ARBITRATION AND CONCILIATION ACT,1996

• The dispute between parties is not decided by a court. It is decided

between the parties themselves through a third person called
Arbitrator.

• It is an alternative method of dispute settlement. An alternative to

court process.

• Adjudicating Authority is called Arbitrator/Arbitration Tribunal

• The decision of the Arbitrator /Arbitration Tribunal is called Award.

• every award is enforced in the same manner as the decree of the

court.

Arbitration and Conciliation Act,1996

It is an Act to consolidate the law relating to;

i. Domestic arbitration,

ii. International Commercial Arbitration;

iii. Enforcement of foreign award

It has two ways of settling the dispute-

a) through arbitration and

b) through conciliation

The Arbitration and Conciliation Act, 1996

• The Arbitration and Conciliation Act, 1996 was introduced with the
objective of providing speedy dispute resolution. The Act covered
international arbitration as well and was based on the UNCITRAL Model
Law on International Commercial Arbitration. The Act, however, was
met with criticism due to exorbitant costs, absence of a stipulated time
period for making an arbitral award, interference by the court beyond a
reasonable limit which went against the essence of the Act

• Subsequently, the Arbitration and Conciliation (Amendment) Act,

2015 was passed with a number of amendments. After taking into
account the recommendations made by a committee headed by Justice
B.N. Srikrishna, the Arbitration and Conciliation (Amendment) Act,
2019 was enacted. The Arbitration Council of India was instituted with
the goal to promote ADR in India, boost the established arbitration in
 the country, and evaluate the functioning of the arbitral institutions
and the arbitrators.

• On November 4, 2020, the Arbitration and Conciliation (Amendment)

Ordinance, 2020 was implemented with two major amendments. First,
the enforcement of an arbitration award could be stayed
unconditionally if the court can infer that the contract/agreement or
the award was given fraudulently or under undue influence. Second,
after much scrutiny and discourse, the qualifications and experience
required for approving an arbitrator were deleted from the Eighth
Schedule of the said Act.

Kinds of arbitration

1. Domestic Arbitration- Occurs in India

2. International Arbitration- Occurs in foreign country

3. International Commercial Arbitration-arbitration that takes place

because of a dispute arising from a commercial contract where either
one of the parties resides in a foreign country or is a foreign national;
or the core management committee of an association, company or a
body of individuals is controlled by foreign individuals

Further types of arbitration

• On the basis of the established procedure and rules, there are further
three types of arbitration that have been recognized in India:

1. Ad-hoc Arbitration

• Arbitration is conducted without having any institutional proceedings.

it does not comply with the rules of an arbitral institution. The parties
have the option to choose the rules and the procedure to be followed.
This form of arbitration can be used for international commercial
transactions and domestic disputes.

2. Fast track Arbitration

It does not involve any procedure that takes time and upholds the main
objective or arbitration, that is, to resolve a dispute in a short period of
time. In the provision of the Act, fast-track arbitration is given a
stipulated time period of six months. The arbitrator only makes use of
the written submission and unlike other forms of arbitration, one sole
arbitrator is sufficient to resolve the dispute
 3. Institutional Arbitration

• In Institutional Arbitration, the parties are free to choose a particular

arbitral institution

• The institution selects one or more arbitrators who possess the skills
and experience stipulated applicable in a given case when the parties
do not appoint an arbitrator themselves. On the other hand, if the
parties choose to appoint one themselves they can choose from the list
provided by the institution.

