Women & Child Law EBook & Lecture Notes PDF Download (Studynama.com - India's Biggest Website for Law Study Material Dow

CONTENTS UNIT - I - Arbitration - Arbitration Agreement IMPORTANT QUESTIONS UNIT - II - Arbitration Tribunal - Award - Court Assistance - Finality and Enforcement of Arbitral Awards IMPORTANT QUESTIONS Studynama.com UNIT - III - Appeal - Revision - Enforcement of Foreign Award and New York and Geneva Convention Awards IMPORTANT QUESTIONS UNIT - IV - Conciliation - Power of High Court and Central Government to make Rules IMPORTANT QUESTIONS UNIT - V - Legal Services Authority Act, 1987 - Alternative Dispute Resolution System - Industrial Dispute Act, 1947 IMPORTANT QUESTIONS Suggested Readings

Strictly for Internal Circulation - KCL UNIT – I ARBITRATION KAMKU Arbitration is not a new concept for the administration of justice without any delay. It is an age old alternative S dispute resolution method all over the world. It is an alternative way to resolve the dispute out any access to the regular judicial system i.e. regular courts. Arbitration has been adopted from e immemorial and it has been given the sanctity of law after its efficacy was tested by the Governments. Objectives: The main objectives of the Act are : Studynama.com a) to comprehensively cover international commercial arbitration and conciliation as also domestic arbitration and conciliation; b) to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration; c) to provide that the Arbitral Tribunal gives reasons for its arbitral award; d) to ensure that the Arbitral Tribunal remains within the limits of its jurisdiction. e) to minimise the supervisory role of courts in the arbitral process; f) to permit an Arbitral Tribunal to use medication, conciliation or other procedures during the arbitral proceedings to encourage settlement of disputes; g) to provide that every final arbitral award is enforced in the same manner as if it were decree of the court; h) to provide that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on agreed terms on the substance of the dispute rendered by an Arbitral Tribunal; and i) to provide that, for purposes of enforcement of foreign awards, every arbitral award made in a country to which one of the two international Conventions relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award. Use of Objects and Reasons for Interpreting Provisions : The Supreme Court observed in Narain Khamman vs. Parduman Kumar (1985): It is now well settled 1

Strictly for Internal Circulation - KCL that though the Statement of Objects and Reasons accompanying legislative Billing cannot be used to determine the true meaning and effect of the substantive provisions of a statute, it is permissible to refer to the Statement of Objects and Reasons accompanying a Bill for the purpose of understanding the background, the antecedent state of affairs, the surrounding circumstances in relation to the statute, and the evil which the statute sought to remedy. It is well-settled that when the language of the statute is clear and admits of no ambiguity, recourse to the statement of objects and reasons for the purpose of construing a statutory provision is not permissible. The objects and reasons give an insight into the background why the provision was introduced. Though objects and reasons cannot be the ultimate guide in interpretation of statutes, it often-times aids in finding out what really persuaded the legislature to enact a particular provision. KAMKU The objects and reasons of an Act should be taken into consideration in interpreting the provisions of the statute in case of doubt. If the language of a provision is not clear, words have to be construed in the light of S the legislative scheme, the object and purpose of enacting the provision and the ultimate effect of adopting one or the other construction. Definitions: In this part, unless the context otherwise require: Studynama.com a) "arbitration" means any arbitration whether or not administered by permanent arbitral institution; b) "arbitration agreement." means an agreement referred to in Section 7; c) "arbitral award" includes an interim award; d) "arbitral tribunal" means a sole arbitrator or a panel of arbitrators. Meaning, Nature and Scope of Arbitration: In the terms of sub-section (1) (a) "arbitration means any arbitration whether or not administered by permanent arbitral institution". When the parties agree to have their disputes decided with the) meditation of a third person, he with all the formally of a judicial adjudication, may be, speaking broadly, called an arbitration. An arbitration, therefore, means the submission by two or more parties of their dispute to the judgment of a third person, called the "arbitrator" and who is to decide the controversy in a judicial manner. "An arbitration is the reference of a dispute or difference between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction." "Arbitration" is thus defined by Romilly M.R. in the case of Collins vs. Collins (1858): "An arbitration is a reference to the decision of one or more persons, either with or without an umpire, of a particular matter in difference between the parties." Dispute: What is meant by the term “dispute" for this purpose? The term has not been defined by the Act nor there seems to be any judicial definition for the purposes of the Act. Thus, the word "dispute" means/the matter in dispute, and not the contention or disputation over it. The expression shall include disputl9s of law as well as of fact. The dispute may relate to an act of commission or omission, for example, withholding a certificate to which a person is entitled or refusal to register a transfer of shares. Where the liability is already clear, but the party liable is refusing to pay up, that is not a "dispute". It is a mere default. It is directly actionable. 2

Strictly for Internal Circulation - KCL In Cleobulos Shipping Co. Ltd. vs. Intertanker Ltd., (1982) 132 ~Jew LJ 557, a ship was chartered to carry a cargo of naphtha under a voyage charter-party containing an arbitration clause'. The charterers refused to pay the full freight on the ground that the vessel had to be taken to a second unloading port owing to defects in the vessel's pumping facilities. The owner brought an action for the freight. The charterers wanted the action to be stayed because of the arbitration clause. The court refused to agree that a failure to pay the full form freight was capable of constituting a "dispute". The court said that the rule is well established in Aries Tanker Corporation vs. Total Transport Ltd., (1977) 1 All ER 398 HL, that freight had to be paid in full without any set-off; the good conduct of business so required. All cross-claims can be adjusted in legal proceedings. KAMKU the crime. In Damodar Valley Corporation v. K.K. Kar, AIR 1974 SC 158; (1974) 1 SCC 141: (1974) SCR 240, where, in a case before the Supreme Court, the liability to pay for coal supplied by a party under a contract was first S repudiated, but finally payments were made and accepted by the other party, the latter than claiming compensation for repudiation, it was held that this was a dispute and the defendant's contention that the matter had been settled was not sufficient to bar arbitration. In State of Orissa v. Damodar Das, (1996) 2 SCC 216: AIR 1996 SC 942; (1996) 82 Cut LT 110, the Studynama.com agreement to refer disputes and differences to arbitration must be expressly or impliedly spelt out from the clause. A clause in a contract empowered the public health engineer to decide questions relating to the meaning of specifications, drawings, quality of work etc. and provided that the decision shall be final and effect of being an arbitration clause. it is not permissible for the complainant to raise new disputes in relation to damages claimed to have been sustained by him after the disputes have been referred to arbitration. The scope of arbitration has o be confined to the disputes which were the subject-matter of arbitration before the first arbitrator. Dispute of Civil Nature: Whatever be the type of dispute, the matter in dispute must be of civil nature. Matters of criminal nature cannot be referred to arbitration. In most cases reference to arbitration shuts out the jurisdiction of the courts, except as provided in the Act and since criminal courts cannot be deprived of their jurisdiction to try criminals, no criminal matter can be referred to arbitration. Thus, if the reference of any case to arbitration would mean stifling prosecution of a criminal, the reference is not roper. Where, however, a criminal prosecution is only incidentally affected by reason of a reference, the eference is not improper. Similarly, where a single act involves civil as well as criminal consequences and the injured party has either remedy at his disposal, he may agree to refer the matter to arbitration even if it has the effect of wiping out If it is an implied term of the arbitration agreement or of the reference to arbitration that a complaint for on- compoundable offence will not be further proceeded with, the arbitration agreement is illegal and an award, if any, is invalid and it is immaterial whether a prosecution has been actually started or not (Kamini Kumar Basu v. Birendra Nath Bose, AIR 1930 PC 100; 57/A117; ILR (1930) 57 Cal 1302 : AIR 930 PC 100) Generally matters of a criminal nature which cannot be compromised cannot be referred to arbitration. t in cases where the injured party has a remedy by civil action as well as by criminal prosecution, a reference to arbitration can be made. Thus compoundable cases may be referred to arbitration. Disputes under Section 3

Studynama’s Law Community is one of India’s Largest Community of Law Students. About 29,982 Indian Law students are members of this community and share FREE study material, cases, projects, exam papers etc. to enable each other to do well in their semester exams. Links to Popular Study Material for LAW (LLB & BA.LLB) students: •Family law pdf lecture notes & eBook download for LLB students •Jurisprudence Law lecture notes pdf & eBook download for LLB students •Company Law lecture notes pdf & eBook download for LLB students •Law of Evidence lecture notes pdf & eBook download for LLB students •Contract Law lecture notes pdf & eBook download for LLB students •Criminal law pdf lecture notes & eBook download for LLB students •Taxation Law lecture notes pdf & eBook download for LLB students •Law of torts pdf eBook & lecture notes for LLB students •Constitutional law pdf lecture notes & eBook download •Labour law lecture notes pdf & eBook download for LLB students •Administrative law lecture notes pdf & eBook download for LLB students •Constitutional Law - I q&a notes pdf & eBook download for LLB And 1998 more free downloads for Law & LLB Students. Other Popular Links for Law Study Material: •LLB/LLM Lecture Notes, eBooks, Guides, Handouts FREE PDF Download •LLB - Law third year notes, eBooks, handouts and study material - semester 5 & 6 •LLB - Law second year notes, eBooks, handouts and study material - semester 3 & 4 •LLB - Law first year notes, eBooks, handouts and study material - semester 1 & 2

Strictly for Internal Circulation - KCL 145, Cr.P.C. (disputes to possession) are mostly of a civil nature and may be referred to arbitration. Subject to this restriction, any matter of civil nature can be referred to arbitration. Disputes relating to property, ownership or tenancy, claims for damages howsoever arising, partnership matters, disputes between an institution, like a company, and its members, can all be referred to arbitration. But some letters involving a special type of jurisdiction cannot be so referred. For example, matters involving insolvency or probate jurisdiction or those involving breach of a trust created for a public purpose under - section 82 of the Code of Civil Procedure cannot be referred, for they involve public consequences and not mererly adjudication of rights between private individuals. Matters under the Electricity Supply Act, 1948 which contains its own statutory provision are not arbitrable except as provided. In Punjab S.E.B. v. Guru Nanak Cold Storage and Ice Factory Manufacturers, (1996) 5 SCC 411 : AIR 1996 SC 284, before the Supreme Court, a defaulter in payment of bills was sued by the Electricity Board and decree for payment was KAMKU assignable as part of the contract". obtained. The consumer, instead of satisfying the decree, claimed compensation for losses caused because of the sudden disruption of supply and demanded arbitration. The court said that the matter was S not arbitrable because of the special provisions of the Electricity Supply Act. Tort Matters: The arbitrator can decide matters connected with the contract. Where a charterer arrested the ship because it refused to deliver the whole of the cargo, the ship owner's claim for damages for the arrest was held by the court to be one in tort, but because the claim had arisen out of the breach of the Studynama.com charter party, the arbitrator was competent to adjudicate upon the connected matter. Winding up of Companies: In Astro Vencedor Comapnia Naviera v. Mobanaft, (1971) 2 OB 588, the matter of the winding up of a company cannot be referred to arbitration. The court explained the position as follows: Section 8(1) of the Arbitration and Conciliation Act, 1996 provides that the judicial authority before whom an action is brought in a matter will refer the parties to arbitration the said matter in accordance with the arbitration agreement. This, however, postulates that what can be referred to the arbitrator is only that dispute or matter, which the arbitrator is competent or empowered to decide. The claim in a petition for winding up is not for money. The petition filed under the Companies Act would be to the effect, in a matter like this that the company has become commercially insolvent and, therefore, should be wound up. The power to order winding up of a company is contained in the Companies Act and is conferred on the court. An arbitration notwithstanding any agreement between the parties, would have no jurisdiction to order winding up of a company. Contracts of Apprenticeship: Contracts of apprenticeship being for the benefit of minors, if they contain an arbitration clause it will also be binding upon the minors. Assignment: "When a contract is assignable, the benefit of an arbitration clause contained in it is Powers under Agreement: Specific Enforcement: Where a reference was made by the court under a consent order which provided that the arbitrator would have summary powers and would not have to give reasons, it was held that the consenting party was precluded from challenging the validity of the non- speaking award. Arbitration and Litigation: "One of the principal advantages of arbitration over litigation is commonly stated to be that where the dispute concerns a technical matter such as a building contract, the person chosen to arbitrate will normally be an expert in the subject-matter of the dispute, whereas a judge will 4

Strictly for Internal Circulation - KCL seldom have any practical experience of the technicalities of the trade in question." "The court does not have the power which the arbitrator had to open up and review the exercise of the architect's discretion since the court's jurisdiction was limited to determining the enforcing the contractual rights of the parties. The arbitrator, on the other hand because the parties' agreement expressly gave him such power, was entitled to modify the parties contractual rights by substituting his own discretion for that of the architect if he disagreed with the architect's certificates and opinions. Accordingly, if the parties choose to litigate rather than arbitrate the court would not have the same powers." The Supreme Court has also passed the following observation in State of J&K v. Dev Dutt Pandit, (1999) 7 SCC 339 : AIR 1999 SC 3196; "Arbitration is considered to be an important alternative dispute redressal process which is to be encouraged because of high pendency of cases in the courts and cost of litigation. KAMKU record of the agreement; or Arbitration has to be looked up to with all earnestness so that the litigant has faith in the speedy process of resolving their disputes." S Reference under Arbitration Agreement: The second important feature of an arbitration is the agreement between the parties to the dispute to refer the matter to arbitration. The word "reference" was defined in Section 2 (e) of the Arbitration Act, 1940 (now repealed) this way : "reference" means a reference to arbitration. Studynama.com ARBITRATION AGREEMENT According to Section 70f Arbitration Conciliation Act, 1996 the Essentials and Kinds of Arbitration Agreement are: 1. "Arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. 2. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. 3. An arbitration agreement shall be in writing. 4. An arbitration agreement is in writing if it is contained in : 1) an exchange of letters, telex, telegrams or other means of telecommunication which provide a 2) An exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. 5. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. Agreement to be in Writing: One of the points of some formal importance emphasised by these provisions is that the reference should be by means of a written agreement. Section 7(3) most emphatically 5

