ADR - An Alternative to Litigation

INTRODUCTORY
General
Article 39A of the Constitution of India which was added by the Constitution 42nd Amendment in 1976 reads equal
justice and free legal aid to any citizen with economic and other disability.
The Supreme Court has also recognized "right to speedy trial" as being implicit in article 21 of the Constitution of India
(Hussainara Khatoon v. State of Bihar, MANU/SC/0119/1979 : AIR 1979 SC 1360).
In order to give effective mandate the Parliament of India has recognized various Alternative Dispute Resolutions (ADR)
mechanisms, viz Arbitration, Conciliation, Mediation and Lok Adalats to strengthen both fair administration of justice and
smooth judicial system.
Section 89 of Code of Civil Procedure expressly provides for the settlement of dispute through ADR system.
Section 89(2) of the Code provides that where dispute has been referred to a Lok Adalat, the Court shall refer the same
in accordance with the provisions of section 20(1) of the Legal Services Authorities Act, 1987. Further for a judicial
settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be
deemed to be a Lok Adalat.
The Constitution of India was aimed at providing, besides other rights, protection of life and personal liberty. The framers
of the Constitution ensured that it safeguards any deprivation to the common man by the State or the nation as a
whole. For this purpose, the Constitution provides for a system of courts. But, at the time when the Constitution was
formally adopted in 1950, there existed a unified structure of courts and laws, which were left undisturbed, as it would
mean an upheaval of the entire system. Unity and uniformity of the judicial structure was preserved in such areas of law
as criminal laws and procedures, civil procedures, Wills, succession, contracts, etc.
In India, at the apex of the entire judiciary is the Supreme Court of India with a High Court for each State or a group of
States. Under the High Court, there is a hierarchy of subordinate courts. The courts provide ample safeguards for the
enforcement of rights of citizens. Disputes of all the citizens are settled through a well defined and recognised system of
litigation. The courts have formal rules for settlement of disputes and its decision is binding on the parties, but is subject
to appeal to the higher court. The system is highly technical and formal and the judge controls the proceedings as well
as the outcome of the litigation. But litigation does not always lead to satisfactory results. It is expensive in terms of
time and money. A case won or lost in a court of law does not change the attitude of the litigants who continue to be
adversaries and go on fighting in appeal after appeals. These are the reasons due to which parties to a dispute look
after an alternative way of resolving their dispute. Resolving the dispute between the parties amicably enables a change
in the approach of the parties. Mahatma Gandhi wrote in his autobiography in the following words: "...... I had learnt the
true practice of law. I had learnt to find out the better side of human nature and to enter man's heart. I realised that
the true function of a lawyer was to unite parties. The lesson was so indelibly burnt into me, that a large part of my
time during the twenty years of my practice as a lawyer was occupied in bringing about private compromise of hundreds
of cases. I lost nothing thereby, not even money, certainly not my soul ......"
Alternative Dispute Resolution (ADR)
What is ADR?
ADR is an abbreviation that stands for Alternative Dispute Resolution. ADR refers to all those methods of resolving a
dispute, which are alternatives for litigation in the Courts. ADR processes are decision-making processes to resolve
disputes that do not involve litigation or violence. ADR includes a variety of processes through which litigants or
potential litigants may resolve their disputes. Unlike the courts, which use adversarial processes, ADR focuses on
effective communication and negotiation.
ADR includes Arbitration, Mediation, Conciliation, Negotiation, Expert Determination, Early Neutral Evaluation by a third
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person, Mini-Trial, Dispute Resolution Board and Lok Adalat etc. The approach of judges, lawyers and parties throughout
the world is changing towards adoption of ADR instead of Court-litigation. Arbitral institutions provide ADR services for
quicker, less costly and consensual resolution of civil disputes outside the crowded Court system. ADR provides creative
options to the parties to resolve the disputes that are not available in traditional dispute resolution forums. ADR
promotes communication between the parties. ADR enables the parties to work together to solve the real concerns
underlying the conflict by focusing on the parties' real interest instead of their positions and claims.
When ADR is useful and recommended?
ADR can be used as an alternative to time consuming adversarial process of court-litigation. ADR is an alternative for
those parties who are willing to communicate with each other and make genuine attempt to resolve the dispute with the
help of a neutral party. Many disputes like consumer complaints, family disputes, construction disputes, business
disputes can be effectively resolved by ADR. It can be used in almost every dispute, which can be filed in a court as a
civil suit
What is the difference between ADR and civil suit in a court?
When a civil suit is filed in a court of law, a formal process occurs, which is operated by Advocates and managed by the
court. The parties virtually lose all control over the result of their dispute when a court makes the decision. Litigation is
a costly affair and it takes a lot of time to get a final decision of the court. Litigation harms relationships and causes
emotional stress. Participation in a civil suit is unpleasant and cumbersome. On the other hand, ADR is a problem solving
process, which promotes creative solution to the parties, which emphasizes communication between the parties. In ADR,
parties work together to solve the dispute.
What is an 'ADR Neutral'?
An 'ADR Neutral' is an unbiased, impartial and third party not connected with the dispute, which includes an Arbitrator,
Mediator, Conciliator, Facilitator, Evaluator or any other person who helps the parties to settle their conflicts by ADR.
What are the features of ADR?
ADR processes are consensual and voluntary processes, which are chosen by the parties to the dispute. These
processes are expeditious because ADR avoids those components of traditional litigation that prolong and delay
resolution of dispute. ADR process is flexible which is handled and resolved through an ADR agreement. The parties
choose a particular ADR process, outline the specific steps of the process, and establish time limits. It is a non-judicial
process in which decision is made by the parties themselves. In ADR, the parties control the process and the outcome.
What are the advantages of ADR?
ADR proceedings are flexible. They can be conducted in any manner to which the parties agree. It may be as casual as a
discussion around a conference table or structured as a private Court trial. Also unlike the Courts, the parties have the
freedom to choose the applicable law, a neutral third party to act as Arbitrator/Conciliator in their dispute, on such days
and places convenient to them and also fix the fees payable to the third party. ADR is a private process and it offers
confidentiality, which is generally not available in Court proceedings. While a Court procedure results in a win or lose
situation for the disputants, in an ADR process such as Mediation or Conciliation, it is a win-win situation for the parties
because the solution to the dispute emerges with the consent of the parties. ADR proceedings save considerable time
and money. ADR has distinct advantages because it involves increased respect and trust between the parties, more
creative and satisfying solutions, greater compliance with the settlement, reduced cost and emotional energy and faster
resolution of dispute. It improves communication and relationships between the parties.
Ensuring through speedy trial the alternative dispute resolution and case-flow management the High Courts should adopt
model ADR rules and case-flow management rules or frame rules, so that a step forward is taken to provide to litigating
public a fair, speedy and inexpensible justice (Salem Advocates' Bar Association v. Union of India, MANU/SC/0450/2005 :

