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UNIT-II
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ARBITRATION, CONCILLATION AND ADR(alternative

dispute resolution) SYSTEM

ARBITRATION:
Arbitration is a dispute resolution process agreed between parties in which the dispute is
submitted to one or more arbitrators who issue an award. It is an alternative dispute
resolution (ADR) mechanism because it allows the parties to resolve their dispute outside of
State courts, i.e., without litigation.
Among alternative dispute resolution methods, arbitration is defined as
a jurisdictional means of settling disputes because of the power given to arbitrators to decide
a case and issue an award. Different from mediation and negotiations, the parties have no say
on the solution found by the arbitral tribunal, which is imposed on them in a final and binding
manner.

Consent to Arbitration
The main characteristic of arbitration is its consensual nature. A dispute may be solved by the
arbitrator only if both parties have agreed to this. The parties' agreement usually takes the
form of an arbitration clause in the contract, prior to the occurrence of a dispute. Once the
dispute has emerged, the parties may agree to submit the particular dispute to an arbitral
tribunal.

In arbitration a dispute is submitted to the 'arbitral tribunal' and not to a regular civil court or
otherwise. The arbitral tribunal must give a decision on the dispute and this decision is thus
binding on the parties in the dispute since they have no grounds to appeal.
Scope: arbitration is no more and less than litigation. Arbitrator is called upon to find the
facts, apply the law, Grand relief to the disputed parties. In any agreement in force between
India and any other country these parts shall applied to all arbitration to all proceedings
relating thereto.
When contrasted with the traditional approach of a judicial proceeding which ordinarily
happens in a Court; and has to go through a lengthy process, and which usually leaves one
party or both parties exhausted financially. An arbitration proceeding is not formal and does
not involve judicial proceeding which can save a lot of time for the parties.

Domestic Arbitration
Domestic arbitration is that type of arbitration, which happens in India, wherein both parties
must be Indians and the conflict has to be decided in accordance with the substantive law of
India. The term 'domestic arbitration' has not been defined in the Arbitration and
Conciliation Act of 1996. However, when reading Section 2 (2) (7) of the Act 1996 together,
it is implied that 'domestic arbitration' means an arbitration in which the arbitral proceedings
must necessarily be held in India, and according to Indian substantive and procedural law,

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and the cause of action for the dispute has completely arisen in India, Origin the event that
the parties are subject to Indian jurisdiction.

International Arbitration
When arbitration happens within India or outside India containing elements which are foreign
in origin in relation to the parties or the subject of the dispute, it is called as International
Arbitration. The law applicable can be Indian or foreign depending upon the facts and
circumstances of the case and the contract in this regard between the respective parties. To
fulfil the definition of International Arbitration it is sufficient if any one of the parties to the
dispute is domiciled outside India or if the subject matter of dispute is abroad.
International Commercial Arbitration
International Commercial Arbitration' is defined as the substitution of many burning
questions for a smouldering one'.NaniPalkhiwala has stated that 'International Commercial
Arbitration' 'is a 1987 Honda car, which will take you to the same destination vwith far
greater speed, higher efficiency and dramatically less fuel consumption" International
Arbitration is considered to be 'commercial' if it related to disputes arising out of a legal
relationships irrespective of their contractual nature and are considered as commercial under
the law in force in India and where at least one of the parties is-

(1) A national of, or habitual resident in, any country other than India or

(2) a body corporate which has to be incorporated in any foreign country, or

(3) An association or a body of individuals whose core management and control in a coutry
which is not India or
(4) the government of a country other an India." In nternational Commercial Arbitration the
arbitral tribunal is bound to decide the conflict according to the rules of law chosen by the
parties as applicable to the substance of the dispute; any designation by the parties of the law
or legal system of a given country can be interpreted, unless it has been expressed otherwise,
one which directly refers to the substantive law of that country and does not refer to its
conflict of laws rules.
DISTINCTION BETWEEN LAWS OF 1940 AND 1996:
The arbitration act of 1940:
1. The Arbitration Act 1940 was enacted in India to consolidate and amend the law relating to
arbitration and is made effective from 1 July 1940. The Act repealed the Arbitration Act of
1899 and relevant provisions of CPC, 1908.

2. This Act empowered the Indian courts to modify the award, remit award to arbitrators for
reconsideration and to set aside the award on specific grounds.
3. The Act laid down the framework within which domestic arbitration was concluded in
India.
4 The scheme of the Act is
-to deal with arbitration without the intervention of the Court (Chapter II)
-to deal with arbitration with the intervention of the court where there is no suit pending

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(Chapter III)
-to COver arbitration in suits (Chapter IV).
Provisions common to all three kinds of arbitration constitute the remaining proportion of the
Act (Chapters V to VII and the Schedules).

5. The Act extended to whole of India except the states of J&K.

Principle shorteomings of the arbitration act of 1940:

1. Though the Act was a big step forward in bringing a comprehensive law covering all
important aspects of arbitration, the need for its replacement started being felt with increasing
urgency in view of the liberalization programme of the Government of India.
The law lacked statutory recognition of conciliation as a means of settling the disputes.
2. The Act allowed courts to interfere at every stage of the arbitration proceeding; starting
from the appointment of the arbitrator through the interim stage till the passing of the award.*
This developed the culture of the court overseeing the arbitration proceedings and not giving
arbitration the status of an alternate resolution mechanism. This was coupled with the fact
that the Indian courts had enormous backlog of cases which delayed the resolution of the
issues that went to the court;
3. Any party interested in delaying the proceedings would resort to the court during any stage
of the proceedings taking advantage of the backlog of the cases;
4. The Act did not prohibit the parties from raising disputes relating to the proceeding or
validity of the arbitration agreement or the constitution of arbitration even after passing the
award, while they have participated in the arbitration without demur;
5. The Act allowed the award to be challenged on a large number of grounds, including the
merits of the award.
6. Foreign investors were reluctant to invest in India as they required for a stable business
environment and a strong commitment to the rule of law.
The arbitration and conciliation act of 1996:
The Arbitration and Conciliation Act, 1996 is an Act to consolidate and amend the law
relating to domestic arbitration, international commercial arbitration and enforcement of
foreign arbitral awards and to define the law relating to conciliation and for matters
connected therewith or incidental thereto.
In order to meet the various shortcomings expressed in the 76th report of the Law
Commission the Act of 1996 came into force on 22.08.1996. The Act is based on the
UNCITRAL Model Law on Internal Commercial Arbitration, 1985 and UNCITRAL
Conciliation Rules, 1980
Object of the act:
1.To comprehensively cover international commercial arbitration and conciliation as also
domestic arbitration and conciliation;
2. To minimize the supervisory role of courts in the arbitral process;

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3. To provide that every final arbitral award is enforced in the same manner as if it was a
decree of court.

4. To make provision for an arbitral procedure which is fair, efficient and capable of meeting
the needs of specific arbitration

5. To provide that arbitral tribunal gives reasons for its arbitral award,

6. To ensure that the arbitral tribunal remains within the limits of its jurisdiction.

7. To permit arbitral tribunal to use mediation, conciliation or other procedures during arbitral
proceedings to encourage settlement of disputes.
Critical comparison of the 1996 act with the 1940 act:
1. Under the old Act, an Arbitrator was not a conciliator. He was only to adjudicate the
disputes referred to him by the parties.
However, the 1996 Act has recognized the Arbitrator as a Conciliator as well.
2. Under the old Act, an aggrieved party to get an Arbitrator appointed has to approach the
jurisdictional Civil+ Court either under sec 8 or sec 20 of the 1940 Act. This was a time-
consuming ordeal.
Under the new Act, the Chief Justice of the HC has been named under schedule II for the
purpose of appointment of Arbitrator.
3. Under the Act of 1940, court was defined as Civil Court having jurisdiction to decide the
question forming the subject matter of reference if the same had been the subject matter of
the suit but did not include small causes court except for the purposes of arbitration
proceedings.
Act of 1960 provides that the Principle Civil Court of Original Jurisdiction in a district which
includes the HC in exercise of its Original Jurisdiction but does not include any Civil Court
of a grade inferior to such Principal Civil Court or any court of small causes.
4. Under the Act of 1940, if a specific question of law was referred to the Arbitrator by the
parties, the decision thereon was final and binding on the parties. Similarly, the decision of
the arbitrator regarding jurisdiction was also deemed to be final
Under Act of 1996 the arbitral tribunal shall decide on its own jurisdiction, but this by no
means is an un referred power. If Arbitrator has wrongly decided the issue of jurisdiction and
has made the award by virtue of sec 34(b) of the new Act the decision can be challenged
before the court flaw.
Thus jurisdiction assumed by arbitral tribunal not final and subject to judicial security.
is is

UNICITRAL model law:

The Model Law on Cross-Border Insolvency of the United Nations Commission on
International Trade Law (UNCITRAL) was enacted in 1997 to assist countries in developing
their domestic law strategies in relation to cross border insolvency matters. The Model Law
aspires to make the legal system more efficient, fair, and transparent by bringing cost- a
effective method of dealing with international insolvency cases. As of 2021, the Model Law
has been accepted byaround 49 nations, including the Australia, Canada, United Sates
Japan,New Zealand, Singapore, and South Africa (UNCITRAL, 2019a)

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The model law consists of 4 major elements that are therein divulged under different heads.
Firstly, Access (stated under chapter II of the UNCITRAL Model Law) wherein, foreign
creditors have a right of access to the enacting state's courts to seek help in insolvency
proceedings. A foreign representative can apply directly to a local court, according to Article
9 of the Model Law (UNCITRAL Model Law, art. 9). According to UNCITRAL Model Law
a
Article 1l, foreign representative can initiate _an insolvency proceeding under local
a
jurisdiction if the conditions for initiating such proceeding are met. When foreign a
bankruptcy procedure is recognized, Article 12 of the Model Law allowsa foreign
a
representative to participate in local insolvency proceeding of the debtor (UNCITRAL
Model Law, art. 12). In contrast to local/domestic creditors, foreign creditors have the right
of access under Article 13 of the Model Law. Foreign creditors shall, at the very least, have
the same treatment as ordinary unsecured creditors, unless they form a class of creditors to
which domestic creditors would also be subordinated (UNCITRAL Model Law, art. 13.2)
Secondly, there is Recognition, in which eligible foreign processes are recognized in order
to save time and money. A qualifying foreign proceeding can be recognized as the main
proceeding in the jurisdiction where the debtor has its centre of main interests (COM) at the
time the foreign process is commenced, or as a non-main proceeding in the jurisdiction where
c
the debtor has an establishment (UNCITRAL Model Law, arts. 2. & 2.f). The Foreign
Representative shall, pursuant to Article 15 of the Model Law, apply to recognize the foreign
proceeding by including a number of documents, such as the certified copy of the decision
which is therefore an affirmation of the commencementof the foreign proceeding
UNCITRAL Model Law, Art.15). The requirements of Article 17 provide that, once they
have been met, a foreign process shall, accordingto the criteria enshrined in the Model Law
a
berecognized as foreign primary procedure or aforeign, non-main procedure (UNCITRAL
Model Law, Art. 17)

Thirdly, one of the primary purposes of the Model Law is "Relief" for the assistance of
foreign proceedings. Central elements of the available relief include an Interim Relief at the
discretion of the Court, staying on the recognition of a foreign major_procedure, and an
Interim Relief at the discretion of the Court with regard to both the main and the non-main
foreign procedures. Article 19 of the model law states that the Court may grant a temporary
remedy upon the regquest of the Foreign Representative to protect the interest of the creditors
or to protect the debtor's assets. Some oftheinterim reliefs include the staying of execution
against the debtor's property and the entrustment to the foreign representative or court-a
appointed person of the for the debtor's_property (UNCITRAL Model Law, Article 19
Article 20 states that certain automatic relief provisions, such as staying the actions of
individual creditors against the debtor, a suspension of the debtor's right to entrust property
tothe third person, all these relief mayberecognized by taking advantage of upon acceptance
of the foreign major procedure (UNCITRAL Model Law, art. 20)
Fourth, the model law enables the courts to directly communicate with foreign courts and
coordinate concurrent proceedings. Articles 25 and 26 of the Model Law provide for the
maximum possible cooperation between the local courts and foreign insolvency
representatives (UNCITRAL Model Law, arts. 25 and 26)

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ARBITRATION AND EXPERT DETERMINATION:

Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one
or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the
parties opt for a private dispute resolution procedure instead of going to court.
Arbitration is considered as an alernative dispute resolution procedure under which
mediation and conciliation are also included. It is considered as International commercial
arbitration where two parties from two different countries approach an international arbitrator
either by their mutual consent or through an arbitration institution and dissolve their dispute
accordingly. The alternative dispute resolution procedure has gained importance in the last
few years due to the increase in commercial market dispute and also it is a speedy, cost-
effective and efficient way of settlement. The United Nations have given due recognition to
Model Law of International Commercial Arbitration and Conciliation rules given by
the United Nations Commission on trade and law (UNCITRAL). The model law and rules
have played a significant role in the settlement of commercial disputes and provided rules top
various other countries. These can be adapted and made according to their municipal laws as
earlier there was no unified law related to trade and its need was felt with globalization which
further gave rise to disputes related to it.
Based on UNCITRAL model law India enacted the Arbitration and Conciliation Act,
1996 further amended in 2015 which deals with domestic and international commercial
arbitration in India. The amended Act especially emphasizes minimizing the role of judiciary
court in arbitration proceedings and further to consider every arbitration order or award as a
decree as it is been 1sidered in civil procedure code. The Act is categorized in two, Part I
deals with significant provisions which deal with domestic and International commercial
arbitration procedure to be conducted in India irrespective of nationality and Part II talks
about enforcement of foreign arbitration award.
In spite of the need for arbitration, there are some disadvantages where arbitration cannot be
used as an effective mode of settlement, as:

Arbitration lacks in granting authoritative remedies such as permanent injunction and specific
performance order.
In certain cases, the arbitrators do not have jurisdiction and are excluded to try the case.

The cost can be a major factor as, if the arbitration proceeding is delayed, the cost keeps on
increasing and especially, in the cases where three arbitrators are appointed by the parties.
No appeal can be made for an arbitration order granted by the arbitrator.

Lack of cross-examination as the process relies on evidence and not on witnesses.

Tts principal characteristics are:
Arbitration is consensual
Arbitration can only take place if both parties have agreed to it. In the case of future disputes
arising under a contract, the parties insert an arbitration clause in the relevant contract. An
existing dispute can be referred to arbitration by means of a submission agreement between
the parties. In contrast to mediation, a party cannot unilaterally withdraw from arbitration.

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The parties choose the arbitrator(s)

Under the WIPO Arbitration Rules, the parties can select a sole arbitrator together. If they
choose to have a three-member arbitral tribunal, each party appoints one of the arbitrators;
those two persons then agree on the presiding arbitrator. Alternatively, the Center can suggest
potential arbitrators with relevant expertise or directly appoint members of the arbitral
tribunal. The Center maintains an extensive roster of arbitrators ranging from seasoned
dispute-resolution generalists to highly specialized practitioners and experts covering the
entire legal and technical spectrum of intellectual property.
Arbitration is neutral
In addition to their selection of neutrals of appropriate nationality, parties are able to choose
such important elements as the applicable law, language and venue of the arbitration. This
allows them to ensure that no party enjoys a home court advantage.
Arbitration is a confidential procedure
The WIPO Rules specifically protect the confidentiality of the existence of the arbitration,
any disclosures made during that procedure, and the award. In certain circumstances, the
WIPO Rules allow a party to restrict access to trade secrets or other confidential information
that is submitted to the arbitral tribunal or to a confidentiality advisor to the tribunal.
The decision of the arbitral tribunal is final and easy to enforce
Under the WIPO Rules, the parties agree to carry out the decision of the arbitral tribunal
without delay. International awards are enforced by national courts under the New York
Convention, which permits them to be set aside only in very limited circumstances. More
than 165 States are party to this Convention.

Expert determination:
Expert determination is founded in contract. An independent third party will act as an expert
rather than judge or arbitrator, and is appointed by the parties to decide the dispute
privately. There is no right of appeal and the expert's determination is final and binding on
the parties save usually in the case of fraud or manifest error. Parties will make written and
oral submissions to the expert and he or she will then give a binding decision on the case. It
is particularly used in disputes concerning valuation (for example rent reviews, share
valuatios or price adjustments) or technical disputes across a range of sectors (for example
IT, accountancy, supply contracts, oil and gas).