Strictly for Internal Circulation - KCL prescribes that "an arbitration agreement shall be in writing". An oral agreement to submit a dispute to arbitration is not binding. If the agreement is in writing it will bind, even if some of its details are filled in y oral understanding. It is not necessary that the agreement should be on a formal document nor it is necessary that the agreement should be signed by both or either party. It is sufficient that the written agreement has been orally accepted by the parties or that one has signed and the other has accepted. Act recognises in Section 7(4) some three methods of arriving at a written agreement. One of them is exchange of letters or raising a claim under an alleged arbitration agreement which is not denied by e other party. The Act provides in Section 7 (4) that an arbitration agreement is in writing if it is contained in an exchange of letters, telex, telegrams, or other means of telecommunication which provide a record of the agreement or in an exchange (jf statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. KAMKU Whatever be the form or contents of th9 agreement, it is necessary for the Act to apply that there should be a S mandatory requirement for settlement of disputes by means of arbitration. An agreement that the parties may go in for a suit or may also go in for arbitration is not an arbitration agreement. No prescribed form of agreement: In Rukmanibai Gupta v. Collector, Jabalpur (1980) 4 SCC 556: AIR 1981 SC 479, the Supreme Court laid down that an arbitration clause is not required to be stated in any Studynama.com particular form. If the intention of the parties to refer the dispute to arbitration can be clearly ascertained from the term of the agreement, it is immaterial whether or not the expression "arbitration" or "arbitrator" has been used. Nor it is necessary that it should be contained in the same contract document. An arbitration clause may be incorporated into an existing contract by specific reference to it. Section 7 (5) clearly provides that the reference in a contract to a document contained an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make tile arbitration clause a part of the contract. Hence, the whole thing turns upon the intention of the parties. Where the party showed that the arbitration clause in the signed agreement crept in mistake, it was held that the civil court was in error in acting upon a clause which the parties did no intend to be there and appointing an arbitrator on that basis. Tenders Containing Arbitration Clauses: The acceptance of a tender or a work order which carries an arbitration clause, or the membership of an institution the constitution of which provides for arbitration or a contract which contains a provision for arbitration, is sufficient. Acceptance of such a tender by an authorised functionary of the Government would be a sufficient compliance of the formal requirements of Article 299 of the Constitution of India so as to bind the Government by the arbitration clause. "Arbitration Agreement" and "Reference": The expressions "arbitration agreement" and "reference" have been separately defined. Explaining the purpose and effect of this scheme, the Supreme Court observed in Banwari Lal Kotiya v. P.C. Aggarwal, (1985) 3 SCC 255, 260: AIR 1985 SC 1003: 1985 Arb. LR 1003. (The term "reference" has not been defined in the new 1996 Act, but the statement continue to be valid as emphasising the distinction between an agreement for arbitration and a reference under it): "The expression (reference) obviously refers to an actual reference made jointly by the parties after disputes have arisen between them for adjudication to named arbitrator or arbitrators, while the expression "arbitration agreement" is wider as it combines two concepts, (a) a bare agreement between the parties that disputes arising between them should be decided or resolved through arbitration and (b) an actual reference of a particular dispute for adjudication to named arbitrator. 6

Strictly for Internal Circulation - KCL The facts of Banwari Lal Case, (1985) 3 SCC 255, were that there was a dealing about shares between a Stock Exchange member and an outsider under which a sum of money had become due to the member. The parties signed the contract-notes on a prescribed form. The transaction was subject to the rules, regulations and bye-laws of the Stock Exchange one of which provided for arbitration in such matters. The member appointed his arbitrator. The other refused to reciprocate. In such cases, the rules provided for appointment by the Exchange. The latter accordingly appointed one. The other party participated in the proceedings under protest that he had not given his consent and, therefore, the award would not be binding on him. The Supreme Court came to the conclusion that a fresh consent was necessary on his part. He had consented to the rules and regulation which contained an elaborate machinery for submission. No fresh consent was necessary. Clauses having the effect of "arbitration agreement": Whether a clause in a contract amounts to an KAMKU agreement of arbitration depends upon its scope. In State of U.P. v. Tipper Chand, (1980) 2 SCC 341: AIR 1980 SC 1522: 1980 All LJ 749, before the Supreme Court a clause in a Government contract provided that S the decision of the superintending engineer upon all questions relating to the contract shall De final and binding. An application was made under Section 20 of 1940 Act (now Section 8) to refer a dispute to arbitration on the basis that the above clause amounted to an agreement of arbitration. The supreme Court rejected the contention. FAZAL All, J., observed: Studynama.com “Admittedly the clause does not contain any express arbitration agreement. Nor can such an agreement e spelled out from its terms by implication, there being no mention in it of any disputes much less of a reference thereof. The purpose of the clause clearly appears to be to vest the superintending engineer with supervision of the execution of the work and administrative control over it from time to time." Thee court distinguished the case from some earlier rulings in which the clause in question provided that in any dispute between the contractor and the department the decision of the chief engineer shall be final". The court said that this clause was correctly interpreted as amounting to an arbitration agreement. In another case i.e., Rukmani Gupta v. Collector, Jabalpur (1980) 4 SCC 556, a mining lease granted by e State carried a clause that disputes, if any, shall be decided by the lessor (in this case the Governor whose name the lease was executed) and his decision shall be final. The Supreme Court held that is amounted to an arbitration agreement. DESAI. J., said: Arbitration agreement is not required to be in any particular form. What is required to be ascertained is 'whether the parties have agreed that if disputes arise they would be referred to arbitration, then such an arrangement would spell out an arbitration agreement." Reference of time-barred claim: An arbitration agreement may even contemplate reference of a time barred claim. A policy of insurance required the assured to refer the matter to arbitration within twelve months of the company's disclaimer. The assured referred it after twelve months and yet the reference as held to be binding. (Ruby General Insurance Co. Ltd. v. Peare Lal Kumar, AIR 1951 Punjab 440) The significance of Section 25(3) of the Indian Contract Act, 1872 has also to be kept in view. A time barred claim can, therefore, validly form the subject-matter of reference. A distinction, however, is to be made between an arbitration agreement entered into about a time-barred claim and a reference made the basis of an arbitration clause after the expiry of the period of limitation. In the latter case no reference can be made as the right to claim ceases to subsist and the relief with respect to the dispute as become time-barred. 7

Strictly for Internal Circulation - KCL Adoption of arbitration clause from main contract by sub-contract: Where an arbitration clause contained in the main contract is adopted in a sub-contract also by a clause declaring that this subcontract is being granted on the terms and conditions applicable to the main contract, it will not necessarily follow that the parties to the sub-contract would also be bound by the arbitration clause. For e thing, the parties are different and for another, the purpose of the contract being different, different kinds of disputes are likely to arise than those contemplated by the main contract. Position of Non-Parties: An arbitration is a private procedure. It is an implied term that stingers to the 2 agreement are excluded from hearing and conduct of proceedings. Accordingly, an arbitrator cannot, less all parties consent, order that the arbitration of a dispute between a ship owner and a charterer - 'sing out of a charter party and the arbitration of a separate but closely-related dispute between the charterer and a sub-charterer arising out of a sub-charterer be heard together even though the two disputes are closely KAMKU 1) present or future disputes which are, related and a consolidated hearing would be convenient. S Validity of Arbitration Agreement Reference without agreement or under void agreement: The court may stay arbitration proceedings where the parties have not agreed to refer the particular dispute to arbitration or where the contract which carried the arbitration clause is itself void. The proceedings remain stayed till the matter as to the validity of Studynama.com the reference is decided. A situation of this kind came before the Court of Appeal in England in Ben & Co. Ltd. v. Pakistan Edible Oils Corporation Ltd. (1979) There was a contract to purchase palm-oil by a Karachi firm from a Singapore seller. The contract included a London arbitration clause. The Karachi firm contended that the agent who purported to contract on their behalf had no actual or apparent authority to do so . the seller commenced arbitration proceedings in London. The Karachi party-applied for a stay. In K.K. Modi v. K.N. Modi, (1998) 3 SCC 573 : AIR 1998 SC 1297, in a family matter before the Supreme Court, a memorandum of understanding was signed between the two branches of the family for bringing about division of property between them. Experts were appointed for valuation and preparation of scheme for division between the two groups the corporate undertakings of the family. The agreement also provided that any dispute, clarification, etc. in the matters of implementation would be referred to the Chairman of the Industrial Finance Corporation of India. It was held that this did not constitute an arbitration agreement. It only amounted to a reference of issues to an expert for decision. Nature of Dispute: Disputes which can be referred to arbitration are : 2) In respect of a defined legal relationship, whether contractual or not. Present or Future Disputes: All matters of a civil nature with a few exceptions, whether they relate to present or future disputes may form the subject of reference but not a dispute arising from and founded on an illegal transaction. Though the existence of a dispute is essential to the validity of a reference to arbitration, an arbitration agreement may provide for a present or a future dispute. If the agreement relates to a present dispute it will generally amount to a reference, but if it has been entered into merely to provide for any future dispute, it is an arbitration clause. 8

Strictly for Internal Circulation - KCL Cases of Special Jurisdiction: Where the law has given jurisdiction to determine, certain matters to specified tribunals only, such matters cannot be referred to arbitrations, e.g., a) Insolvency proceedings b) Probate proceedings c) Suit under Section 92, CPC d) Proceedings for appointment of guardian e) Matrimonial causes - except settlement of terms of separation or divorce f) Title to immovable property in a foreign country KAMKU to the court and the letter may order reference to 'arbitration'. g) Claim for recovery of octroi duty. S Not necessary to specify dispute: It is not necessary to specify the dispute either in the arbitration agreement or in the reference to the arbitrator. Such specification can also be made in the proceedings before the arbitrator. Statutory Arbitrations: The disputes which may be the subject of an arbitration agreement need not Studynama.com necessarily arise out of a contract. They may also arise out of stat4tory provisions. Who can make reference: Reference to arbitration may occur in any of the following ways : Under Statutory Provisions: A reference can be made under the provisions of an Act. There are many Acts of Parliament which provide that any dispute about their provisions shall be settled by arbitration. The electricity Supply Act, 1948, for example, provides for disposal by arbitration the disputes that may arise about its provisions. By Consent of Parties: The parties to a dispute may agree to have their differences resolved by arbitration. The method of having arbitration though the intervention of the court has been dropped by the 1996 Act. The policy of the Arbitration and Conciliation Act, 1996 is to minimise the intervention of the court. The new Act minces no words in declaring in Section 5 that notwithstanding anything contained in any other law for the time being in force, in matters governed by part I of the Act no judicial authority can intervene except where permitted by the provisions of Part I. Accordingly, an arbitration can now by only parties' agreement and not through court or through intervention of court. On this point, Section 8 of the 1996 Act carries this provision that where a party to an arbitration agreement nevertheless files a suit the other party may apply Effect of Arbitration Agreement: Stay of Suits (Section 8) Power to refer parties to arbitration where there is an arbitration agreement: 1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. 2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the 9

Strictly for Internal Circulation - KCL original arbitration agreement or a duly certified copy thereof. 3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made. Power of court to order parties to arbitration: The Arbitration and Conciliation Act, 1996 is intended help the parties to settle their differences privately by conciliation or by arbitration and thereby to spare - themselves of wasteful and vexatious litigation. If the matter covered by an arbitration agreement could shall be litigated upon, the arbitration, instead of being a cheaper and less time-consuming alternative to litigation, would involve duplicity of expenditure and effort and would in essence be self-defeating. It is, therefore, necessary to provide, to make arbitration meaningful and a real alternative to litigation, that the KAMKU matter covered by an arbitration agreement shall not be litigated upon in any court of law whatsoever, except for the purposes of making the arbitration really effective. S In recognition of this principle Section 8(1) of the Arbitration and Conciliation Act, 1996 provides that if any party to an arbitration agreement brings before a judicial authority the matter covered by the agreement, the other party may apply for stay of the suit and for order of reference to arbitration. Studynama.com The question whether the dispute in question is arbitrable or not has to be decided by the court. It has also to decide whether the dispute brought before it is the subject-matter of the arbitration agreement. In satisfying itself whether the dispute is arbitrable or not the court has to go into the aspects of validity, existence etc. of the agreement. Under the Arbitration and Conciliation Act, 1996 (Section 8), the word used is "shall". The effect is that the court has no choice or discretion in the matter and is bound to refer the parties to arbitration. The Supreme Court in Anderson Wright Ltd. v. Moran & Co. AIR 1955 SC 53, stated the requirements of stay as they applied under the 1940 Act; In order that a stay may be granted it is necessary that the following conditions should be fulfilled: 1) The proceedings must have been commenced by a party to an arbitration agreement against any other party to the agreement; 2) The legal proceeding which is sought to be stayed must be in respect of a matter agreed to be referred. The subject-matter of the action should be the same as the subject-matter of the arbitration agreement. 3) The applicant for stay must be a party to the legal proceedings and he must have taken no step in the proceedings after appearance. [Under the 1996 Act, the requirement is before 'submitting first statement on the substance of the dispute'] It is also necessary that he should satisfy the court not only that he is but also was at the commencement of the proceedings ready and willing to do everything necessary for the proper conduct of the arbitration; and 4) The court must be satisfied that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the arbitration agreement. The discretionary element in the power of the court is not applicable under the 1996 Act. Under the new 10

