Arbitration is considered as an alternative 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 Arbitration proceedings in India are governed by the Arbitration and Conciliation Act, 1996. The Indian Arbitration Act is based on the UNCITRAL Model Law on International Commercial Arbitration 1985 and the UNCITRAL Arbitration Rules 1976.
The Act renders definition of Arbitration Agreement (Section 7). The essential ingredients of an arbitration agreement are as under:
- Agreement by the parties to submit to arbitration all or certain disputes
- Dispute must have arisen in respect of a defined legal relationship (may or may not be contractual)
- Agreement can be (i) in form of arbitration clause or (ii) a separate agreement
- Agreement must be in writing
- Signed by both the parties.
The Arbitration Award granted by the arbitrator can be challenged under Section 34 of the Act by making an application under it only on the basis of grounds specified therein and they are as follows:
- The party was under some incapability to make an application;
- The arbitration agreement agreed by the parties was not valid as per the law;
- The party making the application was not given proper notice for appointment of the arbitrator or arbitral proceedings;
- The award made is out of the Scope of arbitration and does not deal with the dispute;
- The award made is contrary to public policy;
- The subject matter dealt is not capable of settlement by Arbitration.
An application to set aside the award must be made within 3 months from the date of receipt of such award by the applicant who can be further extended to 30 days on giving sufficient cause of delay.
Chapter V of the Act deals with the conduct of arbitral proceedings. The Act provides for giving of equal opportunity to all parties to arbitration to present their case. It further enumerates that the parties are free to decide the manner in which the arbitral proceedings are to be conducted. If the parties to fail in arriving at a decision, the Arbitral Tribunal may determine the manner of proceedings and also the admissibility, relevance, materiality and weight of any evidence.
Place of Arbitration– Section 20(1) of the Act gives the parties the freedom to decide on a place of arbitration, however, failing such agreement the place is to be decided by the Arbitral Tribunal having regard to the circumstances of the case including the convenience of parties.
Language of Arbitration– Section 22 of the Act gives freedom to the parties to agree upon the language or languages to be used in arbitral proceedings. It provides that the Tribunal subject to agreement between the parties has the power to determine the language/es to be used in arbitral proceedings.
Sections 23 to 27 of the Act stipulate the procedure to be followed in arbitration proceedings. The Act entails a comprehensive guidance regarding the procedure to be followed like submission of claim and defence, amendment of claims etc.
Statement of Claim and defence– Section 23 of the Act provides that within the period of time agreed, the claimant shall state the facts supporting his claims and also the relief sought. The act also provides for the amendment of statement of claims during the arbitral proceedings under Section 23(3). However, the Law empowers the Arbitral Tribunal to disallow amendment of claims on the grounds of delay.
Section 24 of the Act also enumerates the manner in which proceedings are to be conducted. It envisages the law regarding hearings and submission of written proceedings before the Tribunal. Under this provision, the Act empowers the Tribunal to decide whether the proceedings shall be conducted orally or on the basis of documents and other materials on record.
Power to terminate the proceedings– The Act under Section 25 empowers the arbitrator to terminate the proceedings where the without any sufficient cause, the claimant fails to communicate his statement of claim within the stipulated period. However, if the respondent fails to submit his statement of defense within the predetermined period, the arbitrator shall continue with the proceedings without treating such a failure in itself as an admission of claimant’s allegations.
Appointment of experts by the Arbitral Tribunal (Section 26) – The Act also empowers the Tribunal to appoint one or more experts to report to it in specific issues to be determined by the Arbitral Tribunal. The provision also requires the party to give expert any relevant information or to produce, or provide access to any relevant documents, goods or other property for his inspection.
Court Assistance– The Act under Section 27 provides that an Arbitral Tribunal can take Court’s assistance in securing the attendance of witness or for the production of documents. The Act also extends the Court the authority to issue summons for examination of witnesses and for the production of documents.
A party can seek Interim Measures for which two avenues are open to them which is:
- Approach the court under Section 9.
- They may approach the arbitral tribunal under of the Act.
Section 9 of the Act enables a person to approach the competent court before or after or during the arbitral proceedings are made but before the enforcement of the arbitration award. Under Section 17 the parties can also approach the arbitral tribunal and in such cases, the tribunal has the power to grant interim measures related to the subject matter in dispute. The interim measures are the urgent measures required by the party to preserve and protect his property, measure related to payment of claim etc.
COURT CANNOT INTERFERE-
As per Section 5 of the Arbitration and Conciliation Act, 1996 the court cannot interfere in the arbitration proceeding except wherein provided by the act in the following situations:
- Where an arbitrator needs to be appointed when the parties cannot appoint a mutually independent arbitrator.
- In cases of taking the shreds of evidence.
- Where the court is ruling in the cases as the arbitrator is terminated due to incapacity or other sufficient reasons mentioned under the Act.
Section 8 is a companion section which says “where a party has approached the judicial court to dissolve a dispute and it is exclusively to be trialed by the arbitrator, then the court must direct the person to start the arbitration proceeding first without any delay and may come later to the court when arbitration award has been made.”