Institutional Arbitrations

• Indian Institute of Arbitration and Mediation, Delhi

• Indian Institute of Technical Arbitrators, Chennai

• Mumbai Centre for International Arbitration, Mumbai

Cases not referred to Arbitration

1. Winding up proceedings of any company.;

2. Disputes that have to be determined by any particular tribunal as the

law may provide;

3. Proceedings related to insolvency;

4. Probate proceedings;

5. Question of will and genuineness;

6. Guardianship matters;

7. Succession disputes;

8. Disputes related to immovable property;

9. Illegal transaction cases;

10. Proceeding under Section 145 of the Code of Criminal Procedure;

and

11. A criminal case cannot be referred to arbitration;

Arbitration Agreement-Section 7

• “Arbitration agreement means an agreement by the parties to submit

to arbitration all or certain disputes, which have arisen or which may
 arise between them, in respect of a defined legal relationship, whether
contractual or not

• It may be in the form an arbitration clause in a contract or in the form

of a separate agreement. It may be noted that if certain provisions of a
contract, containing an arbitration clause, come to an end owing to
frustration or is avoided on the ground of fraud, misrepresentation,
undue influence or coercion, the arbitration clause continues to be
binding.

CHAPTER III
Composition of arbitral tribunal

1. Number of Arbitrators Section 10-The parties are free to determine

the number of arbitrators provided that such number shall not be an
even number. If the parties fail to make the determination, the arbitral
tribunal shall consist of a sole arbitrator after being appointed by the
Chief Justice of a Supreme Court or the Chief Justice of a High Court.

2. Appointment of arbitrators. — In three ways:

a- by the parties as per agreed procedure,

b- Parties can appoint one each and the two arbitrators shall appoint a
third arbitrator as umpire.

c- By the court when an application is made under section 8 of the Act

Power of Judicial Authority to refer parties to Arbitration- Section 8

In order that the judicial authority may refer the parties to arbitration, the
following conditions must be fulfilled:

1. There should be a valid and a subsisting arbitration agreement capable

of being enforced

2. The subject matter in question in the legal proceedings must be within

the scope of the arbitration agreement.

3. The applicant must be made by a party to the arbitration agreement or

by some person claiming under him.

4. The application must be accompanied by the original arbitration

agreement or a duly certified copy thereof

Place of arbitration
 1. The parties are free to agree on the place of arbitration.

2. If they fail to agree, the place of arbitration shall be determined by the

arbitral tribunal having regard to the circumstances of the case,
including the convenience of the parties.

3. The arbitral tribunal may, unless otherwise agreed by the parties, meet
at any place it considers appropriate for consultation among its
members, for hearing witnesses, experts or the parties, or for
inspection of documents, goods or other property.

Commencement of arbitral proceedings.

Unless otherwise agreed by the parties, the arbitral proceedings in

respect of a particular dispute commence on the date on which a
request for that dispute to be referred to arbitration is received by the
respondent

Process of Arbitration

1. Arbitration clause: A contract or an agreement signed by both parties

must contain an arbitration clause to resolve the dispute through
arbitration. Arbitration clauses can be in the form of a separate
arrangement or a contract in arbitration. The party should also mention
the venue for the proceeding of the arbitration clause

2. Appointment of Arbitrator

3. The parties shall appoint Arbitrator

4. If each party appoints one arbitrator each, then the two arbitrators
shall appoint the third arbitrator who is called the presiding arbitrator.

5. If they do not appoint within 30 days of communication of dispute by

the claimant, application will be made to High Court/Supreme court for
appointment of Arbitrator.

DOMESTIC ARBITRATION CLAUSE

• Any dispute arising out of or incidental or in connection with this

Contract / Agreement, including any question regarding its existence,
operation, termination, validity or breach thereof, shall be referred to
and finally resolved by Arbitration administered by ‘Hyderabad
Arbitration Centre’ (HAC), in accordance with its Arbitration Rules
(“HAC Arbitration Rules”) for the time being in force.
 • The Arbitral Tribunal shall consist of sole / three Arbitrator(s).

• The seat of Arbitration shall be _________.

• The Language of the Arbitration shall be _________.“

• Any dispute arising directly or indirectly out of or in connection with

this Contract / Agreement, shall be referred to and finally resolved by
Arbitration administered by ‘Hyderabad Arbitration Centre’ (HAC), in
accordance with its Arbitration Rules (“HAC Arbitration Rules”) for the
time being in force.

