The Arbitration Act

7/27/2019 The Arbitration Act

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The Arbitration Act

Course Contents:

1. The Arbitration Act (X) of 1940 (as amended upto date).

Books Recommended:

1. The Arbitration Laws by Muhammad Farani.

2. The Arbitration Act (X of 1940) by Mian Ghulam Hussain.

Arbitration does mean the determination of disputes by the decision of one or more persons who are called arbitrators, e.

in commercial matters. An umpire decides differences between the arbitrators.

No appeal lies to Court against the award of arbitrator but application can be made to District Judge.

An agreement to refer a dispute to arbitrators is called an arbitration agreement, and if legal proceedings are instituted in

contravention of the submission the defendant may, but only before delivering pleadings, or taking any other step in the

proceedings, apply to the Court to stay them. The decision of arbitrator is called an award, which can be appealed against

the High Court on the ground of mistake of law. A legal process can enforce a valid award. The Court may remove an

arbitrator for misconduct or set aside his award.

Arbitration agreement: It means a written agreement to submit, present or future differences to arbitration, whether an

arbitrator is named therein or not.

Reference: It means a reference to arbitration.

Appeal against award: The decision made by the arbitrator is called award. Appeal cannot be instituted in Court. An

application can be made against the award by both looser and gainer on the grounds lesser or greater remedy. Both partie

may put their objections in application. Court must have territorial and pecuniary jurisdiction.

This Act does not provide number of arbitrators but it should be one preferably. More parties may appoint more arbitrato

but if the appointment bears even numbers then one umpire must be appointed to give award.

Time period for award: Arbitrators are obliged by law to give award within four months. Only Court may extend this period

upon justifiable grounds. Clause for the award may not be necessarily incorporated in agreements. It is considered implied

incorporation if not specifically provided.

Time period for award remains two months for umpire. This period may also be extended with the permission of Court.

Arbitration is not a Court. No specific qualification is required for appointment. Court cannot change or alter award of

arbitrator and if any change is desired, Court orders to arbitrator to alter such award.

If witnesses refuse to testify the truth in question, Court may call them also to testify the truth.

Arbitrator and party mutually decide the fee for the purpose of arbitration. Court cannot intervene in the appointment of

the arbitrator and alteration of the award. When agreement is written, parties have right to appoint arbitrator to anybody

whosoever. Power to appoint the arbitrator can be delegated.

Appointment of the arbitrator remains irrevocable unless he commits misconduct in proceedings or illegality or fails in the

dispensation of justice. Death of the appointing authority normally does not affect his appointment but if a person upon

personal qualification appoints him then death of the appointing authority revokes his appointment.

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The Arbitration Act

The purpose of the S. 7 is to standardize the law as to the effect on an arbitration agreement and proceedings on insolven

of a party thereto.

Where any contract to which a bankrupt is a party contains an agreement to refer to arbitration any dispute which may ar

thereunder, and the trustee in bankruptcy adopts the contract, the agreement to refer will be enforceable by or against h

Even where there has been no such adoption, the Court has discretion upon the application either of the justice, with the

leave of the committee of inspection, or of any other party to the agreement, to make an order that the matter be referre

to arbitration.

Origin of S. 7: Andrew v. Plamer was a leading case on this point. In that case the Court observed, “The bankruptcy did not

operate as a revocation of the submission. It would not have put an end to the suit, which the bankrupt had instituted, no

could it, therefore, put an end to the arbitration founded upon that suit. If he has commenced an action without having an

cause for it, the bankruptcy neither does nor ought to protect him against the consequences of it.”

Power of liquidator to refer: The powers, which living companies as regards reference of disputes to arbitration may posse

are not co-extensive with the power to be exercised by the liquidators. The directors of the company are supposed to kno

their own business being businessmen, while an Official Liquidator is very often a new man unconnected with the business

carried on by the company. His knowledge and information of men and things is not likely to be co-extensive with similar

knowledge of the directors. It, therefore, does not follow that because a living company is allowed to refer matters indifference to arbitration in a particular way that an official assignee is allowed to make a reference to private arbitration. B

where an arbitration agreement has been entered by a company and then goes into liquidation it appears that the princip

underlying this section should apply in the case of a liquidator.