The expression "Expert" is much more commonly used to refer to expert witnesses. In expert
determination, the appointed expert is not in any sense a witness.
Expert determination clauses govern the jurisdiction of the expert and the conduct of the
determination. They should typically cover:
the issue(s) to be determined (this must be carefully drafted)

the expert's qualifications, appointment and his duty to act independently, and as an expert
not an arbitrator

how the reference will be conducted

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how the decision will be issued (in writing, with or without reasons) and that it will be final
and binding save in the case of fraud or manifest error

provisions as to the due date for payment and the power to award interest (and sometimes
costs)

payment of the expert's fees (these are usually shared between the parties with joint and
several liability should one party fail to pay)
EXTENT OF JUDICIAL INTERVENTION:
The evolution of arbitration law in India has a long-running history. Modern Arbitration was
first introduced during British India in 1772 through the Bengal Regulations. However, the
eventually Arbitration and Conciliation Act, 1996 came into being. In the initial stage, when
a dispute arises with regard to the appointment of an arbitrator, necessarily requires the
court's intervention. During the proceedings, the court's intervention is required to assist the
proceedings. The court can provide assistance by providing interim protection or otherwise.
Finally, when the arbitral award is declared, judicial intervention is required for either the
enforcement of the award or to challenge it.
Judicial intervention in Arbitration Law
Three ways in which judicial intervention in arbitration takes place: -

Before proceedings- Section 5 of the 1996 act

During proceedings- Section 9 of the 1996 Act
After proceedings- with regard to arbitral awards
How does the intervention function at start?
When in contravention to the arbitration agreement an application is made to stay the court
proceedings, a judicial authority steps in to resolve disputes. It is interesting to note at this
point that Courts cannot compel arbitration on the claimants. They are entitled to avail a
remedy through Courts and can also avail arbitration.
Section 8 refers to domestie arbitration and Section 45 and 54 refer to International
commercial arbitration. A party involved in court proceedings can receive a reference of their
dispute to arbitration by virtue of these sections.[6]
The power to refer parties to arbitration only arises when a valid arbitration agreement exists.
Such agreements are contractual understanding between parties. Yet Parties try to approach
traditional courts. The object of arbitration is speedy and inexpensive dispute resolution.
Judicial intervention must only be to support arbitration and not overstep its jurisdictional
authority. As per Section 8 of the Act, the judicial authorities are mandatorily required to
refer the parties to the arbitration.[71
In P. Anand Gajapathy Raju V. P.V.G. Raju[8] it was held that "the language of section 8 is
preemptory and brings about a legal obligation upon Courts to refer parties to the arbitration.
Furthermore, 'arbitration may be commenced or continued and concluded by making an
arbitral award' while the application is pending.[9

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The essentials laid down under Section 8 of the 1996 Act in order to refer parties to the
arbitration.

there is an arbitration agreement

a party to the agreement brings an action in the Court against the other
the subject matter of the action is the same as the subject matter of the arbitration agreement

the other party moves the Court for referring the parties to arbitration before it submits his
first statement on the substance of the dispute.
The judiciary has had an exceptional role in shaping the course of policies and politics in
India. Justice V.R. Krishna Iyer, who died last week, is an exemplar of this fact. Krishna Iyer,
along with Justice P.N. Bhagwati, had thrown open the doors of Indian courts to public
interest litigations (PILs) and was instrumental in reinventing the Supreme Court as an
activist institution in the post-Emergency era. His death coincided with the announcement
that the apex court will now set up a special bench to help secure social justice in India.
While the precise nature of the new bench will be known only after the bench starts
functioning from 12 December, the move seems to herald a new wave of judicial activism in
the country.

It appears to signal judicial impatience over the political process of the country, which is
perceived to be failing to meet the goals of social justice, as envisaged by the founding
fathers of the republic.

Such a move raises troubling questions on the role of the Indian judiciary in India's polity.
After all, social justice means nothing once it is shorn of politics. The need to secure social
justice animates democracies across the world, and India is no exception. The questions as to
what goals constitute social justice, how those goals can be achieved, and which goal should
take precedence over others are inherently political questions, which should be debated and
decided in sovereign legislatures rather than courts. It is for the courts to judge whether the
laws being passed on social justice, as on other issues, are being followed or being violated.
Just as the executive and the legislature can't interfere in the latter function, it behoves the
courts not to interfere in the former function.
To be sure, specialization within the ranks of the judiciary is sorely needed.

The apex court today deals with a mind-boggling array of subjects, ranging from energy
prices to malnutrition. Many such subjects involve complex issues, and the lack of prior
training can impede and delay judgements. To the extent that the new social justice bench
facilitates such training and specialization, it is a welcome move. But it is important to set
boundaries on what the bench can and cannot do.
The history of the apex court suggests the need for caution, and the need for greater public
debate on the desirability and on the mandate of the new social justice bench.
Prior to the imposition of the Emergency, the Supreme Court functioned largely in the
classical judicial mode and focused on protecting the rights of Indian citizens. But when it
clashed with the executive on issues such as land reforms and the right to property and
compensation, it found itself projected as an elitist institution, which was out of tune with the

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realities of a poor country. The charge was led by India's most famous populist leader, Indira
Gandhi, who later managed to get the apex court to toe her line during the Emergency.

To re-establish its credibility in the post-Emergency era, and to counter the perceptions of
being elitist, the Supreme Court reinvented itself as the voice of the voiceless through
creative use of judicial innovations such as the PIL, according to sociologist and legal scholar
Anuj Bhuwania. In the process, the apex court merely mimicked the populism of Gandhi, and
became the self-proclaimed vanguard of the social revolution, Bhuwania argues in a recent
research paper.

Over the past three decades, the Supreme Court has continually reinvented itself, and
extended its reach to the domain of public policies. While court interventions have sometimes
offered short-term palliatives and have sought to balance the eroding credibility of political
institutions, such interventions can never be an alternative to long-term reforms and policy
initiatives that rebuild institutional credibility. Also, there are limits to which such
exceptional interventions work in a setup where the administration is accountable to the
executive and legislature, rather than to the judiciary.
The future of the apex court and the future of our polity will depend on how we address these
issues.

INTERNATIONAL COMMERCIAL ARBITRATION:

International commercial arbitration is a means of resolving disputes arising under
international commercial contracts. It is used as an alternative to litigation and is controlled
primarily by the terms previously agreed upon by the contracting parties, rather than by
national legislation or procedural rules. Most contracts contain a dispute resolution clause
specifying that any disputes arising under the contract will be handled through arbitration
rather than litigation. The parties can specify the forum, procedural rules, and governing law
at the time of the contract.

Indian law provides provision for dispute resolution by way of International Commercial
Arbitration. This mechanism is aimed at resolving commercial disputes between an Indian
entity and a foreign entity within the framework of Indian Arbitration Laws. The arbitration
proceedings can be governed by the rules of arbitration institutions or the courts have the
power to appoint arbitrators under the provisions of section 11 of the Arbitration and
Conciliation Act 1996. By way of arbitration, business disputes between parties are settled
through mutually agreed-upon terms. The parties submit the dispute to one or more
arbitrators who settle the dispute by making a binding decision on the dispute. Thus,
arbitration is a way of settling the dispute outside the courts in an efficient and timely
manner

International Commercial Arbitration

As per ndian laws, section 2(1)0 of the Arbitration Act defines ICA (International
Commercial Arbitration) as a legal and commercial relationship and either of the parties is a
foreign national/resident or a foreign body corporate, company, association or body of
individuals whose central management is in foreign hands. Thus, as per Indian laws,
arbitration with a seat in India involving a foreign party is regarded as ICA, subject to Part I
of the Act.

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Objectives of International Commercial Arbitration

Arbitration is a progressing alternative to the legal system and aims to fill up gaps that persist
in the conventional court proceedings. Various legal aspects of commercial arbitration in
India include, provision of a Neutral Dispute Resolution Forum against the local courts,
providing parties with commercial expertise to adjudicate the tribunal, unlike courts that
merely exercise general jurisdiction. The law in India provides parties with an enforceable
award as opposed to jurisdictional uncertainties in litigation and the arbitration procedure is
speedy avoiding the delays and appeals that always persist in the court system. In addition,
the parties are not subject to public trials, thereby upholding the confidentiality of the parties.

Arbitration Agreement
Arbitration resolves the dispute following adjudicatory procedures affording the parties an
opportunity to be heard. Thus, arbitration agreements usually take the form of clauses in
commercial contracts providing for arbitration of future disputes and include submission
agreements covering arbitration of existing disputes.
International Arbitration Legislation
The UNICITRAL Model Law was adopted in 1985 and was subsequently revised in 2006.
There are more than 60 countries that have adopted this model law that allows comprehensive
legislative treatment of the international arbitral process. The Model upholds the validity and
enforceability of arbitration agreements (Arts. 7-9) by providing a guideline for competent
arbitrators (Art 16) and the absolute judicial non-interference (Art 5). The parties have the
choice of arbitral seat (Art 1(2), 20), appointing of the arbitrators (Art 10-15) and the
provisional measures (Art 17) to be taken. The Model only lays down an objective procedure
for arbitration (Art 18-26), and evidence taking (art 27) as per the applicable substantive law
(Art 28) to come to a concluding arbitral award (Art 29-33). Most importantly, the model
enforces the recognition and enforcement of foreign arbitral awards including bases of non-
recognition (Art 35-36).
Drafting International Arbitration Agreements
Business lawyers and law firms work closely with clients for drafting and review
of international arbitration agreements. During such drafting, important considerations
include provisions such as, but not limited to, definition of arbitration clause, scope of the
disputes submitted to arbitration, stating an arbitral institution and its rules, the seat of the
arbitration, venue of the arbitration, method of appointment of the arbitrator, number and
qualifications of the arbitrators, language of the arbitration, applicable law and jurisdiction.
International Commercial Arbitration with Seat outside India
There is no generally applicable procedural code that applies to ICA worldwide. Each
procedure is tailored to specific cases that are distinct from litigation. Thus, specific country
based institutional rules apply. This can be seen in the judgment of Bhatia International v/s.
Bulk Trading in which it was held that Indian courts have the right to use their jurisdiction to
test the significance of an arbitral award made in India, even if the actual law of the contract
is foreign. The court recognized that Part 1 of the Arbitration and Conciliation Act, 1996
gives effect to UNCITRAL Model Law allowing courts to grant interim relief even when
the seat of international commercial arbitration is outside India.

