1) DISTINGUISH BETWEEN ARBITRATION AND CONCILIATION

What is Arbitration?
Arbitration is a means of conflict resolution through which the parties decide to submit a
conflict to the decision of one or more arbitrators, who must be qualified professionals in
the subject matter of the conflict, renouncing to go to the ordinary courts and tribunals.
The Arbitration and Conciliation Act, 1996 governs the arbitral proceedings in India.

Arbitration offers an alternative to traditional litigation and provides a more efficient and
cost-effective means of resolving disputes. It is commonly used in various areas,
including commercial contracts, labor disputes, construction disputes, international trade,
and consumer matters. The process is governed by arbitration laws and regulations,
which vary across jurisdictions.

Types of Arbitration Based on Jurisdiction

a) Domestic Arbitration
Domestic arbitration occurs when both parties are Indian, and proceedings take place in
India under Indian procedural and substantive laws. Though not explicitly defined, it is
governed by Section 2(2) of the Arbitration and Conciliation Act, 1996. It is commonly
used for resolving disputes in business contracts, employment agreements, and property
matters.

b) International Arbitration
International arbitration occurs when a dispute involves foreign elements, such as parties
from different nations or a contractual clause specifying arbitration in a foreign country.
The governing law may be Indian or foreign, depending on the agreement. It provides
flexibility in choosing a neutral venue and legal framework, making it ideal for cross-
border disputes.

c) International Commercial Arbitration (ICA)

As per Section 2(1)(f) of the Arbitration and Conciliation Act, ICA arises when at least
one party is a foreign entity, resides abroad, or is managed by foreign individuals. It
applies when arbitration occurs in India, but Part I of the Act does not cover ICAs
conducted outside India. In TDM Infrastructure Pvt. Ltd. v. UE Development India Pvt.
Ltd. (2008), the Supreme Court ruled that Indian-registered companies are not foreign
entities for ICA.
Types of Arbitration Based on Procedures and Rules

a. Ad-Hoc Arbitration
Ad-hoc arbitration is flexible and cost-effective, as parties agree on procedures without
institutional involvement. It allows greater control but may lead to delays due to the
absence of pre-defined rules. Sections 6 and 11 of the Act provide provisions for
administrative assistance and arbitrator fees.

b. Fast-Track Arbitration
Introduced in the 2015 Amendment, fast-track arbitration ensures a time-bound resolution
within six months, using a sole arbitrator and simplified procedures. Governed by Section
29B, it is mainly used for commercial disputes requiring quick decisions. It reduces costs
and procedural complexities by relying on written submissions with limited oral hearings.

c. Institutional Arbitration
Institutional arbitration follows established rules of recognized arbitral institutions like
the SIAC and ICC, ensuring efficiency and expert arbitrator selection. It provides
administrative support, reducing delays but comes at a higher cost than ad-hoc
arbitration. In M/S Nandan Biomatrix Ltd. v. D1 Oils Ltd. (2009), the Supreme Court
upheld institutional arbitration even when no institution was named in the agreement.

Process of Arbitration:

 The foundation of arbitration lies in the arbitration agreement, which can either be a
clause within a broader contract or a separate standalone agreement. This agreement
signifies the parties’ consent to resolve disputes through arbitration rather than
litigation. For instance, a typical arbitration clause may state: “Any dispute arising out
of this agreement shall be resolved through arbitration under the Arbitration and
Conciliation Act, 1996.”

 When a dispute arises, the invocation of arbitration occurs, where the aggrieved
party formally notifies the other party about initiating arbitration. This notification
activates the arbitration clause in the agreement and sets the process in motion,
leading to the structured resolution of the conflict.
 The next crucial step is the appointment of arbitrator(s). The parties mutually
decide on a single arbitrator or a panel of arbitrators. If they fail to reach an
agreement, they can seek intervention from a designated authority or the court under
Section 11 of the Arbitration and Conciliation Act. The chosen arbitrator(s) must be
impartial and possess the necessary qualifications to handle the dispute.

 A preliminary hearing follows, where the arbitrator(s) and the parties establish
procedural rules, set timelines, and define the scope of arbitration. This initial meeting
ensures that the process remains structured and efficient, helping both sides
understand the framework for resolving their dispute.

 The dispute resolution formally begins with the statement of claims and defense.
The claimant submits a detailed statement outlining their claims, supported by
evidence and legal arguments. The respondent, in turn, files a statement of defense
and may include counterclaims if applicable. This phase defines the core issues to be
adjudicated.

 During the evidentiary hearings, both parties present their evidence, witnesses, and
arguments before the arbitrator(s). The arbitrator(s) may question witnesses and
parties to clarify specific issues. This stage resembles a trial in litigation but is
generally more flexible and less formal, focusing on efficiency and fairness.

 Following the hearings, the arbitrator(s) issue the arbitral award, a written decision
resolving the dispute. This award is binding on the parties and must include reasons
unless the parties have agreed otherwise. The arbitral award marks the conclusion of
the arbitration process.

 Finally, the enforcement of the award ensures that the decision is implemented.
Domestic arbitral awards are enforceable as court decrees under the Arbitration and
Conciliation Act, 1996. For foreign arbitral awards, enforcement is governed by the
New York Convention or the Geneva Convention. Courts can only refuse enforcement
on limited grounds, such as jurisdictional issues or violations of public policy.

What is Conciliation?
Conciliation refers to a voluntary dispute resolution process in which an impartial third
party, called a conciliator, assists the parties in reaching a mutually acceptable settlement.
It is an alternative to litigation and arbitration to facilitate communication, understanding,
and compromise between the disputing parties.
The key objectives of conciliation are to promote understanding, rebuild relationships,
and reach a voluntary agreement that satisfies the interests of both parties. The process is
typically confidential, allowing the parties to freely express their concerns and explore
possible solutions without fear of their statements being used against them later.

Conciliation can be used in various disputes, including family, community, labour-

management, and interpersonal disputes. It is a flexible and collaborative approach that
empowers the parties to actively participate in the resolution process and retain control
over the outcome.

The conciliation process under the Arbitration and Conciliation Act, 1996, follows a
structured approach to dispute resolution. It begins with initiation, where one party
invites the other to participate in conciliation. If the other party accepts, both agree on the
nomination of a conciliator to oversee the process.

Process of Conciliation:

 In the appointment of the conciliator, parties can choose either a single conciliator
or a panel of three, based on neutrality, expertise, and mutual consent. The conciliator
plays a crucial role in guiding discussions and helping parties reach an amicable
settlement.

 The next step is defining the terms of reference, where the conciliator outlines the
scope of the dispute and sets procedural ground rules. This ensures clarity regarding
what is to be achieved and the framework within which discussions will take place.

 During conciliation sessions, the conciliator facilitates open communication between

the parties. Private meetings (caucuses) may be held with each party to understand
their interests and explore possible solutions. The goal is to encourage constructive
dialogue and mutual understanding.
 As discussions progress, the formulation of settlement proposals takes place. The
conciliator may suggest solutions based on the deliberations, helping parties negotiate
agreeable terms. The focus remains on collaboration rather than adversarial
proceedings.
 Finally, if the parties reach a consensus, an agreement outcome is documented in the
form of a settlement agreement. Once signed, this agreement is legally binding and
enforceable as if it were an arbitral award, providing a conclusive resolution to the
dispute.

The difference between arbitration and conciliation can be drawn clearly on the
following grounds:

1. Arbitration refers to a method of resolving industrial disputes, wherein the

management and the labour present their respective positions to the neutral third party,
who takes a decision and imposes it. Conciliation is a method of resolving the dispute,
wherein an independent person, who meet the parties jointly and severally and helps
them to arrive at negotiated settlement or resolve their differences.

2. The decision made by the arbitrator is acceptable to the parties concerned. On the
other hand, the conciliator does not have the right to enforce his decision.

3. Arbitration requires a prior agreement between parties known as arbitration

agreement, which must be in writing. As against this, the process of conciliation
doesn’t require any prior agreement.

4. Arbitration is available for the current and future disputes whereas the conciliation can
be adopted for existing disputes only.

5. Arbitration is like a courtroom proceeding, wherein witnesses, evidence, cross-

examination, transcripts and legal counsel are used. On the contrary, Conciliation is an
informal way of resolving disputes between the management and labour.

Conclusion:
Arbitration and conciliation are both effective Alternative Dispute Resolution (ADR)
mechanisms, each suited to different dispute contexts. Arbitration provides a formal,
binding decision, making it ideal for complex commercial disputes where enforceability
and finality are crucial. In contrast, conciliation is more flexible and informal, focusing
on mutual agreement to preserve relationships, making it preferable for parties seeking
collaboration over conflict.
Understanding key differences—such as arbitration’s binding nature versus conciliation’s
facilitative role—helps parties choose the right approach. These ADR methods offer
swift, cost-effective dispute resolution while reducing the burden on traditional courts.

2) WHEN DOES FOREIGN AWARD BECOMES BINDING ON PARTIES TO

THE ARBITRATION

Arbitration has long been a preferred mechanism for resolving international disputes,
offering a more efficient and private alternative to traditional litigation. In the context of
foreign awards, India has adopted a legal framework that ensures the enforcement of such
awards while respecting international conventions. Section 46 of the Arbitration and
Conciliation Act, 1996 plays a pivotal role in this regard, providing the criteria under
which foreign awards become binding in India. In this article, we will explore the
significance of Section 46, how foreign awards are recognized, and the challenges faced
during the enforcement of such awards.

What is Section 46 of the Arbitration and Conciliation Act?

Section 46 deals with the enforcement of foreign arbitral awards in India. It defines the
circumstances under which a foreign award becomes binding and enforceable. A foreign
award, in the context of Section 46, refers to an arbitral award that has been made outside
India by an arbitral tribunal. To be enforceable in India, a foreign award must meet the
conditions laid down in the Arbitration and Conciliation Act, 1996, specifically aligning
with international treaties like the New York Convention of 1958.

Legal framework of section 46:

1. Definition of a Foreign Award

A foreign award, as per Section 46, refers to an arbitral award made outside India. These
awards are typically rendered in jurisdictions that are signatories to the New York
Convention or the Geneva Convention. The award must have been made in an
international arbitration procedure, meaning the parties to the arbitration are from
different countries.

2. Binding Nature of Foreign Awards

Under Section 46, foreign awards are considered binding and enforceable in India once
they have been recognized by the court. Upon recognition, a foreign award is treated as
an Indian court decree, granting it the same legal effect and enforceability as a domestic
decree. This ensures that international commercial arbitration decisions are given equal
weight to domestic arbitration awards, allowing foreign investors and companies to have
their awards recognized in India.

3. Enforcing a Foreign Award

For a foreign award to become binding in India, it must go through the process of
enforcement in an Indian court. The party seeking enforcement of a foreign award must
file an application with a competent court in India, typically in the jurisdiction where the
assets are located or where the other party resides.

4. Grounds for Refusing Enforcement

While Section 46 mandates the binding nature of foreign awards, Section 48 lays down
specific grounds on which an Indian court may refuse to enforce such awards. These
grounds include:
 Incapacity of the Parties: If one of the parties was under incapacity or lacked the
legal capacity to enter into an arbitration agreement.
 Improper Notice: If a party was not provided adequate notice of the arbitration
proceedings.
 Contravention of Public Policy: If the award violates Indian public policy or
principles of natural justice.
 Non-Arbitrability of Dispute: If the subject matter of the dispute is not arbitrable
under Indian law (e.g., criminal matters, family disputes).
These grounds are framed to ensure that foreign awards are consistent with India’s legal
norms and public policy.

5. Court’s Role in Enforcement

The Indian court plays a significant role in determining whether a foreign award should
be enforced. The court conducts a limited review of the award, focusing on procedural
fairness and adherence to Indian public policy. The scope of the review is not to evaluate
the merits of the dispute but to assess the procedural legitimacy and enforceability of the
award under the law.
Once the court is satisfied with the foreign award’s compliance with the necessary
requirements, it issues an order recognizing the award, which then allows it to be
enforced as if it were a decree of an Indian court.

6. International Treaties and Conventions

Section 46 aligns with India’s obligations under international treaties, notably the New
York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(1958) and the Geneva Convention (1927). As a signatory to these conventions, India has
committed to enforcing foreign awards that meet the specified criteria. This ensures that
India adheres to its global obligations and provides international arbitration users with a
predictable legal environment.

7. Limitations and Exceptions

Section 46 does not allow for an automatic or unconditional enforcement of a foreign
award. If the award meets any of the criteria set forth under Section 48 (grounds for
refusal), the enforcement application may be dismissed. Additionally, there may be delays
in enforcement due to court backlogs or legal challenges raised by the losing party.

Key Features of Section 46

1. Binding Nature of a Foreign Award

According to Section 46, a foreign award becomes binding in India when it has been
recognized by the Indian courts. It is enforceable in the same manner as an Indian decree
once the court grants its recognition.

2. Conditions for Enforceability

The enforceability of a foreign award is contingent upon the award meeting specific
conditions set forth under Section 48 of the Act. These conditions relate to the due
process of the arbitration, such as ensuring that the award does not violate Indian public
policy or the laws of the land.

3. International Recognition
Section 46 reflects India’s commitment to honoring its international obligations under
the New York Convention, which mandates the recognition and enforcement of foreign
arbitral awards in signatory countries. India’s recognition of foreign awards is based on
the principle of comity of nations, which emphasizes mutual respect between
jurisdictions.

4. Judicial Scrutiny
Indian courts are tasked with reviewing the foreign award to ensure compliance with both
the legal framework of the Arbitration and Conciliation Act, 1996 and India’s
international obligations. However, the review process is limited and does not extend to a
re-examination of the merits of the award.

How Does a Foreign Award Become Binding in India?

For a foreign award to be considered binding in India, it must pass through a legal
process that involves the following steps:

1. Application for Enforcement

The party seeking to enforce the foreign award must file an application in the competent
Indian court. The application should include the original award, the arbitration
agreement, and, if necessary, a certified translation of the award and the agreement.

2. Court’s Examination of the Award

The court will assess whether the foreign award complies with the requirements laid out
in the Arbitration and Conciliation Act, 1996, specifically Section 48, which provides the
grounds for refusing enforcement. These grounds include issues like a lack of
jurisdiction, the violation of due process, or contravention of Indian public policy.

3. Order for Enforcement

If the court is satisfied that the award complies with the necessary conditions, it will pass
an order recognizing the foreign award. Upon such an order, the foreign award will be
deemed as binding and enforceable in India, as though it were a decree of an Indian court.

Grounds for Refusing Enforcement of Foreign Awards

While Section 46 mandates the recognition and enforcement of foreign awards, it also
aligns with international standards by providing limited grounds for refusing
enforcement. These grounds are laid out in Section 48 and include:

1. Incapacity of the Parties

If the parties to the arbitration agreement were under some form of incapacity (e.g.,
minors or mentally incapacitated), the foreign award may not be enforceable.

2. Lack of Proper Notice

If a party was not given proper notice of the arbitration proceedings, the foreign award
may not be enforced. This ground ensures that the principles of natural justice are upheld.
3. Contravention of Public Policy
The most commonly cited ground for refusing enforcement is the violation of Indian
public policy. This includes awards that conflict with India’s sovereignty, morality, or
public interests.

4. Non-Arbitrability of the Dispute

The subject matter of the dispute must be arbitrable under Indian law. For instance,
disputes related to criminal matters, family law, or insolvency are not arbitrable under
Indian law.

Challenges and Criticism of Section 46

While Section 46 is a significant step towards strengthening India’s arbitration
framework, it has faced certain challenges and criticisms:

1. Vague Grounds for Refusal

The broad term “public policy” in Section 48 has been criticized for its ambiguity. Indian
courts have often used public policy as a reason to refuse enforcement, leading to
unpredictability in the enforcement of foreign awards.

2. Judicial Delays
The process of enforcing foreign awards in India can often be slow due to judicial delays.
Despite the clear provisions under Section 46, the time taken for an award to become
enforceable can be lengthy, discouraging foreign investors.

3. Over-reliance on Judicial Interpretation

The provision leaves a significant amount of discretion to the courts in interpreting the
enforceability of foreign awards. This judicial discretion can sometimes result in
inconsistent rulings.

4. Resistance to International Norms

There have been instances where Indian courts have shown resistance to certain foreign
arbitration practices. Some critics argue that this resistance undermines the intent of
the New York Convention and creates uncertainty for foreign parties seeking to enforce
awards in India.

Conclusion
Section 46 of the Arbitration and Conciliation Act, 1996 plays a vital role in ensuring the
enforceability of foreign arbitral awards in India. While the provision aligns with
international conventions and is designed to minimize judicial interference, challenges
such as vague legal terms and judicial delays remain. Moving forward, there may be a
need for judicial reforms to improve the clarity and efficiency of the enforcement
process, ensuring that foreign awards are promptly recognized and enforced. Ultimately,
Section 46 helps position India as a globally competitive jurisdiction for arbitration,
enhancing the nation’s standing in international commercial relations.