Strictly for Internal Circulation - KCL provision (Section 8 of 1996 Act) the requirements of stay application and of an order for reference to arbitration were stated by the Supreme Court in P. Anand Gajapathi Raju v. P.v.G. Raju AIR 2000 SC 1886 as follows: 1) There must be an arbitration agreement; 2) A party to the agreement brings an action in the court against the other party; 3) The subject-matter of the action is the same as the subject-matter of the arbitration agreement; 4) The other party moves the court for referring the parties to arbitration before submitting the first statement on the substance of the dispute." Matter of stay should be within arbitration agreement: Firstly, the matter about which a suit has been KAMKU to be raised. filed should be within the scope of the arbitration agreement. The words used in the section are: S "In a matter which is the subject of an arbitration agreement". Impartiality of Nominated Arbitrator: The impartiality of the arbitrator or lack of independence on his part is under the 1996 Act a ground Tor having him substituted and riot for staying legal proceedings because Section 8 is couched in mandatory form. The court has no choice in the 'matter but to order the parties to Studynama.com reference. The Supreme Court pointed out in U.P. Cooperative Federation vs. Sunder Bros., Delhi (1966) that a stay will not be granted if there is a good reason for apprehending that the selected arbitrator is likely to show bias or that he will not act fairly or that he has been guilty of unreasonable conduct or that for some reason it is improper that he. should arbitrate in the dispute. Bias may arise, for example, from the act that the arbitrator is related to one of the parties. Similarly, where the arbitrator has to play the role of a witness also, it is improper that he should arbitrate, and, therefore, an action would be allowed to proceed. Thus, where a contractor worked for a corporation and the disputes, if any, were to be referred o the corporation's engineer, a dispute which arose involved conflict of evidence between the contractor and the engineer, it was held that the engineer was not the proper person to arbitrate and so the suit should be allowed. These rulings would be applicable under the Arbitration and Conciliation Act, t996 only when the circumstances are such and the arbitration agreement is such that the substitution of the arbitrator is not possible under the challenge procedure permitted by Section 12 and 13 of the Act. Fraud by one party to arbitration: The court may refuse a stay where the question is whether one of the 3arties to the arbitrator, agreement has been guilty of fraud. In such cases a special issue for setting aside the agreement on the ground of fraud under Sections 17 and 19 of the Indian Contract Act, 1872 would have Agreement to exclude courts altogether: An arbitration agreement which seeks to exclude altogether. The jurisdiction of the courts would be void, being contrary to the arbitration am;! conciliation Act, 1996 itself. For example, the court's power to ask the arbitrator to submit a question of law for determination by the court under. the earlier 1940 Act could not be ousted. But it is open to the parties to stipulate that the award of the arbitrator shall be a condition precedent to the mi3intainability of any suit. In such cases action may be allowed until an award has been obtained. This was laid down in Scott v. Avery (1856) CL 811 and such a clause is also known by the' name of that case. 11

Strictly for Internal Circulation - KCL A policy of insurance on a ship provided that in the event of loss the amount of loss would be determined - arbitration and that the award of the arbitrator would be a condition precedent to the maintainability of any suit. The House of Lords accordingly held that no action was maintainable until the award was obtained. The validity of Scott v. Avery clause was approved by the Supreme Court in Vulcan Insurance Co. v. Maharaj Singh(1976) 1 SCC 945 : AIR 1976 SC 287. A factory was insured against fire. It was lost in a fire, but the insurance company repudiated all liability under the policy. The policy provided that if any dispute arose as to the amount of any loss or damage, the same would be decided by arbitration. The assured attempted to appoint an arbitrator by filing the agreement in the court. KAMKU so object. UNTWALIA, J., held that the repudiation of liability was not a dispute as to the amount of "an loss or age" and, therefore, it was outside the arbitration agreement. The proper course for the assured as to commence S a suit to determine the question and once a court had decided that the company could have been held liable, the matter could have been referred to arbitration as to the amount of liability. Such a suit was not barred by the policy. A suit of this kind is not barred unless there is the Scott v. Avery clause. Effect of Legal proceedings upon Arbitration (Section 8, 1996 Act): Sub-section (3) of Section 8, 1996 Studynama.com Act deals with this point: "Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made." Under Section 8 of the new Act unless a party objects to the .legal proceedings, they are valid. The arbitration agreement does not oust the jurisdiction of the courts by itself. Where no party comes forward to object to the suit, the arbitration agreement becomes ousted. A suit would have no effect on the arbitration proceeding if it is pending, or even 'commenced. Such proceedings can be continued and an award made. Waiver of Rights Waiver of Right to Object: A party who knows that: 1) Any provision of this Part from which the parties may derogate, or 2) Any requirement under the arbitration agreement, has not been complied with the yet proceeds with the arbitration without stating his objection to such-non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to Extent of Judicial Intervention: Notwithstanding anything contained in any other law for the time, being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. Judicial Intervention: This section bars the jurisdiction of courts to interfere or to intervene in arbitration proceedings except to the extent provided in Part l. This Part provides for/intervention of Courts in the following cases: 12

Strictly for Internal Circulation - KCL 1) Section 8 - making reference in a pending suit. 2) Section 9 - passing interim orders. 3) Section 11 - appointment of arbitrators. 4) Section 14(2) - terminating mandate of arbitrator. 5) Section 27 - Court assistance in taking evidence. 6) Section 34 - setting aside an award. 7) Section 37 - entertaining appeals against certain orders. 8) Section 39(2) - directing delivery of award. KAMKU b) securing the amount in dispute in the arbitration; Some of the cases where Courts exercised jurisdiction under the repealed Arbitration Act, 1940, and in which the jurisdiction is barred under the present Act were: S 1) Section 11 - removal of an arbitrator or umpire 2) Section 14 - filing of an award in court. 3) Section 15 - modification of award by court. Studynama.com 4) Section 16 - power of court to remit an award for reconsideration. 5) Section 17 - pronouncing judgment in terms of an award. 6) Section 19 - superseding an agreement. 7) Section 20 - filing of arbitration agreement in Court and seeking an order of reference Provision of Interim Relief by Courts Interim Measures by Court: A party may, before or during arbitral proceedings or at any time after the making of the arbitral award -but before it is enforced in accordance with Section 36, apply to a Court - 1) For the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or 2) For an interim measure of protection in respect of any of the following matters, namely: a) the preservation, interim custody or sale of any goods which are subject-matter of the arbitration agreement; c) the detention, preservation or inspection of any properly 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 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 Court to be just and convenient. 13

Strictly for Internal Circulation - KCL and the court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it. Power of Court: The section provides for the making of orders for interim measures to provide interim relief to the parties in respect of arbitration. Section 41 and Schedule II of repealed 1940 Act dealt with this subject-matter. Those provisions have been deleted. The powers of the court include an order in respect of the following matters: 1) the preservation, interim custody or sale of any goods which are the subject-matter of the reference. 2) Securing the amount in difference in the reference. KAMKU 3) The detention, preservation of inspection of any property or thing which is the subject of the reference or S as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon or into any land or building in the possession of any party to the reference, 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. Studynama.com 4) Interim injunctions or the appointment of a receiver. 5) The appointment of a guardian for a minor or person of unsound mind for the purposes of arbitration proceedings. Effect of Interim Measures: An interim measure does not put to rest the rights of the parties. The rights of the parties are required to be adjudicated finally when a reference is made. The court has the authority and jurisdiction to pass interim orders for protection and preservation of rights of the parties during the arbitration proceedings but that does not necessarily mean that if a party has availed of a benefit under this jurisdiction, the other party cannot put his claim in the ,main pr0geedings which is before the arbitrator. The interim arrangement made by the court has to be giver:' the interim status. Where an arbitration clause exists in a contract and an order relating to the contract is passed and the parties do not abdicate the arbitration clause and, on the contrary, take a resource to the same, at the disputes inclusive of benefits arising or having already arisen, have to be decided by the arbitrator. IMPORTANT QUESTIONS Q.1. What are the salient features of Arbitration and Conciliation Act, 1969? Discuss. Q.2. Explain the requirements of a valid arbitration agreement. Q.3. "An arbitration agreement cannot be revoked due to the death of either of the party to dispute." Comment. 14

Strictly for Internal Circulation - KCL UNIT - II ARBITRATION TRIBUNAL KAMKU or institution designated by him. According to Section 10 of Arbitration and Conciliation Act the qualification and procedure for the Appointment of Arbitrators are: S 1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. 2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. Studynama.com 3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. 4) If the appointment procedure in sub-section (3) applies and – a) a party fails to appoint an arbitrator within thirty days .from the receipt of a request to do so from the other party; or b) The two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. 5) Failing any agreement referred to in sub-section (3), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of 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 or any person 6) 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 the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or c. a person, including an institution, fails to perform any function entrusted to him or if under that procedure, a party may request the! Chief Justice or any person or institution designated by him to 15

Strictly for Internal Circulation - KCL take the necessary measure, unless the agreement on .the appointment procedure provides other means for securing the appointment. 7) A decision on a matter entrusted by sub-section (4) of sub-section (5) on sub-section (6) to the Chief Justice or the person or institution designated by him is final. 8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to – a. any qualifications required of the arbitrator by the agreement of the parties; and b. other considerations as are likely to secure the appointment of an independent and impartial KAMKU arbitrator. S 9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by tlil1lf may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. 10) The Chief Justice may make such scheme as he may deem appropriate for dealing with matters Studynama.com entrusted by sub-section (4) or sub-section (5) or sub-section (6) to him. 11) Where more than one request has been made under sub-section (4) or sub-section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request. 12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the "Chief Justice of India". (b) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the Chief Justice of the High Court within whose local limits the Principal Civil Court referred to in clause (e) of sub-section (1) of Section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court. Appointment by Chief Justice (Section 11): The expression Chief Justice in this connection virtually means the court because in most cases the Chief Justices have authorised Civil Judges. In the three cases mentioned in -the section the Chief Justice gets- the power to appoint an arbitrator. They are: a) Where he parties fall to appoint or concur in the appointment of an arbitrator or arbitrators; b) Where the two appointed arbitrators fail to appoint or concur in the appointment of the presiding arbitrator. c) Where the person or institution designated by the parties for appointment fails to act. 16

Strictly for Internal Circulation - KCL Thirty-day Notice: Before asking the Chief Justice to act in the matter, a thirty clear days' notice should be given to the other party to concur in the appointment and if he fails to do so then an application can be made to the court. The court will also give an opportunity to the other party to explain his position. The Chief Justice must have due regard to the qualifications f the arbitrators required by the parties under their agreement and also independence and impartiality of the person in question. An application for appointment of arbitrator made before giving any notice to the other party or raising a demand against him was held to be incompetent. Challenge to Arbitrators: The old topic of revoking the authority of an arbitrator and seeking removal has been given a new jargon, namely challenging the arbitrator. The grounds on which a challenge can be presented are listed in Section 12 of Arbitration and Conciliation Act, 1996. KAMKU Grounds for Challenge: S Grounds for challenge: 1) When a person is approached in connection with his possible appointment as an arbitrator he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. Studynama.com 2) An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him. 3) An arbitrator may be challenged only if- a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or b) he does not possess the qualifications agreed to by the parties. 4) 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. Doubt as to Independence. or Impartiality at initial stage: One of the grounds for challenge is the existence of a doubt about the arbitrator's independence or impartiality. Section 12 (1) says that when a person is approached in connection with his possible appointment as an arbitrator, he is under a duty to disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. Disclosure of circumstances by proposed arbitrator: Sub-section (1) casts a duty upon a person who is approached for appointment as an arbitrator to disclose in writing any circumstances which are liable to cast justifiable doubts as to his independence or impartiality. The arbitrator must be, and must be seen to be, disinterested and unbiased. Unless both parties, with full knowledge of the facts expressly agree to his acting, no one should adjudicate in proceedings in the outcome of which he has a direct pecuniary interest. For example, no one should accept appointment in a dispute if he holds shares in one of the parties, or if he would benefit in some other way from a decision in favour of one of the parties. And the arbitrator in a valuation dispute should not be remunerated on a scale 17