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International Commercial Arbitration with Seat in India

The international commercial arbitration process in India begins with a notice of arbitration,
which is sent from one party to another to represent the intention of the party to settle the
dispute through arbitration. Under section 8 of the Arbitration and Conciliation Act, 1996
(the Act), if the party before a judicial authority, applies along with the original copy of the
arbitration agreement, on the date of submitting its first statement itself, then the judicial
authority must accept such application. As per the Act, section 9 allows interim relief to be
granted to the parties by the court. In addition, section 17 allows the same for the arbitral
tribunal. These provisions provide security to the party seeking relief until the final decision
is given.

Appointment of Arbitrator
Section 11 of the Act allows appointment of arbitrators where within 30 days, each party
nominates one arbitrator and subsequently the two appoint the third one. Their nationality is
decided by the parties. An arbitrator must act independent and impartial manner. Where he is
found to be partial and dependent, then his appointment can be challenged. Moreover, he
must possess the qualifications agreed to by the parties and solve the dispute in a time-bound
period.

The parties must be flexible in terms of the procedure, place, and language of the arbitration
as the arbitral tribunal decides the sequence the evidence is to be examined. The parties can
also settle the dispute through mutual consent or the arbitral tribunal. In case a party is not
satisfied with the decision of the tribunal it can make an application to the court under section
34 to set aside the arbitral award. Or, an appeal can be filed for refusal to provide interim
relief under section 9 and section 17 and to set aside the arbitral award under section 34.
ARBITRATION AGREEMENTS:
Arbitration, in lucid terms, means referring of disputes by the parties to a neutral third party,
this neutral third party is known as an arbitrator, he adjudicates over the disputes and his
decisions are binding on the parties.
The formation of an arbitration agreement takes place when two parties, enter into a contract
and in which, the contract states that any dispute arising between the parties have to be solved
without going to the courts with the assistance of a person, who would be a neutral person, a
third party, appointed by both of the parties, known as the Arbitrator, who would act as a
judge. The arbitrator so appointed should have been previously mentioned in the contract that
they made. They should also state who should select the arbitrator, regarding the kind of
dispute the arbitrator should give decisions on, the place where the arbitration would take
place. Furthermore, they should also state the other kinds of procedures mentioned or that has
to be required during an arbitration agreement.

The parties are generally required to sign an Arbitration Agreement. The decision taken by
the arbitrator regarding any issue, is binding on both the parties, as stated by the agreement.
In any event, where one party decides that an agreement must be made prior to entering the
contract, it can be stated that the agreement was made to deviate from the hassles of the court.
These agreements are like contingent contracts, which means that these agreements shall only
come into force or become enforceable if any dispute happens, and on the basis of the same

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dispute between two parties mentioned in the contract. It also takes place or is enforceable in
the light of any dispute that arises between the parties to the contract.

ESSENTIALS AND KINDS OF ARBITRATION AGREEMENTS:

This decision has prompted employers to reconsider whether to require employees to sign
binding arbitration agreements. If you are considering requiring employees to sign such
agreements, this article outlines 10 essential elements to include in such agreements.
1. Governing Law of the Arbitration Agreement
Federal law governs employnment arbitration agreements if the agreements are in writing, the
transaction involves interstate commerce, and the agreement would be upheld as a contract
under state law. Make sure all of these basic requirements are met.
2. Existence of a Contract

As arbitration agreements are considered contracts, the legality of whether a contract exists is
reviewed under state law. State contract laws typically require that the parties have the
capacity to contract, that the parties mutually assent to the terms and that valid consideration,
or a benefit to the signor, exists.
Depending on the state, courts have found pre-dispute arbitration agreements binding when
contained in an offer letter, an application for employment, an employee handbook, stand-
alone documents and on benefit forms. On the other hand, some states are not as quick to find
that a contract exists.
Employers should ensure that any arbitration agreement is only signed by those employees
aged 18 years or older, and not by any employees with mental infirmities that prevent them
from having capacity (i.e., those with a legal guardian)
As for mutual assent, the execution of the agreement provides this as both parties agree to the
terms and execute the agreement.
3. Consideration

To have a contract, consideration must exist. Consideration is the "benefit" received by the
parties signing the agreement. Although the agreement is governed by federal law, the
determination of whether consideration exists to create a valid contract (or "agreement") is
made under state law.

If you implement an arbitration program, we suggest providing the agreement with your new
hire packet and having new employees sign the agreement before starting work. This way,
employees agree to arbitration in exchange for the employer's decision to employ them,
providing consideration.
In some states, existing employees can be required to sign the agreement as both continued
employment and mutual assent will serve as valid consideration.
However, the safest approach is to extend some additional consideration to current
employees, such as a raise in pay, new perk such as a vehicle or even a nominal payment.
Before making a final decision, it is wise to research applicable state law.

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4. Mutuality

Most courts require that arbitration agreements be mutually binding, meaning that the
employer must also be bound to arbitrate, or the agreement is unconscionable as being too
favourable to the employer.
In fact, some third-party commercial arbitration groups that provide arbitrators and arbitration
services require mutuality in an agreement before assisting with arbitration. Accordingly, an
agreement should require mutuality with respect to all obligations. An exception can be
carved out allowing employees to file charges with the Equal Employment Opportunity
Commission (EEOC) as required under federal law.
Also, employees and the employer may request temporary restraining orders or preliminary
injunctive relief from courts to preserve the status quo, particularly with respect to restrictions
on disclosures, solicitation and competition.

5. Class-Action Waiver

A class-action waiver prohibits employees from bringing class or collective action lawsuits or
arbitrations against the employer. Such provisions are very beneficial to the employer
because such class and collective action lawsuits are very expensive to litigate.
Additionally, because the likely recovery on an individual basis is often small, plaintiffs"
attorneys are not as likely to bring suit if they cannot do so on a collective or class-action
basis.
6. Opt-out Provision

Courts often hold that arbitration agreements are adhesion contracts if employees are required
to agree to arbitrate disputes in remain or be employed. Arbitration agreements that are too
favourable to the employer are generally held unenforceable as unconscionable.
To avoid this result, many employers include "opt-out clauses" that give employees the right
to reject arbitration within a certain time frame. Several courts have declined to find
arbitration provisions procedurally unconscionable where an opt-out clause was included in
the arbitration agreement.

The presence of an opt-out clause does not automatically prevent a judge from determining
that an arbitration agreement is unconscionable. However, in cases where an arbitration
agreement with an opt-out provision was found unconscionable, the opt-out provision
provided a short rejection period (such as one (1) day) and did not stand out in the agreement.
A 30-day period should minimize the risk of a finding that the agreement is an adhesion
contract. We also recommend that the opt-out provision be in bold face print in the
agreement. An opt-out provision can be included for new hires and/or current employees.
The opt-out clause allows the flexibility of ensuring consideration by mandating execution of
the agreement, but prevents an adhesion contract as employees can choose to opt-out.
7. Employees' Rights Under the Law

To minimize the risk of a finding that the agreement is unconscionable, employees should not
be required to give up substantive rights that would be available to them under the law.

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Also, the employer pays the costs of arbitration, other than what an employee would pay in a
court proceeding, as well as the arbitrator's fee. However, the employee would be responsible
for the arbitration filing fee and for his or her own attorney's fees and expert witness fees.
Several cases have discussed responsibility for arbitration costs, and courts generally agree
that an arbitration agreement is invalid if employees are precluded from arbitration due to
prohibitive costs.
8. Waiver of Jury Trial

The law on whether or not waivers of a jury trial provisions will be enforced is still
developing. In some jurisdictions, judges believe that such clauses violate the public policy of
the state. Before implementing an arbitration program, research the applicable state law on
this critical issue.
9. Governing Body Over Disputes

Arbitration services can be costly, and each organization has its own set of rules that must be
followed.

Each commercial dispute resolution group provides arbitration rules. Copies of the
Arbitration Rules propounded by AAA and JAMS can be found at their websites
(www.adr.org and www.jamsadr.com) for your review.
In contrast, self-administration of an arbitration program can be burdensome and stressful. It
is also more expensive to set up, even though in the long run it may be cheaper to operate.

Because administering your own program could be difficult, we recommend that you start by
using a commercial dispute resolution group, such as AAA or JAMS. In the future, you can
consider developing your own arbitration rules and creating your own arbitration program.
10. Practical Tips

To ensure employees acknowledge the agreement and to dissuade arguments that the
employer "hid" important terms, such as the opt-out provision, we suggest that you have a
New Hire Packet cover sheet listing all documents employees must sign, and an Information
Sheet that provides information on arbitration.
The New Hire Packet should include a Cover Sheet and Information Sheet to be modified as
needed. The Information Sheet should cover the basic provisions of the agreement.
You should add language to your application to notify applicants of the agreement in advance
of accepting employment with the employer. Employers should keep both the executed
application acknowledging that the applicant has been informed of the agreement that will be
offered upon employment, as well as the executed agreement.
Individuals who execute the agreement when offered a position with the employer will be
bound by the agreement unless they exercise their rights under the "opt-out" provision.

