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Arbitration & Conciliation

Arbitration & Conciliation

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1

Arbitration & Conciliation Law





Gunjan Pathak, Advocate
Vedanta Law Chambers
2
Arbitration
Arises due to a dispute
includes
disagreement
Partial
Agreement
Inconvenient
Agreement
Breach
3
Dispute
4
Dispute
ALWAYS NEEDS A SOLUTION----
ELSE……….PROLONGED QUARREL

India V Pakistan
Disagreements amongst
Friends
5
Modes of
Resolution of Disputes

• Litigation
• Arbitration
• Conciliation
• Mediation
• Negotiation

6
Solution
Litigation
Arbitration/Concillation/
Mediation


Hostile (Forced) Non-Hostile
(natural)
7
ARBI TRATI ON


A process of dispute resolution in which a
neutral third party (Arbitrator) renders a
decision after a hearing at which both parties
have an opportunity of being heard.
8


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




Arbitration: Not a New Phenomenon
9
DISTINGUISHING FEATURES
OF
LITIGATION ARBITRATION
– Public process
– Any party can
institute
– Adversarial Procedure

– Formal and inflexible

– Rules and procedures


• Private process
• Initiation of arbitration
under an agreement
• Generally less
adversarial
• Less formal and more
flexible
• Simpler procedures, no
formal rules of evidence
etc….

10
• Broad discovery



• Parties have no voice in
selection of
Adjudicators (Judge or
Jury)
• Adjudicators are
Generalists

• Adjudicators apply the
Law; their decision set
precedents
• Discovery limited to
some documents, no
interrogations or
depositions
• Generally Adjudicator
are selected by parties

• Adjudicators are
selected on the basis of
their expertise
• Adjudicators pay
attention to the law.
Their decisions do not
formally set precedents
11
• Appeal against
decisions



• Remedies may include
compensatory and
punitive damages,
injunctive relief


• High costs
• Delayed justice


• No appeal-
verification of award
generally limited to
arbitrators misconduct
and bias
• Arbitrators normally
are empowered to
grant compensatory
damages including
provisional relief
• Usually reduced costs
• Quick Justice
12


• The Arbitration and Conciliation Act, 1996
• Indian Arbitration Act, 1940
• UNCITRAL ( United Nations Commission
on International Trade Law) on
International Commercial Arbitration.
13
The Arbitration & Conciliation Act, 1996
Part I
Arbitration
Part II
Enforcement of Certain Foreign Awards
Part III
Conciliation
Part IV
Supplementary Provisions

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

15
Waiver of Right to Object
Where it is known to a party that any
requirement of the arbitration contract has
not been fulfilled or there exists some other
default but still the party proceeds with
arbitration proceedings without any
objection thereto, it shall be deemed that
the party has waived its right to object
against the same.
16
Extent of Judicial Intervention
• No judicial authority is entitled to intervene in
the matters covered by arbitration except as
provided in this law. (e.g. parties mutually decide
not to proceed but to move the court )

• A judicial authority shall refer the parties to
arbitration when an action is brought before it in
a matter which is subject to ARBITRATION
AGREEMENT.
17
ARBI TRATI ON
AGREEMENT
• It means an agreement by the parties regarding
disputes to arbitration whether contractual or not.
• It SHALL be in writing and may be in the form of
Arbitration Clause in any other document.
• It may be in the form of exchange of letters or
confirmation through letters or verbal
communication.
• It may be a separate comprehensive independent
agreement.
18
Number of Arbitrators

The parties are free to decide the number
of arbitrators, but it shall not be an even
number, if the parties fail then arbitral
tribunal shall consist of a sole arbitrator.
2,4,6
1,3,7,9
19
FEW CASE STUDIES
By invoking a clause in
the PD ‘A’ appointed one
Arb.. And ‘B’ appointed
one. The deed specified
that both shall appoint
one Arb.. Each. Whether
Arb proceedings valid?
The deed specifies that
both can appoint one
Arb.. each and the two
Arb.. ,so appointed, shall
appoint a I I I rd one to act
as an umpire. I f 3
rd
could
not be appointed
Whether Arb.
Proceedings valid?
Study-I Study-II
20

• Person of any nationality agreed by the parties
• Subject to failure of appointment procedure agreed
by the parties, every party is free to appoint single
arbitrator and the third one will be selected by two
of them.
• Failure of above procedure within 30 days, then
appointment on request of parties by Chief justice
or person or institution designated by him and
similar manner for sole arbitrator.
• The Chief justice should consider qualifications,
independent and impartial qualities of arbitrator.
21
Agreement where at least one party
has nationality of any country other
than India
• In case of International commercial arbitration, the
Chief justice of India or any other person appointed
by him may appoint arbitrator of any nationality.
• Where more than one request to Chief Justices of
High Court, Chief Justice shall alone be competent
to decide the request.
• Reference of Chief Justice in case of International
Commercial Arbitration is of Chief Justice of India
and in any other case Chief Justice of jurisdictional
High Court.
22
Arbitral Tribunal-Jurisdiction, Function etc.
• The arbitral tribunal shall not be bound by the
Code of Civil Procedure, 1908 or the Indian
Evidence Act, 1872
• The parties are free to agree on procedure to be
followed, failing which, the proceedings shall be
carried out as tribunal considers appropriate.
However Tri.. should determine admissibility,
relevance, materiality and weight of any
evidence.
23
Arbitral proceedings- An
Overview
•Language in which Arb… Proceedings are to be carried- At
will of the parties to Arbitration
•If no language decided by parties – selection at will of Arb..
Tri..
•Hearing can be oral or written as per mutual consent by
parties
•Arb.. Tri.. Competent to take Assistance of experts

