BANGALORE UNIVERSITY

UNIVERSITY LAW COLLEGE,

DEPT.OF STUDIES AND RESEARCH IN LAW

ARBITRATION VISIT REPORT

NAME: RACHANA MANJULA P.N

REG. NUMBER: 16LUL09050
SEMESTER: X SEMESTER, V YEAR COURSE: B.A.,L.L.B.

CLINICAL COURSE PAPER-III

FACULTY IN CHARGE- DR. CHANDRAKANTHI
ARBITRATION REPORT

INTRODUCTION:
Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes
outside the courts. The dispute will be decided by one or more persons (the "arbitrators",
"arbiters" or "arbitral tribunal"), which renders the "arbitration award". An arbitration award
is legally binding on both sides and enforceable in the courts.
Arbitration is often used for the resolution of commercial disputes, particularly in the context
of international commercial transactions. In certain countries such as the United States,
arbitration is also frequently employed in consumer and employment matters, where
arbitration may be mandated by the terms of employment or commercial contracts and may
include a waiver of the right to bring a class action claim. Mandatory consumer and
employment arbitration should be distinguished from consensual arbitration, particularly
commercial arbitration.
Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose
decision the parties to the dispute have agreed, or legislation has decreed, will be final and
binding. There are limited rights of review and appeal of arbitration awards. Arbitration is not
the same as judicial proceedings (although in some jurisdictions, court proceedings are
sometimes referred as arbitrations), alternative dispute resolution (ADR), expert
determination, mediation (a form of settlement negotiation facilitated by a neutral third
party).

ARBITRATION AND CONCILIATION CENTRE:

Arbitration & Conciliation Centre – Bengaluru (Domestic & International) is an initiative of
the High Court of Karnataka. It is “non-profit “venture totally dedicated to facilitate all
arbitration proceedings-Domestic and International.
It is conceived as a project to promote dispute resolution under the provisions of the
Arbitration and Conciliation Act, 1996 and in furtherance of the Object of Section 89 of the
Code of Civil Procedure. The centre facilitates both voluntary and Court annexed arbitration.
The Chief Justice of The High Court of Karnataka is the Patron-in-Chief of the Centre and
the Centre is governed by a Board of Governors consisting of Five Sitting Judges of the High
Court of Karnataka, the senior most among them is nominated by the Chief Justice as the
President of the Board of Governors.
The day to day management of the Centre is under the supervision of a full-time Director
assisted by two Deputy Directors, Support Staff and Research Assistants.
The Centre ensures secure and transparent transactions. Its functioning is governed by The
Arbitration & Conciliation Centre – Bengaluru (Domestic & International) Rules, 2012,
framed by the High Court of Karnataka.
Arbitration and conciliation proceedings that are facilitated would be consistent with the
provisions of Arbitration and Conciliation Act, 1996.

OBSERVATION:

DATE: 01/04/2021

SUBJECT: DISCUSSION WITH DIRECTOR

DIRECTOR : PRAKASH S HELAVAR

TOPIC : ARBITRATION AND CONCILIATION CENTRE RULES,2012

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 Shri Prakash, Former Judge, District court Bangalore –

PROVISIONS WHICH HAVE DISCUSSED WITH DIRECTOR

SEC 89 OF CPC and SEC 9(2)(a)

SECTION 3 & 4,2012 (PART-I)
SECTION 5-7 (PART-II)
SECTION 15-22 (PART-IV)
SECTION 24-33
RECENT AMENDMENTS
DIFFERENCE BETWEEN INDIAN AND FOREIGN/ PVT AND GOVT
ARBITRATION
ILLUSTRATIVE CASE
DIFFERENCE BERWEEN ARBITRATION, CONCILIATION AND
MEDIATION.

SUMMARY OF SECTIONS DISCUSSED

# Section 89 deals with Settlement Of Disputes Outside The Court :

This section specifically deals with elements of settlement which may be acceptable by
parties, court shall formulate the terms of settlement and refer the same for certain settlement
institution, two among them are:-
(a) Arbitration
(b) Conciliation
# Sec 9(2)(a) deals with reference to arbitration :
Under this section, if any differences or disputes arise out of contract between parties, shall
be referred to arbitration in accordance with arbitration clause stated in joint memorandum of
agreement as they agreed before entering into contact. Arbitration and conciliation centre
rules,2012 shall apply to the any proceedings as per section 89 of CPC.

