Arbitration Act

Group Members:

Suketu Bhatt PG-10-05 Roshan Gehani PG-10-14 Shishira Hegde PG-10-18 Abhishek Nair PG-10-32 Vaibhav Sarangale PG-10-42

The Indian Arbitration and Conciliation Act, 1996 the governing arbitration statute in India. It is based on the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985. The Arbitration and Conciliation Act, 1996 has repealed the Arbitration Act, 1940 and also the Acts of 1937 and 1961.

(a) "arbitration agreement" means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not; (b) "award means an arbitration award; (c) "Court" means a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21, include a Small Cause Court; (d) "legal representative" means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting; (e) "reference" means a reference to arbitration.

The Types of Arbitrations

 Domestic Arbitration The procedure for arbitration and jurisdiction are as per the Indian Law and subject to the jurisdiction of courts in India.  International Arbitration One of the parties is resident abroad, a company incorporated abroad etc or government of foreign country.  Foreign Arbitration Arbitration to be conducted abroad.  Institutional Arbitration As per the most established Arbitral Organization (Indian Council of Arbitration & Indian Chamber of Commerce and Industry)  Specified Arbitration Arbitration of disputes in highly specialized areas like construction, high technology and commodities etc.

Requirements of an Arbitration Agreement

Act requires that the arbitration agreement must be in writing. It may be in the form of an arbitration clause in a contract or it may be in the form of a separate agreement. An arbitration agreement is in writing, if it is contained in : (a) a document signed by the parties, (b) an exchange of letters, telex, telegrams or other means of telecommunication, providing a record of agreement, (c) or an exchange of claims and defense in which the existence of the agreement is alleged by one party and not denied by the other.

Validity of Arbitration Agreements: y All disputes about property, money or about the amount of damages payable for breach of contract can be referred to arbitration. Competency of the Parties (Sec 11 and 12): y They should be majors. y They should be of sound mind. y They are not to be disqualified by the law to which they are subject. Contents of Arbitration Agreement: y If the agreement does not specify and appointment of sole arbitrator is not made despite notice, appointment should be made by Chief Justice of High court or person designated by him upon request by the party.

Venue of Arbitration
y Section 20(1) provides that parties may agree on a place of arbitration. y If not agreed arbitral tribunal may determine the venue. y Section 19(1) prescribes in the matter of determination of venue of international arbitration with a foreign party is held in India. y The power of arbitral tribunal includes to determine the admissibility, relevance and the evidential value of various submission made and documents produced by the parties.

The parties may by agreement appoint whomsoever they please to arbitrate on their dispute. They may appoint a single arbitrator or two arbitrators and an umpire or two or more arbitrators without any umpire. The parties may appoint an arbitrator in the following ways:

1) An arbitrator may be named in the arbitration agreement, or 2) He may not be named at all, or 3) It may be agreed that the arbitrator shall be appointed by a third party who shall be named in the agreement.

To administer oath to parties and witnesses appearing before him; To state a special case for the opinion of the court on any question of law or state the award in the form of a special case for the opinion of the court To make the award conditional or in the alternative To correct in an award any clerical mistake or error arising from any accidental slip or omission To administer any party interrogatories

Duties of Arbitrator
Duty to follow rules of natural justice Duty to act fairly to both parties Duty not to delegate Duty to decide according to law Duty not to exceed his authority Duty to decide all matters referred Duty to act together Duty not to accept hospitality

Modification or Correction of Arbitration Awardy An application for setting aside award may be made to the court within

a period of 3 months of receipt of the award on following grounds. y Incapacity of the party y Invalidity of the agreement y Want of proper notice y Award does not pertain to the dispute duly referred y Arbitral tribunal is defective in composition y Subject matter of dispute is not capable of settlement through arbitration y Arbitral award is contrary to public policy Under the Section 82, High court may make the rules consistent with the provision of the Act for conduct of the proceedings before the court.

Enforcement of Arbitration Awardy Enforcement of Domestic Award (Section 36)y Enforcement of Foreign Award under conventions y Enforcement of awards to which conventions do not apply

Appeals y The act provides for only one appeal and expressly bars second appeal excepting the right to appeal to the Supreme Court.

Conciliation
y Acts as a catalyst to bring settlement between the parties. y Conciliation commences when the party accepts in writing invitations of

the other to conciliation. Stages in Conciliation Proceedings: y They are expected to assist in an independent and impartial manner. y He facilitates steps such as mutual exchange of written statements and inviting parties to communicate jointly or separately. y Try to find areas of agreements and try to formulate terms of possible settlement. y The agreement signed by the parties and authenticated by conciliator shall be final and binding and has the status of an arbitral award.

Confidentiality:
y He has to endeavor for a speedy settlement but he is not supposed to

disclose confidentiality. y The views expressed or suggestions made by the parties for a possible settlement , admission made by the parties cannot be used in arbitral or judicial proceedings. Cost and expense related to Arbitrator:
y Unless agreed by the parties, the costs of an arbitrator shall be fixed by y y y y

the Arbitral Tribunal. The party entitled to costs; The party who shall pay costs; The amount of costs or method of determining that amount; The manner in which the costs shall be paid.

Case - ONGC VS SAW Pipesy ONGC in June 1996 indented an order of 26 and 30 y

y y y

diameter to SAW pipes Pvt. Ltd. The order was time critical and was to be delivered by December 1996. The quality of product expected was premium. Due to labor strike in Italy SAW pipes failed to deliver the goods in time and asked for the extension. ONGC deducted appox. $ 3,00,000 and $ 15,15,000 as liquidation damages from the final invoice payment. The case was taken to arbitral tribunal for unlawful deduction of liquidation damages.