3) STATE THE IMPORTANCE OF LOK ADALAT IN JUDICIAL SYSTEM /

EXPLAIN THE PROCEDURE OF LOK ADALAT

Lok Adalats, conducted by the National Legal Services Authority (NALSA) and other
Legal Services Institutions, serve as an alternative dispute resolution mechanism. They
provide a forum for amicable settlement of disputes, whether pending in court or at the
pre-litigation stage. These Adalats hold statutory status under the Legal Services
Authorities Act, 1987, and their awards are treated as civil court decrees, which are final
and binding. Although there is no provision for appeal, dissatisfied parties may initiate
litigation in the appropriate court.

Characteristics of Lok Adalats

One of the most significant advantages of Lok Adalats is that no court fee is required for
matters filed before them. If a pending case is settled through a Lok Adalat, the court fee
already paid is refunded. The members of Lok Adalats act as statutory conciliators rather
than judicial officers, facilitating voluntary settlements without coercion. They assist the
parties in reaching a compromise in an impartial manner but do not have the authority to
impose a decision.

Lok Adalats uphold the constitutional promise of justice—social, economic, and political
—as outlined in the Preamble of the Indian Constitution. Article 39A ensures free legal
aid to weaker sections, promoting justice on the basis of equal opportunity. Articles 14
and 22(1) further mandate equality before the law. The Legal Services Authorities Act,
enacted in 1987 and operational from 9th November 1995, established a nationwide
network to provide free and competent legal services to marginalized sections of society.

Composition of Lok Adalats

1. State Authority Level – The Member Secretary of the State Legal Services Authority
constitutes benches comprising:
 A sitting or retired High Court judge or a judicial officer.
 A member from the legal profession.
 A social worker engaged in legal aid activities.

2. High Court Level – The Secretary of the High Court Legal Services Committee
constitutes benches comprising:
 A sitting or retired High Court judge.
 A legal professional and/or a social worker involved in legal aid programs.

3. District Level – The Secretary of the District Legal Services Authority forms benches
comprising:
 A sitting or retired judicial officer.
 A legal professional and/or a social worker or a para-legal volunteer, preferably a
woman.

4. Taluk Level – The Secretary of the Taluk Legal Services Committee constitutes
benches with:
 A sitting or retired judicial officer.
 A legal professional, social worker, or para-legal volunteer, preferably a woman.

Types of Lok Adalats

1. National Lok Adalat
 Held at regular intervals across all courts from the Supreme Court to Taluk levels.
 Focuses on specific subject matters each month.
 Facilitates the disposal of cases in bulk.

2. Permanent Lok Adalat (Under Section 22-B of the Legal Services Authorities Act,
1987)
 Functions as a permanent body with a chairman and two members.
 Handles cases related to Public Utility Services such as transport, postal services,
and telecommunications.
 If a settlement is not reached, it has jurisdiction to decide the dispute (except
criminal cases).
 Awards are final and binding on the parties, with no appeal allowed.
 3. Mobile Lok Adalat
 Operates in various locations, ensuring accessibility.
 Helps settle disputes in rural and remote areas.

Powers and Jurisdiction of Lok Adalats

Lok Adalats can take up cases in the following circumstances:
 If both disputing parties agree to refer a matter to the Lok Adalat.
 If one party requests the court to refer a case, and the court finds scope for settlement.
 If a party approaches the organizing Authority or Committee to refer the case to Lok
Adalat.
 If the court, after hearing both parties, believes the case is suitable for a Lok Adalat.

Procedure of Lok Adalat

1. The Authority or Committee organizing Lok Adalat may, on application from any
party to a dispute or suo moto, refer the said dispute to Lok Adalat, after giving a
reasonable opportunity for hearing to all the parties.
2. It may require parties to file written statement stating therein, all the facts and the
nature of the dispute, points or issues and the grounds in support or opposition.
3. It shall be guided by principles of law, justice, equity and fair Permanent Lok Adalat
and shall not be bound by the CPC and the Indian Evidence Act.
4. It shall try to reach an amicable settlement or compromise through Conciliation as the
main mode of settlement between parties.
5. If the parties reach a compromise, an award is passed, which is final and binding.
6. If no compromise or settlement is accomplished, the case is to be returned to the court
which referred it. which resumes the proceedings from the stage where it was before
referral. If the case was referred by an authority or committee and remains unresolved,
the parties are advised to seek remedies in a court of law.
7. Then the case will proceed in the court from the stage immediately before the
reference.

Significance and Benefits of Lok Adalats

i) Reduction of Case Backlog

 Approximately 16.9% of cases in taluka and district courts are 3-5 years old
(National Judicial Data Grid).
 17% of cases in High Courts are 10-20 years old.
 20.4% of High Court cases are 5-10 years old.
  Over 66,000 cases are pending in the Supreme Court, while 57 lakh cases are
pending in High Courts and 3 crore cases in subordinate courts.
 Lok Adalats expedite case resolution, reducing the burden on courts.

ii) Cost-Effectiveness and Speed

 Lok Adalats function without rigid legal procedures.
 They are party-driven mechanisms allowing direct settlement.
 The absence of court fees makes them affordable.
 Cases are typically resolved in a single day.

iii) Flexibility and Finality

 No strict application of procedural laws (CPC, 1908, and Indian Evidence Act,
1872).
 The award has the status of a civil court decree, making it legally binding.
 The no-appeal provision ensures the finality of settlements.
 Court fee reimbursement for settled cases adds financial relief to litigants.

Challenges and Concerns

(i) Power Imbalance in Settlements

 Many cases involve poor litigants versus entities with deep pockets (banks,
insurance companies, government departments).
 There is a risk of compromises being imposed on weaker parties.
 The quest for quick disposal may sometimes overlook the principles of justice.

(ii) Lack of Judicial Authority

 In State of Punjab vs Jalour Singh (2008), the Supreme Court ruled that Lok
Adalats are purely conciliatory and do not have judicial or adjudicatory powers.

Conclusion
Lok Adalats play a vital role in providing an alternative dispute resolution mechanism in
India. By reducing litigation costs, ensuring speedy disposal of cases, and promoting
amicable settlements, they alleviate the burden on conventional courts. However,
concerns regarding power imbalances and the compromise-driven approach must be
addressed to ensure true justice is served. Strengthening the framework of Lok Adalats
with adequate safeguards will enhance their effectiveness in delivering justice to all
sections of society.
4) WRITE VARIOUS SALIENT FEATURES OF THE ARBITRATION AND
CONCILIATION ACT, 1996

The Arbitration and Conciliation Act of 1996 is an important legislative statute in India
that oversees dispute resolution through arbitration and conciliation. It provides a
framework for conducting arbitration, recognizing, and enforcing awards, and promoting
dispute resolution through conciliation. The Act was created to modernize and streamline
India’s arbitration procedure, align it with international norms, and promote alternative
dispute resolution alternatives. It replaced the outdated provisions of the Indian
Arbitration Act, 1940 bringing India’s arbitration framework in conformity with
the UNCITRAL Model Law on International Commercial Arbitration.

Arbitration, as defined in the Act, involves parties agreeing to refer disputes to a neutral
third party or panel of arbitrators. The Act establishes a legal framework for conducting
arbitration processes, which includes appointing arbitrators, holding hearings, submitting
evidence, and issuing awards. It also assures that the arbitral proceedings are fair,
efficient, and unbiased. The Act also recognizes the use of conciliation as an alternative
method of dispute resolution. Conciliation entails the appointment of a conciliator to
assist the parties in reaching a mutually agreeable settlement. The Act establishes the
procedure for initiating and conducting conciliation proceedings, maintaining secrecy and
allowing the parties to actively participate in finding a solution for the dispute which has
arisen.

One of the most notable aspects of the Arbitration and Conciliation Act of 1996 is its pro-
arbitration stance, which emphasizes limited judicial participation in the arbitration
process. The Act restricts the court’s involvement in arbitration procedures, except when
it is required to promote justice, integrity, or public policy. This strategy is meant to
increase parties’ autonomy in choosing arbitration as a dispute resolution mechanism
while also expediting conflict settlement. Furthermore, the Act allows for the recognition
and enforcement of both domestic and international arbitral rulings. It sets a clear
structure for enforcing arbitral awards, ensuring that they are considered as legally
binding and enforceable court judgments.

Key features of the Arbitration and Conciliation Act, 1996

The key features of the Arbitration and Conciliation Act of 1996 are as follows:
1. Scope and Application
The Act applies to both domestic and international arbitration. It applies to all
arbitrations, including those deriving from legal disputes, commercial agreements, and
civil cases.

2. Arbitration Tribunal
If two parties decide to resolve their economic problems through arbitration, an arbitral
panel is formed. This tribunal is made up of one or more arbitrators who adjudicate and
decide the dispute before granting an arbitral decision. Part I, Chapter III of the Act
details the formation of an arbitral tribunal. A disagreement is submitted to an arbitral
panel rather than a regular civil court. The arbitral panel must then rule on the issue. The
decision is issued in the form of an arbitral award that is binding on all parties involved.

3. Arbitration Agreement
Section 7 of the Act defines an arbitration agreement as a written agreement between
parties to refer present or future disputes arising from their legal relationship to
arbitration. It can be a standalone agreement or a clause within a contract. Sub-section (3)
mandates that the agreement must be in writing, excluding oral agreements.

In Jayant N. Seth v. Gyneshwar Apartment CHS Ltd. (1998), the Bombay High Court
outlined key elements of an arbitration agreement under Section 2(1)(b) and Section 7:
 A valid and binding agreement, either separate or as a contract clause.
 It must be in writing, including signed documents, letters, telexes, or telegrams.
 Clear intent to arbitrate disputes arising from a defined legal relationship.

4. The number of Arbitrators

Section 10 discusses the number of arbitrators. Sub-section (1) states that the parties may
choose any odd number of arbitrators for convenience. Furthermore, Sub-section
(2) states that if the parties fail to agree on the number of arbitrators, the arbitral tribunal
will be made up of a single arbitrator.

5. Appointment of Arbitrators
The Act allows for the appointment of arbitrators. If the parties fail to agree on the
number of arbitrators, a single arbitrator is appointed by default. The Act also establishes
a method for challenging an arbitrator’s appointment if there are legitimate concerns
about impartiality or independence.
6. Disclosure by Arbitrator
Section 12 explains the rules for disclosures made by an arbitrator when approached
about an appointment. The arbitrator must provide a written disclosure of:
 the existence of any past or present relationship, any interest (direct or indirect),
whether financial, business, professional, or otherwise, with any of the parties
involved or the subject matter in dispute, likely to raise justifiable doubts about their
independence or impartiality; and
 any facts which are likely to affect their ability to devote sufficient time to the
arbitration, particularly in completing the entire procedure.

Moreover, Sub-section (3) of this section offers two grounds for contesting the
arbitrator’s appointment:
 the existence of any circumstances that might give rise to reasonable doubts about
their impartiality or independence, or
 the arbitrator’s failure to meet the qualifications that the parties agreed upon for the
arbitrator’s appointment.

7. Conduct of Arbitration Proceedings

The Act guarantees a fair and unbiased conduct of arbitration proceedings. It enables
parties to introduce evidence, make their argument, and question witnesses again. The
arbitral proceedings are not governed by the Code of Civil Procedure, 1908, or the
Bharatiya Sakshya Adhiniyam, 2024 (formerly the Indian Evidence Act, 1872).The Act
also allows the arbitrator to take temporary actions, such awarding injunctions and
protecting property.

8. Powers and Obligations of Arbitrations

The Arbitration and Conciliation Act, 1996, grants arbitrators broad authority, including
ruling on jurisdiction and the validity of arbitration agreements, administering oaths,
passing interim measures, determining the admissibility and weight of evidence,
proceeding ex parte, and deciding disputes on merits while considering applicable laws
and contract terms. They can appoint experts, facilitate conciliation, allocate arbitration
costs, and deliver a reasoned award with provisions for correction or interpretation.
Arbitrators must uphold natural justice by ensuring fair hearings, neutrality, and
impartiality. Any award violating public policy is void and subject to judicial review.

9. Time limit for Arbitral Awards

Section 29A of the Act establishes the rules for making an award. Section 29A, sub-
section 1, states that awards must be made within 12 months of the arbitral tribunal’s
completion of pleadings, save in the instance of international commercial arbitration[21].
Furthermore, sub-section 3 of Section 29A states that the parties may, with their
cooperation, extend the 12-month period for issuing an award by no more than 6 months.

10. Fast Tracked Arbitration

Section 29B of the Arbitration and Conciliation Act, 1996, introduced by the 2015
amendment, provides for fast-track arbitration, ensuring time-bound and efficient dispute
resolution within six months. This process relies on written submissions rather than oral
hearings unless deemed necessary by the tribunal or requested by both parties. The
parties must mutually agree in writing to adopt the fast-track procedure, and they also
determine the arbitrator’s fees. The tribunal, typically consisting of a sole arbitrator
chosen by the parties, operates without court intervention. If the award is not issued
within six months, an extension of up to six months may be granted.

11. Enforcement of Foreign awards

One of the highlights of this act is that it provides for the enforcement of certain
international awards issued under the New York Convention and the Geneva Convention,
as specified in Part II of the Act, as a court decision. Countries that have not ratified
either the New York Convention or the Geneva Convention are outside the ambit of Part
II of the Act, and hence their awards are not enforceable as foreign awards in India.

12. Mediation and Conciliation

Conciliation and mediation are recognized by the Act as alternative conflict resolution
procedures, and their usage is encouraged. It describes the steps involved in conducting
conciliation and mediation processes and offers a legal foundation for the selection of
conciliators and mediators.

13. Elimination of the Umpire System

Before the Arbitration and Conciliation Act of 1996, an earlier act from 1940 stated that
in cases when an even number of arbitrators were appointed and one of them failed to
render an award within the allotted time frame or in cases where two arbitrators could not
agree on a matter, the umpire would enter on the reference rather than the arbitrators.
However, under the 1996 Act, the parties determine how many arbitrators will be
appointed, with the caveat that an even number of arbitrators will not be appointed. A
third arbitrator known as the Presiding Arbitrator (umpire) will be chosen by the
arbitrators in this manner.

14. Intervention of the Court

The Act limits the ability of courts to meddle in arbitration procedures. Only certain
situations, such the nomination of arbitrators, the annulment of an arbitral ruling, and the
enforcement of an arbitral award, allow for the involvement of courts.

The Act allows the arbitral tribunal to seek court assistance in gathering evidence. In this
situation, the witness may be required by the court to give the testimony directly to the
arbitral panel. However, the Arbitral Tribunal lacks the authority to call witnesses. Thus,
the court may grant an application for help in gathering evidence from the arbitral
tribunal or from a party acting on the arbitral tribunal’s authority.

15. Capable of issuing Provisional Orders

The Arbitrators may issue temporary orders regarding the dispute’s related topics in
accordance with the Act of 1996.

Conclusion
The Act addresses efficient, affordable, and time-efficient alternative dispute settlement
techniques. People these days typically choose to resolve disputes outside of court with
the use of alternative dispute resolution (ADR) processes like arbitration, conciliation,
mediation, etc. because of the backlog of cases, the strict procedural requirements of the
courts, and the desire to avoid litigation. The Act provides a comprehensive process for
arbitration, covering the tribunal’s composition, conduct, and issuance of awards. In an
arbitration agreement, the ruling is presented as an arbitral award that is legally binding
on the parties. It also specifies how disputes should be resolved by going through the
court appeals process.

5) EXPLAIN IN DETAIL CONCILIATION PROCEDURE

Conciliation is a non-adjudicatory alternative dispute resolution (ADR) process to resolve

conflicts between parties. It is a voluntary and confidential method of resolving disputes
to facilitate communication, understanding, and agreement between the parties involved.

In conciliation, a neutral third party, known as the conciliator, assists the parties in
reaching a mutually acceptable resolution. The conciliator acts as a facilitator, helping the
parties identify and explore the issues in dispute, understand each other’s perspectives,
and find common ground for agreement.
Conciliation is governed by specific procedures and guidelines, which may vary
depending on the jurisdiction or the applicable laws. In India, the process of conciliation
is regulated by legislation such as the Arbitration and Conciliation Act.

What is the Process of Conciliation under the Arbitration and Conciliation Act
1996?
Part 3 of the Arbitration and Conciliation Act 1996 discusses the process of conciliation,
which is an alternative method of resolving disputes outside of court. Conciliation is
governed by the provisions outlined in the Arbitration and Conciliation Act, 1996 (26 of
1996), as defined in Wharton’s Law Lexicon.

