JAI NARAIN VYAS UNIVERSITY
JODHPUR
FACULTY OF LAW
TOPIC – ARBITATTION PROCESS UNDER
ARBITRATION AND CONCILLIATION ACT
1996
SUBMITTED BY – TRAPTI PAREEK
ROLL NO. – 17BBL51041
CLASS – BBA LL.B 9th SEM
SUBMITTED TO- Dr. AKALOVYA A. BHANSALI
SUBJECT – ARBUTRATION CONCILLIATION
AND ALTERNATIVE
MECHANISM/COMPETITON ACT
Acknowledgement
I would like to express my special thanks of
gratitude to my teacher Dr. AKALOVYA A.
BHANSALI as well as our principal
Dr.CHANDANBALA who gave me the golden
opportunity to do this wonderful project on the
topic, ARBITATTION PROCESS UNDER
ARBITRATION AND CONCILLIATION ACT 1996
which also helped me in doing a lot of Research
and i came to know about so many new things I
am really thankful to them .
Secondly i would also like to thank my parents
and friends who helped me a lot in finalizing this
project within the limited time frame.
Trapti Pareek
B.B.A –LLB 9TH Sem
Arbitral Process under Arbitration and
Conciliation Act, 1996
What is Arbitration?
It is a method of alternative dispute resolution that emerged to prevent
Court litigation and resolve the disputes quickly and amicably. An
amicable settlement doesn’t mean compromising at any cost. The
arbitration provides an alternative mode of dispute resolution through an
arbitrator. It includes a selection of the neutral third person who is an
expert in the area of the arbitral issue. All the parties are bound by the
rule and the time limits fixed by the arbitrator within which the dispute is
to be settled.
Types of Arbitration
The types of arbitration proceedings:
1.Institutional Arbitration
Institutional Arbitration is a specialized body with a permanent centre
participating and performing the function of aiding and administering in
the arbitral process as provided by the rules of the institution. These
institutes provide administrative support to the parties. Institutional
arbitration just provides the platform for the process. Parties mention in
their arbitration clause of the contract whether they want to choose
institutional arbitration or ad hoc arbitration.The issue arises for the
parties if they choose institutional arbitration for the disputes. Various
factors have to be considered in such a case:
• Nature & commercial value of the disputes
• Institution Rules
• Past record
• The reputation of the institution
• Fees charged
Some reputed institutions for arbitration:
• Indian Council of Arbitration
• International Chamber of Commerce
• Federation of Indian Chamber of Commerce & Industry
• World Intellectual Property Organization
2. Ad hoc Arbitration
An ad hoc arbitration is one that is not administered by an institution. The
parties are required to determine all the aspects of the arbitration such as
the number of arbitrators, manner of their appointment, the procedure for
appointment, procedure for conducting the arbitration. Ad hoc arbitration
is not administered by others. The parties themselves have to make their
own arrangement for selection of an arbitrator, designation of rules, the
applicability of law, procedure and administrative support. These
proceedings are cheaper, flexible and faster than the Institutional
arbitration and cost fewer fees.
3. Domestic and International Arbitration
Domestic arbitration takes place in India. The arbitration is a subject
matter of the contract and merits of the disputes are all governed by
Indian law and the cause of action arises wholly in India. Both parties are
from the domestic country and all the proceeding of the arbitration are
performed in their own country or habitually resident, or home country.
International commercial arbitration refers to the arbitral proceeding
which takes place either in India or outside the country or when the
parties or subject matter of the arbitration belong to a foreign party. r
domestic and international arbitration.
Stages of the Arbitral Process
1. Arbitration Clause or Arbitration Agreement
During the drafting of a contract of construction, insurance, partnership or
any civil matter, Parties shall add a clause of arbitration in the contract. In
the future, if any disputes arise between the parties they can resolve it
through arbitration. But while drafting an arbitration clause in the contract,
the lawyer should be very careful to make the clause detailed and ensure
that it should contain all the possible disputes which can be raised out of
contract or in relation to the contract. If the parties had no arbitration clause
in the contract, the parties can make an arbitration agreement with their
mutual consent to solve the disputes arising out of the previous contract.
Elements which are required to make the arbitration agreement or
arbitration clause effective
Number of Arbitrators
Section 10 of Arbitration and Conciliation Act, 1996 states that:
• Parties are free to appoint as many arbitrators as they can but the
number of arbitrators shall not be in even number.
• If the parties did not decide the number of the arbitrator within 30
days of sending the request, in such a case, they can reach the
arbitration tribunal which will appoint a sole arbitrator.
Arbitration Notice
Section 21 of the Arbitration and Conciliation Act, 1996 states the
commencement of the arbitration. The dispute begins from the date on which
a request for the dispute as referred to arbitration is received by the
respondent. From the date of receiving the legal notice to the respondent till
the completion of the fixed period given in the notice, parties have to give
the reply of the notice.
Appointment of Arbitrators
Appointment of the arbitrator is mutually decided and appointed by the
parties. The parties in the arbitration agreement or clause mutually decide
and mention the name of the concerned arbitrator who will resolve the
dispute. If the parties fail to mutually decide or appoint the arbitrator then in
such case, Section 11 of the Arbitration and Conciliation Act, 1996 states
that the parties shall move to the Court and request to appoint an arbitrator.
Statement of Claim
Section 23 of the Arbitration and Conciliation Act, 1996 states that with the
period of time fixed by the parties, the claimant shall state the facts for
supporting his claim, point of issue and relief.
The parties are required to submit their statement of claim by providing all
documents supporting the relevant facts of the issues of the arbitration. The
claim can be amended if it is agreed by the parties than they can amend the
claim during the course of the arbitral proceeding. Or unless the arbitral
tribunal considers the claim inappropriate.