Strictly for Internal Circulation - KCL such that the higher the amount of his award, the higher his fee. The arbitrator should have no connection, direct or indirect, with a party such that it creates an appearance of partiality. It is easier to recognise than to define the boundary between what previous connections do and what do not disqualify. Actual bias is irrelevant for this purpose. The test is whether a reasonable person who was not a party to the dispute would think it likely that the connection was close enough to cause the arbitrator to be biased. Thus, personal friendship or hostility; an employment relationship; a previous professional relationship either direct or through other members of a firm in which the arbitrator is a partner; these are examples of a relationship which might create in a responsible outsider a reasonable suspicion of bias. If there is any real doubt about the matter, the arbitrator should disclose the facts to the parties and should ask if they object to his accepting the appointment. If the facts become known to him after appointment, he should disclose them and ask if they object to his continuing. KAMKU challenged on any other grounds. It is well-settled that there must be purity in the administration of justice as well as in administration or quasi- S judicial functions as are involved in the adjudicatory process before the arbitrators. An arbitrator ought to be an indifferent and impartial person between ~he disputants. When the parties entrust their facts into the hands of an arbitrator, it is essential that there must be abundant good faith. The arbitrator must be absolutely disinterested and impartial. An interested person is disqualified from acting as Studynama.com an arbitrator. The interest disqualifies the arbitrator if it is calculated to produce a bias in his mind. The test is whether he is likely to be biased. Actual bias need not be proved. Doubts Developing Afterwards: Disclosure after appointment: Sub-section (2) casts a duty on the arbitrator after his appointment and throughout the arbitral proceedings to make to the parties the disclosures, mentioned in sub-section (1), relating to matter which may have arisen after the appointment began. He may not do so if he has already made the disclosure before the appointment. Section 12(2) takes care of doubts which develop after the appointment. It requires the arbitrator to disclose' to the parties in writing and without any delay any circumstances developing after the time of his appointment and during the course of the arbitral proceedings which give rise to a justifiable doubt about his independence or impartiality. Thus an arbitrator can be challenged, whether he discloses his disqualification or not jf there are justifiable doubts about his independence or impartiality. The appointment of an arbitrator can be challenged only on one or more of the following grounds: a) That circumstances exist which give rise to justifiable doubts as to his independence of impartiality, or b) That he does not possess the qualifications agreed to by the parties. The appointment can not be Party's Challenge to his own arbitrator: An arbitrator can be challenged by the party who appointed him or in whose appointment he participated only for reasons of which the party became aware after the appointment has been made. Challenge Procedure: 1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator. 2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, 18

Strictly for Internal Circulation - KCL within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of Section 12, send a written statement' of the reasons for the challenge to the arbitral tribunal. 3) Unless the arbitrator challenged under sub-section(2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. 4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub- section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award. 5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make KAMKU an application for setting aside such an arbitral award in accordance with Section 34. S 6) Where an arbitral award is set aside on an application made under sub-section (5), the Co may decide as to whether the arbitrator who is challenged is entitled to any fees. On this point also the Act gives freedom to the parties to settle by agreement the procedure by which the arbitrator in question would be challenged. If there is no agreement on the point or the parties have failed to Studynama.com agree, then the procedure to be followed is that the party wishing to challenge the person has to inform the Arbitral Tribunal of the matter. This should be done within fifteen days. If the other party agrees to the challenge and the -arbitrator does not voluntarily withdraw, the Tribunal shall decide the matter. If the challenge is not successful, the Tribunal shall continue with the proceeding and make an award. The arty who challenged the arbitrator may challenge the award also and make an application for setting aside in accordance with Section 34. If the award is set aside, the court can consider whether the arbitrator should be entitled to his remuneration or not. The grounds on which leave to revoke could be given were put under five heads: 1. Excess or refusal of jurisdiction by the arbitrator. 2. Misconduct of arbitrator. 3. Disqualification of arbitrator 4. Charges of fraud. 5. Exceptional cases. Termination of authority of arbitration: Sub-section (1) of Section 14 sets out the following grounds on which the mandate or authority of an arbitrator can be terminated: 1. (a) the arbitrator either in law of factually becomes unable to perform his functions, or (b) For some reasons he fails to act without undue delay, and 2. (a) he withdraw from his office, or (b) the parties agree the termination. There was no provision corresponding to Section 14 in the repealed Arbitration Act, 1940. Section 11(1) of the old Act gave power to the Court to remove an arbitrator in circumstances similar to those mentioned in Section 14(1) (a) of the present Act. Section 11 (1) of the old Act provided: 19

Strictly for Internal Circulation - KCL "The court may, on the application of any party to a reference, remove an arbitrator or umpire who fails o use all reasonable dispatch in entering on the proceeding with the reference and making an award." Retirement or Change of Posting of Ex-officio Arbitrator: An arbitration agreement provided for reference to an engineer officer to be appointed by a third party. The arbitrator so appointed retired during the pendency of the proceedings. The Supreme Court held that the retirement resulted in the termination of the authority of the arbitrator. A new arbitrator would be appointed and the proceedings would be deemed to have continued before the new arbitrator. Court's Assistance: If there is a dispute between the parties as to the existence of the grounds mentioned in clause (a) of sub-section (1) of Section 14, any party may apply to the Court for resolution of the dispute. Such grounds are de jure or de facto inability to act or failure to act without undue delay. KAMKU But the section does not contemplate a dispute as regards the grounds mentioned in Section 14 (1) (b) and S there is no provision for a reference to the Court in this regard. These grounds are withdrawing from office or termination of authority under parties' agreement: There can hardly be any doubt about the operation of these grounds. Effect of withdrawal: Where - (a) an arbitrator withdraws from his office, or (b) a party agrees to the Studynama.com termination of his mandate, it will not be inferred that any of the grounds referred to in Section 14 (1) or in Section 12 (3) have been established. Withdrawal from office by the arbitrator is not on account of any decision on the merits of grounds for termination of his mandate. Likewise the agreement of the parties to the termination of the mandate does not entail any decision on merits. The mandate of an office holder arbitrator comes to an end on his withdrawal from office. The court cannot provide an extension except perhaps, where he was appointed by the court. Additional Grounds for Termination: Section 15 (1) purports to set out an additional ground for terminating the mandate of an arbitrator: namely, where he withdraws from office for any reason. But the provisions being of overlapping nature, it seems that the ground mentioned is already covered by Section 14(1) (b). Removal of arbitrator (Sections 12 and 13): The provisions of the Arbitration and Conciliation Act, 1996 about removal of arbitrators are somewhat different. They do not confer -a straight power on the court. Section 12 casts a duty upon a would be arbitrator to disclose in writing if there is anything which gives rise to a justifiable doubt as to his independence ,and impartiality. An arbitrator's appointment can be challenged on' that ground and also on the ground of his being not in possession of requisite qualifications as agreed to between the parties. A party can challenge his own appointee only on the basis of a ground which he discovered afterwards. If the arbitrator does not withdraw after the challenge, the Tribunal would decide the question. If the challenge is successful the mandate of the arbitrator would be terminated. The mandate of an arbitrator also becomes terminated under Section 14 if he becomes unable to perform his functions de facto or de jure or if one withdraws or agrees to the termination of his mandate or fails to act without under delay. Jurisdiction of Arbitral Tribunal: 1. 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 that purpose: 20

Strictly for Internal Circulation - KCL a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. 2. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be' precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. 3. 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. KAMKU AWARD 4. The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a S later plea if it considers the delay justified. 5. The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section 93) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. Studynama.com 6. A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34. Challenge to Jurisdiction: Section 16(1) empowers an Arbitral Tribunal to decide: 1. The question as to its jurisdiction, and 2. The objection as to the existence or validity of the arbitration agreement. For this purpose an arbitration clause in a contract shall be-treated as an arbitration agreemerit independent of the contract. If the Arbitral Tribunal holds that the contract is null and void it will not resu1t in the automatic invalidity of the arbitration clause . Though there was no similar provision in the erstwhile .1940 Act, the position in law was more or less the same. When an award has been made after rejection of the objections as to lack of or excess of jurisdiction the aggrieved party may make an application under Section 34 to set aside the award. In these proceedings the award can be challenged. inter alia, on the ground that the objections were wrongly rejected. This provision [Section 16(5)] has been held to be constitutionally valid. The fact that the court can consider the question of jurisdiction of arbitrator only after passing of the award was held to be not a ground for contending that the award is not subject to any judicial scrutiny. Arbitration Clause is Collateral or Ancillary Contract: The arbitration agreement contained in the 21

Strictly for Internal Circulation - KCL arbitration clause in a contract is often referred to as a collateral or ancillary contract in relation to the main contract of which it forms a part in the sense that it survives even after the parties have broken or repudiated the rest of the contract and will remain applicable for the settlement of the resulting dispute. The repudiation or breach of the main contract does not put an end to the arbitration clause. The failure of the main contract constitutes the occasion for the application of the arbitration clause. The main contract does not become irrelevant. That still provides the framework within which the rights and liabilities of the parties would be determined. The arbitration would, therefore, proceed according to the proper or applicable law of contract. Section 7(2) of the Arbitration and Conciliation Act, 1996 provides that an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Section 16 (1) (b) further provides that a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. KAMKU drawing up his award. Interim Measures by Tribunal S According to Section 17 of Arbitration and Conciliation Act, 1996 Interim Measures Ordered by Arbitral Tribunal 1. Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party order a party Studynama.com to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute. 2. The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1). While Section 9 provides for the taking of interim measures by the Court in certain matters, Section 17 provides for the taking of interim measures in respect of the subject-matter of the dispute by the Arbitral Tribunal. The opening words of Section 17(1) indicate that the parties may be agreement exclude the exercise of such a power by the arbitral Tribunal. Sub-section (2) empowers the tribunal to order tile furnishing of adequate security by a party for carrying out an interim measure ordered under the section. Conduct of Arbitral Proceedings: The Arbitrator has to come to a conclusion on the matters of difference between the parties which are referred to him and to express it in terms of an award. He cannot delegate this function to any other person. The parties have appointed him because of their trust and confidence in him and they may not repose the same trust in any other person. But he may obtain legal assistance of The Tribunal has to treat the parties with equality. They should be given full opportunity to present their respective cases. Time and Place of Hearing (Section 20) Equal Treatment of Parties: The parties shall be treated with equality and each party shall be given a full opportunity to present his case. This section casts a two fold duty on the arbitral tribunal : 22

Strictly for Internal Circulation - KCL a) It must be independent and impartial and must mete out equal treatment to each party. [See Section 12 Note (1)] b) It must give each party a full opportunity to present its case. Sections 23 and 24 provide for the giving of such opportunity. A time and place should be fixed, for hearing and notice should be given to the parties accordingly. Section 20 provides that the parties are free to agree on the place of arbitration. Failing such agreement the place is to be determined by the Arbitral Tribunal. In doing so, the Tribunal has to give due consideration to the circumstances of the case and also the convenience of the parties. Unless otherwise agreed by the parties, the Tribunal may meet at any appropriate place for mutual consultation, for hearing witness, experts or KAMKU in the presence of the other. other parties or for inspection of documents, goods or other property. S Rules of Procedure 1. The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872). Studynama.com 2. Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. 3. Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate. 4. The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence. C PC & Evidence Act: Sub-section (1) provides that the Code of Civil Procedure, 1908, and the evidence Act, 1872 are not to be binding in arbitration proceedings. The position under the repealed arbitration Act, 1940 was the same. Natural Justice: No doubt arbitrator is not bound by technical rules of procedure but he cannot ignore les of natural justice. The thread of natural justice should run through the entire arbitration proceedings d the principles of natural justice require that the person who is to be prejudiced by the evidence ought be present to hear it taken, to suggest cross-examination or himself to cross-examine and to be able find evidence, if he can, that shall meet and answer it, in short, to deal with in the same manner as in e ordinary course of legal proceedings. Except in a few cases where exceptions are unavoidable, both ides must be heard, each COURT ASSISTANCE (SECTION 27) The Tribunal may by itself, or any party with the approval of the Tribunal, apply to the court of assistance taking evidence. The application has to specify the particulars as stated in Section 27- 1. The arbitral tribunal, or a party with the approval of the arbitral tribunal, maY-apply to the court for assistance in taking evidence. 23

Strictly for Internal Circulation - KCL 2. The application shall specify : i. the names and addresses of the parties and the arbitrators; ii. the general nature of the claim and the relief sought; iii. the evidence to be obtained, in particular a. the name and address of any person to be heard as witness or expert witness and' a statement of the subject-matter of the testimony required; b. the description of any document to be produced or property to be inspected 3. The court may, within its competence and according to its rules on taking evidence, execute the request KAMKU by ordering that the evidence by provided directly to the arbitral tribunal. S 4. The court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it. 5. Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral Studynama.com proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the Court. 6. In this section the expression "Processes" includes summonses and commissions for the examination of witnesses and summonses to produce documents. Seeking Court's assistance: Under Section 27(1), the Arbitral Tribunal as well as any part with the approval of the Arbitral Tribunal can apply to the court for assistance in taking evidence. Under Section 43 of the old 1949 Act only the arbitrator or umpire could apply and not a party. Orders of Court: The court may order that the evidence be provided directly to the Arbitral Tribunal. It will issue to the witnesses the same processes as it issues in the suits before it. The processes that may be issued include: a. summonses for the examination of witnesses, b. commissions for the examination of witnesses, and c. summonses for the production of documents. Disobedience of Orders: Persons who fail to attend as required, or make any other default; or refuse to give evidence; or are guilty of contempt of the Arbitral Tribunal, shall be dealt with by the Court on the representation of the Arbitral Tribunal in the same way as a person who was guilty of like offences in suits before the court. Default of party (Section 25) Default of a Party: Unless otherwise agreed by the parties, where, without showing sufficient cause: 1. the claimant fails to communicate his statement of claim in accordance with sub-section (1) of Section 24