1. Commencement of Conciliation Proceedings

Section 62 of the Act addresses the initiation of conciliation proceedings. To begin the
process, one party must send a written invitation to the other party. The conciliation
proceedings can only proceed if the other party accepts the invitation. If no response is
received within 30 days of sending the invitation, it will be deemed non-acceptance.

2. Appointment of Conciliators
Once the parties have agreed to engage in conciliation proceedings, appointing a
conciliator is next. Section 64 covers the appointment of conciliators. If the parties agree,
they can appoint a single conciliator. If the parties opt for two conciliators, each party
will appoint one. In the case of three conciliators, each party will appoint one conciliator,
and the parties together can agree upon a third conciliator who will act as the presiding
conciliator.

3. Submission of Written Statements to the Conciliator

The conciliator may request both parties to provide written statements detailing the
relevant facts pertaining to the case. Both parties must submit their written statements to
the conciliator. Additionally, the parties are required to exchange their written statements
with each other.

4. Conduct of the Conciliation Proceedings

Sections 67(3) and 69(1) describe the conduct of conciliation proceedings. The
conciliator has the discretion to communicate with the parties through written or oral
means. They can choose to meet with the parties collectively or separately. The conduct
of the proceedings will be tailored to suit the case’s specific circumstances.

5. Administrative Assistance
Section 68 of the Act addresses the option of seeking administrative assistance. The
parties or the conciliator may seek assistance from an institution or individual if
necessary. However, the consent of the parties is required to engage in such
administrative assistance.

 Termination of Conciliation Proceedings – Section 76

Section 76 of the Arbitration and Conciliation Act provides four ways in which
conciliation proceedings can be terminated:

 Termination by Signing of Settlement Agreement (Section 76(a))

Conciliation proceedings end when the parties involved sign a settlement agreement.
The date of termination is considered to be the date on which the settlement
agreement is signed.

 Termination by Conciliator’s Declaration (Section 76(b))

The conciliation proceedings can be terminated if the conciliator declares in writing
that further efforts at conciliation are no longer justified. The date of termination is the
date of the conciliator’s declaration.

 Termination by Written Declaration of Parties (Section 76(c))

The parties have the authority to terminate the conciliation proceedings by providing a
written declaration to the conciliator stating that they wish to end the proceedings. The
date of termination is the date of the declaration.

 Termination by Party’s Written Declaration to Other Party and Conciliator

(Section 76(d))
A party can unilaterally terminate the conciliation proceedings by sending a written
declaration to both the other party and the conciliator, expressing their intention to
terminate the proceedings. The date of termination is the date of the declaration.

Case Laws Relating to Conciliation Process

1. Haresh Dayaram Thakur v. State of Maharashtra and Ors.

In the case of Haresh Dayaram Thakur v. State of Maharashtra and Ors. (AIR 2000 SC
2281), the Supreme Court examined the provisions of Sections 73 and 74 of the
Arbitration and Conciliation Act 1996. In paragraph 19 of the judgment, the court made
the following observations:

According to the statutory provisions mentioned above, it is evident that a conciliator’s

role is to assist the parties in settling their disputes amicably. The conciliator is granted
broad powers to determine the procedure to be followed without being bound by
procedural laws such as the Code of Civil Procedure or the Indian Evidence Act 1872.

When the parties are able to reach a mutual agreement, and the conciliator believes that
there is a potential settlement acceptable to the parties, the conciliator should follow the
procedure outlined in Section 73. This involves formulating the settlement terms and
presenting it to the parties for their observations. The final step for the conciliator is to
draft the settlement based on the parties’ observations.

The settlement becomes legally binding only when the parties themselves draw up the
settlement agreement or request the conciliator to prepare it and affix their signatures. As
per Sub-section (3) of Section 73, once the parties sign the settlement agreement is
considered final and binding on them and any individuals claiming under them.

2. Mysore Cements Ltd. v. Svedala Barmac Ltd.

In the case of Mysore Cements Ltd. v. Svedala Barmac Ltd. (AIR 2003 SC 3493), the
court discussed Section 73 of the Arbitration and Conciliation Act. The court made the
following observations:

Section 73(1) states that when the conciliator believes that there are elements of a
possible settlement that may be acceptable to the parties, they should formulate the terms
of the potential settlement and present them to the parties for their observations. Upon
receiving the parties’ observations, the conciliator may reformulate the settlement terms
accordingly.

However, in the present case, the court did not find any such formulation and
reformulation by the conciliator, as required under Sub-section (1). Sub-section (2) states
that if the parties reach a settlement agreement based on the possible terms of settlement
formulated, they may draft and sign a written settlement agreement. Sub-section (3)
clarifies that when the parties sign the settlement agreement, it becomes final and binding
on them and any individuals claiming under them. Furthermore, Sub-section (4) requires
the conciliator to authenticate the settlement agreement and provide each party with a
copy.

Conclusion
Conciliation is a valuable alternative dispute resolution process guided by the Arbitration
and Conciliation Act. It involves a neutral conciliator assisting parties to settle. The
process begins with a written invitation, followed by the appointment of a conciliator.
Written statements are exchanged, and the conciliator conducts proceedings based on
fairness and justice. Confidentiality is maintained throughout.

The goal is to reach a settlement agreement, which becomes final and binding when the
parties sign. Conciliation allows parties to resolve disputes amicably, avoiding litigation
while preserving relationships. It offers a structured and flexible approach, empowering
parties to actively participate in finding mutually acceptable resolutions.

6) PROVISIONS RELATING TO CORRECTION, INTERPRETATION, AND

ADDITIONAL AWARD IN ARBITRATION

Arbitration is a widely accepted method of dispute resolution that provides an alternative

to litigation. One of the key aspects ensuring the efficacy of arbitral awards is the
mechanism for correcting errors, interpreting ambiguous parts, and granting additional
awards when necessary. These provisions maintain the fairness and integrity of the
arbitration process, allowing the parties to seek clarifications and rectifications without
resorting to lengthy court proceedings.

Correction of Arbitral Award

Errors in an arbitral award can occur due to typographical mistakes, miscalculations,

clerical errors, or other minor inaccuracies. Most arbitration laws, including the
UNCITRAL Model Law and the Arbitration and Conciliation Act, 1996, recognize the
need for a correction mechanism.

Under Section 33(1) of the Arbitration and Conciliation Act, 1996, a party may request
the arbitral tribunal to correct any computation, clerical, typographical, or similar errors
within thirty days of receiving the award. If the tribunal notices such an error on its own,
it can rectify it within the same period. The correction should not alter the substantive
decision of the tribunal but must only rectify inadvertent mistakes that do not affect the
award's intent or reasoning.

The primary objective of this provision is to ensure that minor errors do not affect the
enforceability of the award or create ambiguity in its execution. Courts have held that the
power to correct errors is limited to non-substantive corrections and should not result in a
material change in the award.

For instance, if an award mistakenly states that the amount payable is Rs. 10,000,000
(Ten Thousand Rupees) instead of Rs. 10,000,000 (Ten Million Rupees), such an error
can be corrected under this provision.

Interpretation of an Arbitral Award

Sometimes, an arbitral award may contain ambiguous language, leading to uncertainty

about its implementation. Interpretation of an award is necessary when parties have
conflicting understandings of a particular clause or direction provided by the tribunal.

Section 33(2) of the Arbitration and Conciliation Act, 1996 allows a party to request the
arbitral tribunal to interpret a specific part of the award within thirty days of receiving it,
provided the other party agrees to such a request. The tribunal's interpretation should
clarify the meaning of the award without modifying its core substance.

For example, if an award directs that "Party A shall pay reasonable costs to Party B," but
does not define "reasonable costs," an interpretation request can clarify the scope and
quantum of costs to be paid.

This provision ensures that ambiguities in an award do not lead to unnecessary disputes
or enforcement challenges. Courts generally uphold the principle that an interpretation
should not go beyond the four corners of the award and should only clarify what was
originally intended by the tribunal.

Additional Award
In some instances, an arbitral tribunal may inadvertently omit deciding on a claim that
was duly presented during the proceedings. Such omissions can create significant
prejudice for the affected party, necessitating a remedy. The provision for an additional
award allows the tribunal to address any claims that were raised but not adjudicated.

Under Section 33(3) of the Arbitration and Conciliation Act, 1996, a party may request
the tribunal to make an additional award regarding claims presented in the arbitration
but omitted from the award. This request must be made within thirty days of receiving
the award. The tribunal has sixty days to make the additional award unless a different
period is agreed upon by the parties.

For example, if a party seeks damages and reimbursement of expenses in an arbitration

claim, but the tribunal addresses only damages and overlooks reimbursement, the party
can request an additional award on the omitted claim. The additional award must be
consistent with the original award and should not modify or overturn any aspect of the
decision already made.

Tribunal’s Authority and Limitations

The authority of an arbitral tribunal to correct, interpret, or grant additional awards is not
absolute. It is subject to strict limitations to ensure that the finality and integrity of
arbitral awards are not compromised. These limitations serve to prevent the misuse of
these provisions as a means to reopen the merits of the case or alter the fundamental basis
of the decision.

1. Non-Substantive Corrections
The tribunal is limited to making only clerical, typographical, or computational
corrections in the award. These corrections do not extend to revising the tribunal’s
reasoning or substantive conclusions. For instance, if a numerical error is identified in the
calculation of damages, the tribunal can rectify it. However, if a party argues that the
damages were incorrectly assessed based on evidence, the tribunal cannot reassess the
claim under the pretext of correction.
Such corrections are crucial to ensuring that inadvertent mistakes do not result in undue
hardship for any party, yet they do not allow the losing party to seek a revision of the
award’s core findings.

2. Clarification Without Modification

The provision for interpretation ensures that an ambiguous or unclear award does not lead
to further disputes. However, the tribunal must be cautious not to introduce new
reasoning or alter the substance of the award. Interpretation should only serve to clarify
what has already been decided.
For instance, if an award states that a party is required to deliver certain goods but does
not specify the timeframe, and the timeframe was a matter of dispute, an interpretation
request may clarify what the tribunal intended. However, if a party seeks to modify the
terms of delivery or introduce additional obligations, it would exceed the tribunal’s
interpretative authority.

3. Addressing Only Omitted Claims

An additional award can be granted only for matters that were originally submitted to the
tribunal but were inadvertently left undecided. This does not mean that parties can
introduce new claims after the award is rendered. The tribunal is only permitted to deal
with claims that were validly raised during the arbitration proceedings but were
mistakenly omitted in the final award.
For example, if a claimant sought compensation under three separate contractual
provisions, and the tribunal ruled on only two of them, an additional award may be
sought for the omitted claim. However, if a party attempts to raise a fresh claim that was
never part of the initial arbitration, the tribunal has no authority to entertain it.
This limitation is critical in ensuring that the finality of arbitration is preserved while
allowing legitimate oversights to be corrected.

4. Strict Adherence to Timelines

Time limits play a crucial role in ensuring that arbitration proceedings do not remain
indefinitely open to revisions.
 A party requesting a correction, interpretation, or additional award must do so
within thirty days from the date of receipt of the arbitral award.
 The tribunal must decide on the request within thirty days of receiving it.
 If the tribunal itself identifies a mistake, it has the power to rectify it within a
reasonable time after the award is issued.
These time limits are designed to balance the need for efficiency with the requirement of
fairness. If a party fails to make its request within the stipulated time, it generally loses
the right to seek a correction, interpretation, or additional award.

Judicial Precedents and International Best Practices

Judicial interpretations have played a significant role in clarifying the scope of correction,
interpretation, and additional awards in arbitration. Courts have consistently reinforced
that these mechanisms should not be used to reopen the merits of the case.

1. Judicial Precedents in India

In ONGC v. Western Geco International Ltd., the Supreme Court of India ruled that an
arbitral tribunal’s authority to correct errors is strictly confined to patent mistakes. The
tribunal cannot reconsider evidence or alter its findings under the pretext of correction.
This case set an important precedent in ensuring that correction mechanisms are not
abused to seek a substantive review of the award.
Similarly, in McDermott International Inc. v. Burn Standard Co. Ltd., the Supreme
Court emphasized that arbitration is meant to be a one-time adjudicatory process. Any
attempt to modify an award under the guise of correction, interpretation, or additional
awards must be scrutinized carefully to prevent misuse.

2. International Best Practices

International arbitration institutions such as the International Chamber of Commerce
(ICC) and the London Court of International Arbitration (LCIA) have similar
provisions governing correction, interpretation, and additional awards. These institutions
ensure that:
 Only clerical, typographical, or computational errors can be corrected.
 Interpretation requests should not lead to a substantive revision of the award.
 Additional awards can only address omitted claims, not new disputes.
For instance, under ICC Arbitration Rules, an arbitral tribunal is explicitly prohibited
from reconsidering its decision when interpreting an award. The LCIA Rules also provide
that additional awards can only be issued in relation to claims that were raised but
overlooked in the final decision.
Such international standards reinforce the principles of finality, efficiency, and
procedural fairness in arbitration.

Practical Considerations for Parties

Parties involved in arbitration should take proactive steps to ensure that any issues related
to corrections, interpretations, or additional awards are properly addressed within the
legal framework.

1. Prompt Review of the Award

Upon receiving the arbitral award, parties should conduct an immediate and thorough
review to identify:
 Clerical or typographical errors
 Ambiguous or unclear portions of the award
 Any claims that were raised but left undecided
Delaying such a review could lead to missed deadlines, making it difficult to seek
necessary corrections or clarifications.

2. Clear and Specific Requests

When submitting a request for correction, interpretation, or an additional award, parties
should ensure that:
 The request is concise and specific, focusing only on the errors, ambiguities, or
omissions in the award.
 Supporting documents or references to the record are provided to justify the
request.
 The request does not attempt to reargue or reopen issues that were already decided.
A vague or overly broad request may be dismissed by the tribunal, leading to unnecessary
delays and costs.

3. Agreement Between Parties on Minor Clarifications

While arbitration allows a party to formally seek interpretation or correction, minor
clarifications can often be resolved through mutual agreement between the parties. If
both parties agree on a certain clarification, they may jointly submit a request to the
tribunal, reducing the risk of further disputes.
This approach can be particularly useful in cases where an award contains minor
ambiguities that do not affect its substantive outcome but may lead to difficulties in
enforcement.

4. Understanding the Tribunal’s Limited Authority

Parties must recognize that the tribunal does not have unlimited power to modify its own
award. The tribunal:
 Cannot alter its findings or reassess evidence.
 Cannot introduce new arguments or reasoning under the guise of interpretation.
 Can only address clerical errors, ambiguities, or overlooked claims.
Understanding these limitations helps parties frame their requests appropriately and
prevents unnecessary litigation over misinterpretations of the tribunal’s powers.
Conclusion
The provisions relating to correction, interpretation, and additional awards in arbitration
play a crucial role in ensuring that arbitral awards are free from errors, clear in their
directives, and comprehensive in their coverage. These mechanisms uphold the
credibility of arbitration as an effective dispute resolution process by allowing minor
rectifications without undermining the finality of awards. By understanding and
effectively utilizing these provisions, parties can ensure that arbitration remains a fair,
efficient, and enforceable mode of dispute resolution.

7) LOK ADALAT VIS-A-VIS PERMANENT LOK ADALAT

Introduction
Lok Adalats serve as an alternative dispute resolution (ADR) mechanism in India, aimed
at expediting justice while reducing the burden on courts. They operate under the Legal
Services Authorities Act, 1987, and provide an informal, cost-effective forum for dispute
resolution. The decisions of Lok Adalats hold the same value as a civil court decree and
are binding on the parties. However, dissatisfied parties retain the right to initiate formal
litigation.
Permanent Lok Adalats, on the other hand, function as a specialized variant of Lok
Adalats with pre-defined jurisdiction over public utility services and the power to
adjudicate disputes if conciliation fails. They were introduced through an amendment to
the Legal Services Authorities Act in 2002 under Section 22-B.

Lok Adalats

Key Features of Lok Adalats:

1. Statutory Recognition: Lok Adalats derive their legitimacy from the Legal Services
Authorities Act, 1987, and are conducted under the aegis of NALSA (National Legal
Services Authority) and other Legal Services Institutions.

2. Jurisdiction:
 Any case pending before a court can be referred to a Lok Adalat if:
 Both parties agree to settle the dispute through the Lok Adalat.
 One of the parties applies for referral.
 The court finds the matter suitable for Lok Adalat.
 Pre-litigation disputes can also be referred to a Lok Adalat upon an application by
any party.
  Lok Adalats do not have jurisdiction over cases involving non-compoundable
offenses.

3. Nature of Proceedings:
 Lok Adalats function as conciliatory bodies rather than adjudicatory forums.
 Members act as facilitators, encouraging amicable settlements rather than imposing
decisions.
 The process is informal and non-adversarial, promoting voluntary compromise
between parties.