• It is further agreed that, following the commencement of arbitration,

the parties will attempt in good faith, to resolve such dispute through
Mediation, as per the Arb-Med-Arb Procedure of ‘Hyderabad Arbitration
Centre’ (HAC), for the time being in force. Any settlement reached in
the course of such Mediation shall be referred to the Arbitral Tribunal
so constituted/appointed by HAC and the same shall be drawn up as a
“Consent Award” on agreed terms.

• The Arbitral Tribunal shall consist of sole / three Arbitrator(s). Likewise,

the dispute shall be mediated through _____ number of Mediators. The
seat of Arbitration shall be _________. The Language of the Arbitration
shall be _________. The Governing Law for this Arbitration shall be
__________. The Governing Law of the Contract shall be __________.

Process of Arbitration

• 5. Statement of claim and defence: This provision is under section

23 of the act. An arbitrator is appointed after both parties agree to an
arbitration procedure. The claimant drafts a statement of claims
containing all the information and documents they think are relevant to
the case and evidence proving their statements

• Expert Appointment by Arbitral Tribunal: The Arbitral Tribunal

may appoint one or more experts to report to it, on specific issues to
be determined by the Arbitral Tribunal.

• 6. Hearing and written procedures: The arbitrators and arbitral

tribunal hear about the conflicts between the parties and examine the
evidence. Then the tribunals decide whether the information or the
evidence provided by the claimants is valid or not and proceed with
the case.
 • 7. Arbitral award: After the hearing and examination, the arbitrator
gives a final award. This is binding and final to both parties. They
cannot file an appeal before the arbitrage tribunals, but the parties can
appeal in the court against the arbitral. This provision is under Section
31

Arbitral award

• It should be by majority

• In writing and signed by the Arbitrators.

• States the reason for the award

• Date of award and place of award to be mentioned.

• Copy of the award to be given to each party

• Tribunal can make interim award on application by the claimant

• Enforcement of arbitral award: After the arbitral passes the award, it

has to be executed. This provision is under sections 35 and 36,
respectively

Time limit for arbitral award.

• twelve months from the date the arbitral tribunal enters upon the
reference,i.e., the date on which the arbitrator or all the arbitrators, as
the case may be, have received notice, in writing, of their
appointment.

• If the award is made within a period of six months ,the arbitral tribunal
shall be entitled to receive such amount of additional fees as the
parties may agree.

• The parties may, by consent, extend the period for making award for a
further period not exceeding six months. In case of further delay, the
court can extend the period.If the delay is due to the Arbitrator, then
fees will be reduced not exceeding five per cent for each month of
such delay.

Default of a party

If the claimant fails to communicate his statement of claim, the arbitral

tribunal shall terminate the proceedings;
 If the respondent fails to communicate his statement of defense, the arbitral
tribunal shall continue the proceedings treating the right of the respondent
to file such statement of defense as having been forfeited].

If a party fails to appear at an oral hearing or to produce documentary

evidence, the arbitral tribunal may continue the proceedings and make the
arbitral award on the evidence before it.

Regime for costs

The Court or arbitral tribunal, shall have the discretion to determine— (a)
whether costs are payable by one party to another; (b) the amount of such
costs; and (c) when such costs are to be paid

Correction and interpretation of an Award Sec 33(1)

If request is made by the parties, Arbitrator can correct the Award with
respect any computation errors, any clerical or typographical errors or
any other errors of a similar nature occurring in the award

• Additional Award Sec 33(4)

Request can be made within 30 days from the receipt of arbitral award,
to the arbitral tribunal to make an additional arbitral award as to claims
presented in the arbitral proceedings but omitted from the arbitral
award. The Arbitration Tribunal shall make the additional arbitral award
60 days from the receipt of such request.

Termination of proceedings

• The arbitral proceedings shall be terminated by the final arbitral award

or by an order of the arbitral tribunal

• The arbitral tribunal shall issue an order for the termination of the
arbitral proceedings where— (a) the claimant withdraws his claim, (b)
the parties agree on the termination of the proceedings, or (c) the
arbitral tribunal finds that the continuation of the proceedings has for
any other reason become unnecessary or impossible.