Where during the pendency of the insolvency proceedings the receiver and the secured creditors referred the matter to

arbitration and the award directed the receiver to bring the insolvent’s property, which was ancestral (inherited, hereditar

and revenue paying, to sale and realize the sale proceeds through Court: held, that the Insolvency Act has no provision to

prevent secured creditors from acting according to the award, but the better way would be to obtain the insolvent’s

discharge under S. 38 and deal with the property outside the jurisdiction of the insolvency Court. The receiver would then

cease to be a receiver under the insolvency, but being a person vested by the arbitrator with authority to sell the property

under the arbitration provisions, would be able to sell the property under the terms of the award.

Agreement of arbitration: Arbitration does mean solution of dispute before going to Court. Parties put their disputes befo

the person to whom they appoint at their own choice under agreement made between them. When parties form contract

they may incorporate a clause of arbitration in agreement that they shall refer their disputes toward arbitrator. Where thi

clause is not incorporated in agreement, it is presumed that it has been incorporated.

Where parties are agreed to refer dispute to arbitrator, they cannot invoke to Court of law before going into this forum.

Agreement of reference: Where parties remain fail to resolve their dispute by way of arbitration, they may agree to refer t

case to Court for its interpretation.

How agreement of arbitration is enforced: Following are the method by which agreement of arbitration is enforced:

1. By appointment: When dispute is arisen, parties may appoint arbitrator on their part. As soon appointment of

arbitration is made, agreement of arbitration is enforced.

2. By notice: Party may give notice to other party for appointment of arbitration on his part where other party remains

fail to appoint arbitrator.



The Arbitration Act

3. By Court: Court may also enforce this agreement where one party remains fail to appoint arbitrator either upon dispu

or notice of other party.

Qualification of arbitrator: As far as qualification of an arbitrator is concerned, this Act does not describe any particular

qualification for him. He may either be person of ordinary prudence or/and person of sound mind and major. Following ar

the qualifications:

1. Major: He must be major as minor is not competent to act under contract of any type.

2. Sound mind: Person who is person of unsound mind and could not understand the requirement under arbitration

cannot be appointed as arbitrator.

3. Competent: It does mean that he is not debarred under any law of land, i.e., bankrupt or insolvent.

4. Appointment under contract: His appointment is made under contract which parties make. If the clause for arbitratio

is not provided in agreement, even than it is deemed that it has been incorporated.

Power of Court to appoint arbitrator or umpire: In normal circumstances Court does not intervene in the appointment of

arbitrator. But there are certain factors, which put pressure on Court to act for the compliance of law. Responsibilities of

parties and power of Court can be described as under:

1. Agreement: There must be agreement for the appointment of arbitrator. If agreement does not provide the

appointment of arbitrator then question of his appointment does not arises.

2. Agreement between parties: If two persons form one party then this Act is not applicable on them. Agreement must

within two or more parties who have agreed to appoint arbitrator upon requirement.

3. Consents of parties: Appointment of the arbitrator is made with mutual consents of the parties concerned. No one ca

be compelled in contrast. Both parties shall appoint arbitrators of their own choice.

4. Disputes: Appointment of the arbitrator is subject to the rise of dispute. In the absence of dispute appointment of

arbitrator becomes needless.

5. Filling of the vacant position: Appointment becomes compulsion when arbitrator appointed dies, mentally becomes

incapable to act upon, neglects in working, or refuses to act with or without reason. In case of even number of arbitrator

one umpire is also becomes necessary.

6. Notice of appointment: If one party fails to appoint arbitrator in original or upon occurrence of vacancy or umpire in

case of even number arbitrators, other party shall give clear notice to do so within fifteen days failure of which shall cause

intervention of Court.

7. Application to Court: Non-compliance of the notice shall give rise to make application to Court for the appointment o

arbitrator. Court shall give chance to parties for the explanation. Upon satisfaction, Court shall appoint arbitrator or

arbitrators or umpire, as the case may be to act in references. New appointee shall make award. This appointment shall be

considered as made by the parties.

8. Agreement for the appointment of two arbitrators: Where agreement provides to appoint two arbitrators by the

parties, both are obliged by law to appoint them upon the rise of dispute. Negligence of one party may put other party to

give clear notice of fifteen days for the compliance of the provisions of contract.