Strictly for Internal Circulation - KCL 23, the arbitral tribunal shall terminate the proceedings: 2. the respondent fails to communicate his statement of defence in accordance with sub-section (1) of Section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the' allegations by the claimant; 3. a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it. Principles governing ex parte proceedings: The principles governing the arbitrator's right to proceed ex parte are: 1) If a party to an arbitration agreement fails to appear at one of the sittings, the arbitrator cannot or, at KAMKU least, ought not to proceed ex parte against him at that sitting; S 2) Where non-appearance was accidental or casual, the arbitrator should ordinarily proceed it the ordinary way, fixing another date of hearing and awaiting the future behaviour of the defaulting party; 3) If, on the other hand, it appears that the defaulting party had absented himself for defeating the object of the reference, the arbitrator should issue a notice that he intended at specified time and place to Studynama.com proceed with the reference and that if the party concerned did not attend he would proceed in his absence; 4) But if after making such peremptory appointment issuing such a notice the arbitrator did not in fact proceed ex parte on the day fixed, but fixed another subsequent date, he could not proceed ex parte on such subsequent date, unless he issued a similar notice in respect of e ate well; and 5) If he issued a similar notice and the party concerned did not appear, an award made ex parte would be in order. But, if he did not issue such notice on the second occasion but nevertheless proceeded ex parte, the award would be liable to be set aside in spite of a notice of peremptory hearing having been given in respect of the earlier date, Subject, however, to the condition that prejudice was caused to the party against whom the ex parte order was made. Arbitrator's action ought to be in due compliance with the concept of natural justice. In the event of there being any such violation, courts oughts not to hesitate to strike down an action of the Arbitrtrator and set aside the award if made. In Juggilal Kamlapat v. General Fibre Dealers Ltd., AIR 1955 Cal 354, the Calcutta High Court laid down e procedural rule to be followed by the arbitrators: "If a party fails to appear, the arbitrator ought ordinarily to fix another date of hearing and await the future behaviour of the defaulting party, and give the party notice that is he does not appear, he (the arbitrator) would proceed ex parte against him. If after having issued such a notice the arbitrator does not proceed ex parte on the adjourned date, and fixed another date, he cannot proceed ex parte on that date, unless similar notice has been given in respect of that date as well." The same view was been taken by the Punjab High Court. If no such notice was given, and it could be shown that no prejudice was caused to the absenting party, e award would not be set aside. But it has been held in the very same case that where no such notice as given, there will always be a presumption that prejudice has been caused. Power to Limit evidence [Section 19(4)]: The arbitrator may restrict evidence to the necessities of e case and the court may not interfere in such matters. 25

Strictly for Internal Circulation - KCL A contract for the construction of two office blocks contained an arbitration clause. Disputes arose as to 81 separate roofs in the two blocks. They were referred to arbitration. The roofs involved being too any, attempts were made by the parties to limit the issues. The parties failed to agree. One of them asked the arbitrator to do so by an order. He accordingly ordered that the issue of liability be determined by reference to a maximum of 25 roofs and then suspended it to enable the parties to test its validity in a court. He indicated by his letter that the parties were still free to raise any matter requiring special consideration. I was held that in general the court should be slow to interfere with an arbitrator's procedural orders. In is case, the particular question of law was one which the arbitrator ought not to have been asked to state. There was no requirement that an arbitrator must allow each party to call the evidence which he wishes to call. In all the circumstances of the case the arbitrator was not acting unfairly or refusing to decide the case submitted to him. KAMKU an arbitral award. An arbitrator may order for filing of pleadings, or for discovery or inspection of documents. Under the S receding 1940 Act, the arbitrator could call upon a party to provide security for costs unless such power was granted to him by the parties. But now by virtue of the provisions in. Section 38 of the arbitration and Conciliation Act, 1996, the Arbitral Tribunal can call upon the parties to deposit a sum of money for covering costs. Studynama.com The arbitrator has to follow the ordinary rules of evidence. The owner engaged a building contractor. Disputes arose as to adjustments to be made for certain sums and were referred to arbitration. Closure of Hearings: There is no provision in the 1996 Act requiring the arbitrator to give notice of closure of hearing to the parties. But judicial pronouncements and fair play require that the parties should be informed of the closure of the proceedings. The Courts have held that such a notice should be given so as to enable the parties to lead any additional evidence if they so desire. Settlement 1) It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of the dispute and, with the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement. 2) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms. 3) An arbitral award on agreed terms shall be made in accordance with Section 31 and shall state that it is 4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute. Settlement Through Alternative Dispute Resolution (ADR): Though there was no specific provision corresponding to this section in the repealed Arbitration Act, 1940, the law was the same. An award which merely embodied a compromise of the parties themselves was a valid award. Accepting a compromise is an adjudication of the case as is a decree of the court founded on a compromise. An award remains an award even though it approved an arrangement put forward by the parties and was in accordance with their 26

Strictly for Internal Circulation - KCL wishes. The rule that all award is not open to objection on the sole basis that it merely reproduced an agreement come to between the parties, applies only where the consent of the parties is regarded by the arbitrator as evidence of the fact that the settlement proposed is fair to all. If the existence of the compromise is disputed, the arbitrator can go into that question and if he finds the compromise to be valid, he can given his award in terms of the same. This section gives this position to the arbitral tribunal that to the extent possible it should encourage the parties to come to a voluntary settlement and for this purpose to use mediation, conciliation and other procedures. Sub-section (2) provides that if the parties settle the dispute the Tribunal may terminate the proceedings and if the parties so desire record the settlement in the form of an award on agreed terms. Sub-section (3) KAMKU requires that an award on settled terms should state that it is an award and it has to be made in accordance with the requirements of Section 31. Sub-section (4) gives to an agreed award the same status and force as S if it were an arbitral award. Form and Contents of Award Form and Contents of Arbitral Award Studynama.com 1. An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. 2. For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient the reason for any omittee signature is stated. 3. The arbitral award shall state the reasons upon which it is based, unless : i) the parties have agreed that no reasons are to be given, or ii) the award is an arbitral award on agreed terms under Section 30. 4. The arbitral award shall state its date and the place of arbitrator determined in accord with Section 20 and the award shall be deemed to have been made at that place. 5. After the arbitral award is made, a signed copy shall be delivered t eacp party. 6. The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral a award on any matter with respect to which it may make a final arbitral award. 7. (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for t e payment of money, the arbitral tribunal may include in the sum for which the award 's made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which tile cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral' award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment. 27

Strictly for Internal Circulation - KCL 8. Unless otherwise agreed by the parties – a. the costs of an arbitration shall be fixed by the arbitral tribunal: b. the arbitral tribunal shall specify – i) the party entitled to costs, ii) the party who shall pay the costs, iii) the amount of costs or method of determining that amount, and iv) the manner in which the costs shall be paid. KAMKU Explanation: For the purpose of clause (a), "costs" mans the reasonable costs, relating to: S d) any other expenses incurred in connection with the arbitral proceeding and the arbitral award. a) the fees and expenses of the arbitrators and witnesses. b) legal fees and expenses. c) any administration fees of the institution supervising the arbitration, and Studynama.com Requirements of Valid Award: At the conclusion of the hearing, the Tribunal passes its judgment a it is known as the award. There is no presumption that merely because an award had been made it a valid award. It has to be proved by the party who sues upon it that it was made by the arbitrators within the terms of the authority. A valid award has to satisfy the following requirements: 1) Must Conform to Submission: The arbitrator should conform to the terms of the agreement under which he is appointed and is supposed to function. He has no authority to arbitrate that which is not submitted to him. One of the grounds of setting aside in Section 34(2) (iv) says: (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may beset aside; or Hence an award which is outside the submission is void. If an arbitrator has awarded something beyond authority the award is pro tanto void and if the void part is so mixed up with the rest that it cannot be separated, the award is void altogether and such an ward is liable to be set aside. For example, where the arbitrator awarded damages in lump sum and in reckoning the amount he had taken into account matters which he had no jurisdiction to consider, the award was held to be bad. But where the excess part can be separated from the rest, the part which is within the reference remains valid. 2) Must be Certain: The award must be certain in its operative particulars. For example, there must be certainty as to the party who has to perform, who has to receive the payment, the time and mode of payment, the amount payable. An award which says that A or B shall do a certain act, or that the money shall be paid by some or one of the several named persons on demand, has been held to be bad for uncertainty. An award allowed the supplier of electricity to recover the amount only as shown by the meter or according to the report of the inspector. Under Section 26(6) of the Electricity Act, 1910, the inspector's 28

Strictly for Internal Circulation - KCL report superseded the award. The Supreme Court held that the award was not uncertain. The supplier claimed that the meter was slow. The Supreme Court referred the matter to arbitration. The arbitrator decided in the above manner. Where the arbitrator passed an award stating that "the claimant will be paid 10% more than the measured quantity of the embankment for conveyance charges after deducting the quantity of cut earth", it was held that the language of the award was highly vague even to a technically equipped engineer. The court agreed with the following remark of the trial judge: Apart from the language, the determination calls for a further calculation based upon several records such as the measurement books, a matter on which there may still be scope for controversy. Why the arbitrator should not at least take the trouble of doing this work rather than leaving it to the parties to fight KAMKU out later. The courts are not obliged to pass a decree based on awards unless the awards are self- contained; if an award calls for other records or evidence so as to be the basis for an executable decree S the award is incomplete. The court agreed with the judge and said that the award was too vague and in determinative of the main points in controversy. It was difficult to confirm the decree which was passed in terms of such an award. An award may be referred back to an arbitrator where it is so indefinite as to be incapable 0 execution. Studynama.com An uncertain award is not capable of being executed with any certainty and, therefore, it may be referred back to the arbitrator to remove the elements of uncertainty from it. Where the setting aside of an award is demanded on the ground of wrong application of law, it may be sent back to the arbitrator with a guidance note as to the state of the law. A vessel was chartered for a period of 24 months. Its engine suffered a major breakdown. The charterer purported to treat the contract as terminated on this ground. The ship owner, however, elected to continue the contract, he carried out extensive repairs and re-tendered the ship. The charterer refused to take to saying that by failing to make the vessel seaworthy at the inception the ship owner had committed repudiator breach of the contract. The arbitrator held that the ship owner had committed the alleged breach, but it did not go to the roof of the contract. The character's repudiation was wrong, but even so the ship owner was bound to accept it. The ship owner brought the matter before the court. The court felt that there was a strong prima facie case that the arbitrator's decision that the ship owner was bound to accept the repudiation was wrong. The case thus involved a question or importance in the development of the law of contract as to whether a party is bound to accept a repudiation. The ship owner's appeal for a consideration this question was allowed. The court also held that the award would be remitted to the arbitrator in order that he should summa rise the facts upon which he had concluded that the ship owner had no legitimate interest in keeping the contract alive and was, therefore, bound to accept the repudiation. 3) Must be Consistent and Not Vague: An award may be set in terms of alternatives. An award directed the party to do one of two things. One of the alternatives was certain and impossible, but the other ~as certain and possible. The award was held to be valid and binding. The award should be consistent in all its terms. At inconsistent award is as bad as an uncertain one. 4) Must be Complete and Final: the arbitrator should finally dispose of the matter before him and not leave it a part of the way The award found that some sleepers were merchantable and some not and directed that the buyer should dispose of them and the sleeping broker should certify the difference in amount 29

Strictly for Internal Circulation - KCL realised by the unmerchantable and merchantable sleepers and that amount the seller should pay. The award was held to be bad for want of finality. Similarly, where an arbitrator made his award subject to the opinion of a third person, it was held to be a substituted judgment and the award was not final. Where the award finally decides the facts involved in the submission but is stated in the form of a special case for the opinion of the court over a matter of law, it will not be void for want of finality. The power of the arbitrator to state a special case for the opinion of the court has not been included in the Arbitration and Conciliation Act, 1996 Act. Now under the new Act, it is the duty of the arbitrator to record his finding of facts on the basis of evidence adduced before him and apply the substantive law to the facts so KAMKU found. Facts must be recorded in the award itself. A mere reference to the evidence is not enough. S 1) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where: Grounds of Challenge Resulting into Termination: The arbitral proceedings shall be terminated by he final arbitral award or by an order of the arbitral tribunal under sub-section (2). Studynama.com a. the claimant withdraws his claim, unless the respondent objects to the' order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute, b. the parties agree on the termination of the proceedings, or c. the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible. 2) Subject to Section 33 and sub-section (4) of Section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings. Automatic Termination: The arbitration proceedings stand automatically terminated when the final arbitral award is made. Where the contract under which an arbitration arose is assigned to another person on an assignment takes place by reason of take over of the concern, it becomes the duty of the assignee to give notice to the arbitrator, within a reasonable period, that he has succeeded to the rights of the previous party to the arbitration. His failure to do so would bring the arbitration agreement to an end. Termination by Tribunal: An order for the termination of arbitral proceedings has to be passed by the Arbitral Tribunal in the following cases: 1. when proceedings under section 33 have been initiated : ii. for interpretation of the award, or iii. for making an additional award, or 2. when proceedings for setting aside an award under Section 34(1) have been adjourned by the court to enable the Arbitral Tribunal to take action to eliminate the grounds for setting aside the award. [Section 34(4)]. 30

