ALTERNATE DISPUTE RESOLUTION

Q1.
The term arbitration in very lucid terms means the disputes of the parties with one another, gets
referred to a neutral party where this neutral party solves the disputes. Arbitration is a form of
alternative dispute resolution, where the settlement of the dispute takes place outside the
Courtrooms. This third party who solves the dispute is known as an arbitrator. His decisions
regarding the dispute are always binding upon the parties. It is an adequate way to save time and
resources. This method of settlement outside the court is governed by an Act called, “The
Arbitration and Conciliation Act, 1966”. This Act saves the parties from the hassle of spending
years in the Courts and saves them a lot of time and money, which otherwise would have been a lot
to invest. Arbitration is a quasi-judicial process and the parties are referred to a domestic tribunal. 

ARBITRATION AGREEMENTS

The formation of an arbitration agreement takes place when two parties, enter into a contract and in
which, the contract states that any dispute arising between the parties have to be solved without
going to the courts with the assistance of a person, who would be a neutral person, a third party,
appointed by both of the parties, known as the Arbitrator, who would act as a judge. The arbitrator
so appointed should have been previously mentioned in the contract that they made. They should
also state who should select the arbitrator, regarding the kind of dispute the arbitrator should give
decisions on, the place where the arbitration would take place. Furthermore, they should also state
the other kinds of procedures mentioned or that has to be required during an arbitration agreement. 

The parties are generally required to sign an Arbitration Agreement. The decision taken by the
arbitrator regarding any issue, is binding on both the parties, as stated by the agreement. In any
event, where one party decides that an agreement must be made prior to entering the contract, it can
be stated that the agreement was made to deviate from the hassles of the court. These agreements are
like contingent contracts, which means that these agreements shall only come into force or become
enforceable if any dispute happens, and on the basis of the same dispute between two parties
mentioned in the contract. It also takes place or is enforceable in the light of any dispute that arises
between the parties to the contract. 

ESSENTIALS OF AN ARBITRATION AGREEMENT

 There must be a dispute that should take place, only then the agreement will be valid. The
presence of a dispute amongst the parties is an essential condition for the contract to take
place. When the parties have already settled the dispute, in no case, they can invoke the
arbitration clause to refute the settlement. 
 Another essential is the written agreement. An agreement related to the arbitration must
always be in writing. An arbitration agreement will be considered as a written agreement
when:

1. It has been signed by both parties and it is in the form of a document. 

 2. It can be the exchange of the telex, the letters, the telegrams, or any other means of
communication which provides the record of the exchange and the agreement for arbitration.
3. There must be an exchange of statements between the parties that gives the statement of
claim and defence in which the existence of the agreement of the arbitration is agreed by one
of the parties and which is not defined by the other party. 

 The third essential intention. The intention of the parties while forming the contract is of
utmost importance and it forms the basis of the agreement. There have been no prerequisite
citations of terms such as an “arbitrator” or “arbitration” to be made in the agreement.
Therefore, it is necessary to note that the intention of both parties plays a very important role
in such an agreement. However, one must keep in mind that even if the words have not been
mentioned, the intention must show that both the parties have agreed to come to the terms
with the Arbitration Agreement. 
 The fourth essential element is the signature of the parties. The signature of the parties is an
essential element to constitute an arbitration agreement. The signature can be in the form of a
document signed by both the parties to the contract which comprises all the terms and
conditions, or it can also be in the form of a document which is signed by only one party to
the contract which contains the terms and acceptance by the other party to the contract. It will
be sufficient if one party puts up a signature in the agreement and the other party accepts
that. 

IMPORTANT PROVISIONS IN THE ARBITRATION AGREEMENT

There are a few important provisions under an arbitration agreement, and these are mentioned
below:

1. Written Agreement- As stated as an essential condition, there must be a written agreement.

Section 7(4) of the Act, states that every agreement made must be in the form of a written
document or even in the form of any kind of communication whether or not those
communications take place through telegrams, telex or even other telecommunication devices
provided that there must be a record of the communication. 
2. Appointment of the Arbitrators- Section 11 states that the arbitrator can be appointed at the
liberty of the parties to the contract. In case, where the parties fail to decide the appointment
of the arbitrator, the Chief Justice of the High Court, in case of the domestic arbitration and
the Chief Justice of the Supreme Court, in case of International Commercial Arbitration is
approached. 