9. Arbitration upon default: When other party fails to appoint arbitrator on its part, first party may compel to its

arbitrator to work as sole arbitrator.



The Arbitration Act

10. Filling of vacant position: If any appointed arbitrator refuses to work, neglects, dies, or incapacitated to work, party is

duty bound to fill in the vacancy incurred. Other party has to serve a clear notice of fifteen days to fill in vacancy incurred.

11. Excusable default: When party commits default in compliance of law to appoint arbitrator either original or substitute

may apply Court to get more time for the appointment of arbitrator by giving justifiable reasons.

12. Appointment of three or more arbitrators: Parties may provide in agreement for the appointment of three or more

arbitrators to reach conclusion. Award of majority shall be binding on parties.

13. Appointment by parties: Only parties are competent to appoint arbitrator under law. Arbitrators cannot appoint

arbitrator or arbitrators. Appointment made by arbitrator shall be termed umpire.

14. Need of third appointment: Where contract provides appointment for two arbitrators, and both reach on equal

conclusion and are divided in two parties, there parties or arbitrator may appoint another person as umpire who shall

second the opinion of one of both and his decision shall be binding on parties. He may vary in the decision of the arbitrato

He is independent. Arbitrators may refer their decision toward umpire. Umpire does not interfere in the proceedings of

arbitrators.

Removal of arbitrator and punishment u/s 11: Although Court cannot intervene in the appointment or removal of the

arbitrator but there are certain grounds, which lead his removal such as:

1. Fail to use all reasonable despatch: It means if arbitrator fails to give award, Court may remove him provided other

party applies to Court for his removal on such ground. They have to record evidence or inspect documents to reach on

conclusion and their failure to do put in their removal.

2. Misconduct: It is another reason to remove him upon application to Court. It includes his personal misconduct or

misconduct in proceeding.

3. Failure in unanimous decision: Where more than one arbitrators fail to give their unanimous decision then party or

parties may apply to Court for their removal. Upon failure in unanimous decision other party has to give notice of such

failure to defaulter. After serving a notice application can be moved to Court for the termination of arbitrator or umpirewhatsoever situation is.

Punishment upon removal: Arbitrator or umpire who fails to do for what he is appointed is punished by debarring his

remuneration, which was decided at the time of his appointment. His entitlement of remuneration under law becomes

ineffective. His right of remuneration ends when he is terminated upon failure to give award.

Revocation of authority u/s 12:

Filling of the vacancies: When Court removes umpire or arbitrator in non-compliance of the agreement for which entered

upon, Court appoints umpire or arbitrator upon occurrence of vacancy provided party applies for such appointment.

Where authority of arbitrator or arbitrators or umpire is revoked by the leave of Court or upon application, then Court eith

shall appoint another arbitrator as he appointed by the parties concerned or shall order to cease the arbitration agreemen

upto the extent of difference.

Powers of arbitrators or umpire: Law recognizes certain powers to arbitrators or umpires to reach on conclusion. They are

under:

1. Administration of oath: He or they may call witnesses to appear before them and take oath to give evidence. The

arbitrator may give his reasons for shutting out certain amount of evidence sought to be tendered.



The Arbitration Act

2. Reference to Court: Since they are not special person and have no specific qualification so they may refer the case

toward Court for its opinion.

3. Correction of mistakes: If any clerical mistake is found in their award, they may rectify it to make the award fair and

just.

4. Administration of cross-questions: To avoid time consuming they may collect the objections of one party in term of

questions and may forward toward second party to answer them and put their own questions, if any. Such interrogations

may be sent to Court for cross-examination through Court.

5. Making award: They may make award which may be either conditional or in the alternative.

Finality of award: Upon the completion of the work of award, arbitrators shall do as follows:

1. Signature on award: Whenever award is made, makers are required to sign it as a sign of finality.

2. Notice to parties: Arbitrators are required by law to notify such making of award to parties. They also may notify thei

fees and other charges payable in respect of arbitration and award.

3. Deposition of award: Arbitrators may deposit award to Court on the desire of parties.

4. Orders of Court: If arbitrators have referred the case toward Court for the opinion of Court and Court has given

instruction, Court shall revert the case toward arbitrators after making some suggestions so that it may form the part of

award. Court itself cannot make its orders as part of award.