AIR 2005 SC 3353).
Arbitration
What is Arbitration?
Where two or more persons agree that a dispute or potential dispute between them shall be decided in a legally binding
way by one or more impartial persons in a judicial manner, that is upon evidence put before him or them, the agreement
is called an Arbitration Agreement or a submission to Arbitration. When, after a dispute has arisen, it is put before such
person or persons for decision, the procedure is called as Arbitration, and the decision when made is called 'award'1 .
Arbitration is a method whereby parties can resolve their disputes privately. It is known as an Alternative Dispute
Resolution mechanism. In this mechanism, instead of filing a case in a court, parties can refer their case to an arbitral
tribunal, which is the forum where Arbitration proceedings are conducted. The arbitral tribunal considers the cause of
the conflict between the parties and arrives at a decision known as 'award'. The arbitral tribunal controls the process
and outcome of the dispute. Generally, the hearing is limited by rules agreed by parties and is conducted in private and
strangers cannot be present. While an Arbitrator does have greater flexibility than a judge, in terms of procedure and
rules of evidence then the arbitration process is akin to the litigation process.
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1. Ronald Bernstein Derek W ood in Handbook of Arbitration Practice, 2nd Edn., p. 9.
What are the advantages of Arbitration over litigation?
Arbitration is preferred over traditional litigation because Arbitration is generally less expensive than litigation. It provides
for faster resolution of dispute through flexible time schedule and simpler rules. Arbitration offers advantages that cannot
be provided by litigation. In many cases, a big advantage is that the Arbitrator or arbitral tribunal is an expert in the field
of the dispute so that the entire procedure can be conducted without the intervention of lawyers, or other
representatives, with major gains in speed and economy. Thus, many disputes as to quality in the commodity trades,
many disputes as to the rent of commercial property, and many small consumer disputes, are resolved in this way.1
What type of disputes can be settled by Arbitration?
The disputes, which can be settled by an agreement between the parties, can be settled by Arbitration. All civil disputes
can be referred to Arbitration unless prohibited by any law. Virtually, all disputes can be settled by Arbitration, including
contract disputes involving businesses and consumers, employment claims, real estate and construction issues. As a
general rule, matters involving criminal question or questions of public law cannot be resolved by Arbitration. For
instance, the following matters are not referred for Arbitration:
Matrimonial matters, like divorce or maintenance;
Insolvency matters, like declaring a person as insolvent;
Criminal offences;
Dissolution or winding up of a company;
Disputes relating to age.
Put in a general way, it may be said that the disputes arising out of rights in personam may be settled by Arbitration and
the disputes arising out of rights in rem cannot be settled by Arbitration.
Statutory Arbitration
What is statutory Arbitration?

In India a lot of Central and State Acts specifically provide for arbitration in respect of disputes arising out of matters
covered by those enactments viz. Electricity Act, Electricity Supply Act. Since such an arbitration would be also
governed by 1996 Act, to provide for statutory arbitration in such legislation is deemed to be arbitration agreement (Grid
Corpn. of Orissa v. Indian Charge Chrome Ltd., MANU/OR/0030/1998 : AIR 1998 Ori 101).
Ad hoc Arbitration
What is Ad hoc Arbitration?
Ad hoc arbitration is a proceeding administered by the parties themselves (and not a stranger or institution) with rules
created solely for that specific case. The parties make their own agreement with respect to all aspects of arbitration
including applicable laws and rules, etc.
Fast Track Arbitration
What is Fast Track Arbitration?
Where the parties agree that no oral hearings shall be held, then the arbitral tribunal could fast track the arbitration
process, by making the award only on the basis of documents submitted by parties, in respect of their case.
Attributes of Arbitration Agreement
The arbitration agreement must contemplate that the decision of the arbitral tribunal will be binding on the parties to the
agreement.
The jurisdiction of arbitral tribunal to decide the rights of the parties must derive either from the consent of parties, or
from an order of
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1. Michael Kerr in Handbook of Arbitration Practice, Introduction, p. 3.
court or from statute, the terms of which make it is clear that the dispute will be subject to arbitration.
The agreement must contemplate that the substantive rights of the parties will be determined by the arbitral tribunal.
The arbitral tribunal must determine the rights of the parties in an impartial and judicial manner.
The agreement of parties to refer their disputes to the decision of the arbitral tribunal should be enforceable at law.
The agreement should contemplate that the tribunal will receive evidence from both sides and hear their contention or at
least, give the parties an opportunity to put them forward.
The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the
time when the reference is made to the tribunal. (K.K. Modi v. K.N. Modi, MANU/SC/0092/1998 : AIR 1998 SC 1297;
Bharat Bhushan Bansal v. U.P. Small Industries Corpn., MANU/SC/0023/1999 : AIR 1999 SC 899).
Conciliation and Mediation
What is Conciliation?
Conciliation is a process in which a third party assists the parties to resolve their dispute by agreement. A Conciliator
may do this by expressing an opinion about the merits of the dispute to help the parties to reach a settlement.
Conciliation is a compromise settlement with the assistance of a Conciliator.
Conciliation is a voluntary and non-binding process in comparison to Arbitration and Litigation. Any party may terminate
Conciliation proceedings at any time even without giving any reason. The other important difference is that the parties

control the process and outcome of the dispute, which is not the case in Arbitration as well as litigation. Conciliation is a
consensual process whereas Litigation and Arbitration solemnly urge the parties for an amicable reconciliation and have
no control on the outcome of the dispute or the process.
What is Mediation?
Mediation is a process for resolving disputes with the aid of an independent third person that assists the parties in
dispute to reach a negotiated resolution. Mediation is the acceptable intervention into a dispute of a third party who has
no authority to make a decision. The objective of the third party is to assist the parties in reaching an acceptable
resolution of the dispute. The Mediation process is voluntary and does not eliminate other dispute resolution options. It
is confidential, whether or not it results in the settlement and resolution of the dispute.
How is Mediation different from Conciliation?
Many a times, conciliation and mediation are used interchangeably and they are together referred to as Mediation. A
Mediator assists the parties to reach an agreement for resolving the dispute and he does not express his opinion on
merits of the dispute, whereas a Conciliator may express an opinion about the merits of the disputes. In both, a third
party is appointed to assist the parties to reach a settlement of their dispute. The Mediator is not given any power to
impose a settlement. His function is only to try to break any deadlock and encourage the parties to reach an amicable
settlement. A Mediator does not determine a dispute between parties.
A Mediator may act as a communicator filtering out the emotional aspects and allowing the parties to focus on the key
issues. He encourages the parties to reach an agreement on their own as opposed to having it imposed upon them.
What are the limitations of Conciliation?
ADR techniques such as Conciliation, Negotiation and Mini-Trials have the benefit of less time and less cost but there is
no assurance that they would result in a settlement of disputes as these are non-binding and voluntary modes. These
techniques bring the parties closer but the settlement is not compulsory. Any party may walk out of such proceedings at
any time or may not agree even to a very fair settlement. Many times it has been observed that for the respondent, it is
a case of either total liability or no liability and to avoid liability he may refuse even a fair settlement.
What is 'Pre-Trial Mediation'?
A provision is introduced in section 89 of the Code of Civil Procedure as amended in 2002 for encouragement of pre-trial
alternatives for resolving the disputes. This provision provides for Conciliation, Mediation and pre-trial settlement
methodologies. Pre-trial Mediation is a settlement of disputes by the efforts of the Courts before initiation of proceedings
before it.
What do you mean by the expression 'Med-Arb'?
'Med-Arb' is a dispute resolution process that combines some of the features of both Mediation and Arbitration. Most
'Med-Arb' proceedings call for a third-party Neutral to first mediate or help the parties agree to as many issues as
possible and then, by agreement of the parties, to arbitrate or make a decision on those that remain. The same neutral
person may perform both roles.
When an Arbitration proceeding is pending in an Arbitral Tribunal, the Arbitral Tribunal may encourage the settlement of
dispute by Mediation with the consent of the concerned parties. The Arbitral Tribunal may use Mediation, Conciliation or
other procedures at any time during the arbitral proceedings with the consent of parties to encourage settlement. If,
during arbitral proceedings, the parties settle the dispute, the Arbitral Tribunal terminates the proceedings. The Arbitral
Tribunal can also record the settlement in the form of an Arbitral Award on agreed terms on the request of the parties.
Such an award has the same status and effect as any other Arbitral Award on the substance of the dispute. It is called
Mediation during Arbitration i.e. Med-Arbitration. Relevant provision is provided in section 30 of the Arbitration and
Conciliation Act, 1996 in this regard.