CONCLUSION

Therefore, from the above article, we can state that an arbitration agreement is not only beneficial to
the parties whilst saving the resources, but also in means of the time and efforts put in by each of the
parties. Despite a few people stating that it is not a complete procedural aspect of dealing with the
cases, one state that it does help both the parties who have faced the dispute. However, most
importantly, it is important that there are certain things that have to be kept in one’s mind before
actually drafting or while drafting a contract for the arbitration agreement. In practice though,
almost all arbitration agreements are concluded with arbitration clauses. 
Q2.
COMPOSITION OF AN ARBITRATION TRIBUNAL

INTRODUCTION

Litigation is considered as a tedious process. It is not only time-consuming but also costly. The
reason why private parties and institutions have come up with alternative modes of dispute
resolution. Arbitration is one such alternative mechanism that is used to resolve commercial disputes
in India.

WHAT IS AN ARBITRATION TRIBUNAL?

Whenever a commercial dispute arises between two or parties, and they decide to resolve the dispute
through arbitration, an arbitral tribunal is to be set up. It consists of one or more arbitrators that
adjudicate and resolve the dispute and provide an arbitral award.

The Indian Council of Arbitration has provided a set of rules known as the ‘Rules of Arbitration’
that are to be abided by the parties undergoing the arbitration process as well as the arbitrators. Rule
2 of these regulations defines Arbitral Tribunal as “an arbitrator or arbitrators appointed for
determining a particular dispute or difference”[1] Section 2(d) of the Arbitration and Conciliation
Act, 1996 also defines an arbitral tribunal as a sole arbitrator or panel of arbitrators.

COMPOSITION OF AN ARBITRATION TRIBUNAL

Chapter III of the Arbitration and Conciliation Act, 1996 (herein referred to as the ‘Act’) lays down
the provisions for the Composition of an Arbitral Tribunal. Also, Rule 22 of the Rules of Arbitration
laid down by the Indian Council of Arbitration states that when an application for arbitration
procedure is received, the Council takes necessary steps for the constitution of an arbitral tribunal to
adjudicate the disputes or differences between parties. Several provisions concerning the
composition of an arbitral tribunal are as follows:

NUMBER OF ARBITRATORS IN AN ARBITRATION TRIBUNAL

Section 10 of the Act mentions the number of arbitrators that shall be a part of the arbitral tribunal.
According to clause (1) of the Section, the parties to the dispute are free to mutually decide the
number of arbitrators that shall constitute the arbitral tribunal to adjudicate the dispute. It is,
however, necessary that the number of arbitrators appointed shall be an odd number and not an even
one ensure that there are no ties. Furthermore, Section 10 also states that if the parties to the dispute
are unable to decide the number of arbitrators, in that case, only one arbitrator shall be appointed.
Rule 22 of the Rules of Arbitration provides that if the value of the claim made under arbitration is
One Crore or less, a single arbitrator can resolve the dispute if the parties agree to it. In cases where
the claim to the dispute exceeds one Crore, the arbitral tribunal shall be composed of three
arbitrators with the agreement of the parties.

In Narayan Prasad Lohia vs, Nikunj Kumar Lohia,[2] the Supreme Court observed that if two
arbitrators are appointed for an Arbitral Tribunal instead of three, and they give an award through
common opinion, there will be no frustration of proceedings.

The procedure and appointment of arbitrators under the arbitral tribunal is specified under Section
11 of the Arbitration and Conciliation Act. It states the following:

1. Nationality- The parties to the dispute may, on agreement, appoint an arbitrator belonging to
any nationality.
2. Appointment by Parties- The procedure to appoint one or more arbitrators can be decided
by the parties. If the parties fail to do so, they may individually appoint an arbitrator each,
and the two arbitrators, mutually decide the third one.
3. Appointment by Court- if the parties do not appoint an arbitrator within 30 days from the
receipt of the request, the Supreme Court, the High Court, or any other official designated by
the Court may appoint an arbitrator.