Exceptions: Under the following circumstances, award remains not final:

1. Remit award:

2. Interim order:

3. Supercede arbitration:

4. Payment of remuneration:

5. Stay where agreement:

Powers of Court in respect of modifications u/s 15: Court may at any stage modify the award to some extent but not at all.

Powers of Court are as follows:

1. Modification on irregularity: If it appears that arbitrators have made award on the matters which were not referred

toward them, Court may separate it if it does not effect the original or substantial award referred.

2. Modification on imperfection: If award contains any error, which can be modified without effecting such decision,Court may alter award. It may be any matter un-referred. It does not amount intervention of the Court but mere procedur

intervention.

3. Modification of clerical error: Court may modify in any clerical error if occurred.

Powers of Court to remit award: Court may remit award when presented to Court to arbitrators or umpire whatsoever cas

is in certain cases, such as:



The Arbitration Act

1. Remittance upon non-determination of referred matter: Court may remit the award toward arbitrators or umpire,

whatsoever case is, for reconsideration if any of the matter remains undetermined which were referred for arbitration. He

again intervention of Court is mere procedural.

2. Remittance upon determination of un-referred matter: Where arbitrators or umpire has determined any matter

actually not referred for arbitration, Court remits it back to arbitrators or umpire for reconsideration provided it is not

separable by the Court. Court intervenes if the matter is separable. Here again Court shall not intervene for the modificati

of award but shall leave it to its originators whatever they may do.

3. Remittance upon incapacity of execution: If award remains incapable to execute, Court shall remit it to arbitrator or

umpire for reconsideration.

4. Remittance upon the question of apparent illegality: Award can be remitted only where the question of law necessar

arises on the face of the award or upon some paper accompanying and forming part of the award and that question ex-

facie has been decided wrongly; otherwise not.

Powers of Court in case of remittance of award: Court exercises certain power when remit award, including:

1. Fixation of time: Court fixes the time for arbitrators or umpire so that they may reconsider and submit their decision

Court.

2. Subsequent extension of time: Court may subsequently extend the time period to reach on the conclusion.

3. Declaration of award null and void: When arbitrators or umpire fails in reconsideration of award within time limit wh

Court grants, Court may declare such award void.

4. Grant of decree on award: Court is entitled to a decree upon award if party in whose favour the award is made, if no

application is filed or if the application is filed and dismissed on merits.

5. Power to set aside award: Opportunity is given to party challenging or disputing the award to file an application to se

aside the award and the application has got to be filed within the period of limitation prescribed by Limitation Act.

6. Power to pass interim order: Court exercises this power in a case where an award has been filed and a decree has be

passed. But where some one of the parties had been trying to defeat or delay or obstruct the execution of the decree pass

upon the award, in such cases, the Court is specifically empowered by law to pass interim orders that may be deemed

necessary. The power of Court is discretionary. The order of the Court is not appeal-able.

7. Power to reverse order: Aggrieved party may approach Court to reverse order being not having mala-fide intention,

which may occur after the decree of Court.

8. Power to supersede arbitration: If award becomes void on the ground of failure of the arbitrators or umpire for

reconsideration of award upon remittance, Court may supersede the arbitration at all. This is exclusive power of Court.

Arbitration with intervention of Court: Court may intervene in arbitration in certain circumstances provided:

1. Non-pendency of suit: If agreement has been framed but no suit is pending in any Court regarding the subject matter

of the agreement.

2. Arising out of dispute: A dispute regarding the subject matter has arisen between the parties, which requires

arbitration.



The Arbitration Act

3. Application of parties to Court: Parties have applied to Court for its intervention. Application must follow the procedu

provided in Arbitration Act, 1940.

Procedure of Court on application: When the application is moved to Court for its intervention in arbitration, Court follows

the procedure provided in Arbitration Act, 1940. Procedure follows rules as follows:

1. Notices to parties: Court serves notices to the parties interested as defendant in the application except plaintiff who

physically presented in the Court to file suit.

