PROFESSIONAL

PRACTICE
&
ETHICS

• ARBITRATION
 ARBITRATION
215
➢ Arbitration?
➢ Need of Arbitration.
➢ Indian Arbitration and Conciliation act.
➢ Role of Arbitrator & Umpire.
➢ Arbitration Procedure.
➢ Arbitration award.
 ARBITRATION: DEFINITION
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• It is a method of settling disputes and differences between two or more
parties whereby they appoint one or more persons to adjudicate upon
the said disputes and differences that have arisen or that may hereafter
arise and agree to abide by the decision of the said one or more persons
nominated for the purpose of Adjudication.
ARBITRATION
• Form of Alternative Dispute Resolution
• Alternative to court room litigation
• Parties submit their disputes to a NEUTRAL third party called the
Arbitrator (s) or Arbiter (s) for resolution
• Binding dispute resolution, equivalent to litigation in the courts

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BENEFITS OF ARBITRATION
• Confidentiality
• Limited Discovery
• Speed
• Expert Neutrals
• Cost Savings
• Preservation of Business Relationships

DRAWBACKS OF ARBITRATION
• Arbitration agreements are sometimes misleading
• If arbitration is not mandatory parties waive their to
access the courts.

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ARBITRAL DISPUTES
Some types of arbitral disputes are
• Property
• Insurance
• Contract (including employment contracts)
• Business / partnership disputes
• Family disputes (except divorce matters)
• Construction
• Commercial recoveries

NON ARBITRAL DISPUTES

The following cannot be resolved by arbitration
• Insolvency
• Matrimony
• Criminal matters
• Torts etc. 6
NEED OF ARBITRATION
• The increasing role of architects in the economic development of nations
has increased manifold over the years. Alongside, the risk of commercial
disputes has also grown substantially.

• Areas where arbitration has proved especially effective include building

and civil engineering contracts; shipping; imports; exports and international
trade; partnership disputes; insurance contracts; intellectual property
agreements; and rent review in commercial leases.

• Arbitration is preferred to litigation not merely because of the length of

time taken in commercial cases in Courts - especially in a three-tier court
system that is prevalent in India; but more importantly, because there is
simply no other option.

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1.ARBITRATION BASED ON ARBITRATION CLAUSE IN
THE CONTRACT.

• It arises in case of arbitration clause of contract were by future and

present disputes are referred to arbitral tribunal.
• The parties can have arbitration in a manner under CI.56 of IIA form of
contract which Carries with it arbitration clause.
• This arbitration clause will constitute as an arbitration Agreement.

2. ARBITRATION IN SUITS

• In case of suit pending in court, all interested parties at any time before
the judgement Is pronounced , agree that the disputes and differences be
settled by arbitration and The judicial authority will refer the parties to
arbitration.
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3. ARBITRATION WITH THE INTERVENTION OF A COURT
WHERE THERE IS NO SUIT PENDING.
Where the disputes and differences have arisen between the parties to
which the arbitration
Agreement applies, the parties have dual choice:
1.Appoint arbitral tribunal and get award, if not
2.one of the parties may apply to appropriate judicial authority with original
arbitration agreement or duly certified copy thereof, the judicial authority
will refer the parties to arbitration.

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INDIAN ARBITRATION
AND
CONCILIATION ACT.

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 ARBITRATION VS CONCILIATION
Arbitration:
 Settlement of disputes between two parties to a Contract by a
neutral third party (The Arbitrator) without resorting to court
order.
 It is a Contractual remedy

Conciliation:
 The Action of mediating between two disputing People or
Groups
 It is a Mutual concern
INTRODUCTION
• Arbitration is the mechanism to settle disputes between parties to a
contract, determined in a quasi-judicial manner
• The Arbitration and Conciliation Act 1996 provides legal frame work for
settlement of disputes by mutual settlement out side the court.
• Central Government may make rules for carrying out the provisions of
this act subjected to the approval of the Parliament.
• Arbitration is an arrangement agreed upon by the parties concerned to
refer the disputes to a third party for settlement.
• The arbitration tribunal can be a panel of arbitrators or a sole individual.
• Any written document or a clause in a contract for referring the dispute
to arbitration shall be an arbitration agreement.
• The parties to the contract will decide the constitution of arbitration
tribunal and mode of appointment as laid down in the contract
agreement.
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APPOINTMENT OF ARBITRATOR
• The arbitrator has to be appointed within 30 days of such request by
any party.
• In case of failure to comply the above, the Chief Justice of the High
Court shall appoint suitable arbitrator as per the request of the party.
• If the appointed arbitrator fails to perform, the court may replace him
by a suitable arbitrator as per the request of the party.
• The appointed arbitrator shall disclose any circumstances likely to
occur to give doubt about his impartiality.
• The party to the dispute also can challenge the appointment of the
arbitrator on the above count.
• The mandate of an arbitrator ends without proceedings starts or in the
course of proceedings when
o He is not able to perform
o He withdraws
o Parties agrees to terminate him 13
PROCEEDINGS
• Proceedings of the arbitration commences from the date of receipt of
communication by the respondents, for reference of the matter to the
arbitration.
• The parties shall be treated equally and shall be given full opportunity to
present their case.
• The procedure, place of hearing, time limit for production of documents /
evidence etc can be agreed upon by the parties or otherwise decided by the
arbitrator.
• The arbitration procedure need not follow the Civil court procedures or
evidence act, but shall ensure the principles of natural justice.
• The tribunal shall decide its own jurisdiction.
• The parties can counter if the tribunal exceeds its authority.
• The arbitral tribunal may appoint an expert/institution to examine and to give
expert report.
• If the respondent fails to communicate his defense or fails to appear for oral
hearing / fails to produce documents, tribunal shall not treat it as admission by
the defaulting party but proceed with the evidences before it and make award. 14
ARBITRATION COST
• The tribunal may direct the parties to deposit an amount towards cost etc.
as decided by it during the course of proceedings.
• The tribunal shall fix the cost of arbitration, the fee of arbitration, for
witness, administrative charges, fees for experts etc.
• It decides cost payable by the each party and also decides the cost payable
to one party by the other.