What is 'Hybrid Conciliation, Mediation and Arbitration'?
In this ADR process, if the parties are unable to reach resolution through Conciliation, the Conciliator becomes an
Arbitrator with written consent of the parties. He converts the proceedings into one of Arbitration and seeks additional
evidence from the parties as, since witnesses are not normally called in Conciliation, and thereafter he renders an
arbitral decision.
If the Conciliator fails in his efforts, he can proceed as an Arbitrator to make an award on the substance of dispute.
Initially, parties start with Conciliator but after sometime, they authorize the Conciliator to act as Arbitrator and decide
the dispute. However, in such cases consent of both parties is required. These are called 'Hybrid Conciliation, Mediation
and Arbitration'.
Negotiation
What is Negotiation?
Negotiation is an ADR process by which parties resolve their disputes. They agree upon course of action and bargain for
advantage. Sometimes, they try to adopt such a creative option that serves their mutual interests. Because of its
mutual advantages, people negotiate in almost all walks of life, from home to the courtroom. It is the most common form
of resolving a dispute and this process solves most disputes. If Negotiations fail, it is necessary to seek the assistance
of a neutral third party or several neutral third parties to reach a solution.
How is a dispute resolved by Negotiation?
Negotiation bargaining is a process in which both the parties cooperate and seek a solution that is mutually beneficial (a
win-win solution or co-operative bargaining). It can also be confronting when each side seeks to prevail over the other.
If Negotiation succeeds, the parties sign a settlement agreement incorporating the terms and conditions of the
agreement or they can simply enforce the agreement. The definition of the Negotiation process, and how the process
occurs differs across cultures.
What is 'Position-Based Negotiation'?
'Position-Based Negotiation' is a term that describes the traditional approach to Negotiation, in which the parties are
firmly committed to their bargaining positions. It exchanges proposals and counter proposals in the anticipation that one
or more parties will compromise to achieve a dispute settlement that satisfies all parties.
What are Facilitated Negotiations and what is the role of a Facilitator?
The Negotiations which have a coordinator known as Facilitator are called Facilitated Negotiations. Facilitated
Negotiations are assisted by a qualified Facilitator. He runs the meetings, keeps the parties focused, guides them in the
process, encourages ground rules, and takes notes. He helps the parties with divergent views to reach a goal or
complete a task to the mutual satisfaction. He improves the definition of issues, develops options, keeps on task, and
ultimately increases the likelihood that a consensus will be reached.
Expert Determination
What is Expert Determination?
Expert Determination is a non-binding and flexible ADR process in which the parties agree to appoint an independent third
party, who is expert in a particular field, to adjudicate on a dispute within the field of his expertise. The parties may
settle the dispute based on Expert Determination. The decision of the expert is not binding on the parties but it opens
the doors for an amicable settlement.
When Expert Determination is useful?

Expert Determination is useful for determination of technical or legal disputes that require technical expertise or
evaluation by an expert to assist the parties to settle the dispute. In construction contracts, the dispute relating to
quantities is generally settled, based on the measurements recorded by an expert appointed by the parties. Construction
contracts generally have a clause in the contract for determination of technical issues by an expert engineer or
architect prior to Arbitration. Expert Determination is also useful where the parties want to reduce the cost of litigation
or Arbitration and they are genuinely interested in an early and fair settlement.
What are the advantages of Expert Determination?
Expert Determination is an ADR process, which is very simple and does not require formal meetings and presentation of
pleading and evidence. It is an efficient, economical and efficient process in which the parties can maintain a cordial
relationship.
How does the Expert Determination proceed?
The procedure for an Expert Determination is decided by the parties or the expert. The process is very flexible and
efficient which may involve following steps:
(a) a meeting between the expert and the parties to decide the process for the determination;
(b) providing relevant information or evidence to the expert;
(c) a visit to the site of dispute for determination by the expert;
(d) decision by the expert;
(e) consideration of the decision by the parties;
(f) settlement of the dispute.
Early Neutral Evaluation
What is 'Early Neutral Evaluation'?
'Early Neutral Evaluation' is an ADR process which is preventive in nature, the object of which is to settle the dispute
amicably at the earliest stage. It is non-binding, flexible and confidential process in which a person experienced in the
subject matter of the dispute is appointed by the parties for 'Early Neutral Evaluation' known as 'Evaluator' at the outset
of the dispute. 'Early Neutral Evaluation' provides the parties with an early and confidential evaluation of the merits of a
dispute at the initial stage. The Evaluator studies all materials provided to him, performs independent research into the
relevant case law, considers presentations carefully, clarifies positions and facts through questioning and then he
prepares an evaluation report.
How does 'Early Neutral Evaluation' proceed?
The Evaluator convenes a meeting to listen the parties who outline the key element of the dispute. The Evaluator
assesses the merits of case of each party and identifies the main issues to explore possibilities of settlement. If there is
no settlement, the Evaluator may assist the parties by making procedural recommendations.
The Evaluator gives a non-binding decision indicating the way in which he considers the dispute would be determined by
a Judge or Arbitrator.
'Early Neutral Evaluation' may be conducted without an oral hearing. If the parties so desire, a short hearing can be held
to facilitate evaluation. The procedure at the hearing is determined by the Evaluator but witnesses are not normally
heard. The parties make short submissions within a time limit set by the Evaluator. Settlement is very often achieved
between the parties on the basis of the evaluation. The parties may, if they wish, agree to be bound by the decision of
the Evaluator.

The 'Early Neutral Evaluation' process is very useful where the dispute involves a difficult point of law or interpretation of
a contract that prevents the parties from successfully conciliating the dispute or otherwise reaching settlement.
Lok Adalat
What is Lok Adalat? Write a short note on Lok Adalat
Lok Adalats are extempore Courts created as per the requirement of the people of a particular area. Camps of Lok Adalat
were started initially in Gujarat in March 1982 and now they have been extended throughout the country. The evolution
of this movement was a part of the strategy to relieve heavy burden on the Courts with pending cases. The reason to
create such camps was only to dispose of the pending cases and to give relief to the litigants who were in a queue to
get justice. The seekers of justice are in millions and it is becoming rather difficult for the Courts to cope up with the
ever-increasing cases with the present infrastructure and manpower. Lok Adalats are organized with financial assistance
by the government and monitored by the judiciary. Lok Adalats have set Conciliation process in motion in India. In Lok
Adalat, voluntary efforts are aimed at bringing about settlement of disputes between the parties through conciliatory
and persuasive efforts, and provide speedy and inexpensive justice. Members of Lok Adalats act as Conciliators. Lok
Adalats have assumed statutory recognition under the Legal Services Authorities Act, 1987.
Section 19 of the Legal Services Authorities Act, 1987 provides for organisation of Lok Adalats. The section lays down
that every State Authority or District Authority or the Supreme Court Legal Services Committee or every High Court
Legal Services Committee or, as the case may be, Taluk Legal Services Committee may organise Lok Adalats at such
intervals and places and for exercising such jurisdiction and for such areas as it thinks fit.
The section further provides that every Lok Adalat organised for an area shall consist of such number of-
(a) serving or retired judicial officers; and
(b) other persons,
of the area as may be specified by the State Authority or the District Authority or the Supreme Court Legal Services
Committee or the High Court Legal Services Committee, or as the case may be, the Taluk Legal Services Committee,
organising such Lok Adalat.
Sub-section (5) of section 19 of the Legal Services Authorities Act, 1987 lays down that a Lok Adalat shall have
jurisdiction to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of-
(i) any case pending before; or
(ii) any matter which is falling within the jurisdiction of, and is not brought before, any court for which the Lok
Adalat is organised:
Provided that the Lok Adalat shall have no jurisdiction in respect of any case or matter relating to an
offence not compoundable under any law.
Section 21 of the Legal Services Authorities Act lays down that every award of the Lok Adalat shall be deemed to be a
decree of a civil court or, as the case may be, an order of any other court and where a compromise or settlement has
been arrived at, by a Lok Adalat in a case referred to it under section 20(1), the court-fee paid in such case shall be
refunded in the manner provided under the Court Fees Act, 1870.
Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to
any court against the award.
Nayaya Panchayat and Gram Nayayalaya
What is Nyaya Panchayat?