2. Order for filing of agreement: Where no sufficient cause is shown in the application, Court orders the agreement to b

filed. In the absence of a “sufficient cause” the Court shall order the agreement to be filed andshall call upon the arbitrato

mentioned in the agreement of the parties or otherwise agreed by them, to decide the dispute. If the parties cannot agree

then the Court shall have a right to appoint another arbitrator.

Previously the Court was not entitled to fill up the place of an arbitrator who had refused to act. But now if the arbitrator

named in the agreement declined to act, the Court could ask the parties to agree to another person as arbitrator, and if th

parties still could not come to an agreement, the Court could intervene.

3. Reference to arbitration: Court may refer the case toward arbitrators appointed by parties or in case of their failure

appointed by Court for their determination.

4. Arbitration under Arbitration Act, 1940: All the provisions of the Arbitration Act, 1940, shall apply on the case where

Court refers case towards arbitrators after making of an application by parties.

Arbitration in suits u/ss 21 – 24: Court may also intervene in arbitration when suit is under litigation before they enter in

arbitration agreement. Following are requirement for arbitration in suits:

1. Agreement of parties:

2. Matter is related with suit:

3. Reference to arbitration:

4. Application writing:

5. Application to Court: All interested parties are required to apply Court for the reference of arbitration.

6. Application before judgement:

Agreement of arbitrators: Number of arbitrators and the manner of their appointment and award should be pre-decided.

Order of Court to make reference:

Determination of time: Only Court determines the time for arbitration.

Determination of disputed matter: Only Court determines the matter of dispute.

Stay of Court’s proceedings:

Reference only for joining parties: It is not binding for the non-joinders.

Time of application: This application for reference to Court must be submitted before the pronouncement of the Court.

Once the Court has decided the case and judgement has been made, not application is liable to submit in Court for referen

to arbitrators.



The Arbitration Act

Appointment of arbitrator: Appointment of arbitrator is made in a manner as, he is appointed by the parties.

Order of reference: Court refers the matter to arbitrators which is to be determined.

Time limit: Court fixes the time limits for the arbitrators, during which they have to determine the matter referred. Court

determines that how much time shall be suitable to determine the matter.

Responsibility of Court: Court does not interfere in the matter, which is referred to arbitrator unless it is saved and require

under law.

Partial arbitration: Where some of the parties apply for arbitration for rest matter to Court, Court shall refer the matter to

arbitrator for those who apply. It should be kept in mind that such matter is referred to arbitrator, which is separable and

applied. Remaining case is rest in Court for decision and judgement.

Award is binding for the parties who applied to do so and rest shall wait for Court’s judgement, which shall be binding for

them. Award and judgement have no effect over each other. These are two separate matters.

Applicability of other provisions: The provisions of the other Chapters shall so far as they can be made applicable, apply to

arbitration under this Chapter. Court may supercede the arbitration where due appointments are not made by the parties

concerned.

Application of Chapter V: Provisions of this Chapter are applicable in all cases provided they are not saved.

Making interim award: Where arbitrators or umpire feels necessary they may make interim award.

Time extension for award: Court may time to time extend the time so that award can be made. Arbitrators cannot extend

time without consents of the parties.

Interest on award: Interest is not payable unless Court grants it. Only Court is competent to grant interest on principal

amount due on award.

Grounds to set aside award u/s 30: Award can be set aside on the following grounds:

1. Misconduct: If arbitrator has committed misconduct during or at the time of making award.

2. Making award after Court’s order: When Court has made order to cease the proceeding and award has been made

shall be declared null and void.

3. Determination of un-referred matter:

4. Left matter referred:

5. Incapable to execute:

6. Illegality:

7. Irregularity:

8. Disregard of Court’s order:

9. Non-separation of undesirable matter:

10. Sufficient reasons u/s 26 – A:



The Arbitration Act

11. Fraud:

12. Coercion:

No suit can be instituted in civil Court against the award. Only application can be moved in civil Court having jurisdiction.

Decree is a part of judgement based upon reason. Every judgement is appeal-able. Order is also judgement. Every order is

not appeal-able. Locus standi does mean person who is competent to stand before Court. He may either be plaintiff or

defendant.

Determination of award: A person is permitted to challenge the arbitration agreement or award only. The existence of

contract itself cannot be challenged. Ordinarily, the Court should decide the questions on affidavits. But where such

questions cannot be conveniently tried by affidavits, the Court is entitled to examine witnesses.

