Arbitration & Conciliation Law

1. Arbitration & Conciliation Law Gunjan Pathak, Advocate Vedanta Law Chambers

2. Arbitration Arises due to a dispute includes Inconvenient Agreement Breach Partial Agreement disagreement

3. Dispute

4. Dispute ALWAYS NEEDS A SOLUTION---- ELSE……….PROLONGED QUARREL India V Pakistan Disagreements amongst Friends

5. Modes of Resolution of Disputes • Litigation • Arbitration • Conciliation • Mediation • Negotiation

6. Solution Hostile (Forced) Non-Hostile (natural) • Arbitration/Concillation/Mediation Litigation

7. ARBITRATION A process of dispute resolution in which a neutral third party (Arbitrator) renders a decision after a hearing at which both parties have an opportunity of being heard.

8. Arbitration: Not a New Phenomenon • Arbitration- law adopted from social customs/ traditions/ prevailing practices • But instead of refining the same, govt adopted a different course.---Alleging that arbitration was a “Crude” Measure • With Urbanisation Arbitration lost force (Particularly in urban areas) • Society cannot forget this non-hostile/ natural way • Govt. Budget imbalance--- court costly to function/ delayed justice • Now Arbitration recognized as an Alternate Dispute Resolution Measure • Thus Arbitration & Concillation Act 1940 • Then the refined and recodified 1996 Act.

9. Public process Any party can institute Adversarial Procedure Formal and inflexible Rules and procedures Private process Initiation of arbitration under an agreement Generally less adversarial Less formal and more flexible Simpler procedures, no formal rules of evidence etc…. DISTINGUISHING FEATURES OFLITIGATION ARBITRATION

10. Broad discovery Parties have no voice in selection of Adjudicators (Judge or Jury) Adjudicators are Generalists Adjudicators apply the Law; their decision set precedents Discovery limited to some documents, no interrogations or depositions Generally Adjudicator are selected by parties Adjudicators are selected on the basis of their expertise Adjudicators pay attention to the law. Their decisions do not formally set precedents

11. Appeal against decisions Remedies may include compensatory and punitive damages, injunctive relief High costs Delayed justice No appeal- verification of award generally limited to arbitrators misconduct and bias Arbitrators normally are empowered to grant compensatory damages including provisional relief Usually reduced costs Quick Justice

12. The Law • The Arbitration and Conciliation Act, 1996 • Indian Arbitration Act, 1940 • UNCITRAL ( United Nations Commission on International Trade Law) on International Commercial Arbitration.

13. The Arbitration & Conciliation Act, 1996 Part I Arbitration Part II Enforcement of Certain Foreign Awards Part III Conciliation Part IV Supplementary Provisions

14. Important Provisions(ARBITRATION) • Waiver of Right to Object-S.4 • Extent of Judicial Intervention – S.5, 8 • Arbitration Agreement – S.7 • Number of Arbitrators – S.10 • Appointment of Arbitrators – S.11 • Determination of rules of procedure – S.19 • Place of Arbitration – S.20 • Recourse Against Arbitral Award – Ch.7 • Finality And Enforcement of Arbitral Award – Ch.8

15. Waiver of Right to Object Where it is known to a party that any requirement of the arbitration contract has not been fulfilled or there exists some other default but still the party proceeds with arbitration proceedings without any objection thereto, it shall be deemed that the party has waived its right to object against the same.

16. Extent of Judicial Intervention • No judicial authority is entitled to intervene in the matters covered by arbitration except as provided in this law. (e.g. parties mutually decide not to proceed but to move the court ) • A judicial authority shall refer the parties to arbitration when an action is brought before it in a matter which is subject to ARBITRATION AGREEMENT.

17. ARBITRATION AGREEMENT • It means an agreement by the parties regarding disputes to arbitration whether contractual or not. • It SHALL be in writing and may be in the form of Arbitration Clause in any other document. • It may be in the form of exchange of letters or confirmation through letters or verbal communication. • It may be a separate comprehensive independent agreement.

18. Number of Arbitrators The parties are free to decide the number of arbitrators, but it shall not be an even number, if the parties fail then arbitral tribunal shall consist of a sole arbitrator. 2,4,6 1,3,7,9

19. By invoking a clause in the PD ‘A’ appointed one Arb.. And ‘B’ appointed one. The deed specified that both shall appoint one Arb.. Each. Whether Arb proceedings valid? The deed specifies that both can appoint one Arb.. each and the two Arb.. ,so appointed, shall appoint a IIIrd oneto act as an umpire. If 3rd could not be appointed Whether Arb. Proceedings valid? FEW CASE STUDIES Study-I Study-II

20. Appointment of Arbitrator • Person of any nationality agreed by the parties • Subject to failure of appointment procedure agreed by the parties, every party is free to appoint single arbitrator and the third one will be selected by two of them. • Failure of above procedure within 30 days, then appointment on request of parties by Chief justice or person or institution designated by him and similar manner for sole arbitrator. • The Chief justice should consider qualifications, independent and impartial qualities of arbitrator.