Nyaya Panchayats are village Courts with civil, criminal and revenue powers as granted to them under certain laws.
Panchayat Courts also function in some States under various names like Nyaya Panchayat, Panchayat Adalat, Gram
Nyayalya, Kachheri, etc. to decide civil and criminal disputes of petty and local nature.
Article 243B of the Constitution of India provides for the establishment of Panchayats at the village, intermediate and
district levels in every state. In ancient times, the village Panchayats comprising of the elders, had administrative and
judicial powers and exercised full control over the villages.Now a days, Nyaya Panchayats are established under
statutory enactments in many States like Uttar Pradesh, Madhya Pradesh and West Bengal.
What is the History of Nyaya Panchayat?
The concept of Nyaya Panchayat was very popular and prevalent in ancient India. There was a tradition of Nyaya
Panchayats. In fact, the Panchayat, in its original conception was, primarily, an instrument of law and order, a means of
Conciliation and Arbitration within the community. The awards were known as decisions of Panchayats, commonly known
as Panchs. There were three grades of judges or Panchs in ancient India, namely Puga, Sreni and Kula. The decision of
Panchayat was subject to revision. A decision given by a Kula could be revised by a Sreni and further by way of second
revision, it could be revised by a Puga. The decisions of the Panchayats were of binding nature in law in force in those
times.
During the ancient Hindu period, the villages enjoyed autonomy and were governed by the Panchayats, which exercised
administrative and judicial powers. These village bodies received a setback under the Muslim rule and almost
disappeared, though they were there in their old form under the British, confining their authority only to the social life of
the village community.
What is the jurisdiction of Nyaya Panchayats?
The Panchayat adalats, now called Nyaya Panchayats, were established in the Mainpuri district in 1949 under the U.P.
Panchayat Raj Act, 1947, to adjudicate upon petty civil and criminal disputes arising in the rural areas. The jurisdiction
of a Nyaya Panchayat usually extends over an area of five to ten Gram Sabhas, depending on the population of the
constituent villages. Their scope, powers and functions have been defined in the Act referred to above, and revisions
against their decisions lie to Sub-divisional Magistrates in criminal cases and to Munsifs in civil suits.
The jurisdiction and powers of the Nyaya Panchayats depends upon the respective statute under which it is constituted.
It is a matter of State list as given in the Constitution. In U.P. State, the Nyaya Panchayats are empowered to try
cases as given below:
(a) All cases under Panchayati Raj Act.
(b) The selected sections of I.P.C. i.e. involving property not exceeding an amount of Rs. 50 in value.
(c) The Nyaya Panchayats have original jurisdiction to try civil suits up to a valuation of Rs. 500.
(d) Any dispute not pending in any Court in accordance with some settlement compromise on oath, if the parties
concerned agree in writing to such a course. They are not authorized to award sentences of imprisonment and
can impose fines up to hundred rupees only.
(e) Any other cases as conferred by appropriate Government from time to time.
How Nyaya Panchayats are constituted?
The Nyaya Panchayat is a matter of State list; hence it is constituted under the respective State law. Generally, the
Panchs of Nyaya Panchayats are nominated from amongst the elected Panchs of the Gram Panchayats by the District
Magistrate with the assistance of an advisory body.
Members of the village Sabhas may also be nominated as Panchs in case the members of village Panchayats with

requisite qualifications are not available. These Panchs elect from among themselves the Sarpanch, who is the Presiding
Officer and an Assistant Sarpanch to assist him. The Panchs are honorary workers and hold office for a period of 5
years. Their term may be extended by another year by the State Government. The cases are heard and disposed of by
benches consisting of 5 Panchs. The presence of at least three Panchs including a sarpanch is essential at every
hearing.
Tribunals and Commissions
What are tribunals and why they are established?
The tribunal system was evolved in our country to provide an alternative to the regular Courts. The tribunals are
presided over by the experts of the respective fields and are not only less costly in comparison to regular Courts but
also they effectively resolve the disputes by taking much less time in comparison to the regular Courts. Examples of
tribunals are-Central Administrative Tribunal, Income Tax Appellate Tribunal, Central Excise and Service Tax Appellate
Tribunal etc.
Tribunals are established under varied circumstances, for example Article 323A of the Constitution of India provides for
the establishment of Administrative Tribunals for trial of disputes and complaints with respect to recruitment, conditions
of service of persons appointed to public services and other allied matters. Article 323B of the Constitution makes
provision for creation of tribunals for judging or trial of disputes, complaints or offences connected with tax, foreign
exchange, industrial and labour disputes, land reforms, ceiling on urban property, election to Parliament and State
Legislature etc. The Parliament has power to enact any law under Article 323A while both Parliament and Legislatures
can make laws on matters under Article 323B.
Development of Alternative Dispute Resolution System in India
What is the history of development of law of Arbitration in India?
In India, an alternative system is available to the disputing parties including Arbitration, Conciliation, Mediation,
Negotiation etc. Arbitration was very popular and prevalent in ancient India and awards were known as decisions of
panchayat, which were binding in nature. During the British Rule in India, the panchayat system was not abrogated. In
West Bengal Regulation of 1772, a provision for arbitration was made and subsequent Regulations also provided for
arbitration in certain matters. The Legislative Council for India came into existence in 1834 and Civil Procedure Code,
1859 was enacted\ which also dealt with law of arbitration. The next Code of Civil Procedure of 1882 repeated the same
provisions about arbitration. Indian Arbitration Act was enacted in 1899 on the lines of English Arbitration Act, 1889. It
made provision for reference of disputes, present as well as future, to arbitration without intervention of the court. The
Indian Arbitration Act, 1940 consolidated and amended the laws relating to domestic arbitration very exhaustively. There
were two more Arbitration Acts in India in relation to foreign
awards namely - the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and
Enforcement) Act, 1961, which were enacted in compliance of International Conventions to which India was a party.
Thus, the law of arbitration was scattered in three enactments. The Arbitration and Conciliation Act, 1996 had amended
and consolidated the law of arbitration and repealed all the three enactments. The 1996 Act is based on the Model Law
on International Commercial Arbitration recommended by United Nations Commission on International Trade Law
(UNCITRAL).

© Universal law Publishing Co.

THE ARBITRATION AND CONCILIATION ACT, 1996
CHAPTER 1
GENERAL PROVISIONS OF ARBITRATION
I. OBJECTS AND REASONS OF THE ACT
Briefly discuss the objects of the Arbitration and Conciliation Act, 1996
The law on arbitration in India was substantially contained in three enactments, namely - the Arbitration Act, 1940, the
Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. The
Arbitration Act, 1940 was widely felt to have become outdated. The Law Commission of India, several representative
bodies of trade and industry and experts in the field of arbitration had proposed amendments to this Act to make it more
responsive to contemporary requirements. It was also felt that economic reforms taking place in India may not become
fully effective if the laws dealing with settlement of both domestic and international commercial disputes remains out of
tune with such reforms. Conciliation, like arbitration is also getting worldwide recognition as an instrument for settlement
of disputes.
The United Nations Commissions on International Trade Law (UNCITRAL) adopted the Model law on International
Commercial Arbitration in 1985. The General Assembly of the United Nations has recommended that all countries give due
consideration to the said Model Law in view of the desirability of uniformity of the law of arbitral procedures and the
specific needs of international commercial arbitration practice. The UNCITRAL also adopted a set of Conciliation Rules in
1980. The General Assembly of the United Nations has recommended the use of these Rules in cases where the disputes
arise in the context of international commercial relations and the parties seek amicable settlement of their disputes by
recourse to conciliation. An important feature of the said UNCITRAL Model Law and Rules is that they have harmonised
concepts on arbitration and conciliation of different legal systems of the world and thus contain provisions which are
designed for universal application. The UNCITRAL Model Law and Rules, though, are intended to deal with international
commercial arbitration and conciliation, they could, with appropriate modifications, serve as a model for legislation on
domestic arbitration and conciliation.
In India, in order to consolidate and amend the law relating to domestic arbitration, international commercial arbitration,
enforcement of foreign arbitral awards and to define the law relating to conciliation, taking into account the Model Law
and Conciliation Rules adopted by the UNCITRAL, the President of India promulgated on 16th January, 1996, the
Arbitration and Conciliation Ordinance, 1996 as the Parliament was not in session and the circumstances existed which
rendered it necessary to take immediate action. The ordinance could not be replaced by an Act as the Parliament
session was prorogued without passing the Bill. But in order to give further continued effect to the provisions of the said
Ordinance, the President promulgated the Arbitration and Conciliation (Second) Ordinance, 1996 on 26th March, 1996
which could also not be passed by the Parliament. On 21st June, 1996, the President promulgated the Arbitration and
Conciliation (Third) Ordinance, 1996. To replace the Ordinance of 21st June, 1996, the Arbitration and Conciliation Bill
was introduced in the Parliament. The Bill was passed by both the Houses of Parliament and received the assent of the
President on 16th August, 1996 and was titled as the Arbitration and Conciliation Act, 1996.
The main objects of the Act are-
(i) to comprehensively cover international and commercial arbitration and conciliation as also domestic arbitration
and conciliation;
(ii) to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the
specific arbitration;
(iii) to provide that the arbitral tribunal gives reasons for its arbitral award;

