartially, as he holds a quasi-judicial position.

• 3. To observe the rules of evidence based on principles of natural justice.

• 4. Not to misconduct himself or the proceedings in any way.

• 5. To act within the scope of his authority as per the arbitration agreement.

Duties of Arbitrators

• 6. To disclose to the parties before accepting the work of arbitration, if he has any interest in the subject-matter of dispute or in any party to the dispute.

• 7. Not to delegate his authority to somebody else.• 8. Not to make use of his personal knowledge unless

authorised to do so.• 9. To be present in every meeting of the arbitrators, in

case there are any.• 10.To give a final award on all matters referred to him.

To sign the award and make it available to the parties to the arbitration agreement within a reasonable time.

What can be referred to arbitration:

1. Matters of a civil nature,

e.g.disputes about property or money, disputes about the amount of damages payable for breach of contract,

questions of law.


2. Matters relating to personal rights between the parties

e.g. a question of validity of marriage or maintenance payable to wife,

terms of separation between

husband and wife.


3. Disputes regarding dignity

and respect.


4. Time-barred claims.


1. Matters of a civil nature, e.g.disputes about property or money, disputes about the amount of damages payable for breach of contract, questions of law.

2. Matters relating to personal rights between the parties e.g. a question of validity of marriage or maintenance payable to wife, terms of separation between husband and wife.

3. Disputes regarding dignity and respect. 4. Time-barred claims.

What cannot be referred

1. Disputes relating to

matrimonial relations like

a suit for divorce or

restitution of conjugal rights.


2. Testamentary matters

e.g. question of genuineness

or otherwise of a ‘will’.


3. Insolvency matters

i.e. adjudging a person

as an insolvent.


4. Questions relating to

public charities or

charitable trusts.


5. Matters relating to

guardianship of a minor

or a lunatic.


6. Criminal matters and disputes.


1. Disputes relating to matrimonial relations like a suit for divorce or restitution of conjugal rights.

2. Testamentary matters e.g. question of genuineness or otherwise of a ‘will’.

3. Insolvency matters i.e. adjudging a person as an insolvent.

4. Questions relating to public charities or charitable trusts.

5. Matters relating to guardianship of a minor or a lunatic.

6. Criminal matters and disputes.

Contents of an Arbitral Award:

• 1. An arbitral award shall be made in writing. An oral decision is not an award under the law.

• 2. The award shall be signed by the members of the arbitral tribunal. Where there are more than one arbitrator, the signatures of the majority of all the members shall be sufficient provided that the reason for any omitted signature is stated.


• 3. The award must state the reasons upon which it is based. In other words the arbitral tribunal must give a speaking award or reasoned award setting out the reasons which led the arbitrator to arrive at the conclusions upon the questions or issues that arise in the arbitration proceedings. However, there are two exceptions where award without reasons is valid.

Contents of an Arbitral Award:(3)

When award with giving reasons is valid :

a) Where the arbitration agreement expressly provides that no reasons are to be given or

b) Where the award has been made under Sec. 30 of the New Act, i.e. where the parties settled the dispute themselves and requested the arbitral tribunal to record the settlement in the form of an ‘award’ and accordingly the tribunal gives the award in terms of the settlement.


• 4. The arbitrator may make an ‘interim award’ on any matter on which final award may be made. An interim award remains in force till the final award is made.

• 5. The arbitral award shall state its date and the place of arbitration. Place of arbitration is important for the determination of rules of law applicable to arbitration, and recourse against the award.


• 6. Unless otherwise agreed by the parties, where the award is for the payment of money, the arbitral tribunal may include interest at a reasonable rate upto the date of the award and also direction regarding future interest. Unless stated otherwise, the rate of interest shall be 18% from date of the award till date of payment.

• 7. After the award is made, a signed copy should be delivered to each party for appropriate action like implementation or recourse against the arbitral award.

Documents

Arbitration