# Section 3 & 4 deals with Board Of Governors and their powers:

Board of governors are nominated by the CJI consisting of five members, one among them is
president. The board have power to frame rules for internal management, recommend any
amendment to the Act, constitute panel and fix fees payable to arbitrators and conciliators, to
take complaint and remove an arbitrator or a conciliator from panel and to make any other
measures seems necessary.

# section 5-7 of the Act deals about the Directorate and their power:
There shall be a director to supervise and manage the day to day affairs of the centre and he
shall be a serving or retired district judge of Karnataka judicial service appointed by CJI. Two
serving judicial officers of Karnataka judicial service consisting not less than two members
appointed by the CJI who shall work under supervision of the directorate. Staff of research

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assistants s may be appointed by the board of governors to assists the directorates and the
arbitrators.
Duties of directors:-
(1) Director shall be responsible as custodian of the centre without prejudice to the
generality of the provision
(2) The director is hereby authorised to sue or be sued on behalf of the centre.
(3) All correspondence and communications to the centre shall be addressed to the
director and all correspondence and communications on behalf of the centre shall
be made by the director.
Duties of research assistants:
Research assistance shall carry out the duties as may be fixed by the board of governance and
they work under the supervision of the directors and the deputy directors.

# SECTION 15-22 deals with composition of arbitral tribunal:

Appointment of arbitrators: the parties to a dispute are free to determine the number of
arbitrators. The parties shall appoint such arbitrators from amongst the members on the panel
of arbitrators, within thirty days of intimation of filing of the request. The parties are free to
agree or disagree with the said panel within the said period.
Consent of arbitrators : soon after the selection of arbitrators, the director shall send an
official communication to that effect to the parties and to the arbitrators. The arbitrators so
chosen shall give their consent in writing to the centre in turn shall communicate it to the
parties. If party having an objection to the nomination of the arbitrator or arbitrators made by
the president, any such objection shall be lodged, in writing, with the directorate within seven
days from date of receipt of such intimation of nomination.
Hearing procedure :The arbitral tribunal shall hold oral hearing and shall conduct as
contemplated in sub-sec 3 of sec 29B of the Act. Arbitral proceedings for the presentation of
evidence or for oral argument on day to day basis, and not grant any adjournments unless
sufficient cause is made out. After the conclusion of evidence and hearing, the arbitral
tribunal shall publish the award.
Settlement of dispute :firstly arbitral tribunal may encourage settlement of the dispute with
the agreement of parties by referring matter either to mediation or conciliation at any time
during the pendency of the proceeding with consent of parties. In such case the arbitral
tribunal shall terminate the proceedings, record the settlement in form of an arbitral award on
agreed terms.

#SECTION 24-33 deals with rules of procedure

Default of parties and arbitrators: if any party fails to participate at stage, then such party
shall be set ex-prate. In case of arbitrator fails to participate in two hearing, without
sufficient cause, his mandate to act an arbitrator shall stand terminated and board of governor
shall appoint another arbitrator in consultation with the parties.
Appointment of experts and application of adjournment: arbitral tribunal appoint one or
more experts to report to it on specific issue. The fees and costs of any experts appointed by a
party shall be borne by the appointing him. Any party seeing adjournment or change in the
time table fixed for the arbitration proceedings shall file s written request, and arbitral

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tribunal may grant the same after recording its reasons in writing and subject to payment of
costs at the rate of a minimum of Rs. 3,000/- per day.
Arbitrators fees and administrative expenses: the director may require the parties, before
referring the case to the arbitral tribunal, to deposit in advance in one or more instalment Sec
29 deals with fee payable to arbitrators which depends upon sum of dispute. Any claim or
dispute which is not valued in terms of money, shall attract a minimum fee of Rs.1,00,000/-.
in addition, administrative expenses payable by parties as contained under sec 30. If dispute
which is not valued in terms of money, shall attract a minimum deposit of Rs.30,000/-.
Content of arbitral award and termination of proceedings: firstly, award must be in
writing and should be signed by arbitrator or arbitrators. Arbitral award shall state the reasons
upon which it is based. It shall contain date and place of arbitration the same shall be
delivered to each party. The arbitral proceedings shall be terminated by final arbitral award or
by order of arbitral tribunal.