Strictly for Internal Circulation - KCL Powers of Arbitrators: Under Section 13 of the erstwhile 1940 Act the powers of the arbitrator included the following: 1) The powers to administer oath to parties and witnesses appearing before him. 2) In reference to questions of law, he had the power to refer the matter for the opinion of the court or he could write his award his award in terms of a reference to the court on a point of law so that the court's opinion would finally decide the matter. (Not applicable under 1996 Act) 3) He had the power to make the award conditional or in terms of alternatives. KAMKU 4) He had the power to rectify any clerical error or mistake arising from any accidental slip or omission. S 5) He had the power to administer such interrogatories to the parties as may in his opinion be necessary. Power to Rectify clerical errors or accidental slip or omission [Section 33(1) (a), 1996 Act]: Though the words "accidental slip or omission" are not there in Section 33(1) (a) but such matte a likely to be Studynama.com covered by the words "any other errors of a similar nature". Under clause (a) of section 33 (1) of the 1996 Act the arbitrator has the power to rectify any clerical mistake or error which arises c to any accidental slip or omission. In Rikhabdas v. Ballabhdas, AIR 1962 SC 551, before the Supreme Court, an arbitrator submitted his award without using proper stamps and one of the questions as whether the award could be sent back to the arbitrator for rectifying this error. SARKAR, J. (after war s C.J.) held that the provision as to rectification was not applicable. Similarly, where an arbitrator had mentioned costs in his award, he was not allowed subsequent, b issuing a new award to say that the intended to include a larger amount by way of costs and by mistake mentioned less. Power Generally to award Interest [Section 31(7), 1996 Act]: Section 31(7) enables the Arbitral Tribunal to award interest. The provisions of the sub-section are as follows: Section 31(7) a) Unless otherwise agreed by the parties, where and insofar as an arbitral award is for the payment of money, the Arbitral Tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen percentium per annum from the date of the award to the date of payment. The parties may make their own agreement as to the matter of interest. If they have not done so, these provisions would come into play. Where the award is for payment of money, the Tribunal may add a sum by way of interest to the amount awarded at such rate as it deems reasonable. Interest may be allowed on the whole amount awarded or on any part of it and also for the whole or any part of the period between the date of the cause of action and the date on which the award is made. If the Tribunal does not specify and rate of 31

Strictly for Internal Circulation - KCL interest, 18% interest would be applicable from the date of the award to the date of payment. Correction of Errors: Section' 33(1) (a) permits a party to request the Arbitral Tribunal to correct: a) Any computation errors, b) any clerical or typographical errors, or c) any other errors of a similar nature occurring in the award. The request is to be made after notice to the other party within the time prescribed. Recourse Against Arbitral Award KAMKU Application for Setting Aside Arbitral Award S 1) Recourse to a court against an arbitral award may be made only by an application for se aside such award in accordance with sub-section (2) and sub-section (3). 2) An arbitral award may be set aside by the court only if: Studynama.com a) the party making the application furnished proof that: I. a party was under some incapacity, or II. the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force, or III. the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or IV. the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be see aside; or V. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or b) the court finds that : a. the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or b. the arbitral award is in conflict with the public policy of India. 32

Strictly for Internal Circulation - KCL Explanation: Without prejudice to the generality of sUb-c1ause(ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was- induced or affected by fraud or corruption or was in violation of Section 75 or Section 81. 3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal. Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. KAMKU 4) On receipt of an application under sub-section (1), the court may, where it is appropriate and it is so requested by a party, adjourn. the proceedings for a period of time determined by it in order to give the S arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside t award. Setting Aside Award (Section 34): The effect of an award no doubt is that the parties cannot a against it as to its merits and the court cannot interfere with it on merits. But this does not me there is no check on the Studynama.com arbitrator's conduct. In order, therefore, to assure proper conduct of proceed', the law allows certain remedies against an award. These remedies can be obtained through a co law having jurisdiction over the matter. These remedies have been put under the 1996 Act into two groups. To the extent to which the remedy was for rectification of errors, it has been handed over to the parties and the tribunal. Moving the court is not necessary. The parties 'can apply to the Tribunal for removal of errors and the Tribunal can also rectify errors at its own motion. The remedy of setting aside has been moulded into a composite one, namely, setting aside as well as returning the award back to the Tribunal for removal of defects. Thus remission and setting aside have been brought under one head. Incapacity of Party [Section 34(2) (a) (i)]: If a party to an arbitration is not capable of looking after his own interests, and he is no represented by a person who can protect his interests, the award will not be binding on him and may be set aside on his application. Thus, if a minor, or a person of unsound mind is a party, he must be properly represented by a proper guardian otherwise the award would be liable to be set aside. There is nothing new in this. A minor or a person of unsound mind is not capable of binding himself by a contract and, therefore, an award under a contract does not bind him. In order to protect the interest of such a party Section 9 of the 1996 Act enables him to apply to the court for the appointment of a guardian for a minor or a person of unsound mind for the purpose's of arbitral proceedings. The ground of incapacity would cease to be available when the incompetent person is represented by a guardian. Invalidity of Agreement [Section 34 (2) (a) (ii)]: If the arbitration agreement is invalid, the reference there under and consequently the award or the basis of such reference would be invalid and can be set aside. The validity of an arbitration agreement can be challenged on any of the grounds on which the validity of a contract may be challenged. In cases where the arbitration clause is contained in a contract, the arbitration clause will be invalid if the contract is invalid. Notice not given to party [Section 34 (2) (a) (iii)]: Section 34 (2) (a) (iii) permits challenges to an award on the grounds: 33

Strictly for Internal Circulation - KCL a) That the party was not given proper notice of the appointment of an arbitrator, or b) that the party was not given proper notice of the arbitral proceedings, or c) that the party was for some reason unable to present his case. Section 12 gives a party the right to challenge the appointment of an arbitrator on the ground of his integrity and impartiality being doubtful and of challenging the award on this ground. If the party is no given notice of the appointment of an arbitrator he is deprived of this valuable right. It is essential that the parties be given proper notice of the arbitral proceedings so that they may file their statements of claim or defence as required by Section 23. Under section 23 (1) the Arbitral Tribunal has to KAMKU determine the time within which the statements must be filed. This determination must be communicated to the parties by a proper notice. Failure to give such notice may deprive the parties of the opportunity placing S their cases before the tribunal. Further, sub-section (2) of Section 23 mandates that the parties shall be given sufficient advance notice of any hearing and of any meeting of the Tribunal for the purpose of inspection of documents, goods or other property. If there is a non-compliance of these obligations in reference to a party, the award would be liable to be set aside at the instance of that party. Studynama.com If for any good reason a party is prevented from appearing and presenting his case before for Tribunal, the award will be liable to be set aside as the party will be deemed to have been deprived of an opportunity of being heard. Award beyond scope of reference [Section 34(2) (a) (iv)): The reference of a dispute under an agreement defines the limits of the authority and jurisdiction of the arbitrator. The arbitrator's authority hap has it source in the reference. he cannot traverse beyond the reference, If he does so he acts without jurisdiction. The jurisdiction of the arbitrator is limited by the reference and if the arbitrator has assumed jurisdiction not possessed by him the award to the extent to which it is beyond the arbitrator's jurisdiction would be invalid and liable to be set aside. Section 34(1) (a) (iv) of the present 1996 Act provides that an arbitral award is liable to be set aside if it deal with a dispute. a) not contemplated by the reference, or b) not falling within the terms of the reference, or c) it contains a decision in matters beyond the reference. Illegality in Composition of Tribunal or in arbitral procedure [Section 34(2) (a) (v)]: An application under Section 34 for setting aside an arbitral award can be made on the grounds a) that the composition of the Tribunal was not in accordance with the agreement; or b) that the procedure agreed to by the parties was not followed in the conduct of proceedings or c) that, in the absence of agreements as to procedure, the procedure prescribed by the Act was not followed. Failure to follow the agreed procedure or the procedure prescribed by the Act is a procedural misconduct. Where the parties agreed that the counsel's opinion should be sought on the legal questions surrounding 34

Strictly for Internal Circulation - KCL the arbitration such opinion and the award based on it should not be lightly overturned. Non-speaking award: It was not obligatory under the 1940 Act for an arbitrator, unless the parties so to required, to state reasons for his award. This state of the law has been changed by 1996 Act which provides its Section 31 (3) that an arbitral award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is on agreed terms. In the decision of the Supreme Court in Food Corporation of India vs. Great Eastern Shipping Co. Ltd. (1988) 3 SCR 366 : AIR 1988 SC 1198 and Raipur Development Authority v. Chokhamal Contractors (1982) 2 SCC 721 AIR 1990 SC 1426, it was held that no objection could be taken to an award merely on the ground that no reason were stated when the arbitration clause didn't contain any requirement to that effect. On the basis of these decisions, the Supreme Court in Food Corporation of India v. Jagdish Chandra Saha, AIR 1994 sC 219 came to the conclusion that though the unreasoned award could not have been challenged the Calcutta High Court was KAMKU wrong in not considering other possible objections to a non speaking award. The party was challenging the validity on the ground that the effect of the arbitration agreement was that reasons were required to be S stated. The matter was accordingly sent back to the trial court to consider such other objection as were available against a silent award. The Supreme Court reiterated these points in M.K. Shah Engineers and Contractors v. State of M.P. 1999) 2 SCC 594; AIR 1999 SC 950. An arbitrator's award is not vitiated merely because the arbitrator has not Studynama.com given an item-wise award and has chosen to give a lump sum award. A lump sum award is not a bad award. An award need not formally express the decision of the arbitrator on each matter of difference, nor it is necessary for the award to be a speaking one (under the 1996 Act it has to be a speaking one unless the parties agree otherwise). It will be presumed that the award disposes of finally all the matters in difference. A non-speaking award can be interfered with where it has been passed without jurisdiction or if the arbitrator has misconducted himself or the proceedings. Reasoned or Speaking Awards: it becomes easier to locate a fault if the award is with a statement of reasons and there is a flaw in them. A reasoned award is known as a speaking award. The Supreme Court explained the concept in Jajodia (Overseas) (P) Ltd. v. Industrial Development Corporation of Orissa (1993) 2SCC 106. A speaking or reasoned award is one which discusses or sets out the reasons which led the arbitrator o make the award. Setting out the conclusions upon the question or issues that arise in the arbitration proceedings without discussing the reasons for coming to those conclusions does not make an award a reasoned or speaking award. Reference in the award to pleadings does not amount to not incorporating the pleadings in the award. The question where a contract or a clause of it is incorporated in the award is a question of the construction of the award. The test is, does the arbitrator come to a finding on the wording of the contract. If he does, he can be said to have impliedly incorporated the contract or a clause in it. But a mere general reference to the contract in the award is not to be held as incorporating it. Even where the contract or any clause of it finds incorporation in the award, it would still be necessary or setting aside the award that it suffered from a patent defect. In its decision in Bungo Steel Furniture P) Ltd. v. Union of India (1967) 1 SCR 633 : AIR 1967 SC 378, the Supreme Court quoted the well known passage from the judgment of Lord DUNEDIN in Champsey Bharat Co. v. Jivraj Balloo Spinning & Weaving Co. Ltd., 35

Strictly for Internal Circulation - KCL SOIA 324: AIR 1923 PC 66. An error in law on the face of the award means, in their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating j)e reasons for his judgment, some legal proposition which is the basis of the award and which you can en say is erroneous, it does not mean that if in narrative a reference is made to a contention of one party, that opens the door to seeing first what that contention is, and then going to the contract on which me parties' rights depend to see if that contention is sound .... An award has to be read as a whole and harmoniously. The grounds upon which an award can be set aside are limited. The court should be very circumspect about setting aside an award reached by an arbitrator. Another possible angle from which the validity of a non-speaking award can be examined as the subject- KAMKU matter of some explanation in Sudarsan Trading Co. v. Government of Kerala (1989 2 SCC 38 : (1989) 1 SCR 665,687. SABYASACHI MUKHERJI, J., said: S An award may be remitted or set aside on the ground that the arbitrator in making it has exceeded his jurisdiction and evidence of matters not appearing on the face of it, will be admitted it order to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something which has to be determined outside that award - whatever might be said about it in beyond his jurisdiction - is a Studynama.com different ground from an error apparent on the face of the award. It is not necessary that the arbitrator should give actual arithmetical computation of amount awarded under different heads. It is enough that the award indicates reasons for allowing or disallowing objections raised by the parties in respect of the different claims. Dispute not Arbitrable [Section 34(2) (b) (i)): Generally speaking, almost all matters in dispute, not being of a criminal nature, may be referred to arbitration. Where the law has given jurisdiction to determine a particular matter to specified tribunals only, determination of that matter by other tribunals is excluded. Insolvency proceedings "require the exercise of judicial discretion and it would be acting contrary to the whole spirit of the Insolvency Act to the arbitrator". It has, therefore, been held that proceedings in insolvency including the question whether or not a certain person should be declared an insolvent, cannot be referred to arbitration. Similarly, only matters in difference between the parties to litigation which affect private rights can be referred to arbitration. Matters of public right cannot be decided by arbitration. A judgment in probate proceedings is not merely inter parties but a judgment in rem. It cannot be allowed to be decided by arbitrators selected at the instance of the parties to the proceeding. Questions, therefore, relating to the genuineness of a will or revocation of probate cannot be referred to arbitration. Proceedings for winding up of a company under the Companies Act, 1956 cannot be referred to arbitration. Similarly, a suit under Section 92 of the Code of Civil Procedure is not one for the determination of the private rights of parties, and matters in such a suit cannot be referred to arbitration, though disputes inter se about a mutt which is not a public charity, between parties litigating in their own right, can be referred to arbitration. Proceedings relating to the appointment of a guardian are also not matters of private interest and cannot be settled by reference to arbitration. The arbitrator cannot clothe himself collusively with the jurisdiction to decide or omit to decide the arbitrability of a particular item. He has to state reasons for his decision one way other. His jurisdiction to decide on merits depends on the arbitrability of the issue. The Supreme Court in U.P. Rajkiya Nirman Nigam ltd. v. Indure (P) Ltd. (1996) 2SCC 667: AIR 1996 SCW 980 held that the arbitrability of a claim 36