Power to stay legal proceedings on arbitration agreement: Where suit is pending in Court against the other party of the

agreement and other party applies for the determination of the case by the arbitrator, Court shall stay the proceedings an

upon satisfaction case shall refer to arbitrators. Court set-asides its proceedings.

Where any party to an arbitration agreement commences any legal proceedings against any other party to the agreement

such party may apply to the judicial authority before which the proceedings are pending to stay the proceedings. And if th

judicial authority is satisfied that there is sufficient reason why the matter should not be referred in accordance with the

arbitration agreement then such authority may make an order staying the proceedings.

Effects of legal proceedings on arbitration: Where concurrent proceedings are started and Court has served notice to

arbitration or umpire and they have received such notice and they are present in Court for proceedings, Court shall not se

aside the proceedings. Proceedings are not a guarantee to stop the arbitration or award. Where notice has been served an

parties are present in Court, Court shall not invalidate its proceedings.

Stay or continuous of proceedings in Court are subject to the no objection of the parties. Proceedings after order of the

Court or making award undergo null and void.

Condition precedent: Condition precedent if provided in agreement is not maintainable in courts. It is first essential that th

Court should order that the agreement shall cease to have effect as regards the particular dispute. And upon making such

order, if the agreement contains a provision that an award under an arbitration agreement shall be a condition precedent

the bringing of an action in respect of any matter to which the agreement applies, may further order that the provision

making an award a condition precedent to the bringing of an action shall also cease to have effect as regards that dispute.

Limitations: Limitation period for the purpose of arbitration is as in other proceedings in Court appended in Limitation Act,

1908.

The terms and conditions of the agreement cannot change limitation period and if so, they are null and void.

Limitation for appointment of arbitrator: Time limit for the appointment of arbitrator commences when the notice is serve

to him for his appointment. If one party has appointed arbitrator, she is required to serve a notice to other party to do so f

the appointment of the arbitrator on its part. When one party serves notice to other party, then limitation commences.

Waive off limitation period: Where limitation period has been expired but party applies to Court for the waiver of the laps

time period, Court may, if thinks fit, extends the limitation period. Limitation in suit is not waived off while limitation in

appeal may be waived off.



The Arbitration Act

Dispute of remuneration: Where dispute arises regarding the remuneration, arbitrator or umpire may seize to deliver awa

until or unless his remuneration or fee is paid. He may file an application to Court for the payment of his remuneration or

fee.

Order of Court: Court may order to arbitrator or umpire to deliver award to applicant provided party deposits the amount

remuneration or fee to Court whatsoever he has demanded.

Inquiry of Court: As soon as party deposits the amount in Court, Court proceeds an inquiry to arrive at the conclusion. If

Court arrives at the conclusion that amount demanded is justifiable then it shall be given to arbitrator or umpire. If Courtthinks fit that he has demanded unreasonable amount, Court may deduct such an extra amount and balance shall be

refunded to the party deposited. Assessment is responsibility of the Court. Until fee is not paid, award shall not come into

force.

Non-maintainability of the application: No application is maintainable where there is a written agreement between the

parties and the arbitrator as regards his remuneration. Case is maintained where express provision so as to remuneration

not provided and mere implied consents for the payment of remuneration are made.

Appeal-able orders: Following are the order against which appeal can lie in the Court having jurisdiction:

1. Superseding arbitration;

2. On an award stated in the form of a special case;

3. Modifying or correcting an award;

4. Filing or refusing to file an arbitration agreement;

5. Staying or refusing to stay legal proceedings where there is an arbitration agreement;

6. Setting aside or refusing to set aside an award.

Only one appeal lie in the Court of having jurisdiction but provisions of this law cannot take away the right to appeal to theSupreme Court, which is second appeal.

When a dispute has been referred to arbitration, the Court’s jurisdiction to interfere in the findings of the arbitrator is very

limited and confined to the grounds specified herein. It is therefore obvious that it is not open to ask the Court to go into t

details of the claim and counter claim to reassess the questions as if this was Court of appeal from a decision of a civil Cou

in its ordinary jurisdiction. No appeal lies unless law gives it.