Guide lines similar to AAS-9 Apply
• Arb.. Tri may also take court’s assistance
24
• As agreed by parties, if not, as decided by
tribunal considering the circumstances of
the case.
• The arbitral tribunal may meet at any place
as for consultation among its members for
hearing witnesses, experts etc. unless
agreed by the parties.
25
In an Arb.. Proceeding in India--- in accordance
with substantive law in force
In an ICR– Law/ Procedure agreed by parties (this
generally is construed as a harmonious construction
of laws of BOTH COUNTRIES)
In a proceeding other than by sole arbitrator---
award only by majority
Arb..Award shall be in writing and duly signed by
the Arb…(majority in proceeding other than by sole
Arb..)
Reasons of Award
Signed copy to be delivered to each party
Monetary award- by default carry S.I. @ 18% p.a.

Arbitral Awards
26
Recourse against Arbitral Awards
• U/s 34(1) & (2) an arbitral award may be set aside
if application made within 3 months by any party
under S.s 3 to principal Civil Court
• The onus to prove for the grounds of allegation lies
on the party making application.
• The award may be set aside due to arbitrators
misconduct or award improperly procured or
otherwise invalid.
• The only right of a party aggrieved from the defects
mentioned in S. 13&16 is to apply under S.34 of
the Act.
• The Court cannot suo motto set aside the award
under the Act of 1996.
27
Recourse u/s 34 only if ….
• A party was under some incapacity
• Arbitration agreement is not valid
• Aggrieved party was not given proper opportunity.
• Composition of Arbitral Tribunal is not in terms of
Arbitration Agreement.
• Court finds that subject matter of dispute is not
capable of settlement by Arbitration or that
Arbitration Award is against Public Policy of
India
28
Finality and Enforcement of
Arbitral Awards
• An arbitral award shall be final and
binding on the parties U/s 35.
• In case of expiry or refusal of set aside
application the award shall be enforced
under the Code of Civil Procedure, 1908.
29
Correction of an Arbitral Award
• A Party to an Arb.. Proceeding, who finds……
– Computational
– Clerical
– Typographical
– Or other mistake of similar nature (Rule of ejusdem generis)
may request the arbitral tribunal to rectify the
same.
• Correction shall be done within 30 days of
request
• Even suo motu by Arb.. Tri.. for these





30
Adjustment and settlement
of a dispute in a friendly and
non-antagonistic manner by using
a non binding procedure.
31
An Introduction……
• Applies to conciliation of disputes arising out of
legal relationships, whether contractual or not,
and to all proceedings relating thereto.
• Party wanting conciliation shall “INVITE” other
party to conciliate.
• Proceedings commence only when a reply is
received within 30 days, else deemed rejection of
invitation
• On rejection or deemed rejection first party to
re-inform the other.
32
• Number: can be one or if parties then two
or three (that suggests that it cannot be
more than three)
• Appointment:
– One – By mutual agreement of parties.
– Two– One each, by each party.
– Three– One by each party and 3
rd
by mutual
agreement.

33
Statements-Before, During & After the proceedings
• Before proceedings conciliator shall request each party to
submit a statement explaining nature of dispute.

• The statement must clearly specify and state the
conciliators position and the facts and grounds in support
thereof.

• During the proceedings the conciliators can call for
further information from the parties and S.71 calls for
cooperation by parties.

34
Relevant Provisions at a
glance
• Conciliators not bound by Code of Civil
Procedures 1908 or The Indian Evidence Act
1872.
• Guided by principles of objectivity, fairness and
justice.
• Proceedings in the manner as conciliator deems
appropriate.
• Conciliator may take administrative assistance.
• Place of conciliation determined by conciliator
after consultation with parties.
35
Settlement Agreement- The Outcome of
Conciliation
• Where it appears to the conciliator that there exists
elements of settlement he shall formulate terms of
settlement-
• Observations to be submitted by parties on the draft
formulation.
• Conciliator to reformulate the agreement.
• After reaching to an agreement, a formal settlement shall
be drawn up and signed by the parties.
• The settlement agreement shall now be final and binding on
all the parties concerned.
• Conciliation proceeding terminate
– On signing of the agreement
– Written declaration by conciliator
– Written declaration by parties
– Written declaration between parties, Inter-se.
36
Gunjan Pathak, Advcoate

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