4. Binding Effect and Finality:

 The award of a Lok Adalat is final and has the status of a civil court decree.
 No appeal lies against its decision, but parties dissatisfied with the settlement can
approach the regular courts.

5. Advantages of Lok Adalats:

 No court fees are charged, and if a case is resolved, previously paid court fees are
refunded.
 Quick resolution of disputes without procedural delays.
 Ensures justice for marginalized communities by providing free legal aid under
Article 39A of the Indian Constitution.

6. Types of Cases Handled:

 Matrimonial and family disputes
 Compoundable criminal cases
 Land acquisition and labor disputes
 Bank recovery cases
 Motor accident claim disputes
 Service matters of government employees
 Cases under the Negotiable Instruments Act (cheque bounce cases)

Permanent Lok Adalat (PLA)

Key Features of Permanent Lok Adalats:

1. Statutory Framework:
 Established under Section 22-B of the Legal Services Authorities Act, 1987, to
handle disputes related to public utility services.
2. Jurisdiction:
 Matters concerning public utility services, including:
 Transport (air, road, or water)
 Postal, telegraph, and telephone services
 Electricity, water, and sanitation
 Healthcare (hospitals and dispensaries)
 Insurance services
 Disputes involving an amount up to ₹1 crore.
 Cannot entertain disputes related to non-compoundable offenses.

3. Authority to Adjudicate:
 If parties fail to reach a settlement, the PLA can decide the dispute on its merits.
 Unlike regular Lok Adalats, PLAs can issue binding decisions even if no
compromise is reached.
 Their decisions are final and enforceable.

4. Composition:
 Headed by a Chairperson (a retired District Judge or a higher judicial officer).
 Two other members with expertise in public utility services.

5. Binding Effect:
 Once a matter is brought before a PLA, parties cannot approach the courts for the
same dispute.
 The PLA's award has the same status as a civil court decree.

Chairman-cum-Managing Director, National Insurance Co. and Ors v. Kisha Devi

and Ors

Background of the Case

Rajeshwar Prasad Singh had taken a personal accident insurance policy worth ₹3,00,000
from National Insurance Company Limited. He was murdered on November 19, 2003,
and an FIR was lodged. His widow, Kisha Devi, later filed a claim under the policy, but
the insurance company rejected it citing policy conditions.
Aggrieved by the rejection, she approached the Permanent Lok Adalat, Sahibganj,
seeking compensation.
Decision of the Permanent Lok Adalat
 The tribunal ruled in favor of the claimant, holding that the insurance company
was liable to pay the insured amount.
 It directed National Insurance Company to pay ₹3,00,000 with 9% interest.

Appeal Before the Jharkhand High Court

 The insurance company challenged the tribunal’s jurisdiction and the merits of the
ruling before the High Court.
 They sought to quash the Permanent Lok Adalat’s order.

High Court’s Observations

1. Jurisdiction of Permanent Lok Adalat:
 The PLA is empowered to adjudicate disputes that could not be settled through
conciliation, provided the dispute falls within its jurisdiction under public utility
services.
2. Objective of Permanent Lok Adalat:
 Ensures speedy resolution of disputes related to essential services.
 Provides an alternative to prolonged litigation.
3. Principles Governing the Adjudication:
 The PLA follows principles of natural justice, objectivity, and fair play.
 It ensures disputes are resolved equitably without strict adherence to procedural
laws.

Final Verdict
 The High Court upheld the PLA’s decision and ruled that it had properly exercised
its jurisdiction.
 The insurance company was directed to comply with the tribunal’s award.
 The petition was dismissed for lack of merit.

Key Differences Between Lok Adalat and Permanent Lok Adalat

Feature Lok Adalat Permanent Lok Adalat

Any case (except non- Disputes related to public utility
Jurisdiction
compoundable offenses) services up to ₹1 crore
Decision- Can pass binding decisions if
Based on mutual settlement only
Making conciliation fails
Feature Lok Adalat Permanent Lok Adalat
Retired District Judge as Chairperson
Composition Judges, advocates, social workers
with two experts
No appeal, but parties can file a Binding; no party can approach a
Appeal
fresh case in court court for the same dispute

Conclusion
While both Lok Adalats and Permanent Lok Adalats serve the purpose of expeditious
dispute resolution, their operational framework and jurisdiction differ significantly. Lok
Adalats facilitate amicable settlements without coercion, whereas Permanent Lok Adalats
can pass binding judgments in disputes concerning public utility services. The efficiency
of both mechanisms contributes significantly to the Indian judicial system by reducing
case pendency and ensuring access to justice, particularly for the underprivileged sections
of society.

8) WHEN AN ARBITRAL AWARD CAN BE SET ASIDE? / STATE THE

GROUNDS FOR SETTING ASIDE AN ARBITRAL AWARD AND DISCUSS
ANY FOUR OF THEM

Arbitration is a means of conflict resolution through which the parties decide to submit a
conflict to the decision of one or more arbitrators, who must be qualified professionals in
the subject matter of the conflict, renouncing to go to the ordinary courts and tribunals.
The Arbitration and Conciliation Act, 1996 governs the arbitral proceedings in India.

Arbitration offers an alternative to traditional litigation and provides a more efficient and
cost-effective means of resolving disputes. It is commonly used in various areas,
including commercial contracts, labor disputes, construction disputes, international trade,
and consumer matters. The process is governed by arbitration laws and regulations,
which vary across jurisdictions.

Meaning of an Arbitral award

 As per Section 2(1)(c) of the Arbitration and Conciliation Act, 1996, an arbitral award
includes an interim award, which is binding and forms part of the final award. It is
granted after a thorough hearing and encompasses accepted interim measures.
 A valid arbitral award must meet two key conditions: certainty (clear and definite
decision on parties' rights) and decision-based content (resolving all issues before the
 tribunal). It must be signed by the arbitrator(s) and clearly state the reasons for the
decision.

 As per Section 31 of the Act, a valid award must:

1. Be in written form (oral awards are not recognized).
2. Be signed by all or a majority of arbitrators.
3. Mention the date and place of issuance.
4. Be distributed to all parties.

 An arbitral award is final and binding unless set aside by a court. It must be passed
within the prescribed time or an extended period. A dissatisfied party may challenge
the award in court, ensuring fairness and legal compliance.

Can an arbitral award be set aside

The Arbitration and Conciliation Act, 1996, is based on two key principles: Minimum
Judicial Interference, limiting court involvement in arbitration, and Finality and
Enforcement of Awards, ensuring arbitral decisions are binding and enforceable. Under
Section 7, parties entering an arbitration agreement commit to resolving disputes through
arbitration, with the arbitrator’s decision being final and obligatory.
However, if a party is dissatisfied with the arbitral award, the 1996 Act provides specific
grounds for setting it aside. Such an application must be filed in the appropriate court.
According to Section 2(1)(e)(i), for domestic arbitration, the application must be
submitted to the District Court (principal Civil Court of original jurisdiction) or the High
Court with ordinary original civil jurisdiction.
For international commercial arbitration, as per Section 2(1)(e)(ii), the application must
be filed in the High Court with ordinary civil jurisdiction or the one authorized to hear
appeals from lower court decrees. If a Commercial Division exists under the Commercial
Courts Act, it will handle the application. These provisions ensure a structured and
legally sound recourse for challenging an arbitral award while maintaining arbitration as
an efficient dispute resolution mechanism.

Grounds for setting aside an arbitral award

An arbitral award is binding on the parties under the Arbitration and Conciliation Act,
1996. However, Section 34 provides grounds for setting aside an award. Section 37
further provides for appeals against certain orders.
1. Incapacity of Parties

An arbitral award can be set aside if a party lacks the capacity to safeguard their interests
and is not represented by a legal guardian. Under Section 9 of the Arbitration and
Conciliation Act, 1996, a guardian must be appointed for minors or persons of unsound
mind. If, during arbitration, a party is found mentally incapacitated and lacks
representation, the award can be challenged. Courts review such cases to ensure fairness,
as seen in disputes where a freelancer or business entity is unable to represent themselves
effectively.

2. Invalidity of an Arbitration Agreement

An arbitral award can be challenged if the arbitration agreement is invalid. If the main
contract containing the arbitration clause is void, the clause loses its legal foundation and
becomes unenforceable. Even if a party initially participates in arbitration, they can later
dispute the tribunal’s jurisdiction. Courts may set aside an award if the agreement is
legally non-existent from inception.

In N.N. Global Mercantile v. Indo Unique Flame (2023), the Supreme Court clarified that
an unstamped arbitration agreement is not automatically void but inadmissible as
evidence under Section 35 of the Stamp Act. The Court held that improper stamping is a
curable defect and objections should be decided by the arbitral tribunal. This ruling
overruled earlier judgments, reaffirming that arbitration clauses remain valid despite
stamping irregularities.

3. Failure to Notify Parties in Arbitration Proceedings

Under Section 34(2)(a)(iii) of the Arbitration and Conciliation Act, 1996, an arbitral
award can be set aside if a party was not given proper notice regarding the appointment
of an arbitrator or any other aspect of the proceedings. Section 23(1) mandates that the
arbitral tribunal must determine the time within which statements must be filed and
ensure timely communication of the same. Additionally, Section 24(2) requires that
parties receive advance notice for any hearings or inspections of documents, goods, or
property. A failure to comply with these provisions can render the arbitral award legally
unsustainable.

Unilateral Appointment of an Arbitrator

Section 11(2) grants parties the right to mutually decide the procedure for appointing
arbitrators. However, unilateral appointments violate principles of natural justice and
fairness. In Perkins Eastman Architects DPC v. HSCC (India) Ltd. (2019), the Supreme
Court held that unilateral appointments lead to bias and undermine the neutrality of
arbitration. The Court emphasized that arbitrator selection should be a shared process to
prevent favoritism and protect arbitration’s integrity.

Quasi-Unilateral Appointment of an Arbitrator

Although Perkins prohibited unilateral appointments, quasi-unilateral methods remain
contentious. In Central Organisation for Railway Electrification v. ECI-SPIC-SMO-
MCML (2019), the Supreme Court ruled that if one party exclusively selects a list of
arbitrators, it creates an unfair advantage and violates Section 18, which guarantees equal
treatment. The Court held that even if the opposing party has a choice within that list, the
selection process lacks true impartiality and may be deemed invalid.

4. An award not falling within the terms of submission to arbitration

The dispute arising from an arbitration agreement serves as the basis for determining the
jurisdiction of an arbitral tribunal. If any matter arising from such an agreement does not
fall within the jurisdiction of an arbitral tribunal, an award passed on such matter shall be
deemed invalid. Auch an award can be set aside on the grounds of it not falling within the
terms submitted to arbitration. An arbitrator is required to act under the authority as
provided in the terms of an agreement and not beyond that.

In Rajendra Krishan Kumar v. Union of India (2019), the tribunal awarded compensation
for land pollution, an issue not included in the original arbitration reference. The court
ruled that this exceeded the tribunal’s jurisdiction, rendering the award invalid. The case
underscores the necessity for arbitrators to operate strictly within their contractual
authority, ensuring adherence to the agreed arbitration terms and preventing overreach.

5. Composition of tribunal not following agreement

Section 34(2)(a) (v) lays out that an award can be discarded or challenged if the
composition of the arbitral tribunal is not in obedience to the agreement of the parties or
if the procedure of conduct of proceedings was not followed properly. If the arbitrator
passes a decision of an award which is in deviation from the terms of reference and the
arbitration agreement, then this would lead to the award being set aside and will amount
to the misconduct of the arbitrator.

In ONGC Ltd. v. Saw Pipes Ltd. (2003), the Supreme Court ruled that arbitral tribunals
must comply with both party agreements and statutory provisions. Any deviation from
the agreed process or statutory requirements could amount to arbitrator misconduct. The
judgment emphasized procedural compliance as essential for the legitimacy and
enforceability of arbitral awards.

6. Disputes not arbitrable

Disputes in personam can be arbitrated, while those involving rights in rem typically
require court adjudication. While the Arbitration and Conciliation Act, 1996, does not
explicitly prohibit arbitration for specific disputes, Section 2(3) acknowledges legal
restrictions on certain matters. Some disputes fall under special legal regimes and are
implicitly excluded from arbitration. Courts will refuse arbitration referrals for non-
arbitrable matters, and any arbitral award on such disputes can be set aside under Section
34 of the Act.

In Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. (2011), the Supreme Court
distinguished between arbitrable and non-arbitrable disputes. It held that rights in rem
(affecting the public) cannot be arbitrated, while rights in personam (between specific
parties) can. The judgment listed non-arbitrable matters such as matrimonial disputes,
criminal offenses, insolvency, and tenancy under special laws, affirming that such cases
require judicial intervention.

7. Award against public policy

If an award passed by an arbitral tribunal is against public policy, that is, if an award is
influenced by fraud or corruption, it shall be liable to be set aside by the court. Section 34
of the 1996 Act in addition to the aforementioned grounds, provides a party can file an
application to set aside an award if an award is found to be against the public policy. The
context related to public policy implies public welfare and interest.

In Venture Global Engineering v. Satyam Computer Services Ltd., the Supreme Court
held that an arbitral award violating public policy could be set aside under Section 34 of
the Arbitration Act. It ruled that awards obtained through fraud, corruption, or
suppression of facts are contrary to public policy. This judgment reinforced that
arbitration must uphold justice, morality, and fairness, preventing it from legitimizing
unethical conduct.

8. Patent Illegality – ONGC v. Saw Pipes (2003)

In this landmark case, the Supreme Court expanded the scope of judicial review in
arbitration by introducing the concept of "patent illegality." The court ruled that an
arbitral award could be set aside if it was contrary to the fundamental policy of Indian
law, the terms of the contract, or the provisions of the Arbitration and Conciliation Act.
The judgment was criticized for broadening the scope of interference by courts in arbitral
awards, leading to concerns about excessive judicial intervention. However, subsequent
amendments to the Arbitration Act in 2015 limited the applicability of patent illegality
only to domestic awards, preserving arbitration as an effective alternative dispute
resolution mechanism.

Conclusion
Arbitral awards are meant to be final and binding; however, they can be set aside under
Section 34 of the Arbitration and Conciliation Act, 1996, on limited grounds such as
incapacity of parties, invalid arbitration agreements, improper tribunal composition,
exceeding jurisdiction, non-arbitrable disputes, and violations of public policy or
fundamental legal principles. Courts generally follow a policy of minimal interference to
uphold arbitration's efficiency. While the ONGC v. Saw Pipes case expanded judicial
review through the "patent illegality" doctrine, later amendments restricted its scope to
domestic awards, ensuring arbitration remains a viable and efficient dispute resolution
mechanism.

9. EXPLAIN THE CONCEPT OF FOREIGN AWARD WITH THE HELP OF

TWO CONVENTIONS

Foreign arbitration refers to arbitration proceedings conducted outside India, where the
arbitral award is sought to be enforced as a foreign award in India. This type of
arbitration is governed by international conventions and national laws that facilitate the
recognition and enforcement of such awards.

Foreign Award Passed in International Arbitration

The New York Convention (1958) defines a "foreign award" as an arbitral award that
meets the following conditions:
 The award arises out of a legal relationship considered commercial under Indian law.
 The arbitration is conducted pursuant to a written arbitration agreement covered under
the First Schedule of the Arbitration and Conciliation Act, 1996.
 The arbitration is conducted in a country that is a signatory to the New York
Convention and has been declared as a reciprocating territory by the Indian
government.

Thus, two essential preconditions for the enforcement of a foreign award under the New
York Convention are:
1. The country where the award was made must be a signatory to the New York
Convention.
2. The award must be rendered in a country that has been notified as a reciprocating
territory by the Indian government.

Purpose of International Arbitration

International arbitration provides a neutral forum for resolving disputes between parties
from different legal, linguistic, and cultural backgrounds. It allows for the resolution of
disputes in a final and binding manner without being subject to the rigid procedural rules
of national court systems.

Recognition and Enforcement of Foreign Awards in India

Legal Framework for Enforcement

The enforcement of foreign arbitral awards in India is governed by Part II of the
Arbitration and Conciliation Act, 1996, which incorporates provisions of the New York
Convention (1958) and the Geneva Convention (1927).

Recognition of a Foreign Award under Section 46

Section 46 of the Act states that any foreign award enforceable under Part II, Chapter I,
shall be considered binding between the parties and may be used as a defense, set-off, or
for any other purpose in Indian legal proceedings. Thus, a foreign award may be
recognized without necessarily being enforced, but if it is enforced, recognition is
implied.

Definition of "Court" under Section 47

For the purposes of enforcing a foreign award, the term "Court" refers to the Principal
Civil Court of Original Jurisdiction in a district or the High Court with ordinary original
civil jurisdiction over the subject matter of the award. It specifically excludes lower-grade
civil courts and courts of small causes from handling such enforcement matters.