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KINDS:
Depending on the provisions mentioned in the arbitration agreement, the nature of the
dispute, and the laws according to which such arbitration takes place, arbitration can be
differentiated in some categories. These categories have been discussed below:
Ad-hoc Arbitration: In this type, the parties to dispute themselves agree and make
arrangements for the procedure of arbitration without the involvement of an arbitrational
tribunal. In ad- hoc arbitration if the parties are not able to come to a conclusion as to who
will be the arbitrator, according to section 11 of the Arbitration and Conciliation Act of 1996,
the arbitrator will be appointed by the chief justice of a High Court or the Supreme Court (in
matters of international arbitration) or their designate.
Domestic Arbitration: The Arbitration and Conciliation Act of 1996 does not specifically
define the term 'Domestic Arbitration'. Though, section 2(7) of the Act says that a 'domestic
award' is an award that is made Part I. Further, Section 2(2) states that Part I shall be
applicable when the place of arbitration is within India. Thus, it can be said that when the
arbitration proceedings take place within India, under the purview of Indian laws, and when
the cause of the dispute occurred India, such an arbitration may be called domestic
arbitration.
Institutional Arbitration: The Arbitration and Conciliation Act, 1996 categorically mentions
the role of arbitral institutions. For the purpose of assisting in the process of arbitration
proceedings, section 6 provides the provisions according to which the parties may, with the
consent of the parties in dispute seek administrative assistance of an institution. Some of the
prominent arbitral organisations in India are Indian Council of Arbitration (ICA), Bengal
Chamber of Commerce and Industry (BCCI).
Statutory Arbitration: The process of Arbitration may initiate by an agreement that is
entered into by both the parties and when a statute categorically has provisions for arbitration
to be used for resolution in certain matters. When the statute of Parliament or a state
legislature provides for arbitration, such arbitration is called statutory arbitration. Statutory
arbitration is different from other kinds of arbitration as the consent of the parties is not a
necessary condition.
Fast Track Arbitration: Fast track arbitration is a form of arbitration where the rules are
stricter and the process is time bound which excludes the option of delay. Fast track
arbitration is most suitable for cases in which does not include much of oral hearings or
examination of witnesses and a conclusion can be reached on the basis of documents.
These were some kinds of arbitration which are commonly used. They are distinguishable
from each other in characteristics such as time involved, place of proceedings, cause of
dispute etc. These different types of arbitration are thus capable of providing a resolution for
a wide range of disputes.

VALIDITY:
After much uncertainty, it is now settled law that if there is a challenge to the validity of the
substantive contract between the parties, the arbitration clause survives such a challenge and
the arbitrators are free to determine the validity or otherwise of the contract. It is only where
there is an independent challenge to the arbitration clause that the court itself is empowered

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to step in. The point is made yet again by Mr Justice Tomlinson in El Nasharty v J Sainsbury
plc (No 2) [2007] EWHC 2618 (Comm), where the assertion that the main agreement was
tainted by duress was held not to affect the arbitration clause contained in it, so that, in
accordance with s9 of the Arbitration Act 1996, a stay of judicial proceedings asserting
duress was all but inevitable.
Reference:
Section 7 defines an Arbitration Agreement wherein parties agree to submit all/any of
disputes whether contractual or not in a written format for purposes of evidence, in same or
separate Agreement intended to apply to main contract. Section 8 states reference to
Arbitration by a Judicial Authority before which matter is brought that is originally covered
under Arbitration. Either Party to the Arbitration Agreement or claiming under him, upto
submission of lst statement on substance of dispute proves existence of a valid Arbitration
Agreement. Judicial Authority on being satisfied of such presence of Agreement on same
subject is bound to send the other party for Arbitration. Arbitration may be initiated, continue
and Award passed even while such application is pending before Judicial Authority.
It is to be noted that the language of Section 8 is mandatory after fulfilling conditions
prescribed. It diverges from Model Law, Geneva Convention and New York Convention as
Judicial Authority instead of Courts is used and that merit-based analysis of legality is not
provided to any Judicial Body. Words "Prima Facie" indicate that not to delve into a detailed
examination of Arbitration Agreement or Clause, rather observe its sufficiency to refer to
Arbitration. As clearly mentioned, reference of disputes whether contractual or not can be
made, i.e., not limited solely to commercial ones but be extended to certain civil disputes as
well. Arbitration Agreement, in essence, being a contract has to impliedly comply with
capacity and validity preconditions of the Indian Contract Act. Locus Standi requirement has
been a bit relaxed and that a non-signatory can also be a party in Arbitration Proceedings,
provided proves himself to be a necessary and proper party.
ARBITRATION TRIBUNAL
Whenever a commercial dispute arises between two or parties, and they decide to resolve the
dispute through arbitration, an arbitral tribunal is to be set up. It consists of one or more
arbitrators that adjudicate and resolve the dispute and provide an arbitral award.
The Indian Council of Arbitration has provided a set of rules known as the 'Rules of
Arbitration' that are to be abided by the parties undergoing the arbitration process as well as
the arbitrators. Rule 2 of these regulations defines Arbitral Tribunal as "an arbitrator or
arbitrators appointed for determining a particular dispute or difference"Section 2(d) of the
Arbitration and Conciliation Act, 1996 also defines an arbitral tribunal as a sole arbitrator or
panel of arbitrators.
Arbitral tribunals refer to panels of one or more arbitrators responsible for adjudicating
disputes between parties. However, unlike judges sitting in national courts, whose powers are
usually clearly defined under the relevant national laws and procedures, an arbitral tribunal's
jurisdiction, powers and duties are prescribed by:
the agreen nt between the State pai es to the relevant treaty;

the agreement between the parties to the dispute;

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the applicable arbitration rules, e.g., the International Centre for Settlement of Investment
Disputes (ISCID) Arbitration Rules or the United Nations Commission on International
Trade Law (UNCITRAL) Arbitration Rules; and
the law of the place/seat of arbitration, or, if it is an ICSID arbitration, the ICSID Convention;

(Collectively referred to in this note as the "*applicable legal framework").

In an ICSID arbitration, an ad hoc Committee may be appointed to consider an application
for annulment of an arbitral award pursuant to Article 52 of the ICSID
Convention and Articles 50, 52-55 of the ICSID Arbitration Rules. The ad hoc Committee is
distinct from the arbitral tribunal that presides over the main proceedings:
It is constituted by three members that are exclusively appointed by the Chairman of the
ICSID Administrative Council, from the ICSID Panel of Arbitrators.
Members of the ad hoc Committee cannot have been a member of the arbitral tribunal that
rendered the award, or be of the same nationality as any of that arbitral tribunal's members
(Article 52(3) ICSID Convention).
The ad-hoc Committee's jurisdiction and decision is limited to the annulment of the arbitral
award in whole or in part, or rejection of the annulment application.
APPOINTMENT:
The appointment of arbitrators comprises the process whereby arbitrators are appointed tob
adjudicate over a legal dispute. The composition of the arbitral tribunal is perhaps the most
fundamental point in international arbitration procedure. This Note focuses principally on
arbitration proceedings under the ICSID Convention and the UNCITRAL Arbitration Rules.

Arbitrators can be non-lawyer experts in areas relevant to the dispute, but in practice, the vast
majority of arbitrators are lawyers, law professors or scholars, judges and other dispute
resolution professionals.

There are very few restrictions on arbitrator qualifications under the SCC Rules or the
Swedish Arbitration Act, which applies to arbitrations seated in Stockholm. Anyone who is
impartial to the dispute and independent of the parties can serve as an arbitrator.

Section 1l of the Arbitration and Conciliation Act, 1996 deals with the appointment of
arbitrators. A person of any nationality may be appointed arbitrator unless the contrary
intention is expressed by the parties. The parties are free to agree on a procedure for
appointment of arbitrator or arbitrators. Where parties fail to appoint three arbitrators, each
party shall appoint one arbitrator and the two arbitrators shall appoint the third arbitrator.
Hence, appointing three arbitrators is mandatory, with the third one being the presiding
arbitrator.

Where a party fails to appoint an arbitrator in accordance with the third arbitrator with the
within thirty days from the date of receipts of a request to do so from the other party or two
appointed arbitrators fail to agree on the third arbitrator within 30 days from the date of their
appointment, the appointment shall be made, upon a request of a party, by the Chief Justice
of the High Court or any person or institution designated by him.

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In the absence of any procedure to appoint a sole arbitrator, if the parties fail to agree the
arbitrator within 30 days from receipt on a request by one party from the other party to so
agree, the appointment shall be made upon request of a party, by the Chief Justice of the High
Court or any person or institution designated by him.