• the mandate of the arbitral tribunal shall terminate with the

termination of the arbitral proceedings.

Setting aside of an Arbitral Award Sec 34

• Section 34 provides that an arbitral award may be challenged before

the Competent Court for setting aside on the following grounds:
 • A party to arbitration suffered from want of competency

• The arbitration agreement is illegal & void.

• The concerned party (i.e. party applying for setting aside the award)
was not given proper notice of appointment of an arbitrator

• The Arbitral Tribunal was not properly constituted or the procedure

adopted not in accordance with the agreement

• The Arbitral Tribunal acted without jurisdiction Award dealing with a

dispute not contemplated by or not falling within the terms of
submission to arbitration

• The subject matter of dispute is not capable of settlement by

arbitration under the law

• Award is in conflict with the public policy

• An application for setting aside an Arbitral Tribunal may be made

within 3 months from the date on which the party making the
application had received the award.

• If a request had been made u/s 33 for the correction or interpretation

of the award, application for setting aside of award may be made
within 3 months from the date on which that request had been
disposed of by the Arbitral Tribunal. However, if the Court is satisfied
that the applicant was prevented by sufficient cause from making the
application within the prescribed period of 3 months, it may entertain
the application within a further period of 30 days, but not thereafter

Appeals under Section 37

• The parties cannot appeal against an arbitral award on its merits and
also the court cannot interfere on its merits.

• An appeal against the order of Arbitral Tribunal granting or refusing to

grant any interim measures shall lie to a competent Court against the
following orders of the Court:

• A) Order granting or refusing to grant interim measures.

• B) Order setting aside or refusing to set aside an arbitral award.

• No second appeal shall lie from an order passed in appeal under this
section. However, the right to appeal to the Supreme Court is not
affected.
 • Section 37 of the Arbitration and Conciliation Act of 1996 allows for
appeals against orders from an arbitrator or court.

The orders that can be appealed include:

Refusing to refer the parties to arbitration under section 8

Granting or refusing to grant any measure under section 9

• Setting aside or refusing to set aside an arbitral award under section

34

• Accepting the plea referred to in sub-section (2) or sub-section (3) of

section 16

• Granting or refusing to grant an interim measure under section 17

Section 9 empowers the court to issue such measures, allowing parties

to approach the court before, during, or after arbitral proceedings. On
the other hand, Section 17 grants the arbitral tribunal the authority to
order interim measures directly during the arbitration process

• The appeals can be filed to the court authorized to hear appeals from
original decrees of the court or to the arbitral tribunal. The Act does not
specify a time limit for filing an appeal, but the Limitation Act, 1963
applies to arbitrations as it applies to proceedings in Court.

Settlement-Section 30

• This section declares that, in spite of an arbitration agreement, the

Arbitral Tribunal may encourage the settlement of disputes by using
mediation, conciliation or other proceedings, with the agreement of the
parties.If the parties reach to a settlement, the Arbitral Award will be
given by the Arbitral Tribunal. The Arbitral Award, on agreed terms, will
have the same status and effect as any other Arbitral Award on the
merits of the dispute.

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

Conciliation

• Conciliation means the settling of disputes without litigation.

 • The Arbitration and Conciliation Act, 1996 gives a formal recognition to
conciliation in India

• conciliator is appointed in the following manner :

• If there is one conciliator in a conciliation proceedings, there should be

an agreement on his name.

• If there are two conciliators, each party should appoint one conciliator
each.

• If there are three conciliator in a conciliation proceedings, each party

should appoint one conciliator each and third conciliator will be an
agreed person, who will act as Presiding Conciliator.

Conciliator role

• The conciliator’s role is to provide assistance in an independent and

impartial manner to the parties to reach an amicable settlement of
their disputes and to conduct the conciliation proceedings in such a
manner as he considers appropriate.

• The conciliator’s role is not confined merely in providing assistance,

but also extends to making proposals for settlement of disputes.