Arbitral Award
An arbitration award is a final order given by the arbitrator. This award can
be in terms of monetary relief to one party by other parties. It can also be a
non-financial award such as adding employment incentives or stopping such
business practices.There are two types of the arbitration award:
Interim award
This is a temporary award given by the tribunal during the course of the
proceedings. An Interim award can only be made by the tribunal which has
the power to grant a final award. Interim orders are often given for the
payment of money or the disposition of property between the parties and an
order to make an interim payment is on account of the costs of the
arbitration.
Final award
The final award is the order or judgement given by the arbitrator after the
due process of arbitration. An arbitrator shall state the reason upon the
decisions made in the award. After the pronouncing of the final award. it
shall be signed by all the arbitrators and the parties. Till the completion of 90
days, other parties have the right to challenge the award in the Court till the
party in whose favour the award is given can not enforce the award.
Challenge in Court
The party in whose favour award is given by the arbitrator an award holder
will need to wait for a period of 90 days and during this intervening period,
other parties have the right to challenge awards.
In accordance with Section 34 of the Arbitration and Conciliation Act, 1996
that states that the Court can set aside the arbitral award if:
• The party was under some type of incapacity.
• The arbitration contract is not valid under the law to which parties
have been subjected to.
• The party making the application for invoking the arbitration has not
given proper request to the other party for the appointment of the
arbitrator.
• The award deals with the disputes not falling or comes under the
submission of the arbitration or contains matter beyond the scope of
arbitration.
Other Essential Elements of Arbitral
Process
• Seat and Venue
In arbitration, the seat is the legal construct and it is the jurisdiction where
the final arbitral award will be made. The seat has a great impact on the
legal framework of the arbitration. Each jurisdiction applies their own set of
rules for the arbitration that is why parties have to decide the seat of the
arbitration diligently. Selection of the seat of arbitration not only determines
the law governing the arbitration proceedings but also the rights relating to
the enforcement of the arbitration awards.
The venue is the place where parties meet if the arbitration is under the rule
of institutional arbitration, it is generally conducted at the place where the
institution is located. If it is ad hoc arbitration, the place is gradually changed
as decided by the parties. The venue is not the same as the seat of
arbitration, it is merely a geographical location of the arbitration proceedings
chosen on the basis of convenience. When the agreement is completely silent
on the seat and venue, in such situations, it’s a venue which emerges as a
crucial factor in deciding the appropriate Court
• Cost
The cost of the arbitration proceeding is borne by both the parties. It is well
settled that it is against the law that only one party bears the cost solely,
thus, plaintiff or respondent have to pay the entire fees, or as decided by
both parties mutually.
Limitation to Commencement of Arbitration
Section 43(2) of Arbitration and Conciliation Act, 1996 states that the date
on which the cause of arbitration occurred, the period of limitation begins to
run for the claimant to invoke the arbitration clause. The needless
communication or reminders cannot postpone this accrual of the cause of
action nor stop the limitation period to begin, not even if there is no mention
of the limitation period in the arbitration clause.
How long do Arbitral Proceedings last?
The Limitation Act, 1963 applies to the Arbitration and Conciliation Act, 1996
unless expressly excluded by the Arbitration and Conciliation Act. Any
arbitration proceedings commenced after the period of three years from the
date on which the cause of action arose will be time-barred.
The parties have the right to fix their own set of rules for the proceeding of
the arbitration. If no such procedure is agreed by the parties, the tribunal is
authorized to conduct the proceedings in such manner as it considers
appropriate. The tribunal will not apply any provisions of the Civil Procedure
Code, 1908 and the Evidence Act, 1872. In the arbitration contract, the
arbitration is to be administered by an arbitration institution and setting rules
of that institution become a part of the arbitration clause by implication. If
the proceeding is in an ad hoc arbitration, such parties have to make their
own set of rules for the procedure.
Amendments into the Arbitration and Conciliation Act require to hold oral
hearings of the evidence or oral argument on a day-to-day basis and grant
no adjournments unless sufficient cause is provided. The tribunal may
impose exemplary costs on the party seeking frivolous adjournments or
dates.
Enforcement of Arbitral award
After giving the final award of the arbitration, other parties have the right to
challenge the award in Court by an application for setting aside such an
arbitral award.
The Court can set aside the arbitral award if:
• A party may be under some incapability.
• The arbitration agreement is not valid under the law to which parties
have made the contract.
• The party making the application was not given proper notice to the
other party on the appointment of the arbitrator.
• The arbitral award deals with the terms of submission to arbitration
or its decision on the matters beyond the scope of the submission to
arbitration.
Domestic award enforcement
On the enforcement and execution of the award given by the tribunal, an
award holder shall have to wait for a period of 90 days and during this
intervening period, the party has the right to challenge the award in the
Court. The challenge of the award shall be in accordance with Section
34 which provides for the procedure for application for setting aside an
arbitral award.
Foreign award enforcement
The Foreign arbitration award enforcement must be given in a New York
Convention adopted by the United Nations Diplomatic Conference on 10 June
1958 to resolve disputes arising out of a legal relationship. The Geneva
Convention and the New York Convention provide that a foreign arbitral
agreement must be made in writing and there is no need for it to be in a
particular format. The foreign award must be valid and should arise from an
enforceable Arbitration Contract. To give effect to an award, an arbitration
award must be clear, unbiased and capable of resolving the dispute.
Conclusion
The first and foremost important step in the arbitral process is the arbitration
clause which shall be very diligently framed while making the arbitration
clause or arbitration agreement. Arbitration supports the party’s autonomy.
During the framing of the arbitration clauses, parties have to decide the
appointment of the arbitrator, number of arbitrators, rules applicable in the
arbitration. After the final arbitration award, it is enforced by the law
applicable in such jurisdiction of the arbitration.