Where under an appointment procedure agreed upon by the parties?

a. a party fails to act as required under that procedure; or,

b. the parties or two appointed arbitrators fail to reach an agreement as required under
that procedure, or
C. a person including an institution fails to perform any function as required under that
procedure, a party may request the Chief Justice of the High Court or any person or
institution designated by him to take the necessary measures in absence of an
agreement for other means of securing the appointment.

The decision of the Chief Justice of the High Court or the person or the institution designated
by him in appointing an arbitrator shall be final.
In such appointment, two considerations are to be made:

a. Required qualifications of the arbitrator as provided in the agreement of the parties,

and
b. independent and impartial person as an arbitrator.

These are the circumstances under which the Chief Justice of a High Court can make an
appointnment.

In case of appointment of a sole or third arbitrator in international commercial arbitration, the

appointing authority is the Chief Justice of India or a person or institution designated by him.

Important case laws:

In Indian Drugs & Pharmaceuticals Ltd. v. Indo Swiss S. Gem Mfg. Co. Ltd., it has been
held that no retired High Court Judge can be appointed as an arbitrator by the court when the
arbitration clause states categorically that the difference/dispute shall be referredto an
arbitrator by the Chairman and Managing Director of IPDL who is the appellant in this
case.

In National Aluminium Co.Ltd v. Metalimpex Ltd., a Bangladeshi company failed to

nominate its arbitrator in terms of the arbitration agreement on an application under S.11 of
the Arbitration and Conciliation Act, 1996, the Chief Justice of India nominated an arbitrator
to act on behalf of the Bangladeshi company.

CHALLENGES:
(a) An arbitrator may be challenged only if circumstances exist that, from the perspective of a
reasonable third person having knowledge of the relevant facts, give rise to justifiable doubts

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as to his impartiality or independence, or if he does not possess qualifications agreed to by

the parties.

(b) An arbitrator shall decline to accept an appointment or, if the arbitration has already been
commenced, refuse to continue to act as an arbitrator if he or she has any doubts as to his or
her ability to be impartial or independent.
(c) Justifiable doubts necessarily exist as to the arbitrator's impartiality or independence if
there is an identity between a party and the arbitrator, if the arbitrator is a legal representative
of a legal entity that is a party in the arbitration, or if the arbitrator has a significant financial
or personal interest in the matter at stake.
(d) A party may challenge an arbitrator appointed by him, or in whose appointment he has
participated, only for reasons of which he becomes aware after the appointment has been
made.
(e) The parties are free to agree on a procedure for challenging an arbitrator, subject to
mandatory court control of the challenge as provided for by the arbitration law in force at the
seat of the arbitration.
JURISDICTION OF ARBITRAL TRIBUNAL:
Arbitration is a form of Alternate Dispute Resolution (ADR). It refers to amicably settling
disputes between two or more parties instead of going into litigation.

It is a process in which an independent person who is appointed as an arbitrator to make

an official decision that ends a legal disagreement between parties without the need for it tobe
dragged into court.

In India, the process of Arbitration is regulated under the Arbitration and Conciliation Act,
1996. It is based on the UNCITRAL model law to ensure uniformity. It was enacted by the
Parliament of India in 1996 and was recently amended by introducing the Arbitration and
Conciliation (Amendment) Bill, 2015.

Provisions under the Arbitration and Conciliation Act, 1996:

Chapter IV of the Act contains Sections 16 and 17 that deal with the jurisdiction of an arbitral
tribunal. Section 16 of the Act deals with competence of arbitral tribunal to rule on its own
jurisdiction and conveys that the arbitral tribunal has the independence of choosing its own
jurisdiction and freedom from the interference of courts regarding any matter related to
arbitration.

Section 16-Competence of arbitral tribunal to rule on its jurisdiction:

The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with
respect to the existence or validity of the arbitration agreement and for this purpose,

(a) an arbitration clause which forms part of a contract shall be treated as an agreement
independent of the other terms of the contract when it's validity is challenged before the
tribunal.

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(b) a decision by the arbitral tribunal that the contract is null and void shall not mean that the
arbitration clause invalid.

If there is a plea that the arbitral tribunal does not have jurisdiction, it cannot be raised after
the submission of the statement of defence. Even an arbitrator may raise such a plea.
However, if there is any delay and if such a delay is justified, the arbitral tribunal may admit
a later plea according to sub section 4 of section 16 of the Act.

A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon
as the matter alleged to be beyond the scope of its authority is raised during the arbitral
proceedings. The arbitral tribunal shall decide on a plea referred to above and, where the
arbitral tribunal takes a decision rejecting the plea, it shall continue with the arbitral
proceedings and make an arbitral award. A party aggrieved by such an arbitral award may
make an application for setting aside such an arbitral award in accordance with section 34 of
the Act which deals with 'Application for setting aside arbitral award'.

"From the scheme of the Act it is apparent that the legislature did not provide appeal against
the order under section 16(5) where the arbitral tribunal takes a decision rejecting the plea
that the arbitral tribunal has no jurisdiction. The intention appears to be that in such case, the
arbitral tribunal shall continue with the arbitral proceedings and make an award without delay
and without being interfered in the arbitral process at that stage by any court in their
supervisory role."
"Considering the statement and object of the Arbitration Act of 1996 and Section 16 of
the Arbitration Act of 1996 when the Arbitral Tribunal has decided about its own jurisdietion
in an application under Section 16 of the Act, in that case the Arbitral Tribunal has to proceed
further with the arbitral proceedings and to declare the award which can be challenged only at
the stage of Section 34 of the Arbitration Act of 1996, and therefore the petition under Article
226 of the Constitution of India against the order passed by the Arbitral Tribunal1
under Section 16 of the Act is not required to be entertained and the party has to wait up to
conclusion of proceedings under Section 34 of the Arbitration Act"

Section 17-Interim measures ordered by arbitral tribunal:

A party may, during the arbitral proceedings or at any time after the making of the arbitral
award but before it is enforced apply to the arbitral tribunal for the appointment of a guardian
for a minor or person of unsound mind for the purposes of arbitral proceedings or as an
interim measure of protection in any of the following matters,

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the
arbitration agreement;

(6) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject
matter of the dispute in arbitration, or as to which any question may arise therein and
authorising for any of the aforesaid purposes any person to enter upon any land or building in

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the possession of any party, or authorising any samples to be taken, or any observation to be
made, or experiment to be tried, which may be necessary or expedient for the purpose of
obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the arbitral tribunal to be just
and convenient.

The arbitral tribunal shall have the same power for making orders, as the court has for the
purpose of, and in relation to, any proceedings before it.

Under sub-section 2 of the section, if there are any orders passed in an appeal under section
37 of the Act titled Appealable orders', any order issued by the arbitral tribunal under this
section shall be deemed to be an order of the Court for all purposes and shall be enforceable
under the Code of Civil Procedure, 1908 in the same manner as if it were an order of the
Court.

POWERS:
An arbitral tribunal is a panel of one or more adjudicators whose funetion is to sit and resolve
disputes by way of arbitration. The tribunal may consist of a sole arbitrator there may be two
or more arbitrators, which includes a presiding arbitrator.
According to section 10 of the Arbitration and Conciliation act, 1996, the parties are free to
choose the number of arbitrators to be appointed for the proceedings. If they fail to do so, a
sole arbitrator is to be appointed. Section 11 talks about the appointment of arbitrators. The
parties are free to agree upon a procedure for the appointment of the arbitrators. In case of
three arbitrators, each party has to appoint one arbitrator and they have to appoint a third
arbitrator who shall be the presiding arbitrator. In case either the parties or the two arbitrators
fail to appoint an arbitrator within 30 days, then upon the request of the parties, the Supreme
Court or the High Court or any person or institution designated by the courts shall appoint
one. The designation of a person or institution by the Supreme Court or the High Court may
be considered as a delegation of judicial powers.
Qualifications of an arbitrator

Confidence of the parties

Impartiality
Technical and legal qualification
Non conflict of interest
Adjudication of the arbitral agreement

Powers of an arbitrator

The arbitrator has a power to administer an oath to the parties. It is necessary for him
to act as a quasi-judicial authority
Power to take interim measures
According to section 25, an arbitrator has an power to proceed to ex-parte

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Power to appoint an expert

Power to make awards

Duties of an arbitrator

To be independent and impartial

To fix a time and place for arbitration, which is convenient to the parties
Duty to disclose
Duty to efficiently resolve the dispute
Duty to determine the rules for the procedure

BASIS FOR CHALLENGING THE APPOINTMENT OF AN ARBITRATOR:

Section 12(1) compels a prospective arbitrator to provide a written disclosure of any
circumstances which may question his autonomy or fair-mindedness.
Section 12(1) (a) states that the arbitrator shall disclose if he had any direct or indirect
relationship with any one of the parties.
Section 12(1) (6) points out any circumstances that would affect an arbitrator's capacity to
devote enough time to finish the arbitration within 12 months. The disclosure should be made
under the guidelines of the Sixth schedule.
DISTINCTION BETWEEN cONCILIATION, NEGOTIATION, MEDIATION AND
ARBITRATION:

Basis for
Arbitration Conciliation
comparison

Meaning Arbitration is a dispute settlement process Conciliation is a method of

in which a impartial third party is resolving dispute, wherein an
appointed to study the dispute and hear independent person helps the
both the party to arrive at a decision parties to arrive at negotiated
binding on both the parties. settlement.