(iv) to ensure that the arbitral tribunal remains within the limits of its jurisdiction;
(v) to minimise the supervisory role of courts in the arbitral process;
(vi) to permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings
to encourage settlement of disputes;
(vii) to provide that every final arbitral award is enforced in the same manner as if it were a decree of the court;
(viii) 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
(ix) 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 as a party
applies, will be treated as a foreign award. .
Extent and Commencement of the Act
The Arbitration and Conciliation Act, 1996 extends to the whole of India:
Provided that Parts I, III and IV of the Act shall extend to the State of Jammu and Kashmir only insofar as they relate to
international commercial arbitration or as the case may be international commercial conciliation.
The Act of 1996 came into force on 22nd August, 1996. But the Arbitration and Conciliation Ordinance as promulgated
by the President of India on 16th January, 1996 came into force on 25th January, 1996 and till the Act of 1996 came
into force on 22nd August, 1996, two Arbitration and Conciliation Ordinance were passed on 26th March, 1996 and 21st
June, 1996 respectively.
Scheme of the Act
The Arbitration and Conciliation Act, 1996 has four Parts.
As per section 2(2) the provisions of Part I (section 2 - section 43) apply only where the place of arbitration is in India.
Sub-section 3 of section 2 lays down that Part I of the Act shall not affect any other law by virtue of which certain
disputes may not be submitted to arbitration. An award made under the provisions of Part I shall be considered as a
domestic award [section 2(7)]. Part II (section 44 - section 60) of the Act provides for enforcement of certain foreign
awards. The provisions contained in Part III (section 61 - section 81) deals with conciliation and Part IV (section 82 -
section 86) lays down some supplementary provisions.
The three Schedules of the Act are-
First Schedule - Convention on the recognition and enforcement of foreign arbitral award.
Second Schedule - Protocol on arbitration clauses.
Third Schedule - Convention of the execution of foreign arbitral award.
II. DEFINITIONS
Arbitration
Define the term arbitration
Section 2(1)(a) lays down that arbitration means any arbitration whether or not administered by permanent arbitral
institution.
This definition does not give a clear picture about what arbitration is. So, let us look at some authoritative definitions of

arbitration. According to Black's Law Dictionary, arbitration is a method of dispute resolution involving one or more
neutral third parties who are agreed to by the disputing parties and whose decision is binding. According to Halsbury's
Laws of England (4th Edn.,) 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. According to Ronald Bernstein, where two or more persons agree that a dispute or a potential dispute
between them shall be decided in a legally binding way by one or more impartial persons in a judicial manner, that is upon
evidence put up before him or them, the agreement is called an arbitration agreement or a submission to an arbitration.
In his words, "In an arbitration your claim, instead of being heard publicly in court and decided by a judge, is heard
privately by one, two or three persons (arbitrators) chosen by agreement between you and the person against whom
you are claiming (the respondent); or, if you cannot agree upon the choice, chosen by someone whom you have agreed
upon to choose; if all else fails, chosen by the Court. The procedure for deciding your claim can, if you insist, be almost
as formal as if you had gone to court. But it is much more likely to be a relaxed and informal procedure...... If there is a
hearing, it will be in private...... Above all, it is in most cases much quicker than going to court. And when the arbitrator
has made his decision (which is called an "award"), it can be enforced as if it were an order of the court". According to
M.A. Sujan, arbitration in popular parlance may be defined as a private process set up by the parties as a substitute for
court litigation to obtain a decision on their disputes.1
Thus, arbitration is an alternative to the Court litigation and is advantageous insofar as it offers procedural flexibility and
confidentiality. It also ensures a speedy resolution of the dispute(s) between the parties. At one time, arbitration was
regarded as ousting the jurisdiction of the courts but in Scott
v. Avery, (1856) 5 HL Cas 811, it was held that arbitration do not oust the jurisdiction of the court and hence, legal. But
an arbitration agreement cannot totally oust the jurisdiction of courts over the subject matter of arbitration. If it does
so, the agreement itself become void as being contrary to public policy. In the words of Sir John Donaldson, MR,
arbitrators and Judges are partners in the business of dispensing justice, the Judges in the public sector and the
arbitrators in the private sector.2
What are the different types of arbitration?
Types of Arbitration
(a) Domestic arbitration.-Domestic arbitration means an arbitration proceeding which takes place in India and in
accordance with the Indian law and the cause of action wholly arisen in India between the parties who are
subject to Indian jurisdiction.
(b) International commercial arbitration.-International commercial arbitration means an arbitration relating to

disputes arising out of legal relationship, whether contractual or not, considered as commercial under the law in
force in India and where at least one of the parties is-
(i) an individual who is a national of, or habitually resident in any country other than India; or
(ii) a body corporate which is incorporated in any country other than India; or
(iii) a company or an association or a body of individuals whose central management and control is
exercised in any country other than India; or
(iv) the Government of a foreign country. [Section 2(1)(f)]
_________________
1.M.A. Sujan: Law of Arbitration.
2.Q uoted by Ronald Bernstein in the Handbook of Arbitration Practice.