CONCLUSION

The Indian Judiciary has recommended time and again that parties should take up arbitration as a
dispute settlement mechanism to reduce the burden on the courts and for a speedy resolution of
disputes. Therefore, several amendments have been proposed in the Arbitration and Conciliation
Act, 1996. Sections 10-15 of this Act and Rules 22-27 of the Rules of Arbitration, lays down
provisions for the composition of an Arbitral Tribunal. This is of utmost concern in the adoption of
arbitration as a mechanism for dispute settlement. It is important for the parties to choose the right
arbitrator or arbitrators that constitute the arbitral tribunal so that the award delivered by the tribunal
is fair and just and free of any discrimination or biasness. It also ensures that the dispute is resolved
in an effective and speedy manner.

Q3.
The Arbitration and Conciliation (Amendment) Act, 2015 grants the liberty to the parties to appoint
an arbitrator mutually.

The Act provides that the parties are free to determine the number of arbitrators, provided that such
number shall not be an even number. However, if the parties fail to do so, the arbitral tribunal shall
consist of a sole arbitrator.1

The procedure in relation to appointment of arbitrator(s) is provided under Section 11 of the Act. A
person of any nationality may be an arbitrator, unless otherwise agreed by the parties. The aforesaid
section also deals with the contingency wherein the parties fail to appoint an arbitrator mutually. In
such a situation, the appointment shall be made, upon request of a party, by the Supreme Court or
any person or institution designated by such Court, in the case of an International Commercial
arbitration or by High Court or any person or institution designated by such Court, in case of a
domestic arbitration. 

Before the appointment of arbitrator is made, the concerned Court or the person or institution
designated by such Court is required to seek a disclosure in writing from the prospective arbitrator
in terms of Section 12(1) of the Act and also give due regard to any qualifications required for the
arbitrator by the agreement of the parties and the contents of the disclosure and other considerations
as are likely to secure the appointment of an independent and impartial arbitrator.

It may be noted that under Section 12(1) of the Act, an obligation has been cast upon the prospective
arbitrator to make an express disclosure on (a) circumstances which are likely to give rise to
justifiable doubts regarding his independence or impartiality; or (b) grounds which may affect his
ability to complete the arbitration within 12 (twelve) months.

The purpose of this provision is to secure the appointment of an unbiased and impartial arbitrator.

Fifth Schedule to the Act (Annexure-A) contains a list of grounds giving rise to justifiable doubts as
to the independence or impartiality of an arbitrator. The Seventh Schedule (Annexure-B) lays the
grounds which make a person ineligible to be appointed as an arbitrator.

The Act provides that in an International Commercial Arbitration, an arbitrator of a nationality other
than the nationalities of the parties may be appointed where the parties belong to different
nationalities.

Expeditious disposal of application for appointment of an arbitrator(s) is emphasized by the Act and
an endeavour shall be made to dispose of the matter within a period of sixty days from the date of
service of notice on the opposite party.

PROCEDURE FOR THE APPOINTMENT:

Section 11 only confers power on the High Court to appoint an arbitrator or presiding arbitrator only
when the following conditions are fulfilled:

a. where there is a valid arbitration agreement;

b. the agreement contains for the appointment of one or more arbitrators;
c. the appointment of the arbitrator is to be made by mutual consent of all the parties to the
dispute.
d. differences have arisen between the parties to the arbitration agreement; or between the
appointed arbitrators;
e. the differences are on the appointment or appointments of arbitrators.

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 two appointed arbitrators fail to reach an agreement as required under that
procedure, or
c. a person including an institution fails to perform any function as required under that
procedure, a party may request the Chief Justice of the High Court or any person or
institution designated by him to take the necessary measures in absence of an agreement for
other means of securing the appointment.