Enforcement An arbitrator has the power to enforce his A conciliator do not have the
decision. power to enforce his decision.

Prior Required Not Required

Agreement

Available for Existing and future disputes. Existing disputes.

Legal Yes No
proceeding

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Alternative Dispute Resolution

Alternative dispute resolution (ADR) refers to ways of resolving conflicts, other than
traditional Court processes or litigation. Three methods of ADR include:

1. Negotiation
2. Mediation
3. Arbitration

Negotiation

Negotiation is a process where two parties in a conflict or disagreement try to reach a

resolution together. During a negotiation, the parties or their representatives (lawyers) discuss
the issues to come to a resolution.
Before a negotiation, each party should consult a lawyer. Consulting a lawyer allows each
party to be well aware of their rights and duties for the matter they want to resolve.

Mediation

Mediation is a process where a neutral person assists the parties in discussing the matter and
reaching a resolution.
A neutral person is a person who does not support either party in the conflict. This person is
called the mediator, and they help the parties communicate. A mediator ensures that
communication between the parties is fair and honest. The mediator is not a judge or an
arbitrator and cannot take the side of either party, give legal advice, or provide counselling.
Mediators can assist by clarifying issues, identifying concerns, and helping parties understand
each other's interests. The mediator can assist the parties in reaching an agreement between
them but will not force the parties into a solution during mediation.
Mediation takes place in private and the decisions made are private. Mediation can take place
in person where parties meet face-to-face for discussions. Or, the parties may be placed at
separate locations where the mediator communicates information between parties.
After mediation, the parties can sign a Memorandum of Agreement (MOA). A MOA isa
cooperative agreement written between the parties to obey the agreed terms and conditions.
The mediator writes the MOA which outlines details of the solutions reached by the parties.
The purpose of the MOA is to have a written understanding of the agreement between the
parties. Each party should have their lawyer review the MOA.

Arbitration

Arbitration is a process where a neutral third party makes a decision. The decision-makers in
arbitration are called arbitrators. There can be one arbitrator or multiple.
The arbitrator will arrange a meeting between the parties to determine what issues need to be
resolved during the arbitration. Each arbitrator hears the parties present their case and their
supporting evidence. The arbitrators may also request each party to provide their case and
supporting evidence in writing (called, written submissions).
After hearing both parties' sides of the story, the arbitrator will make a decision (in the same
way as a Judge would in court). Arbitral decisions are sometimes called Awards. Arbitral

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awards are generally final and compulsory. An award may be filed in court and enforced as if
it were a court judgment. It can often take a long time to receive an arbitration award.

Arbitration is commonly in commercial disputes, consumer and employment matters, family

disputes, or insurance claim disputes.
Arbitration has many advantages over court hearings and litigation. For example, arbitration
can be faster, more flexible, and less argunmentative, intimidating, and expensive.
Mediation and conciliation both are an informal process. Whereas, arbitration is more formal
as compared to them. In mediation, the mediator generally sets out alternatives for the parties
to reach out an agreement. The main advantage of the mediation is that the settlement is made
by the parties themselves rather than a third party. It is not legally binding on the parties.

Arbitration is a process where the parties submit their case to a neutral third party who on the
basis of discussion determine the dispute and comes to a solution.

Dispute resolution through conciliation involves the assistance of a neutral third party who
plays an advisory role in reaching an agreement. The process adopted by all the three are
different but, the main purpose is to resolve the dispute in a way where the interest of the
parties is balanced.

Confidentiality:

The issue of confidentiality is key to the successful practice of international commercial

arbitration. The confidentiality of arbitration proceedings is a reason for resorting to
arbitration, as distinct from litigation.' It is a collateral expectation of parties to an arbitration
that their business and personal confidences will be kept. Despite its central importance,
confidentiality cannot be assumed in all jurisdictions. It is therefore critical that arbitrators be
fully informed about the legal and policy issues surrounding confidentiality in order to
appropriately resolve disputes concerning those aspects of the arbitration that should, or
should not, be confidential.

RESORT TO JUDICIAL PROCEEDINGS:

The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial
proceedings in respect of a dispute that is the subject- matter of the conciliation proceedings
except that a party may initiate arbitral or judicial proceedings where, in his opinion, such
proceedings are necessary for preserving his rights.
Section 77 of the Act bars the "initiation" of any arbitral or judicial proceedings in respect of
a dispute that is the subject matter of conciliation proceedings, except for the purpose of
preserving" their rights. The term "initiation" in Section 77 clearly supports the provision in
Section 30. That is, when the arbitral or judicial proceedings are on, the parties are even
encouraged to initiate conciliation proceedings but when the conciliation proceedings are on,
they are barred from initiating arbitral or judicial proceedings. The reasons of the provision

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were given in the "Commentary on the Revised Draft UNCITRAL Conciliation Rules:
Report of the Secretary General" as follows, the Article 16 deals with the delicate question
whether a party may resort to Court litigation or arbitration whilst the conciliation
proceedings are under way.. Article 16 emphasizes the value of serious conciliation effort
by expressing the idea that, under normal circumstances, Court or arbitration proceedings
should not be initiated as might adversely affect the prospects of an amicable settlement.
However, the Article also takes into account that resort to Courts or to arbitration does not
necessarily indicate unwillingness on the part of the initiating party to conciliate. In view of
the fact that, under article 15(d), an unwilling party may terminate the conciliation
proceedings at any time, it may well be that, if a party initiates Court or arbitral proceeding,
he does so for different reasons. For example, a party may want to prevent the expiration of a
prescription period or must meet the requirement, contained in some arbitration rules, of
prompt submission of a dispute to arbitration. Instead of attempting to set out a list of
possible grounds, Article 16 adopts a general and subjective formula: *...except that a party
may initiate arbitral or judicial proceedings where, in his opinion, such proceedings are
necessary for preserving his rights." From the above study, it is evident that the real purpose
of provisions in Sections 30 and 77 of the 1996 Act is, to encourage resort to non-formal
conciliation in preference to the formal Court and arbitral proceedings. Secondly, resort to
arbitral or judicial proceedings was permitted as an exception to meet the cases of
requirements of the general law of limitation or of "time-bar clauses" like the Atlantic
Shipping Clause Atlantic Shipping and Trading Company Vs Dreyfus and Company or
interim measures of protection.
COSTS:

The costs of arbitration include arbitrator's fee, administrative and secretarial expense,
expenses on travel of arbitrator and others concerned, stenographic, translation and
interpretation charges, stamp duty on award, expenses of witnesses, cost of legal or technical
advice and other incidental expenses arising out of or in connection with the arbitration
proceeding or award.

5.1 Amount and Party liable to pay

The rules of arbitration of arbitral bodies generally contained detailed provisions

regarding costs and expenses of arbitration and the fee payable to the arbitrator.

In non-institutional arbitrations, the fees were generally fixed in advance by

arrangement with the arbitrator. He might refuse to pronounce the award if his fees
were not paid. As to costs of arbitration, the arbitrator could direct by whom they
should be payable. This was done in the award. If the award was silent, each party
bore its own costs.

5.2 Remuneration of arbitrator

An arbitrator might fix his remuneration either at the time of his appointment or
during the course of arbitration. The award which would contain an order as to costs
and expenses of arbitration generally included the fees of the arbitrator. The arbitrator
had a lien on the award for his fees and till it was paid he might refuse to deliver the
award to the party. He could also apply to the court for an order for the payment of his

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fee. Any party who felt that the fee demanded by an arbitrator was excessive might
apply to the court for determination of the fee. Before doing so, the fee demanded by
the arbitrator had to be paid in court.

New LaW

Under Section 31, unless otherwise agreed by the parties, the cost of an Arbitrator
shall be fixed by the Arbitral Tribunal. The tribunal shall specify:

a. the party entitled to costs;

b. the party who shall pay the costs;
C. the amount of costs or method of determining that amount; and
d. the manner in which the costs shall be paid.

The costs of the arbitration include

-
the fees of the arbitral tribunal;
-
the travel and other expenses incurred by the arbitrators;
-
the Administrative Fee and expenses of the Institute; and
-
the legal and other costs incurred by the parties in relation to the arbitration, if such
costs have been claimed and to the extent that the arbitral tribunal considers that the
amount of such costs is reasonable.
Unless otherwise agreed by the parties, the costs of arbitration shall in principle be
borne by the unsuccessful party.