In an international arbitration there are elements of foreign origin in relation to the parties or the subject-
matter of the dispute.
(c) Institutional arbitration.-This type of arbitration is administered by an arbitration institution. The parties to an
arbitration agreement may stipulate in the agreement to refer the dispute between them to an arbitration
institution for resolution. The Indian Council of Arbitration (ICA), New Delhi, Federation of Indian Chambers of
Commerce and Industry, New Delhi, and International Center for Alternative Dispute Resolution (ICADR), New
Delhi are the leading arbitration institutions in India.
(d) Statutory Arbitration.-Some Central and State Acts provide for resolution of disputes arising under the Act by
arbitration. Section 2(4) of the Arbitration and Conciliation Act provides that except sections 40(1), 41 and 43,
Part I of the Act shall apply to every arbitration under any other enactment as if the arbitration were pursuant to
an arbitration agreement and as if that other enactments were an arbitration agreement, unless the provisions of
Part I are inconsistent with that other enactment or with any rules made thereunder.
In the case of any inconsistency between the provisions of that Act and the provisions of Part I of the
Arbitration Act, the provisions of that Act will prevail.
(e) Ad hoc arbitration.-Ad hoc arbitration refers to arbitration where the procedure is either agreed by the parties
or in the absence of an agreement, the procedure is laid down by the arbitral tribunal at a preliminary meeting
once the arbitral tribunal has been constituted. In ad hoc arbitration, the Arbitration is agreed to and arranged by
the parties themselves without any assistance from an Arbitral Institution. If the parties do not agree as to the
person who will be the Arbitrator or if one of the parties is reluctant as to the choice of the Arbitrator or in
appointing the Arbitrator, the other party will have to resort to court for relief under section 11 of the Arbitration
and Conciliation Act. In ad hoc arbitration, the fees of the Arbitrator is agreed upon by the parties or fixed by the
arbitral tribunal.
(f) Fast track arbitration or document only arbitration.-Fast track arbitration is a specialised type of arbitration,
which is very fast and time bound. It can be adopted for the resolution of international as well as domestic
disputes. The agreement for the resolution of dispute through fast track arbitration is the same as for the
ordinary arbitration, except that, in addition to the provision for arbitration, it provides that the parties have
agreed for fast track arbitration. The parties can adopt the Fast Track Arbitration Rules of any institution for the
speedy and time bound resolution of their dispute. Fast track arbitration is suitable for those disputes where the
parties wish a resolution of disputes very fast, such as within a few days or few weeks.
Documents only arbitration is based only on the claim statement and statement of defence and a written reply by
the claimant if any. The written submission by the parties may be in the form of letters written to the tribunal or
may be a formal document produced by lawyers.
(g) Look-sniff arbitration.-Look-sniff arbitration or quality arbitration is a combination of the arbitral process and
expert opinion. The arbitrator in this type of arbitration is a person having special knowledge and expertise in a
particular area of business. The expert in the field examines the commodity concerned or its samples and gives to
the parties his decision on the quality of the goods based on such inspection. There are no formal hearings or
submissions by the parties.
(h) Flip-flop arbitration or pendulum arbitration.-In this type of arbitration, the parties formulate their cases
beforehand and then they invite the arbitrator to chose one of the two. The arbitrator makes an award favouring
any one of the parties. He cannot decide somewhere in between. He must, after hearing the evidence adduced
by the parties, decide as to the case of which of the parties is correct. In this type of arbitration, the party who
inflates his claim may loose everything.
This type of arbitration is also called baseball arbitration.

Advantages and Disadvantages of Arbitration
Discuss the advantages and disadvantages of arbitration
Advantages-
(i) Parties are free to appoint the person of their choice as arbitrator.
(ii) Arbitration entitles the parties to agree upon procedural rules to be followed by the arbitral tribunal in
conducting the proceeding.
(iii) Much less expensive and less time consuming than court litigation.
(iv) Ensures a fair trial by an impartial tribunal.
(v) Arbitration gives the parties freedom from judicial intervention except where otherwise provided in the Act.
(vi) Parties have the freedom to choose a place for the arbitration proceedings.
(vii) Arbitration proceedings are conducted in private and are protected by the laws of privilege and
confidentiality.
(viii) It is not necessary to appoint lawyers for representing the parties in the arbitration proceedings. The parties
may represent themselves in person or they may appoint specialists and experts in a particular field e.g.,
Engineers, Scientists etc. for representing in the arbitration proceedings.
(ix) An arbitral award has the enforceability like a decree of a Court. Further foreign arbitral awards are also
enforceable under the Arbitration and Conciliation Act, 1996.
Disadvantages-
(i) Though arbitration is regarded as an expeditious and less expensive method of resolution of disputes between
the parties but it cannot always guarantee an expeditious resolution of dispute. The arbitrator also charge
substantial amount of fees. Further, under certain circumstances, an expeditious disposal of the dispute may be
advantageous for one party while for the other it may be disastrous.
(ii) The procedure in an arbitral proceeding although is flexible but is uncertain and will have to be ascertained by
the parties which may prove to be expensive.
(iii) Some benefits are available only in court litigation and not in arbitration, e.g. injunction.
(iv) The lack of procedural rigidity in arbitral proceeding may make the arbitral procedure less effective than court
procedure.
(v) In case of multi party dispute relating to the same subject-matter, it is often difficult to join the parties to
arbitration and to consolidate the arbitration proceedings.
Arbitration Agreement
Define Arbitration Agreement
Section 2(1)(b) provides that "arbitration agreement" means an agreement referred to in section 7.
According to section 7(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.
For detailed discussion on arbitration agreement, see Chapter 2.

Arbitral Award
What is meant by arbitral award?
Section 2(1)(c) only lays down that an arbitral award includes an interim award and does not clearly define what an
arbitral award is.
In simple language, an arbitral award is the expression by an arbitral tribunal of adjudication of a dispute between the
parties before the tribunal. In H.G. Bajaj v. Share Deal Finance Consultants Pvt. Ltd., MANU/MH/0864/2002 : AIR 2003
Bom 296, it was held that an arbitral award is the final determination of a claim or part of a claim or counter-claim by the
Arbitral Tribunal. Section 31 provides that an arbitral award shall be made in writing and shall be signed by the members
of the arbitral tribunal. If the arbitral tribunal consists of more than one arbitrator, it will be sufficient if a majority of the
members of the tribunal sign it provided reasons are given for the omitted signatures.
An arbitral award, as long as clear and unambiguous, cannot be flawed merely because it does not subscribe to any
particular format. Thus an unstamped or insufficiently stamped award is a curable irregularity, but not vitiating the award
[Subhash Projects and Marketing Ltd. v. Assam Urban Water Supply and Sewerage Board, 2003 (Supp) Arb LR 382 (Gau)
(DB)].
Types of Award
What are the different types of arbitral award contemplated under the Arbitration and Conciliation Act, 1996?
The following four types of award are contemplated under the Arbitration and Conciliation Act, 1996,-
(i) Interim award - An interim award is the determination of some preliminary issue(s) arising out of the dispute. It
is a temporary or provisional arrangement and is subject to final determination of the dispute. An interim award
should clearly specify as to which of the claims or issues it relates, otherwise the award may be liable to be set
aside under section 34. An interim award is final with respect to those issues which it has decided and is binding
on the parties and persons claiming under them.
(ii) Additional award - Section 33(4) lays down that where a party on receipt of an arbitral award finds that it
has omitted to decide certain claims which were presented in the arbitral proceedings, in the absence of an
agreement to the contrary, that party on a notice to the other within thirty days from the receipt of the award,
may make a request to the arbitral tribunal to make an 'additional award' with respect to the claims so omitted. If
the arbitral tribunal considers the request made is justified, it shall make the additional arbitral award within sixty
days of receipt of the request [Section 33(5)]. However, the arbitral tribunal may extend the time limit for making
the additional award [Section 33(6)].
(iii) Settlement or agreement awards - This type of award is made on the basis of the terms of a settlement or
agreement between the parties.
Section 30(2) provides that if, during an arbitral proceeding, 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 form of an arbitral award or agreed terms. It is permissible for the arbitral tribunal with
the agreement of the parties, to use mediation, conciliation or other Alternative Dispute Resolution procedure at
any time during the course of arbitral proceedings for bringing about settlement between the parties [Section
30(1)].
An arbitral award so made on the basis of agreed terms shall have the same status and effect as any other
arbitral award on the substance of the dispute [Section 30(4)]. A settlement or agreed award is final and binding
on the parties and persons claiming under them (Section 35).
(iv) Final award - A final award of an arbitral tribunal finally determines all the issues in dispute between the