New York Convention (1958)

The New York Convention on Recognition and Enforcement of Foreign Arbitral Awards
(1958) is one of the most widely accepted treaties governing international arbitration.
India, as a signatory, has incorporated its provisions into the Arbitration and Conciliation
Act, 1996, under Part II, Chapter I (Sections 44-52). The convention facilitates the
recognition and enforcement of foreign arbitral awards, ensuring a uniform legal
framework for international arbitration.

Definition of Foreign Award (Section 44)

A foreign award under the New York Convention refers to an arbitral award made in a
reciprocating country that has been officially notified by the Indian government. The
dispute must arise from a commercial relationship, and the arbitration agreement must be
in writing.

Judicial Referral to Arbitration (Section 45)

If a party to an arbitration agreement files a lawsuit before an Indian court, the court must
refer the parties to arbitration unless the agreement is found to be null, void, or incapable
of performance. This ensures that disputes covered by arbitration agreements are resolved
through arbitration rather than litigation.

Recognition of Foreign Awards (Section 46)

Once recognized under Indian law, a foreign award becomes binding on the parties. It can
be used as a defense, set-off, or for any other legal purpose in India.

Evidence Required for Enforcement (Section 47)

To enforce a foreign award, the applicant must submit:
1. The original award or a certified copy.
2. The arbitration agreement or a certified copy.
3. Evidence that the award qualifies as a foreign award under Section 44.
If these documents are in a foreign language, an authenticated English translation is
required.
Grounds for Refusal of Enforcement (Section 48)
An Indian court may refuse to enforce a foreign award if:
 The arbitration agreement was invalid under its governing law.
 A party was not given proper notice or an opportunity to present their case.
 The award exceeds the scope of the arbitration agreement.
 The arbitration process was not in accordance with the agreed procedure.
 The award is not yet binding or has been set aside in the country where it was made.
 The award is contrary to Indian public policy, which includes fraud, corruption, or
violations of fundamental legal principles.

Foreign Awards as Court Decrees (Section 49)

If the court finds a foreign award enforceable, it is deemed to be a decree of the court.
This means it can be executed like a civil court judgment in India.

Appeal Process (Section 50)

If a court refuses to enforce a foreign award, the aggrieved party can appeal only to the
Supreme Court of India. However, there is no appeal against an order allowing
enforcement, ensuring minimal interference with arbitral decisions.
The New York Convention has strengthened India’s arbitration framework, encouraging
foreign investors and multinational businesses to resolve disputes through arbitration
rather than litigation. The pro-enforcement stance of Indian courts has further enhanced
India's reputation as an arbitration-friendly jurisdiction.

Geneva Convention (1927)

Before the New York Convention, international arbitration was governed by the Geneva
Convention on the Execution of Foreign Arbitral Awards (1927). India incorporated this
convention under Part II, Chapter II (Sections 53-59) of the Arbitration and Conciliation
Act, 1996. Although largely replaced by the New York Convention, Geneva Convention
provisions still apply to older foreign awards.

Definition and Scope (Section 53)

A foreign award under the Geneva Convention refers to an arbitral award made after July
28, 1924, in a country that is a signatory to the Geneva Convention (1927). The award
must relate to a commercial dispute and must be based on a valid arbitration agreement.

Judicial Referral to Arbitration (Section 54)

Like the New York Convention, Section 54 requires courts to refer parties to arbitration if
a valid arbitration agreement exists. This ensures disputes are resolved through arbitration
rather than litigation.

When a Foreign Award Is Binding (Section 55)

A foreign award is considered binding in India if:
1. It was made in accordance with the governing law of arbitration.
2. It has not been set aside in the country where it was issued.

Burden of Proof on the Party Seeking Enforcement (Section 56)

Unlike the New York Convention, which enables Indian courts to adopt a pro-
enforcement approach, the Geneva Convention requires the party seeking enforcement to
bear the burden of proof. This means the applicant must establish that the award was
made in compliance with the arbitration agreement, the arbitration followed the correct
procedure, and the award is final and binding.

Grounds for Refusal of Enforcement (Section 57)

An Indian court may refuse to enforce a foreign award if:
 The award is not legally valid under the governing law.
 The arbitration process was not conducted properly.
 The award is against Indian public policy.
 The dispute is not arbitrable under Indian law.

Since the Geneva Convention is stricter, its application has led to delays and procedural
complications in enforcement.

Foreign Awards as Court Decrees (Section 58)

Like the New York Convention, once an award is declared enforceable, it is treated as a
decree of the court, allowing for execution as a civil judgment.

Appeal Process (Section 59)

Similar to Section 50 under the New York Convention, this provision allows an appeal
only in case of refusal of enforcement. The appeal process is intended to ensure finality in
arbitral decisions.

Comparison with the New York Convention

The Geneva Convention is considered less efficient than the New York Convention
because:
1. Higher Burden of Proof – The applicant must prove the award is enforceable.
2. Limited Reciprocity – Fewer countries are signatories.
3. More Grounds for Refusal – Enforcement is subject to stricter conditions.

Given these limitations, most countries, including India, prefer the New York Convention
for enforcement of modern arbitral awards. However, the Geneva Convention remains
relevant for older awards made before India adopted the New York Convention.

Conclusion
India follows a pro-enforcement approach toward foreign arbitral awards, ensuring
compliance with international conventions. However, enforcement may be refused under
specific conditions, particularly if the award violates Indian public policy. Both the New
York Convention (1958) and the Geneva Convention (1927) provide frameworks for
enforcing foreign awards, subject to procedural and evidentiary requirements outlined in
the Arbitration and Conciliation Act, 1996.

10.EXPLAIN THE PROVISIONS RELATING TO THE APPOINTMENT OF

CONCILIATOR AND ROLE OF CONCILIATOR IN SETTLEMENT OF
DISPUTE

Conciliation is a voluntary and confidential method of alternative dispute

resolution (ADR) in which a neutral third party, known as a conciliator, assists disputing
parties in resolving their differences and reaching a mutually acceptable settlement.
In conciliation, the conciliator acts as a facilitator, helping the parties communicate
effectively, understand each other’s perspectives, and find common ground for resolving
their dispute. The conciliator is a neutral and impartial intermediary who does not impose
decisions but guides the parties towards a resolution through dialogue and negotiation.

Who is a Conciliator?
A conciliator is a neutral third party appointed or chosen to facilitate the conciliation
process in dispute resolution. The conciliator’s role is to assist the disputing parties in
reaching a mutually agreeable settlement through open communication, negotiation, and
consensus-building.
A conciliator is typically someone with expertise and experience in dispute resolution,
negotiation, and conflict management.
Appointment of Conciliator under Arbitration and Conciliation Act
Under the provisions of the Arbitration and Conciliation Act, the number and
qualifications of conciliators are outlined in Sections 63 and 64:

Number of Conciliators (Section 63)

 By default, there shall be one conciliator in a conciliation proceeding.
 However, the parties involved in the dispute can agree on the appointment of two or
three conciliators if they wish.
 When multiple conciliators are appointed, they are generally expected to act jointly in
conducting the conciliation proceedings.
According to the provisions of the Arbitration and Conciliation Act, the appointment of a
conciliator in conciliation proceedings follows the following guidelines:

Appointment by Agreement
 In conciliation proceedings with one conciliator, the parties have the freedom to agree
on the name of a sole conciliator.
 In conciliation proceedings with two conciliators, each party has the right to appoint
one conciliator.
 In conciliation proceedings with three conciliators, each party has the right to appoint
one conciliator, and the parties may collectively agree on the name of the third
conciliator, who will act as the presiding conciliator.

Enlisting Assistance of an Institution or Person

Parties also have the option to seek the assistance of a suitable institution or person in
connection with the appointment of conciliators. This can be done through the following
means:
 A party may request such an institution or person to recommend the names of suitable
individuals to act as a conciliator.
 The parties may agree that the appointment of one or more conciliators be made
directly by such an institution or person.

In making recommendations or appointments, the institution or person involved must

consider factors that ensure the appointment of an independent and impartial conciliator.
Additionally, when appointing a sole or third conciliator, they should consider the
desirability of appointing a conciliator of a nationality different from that of the parties.
These provisions ensure that the appointment of a conciliator is conducted in a manner
that upholds the principles of neutrality, independence, and impartiality, thereby
promoting a fair and effective conciliation process.

Role of the Conciliator

1. Facilitator of Communication Between Parties

The primary role of a conciliator is to facilitate communication between the disputing
parties. The conciliator must create a conducive environment for dialogue, helping the
parties express their concerns and explore possible solutions.
 Breaking the Ice: Often, disputes arise from communication breakdowns. The
conciliator ensures that the parties have the opportunity to voice their positions
without interruption.
 Confidential Meetings: The conciliator may hold private sessions (caucuses) with
each party separately, allowing them to speak freely without the pressure of the other
party being present. This is especially useful in sensitive matters where parties may
have reservations about speaking openly.

2. Neutral Third Party

A conciliator must act as a neutral third party throughout the entire conciliation process.
The conciliator is not there to make decisions for the parties but to assist them in finding
common ground. They should avoid taking sides or showing any bias towards either
party.
 Impartiality: The conciliator must remain neutral at all times, ensuring that neither
party is given preferential treatment. They must avoid any conflict of interest and
should disclose any situation where there could be a perceived bias.
 Maintaining Fairness: The conciliator’s impartial stance ensures that the dispute
resolution process is fair and that both parties have equal opportunities to present their
views.

3. Assisting in Identifying Issues

While a conciliator does not make decisions, they actively help the parties identify key
issues in dispute. This process is essential for ensuring that both parties understand the
exact nature of the conflict, which is the first step toward resolving it.
 Clarifying Disagreements: The conciliator will often work to clarify the areas of
disagreement and help the parties focus on the real issues at hand. This helps avoid
misunderstandings that can lead to further complications.
 Reframing the Problem: The conciliator may suggest reframing certain issues to
make them more manageable or to encourage both parties to see things from the
other’s perspective.

4. Proposing Solutions and Settlement Options

In addition to facilitating communication, a conciliator can propose solutions to the
parties, suggesting ways in which the conflict can be resolved. These proposals are often
based on a careful analysis of the issues and a deep understanding of the parties’ needs
and interests.
 Creative Solutions: Conciliators may propose alternative solutions that the parties
may not have considered. These solutions can sometimes be more flexible than those
available in a court decision.
 Assisting in Drafting Settlement Agreements: If the parties reach an agreement, the
conciliator can assist in drafting the settlement terms, ensuring that the document
accurately reflects the terms of the compromise.

5. Maintaining Confidentiality
Section 67 emphasizes that the conciliator must maintain confidentiality throughout the
conciliation process. Any information shared by the parties in confidence must not be
disclosed to the other party or to any third party without prior consent.
 Confidentiality of Discussions: Discussions between the parties or between a party
and the conciliator in private sessions are treated as confidential. This encourages
open communication and helps prevent any information from being used against a
party in future legal proceedings.
 Safeguarding Sensitive Information: The conciliator ensures that any sensitive
personal or business information shared during the process remains confidential,
promoting trust and cooperation between the parties.

6. Encouraging Voluntary Settlement

The role of the conciliator is primarily focused on achieving a voluntary settlement. Any
resolution reached must be by mutual consent of the parties, and the conciliator cannot
impose a decision.
 Non-Coercive Environment: Unlike adjudicatory processes, where the judge or
arbitrator imposes a decision, the conciliator’s role is to create a non-coercive
environment where the parties feel comfortable reaching their own agreement.
 Encouraging Flexibility: The conciliator encourages both parties to be flexible and
work towards a win-win outcome, rather than a situation where one party “wins” and
the other “loses.”

Significance of Section 67

Promotes a Non-Adversarial Dispute Resolution Process

By emphasizing the conciliator’s role as a neutral facilitator, Section 67 ensures that the
dispute resolution process remains non-adversarial. This is a key advantage of
conciliation over traditional litigation or arbitration, where parties are often pitted against
each other in a competitive setting.
 Mutual Respect: Parties are encouraged to work together to find a solution that
works for everyone, rather than fighting to prove who is right or wrong. This reduces
animosity and fosters mutual respect.

Facilitates Communication and Understanding

The conciliator’s role as a facilitator of communication helps create an environment
where the parties can freely express their concerns. This is particularly important when
there are deep-rooted issues or misunderstandings.
 Improved Communication: By guiding the parties through effective communication,
the conciliator helps them move past barriers and engage in productive dialogue.

Encourages a Flexible Approach to Resolution

Section 67 enables the conciliator to adopt a flexible approach to dispute resolution.
Unlike the rigid procedures of litigation, conciliation allows the parties to create
customized solutions that address their specific needs.
 Tailored Solutions: The conciliator can propose solutions that are more aligned with
the unique circumstances of the dispute, which may be more effective than a blanket
legal ruling.

Promotes Speedy Resolution of Disputes

The flexibility and informality of conciliation allow for a quicker resolution compared to
the drawn-out process of litigation.
 Avoiding Long Court Delays: Conciliation is especially useful in disputes that
require prompt resolution, such as business disagreements, where delays could be
costly.
Criticism and Challenges

1. Lack of Legal Authority – Conciliators can propose solutions but lack enforcement
power, leading to potential deadlocks if a party refuses to comply.
2. Dependence on Goodwill – Success relies on both parties' willingness to negotiate. A
rigid mindset can hinder resolution.
3. Limited Legal Expertise – Conciliators may lack legal proficiency, making it
difficult to handle complex legal issues effectively.
4. Power Imbalances – Weaker parties may feel pressured into unfair settlements, as
conciliators might struggle to neutralize power disparities.

Conclusion:
Conciliation serves as an effective and non-adversarial method of dispute resolution,
allowing parties to reach mutually beneficial settlements with the assistance of a neutral
conciliator. The Arbitration and Conciliation Act ensures that the appointment process
remains fair and impartial while empowering conciliators to facilitate communication,
identify key issues, and propose creative solutions. However, its success depends on the
willingness of the parties to cooperate, and its non-binding nature can sometimes limit
enforceability. Despite these challenges, conciliation remains a valuable tool for resolving
disputes efficiently and amicably.

6 MARKERS

11.THE NEED FOR ALTERNATIVE DISPUTE RESOLUTION (ADR) IN INDIA

Introduction

The concept of justice is fundamental to any legal system, but the efficiency of a judicial
system is equally crucial to ensuring that justice is timely and effective. In India, the
traditional litigation process has been burdened with an overwhelming backlog of cases,
leading to significant delays. As per the National Judicial Data Grid, millions of cases
remain pending at various levels of the judiciary. This situation necessitates the adoption
of Alternative Dispute Resolution (ADR) mechanisms, which offer faster, cost-
effective, and amicable solutions to disputes outside the conventional court system.

ADR is a method of resolving disputes between parties through negotiation, mediation,

conciliation, arbitration, and Lok Adalats, rather than through traditional litigation.
These mechanisms not only ease the burden on courts but also provide parties with
greater control over the resolution process, ensuring confidentiality, flexibility, and a
more amicable settlement.

The Need for ADR in India

1. Burden on the Judiciary and Case Backlog

One of the primary reasons for the increasing importance of ADR is the overburdened
judiciary. As per recent reports, over 4.5 crore cases are pending in Indian courts. The
slow pace of litigation often results in prolonged disputes, affecting individuals and
businesses alike. ADR offers a viable alternative by resolving conflicts swiftly, reducing
the courts' caseload, and ensuring that justice is delivered in a timely manner.

2. Cost and Time Efficiency

Litigation is not only time-consuming but also expensive. The legal process involves
multiple stages, including filing fees, lawyer fees, court fees, and other incidental costs,
making it financially burdensome for many litigants. ADR mechanisms, particularly
mediation and arbitration, significantly reduce these costs and provide quicker
resolutions, making justice more accessible.

For instance, arbitration proceedings can be completed within 6-12 months, whereas
civil suits in India often take several years or even decades. Similarly, Lok Adalats,
which settle disputes through conciliation, resolve cases in a single day without requiring
extensive legal formalities.

3. Promoting Confidentiality and Preserving Relationships

Unlike court trials, which are a matter of public record, ADR proceedings are
confidential, allowing parties to resolve disputes without public scrutiny. This is
particularly beneficial in commercial disputes and family matters, where confidentiality
is crucial.
Additionally, ADR promotes amicable dispute resolution, helping parties maintain
professional and personal relationships, unlike litigation, which often strains relationships
due to its adversarial nature.

4. Flexibility and Party Autonomy

ADR provides parties with greater control over the dispute resolution process. Unlike
litigation, where a judge imposes a decision, ADR allows disputing parties to select
neutral mediators, arbitrators, or conciliators and define procedural rules. This
flexibility ensures that disputes are resolved in a manner best suited to the needs and
interests of the parties involved.