The decision of the Chief Justice of the High Court or the person or the institution designated by
him in appointing an arbitrator shall be final.
In such appointment, two considerations are to be made:

a. Required qualifications of the arbitrator as provided in the agreement of the parties, and
b. independent and impartial person as an arbitrator.

These are the circumstances under which the Chief Justice of a High Court can make an
appointment.

In case of appointment of a sole or third arbitrator in international commercial arbitration, the

appointing authority is the Chief Justice of India or a person or institution designated by him.

Q4.
This article is written by Aradhya Gupta, pursuing B.A. LL.B.(Hons) from Teerthanker Mahaveer
University. This is an exhaustive article which delves into the system of arbitration, certain
provisions of arbitral awards under the Arbitration and Conciliation Act, 1996 to discuss the
concept of application for setting aside the arbitral awards.

INTRODUCTION

The settlement of a dispute out of the court by bringing it to a third person is very commonly known
since the period of Ancient and Medieval India. So, the concept of arbitration is a way back old
phenomena. The modern law of arbitration was drafted by the East India company which was
developed in the regulatory framework through which the courts refer the suits for the arbitration
process.

APPLICATION FOR SETTING ASIDE ARBITRAL AWARDS

To ascertain the proper conduct of the arbitration proceedings, the law allows certain remedies
against an arbitral award. An aggrieved party may resort to the law Court for setting aside the
arbitral award on certain Grounds mentioned under Arbitration and Conciliation Act, 1966. 

GROUNDS

Section 34 of the Arbitration and Conciliation Act provides the provisions of certain specific
grounds on the basis of which an arbitral award rendered in India can be set aside. They are-
 1. Incapacity of a party while making an application to enter the agreement.
2. Arbitration agreement not being valid under the law.
3. Parties were not given proper notice of the appointed Arbitrators or the Arbitral Tribunal.
4. Nature of dispute not capable of settlement by arbitration.
5. Composition of the arbitral award was not in accordance with the agreement of parties.
6. The Arbitral award is in the violation of the public policy of a state.
7. The Arbitral award deals with a dispute not falling within the terms of submissions to an
arbitration.

(1). Incapacity of Parties

An application for setting aside an arbitral award can be passed if a party to the arbitration is
incapable in taking care of their interest and they are not represented by a person who can safeguard
their rights. The award can be set aside by the court if it finds that a party to a contract is a minor or
of an unsound person who is not being represented by a Guardian for protecting his interest. Section
9 of the Arbitration and Conciliation Act,1996 provides that the provision of appointment of a
guardian for a minor of unsound mind for his/her matter’s arbitral proceedings. 

(2). The Invalidity of Arbitration Agreement under Laws 

The validity of an arbitration agreement can be challenged in the same way on the same grounds on
which the validity of a contract is challenged. In cases where the agreement Clause is added in a
contract by the parties to it, the arbitration will be considered invalid if the contract is invalid. 

(3). Notice not given to the parties of arbitration proceedings

As provided under section 34(2)(a)(iii), if the party to a dispute in arbitral proceedings was not given
proper notice regarding the appointment of an arbitrator or any other notice of arbitral proceedings,
then this would be considered as a ground for setting aside the arbitral award of such proceedings.

Section 23(1) of Arbitration and Conciliation Act,1966 provides that the arbitral Tribunal has to
determine the time within which the statement must be filed. This must be timely communicated to
the parties by a proper notice and section 24(2) provides that an advance notice shall be given to the
parties regarding any hearing or meeting of the Tribunal for any purpose of inspection of
documents, goods or other property etc. 

In Dulal podda V. Executive Engineer, Dona Canal Division, Court held that the appointment of an
arbitrator at the request of the appellant of the dispute without sending a notice to the respondent and
an ex-parte decree given by the arbitration Tribunal will be held illegal and liable for setting aside.