21. Agreement where at least one party has nationality of any country other than India • In case of International commercial arbitration, the Chief justice of India or any other person appointed by him may appoint arbitrator of any nationality. • Where more than one request to Chief Justices of High Court, Chief Justice shall alone be competent to decide the request. • Reference of Chief Justice in case of International Commercial Arbitration is of Chief Justice of India and in any other case Chief Justice of jurisdictional High Court.

22. Arbitral Tribunal-Jurisdiction, Function etc. • The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872 • The parties are free to agree on procedure to be followed, failing which, the proceedings shall be carried out as tribunal considers appropriate. However Tri.. should determine admissibility, relevance, materiality and weight of any evidence.

23. Arbitral proceedings- An Overview • Language in which Arb… Proceedings are to be carried- At will of the parties to Arbitration • If no language decided by parties – selection at will of Arb.. Tri.. • Hearing can be oral or written as per mutual consent by parties • Arb.. Tri.. Competent to take Assistance of experts Guide lines similar to AAS-9 Apply • Arb.. Tri may also take court’s assistance

24. Place of Arbitration • As agreed by parties, if not, as decided by tribunal considering the circumstances of the case. • The arbitral tribunal may meet at any place as for consultation among its members for hearing witnesses, experts etc. unless agreed by the parties.

25. Arbitral Awards In an Arb.. Proceeding in India--- in accordance with substantive law in forceIn an ICR– Law/ Procedure agreed by parties (this generally is construed as a harmonious construction of laws of BOTH COUNTRIES)In a proceeding other than by sole arbitrator---award only by majorityArb..Award shall be in writing and duly signed by the Arb…(majority in proceeding other than by sole Arb..)Reasons of AwardSigned copy to be delivered to each partyMonetary award- by default carry S.I. @ 18% p.a.

26. Recourse against Arbitral Awards • U/s 34(1) & (2) an arbitral award may be set aside if application made within 3 months by any party under S.s 3 to principal Civil Court • The onus to prove for the grounds of allegation lies on the party making application. • The award may be set aside due to arbitrators misconduct or award improperly procured or otherwise invalid. • The only right of a party aggrieved from the defects mentioned in S. 13&16 is to apply under S.34 of the Act. • The Court cannot suo motto set aside the award under the Act of 1996.

27. Recourse u/s 34 only if …. • A party was under some incapacity • Arbitration agreement is not valid • Aggrieved party was not given proper opportunity. • Composition of Arbitral Tribunal is not in terms of Arbitration Agreement. • Court finds that subject matter of dispute is not capable of settlement by Arbitration or that Arbitration Award is against Public Policy of India

28. Finality and Enforcement of Arbitral Awards • An arbitral award shall be final and binding on the parties U/s 35. • In case of expiry or refusal of set aside application the award shall be enforced under the Code of Civil Procedure, 1908.

29. Correction of an Arbitral Award • A Party to an Arb.. Proceeding, who finds…… • Computational • Clerical • Typographical • Or other mistake of similar nature (Rule of ejusdem generis) may request the arbitral tribunal to rectify the same. • Correction shall be done within 30 days of request • Even suo motu by Arb.. Tri.. for these

30. Conciliation Adjustment and settlement of a dispute in a friendly and non-antagonistic manner by using a non binding procedure.

31. An Introduction…… • Applies to conciliation of disputes arising out of legal relationships, whether contractual or not, and to all proceedings relating thereto. • Party wanting conciliation shall “INVITE” other party to conciliate. • Proceedings commence only when a reply is received within 30 days, else deemed rejection of invitation • On rejection or deemed rejection first party to re-inform the other.

32. Conciliators • Number: can be one or if parties then two or three (that suggests that it cannot be more than three) • Appointment: • One – By mutual agreement of parties. • Two– One each, by each party. • Three– One by each party and 3rd by mutual agreement.

33. Statements-Before, During & After the proceedings • Before proceedings conciliator shall request each party to submit a statement explaining nature of dispute. • The statement must clearly specify and state the conciliators position and the facts and grounds in support thereof. • During the proceedings the conciliators can call for further information from the parties and S.71 calls for cooperation by parties.

34. Relevant Provisions at a glance • Conciliators not bound by Code of Civil Procedures 1908 or The Indian Evidence Act 1872. • Guided by principles of objectivity, fairness and justice. • Proceedings in the manner as conciliator deems appropriate. • Conciliator may take administrative assistance. • Place of conciliation determined by conciliator after consultation with parties.

35. Settlement Agreement- The Outcome of Conciliation • Where it appears to the conciliator that there exists elements of settlement he shall formulate terms of settlement- • Observations to be submitted by parties on the draft formulation. • Conciliator to reformulate the agreement. • After reaching to an agreement, a formal settlement shall be drawn up and signed by the parties. • The settlement agreement shall now be final and binding on all the parties concerned. • Conciliation proceeding terminate • On signing of the agreement • Written declaration by conciliator • Written declaration by parties • Written declaration between parties, Inter-se.

36. Thanks Gunjan Pathak, Advcoate