5. Suitability for Commercial and International Disputes

With globalization and increasing cross-border trade, commercial disputes have become
more complex. Traditional litigation is often unsuitable for resolving such disputes due to
jurisdictional issues and enforcement challenges. Arbitration, a widely recognized ADR
method, is particularly beneficial for international disputes, as arbitral awards are
enforceable in over 170 countries under the New York Convention, 1958.

6. Access to Justice for Marginalized Sections

ADR mechanisms, particularly Lok Adalats and mediation centers, play a crucial role
in providing justice to marginalized communities. These mechanisms ensure that justice
is not restricted to the wealthy and powerful but is accessible to all sections of society.
Lok Adalats, which offer free dispute resolution, have successfully settled millions of
cases, particularly those related to family disputes, land matters, and motor accident
claims.

7. Legislative and Judicial Encouragement for ADR

The Indian legal system has actively promoted ADR through various legislative measures
and judicial pronouncements. Section 89 of the Civil Procedure Code (CPC), 1908,
mandates courts to encourage parties to settle disputes through ADR methods before
proceeding with litigation.

Moreover, specialized legislations such as the Arbitration and Conciliation Act, 1996 and
the Legal Services Authorities Act, 1987, further strengthen the ADR framework in India.
The Supreme Court has also emphasized the importance of ADR in cases like Afcons
Infrastructure Ltd. v. Cherian Varkey Construction Co. (2010), highlighting the necessity
of ADR in reducing the litigation burden.

Legal Framework Governing ADR in India

Several statutes govern ADR mechanisms in India, ensuring their effective
implementation:

Arbitration and Conciliation Act, 1996 – Provides a legal framework for arbitration
and conciliation, incorporating principles from the UNCITRAL Model Law.

Legal Services Authorities Act, 1987 – Establishes Lok Adalats to provide free legal
services and settle disputes amicably.

The Commercial Courts Act, 2015 – Mandates pre-litigation mediation in commercial

disputes to promote settlement before formal litigation.

Section 89 of the Civil Procedure Code (CPC), 1908 – Encourages courts to refer
disputes to ADR mechanisms.

Consumer Protection Act, 2019 – Introduces mediation as a preferred mode of resolving

consumer disputes.

Judicial Precedents Promoting ADR

The Indian judiciary has played a pivotal role in promoting ADR through landmark
judgments:

Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (2010)

The case of Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (2010) is a
significant judgment by the Supreme Court of India that provided clarity on the scope of
alternative dispute resolution (ADR) and the types of disputes that courts can refer to
ADR mechanisms. This case played a crucial role in strengthening the framework of
ADR in India by issuing guidelines on when courts should direct parties to resolve
disputes through arbitration, mediation, conciliation, or Lok Adalat proceedings.
Background of the Case
Afcons Infrastructure Ltd. and Cherian Varkey Construction Co. were involved in a
contractual dispute regarding the execution of construction work. When the dispute
escalated, one of the parties approached the court for resolution. The court, recognizing
the potential for an alternative method of settlement, examined whether the matter was
suitable for ADR. The case was ultimately heard by the Supreme Court, which had to
determine the appropriateness of referring disputes to ADR mechanisms.
Key Legal Issues
1. When should courts refer disputes to ADR?
2. What types of disputes are suitable for ADR, and what types require adjudication by a
court?
3. What is the procedure for referring cases to ADR under Section 89 of the Code of
Civil Procedure (CPC)?
Supreme Court’s Ruling
The Supreme Court, in this landmark judgment, emphasized the importance of ADR in
reducing the burden on courts and promoting quicker dispute resolution. The Court laid
down guidelines for referring cases to ADR, classifying disputes into two broad
categories:

1. Disputes suitable for ADR:

 Contractual and commercial disputes
 Matrimonial cases (except when they involve criminal offenses like domestic
violence)
 Motor accident claims
 Consumer disputes
 Partition disputes among family members
 Employment and labor disputes

2. Disputes not suitable for ADR:
 Cases involving serious allegations of fraud, coercion, or undue influence
 Criminal offenses
 Disputes requiring complex legal interpretation, such as constitutional matters
 Landlord-tenant disputes governed by special rent control laws

The Court further clarified that if parties refuse ADR in cases where it is suitable, courts
have the authority to encourage and direct them to attempt resolution through mediation,
conciliation, or arbitration.

Challenges in Implementing ADR

Despite its numerous advantages, ADR faces several challenges in India:
Lack of Awareness – Many litigants and lawyers remain unaware of ADR mechanisms
and their benefits.

Enforceability Issues – While arbitral awards are legally binding, challenges to

enforcement often lead to delays.
Resistance from Legal Professionals – Some lawyers and litigants prefer litigation due
to financial incentives and the adversarial nature of court proceedings.

Limited Institutional Infrastructure – While arbitration and mediation centers exist in

major cities, rural areas lack proper ADR facilities and trained professionals.

Conclusion
Alternative Dispute Resolution is an essential component of India's justice system,
offering a faster, cost-effective, and amicable means of resolving disputes. Given the
enormous backlog of cases in Indian courts, ADR plays a critical role in ensuring timely
access to justice. Legislative measures and judicial precedents have strengthened the
ADR framework, making it a preferred mode of dispute resolution in various legal
domains, including commercial, family, and consumer disputes.

For ADR to be fully effective, efforts must be made to increase public awareness,
improve institutional infrastructure, and encourage legal professionals to embrace ADR
mechanisms. With sustained efforts and legal reforms, ADR can significantly contribute
to reducing litigation burdens and promoting a more efficient justice system in India.

12.SECTION 73 OF THE ARBITRATION AND CONCILIATION ACT, 1996:

SETTLEMENT AGREEMENT IN CONCILIATION

Introduction
Section 73 of the Arbitration and Conciliation Act, 1996, deals with the settlement
agreement reached between parties during the conciliation process. This section outlines
the process for converting conciliation discussions into a formal settlement that is legally
binding. Settlement agreements provide a concrete resolution to disputes without the need
for lengthy litigation or arbitration, making conciliation a favorable alternative dispute
resolution (ADR) mechanism.

Key Provisions of Section 73

1. Recording the Settlement Agreement
Subsection 1 of Section 73 states that any settlement agreement reached during
conciliation proceedings should be recorded in writing. The agreement must be signed by
the parties involved in the conciliation process. If the conciliator has facilitated the
process, they may also sign the settlement, but only as a witness, not as a party to the
agreement. The agreement must reflect the terms mutually agreed upon by the parties.
The conciliator’s role is to ensure that the terms are clear and accurately represent what
has been agreed upon during the conciliation discussions.

2. Binding Nature of the Settlement Agreement

Subsection 2 of Section 73 stipulates that once the settlement agreement is signed by the
parties, it becomes legally binding. The agreement is treated as a contract under the
Indian Contract Act, 1872. This means that if either party fails to honor the terms of the
agreement, the other party has the right to seek enforcement through the courts. The
settlement is as enforceable as any other contract, with the same legal standing and
consequences in case of breach.

3. Confidentiality of the Agreement

Section 73 ensures that the settlement remains confidential unless both parties mutually
agree to waive this confidentiality. The conciliator’s responsibility includes ensuring that
the details of the conciliation proceedings are not disclosed unless required by law or
agreed upon by the parties. This confidentiality helps protect the integrity of the
conciliation process and ensures that the discussions that led to the settlement remain
private. In practice, this encourages open and honest communication between the parties
without fear of later repercussions.

4. Voluntary Nature of the Settlement

The settlement agreement under Section 73 is based on the voluntary participation of the
parties. The agreement is only binding if both parties freely consent to the terms. The
conciliator cannot impose any terms, nor can the settlement be enforced unless it is
signed voluntarily by both parties. This is a key principle of the conciliation process,
where the focus is on mutual resolution rather than imposing a solution on the parties.

5. Finality and Completion

Once the settlement agreement is signed by the parties and the terms are agreed upon, the
conciliation proceedings are considered complete. The conciliator may not be involved in
the enforcement of the agreement, and the parties themselves will be responsible for
ensuring that the settlement is executed as agreed. The parties are also free to modify or
terminate the agreement at any time, provided both agree to the changes. However, in the
absence of such modifications, the agreement is final and binding.

6. Judicial Enforcement
If a party refuses to comply with the settlement agreement or if a dispute arises about its
implementation, Section 73 provides that the court can intervene to enforce the
agreement. This ensures that the settlement has the full backing of the law and that any
party failing to honor the terms of the settlement can be legally compelled to comply. The
court, however, cannot interfere with the substance of the settlement as long as it
conforms to the law and public policy.

7. Possibility of Conversion into a Court Decree

One important aspect of Section 73 is that the settlement agreement can be converted into
a court decree. If the parties wish, they can approach the court to convert the settlement
agreement into a decree of the court. This adds an additional layer of legal enforceability
and makes the settlement easier to enforce. The court’s role in this context is primarily to
recognize the agreement and issue the decree, ensuring that it has the same legal effect as
any court judgment.

8. Role of the Conciliator

The conciliator is primarily tasked with facilitating the resolution of the dispute by
helping the parties reach a mutually agreeable settlement. However, the conciliator is not
a judge and cannot impose any terms or force a settlement on the parties. The conciliator
may assist in drafting the settlement agreement and ensuring that the terms are clearly
expressed and accurately reflect the parties’ intentions. The conciliator’s role ends once
the agreement is reached, and they are not involved in its enforcement.

Significance of Section 73

1. Efficient Dispute Resolution

Section 73 contributes significantly to efficiency in dispute resolution. Once the parties
reach a settlement, they avoid the need for protracted litigation or arbitration. This not
only saves time but also reduces the financial costs associated with resolving disputes.

2. Promotes Flexibility
The settlement agreement allows for flexible solutions that are tailor-made for the parties
involved. Unlike court judgments, which are rigid and standardized, conciliation allows
for creative and mutually acceptable resolutions that suit the unique circumstances of
each dispute.

3. Alternative to Litigation
Section 73 significantly reduces the burden on the judicial system by encouraging parties
to resolve their disputes through conciliation rather than litigation. This leads to faster
resolution of disputes, which is vital for reducing the backlog of cases in Indian courts.

4. Finality and Clarity

Once signed, the settlement agreement offers clarity and finality to the parties involved.
Both parties are legally bound by the terms of the settlement, providing them with
security and certainty. The enforceability of the agreement ensures that there are no
ambiguities about the resolution.

5. Enforcement Mechanism
Since a settlement agreement under Section 73 is enforceable in the same way as a
regular contract, it provides a strong legal foundation for enforcement. This reduces the
likelihood of one party failing to honor the terms, as they are aware that the agreement is
legally binding and enforceable.

Challenges and Criticism of Section 73

1. Lack of Scrutiny of Agreement Terms

Section 73 does not guarantee that the terms of the settlement agreement are thoroughly
scrutinized by a neutral third party before signing. This could lead to one party being at a
disadvantage or coerced into agreeing to terms that are not entirely fair or beneficial to
them.

2. Enforcement Issues
While the settlement agreement is enforceable, the enforcement process can still be
challenging. If a party refuses to comply, litigation may be necessary, adding to the cost
and time involved. Enforcement of conciliation agreements also lacks the automaticity of
judicial decisions, requiring court intervention in case of a breach.

3. Limited Awareness of the Settlement Process

Many individuals and businesses may not be fully aware of the conciliation process and
its benefits, leading them to opt for more traditional and adversarial routes such as
litigation or arbitration.

4. Potential for Involuntary Settlements

While Section 73 emphasizes voluntary participation, there may be cases where one party
pressures the other into agreeing to the settlement terms, particularly in cases of power
imbalances.

Steps to Implement Section 73 Effectively

 Clear Communication: Both parties must communicate openly about their needs and
expectations during conciliation.
 Professional Legal Assistance: Seeking legal advice before finalizing the agreement
ensures its enforceability and fairness.
 Mediation and Conciliation Training: Well-trained conciliators can better guide
parties towards fair settlements.

Conclusion
Section 73 of the Arbitration and Conciliation Act, 1996, serves as a critical mechanism
for settling disputes amicably. By formalizing and enforcing settlement agreements, it
provides legally binding and clear resolutions without resorting to prolonged litigation.
Addressing challenges such as enforcement issues, unequal settlements, and lack of
awareness can enhance the effectiveness of this ADR mechanism in India.

13.ARBITRAL TRIBUNAL

Introduction
As per Section 2(1)(d) of the Arbitration and Conciliation Act, an Arbitral Tribunal
consists of either a sole arbitrator or a panel of arbitrators. The 2019 Amendment Act
empowers the Supreme Court (for international commercial arbitration) and High Courts
(for domestic arbitration) to designate arbitral institutions for appointing arbitrators,
which are regulated by the Arbitration Council of India. If no such institution is available,
the Chief Justice of the High Court may maintain a panel of arbitrators. Parties have the
freedom to decide the appointment procedure, but Section 11(9) mandates that in
international commercial arbitration, the arbitrator must not hold the nationality of either
disputing party. If three arbitrators are agreed upon without a set procedure, each party
appoints one, and these two appoint the Presiding Arbitrator.
The 2019 Amendment provides that arbitrators must be appointed within 30 days of
receiving the request. If parties fail, the Chief Justice of the High Court (or Chief Justice
of India for international arbitration) will appoint an arbitrator. The arbitral institution
determines the fees, as per the Fourth Schedule of the Act. The amendment further
mandates arbitrators to disclose in writing any conflict of interest that may raise doubts
about their impartiality. Additionally, unless agreed otherwise, amendments introduced by
the 2015 Act will not apply to proceedings initiated before October 23, 2015.

Arbitral Tribunal in India

Arbitration is a preferred method for dispute resolution, yet its effectiveness in India is
undermined by frequent court interventions, causing delays. Despite legal support for
arbitration, there is a reluctance to accept the finality of arbitral awards. Many parties,
aided by legal counsel, focus not only on winning but also on delaying enforcement. This
lack of adherence to the "spirit of arbitration" affects both the private and public sectors.
Excessive judicial interference weakens arbitration by prolonging disputes and
diminishing its intended efficiency. In a legal system plagued by delays, a pro-arbitration
stance would reduce the pressure on the courts.

India has only 13 judges per million people, compared to 51 in Britain and 107 in the
United States. Over 30 million cases are pending resolution in India, making arbitration
not just an attractive option but a necessity for maintaining the integrity of the legal
system. Moreover, for a nation seeking to attract foreign investment, efficient and
predictable remedies for investors are crucial. If a legal system does not ensure speed and
certainty, a risk premium is added to transactions, making them commercially unviable.
Foreign investors typically prefer arbitration and have avoided Indian courts due to
prolonged litigation delays caused by a backlog of cases.

Composition
The Arbitration and Conciliation (Amendment) Act, 2019 established a structured
Arbitral Council, chaired by a Supreme Court or High Court judge, Chief Justice, or an
arbitration expert. Other members include an arbitration practitioner, an academician, and
government appointees. Ex-officio members include Secretaries from the Ministries of
Law and Finance, along with a representative from a recognized commerce body as a
part-time member.

Rights of Arbitrator
 Scope of Arbitrator’s Powers: The arbitration agreement may define the arbitrator’s
rights, powers, and duties, provided they do not contradict legal provisions.
 Administrative Assistance: The arbitral tribunal can organize proceedings with the
parties’ consent for administrative support.
 Interim Measures (Section 17): The tribunal may order necessary interim measures
and require parties to provide security for the ordered measures.
 Jurisdiction (Section 16): The tribunal has the power to rule on its own jurisdiction
and decide objections regarding the existence or validity of the arbitration agreement.
 Place of Arbitration (Section 20): Unless agreed otherwise, the tribunal determines
the location of arbitration.
 Language of Proceedings (Section 22): The tribunal decides the language of
arbitration unless the parties have specified it.
 Conduct of Hearings (Section 24): The tribunal has discretion to conduct oral or
written proceedings.
 Termination of Proceedings (Section 25): If the claimant fails to communicate their
statement of claim without sufficient cause, the tribunal may terminate proceedings.
 Other Grounds for Termination (Section 32): The tribunal may terminate
proceedings based on other legal grounds specified under this section.
 Appointment of Experts (Section 26): Arbitrators are empowered to appoint experts
unless the parties have agreed otherwise.

Jurisdiction of Arbitral Tribunal

The term ‘jurisdiction’ signifies the power to decide. If there is any irregularity or
illegality in the procedure or pleadings, it would not be covered by the term jurisdiction.
Section 16 empowers the arbitral tribunal to determine the scope of arbitration based on
the agreement and reference made to it. Courts have no jurisdiction over this matter, and
any party challenging the tribunal's jurisdiction must raise objections before submitting
their statement of defense.

The arbitral tribunal may rule on its own jurisdiction, including objections to the
arbitration agreement’s existence or validity. A clause forming part of a contract is treated
as independent of the contract’s other terms. If the tribunal declares the contract null and
void, it does not automatically invalidate the arbitration clause under Section 16(1).
During proceedings, a party may also object if the tribunal exceeds its authority (Section
16(3)).