Strictly for Internal Circulation - KCL depends on the construction of the clause in the contract and on this point the finding of the arbitrator is not conclusive and that ultimately it is the court that decides the controversy, Section 16 of the 1996 Act empowers the arbitrators to decide such questions. The decision of the arbitrator in this respect being appealable, ultimately the matter goes for the decision of the court. The decision in T.N. Electricity Board v. Bridge Tunnel Constructions (1997) 4 SCC 121, was followed by the Supreme Court in Premier Fabricators v. heavy Engineering Corporation Ltd. (1997) 4 SCC 319. In this case, the question whether certain items of claim were or not referable to arbitration in the terms of the contract was raised as a preliminary issue before the arbitrators. The arbitrators were unanimous in their view that the items were referable, but the differed on the merits of the points. An umpire was appointed who ordered a lump sum amount without giving reasons which was three times less than the party's claim. The Supreme Court judges also happened to differ. The majority of two as against one was of the view that the KAMKU entire dispute, including the preliminary question, was referred. There was no interim award by the arbitrator as to the arbitrability of the claims. The umpire was, therefore, required to decide the preliminary S issue first and then to decide on merits. His non-speaking award of an amount was not showing whether he had considered the arbitrability of the matter. That being a jurisdictional issue, the umpire committed a jurisdictional error. The award was returned for de novo consideration. The dissenting judge was of the opinion that the circumstances of the case were creating a presumption - at the umpire must have considered everything and hence there was no jurisdictional error. Studynama.com Specific Performance of Contract: One of the points raised in a case before the Supreme Court was that the grant of specific performance is discretionary and the discretion to order or not to order specific performance has been conferred by the Specific Relief Act, 1963 on -the Civil Court and, therefore, an arbitrator cannot be deemed to be competent to grant such relief. The court noted the decisions of the Punjab, Bombay and the Calcutta High Courts in which the view taken is that the arbitrator can grant the relief of specific performance of a contract relating to immovable' property under an award. The Delhi High Court, however, held in PNB Finance Ltd. v. Shital Prasad Jain, AIR 1991 that such relief cannot be granted in an arbitration proceeding. The Supreme Court did not approve the view point of the High Court of Delhi. "We are of the view that the right to specific performance of an agreement of sale deals with contractual rights and it is certainly open to the parties to agree with a view to shorten litigation in regular courts to refer the issues relating to specific performance to arbitration. There is no provision in the Specific Relief Act, 1963 that issue relating to specific performance of contract relating to immovable property cannot be referred to arbitration. Nor is there any such prohibition it the Arbitration and Conciliation Act, 1996 as contrasted with ,Section 15 of the English Arbitrator Act, 1950 or Section 48(5) (b) of the English Arbitration Act, 1996 which contains a prohibitor relating to specific performance of contracts' concerning immovable property." Public Policy: Fraud and Corruption [Section 34 (2) (b) (ii)]: Section 34(2) (b) (ii) provides that an application for setting aside an arbitral award can be made if the arbitral award is in conflict with the public policy of India. The Explanation to clause (b) clarifies that an award obtained by fraud or corruption would also be an award against the public policy of India. Thus, an award obtained by suppressing facts, by misleading or deceiving the arbitrator, by bribing the arbitrator, by exerting pressure on the arbitrator, et., would be liable to be set aside. Improperly procedure or otherwise invalid or opposed to public policy: An award may be set aside if it has been improperly procedured or is otherwise invalid. Where as award has been obtained by fraud or by corrupt inducements, it is improper. The expression "otherwise improper" would include cases where the 37

Strictly for Internal Circulation - KCL award is suffering from an apparent mark of invalidity such as an error of law apparent on the face of it. An award is liable to be set aside if it is opposed to public policy of India. Though it is a general ground. Section 34 says in particular that an award shall be deemed to be opposed to public policy if it was induced or affected by fraud or corruption. Bias and Misconduct: Doubts about impartiality and lack of independence : This is not one of the grounds specified in Section 34 for setting aside an arbitral award by the court. Section12 (3) (a) provides that an arbitrator may be challenged if there are justificable doubts as to his independence or impartiality. If the challenge is rejected by the Arbitral Tribunal and an award is made, an application for setting aside the award can be made on the ground that the challenge was wrongly rejected and the question of bias can be agitated in that proceeding. But if no challenge was made under Section 12(3) (a), the question of bias cannot be raised before the court under Section 34. KAMKU Misconduct on the part of the arbitrator or misconduct of proceedings is not a direct ground for setting aside S the award under the 1996 Act. The scheme of provisions is somewhat different. Misconduct is a ground for disqualifying an arbitrator. Misconduct creates a doubt about his independence or impartiality and is a ground for challenging the arbitrator under Section 12 (3). Thereafter, Section 13 says that if the challenge is not successful and the award is made, the party challenging the arbitrator may apply to the court under Section 34 for setting aside the award. Misconduct of proceedings would fall under Section 34(2) (a) (v), Studynama.com because this provision says that it would be a ground for setting aside where either the agreed or prescribed procedure was not observed. Thus, not following such procedure is a misconduct of the proceedings. It would also fall under Section 34 (1) (b) (ii) explanation to the extent to which misconduct lies in fraud or corruption. An example of misconduct was before the Supreme Court in Payyavula v. Payyavula Kesanna 1953 SCR 119: AIR 1953 SC 21. The arbitrator took statements from each of the parties in the absence of the other and made an award. Bhagwati, J., set aside the award and cited the following passage from the judgment of Lor LANGDALE, M.R., in Harvey v. Shelton (1844), where an award was set aside on the ground of interview having taken place between the arbitrator and one party in the absence of the other. It is so ordinary a principle in the administration of justice, that no party to a cause can be allowed to use any means whatsoever to influence the mind of the judge, which means are not known to and capable of being met and resisted by the other party, that it is impossible, for a moment, not to see that this was an extremely indiscreet mode of proceeding.... In every case in which matters are litigated, you must attend to representations made on both sides, and you must not in the administration of justice, in whatever form, whether in the regularly constituted courts or in arbitrations, whether before lawyers or merchants, permit on side to use means of influencing the conduct and decision of the judge. It has been held by the Supreme Court in Dewan Singh v. Champat Singh (1969) 3 SCC 447 : (1970) 2 SCR 903 : AIR 1970 SC 967, that it is a legal misconduct on the part of an arbitrator to use personal knowledge for deciding the dispute before him unless so authorised by the reference. Limitation for fifing application for setting aside [Section 34 (3)]: Sub-section (3) prescribes the limitations of three months for filing an application for setting aside an award. The application cannot be made after the expiry of three months - 38

Strictly for Internal Circulation - KCL 1. from the date on which the party received the arbitral award, or 2. from the date of the disposal of the application under Section 33, if made, for the correction, interpretation or making of additional award. The proviso to sub-section (3) empowers the Court to extend, for sufficient cause, the time by a further maximum period of thirty days. FINALITY AND ENFORCEMENT OF ARBITRAL AWARDS Finality of Arbitral Awards: Subject to this Part an arbitral award shall be final and binding on the parties and person claiming under them respectively. KAMKU S This provision makes the award binding on the parties and those claiming under them. The award is final in the sense that there can neither be a further award on the same subject, nor an appeal against e finality of the award. The aggrieved party may apply to the court, if there is a ground, for setting aside - e award, but the court cannot be called upon to decide the matter. Studynama.com Must be Legal: The award must be in accordance with the principles of the relevant law, otherwise it '11 be illegal, being against the law. Thus, where an arbitrator awarded ownership in perpetuity, it was held to be void as offending the rule against perpetuity. Must be reasonable and possible: An award requiring a party to do an act which is unreasonable or not possible, is bad. An award that one of the parties should do a thing which is out of his power to do, to deliver up a thing which is in the custody of another person, is void, as it requires the party to do an possible act. Must dispose of matter: An award should be a complete decision on matters requiring determination. award which leaves some of the questions undecided cannot be enforced. Finality, effect and enforcement of award: The arbitrator's power over the matter submitted to him is complete and final. he has the power to do what the court could have done if the matter had been before e court. His award puts an end to the proceedings. The 'court will not interfere with the findings of the arbitrator even if the court feels on merits that the arbitrator should have come to a different conclusion. His award on both fact and law is final. There is no appeal from his verdict. The court cannot review his award and correct any mistake in his adjudication unless an objection to the validity of the award is apparent on the face of it." Section 35 of the Arbitration and Conciliation Act, 1996 expressly declares' at an arbitrate award shall be final and binding on the parties and persons claiming under them respectively Section 36 makes the award enforceable in the manner of a court decree. In the case of Union of India v. Bungo Steel Furniture (P) Ltd. (1967) 1 SCR 324 : AIR 1967 SC 1032 : (1967) 2 SCJ 440. RAMASWAMI, J., quoted WILLIAM, J., in Hodgkinson v. Fernie, 3 CB NS 189: The law has for many years been settled, and remains so at this day, that where a cause or matters in difference are referred to an arbitrator, whether a lawyer or layman, he is constituted the sole and final judge of all questions, both of law and of fact .... The only exceptions to that rule are, cases where the award is the result of corruption or fraud. Enforcement: Section 36 of the Arbitration and Conciliation Act, 1996 provides for direct enforcement f 39

Strictly for Internal Circulation - KCL awards without having to get them converted into a rule of the court. The section says: Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of e court. Enforcement of award in part: The import of the words "pronounce judgment according to the award" as they appeared in Section 17 of the repealed 1940 Act) was explained by the Supreme Court in Mattapalli Chelamayya vs. Mattapalli Venkatratnam, AIR 1972 SC 1121. In this case, the award was not "Registered, though a portion of the award related to immovable property and was thus compulsorily "Registrable. It was held that a decree could be passed in terms of that part of the award which was severable from the other part of it which was invalid for any reason. Where a severable part of a award cannot be given effect to for a KAMKU award? lawful reason, there is no bar to enforce the part to which effect could be justly given. S IMPORTANT QUESTION S Q.1. On what grounds the appointment of an arbitrator can be challanged? What is the procedure to be adopted for it? Studynama.com Q.2. Which court has the power to set aside an arbitral award or order and what is its procedure? Q.3. To what extent courts can interfer in the matters of arbitration. Q.4. Enumerate briefly the grounds on which an award can be set-aside. Q.5. Trace the provisions of the Act relating to removal of an arbitrator and filling of the vacancy. Q.6. Describe the circumstances in which the court may modify or correct the award. Q.7. What are the essentials of an arbitral award? When arbitral proceedings shall be deemed to be terminated? Discuss. Q.8. State the matters connected with the enforcement of an arbitral award including the jurisdiction of court? Q.9. What provisions exist in the Act for making any correction, interpretation and amendment of an 40

Strictly for Internal Circulation - KCL UNIT - III KAMKU Appealable Orders: S 1. An appeal shall lie from the following orders (and from no others) to the court authorised by law to hear appeals from original decrees of the Court passing the order, namely: a. granting or refusing to grant any measure under section 9; Studynama.com b. setting aside or refusing to set aside an arbitral award under Section 34. 2. An appeal shall also lie to a court from an order of the arbitral tribunal: a) accepting the plea- referred to in sub-section(2) or sub-section (3) of Section 16; or b) granting or refusing to grant an interim measure under section 17. 3. No second appeal shall lie from an order passed in appeal under this section, but nothing if this section shall affect or take away any right to appeal to the Supreme Court. Appeal against interim measures and Setting aside [Section 37(1)]: An appeal lies under this sub section against an order of the court granting or refusing to grant any measure under Section 9 and also against setting aside or refusing to set aside an award. Appeals against orders of court [Section 37(1)]: The following orders of the court under the Arbitration Act are appealable : An order – 1. under Section 9 granting or refusing to grant an interim measure of protection, and 2. an order under Section 34 setting aside or refusing to set aside an arbitral award. Appeal against orders of Arbitral Tribunal [Section 37(2)]: Sub-section (2) provides for an appeal against the order of the Arbitral Tribunal made under Section 17 granting or refusing to grant an interim measure of protection. There is no provision for appeal against orders under Section 11 appointing or refusing to appoint an arbitrator. Second Appeal [Section 37(3)]: This sub-section provides that no second appeal shall lie from an order in appeal. In view of the bar created by sub-section (2) [now Section 37 (3) of 1996 Act] against second appeal 41