(4). An Award not falling within the terms of Submission to Arbitration

The testimonials of a dispute in an agreement determines the limits of the authority and jurisdiction
of an Arbitral Tribunal. If the jurisdiction does not come within the ambit of the Tribunal, then the
award to the extent to which it is beyond the arbitrator’s jurisdictional powers would be considered
as invalid and such award would be liable for setting aside. An arbitrator cannot act in contradiction
to the terms of the contract.
(5). Composition of Tribunal- Not in accordance with Agreement

Section 34(2)(a)(v) lays out that an award can be discarded or challenged if the composition of the
arbitral tribunal was not in obedience with the agreement of the parties or if the procedure of
conduct of proceedings was not followed properly. If the arbitrator passes a decision of an award
which is in deviation from the terms of reference and the arbitration agreement, then this would lead
to the award to be set aside and will amount to the misconduct of the arbitrator.

(6). Disputes not arbitrable

The nature of the dispute should be capable of settlement by arbitration. Generally, all disputes
which can be decided by a Civil Court involving private rights can be referred to the arbitration.
Therefore, matters of criminal nature or matters of public rights cannot be decided by arbitration
proceedings.

(7). Award against public policy 

Section 34 provides that an application for setting aside an arbitral award can be made if such award
is in violation of the public policy of India. The concept of public policy implies matters which
concerns public good and Public Interest.

Q5.
Conciliation is an alternative dispute resolution (ADR) process whereby the parties to a dispute use
a conciliator, who meets with the parties both separately and together in an attempt to resolve their
differences. They do this by lowering tensions, improving communications, interpreting issues,
encouraging parties to explore potential solutions and assisting parties in finding a mutually
acceptable outcome.

Conciliation differs from arbitration in that the conciliation process, in and of itself, has no legal
standing, and the conciliator usually has no authority to seek evidence or call witnesses, usually
writes no decision, and makes no award.

CONCILIATION TECHNIQUES

There is a form of "conciliation" that is more akin to negotiation. A "conciliator" assists each of the
parties to independently develop a list of all of their objectives (the outcomes which they desire to
obtain from the conciliation). The conciliator then has each of the parties separately prioritize their
own list from most to least important. He/She then goes back and forth between the parties and
encourages them to "give" on the objectives one at a time, starting with the least important and
working toward the most important for each party in turn. The parties rarely place the same
priorities on all objectives, and usually have some objectives that are not listed by the other party.
Thus the conciliator can quickly build a string of successes and help the parties create an atmosphere
of trust which the conciliator can continue to develop.
Most successful "conciliators" in this sense are highly skilled negotiators. Some conciliators operate
under the auspices of any one of several non-governmental entities, and for governmental agencies
such as the Federal Mediation and Conciliation Service in the United States.

MAIN DIFFERENCES BETWEEN ARBITRATION AND CONCILIATION

The main differences between arbitration and conciliation are:

1. Arbitration is primarily a method used to resolve disputes where both parties present their
case to a neutral third party who reaches a decision and then enforces that decision.
Conciliation, on the other hand, involves an independent third party assisting the parties
involved in the dispute to arrive at a mutually agreeable outcome.

2. The decision made by an arbitrator is enforceable similar to a judgement of a court. A

conciliator, however, does not have the right to enforce its decisions.

3. Arbitration is a formal process and can follow similar procedures to court proceedings where
witnesses can be called and evidence can be presented to argue the parties’ respective cases.
Conciliation is an informal process and normally involves a ‘round table’ discussion.

4. Arbitrators are not permitted to discuss the issues directly with the parties or generate options
for terms of settlement or negotiation. A conciliator is allowed to discuss issues in dispute,
develop options and consider alternatives to help the parties achieve a mutually agreeable
outcome.

5. An arbitral award is final and binding and has the effect of terminating the arbitral
proceedings whereas conciliation does not always ensure a mutually agreeable outcome will
arise between the parties.

CONCLUSION

The choice of dispute resolution method is entirely up to the parties in dispute. If there is a
possibility that both parties may agree to a mutually agreeable outcome, then conciliation could be
considered. If both parties would like an independent party to set a binding and enforceable
determination then arbitration may be preferred.

At DSS Law, we understand that our clients’ priorities vary widely depending on the nature of a
particular dispute and the parties involved. Our aim is to help our clients resolve conflict as
efficiently and effectively as possible and provide practical advice that maximises our clients’
prospects of success.