Fees and expenses of the arbitral tribunal

The arbitral tribunal's fees shall be determined exclusively by the Institute. The
Institute shall determine the fee of a sole or presiding arbitrator in accordance with
Table B (Appendix Il of the Arbitration Rules).
When fixing the arbitrator's fee, in addition to the monetary value of the dispute, the
Institute shall consider the complexity of the dispute, the time spent on the case, and
the diligence and efficiency of the arbitrator.
DISPUTE RESOLUTION BOARD:
One of the reasons that mechanics liens are such a great construction payment remedy is that
a lien filing will typically be enough to force payment, making litigation unnecessary. Even
the threat of a mechanics lien (in the form of a Notice of Intent) typically speeds up
payments. Everyone hates litigation -even more than they hate liens. It's risky, expensive,
and at the end of the day, often it's only the lawyers who win.

To avoid litigation, many construction contracts call for mediation or arbitration. But there's
another form of alternative dispute resolution that's especially effective in the construction
industry- the use of a Dispute Resolution Board or "DRB."

First, let's note that a Dispute Resolution Board is not the absolute cure for all disputes in the
construction industry. Currently, DRBs are usually only used for massive projects. They have
been particularly helpful for highway and other large infrastructure projects, as well as other
projects that combine public and private resources a project structure that's commonly
known as a P3 project. This means that the average contractor or specialty sub may not ever
end up on a project that's big enough to warrant having a DRB in place.

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However, Dispute Resolution Boards are gaining popularity. Read on as we'll discuss:

1. What a DRB is, and,

2. Why DRBs work

1. What Is a Dispute Resolution Board?

Admittedly, we aren't the DRB experts, but our friends at Construction Executive have a nice
overview of the subject of DRBs. Also, keep in mind that DRBs can go by a number of
different names: Dispute Resolution Boards, Dispute Review Boards, Dispute Adjudication
Boards, or simply Dispute Boards. For the sake of clarity, at least for this article, we're
sticking to "Dispute Resolution Boards" or "DRBs."

Anyway, a DRB is pretty much exactly what the name implies, that is, a board of individuals
that resolves disputes on construction projects. It can be anywhere from 1-3 people, though
conceivably a board could include many more individuals. They're appointed before any
disputes arise -
typically at the time of the contract. Also, these people typically aren't
lawyers! Rather, they're experts in the field for whatever project they're used on. For a
project where a DRB is present, typically, an owner and the general contractor will agree on
who will serve on the DRB. Sometimes, both sides will nominate a member and then the pair
will appoint a third nmember.

2. Why Do Dispute Resolution Boards Work?

DRBs work for a number of reasons. First, they work because both parties agree to let a
neutral third party (the Dispute Resolution Board) either make a decision or recommendation
on how to resolve the dispute. You may be thinking "Wait, that's just the same as a mediator
or arbitrator." But hold on! DRBs are more involved.

Beginning with the contracting stage, all the way through completion the members of the
-

Dispute Resolution Board are involved and understand the ins and outs of the projects well as
the relationships of all parties. They typically even perform walk-throughs to check on the
job. Because the third party in this situation is simultaneously impartial and intimately
informed with the project, it's easier to come to a fair result on disputes

The real magic with Dispute Resolution Boards is their preventative value. According to
the Dispute Resolution Board Foundation, 60% of projects utilizing a DRB have no disputes
at all. Further, 98% of the disputes that reach the Dispute Resolution Board don't go on to
further litigation or arbitration.

Why's that? There are a number of factors that could move the needle in either direction here,
but importantly, utilizing Dispute Resolution Boards sets the tone from the start of a project.
Expectations are clear, and so is the method to resolve construction disputes.

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LOK ADALAT'S:
The concept of Lok Adalat (People's Court) is an innovative Indian contribution to the world
jurisprudence. The introduction of Lok Adalat's added a new chapter to the justice
dispensation system of this country and succeeded in providing a supplementary forum to the
victims for a satisfactory settlement of their disputes. This system is based on Gandhian
principles.

It is one of the components of ADR (Alternative Dispute Resolution) systems. In ancient

times, the disputes were referred to "Panchayats", which were established at the village level.
Panchayats resolved the disputes through arbitration. It has proved to be a very effective
alternative to litigation.

This concept of the settlement of disputes through mediation, negotiation or arbitration is

conceptualized and institutionalized in the philosophy of Lok Adalat. It involves people who
are directly or indirectly affected by dispute resolution.

Origin of Lok Adalat's

The concept of Lok Adalat's was pushed back into oblivion in last few centuries before
independence and particularly during the British regime. Now, this concept has, once again,
been rejuvenated. It has become very popular and familiar amongst litigants.

This is the system, which has deep roots in Indian legal history and its close allegiance to the
culture and perception of justice in Indian ethos. Experience has shown that it is one of the
very efficient and important ADR mechanisms and most suited to the Indian environment,
culture and societal interests.

Camps of Lok Adalat's were started initially in Gujarat in March 1982 and now it has been
extended throughout the Country.

The evolution of this movement was a part of the strategy to relieve heavy burden on the
Courts with pending cases and to give relief to the litigants. The first Lok Adalat was held on
March 14, 1982 at Junagarh in Gujarat. Maharashtra commenced the Lok Nyayalaya in 1984.

The advent of Legal Services Authorities Act, 1987 gave a statutory status to Lok Adalat's,
pursuant to the constitutional mandate in Article 39-A of the Constitution of India. It contains
various provisions for settlement of disputes through Lok Adalat.

This Act mandates constitution of legal services authorities to provide free and competent
legal services to the weaker sections of the society and to ensure that opportunities for
securing justice are not denied to any citizen by reason of economic or other disabilities.

It also mandates organization of Lok Adalat's to secure that the operation of the legal system
promotes justice on the basis of equal opportunity. When statutory recognition had been
given to Lok Adalat, it was specifically provided that the award passed by the Lok Adalat
formulating the terms of compromise will have the force of decree of a court, which can be
executed as a civil court decree.

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The evolution of movement called Lok Adalat was a part of the strategy to relieve heavy
burden on the Courts with pending cases and to give relief to the litigants who were in a
queue to get justice. It contains various provisions for settlement of disputes through Lok
Adalat.

The parties are not allowed to be represented by the lawyers and encouraged to interact with
judge who helps in arriving at amicable settlement. No fee is paid by the parties. Strict rule of
Civil Procedural Court and evidence is not applied. Decision is by informal sitting and
binding on the parties and no appeal lies against the order of the Lok Adalat.

Permanent Lok Adalat's

In 2002, the Parlianment brought about certain amendments to the Legal Services Authorities
Act, 1987 to institutionalize the Lok Adalat's by making them a permanent body to settle the
disputes related to public utility services. The Central or State Authorities may, by
notification, establish Permanent Lok Adalat's at any Permanent Lok Adalat's, for
determining issues in connection to Public Utility Services.

Public Services include:

1. Transport service
2. Postal, telegraph or telephone services
3. Supply of power, light and water to public
4. System of public conservancy or sanitation
5. Insurance services and such other services as notified by the Central or State
Governments

Permanent Lok Adalat's have the same powers that are vested in the Lok Adalat's.

Jurisdiction of Lok Adalat's

A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement
between the parties to a dispute in respect of:

a. any case pending before; or

b. any matter which is falling within the jurisdiction of, and is not brought
before, any court for which the Lok Adalat is organized.

The Lok Adalat can compromise and settle even criminal cases, which are compoundable
under the relevant laws.

Lok Adalat's have the competence to deal with a number of cases like:

1. Compoundable civil, revenue and criminal cases

2. Motor accident compensation claims cases
3. Partition Claims
4 Damages Cases
5. Matrimon and family disputes
6. Mutation of lands case

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7. Land Pattas cases

8. Bonded Labour cases
9. Land acquisition disputes
10. Bank's unpaid loan cases
11. Arrears of retirement benefits cases
12. Family Court cases
13. Cases., which are not sub judice.

Powers of Lok Adalat's

1. The Lok Adalat shall have the powers of a civil court under the Code of Civil
Procedure
2. 1908, while trying a suit, in respect of the following matters:
3. Power to summon and enforce the attendance of any witness and to examine him/her
on oath.
4. Power to enforce the discovery and production of any document.
5. Power to receive evidence on affidavits,
6. Power for requisitioning of any public record or document or copy thereof or from
any court.
7. Such other matters as may be prescribed

Every Lok Adalat shall have the power to specify its own procedure for the
determination of any dispute coming before it.
All proceedings before a Lok Adalat shall be deemed to be judicial proceedings
within the meaning of Sections 193, 219 and 228 of IPC.
Every Lok Adalat shall be deemed to be a Civil Court for the purpose of Sec 195 and
Chapter XXVI of Cr.P.C.

Advantages of Lok Adalat's

1. Speedy Justice
2. Economical
3. Unburdening of Courts and thus reducing the backlog of cases
4. Maintenance of Cordial Relations (since the main thrust is on compromise and not
punishment)

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