Strictly for Internal Circulation - KCL from an order passed in appeal under sub-section (1), the conclusion is inevitable that the bar was brought to confine appeals to strict limits. This was followed in State of West Bengal v. Gourangalal. Chatterjee, (1993) 3 SCC 1: (1993) 2 Arb LR 95. In this case, there was an order of a Single Judge revoking the authority of the chief engineer as an arbitrator because of his failure to act and directing a retired chief engineer to act as an arbitrator. The order was not covered by any of the clauses of Section 39(1) of 1940 Act. It was held that no appeal would lie to a Division Bench either under sub section (2) or under the Letters Patent against the order of the Single Judge even if it was passed in the exercise of original jurisdiction. Even otherwise, the person who was appointed was technically qualified and no allegation was there against him, the order of the Single Judge appointing him did not suffer from any infirmity. New Point in Appeal: Where the State Government did not raise any specific ground before the trial court that the award of interest was not in terms of the contract or was without the authority of law and permitted KAMKU the award, as it was, to be made a rule of the court and converted into a decree, the Government was not permitted to raise this point for the first time in appeal. The appeal was not maintainable. Where the appeal S was at the final stage of hearing, an attempt to introduce for the first time a new technical point that the document produced in the court as award was only a copy of the award engrossed on stamp-paper was not allowed. Studynama.com Lien Lien on Arbitral Award and Deposits as to costs 1) Subject to the provisions of sub-section (2) and to any provision to the contrary in the arbitration agreement, the arbitral tribunal shall have a lien on the arbitral award for any unpaid costs of the arbitration. 2) If in any case an arbitral tribunal refuses to deliver its award except on payment of the costs demanded by it, the Court may, on an application in this behalf, order that the arbitral tribunal shall deliver the arbitral award to the applicant on payment into Court by the applicant of the costs demanded, and shall, after such inquiry, if any, as it thinks fit, further order that out of the money so paid into Court there shall be paid to the arbitral tribunal by way of costs such sum as the Court may consider reasonable and that the balance of the money, if any, shall be refunded to the applicant. 3) An application under sub-section (2) may be made by any party unless the fees demanded have been fixed by written agreement between him and the arbitral tribunal, and the arbitral tribunal shall be entitled to appear and be heard on any such application. 4) The Court may make such orders as it thinks fit respecting the costs of the arbitration where any question arises respecting such costs and the arbitral award contains no sufficient provision concerning them. Lien on award for costs: The matters of costs of arbitration can be decided by the parties by their agreement. Subject to any such agreement, the Tribunal would have a lien (the right to retain the award) on the award for unpaid costs of arbitration. An application can be made to the court over this matter. The court may ask the applicant to deposit the amount of the unpaid costs and order the Tribunal to deliver the award. The court may then enquire into the matter and may award costs to the Tribunal and order the balance amount to be refunded to the applicant. The arbitral Tribunal is entitled to be heard in the disposal of the application. Where the award does not contain sufficient provision as to costs, the court may make such 42

Strictly for Internal Circulation - KCL order as to costs as it thinks fit. Where an arbitrator refuses to deliver his award except on payment of fee demanded by him, the aggrieved party may apply to the court. The court may ask the party to deposit the requisite amount in the court and then ask the arbitrator to deliver his award. The court may then enquire into the matter to ascertain whether the fee demanded is reasonable. If it is not so, the court may authorise the payment of a reasonable amount to the arbitrator and the balance to be refunded to the party. An application under the section can be made by any party but not by a party who has made a written agreement with the arbitrator as to fees. The arbitrator is also entitled to appear whenever any application about his fee is under consideration. KAMKU Where the award does not contain any sufficient provision about costs, the court may make any appropriate order about the costs of arbitration. S There was no provision like Section 39(1) in the Arbitration Act, 1940, giving the arbitrator a lien over the award for fees and charges, but Section 14(2) of the 1940 Act provided that an arbitrator could be asked to file an award in court only "upon payment of fees and charges due in respect of the arbitration". This was held to give him a lien on the award. Studynama.com Section 38 of the Arbitration Act, 1940, [repealed] was exactly in the same terms as Section 39 Sub-section (2), (3) and (4) of the present Act except that the words "costs demanded" are used while in the 1940 Act the words "fees demanded" were used. The word "costs" includes "fee". Lien on award: Sub-section (1) gives to the arbitral tribunal a lien on the award for the p1yment of its costs. This means that the Tribunal can withhold the award and refuse to give copies to the parties until all its costs are paid. This is subject to any provision to the contrary in the arbitration agreement. Order by Court to Deliver Award: If the Arbitral Tribunal exercises its lien, a party may apply to the court and the court may order the Tribunal to deliver the award to the party on payment into court. of the costs demanded by the Tribunal. After inquiring into the matter the court may order that out of the money so paid an amount which the court considers reasonable be paid to the Tribunal, and the balance, if any, be refunded to the applicant. At the hearing of the application the Tribunal will be entitled to appear and to be heard. Fees of Tribunal fixed by agreement: If the fees demanded by the Tribunal have been fixed by a written agreement between the applicant and the Tribunal, no application to the court will lie to compel the Tribunal to deliver the award. It is contrary to the quasi-judicial status of an arbitrator that he should bargain unilaterally for his fee with one party. Arbitration agreement not to be discharged by death of party thereto 1. An arbitration agreement shall not be discharged by the death of any party thereto, either as respects the deceased or any other party, but shall in such event be enforceable by against the legal representatives of the deceased. 2. The mandate of an arbitrator shall not be terminated by the death of any party by whom he was 43

Strictly for Internal Circulation - KCL appointed. 3. Nothing in this section shall affect the operation of any law by virtue of which any right of action is extinguished by the death of a person. Effect of death of party: This section lays down a few points about the effect of death of a party upon the arbitration proceedings. Sub-section (1) makes the simple declaration that an arbitration agreement shall not be discharged by the death of any party, and sub-section (2) supplements the same by saying that the authority of an arbitrator shall not be revoked by the death of any party. Thus the death of a party neither discharges the arbitration agreement nor revokes the authority of the arbitrator. His legal representatives are entitled, and are also bound, to be brought on record. But all this is subject to the provision of sub- section (3) that where the right of action is extinguished by the death of a party the arbitration proceedings KAMKU would abate in the same manner as a suit would have abated. The principle of law is enshrined in the maxim action personalise moritur cum persona. Certain rights of action die with the man. But this applies only to S actions of personal nature, such as the contract to marry, sing or paint. Where an action is capable of surviving beyond the life of the person concerned, it may be enforced by as well as against his legal representatives. This is also true of arbitration proceedings. Where on the death of a party, legal representatives, including those already a party to the arbitration Studynama.com proceedings, were brought on record and there was contention from the side of the respondents that upon death of a party the agreement was to become extinguished, the court held that the parties could be referred to arbitration. Effect of Insolvency [Section 41]: Section 41 deals with the effect of insolvency of a party upon the proceedings. Provisions in Case of Insolvency 1. Where it is provided by a term in a contract to which an insolvent is a party that any dispute arising thereabout or in connection therewith shall be submitted to arbitration, the said term shall, if the receiver adopts the contract, be enforceable by or against him so far as it relates to any such dispute. 2. Where a person who has been judged an insolvent had, before the commencement of the insolvency proceedings, become a party to an arbitration agreement, and any matter to which the agreement applies is required to be determined in connection with, or for the purposes of the insolvency proceedings, then if the case if one to which sub-section (1) does not apply, any other party or the receiver may apply to the judicial authority having jurisdiction in the insolvency proceedings for an order directing that the matter in question shall be submitted to arbitration in accordance with the arbitration agreement, and the judicial authority may, if it is of opinion that, having regard to all the circumstances of the case, the matter ought to be determined by arbitration, make an order accordingly. 3. In this section, the expression "receiver" includes an Official Assignee. Effect of Insolvency: One of the effects of the insolvency of a party is that if the receiver or official assignee adopts the contract (since he has the power to disown certain contracts), which contains the arbitration clause he will become bound by the clause and the matter will have to be decided by arbitration. The second rule laid down is that if the matter in dispute has to be decided for the purpose of carrying out the 44

Strictly for Internal Circulation - KCL insolvency proceedings and the dispute has arisen by virtue of a contract which provided for arbitration, the receiver or the other party may apply to the court for an order. The order shall pass an order only if it appears to the court that having regard to all the circumstances of the case the matter should be decided by arbitration. REVISION Where a party to an award, who was given an opportunity to file objections to the award, did not avail itself of the opportunity and a decree was passed in terms of the award, it was held that the party was debarred from subsequently challenging the award in revision unless it could be shown that the court had acted without jurisdiction in passing a decree in terms of the award. KAMKU "116. Under the Code of Civil Procedure, 1908 : It is within the competency of the High Court to entertain a petition in revision against an order dismissing an application for filing an award and passing a decree thereon. S Section 115 of the Code of Civil Procedure (as amended by U.P. Civil Laws (Amendment) Act of 1963) is confined to cases arising out of original suits and proceedings under sections 14 to 17, 20, 21 and 32 to 34 of the Act are not in the nature of suits hence, a revision petition against revisional orders setting aside an arbitration award is not maintainable. Studynama.com Where a party seeks to set aside the award on the ground that it is delivered after the time fixed, it is not open to the other party to plead that the first party is estopped from challenging the award on that ground, as there can be no estoppel against statute. When an order granting stay of suit under section 34 is passed by the trial court in the exercise of its discretion, it will not be interfered with readily. The fact that the appellate court would have taken a different view if the decision had rested with it, would not justify interference with the trial court's exercise of discretion. No appeal lies from the opinion 0 the court upon a special case stated by the arbitrator with regard to a question of law arising in the course of the reference. The opinion of the Judge in the special case on a point of law not being a judgment, the jurisdiction of the court in revision to correct errors in the opinion, can not be invoked. Limitation The limitation for appeals under this section of the Arbitration Act is governed by Article 116, Limitation Act, 1963 which is as under : a) to a High Court fromany decree or order - Ninety days - The date of the decree or order b) To any other court from any decree or order - Thirty days - The date of the decree or order The Limitation Act and the Code of Civil Procedure have to be read together because both are statutes relating to procedure and they are in para material and, therefore, to be taken together as one system as explanatory of each other. ENFORCEMENT OF FOREIGN AWARD 45

Strictly for Internal Circulation - KCL AND NEW YORK AND GENEVA CONVENTION AWARDS Types of International Commercial Arbitration: International Commercial Arbitration may be broadly classified as: 1. General and specialised arbitration; 2. Institutional and ad hoc arbitration; 3. Arbitration in law, amiable composition, and 4. Arbitration in equity or ex aequo et bono. 1. General and Specialised Arbitration: The difference between these two types of arbitration can be KAMKU understood from the very words themselves. Specialised arbitration is that which is carried in certain S specific industries or commercial activities, as for example marine arbitration, commodities, trade etc. General arbitration refers to that branch of lCA that is apart from specialised arbitration, dealing with non-specific areas that govern a large part of international trade and commerce. Specialised arbitration generally tends to be ad hoc or under the auspices of a particular trade association or mercantile exchange. An interesting facet of this form of arbitration is the relative absence of lawyers as the parties Studynama.com generally prefer experts in the trade to be involved in the disputes as against lawyers. 2. Institutional and Ad hoc Arbitration: Historically, the parties used to spell out the procedures and arbitration agreement, and when the dispute arises, they would jointly select the arbitrator(s) and work out the details of the procedure together with the tribunal. The Tribunal is also empowered to devise its own procedure. This type of customised procedure is called "ad hoc" arbitration. By default, the way in which arbitrations are conducted is "ad hoc" unless the parties agree to employ the services of an arbitration institution. Perhaps the most important advantage of institutional arbitration is a certain measure of convenience and security. Before a dispute has arisen, it is generally very difficult to ascertain what the exact nature of the dispute will be, what kind of procedure will be most appropriate, what contingencies will have to be taken into account and whether both sides will cooperate to get the matter resolved. Negotiating the drafting an arbitration clause that covers all these considerations is a difficult, time-consuming and costly exercise. The use of recognised arbitration rules ensures that the process will take place, it will be reasonably fair and efficient that will lead to decision, and that this decision will be enforceable. One of the most important advantages of institutional arbitration is that the stage of the institution strengthens the credibility of awards and task facilitates both voluntary compliance and enforcement. Furthermore, institutional arbitration is conducted according to set procedural rules and supervised, to a greater or lesser extent, by professional staff. This reduces the risks of procedural breakdowns, particularly of the beginning of the arbitral process, and of the technical defects in the arbitral award. The institution's involvement can be particularly constructive on issues relating to the appointment of arbitrators, the resolution of challenges to arbitrators and the arbitrators' fees. Less directly, the institution lends standing to any award that is rendered, which may enhance the likelihood of voluntary compliance and judicial enforcement. On the other hand, ad hoc arbitration is typically more flexible, less expensive and II lure confidential than institutional arbitration. Despite the growing size and sophistication of international arbitration bar, and the efficacy of the international legal framework for commercial arbitration, having been reduced 46

Women & Child Law EBook & Lecture Notes PDF Download (Studynama.com - India's Biggest Website for Law Study Material Dow

Women & Child Law EBook & Lecture Notes PDF Download (Studynama.com - India's Biggest Website for Law Study Material Dow

Presentation Transcript

Taking Notes in Class

Famous Women of India

FREE eBook Download to Create a Compelling Offer

How to Do Well on a Test

Note taking: organized, active, ongoing

Website for the lecture notes

Women and Child Development (ICDS)

Cornell Notes

Cornell Notes

Chem 125 Lecture 1 10/25/02 Projected material

Best hospitals for Heart Surgery in india

Revision Notes For Class 10 Physics

Revision Notes For Class 12 Economics

Revision Notes For Class 11 Mathematics

District Level Data Ebook - District Factbook Bijnor of Uttar Pradesh State in India

Download Cisco 640-875 Exams – 640-875 Dumps Dumps4download.com

Sponser free Child Education in India

2018 NSE5 Dumps - NSE5 Questions Answers - Dumps4Download.com

Law of Torts EBook & Lecture Notes PDF Download (Studynama.com - India's Biggest Website for Law Study Material Download

Child health in India: 14 out of 20 states cut spending on key programmes

Grow Your Business With the Strategic Website Design Ebook from WebGuru Infosystems