2021 AMENDMENT OF ARBITRATION AND CONCILIATION ACT,1996

The Arbitration and Conciliation (Amendment) Bill, 2021 was introduced in Lok Sabha on
February 4, 2021. It seeks to amend the Arbitration and Conciliation Act, 1996. The Act
contains provisions to deal with domestic and international arbitration and defines the law for
conducting conciliation proceedings. The Bill replaces an Ordinance with same provisions
promulgated on November 4, 2020.
Automatic stay on awards:
The Arbitration and Conciliation Act, 1996 (“Act“), by way of an explanation to Section
34(2)(b)(ii), provides that an award may be set aside if the Court is to find that the making of
an arbitral award has been induced or affected by fraud or corruption i.e. is in conflict with
the public policy of India. Prior to the enactment of the Amendment Act, the Act stipulated
that the parties to the arbitration could approach the Court to file an application challenging
such award on the grounds set forth in Section 34, which include, inter alia, proof of
invalidity of the arbitration agreement by the applicant party, finding of the Court that the
subject matter of dispute is not capable of settlement by arbitration, etc. Importantly however,
Section 36(2) clarified that an application filed therein would not automatically render the
award unenforceable, and the Court had the power to grant stay of the operation of the
impugned award, subject to such conditions as it may deem fit1.

The Amendment Act, in its turn, has departed from the earlier position and effected a material
change in the manner that applications filed under Section 34, alleging fraud, are dealt with.
It has inserted a proviso to Section 36(3), deemed effective from October 23, 2015, the same
date as the commencement of the Arbitration and Conciliation (Amendment) Act, 2015
(“2015 Amendment“), to ensure that in instances where the Court is prima facie satisfied that
a case is made out that either (i) the arbitration agreement or contract which is the basis of the
award; or (ii) the making of the award, was induced or effected by fraud or corruption, it shall
stay the award unconditionally pending disposal of the challenge to the award under Section
34. There is a concern that the proviso may be misused by certain parties to delay the
enforcement of an arbitral award to their advantage.

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The Court further stated that the amendment to Section 36(3), as contained hereinabove, will
have retrospective effect and apply to all cases arising out of or in relation to arbitral
proceedings, irrespective of whether the arbitral or court proceedings began prior to or after
the commencement of the 2015 Amendment.
Qualifications of arbitrators:
Furthermore, the Amendment Act has substituted Section 43J of the Act, which was
introduced by way of an amendment to the Act in 2019 (“2019 Amendment“). Under the
2019 Amendment, the newly inserted Section 43J stated that the qualifications, experience
and norms for accreditation of arbitrators will be as specified in the Eighth Schedule of the
2019 Amendment. The Eighth Schedule prescribed an exhaustive list of qualifications, which
an arbitrator would need to possess, which included, inter alia, an advocate, a chartered
accountant/cost accountant, company secretary, officer within engineering degree, person
with educational qualification at degree level with 10 (ten) years of experience in scientific or
technical streams, etc. Oher than setting forth the professional qualifications of an arbitrator,
the Eighth Schedule also provided for general norms that would be applicable to an arbitrator
for accreditation, such as:

(i) an arbitrator shall be a person of general reputation of fairness, integrity, and capable of
applying objectivity in arriving at settlement of disputes;

(ii) an arbitrator must be impartial and neutral and avoid entering into any financial
business or other relationship that is likely to affect impartiality or might reasonably create an
appearance of partiality or bias amongst the parties;

(iii) an arbitrator should avoid any potential conflict; and

(iv) the arbitrator should be capable of suggesting, recommending or writing a reasoned and
enforceable arbitral award in any dispute which comes before him for adjudication2.

As may be evident, the Eight Schedule was extensive in its stipulation of standards for
arbitrators. The 2019 Amendment was however critiqued precisely due to the introduction of
such norms as they were deemed to be quite restrictive and contrary to the nature of
arbitration itself, which has always been intrinsically associated with party autonomy. In
addition, it was noted that the 2019 Amendment left no room for foreign qualified
professionals to be appointed in India-seated arbitrations, which would heavily compromise
the freedom of parties to opt for arbitrator(s) of their choice.