Arbitral Tribunal Awards

An arbitral award is the final decision of the tribunal on all matters referred to it. It is
binding like a court judgment and must be in writing, signed by all members or the
majority, with reasons for any omitted signatures. The award must state the date and
place of arbitration, and a signed copy must be delivered to each party. As per the
Arbitration and Conciliation (Amendment) Act, the tribunal must deliver the award
within 12 months from the date it enters the reference. This period can be extended by six
months if all parties agree. If the tribunal fails to issue an award within this timeframe or
the mutually extended period, its mandate is terminated unless extended by the court.

The Act does not impose specific limitations on remedies available through arbitration.
The tribunal can order specific performance, damages, declarations, costs, and interest,
similar to Indian court proceedings. However, exemplary or punitive damages for breach
of contract are generally not available. Courts can issue interim measures before the
tribunal is constituted and even after, if the tribunal’s order is deemed ineffective. Both
courts and tribunals can issue interim measures, but courts have wider powers. These
include granting injunctions, appointing a receiver, securing disputed amounts, and
preserving goods. The Amendment Act also clarifies that Indian courts can provide
interim measures for arbitrations seated outside India.

Conclusion:
Arbitration in India holds immense potential for reducing litigation burdens and ensuring
swift dispute resolution. However, frequent judicial interference and delays in
enforcement undermine its efficiency. While the legal framework, including the 2019
Amendments, strengthens arbitral independence and procedural clarity, practical
challenges persist. A shift towards a pro-arbitration approach, reducing court intervention
and expediting award enforcement, is essential. Strengthening institutional arbitration,
enhancing arbitrator accountability, and promoting party cooperation can restore
confidence in arbitration. For India to attract foreign investment and improve its dispute
resolution mechanism, embracing the true spirit of arbitration is crucial for maintaining
judicial efficiency and economic growth.

14.TERMINATION OF ARBITRAL PROCEEDINGS – ADD INFO ABOUT

ARBITRAL TRIBUNAL FROM ABOVE ANSWER

Section 32(1) of the Arbitration and Conciliation Act, 1996, provides that arbitral
proceedings shall be terminated either by the final arbitral award or by an order of the
arbitral tribunal under Section 32(2). This means that arbitration can come to an end in
two primary ways—when the tribunal delivers its final decision or when it issues a
specific order terminating the proceedings under prescribed circumstances.
Section 32(2) specifies three instances where the arbitral tribunal may issue an order for
the termination of proceedings.

Firstly, if the claimant withdraws his claim, the tribunal may terminate the proceedings
unless the respondent objects and demonstrates a legitimate interest in obtaining a final
settlement of the dispute.

Secondly, if both parties mutually agree to terminate the proceedings, the tribunal may
issue an order accordingly.

Thirdly, the tribunal can terminate the proceedings if it finds that their continuation has
become unnecessary or impossible for any reason.

According to Section 32(3), the mandate of the arbitral tribunal comes to an end along
with the termination of the proceedings, subject to the provisions of Section 33 and
Section 34(4). This means that once arbitration is formally concluded, the tribunal has no
further authority over the matter unless specific provisions allow for limited post-award
interventions, such as corrections or interpretations.

While Section 32 primarily governs the termination of arbitral proceedings, other

provisions of the Act also lead to termination in specific situations. Under Section 25(a),
if the claimant fails to submit his statement of claim, the tribunal may terminate the
proceedings. Similarly, under Section 30(2), if the parties reach a settlement, arbitration
comes to an end. Additionally, Section 38(2) provides for termination when parties fail to
deposit the amount fixed by the tribunal for arbitration expenses. These provisions ensure
that arbitration does not remain indefinitely open due to procedural lapses or financial
defaults.

When an arbitral tribunal delivers a final award, it automatically terminates the

proceedings, and no separate formal order is necessary under Section 32(2). The award
itself serves as the conclusive decision, marking the end of the tribunal’s authority over
the case. With the final award, the reference to arbitration ceases, and no further
arbitration-related actions can be initiated unless specifically permitted under law.
An arbitral tribunal must issue an order terminating the proceedings if the claimant
withdraws his claim, both parties agree to terminate, or it determines that continuing
arbitration is unnecessary or impossible. However, if the claimant's withdrawal
negatively impacts the respondent's rights, the respondent may object, in which case the
tribunal may decide whether to allow termination. Parties may also mutually agree to
terminate arbitration, bringing the matter to an amicable close. Additionally, in cases
where further proceedings become impractical due to circumstances such as non-
cooperation or lack of jurisdiction, the tribunal can formally close the case.

15.APPOINTMENT OF ARBITRATORS

Who is an arbitrator

The role of an arbitrator is like that of a judge who acts as a neutral third party. The
decisions made by the arbitrator in a dispute are considered obligatory and final. The
arbitrator regulates a hearing, which is conducted in a formal way, and in this meeting,
the parties produce evidence and arguments in relation to the dispute. In this case, the
decision made by the arbitrator is considered as an award. The decision made by the
arbitrator in regard with the dispute is enforceable in the court of law. The arbitrator acts
according to the procedure that has been chosen by the parties to a dispute. In other
words, an arbitrator is someone to whom the subject matter of the dispute is referred by
the conflicting parties.

Qualification of arbitrators and requirements for filing a request for appointment of

an arbitrator

 One of the basic requirements that an arbitrator should possess is that he should be of
sound mind, he must have accomplished the age of majority, i.e., he must be 18 years
of age or above, and he should not be disqualified by any law in force. The arbitrator
could be of any nationality. This is mentioned in Section 11 of the Act.

 The parties have the right to regulate or decide the qualifications of the arbitrator
according to their arbitration agreement. The arbitrators are required to have 10 years
of experience in the field of the dispute. Impartiality, neutrality, and fairness are some
of the additional qualifications that an arbitrator must have. He should not develop
any profit-making business or relationship with that of the parties that is likely to
change the outcome of the proceedings or effect the same. The concerned arbitrator
 must not be a part of any legal proceedings. The arbitrator should not be convicted of
any offence as mentioned by uu the law.

 The parties have the right to consent upon the course of action adopted for the
appointment of the arbitrator as stated under Section 11 of the Act. The same Section
even mentions that if any of the parties fails to appoint an arbitrator as per the agreed
procedure, then the Supreme Court or the High Court has the power to appoint the
arbitrator either by filing an application in the concerned court or on request made by
the parties.

What is Section 11 of Arbitration and Conciliation Act, 1996

Section 11 governs the appointment of arbitrators. It provides a comprehensive
framework for parties to appoint arbitrators by mutual agreement and prescribes
alternative mechanisms if the parties fail to agree. The section embodies the principles of
party autonomy and minimal judicial interference, allowing parties to tailor the
arbitration process to their needs while ensuring fairness and impartiality.

Key Provisions of Section 11 of Arbitration and Conciliation Act, 1996

1. Nationality of Arbitrators
Section 11(1) states that arbitrators can be of any nationality unless the parties agree
otherwise. This provision is particularly relevant in international commercial arbitrations,
where parties often prefer arbitrators from neutral jurisdictions to ensure impartiality.

2. Appointment Procedure
Section 11(2) allows parties to agree on a procedure for appointing arbitrators. In the
absence of such an agreement, the Act provides default mechanisms:
 For a three-member arbitral tribunal, each party appoints one arbitrator, and the two
appointed arbitrators select the presiding arbitrator.
 For a sole arbitrator, mutual agreement between the parties is required.

3. Role of Arbitral Institutions

The 2019 Amendment introduced Section 11(3A), empowering the Supreme Court and
High Courts to designate arbitral institutions for appointing arbitrators. In jurisdictions
lacking such institutions, the Chief Justice of the High Court may maintain a panel of
arbitrators.
4. Failure to Act
Section 11(4)-(6) addresses situations where parties or arbitrators fail to act as per the
agreed procedure. In such cases, the designated arbitral institution or, in its absence, the
courts, step in to ensure the appointment process is not stalled.

5. Disclosure Requirements
Section 11(8) mandates that prospective arbitrators disclose any circumstances likely to
give rise to justifiable doubts regarding their independence or impartiality, as per Section
12(1). This ensures transparency and maintains the integrity of the arbitration process.

6. Time Frame for Appointment

To promote expeditious dispute resolution, Section 11(13) requires the arbitral institution
to dispose of appointment applications within 30 days of serving notice on the opposite
party.

7. Fees Determination
Section 11(14) empowers arbitral institutions to determine arbitrators’ fees, subject to the
Fourth Schedule of the Act. This does not apply to international commercial arbitrations
or cases where parties have agreed otherwise.

Grounds for challenging the appointment of the Arbitrator

Section 12 of the Arbitration and Conciliation Act, 1996 (Post-2015 Amendment)

The 2015 amendment strengthened the impartiality and independence of arbitrators by
introducing mandatory disclosures and disqualifications. It added the Fifth, Sixth, and
Seventh Schedules to provide clarity on potential conflicts of interest.

Disclosure of Circumstances (Section 12(1))

An arbitrator must provide a written disclosure of any relationships or interests that may
raise doubts about their impartiality. This includes:
 Direct or indirect relationships (past or present) with any party involved.
 Financial, business, or professional interests in the dispute.
 Ability to dedicate sufficient time to complete the arbitration within 12 months.
The Fifth Schedule lists situations that might reasonably raise doubts about an arbitrator’s
independence, such as prior involvement in the dispute or professional ties with parties.
The Sixth Schedule provides a standard disclosure format for arbitrators.
Grounds for Challenge (Section 12(3))
An arbitrator can be challenged if:
1. Their independence or impartiality is in doubt due to circumstances under Section
12(1).
2. They do not meet the qualifications agreed upon by the parties.
A party can challenge an arbitrator even after appointment if new conflicts become
known later.

Automatic Disqualification (Section 12(5))

This section disqualifies arbitrators who fall under any category listed in the Seventh
Schedule, which covers:
1. Relationships with parties or counsel (e.g., past employment or advisory roles).
2. Relationship to the dispute (e.g., prior involvement as a lawyer or expert).
3. Financial or personal interest in the dispute.

Unlike the Fifth Schedule, which suggests potential conflicts, the Seventh Schedule acts
as an absolute bar to appointment unless both parties waive the disqualification through a
written agreement.

Interpretation of Section 12 in recent case laws

Facts
The Delhi Metro Rail Corporation (DMRC) had a contract with M/s Voestalpine, which
contained an arbitration clause requiring disputes to be resolved in accordance with
Clause 9.2 of the DMRC General Conditions of Contract (GCC) and Clause 9.2 of the
Special Conditions of Contract (SCC). These clauses mandated that arbitration be
conducted by a panel of arbitrators consisting of serving or retired engineers from
government departments or public sector undertakings. Both DMRC and Voestalpine
were to select one arbitrator each from this list, and these two arbitrators would then
appoint the presiding arbitrator from the same list. Voestalpine challenged this provision
under Sections 11(6) and 11(8) of the Arbitration and Conciliation Act, arguing that it
violated the principles of neutrality and impartiality introduced by the 2015 amendment,
particularly Section 12(5).

Judgment
The Supreme Court emphasized that the purpose of the 2015 amendment to Section 12
was to ensure greater impartiality in arbitration proceedings. It held that if an arbitration
clause contradicts Section 12(5), the latter prevails, and courts can appoint an
independent arbitrator. However, the Court clarified that merely being a current or former
government employee does not automatically disqualify an arbitrator unless they have a
connection with any of the parties. The Court distinguished between "impartiality" and
"independence," stating that concerns about bias would arise only if an arbitrator
discloses an interest in writing. The Court declined to exercise jurisdiction in the case but
directed DMRC to amend its arbitration clauses by expanding the panel to ensure a
broader and more neutral selection of arbitrators.

Conclusion
The 2015 amendment to the Arbitration and Conciliation Act significantly enhanced the
neutrality and impartiality of arbitrators by introducing mandatory disclosures and
disqualifications. Section 12 ensures transparency, while the Seventh Schedule enforces
strict disqualification criteria. Courts now play a crucial role in upholding fair arbitration
by intervening in biased appointments. Recent case law, such as Voestalpine v. DMRC,
reaffirms the judiciary’s commitment to promoting independent arbitration free from
conflicts of interest.

16.FORM AND CONTENTS OF ARBITRAL AWARD

Introduction
An arbitral award is the final decision given by an arbitral tribunal in a dispute referred to
arbitration. It must adhere to certain formal and substantive requirements as prescribed
under the Arbitration and Conciliation Act, 1996. The form and contents of an arbitral
award are crucial to ensure its enforceability and legitimacy.

Form of an Arbitral Award

1. Written Format and Signatures

 An arbitral award must be in writing and signed by the members of the arbitral
tribunal.
 In cases where there is more than one arbitrator, the signatures of the majority of
the members are considered sufficient, provided that the reason for any omitted
signature is stated.
  This requirement ensures the authenticity and legal validity of the award and
prevents challenges based on procedural irregularities.

2. Reasons for the Award

 The award must specify the reasons on which it is based. This promotes
transparency and allows parties to understand the tribunal’s decision-making
process.
 However, two exceptions exist where an award does not require reasons:
a. If the parties have mutually agreed that no reasons need to be given, or
b. If the award is based on agreed terms under Section 30 of the Act (i.e., when
the award is based on a settlement reached by the parties).

3. Date and Place of Arbitration

 The award must clearly mention the date and the place of arbitration as
determined under Section 20 of the Act.
 The place mentioned in the award is considered the juridical seat of arbitration,
which has implications for enforcement and judicial review.
 The award is deemed to have been made at that place, even if the tribunal
conducted hearings elsewhere.

4. Delivery of the Award

 After the award is made, a signed copy must be delivered to each party involved
in the dispute.
 This ensures that both parties are formally notified of the decision, enabling them
to comply with it or challenge it under Section 34 of the Act if necessary.

Contents of an Arbitral Award

1. Interim Arbitral Award

 The arbitral tribunal has the authority to issue an interim award on any matter over
which it has the power to issue a final award.
 This means that the tribunal can grant relief before the final resolution of the
dispute, such as:
 Directing a party to perform or refrain from certain actions,
 Ordering the payment of a sum on an interim basis,
 Securing assets or evidence relevant to the dispute.
  Interim awards enhance efficiency in arbitration by allowing partial resolution of
issues without waiting for the final award.

2. Interest on Monetary Awards

 If the arbitral award involves a monetary sum, the tribunal has the discretion to
include interest in the award unless the parties have agreed otherwise.
 The interest may be calculated at a reasonable rate and applied:
 From the date the cause of action arose until the date of the final award.
 On the whole or any part of the awarded sum.
 Additionally, under Section 31(7)(b) of the Act, unless stated otherwise, a sum
directed to be paid by an arbitral award will carry interest at 2% higher than the
prevailing rate of interest under the Interest Act, 1978, from the date of the award
until payment.
 This provision ensures that the successful party is compensated for delays in
receiving the awarded amount.

3. Costs of Arbitration
 The arbitral tribunal has the power to fix and allocate the costs of arbitration in
accordance with Section 31A of the Act.
a. "Costs" include all reasonable expenses related to the arbitration process, such
as:
Fees and expenses of arbitrators and witnesses – covering their professional
fees, travel, accommodation, and other necessary expenses.
b. Legal fees and expenses – including the costs incurred by the parties in hiring
legal representation and preparing submissions.
c. Administrative fees – if the arbitration is conducted through an arbitral
institution, the institution's fees and associated expenses are included.
d. Other expenses incurred in connection with the arbitral proceedings and the
arbitral award – including costs related to expert witnesses, document
production, and venue charges.
 The tribunal may allocate costs between the parties based on the outcome of the
dispute and their conduct during the proceedings.

Grounds for Challenge under Section 34

While an arbitral award is final and binding, it can be challenged in court under Section
34 of the Arbitration and Conciliation Act, 1996 on the following limited grounds:
1. Incapacity of Parties – If a party to the arbitration agreement was legally
incompetent (e.g., a minor or mentally incapacitated person), the award can be set
aside.

2. Invalid Arbitration Agreement – The arbitration agreement itself must be valid

under the law. If it is found to be void or unenforceable, the award cannot stand.

3. Violation of Principles of Natural Justice – If a party was not given proper notice of
the proceedings or was denied a fair opportunity to present their case, the award may
be challenged.

4. Jurisdictional Errors – If the arbitral tribunal exceeded its authority by deciding

matters beyond the scope of the arbitration agreement, the award can be set aside.

5. Conflict with Public Policy – An award that contravenes fundamental legal

principles, morality, or statutory provisions in India (e.g., awards obtained by fraud or
corruption) can be annulled.
These grounds ensure fairness in arbitration while maintaining the finality of awards
except in exceptional cases.