Small Cause Court: These courts are the products of separate enactment of the parliament namely “Small Cause Courts Ac

These courts cannot control arbitration administratively but can refer the case to arbitrators. Every case of arbitration is

liable to proceed in these courts. Their general pecuniary jurisdiction is upto Rs. 5,000/-.

Small Cause Court shall have neither jurisdiction over the proceedings of arbitration which have started not will it have

jurisdiction to entertain any application which may arise out of those proceedings. A small Cause Court can, therefore, pas

an order staying suit.

These courts are not likely Civil Courts like grade 1, 2, or 3. These have less power confined for pecuniary jurisdiction upto

Rs. 5,000/-. Neither application can be moved for arbitration nor they can administer arbitration nor they can make

correction in award. But where already dispute is pending in Small Cause Court, Court can refer the arbitration to arbitrato

or umpire upon application.



The Arbitration Act

Code of Civil Procedure is not applicable on arbitrators. Mere parties empower to arbitrators. In case of Court Code of Civi

Procedure is applicable and law grants power to Court and not the parties.

Service of notice: Court, arbitrator, or umpire shall deliver the notice to party in the manner provided in the agreement. In

the absence of provision in agreement notice shall be served in the following manner:

1. Personal delivery: It shall be delivered to the person to whom it is to be served.

2. By post: It can be mailed by registered post to the last known abode (home, dwelling, or residence) address or busine

in Pakistan.

Power of Court to issue notice: Court adopts the same process to service the notice as its own case provided under Order

of the Code of Civil Procedure.

Failure in the presence before Court or arbitrator is punishable offence.

Power of High Court to make rules: High Court has power under this Act to frame rules as to how:

1. Award is filed.

2. The filing and hearing of special cases and all proceedings.

3. Staying powers.

4. Making of forms to be used in Act.

5. All proceedings of the Court under this Act.

Various modes of arbitration: Following are the modes of arbitration:

1. Without intervention of Court:

2. With intervention of Court:

3. Agreement of arbitrators:

4. By notice of parties:

5. Statutory arbitration:

6. By appointment of arbitrators:

Different ways to refer arbitration: Following are the ways to refer arbitration:

1. By parties:

2. By liquidator:

3. By agreement:

4. By Court:

5. By receiver:

6. By administrator:



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7. By executor:

8. By legatee:

Statutory arbitration: Some time arbitration is made as the requirement of statute. It is called statutory arbitration. Under

this arbitration agreement is not necessary. Statutory arbitration is such arbitration which do not flows from any arbitratio

agreement between the parties but by virtue of some provisions of some statute, such as:

1. The Contract Act, 1872 (Ss. 260 to 265).

2. The Companies Ordinance, 1984 (S. 283).

3. The Co-operative Societies Act, 1925 [S. 43 (2) (b)].

4. The Electricity Act, 1910, (S. 52).

5. The Industrial Relations Ordinance, 1969 (S. 31).

6. The Land Acquisition Act, 1894 (Ss. 11, 12, 18, and 26).

7. The Insolvency (Karachi Division) Act, 1909 [S. 68 (h)].

8. The Provincial Insolvency Act, 1920 (S. 52).

9. The Railways Act, 1890 (Ss. 46, 46 – A, 46 – B, and 48).

10. The Religious Endowments Act, 1863 (Ss. 16 and 17).

11. The Trusts Act, 1882 (S. 43).

Application on all arbitration: If any proceedings are being carried on according to former Act, shall not be defeated by new

enactment and shall be continued according to former enactment. Running matters are not effected with new enactment

There are four kinds of arbitration, i.e., with intervention of Court, without intervention of Court, where case is pending in

Court, and where Small Cause Court is involved.

Aims and objectives of Arbitration Act: Following can be put in this regard:

1. Determination of disputes:

2. Easy methodology:

3. Protection of rights:

4. Awareness of people:

5. Inexpensive justice:

6. Trust on award:

7. Trust on arbitrators:

8. Reference to Court where dispute persists:

9. More understandability:



The Arbitration Act

10. Nearness of arbitration:

11. Involvement of common people:

12. Education of public:

13. Power of award:

14. No Court fee:

15. No stamp duty:

16. Amicable settlement:

17. Avoid technicalities:

18. Expeditious justice:

Documents

The Arbitration Act