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ARBITRATOR ROLE
• The arbitrator should not have interest direct or indirect in subject matter
of dispute.
• To conduct arbitration proceeding with equal treatment to both the
parties, giving full opportunities , sufficient advance notice of hearings,
order on inspection of document etc.
• Can call for deposit amount towards the cost of arbitral tribunal from
both parties in equal part.
• To decide its own jurisdiction and seek reports from experts on issues
pertaining to specialized discipline.
• Seek assistance of the court in taking evidence if necessary.
• To hear the parties patiently on all issues at dispute.
• Issue orders for interim measures of protection.
• Make , declare and publish interim award without undue delay.
• Arbitral award to be of reasoned nature.

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ARBITRATION AWRD
• Arbitration award will be decided as per the substantive law in force in
India taking into account the terms of contract and usage of trade
• If the parties arrive at a settlement agreement and request the tribunal to
give award accordingly and if tribunal has no objection it may give award
accordingly which will have the same effect of the award.
• The arbitral award is issued under the signature of all or majority of
arbitrators on the basis of the decision or stating it as mutually agreed
upon by the parties. Signed copy shall be delivered to all parties.
• The award is binding on all the parties. Award is enforceable as if it were
a decree of the Court.

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• The essential ingredients of the arbitral award are:
o The award must be made without undue delay .
o The award as a rule must be in writing and to be signed by the members
of the arbitral tribunal and signatures attested.
o The award must be self explanatory without any ambiguity .
o The award must be made on stamp paper of Rs.100/- value.
o After arbitral award is made , a signed copy to be supplied to each party.
o The arbitral award is to state its date and place of arbitration, claim of
adjudication in term of money contents
o The award must provide interest at 18% p.a on the awarded amount
from the date of award to date of payment.
o The arbitral award must provide legal cost, cost of arbitration and other
o incidental expenses and the manner in which cost to be shared and paid.
o The arbitral award must be reasoned one.
o The arbitral award has now been given the status of a decree, if the
award is not set aside by the court.
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CONCLUDING THE PROCEDURE
• On issuance of award arbitration proceedings are terminated.
• The tribunal is empowered to issue corrections to the Clerical errors set
in the award issued, without effecting the decision concluded

REVIEW BY COURT
• However the Court may set aside arbitral award on application by the
parties in time, if
• The party was under incapacity to participate in the arbitral
proceedings
• Arbitration agreement is invalid
• Non-receipt of proper notice of arbitral proceedings, non adoption of
proper procedure, partiality shown by the Tribunal or exceeding the
Jurisdiction by the Tribunal on examining the case in detail.
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CONCILIATION

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INTRODUCTION
• The act provides a legal frame to encourage voluntary compromise/ conciliation of
disputes arising out of legal relationship connected with commercial disputes
• The party initiating conciliation invites in writing the other party identifying the
subject of the dispute.
• The conciliation proceedings shall commence when the other party accepts in
writing the invitation to conciliate.
• If the other party rejects or does not reply within 30 days/within time limit stated in
the offer there will be no conciliation proceedings

APPOINTMENT OF CONCILIATORS
• Conciliators shall be appointed by the parties to the dispute
• It shall be a sole conciliator or a panel of conciliators of 1 to 3
• In case of 3 one shall be identified as presiding person.
• Institutions may also be appointed as conciliators

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PROCEEDINGS
• The conciliator shall request to the parties to give the dispute, points of
issues and their plea in writing. Thereafter he may request them to give
more details/information as and when required.
• Conciliator is not bound by civil procedure Court/Evidence Act etc.
• He is guided by the trade practices, fairness, natural justice, rights and
obligations of the parties.
• He shall assist the parties in an independent/impartial manner to reach a
amicable settlement
• He may call suggestions for settlement from each party.
• When it appears to the conciliators that element of settlement exists, he
will formulate draft terms of settlement and send it to each party for their
observation.
• On receipt of their observation, he reformulates the terms for possible
settlements.
• Parties shall not resort to arbitral or judicial proceedings when subject
matter is under conciliation
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SETTLEMENT
• If the parties agree on a settlement they may draw up and sign a written
settlement agreement
• When settlement is signed by the parties it is authenticated by the
conciliator and is binding on the parties.
• This settlement agreement will have the same status as of the arbitral award
by mutual settlement

COST
• Fee for conciliation, cost of administration, fee payable to expert opinion etc.
are to be borne by the parties equally unless parties agree to pay in other
ratio.
• Conciliator may also be asked to deposit the probable cost in advance in
equal share by the parties concerned

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Thank You..! ☺

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