Conclusion
The form and contents of an arbitral award are essential to ensure transparency,
enforceability, and fairness in arbitration proceedings. The requirements laid out in the
Arbitration and Conciliation Act, 1996, help maintain the credibility of arbitration as an
alternative dispute resolution mechanism.

17.DIFFERENCE BETWEEN ARBITRATION AND CONCILIATION

Disputes are inevitable in commercial and personal relationships, and alternative dispute
resolution (ADR) mechanisms offer parties a way to resolve conflicts outside of the
formal judicial system. Among these mechanisms, arbitration and conciliation are two
widely accepted forms. While both are aimed at resolving disputes amicably and
efficiently, they differ significantly in their nature, procedure, legal framework, authority,
and finality of outcomes.

1. Definition and Nature

Arbitration is a quasi-judicial process wherein the parties to a dispute refer the matter to
an impartial third party, known as an arbitrator, whose decision (called an award) is
binding on both parties. It closely resembles a court procedure, albeit in a private setting,
and is generally formal and structured.
Conciliation, on the other hand, is a voluntary and informal process where a conciliator
helps the parties arrive at a mutually agreeable solution. The conciliator does not impose
a decision but merely facilitates communication and negotiation between the parties.

Key Difference: Arbitration results in a binding decision imposed by an arbitrator,

whereas conciliation leads to a mutually agreed settlement facilitated by a conciliator.

2. Legal Framework
In India, both arbitration and conciliation are governed by the Arbitration and
Conciliation Act, 1996, as amended. However, they are covered under different Parts of
the Act:
 Part I of the Act deals with Arbitration, covering both domestic and international
commercial arbitration.
 Part III of the Act deals with Conciliation.
Despite being covered under the same Act, the procedural and legal implications of the
two are quite distinct.

3. Role of the Third Party

In arbitration, the arbitrator acts much like a judge. He or she hears both sides, examines
evidence, applies the law, and then passes a binding arbitral award. The arbitrator’s
powers and responsibilities are defined by the arbitration agreement or applicable
arbitration rules.
In conciliation, the conciliator plays a more facilitative role, acting as a mediator or
negotiator. The conciliator may propose solutions, suggest settlements, or help clarify
misunderstandings. However, the conciliator does not have the authority to issue a
binding decision.

4. Binding Nature of the Outcome

 Arbitral awards are binding and enforceable in the same manner as a decree of a
civil court under Section 36 of the Arbitration and Conciliation Act, 1996.
 In conciliation, if a settlement is reached, it is recorded as a settlement agreement
under Section 73, which becomes binding like an arbitration award under Section
 74 of the Act. However, if no settlement is reached, the process ends without a
decision.

5. Initiation of Proceedings
 Arbitration typically requires a pre-existing agreement between the parties – an
arbitration clause in a contract or a separate arbitration agreement.
 Conciliation does not require any prior agreement. One party can invite the other
for conciliation, and if the invitation is accepted, the process begins.
Example: Arbitration is often embedded in commercial contracts, while conciliation is
suitable for resolving civil, family, or employment disputes where parties seek to preserve
their relationship.

6. Procedural Formalities
Arbitration is governed by strict procedural rules. The process includes pleadings,
hearings, examination of evidence, and legal arguments. It resembles a private court
proceeding and usually ends with a formal award.
Conciliation, however, is informal and flexible. The parties may decide the procedure,
and there are no fixed rules for how meetings are held or how discussions are conducted.
The emphasis is on negotiation and dialogue, not on procedure.

7. Confidentiality
While both arbitration and conciliation offer a level of confidentiality that is generally
absent in court proceedings, conciliation is considered more confidential. The conciliator
cannot be summoned to testify in court regarding the process or contents of discussions,
which encourages open dialogue.
In arbitration, although the proceedings are private, the arbitrator’s award may be subject
to challenge in court, which may bring aspects of the case into the public domain.

8. Relationship Between the Parties

Conciliation focuses more on preserving the ongoing relationship between the parties,
making it ideal for disputes where the parties must continue to interact, such as family,
partnership, or employment disputes.
Arbitration, being adversarial in nature, may strain relationships, especially if one party
feels wronged by the arbitrator’s decision.

9. Cost and Time

Conciliation is generally less expensive and quicker than arbitration. It requires fewer
formalities, and the absence of complex procedures leads to a faster resolution.
Arbitration, while still faster than traditional court litigation, may involve significant
costs, especially if conducted through institutional arbitration centers with panel fees,
procedural costs, and legal representation.

10. Role of the Courts

In arbitration, courts may be involved at various stages – for the appointment of
arbitrators, interim relief, setting aside an award, or enforcement of the award.
In conciliation, court intervention is minimal. The entire process is based on voluntary
participation, and the court's role comes into play only if the settlement agreement is
breached.

Conclusion
To summarize, both arbitration and conciliation serve the same objective of resolving
disputes outside the traditional courts, but they do so in distinct ways:
Feature Arbitration Conciliation
Nature Adjudicatory Negotiatory
Arbitrator imposes a
Third Party Role Conciliator facilitates a solution
decision
Settlement agreement becomes binding if
Binding Outcome Binding arbitral award
both parties agree
Formalities Formal and structured Informal and flexible
Court Involvement Can be significant Minimal
Relationship Focus May be adversarial Preserves relationships
Cost and Time Comparatively higher Lower
Requirement of Requires prior arbitration
No prior agreement needed
Agreement clause

Choosing between the two depends on the nature of the dispute, the willingness of the
parties to cooperate, and whether a binding decision or mutual settlement is preferred. In
India, both processes are increasingly used in commercial, civil, and personal disputes,
and understanding their differences is crucial for effective dispute resolution.

18.ARBITRAL PROCEEDINGS
Arbitral Proceedings: Meaning, Process, and Legal Framework

Arbitral proceedings are a method of dispute resolution where parties refer their disputes
to one or more arbitrators rather than approaching traditional courts. The process is less
formal, more flexible, and generally faster than civil litigation. Arbitration is particularly
popular in commercial disputes, including contracts, trade agreements, and international
commercial transactions. The proceedings are governed in India by the Arbitration and
Conciliation Act, 1996, which incorporates the principles of the UNCITRAL Model Law
on International Commercial Arbitration.

Meaning of Arbitral Proceedings

Arbitral proceedings involve the steps taken from the initiation of arbitration to the final
resolution through an arbitral award. It includes the selection of arbitrators, the exchange
of pleadings, hearings, examination of evidence, and delivery of the award. Arbitration
relies heavily on the principles of party autonomy, natural justice, and minimal judicial
intervention.

Legal Basis: Arbitration and Conciliation Act, 1996

The Arbitration and Conciliation Act, 1996, as amended in 2015, 2019, and 2021,
governs arbitral proceedings in India. It is divided into four parts:
 Part I: Domestic arbitration and international commercial arbitration seated in
India.
 Part II: Enforcement of foreign awards.
 Part III: Conciliation.
 Part IV: Miscellaneous provisions.
Part I (Sections 1–43) is relevant for understanding arbitral proceedings in India.

Stages of Arbitral Proceedings

1. Arbitration Agreement (Section 7)

The first requirement is the existence of a valid arbitration agreement, which can be a
separate agreement or a clause within a contract. It must be in writing and signed by both
parties, signifying consent to refer disputes to arbitration.

2. Commencement of Proceedings (Section 21)

Arbitral proceedings are deemed to commence on the date the respondent receives a
request for arbitration from the claimant. This date is crucial for determining the
limitation period for claims under the Limitation Act, 1963.

3. Appointment of Arbitrators (Sections 10–15)

Parties are free to decide the number of arbitrators (provided it is not an even number). If
parties do not agree, the default number is one arbitrator. In case of disagreement over
appointment:
 Parties may apply to the High Court or Supreme Court (depending on whether it's a
domestic or international arbitration) under Section 11.
 Arbitrators must be impartial and independent, and they must disclose any conflict
of interest as per Section 12.

4. Jurisdiction of Arbitral Tribunal (Section 16)

The arbitral tribunal has the authority to decide its own jurisdiction, known as the
Kompetenz-Kompetenz doctrine. This includes determining the validity or scope of the
arbitration agreement.

5. Conduct of Proceedings (Sections 18–27)

Arbitral proceedings are flexible and are not bound by the Civil Procedure Code (CPC)
or the Indian Evidence Act. However, the tribunal must ensure:
 Equal treatment of parties (Section 18),
 Fair and reasonable opportunity to present their case,
 Adherence to the agreed procedure (or decide the procedure if there is no
agreement).

Key stages include:

a) Statement of Claim and Defence (Section 23)

Each party submits their claims and defences, along with facts, legal grounds, and
supporting documents.

b) Hearings (Section 24)

Tribunal may conduct oral hearings or proceed on written submissions, depending on the
parties’ preferences.

c) Expert Evidence (Section 26)

Tribunal may appoint experts for technical opinions and can permit parties to question
such experts.

6. Interim Measures (Sections 9 and 17)

a) By Courts (Section 9)
Parties can approach courts for interim relief (e.g., injunctions, security for claim) before
or during arbitration.
b) By Tribunal (Section 17)
After constitution, the arbitral tribunal can grant interim measures. As per the 2015
amendment, such orders are enforceable like court orders.

7. Place and Language (Sections 20–22)

 Place: The place of arbitration can be agreed upon by parties; otherwise, the
tribunal determines it.
 Language: If not agreed upon, the tribunal decides the language of proceedings.

8. Time Limits for Proceedings (Section 29A)

The tribunal must deliver the award:
 Within 12 months from the completion of pleadings.
 An extension of 6 months can be granted by mutual consent.
 Any further extension requires permission from the court, failing which the
arbitrator’s mandate may terminate.

Arbitral Award

1. Final Award (Section 31)

The arbitral award must be:
 In writing,
 Signed by the members of the tribunal,
 Include the reasons for the decision (unless waived),
 State the date and place of arbitration,
 Delivered to all parties.

2. Costs and Interest (Sections 31A and 31(7))

 Tribunal may award interest for pre-award and post-award periods.
 Tribunal may also decide on costs of arbitration, which usually follow the
principle that loser pays.
3. Settlement Award (Section 30)
If parties settle during the proceedings, the tribunal can pass a consent award, which is
enforceable like a regular award.

Challenging and Enforcing the Award

1. Setting Aside the Award (Section 34)

An arbitral award may be challenged in court only on limited grounds such as:
 Incapacity or invalid agreement,
 Denial of opportunity to be heard,
 Award exceeds the scope of arbitration,
 Conflict with public policy.
The application must be made within 3 months (extendable by 30 days) from receipt of
the award.

2. Enforcement (Section 36)

If no challenge is filed, or if the challenge is dismissed, the award becomes final and can
be enforced like a civil court decree.

Confidentiality and Immunity (Section 42A and 42B)

 Arbitral proceedings are confidential, except for disclosure necessary for
implementation or legal reasons.
 Arbitrators are provided immunity from legal proceedings for acts done in good
faith.

Conclusion
Arbitral proceedings offer an efficient and party-controlled mechanism of dispute
resolution, particularly suited for commercial and contractual disputes. With increasing
amendments and judicial support, arbitration in India is evolving into a robust and
reliable alternative to litigation. While challenges remain in terms of delays and
enforcement, the legal framework provides adequate checks and balances to ensure
procedural fairness, autonomy, and finality in resolution.

19.IMPORTANCE OF LOK ADALAT

Justice for all is a fundamental principle enshrined in the Indian Constitution. However,
the traditional court system, with its procedural complexities, cost implications, and
delays, often becomes a barrier to the common man’s access to justice. In this context,
Lok Adalats—people’s courts—play a vital role in ensuring speedy, accessible, and cost-
effective justice. Established under the Legal Services Authorities Act, 1987, Lok Adalats
are an innovative alternative dispute resolution (ADR) mechanism in India that resolve
disputes amicably, outside the court system.

Concept and Legal Framework of Lok Adalat

Lok Adalat, which literally means “People’s Court,” is a forum where disputes/cases
pending in the court of law or at the pre-litigation stage are settled amicably. It is based
on Gandhian principles of conciliation and non-adversarial methods. The Legal Services
Authorities Act, 1987 provides statutory status to Lok Adalats. The decisions (awards) of
Lok Adalats are final and binding on the parties and are enforceable like a civil court
decree under Section 21 of the Act. No appeal lies against the Lok Adalat award, thus
giving it a strong sense of finality and efficiency.

Types of Lok Adalat

Lok Adalats are broadly of four types:
1. Permanent Lok Adalat (PLA) – For public utility services like transport, postal,
and telegraph.
2. National Lok Adalat – Held periodically across India on a single day for various
types of cases.
3. Mega Lok Adalat – Organized across all courts in a state in one day.
4. Mobile Lok Adalat – Travel to different places to facilitate dispute resolution,
especially in rural areas.

Importance of Lok Adalat

1. Speedy Justice
One of the primary benefits of Lok Adalats is speedy resolution. Traditional courts are
overburdened with a massive backlog of cases. Lok Adalats provide a quick forum for
settling cases, often in a single sitting, thereby reducing the load on courts and providing
timely justice.

2. Cost-Effective Justice
Another important feature is that no court fee is required to be paid when a matter is
referred to Lok Adalat. Even if a court fee was paid earlier, it is refunded once the dispute
is settled in Lok Adalat. The proceedings are informal and do not involve high litigation
costs, making it an attractive option for economically weaker sections of society.

3. Accessible to Common People

Lok Adalats are conducted in an informal, non-technical manner without strict adherence
to procedural or evidentiary laws. This removes the fear and complexity associated with
regular courts and makes the justice system more accessible to ordinary citizens,
especially in rural and semi-urban areas.

4. Finality of Decisions
Awards passed by Lok Adalats are final and binding on both parties. There is no
provision for appeal, which saves time, money, and further litigation. However, if parties
are dissatisfied, they may initiate a fresh litigation in regular courts, provided they did not
consent to the settlement.

5. Promotes Harmony and Amicable Settlements

Since Lok Adalats are based on mutual consent, they help preserve relationships,
especially in family and matrimonial disputes, neighbour disputes, and business conflicts.
This win-win approach promotes long-term peace and harmony in society.

6. Helps in Reducing the Backlog of Cases

India's judicial system is burdened with over 4 crore pending cases. Lok Adalats offer an
efficient solution to help reduce this pendency. Cases that are compoundable or where
compromise is possible are referred to Lok Adalats for quick disposal.

7. Useful in Certain Categories of Cases

Lok Adalats are especially useful in resolving:
 Motor accident claims
 Matrimonial and family disputes
 Land acquisition and compensation cases
 Bank recovery cases
 Utility bill disputes (electricity, water, etc.)
 Labour disputes
 Cheque bounce cases under Section 138 of the Negotiable Instruments Act
Such disputes are often amenable to settlement and benefit from the informal approach of
Lok Adalats.

Working of Lok Adalat

The panel of Lok Adalat usually comprises:
 A judicial officer as the chairperson,
 A lawyer, and
 A social worker or eminent person from the community.
Parties are encouraged to discuss and arrive at a mutual compromise. The panel plays
the role of a facilitator rather than a judge. Once both parties agree, the settlement is
recorded and an award is passed, which is binding and enforceable.

Limitations of Lok Adalat

While Lok Adalats are beneficial, they have some limitations:
 No Jurisdiction Without Consent: Both parties must agree to settle; otherwise,
Lok Adalat has no jurisdiction to decide the matter.
 Not Suitable for Non-Compoundable Offences: Serious criminal cases involving
non-compoundable offences cannot be resolved.
 No Adjudication on Merits: Lok Adalat cannot decide on merits if the parties fail
to agree. It is not a substitute for litigation in contentious or complex legal issues.

Role in Strengthening Justice Delivery in India

Lok Adalats have become a significant tool in achieving the constitutional objective of
Article 39A – free legal aid and equal justice for all. They serve as a practical method to
ensure inclusive justice, especially for weaker sections who might not otherwise seek
redress due to fear, ignorance, or financial constraints.
They also play a role in decentralizing justice by reaching remote areas through mobile
and rural Lok Adalats, thus bridging the urban-rural divide in legal access.

Recent Achievements and Statistics

According to data from NALSA (National Legal Services Authority):
 In 2023, National Lok Adalats settled over 1.6 crore cases in one year.
 Total settlement amount in these cases crossed ₹25,000 crore.
 Such achievements highlight the growing relevance and public trust in this system.

Conclusion
Lok Adalats represent a people-centric approach to justice. They are a crucial
innovation in India's judicial landscape, aiming to decongest courts, provide quick
justice, and promote amicable settlements. While they cannot replace courts in all
matters, their importance in civil, matrimonial, and compoundable criminal disputes is
undeniable. As India seeks to ensure “Justice for All”, strengthening and expanding the
reach of Lok Adalats is a step in the right direction for a more efficient and humane
justice system.