parties.
A final award determines all the issues in the arbitration once and for all. It is a complete decision on the matters dealt
with. Such an award is final and is binding on the parties and on any person claiming under them. A final award is
conclusive as to the issues with which it deals, unless and until it is set aside by the Court under section 34 of the Act.
Foreign Awards
Write a short note on foreign award
Foreign awards are those awards which are made in foreign countries. These awards are enforceable in India under the
Arbitration and Conciliation Act, 1996. The term foreign award in relation to the New York Convention is defined in
section 44 in Chapter I of Part II of the Act. It lays down that a 'foreign award' means an arbitral award on differences
between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law
in force in India, made on or after the 11th day of October, 1960-
(a) in pursuance of an agreement in writing for arbitration to which the convention set forth in the First Schedule
applies, and
(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been
made may, by notification in the official Gazette, declare to be territories to which the said convention applies.
The term foreign award, in relation to the Geneva Convention Awards is defined in section 53 in Chapter 2 of Part II of
the Act. It lays down that "foreign award" means an arbitral award on differences relating to matters considered as
commercial under the law in force in India made after the 28th day of July, 1924,-
(a) in pursuance of an agreement for arbitration to which the protocol set forth in the Second Schedule (Protocol
on Arbitration Clauses) applies, and
(b) between persons of whom one is subject to the jurisdiction of some one of such powers as the Central
Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official
Gazette, declare to be parties to the convention set forth in the Third Schedule (Convention of the Execution of
Foreign Arbitral Awards), and of whom the other is subject to the jurisdiction of some other of the powers
aforesaid, and
(c) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been
made, may, by like notification, declare to be territories to which the said convention applies.
A foreign award under Chapter 2 of Part II of the Act (dealing with Geneva Convention Award) shall not be deemed to be
final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was
made.
The New York Convention Award and the Geneva Convention Award are enforceable in India under sections 48 and 57 of
the Arbitration and Conciliation Act, 1996.
Arbitral Tribunal
What is an arbitral tribunal?
Section 2(1)(d) says that an "arbitral tribunal" means a sole arbitrator or a panel of arbitrators.
An arbitral tribunal is creature of agreement. The parties to the arbitration confer upon it such power and prescribe such
procedure as they deem fit. However, the agreement which creates an arbitral tribunal must be in conformity with law
and the tribunal must also act and make its award in accordance with the law of the land and the agreement. [Irrigation
Deptt. Govt. of Orissa v. G.C. Roy, MANU/SC/0142/1992 : (1992) 1 SCC 508].

Section 10 says that the parties to an arbitration are free to determine the number of arbitrators. But such number shall
not be an even number. In the case of failing of parties to determine the number of arbitrators, the arbitral tribunal shall
consist of a sole arbitrator.
Under section 11 of the Act, the parties can agree on a procedure for appointing an arbitrator.
An arbitrator may be a person of any nationality unless otherwise agreed by the parties [Section 11(1)].
The appointment of an arbitrator may be challenged under the provisions of section 12 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.
Court
Define the expression 'court' as defined in the Arbitration and Conciliation Act, 1996
Section 2(1)(e) defines the expression 'Court' as the principal civil court of original jurisdiction in a district, and includes
the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the
subject-matter of the arbitration if the same had been the subject- matter of a suit, but does not include any civil court
of a grade inferior to such principal Civil Court, or any Court of Small Causes.
Thus Court under the Arbitration and Conciliation Act, 1996 means-(i) principal Civil Court of original jurisdiction in a
district, and (ii) the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the
questions forming the subject-matter of the arbitration.
But any civil court of a grade inferior to a principal civil court or a court of small causes does not come under the
purview of the term court as defined under section 2(1)(e) of the Act.
Definition of "Court" under section 2(e) excludes any civil court inferior to principal civil court in district or any court of
small causes. The District Courts are deemed to be Principal Civil Court of original jurisdiction. The "Principal District
Judge" of district alone will have jurisdiction to decide question forming subject-matter of arbitration and not other court
(S.M. Suparies M/s v. Karnataka Bank, AIR 2011 Karn 38).
The principal Civil Court of original jurisdiction in a district is the District Court [Ankati Satyamaiah v. Sallangula Lalaiah,
(2003) 2 Arb LR 431 (435) (AP)]. In a district, the court of District Judge is the 'principal Civil Court' for the purposes of
the Act. The expression District Judge includes Additional District Judge and Joint District Judge.
In the definition of court under section 2(1)(e), a High Court having ordinary original jurisdiction is also included within
the expression 'principal
Civil Court of original jurisdiction'. Only three High Courts in India have ordinary original civil jurisdiction. These High
Courts are the High Courts of Calcutta, Delhi and Bombay. Thus, only the High Courts in these cities are the 'principal
Civil Court' for the purposes of the Act.
Any civil court of a grade inferior to the principal Civil Court and any court of small causes are expressly excluded from
the purview of the term court under section 2(1)(e). An interesting case on this point is Surat Singh v. State of
Himachal Pradesh, 2003 (3) Arb LR 606 (HP)(DB). In this case, an arbitral award was challenged by an application under
section 34 of the Act, before the High Court of Himachal Pradesh. The Court directed the application to be returned for
presentation to the Court of Senior Sub-Judge, Shimla because it did not have the pecuniary jurisdiction in the case for
setting aside the arbitral award. The Senior Sub-Judge, Shimla doubted his jurisdiction to deal with the application for
setting aside the arbitral award under section 34 because his court did not come under the definition of 'Court' in section
2(i)(e) of the Act. He referred the matter to the Division Bench of the High Court. The Division Bench held that the Court
of the Senior Sub-Judge would not fall within the definition of 'Court' as defined in the Act and transferred the

application to the Court of District Judge, Shimla.
International Commercial Arbitration
What is International Commercial Arbitration?
Section 2(1) (f) lays down that "international commercial arbitration" means an arbitration relating to disputes arising out
of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at
least one of the parties is-
(i) an individual who is a national of, or habitually resident in, any country other than India; or
(ii) a body corporate which is incorporated in any country other than India; or
(iii) a company or an association or a body of individuals whose central management and control is exercised in
any country other than India; or
(iv) the Government of a foreign country.
International commercial arbitration can take place in India or in any other country. When such arbitration takes place in
India, it will be governed by Part I of the Act and award made in such arbitration will be a domestic award.
International commercial arbitration is the result of private contract between the parties but after an award is made in
the arbitration proceedings, its enforcement assumes a public character and can be enforced by the municipal courts of
a country through its local laws.
A foreign award is enforceable in India under sections 49 and 58 of the Act and it is immaterial whether or not the
arbitration agreement was governed by the law in India.
Legal Representative
Define the expression 'legal representative' as defined in the Arbitration and Conciliation Act, 1996
Section 2(1)(g) defines the term legal representative as a person who in law represents the estate of a deceased
person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a
representative character, the person on whom the estate devolves on the death of the party so acting.
Three types of persons are included in the definition of legal representative under section 2(1)(g). They are-(i) a person
who in law represents the estate of a deceased person; (ii) a person who intermeddles with the estate of the deceased;
and (iii) a person on whom the estate of the deceased devolves where the deceased was acting in a representative
character.
When a party to an arbitration agreement dies, his legal representatives are entitled to submit the dispute arising out of
the contract to arbitration and the award made in the arbitration proceedings is final and binding on the legal
representatives. If a person dies intestate, the definition would cover the legal heir and successors of the deceased.
The definition includes an intermeddler as a legal representative. An intermeddler is a person who confers a benefit on
another without being requested or having a legal duty to do so, and who therefore has no legal grounds to demand
restitution for the benefit conferred.1 In Chocklingam v. Kruppan, MANU/TN/0272/1947 : AIR 1948 Mad 386, it was held
that the term intermeddler has been used in the sense as executor de son tort, i.e. a person who, without legal
authority, takes on the responsibility to act as an executor or administrator of a decedent's property to the detriment of
the estate's beneficiaries or creditors. In Andhra Bank Ltd. v. R. Srinivasan, MANU/SC/0022/1961 : AIR 1962 SC 232, it
was held that even if a person intermeddles with a part of the estate of the deceased, he is a legal representative and
is liable to the extent of the property in his possession. Where the claim is of a representative character, a person on
whom the estate devolves on the death of the party to arbitration acting in a representative capacity, is a legal