In view of the same, the Amendment Act has done away with the Eighth Schedule and
replaced the erstwhile Section 43J with the following language: “The qualifications,
experience and norms for accreditation of arbitrators shall be such as may be specified by the
regulations“3. It is apparent that the Amendment Act has sought to rectify the over-
prescription of the 2019 Amendment, as in its memorandum regarding such delegated
legislation, it recognises that the matters in which the regulations may be made are matter of
procedure and administrative details and it is not practical to provide for them in the
Amendment Act itself.

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 Difference between Arbitration, mediation and conciliation;
 Arbitration: Arbitration is like a court procedure because the parties submit evidence
similar to a trial where the third party hear the entire situation and give his decision
which is binding upon the parties. The important element for placing a dispute before
arbitrator is to have an arbitration clause in agreement made by the parties. An
agreement happen between two or more parties between whom some difference has
arisen or may hereafter arise whereby they appoint another person to adjudicate upon
such dispute and agree to be bound by his decision. There are some essentials which
needs to follow for a valid arbitration agreement like the agreement must be in a
written form containing minimum terms of arbitration. The important objective of
written agreement is that the parties should agree to resolve the dispute through
arbitration. It must contains the essential elements of a valid contract such as offer and
acceptance, competent parties, consent, lawful consideration etc. The features of
arbitration are that it is a private tribunal chosen by the parties. A person appointed to
resolve the differences or disputes is called an ‘Arbitrator’, the proceeding is termed
as ‘Arbitral Proceeding’ and the decision imparted is termed as ‘Award’. Signing an
Arbitration Agreement also leads to giving up important rights. So, before signing the
agreement, one should properly read the terms of agreement and must reject or
negotiate upon the inconvenient terms.

 Mediation: Mediation is one of the alternative dispute resolutions which are voluntary
and informal process for resolution of disputes. Mediation is a process which is under
the control of the parties. The mediator acts as a middle person who helps to come on
a negotiated common point of their dispute. They are trained professionals or
sometimes attorneys who assist the parties in dispute to meet at a common place where
they can discuss their issues and can try to negotiate to reach at a common output. A
mediator uses special kind of conversation and communication to resolve the parties
dispute. The decision of the mediation is non-binding upon the parties. The mediator
can suggest, give opinions and can tell what to do or what not but he can’t force the
parties to attend the mediation if they are not interested to continue.

 Conciliation: Conciliation means settling disputes without litigation. It is an informal

process in which conciliator i.e. third party tries to bring the disputants to agreement.
He overcomes the disputable issues by lowering the tension, improvement in
communication, interpreting issues, providing technical assistance, exploring potential
solutions and bringing the negotiated settlement before the parties. Conciliator adopts
his own method to resolve the dispute and the steps taken by him are not strict and
legal. There is no need of agreement like arbitration agreement. The acceptance of
settlement is needed by both of the parties. It covers many disputes like industrial
disputes, marriage disputes, family disputes etc. This allows the parties to control the
output of their dispute. The result is also likely to be satisfactory. The objective of the
conciliation proceedings is to reach upon mutual terms, speedy and cost-effective
settlement of the dispute. Unlike arbitration, decision given by conciliator is not
binding upon the parties. Conciliation does not always ensure that a mutually agreed
result will arise between the parties.

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#Can Two Indian Parties choose foreign law to govern their arbitration agreement?
In india, enforcement of arbitral awards is covered in two parts under the Indian
arbitration and conciliation Act,1996. Part I of the Act applies to arbitrations with their
seat in india, amd includes purely domestic arbitrations (between two Indian parties) as
well as international commercial arbitrators (where at least one party is foreign). Part II of
the Act applies to arbitrations which are seated outside india. Furthermore, the Act makes
it clear that arbitration between an Indian and a foreign party can be governed by foreign
law and can have a foreign seat. However, whether two Indian parties can agree to a
foreign seat of arbitration is not expressly addressed by the Act. In this regards, number of
high courts in india have tried to address this issue affirmatively and some high courts
negatively. It is well settled that the decision of one high court is not binding precedent
upon another high court and at best can only have a persuasive value. Altough, this issue
can only be settled by rulling from the supreme court, it is important to note that the Act
does not expressly prohibit two Indian parties to choose a foreign seat of arbitrator.

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 SUBMITTED BY
P.N. RACHANA MANJULA
V YEAR BA,L.L.B.