representative. [Sumshwar Bind v. Baldeo Sahu, MANU/UP/0462/1934 : AIR 1935 All 390]. It is to be noted that an
arbitral award to be binding on the legal representatives of a decreased party to the arbitration agreement must be
made after bringing the name of the legal representatives on record of the arbitral proceedings.
Party
Define the term 'party' as defined in the Arbitration and Conciliation Act, 1996
Section 2(1)(h) lays down that "party" means a party to an arbitration agreement.
For becoming a party to an arbitration agreement, a person (natural or artificial) must be eligible to enter into a contract
under section 11 of the Indian Contract Act, 1872, every person who is of the age of majority according to the law to
which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject,
has the capacity to enter into a contract. Thus, a minor or a lunatic cannot be a party
_______________
1. Black 's Law Dictionary, 7th Edn., p. 1114.
to an arbitration agreement. Further, any person who was disqualified by any law cannot be a party to an arbitration
agreement. A person who is usually of sound mind, but occasionally of unsound mind, loses the capacity to contract
during the period when he is of unsound mind but can enter into contract during the period when he is of sound mind.
A contract entered into by a minor is void ab initio. But a joint contract entered into by a major party and a minor party
is enforceable against the major party but not enforceable against the minor party [Jamna Bai v. Vasant Rao, 43 IA 99].
The provisions as to lunacy or minority does not effect the contractual capacity of artificial persons like companies,
societies etc. but these legal persons cannot enter into a contract if prohibited by any law to enter into a contract.
Scope and applicability of Part I (Section 2 - Section 43)
Section 2(2) provides that Part I of the Act shall apply where the place of arbitration is in India.
In Bhatia International v. Bulk Trading S.A., MANU/SC/0185/2002 : AIR 2002 SC 1432, the Supreme Court interpreting
the words of section 2(2) that "This Part shall apply where the place of arbitration is in India", observed that it is not
provided in section 2(2) that Part I shall not apply where the place of arbitration is not in India nor that Part I will 'only'
apply where the place of arbitration is in India. Concluding from this the Court held that the provisions of Part I would
apply to all arbitrations and to all proceedings relating thereto. Where such arbitration is held in India, the provisions of
Part I would compulsorily apply and parties are free to deviate only to the extent permitted by the derogable provisions
of Part I. In case of international commercial arbitrations held out of India, provisions of Part I would apply unless the
parties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by
the parties would prevail. Any provision in part I which is contrary to or excluded by that law or rules will not apply.
According to the Court such an interpretation of section 2(2) is necessary otherwise there would be a lacunae in the
Act as neither Part I nor Part II would apply to arbitrations held in a country which is not a signatory to the New York
Convention or the Geneva Convention (i.e. a convention country) and it would mean that there is no law, in India,
governing such arbitrations. Further, a contrary interpretation of section 2(2) will lead to an anomalous situation,
inasmuch as Part I would apply to Jammu and Kashmir in all international commercial arbitrations but Part I would not
apply to the rest of India if the arbitration takes place out of India. The Court was of the view that if the provisions of
Part I is not made applicable to an arbitration proceeding held in a country other than India, a party would be left
remediless inasmuch as in international commercial arbitrations which take place out of India. The party would not be
able to apply for interim relief in India even though the properties and assets are in India. Thus a party may not be able
to get any interim relief at all.
Thus, the present position of law after the decision of the Supreme Court in Bhatia International case,

MANU/SC/0185/2002 : AIR 2002 SC 1432, is that an award made in international commercial arbitration held in a non-
convention country is a 'domestic award' and such award is enforceable under the provisions of Part I of the Act.
Certain disputes may not be submitted to arbitration
Which disputes cannot be referred to arbitration?
Section 2(3) lays down that Part I of the Act shall not affect any other law for the time being in force by virtue of which
certain disputes may not be submitted to arbitration.
Usually, disputes effecting civil rights where damages is the remedy can be referred to arbitration. But there are certain
disputes of civil nature which cannot be referred to arbitration because either decisions of courts or some express
provisions of law prohibits such disputes from referring it to arbitration. Matters of criminal nature may be referred to
arbitration subject to the policy of the law permitting such matters to be compromised. If the matter is non-
compoundable under law, it cannot be referred to arbitration. In Fazal Ellahie v. Nazir Ahmed, AIR 1938 Sind 130, it was
held that arbitrators cannot assume powers of a magistrate and an arbitral award acquitting certain persons of the
offence of criminal misappropriation is a nullity.
The following is an illustrative list of disputes which cannot be referred to arbitration.
(i) Proceedings for winding up of a company under the Companies Act, 1956 [Haryana Telecom Ltd v. Sterlite
Industries, MANU/SC/0401/1999 : (1999) 5 SCC 688].
(ii) If under the law certain particular kind of disputes is to be determined by a particular tribunal.
(iii) Insolvency proceedings including the question whether or not a certain person should be declared to be an
insolvent [Managilal v. Devicharan, MANU/NA/0022/1947 : AIR 1949 Nag 110].
(iv) Probate proceedings [Gopi Rai v. Baij Nath, MANU/UP/0201/1930 : AIR 1930 All 840].
(v) Questions of genuineness or otherwise of a Will [Khelawati v. Chet Ram, AIR Punj 67]. But disputes as to
construction of a Will can be referred to arbitration [Russell on Arbitration, 19th Edn.].
(vi) Guardianship proceedings [Sami Chetti v. A.K. Chetti, MANU/TN/0346/1923 : AIR 1924 Mad 484].
(vii) Dispute as to succession to the office of a muttawali falling within the scope of section 92 of the Code of
Civil Procedure [Mahomed Ibrahim Khan v. Ahmed Said Khan, ILR (1910) 32 All 503].
(viii) Dispute as to any immovable property situated outside India [Nachiappa Chettiar v. Subramaniam Chettiar,
MANU/SC/0185/1959 : AIR 1960 SC 307].
(ix) Disputes leading to a change of status e.g. divorce petition.
(x) Disputes arising from and founded on an illegal transaction [Haji Habib Haji Peer Mohd. v. Bhikam Chand
Janakilal, AIR 1954 Nag 306].
(xi) A matter in proceedings under section 145, Cr. P.C. [Kalikanath Barman v. Rajnath Barman, AIR 1952 Assam
118]. Arbitrators have no power to decide on the point of actual possession. They can only submit a report and
the Magistrate would then be bound to take that report into consideration before passing an order under section
145, Cr. P.C. [Gangadhar v. Balakrishna, MANU/NA/0074/1929 : AIR 1929 Nag 285].
(xii) A criminal complaint cannot be referred to arbitration [Malka v. Sardar, AIR 1929 Lah 394].
Statutory Arbitration
What is statutory arbitration?

Write a short note on statutory arbitration
Arbitration may be under an arbitration agreement entered into between the parties or it may be under the provisions of
a statute specifically providing for arbitration about matters covered under that statute. In the latter case, where the
reference to arbitration emanates from an enactment of the Parliament or a state legislature, the arbitration is called
statutory arbitration. There are many Central and State Acts which provide for reference to arbitration of any dispute
arising under that statute. Some examples are:- Contract Act, 1872 (section 28), Electricity Act, 1910 (section 52),
Industrial Disputes Act, 1947 [sections 2(aa), 2(b) and 10A], Payment of Bonus Act, 1965 [section 2(7)] etc.
Examples of some of the State Acts are:-
Assam Land and Revenue Regulation, 1886 (section 143); West Bengal Security Act, 1950 [section 29(3)(b)];
Delhi Cooperative Societies Act, 1972 (sections 60 and 61); Punjab Cooperative Societies Act, (Sections 55, 56
and 82) etc.
Sub-section (4) of section 2 of the Arbitration and Conciliation Act, 1996 lays down that Part I of the Act except
sections 40(1), 41 and 43 shall apply to every arbitration under any other enactment as if the arbitration were
pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except
insofar as the provisions of Part I are inconsistent with that other enactment or with any rules made under that
Act.
In case of statutory arbitration, its parameters are circumscribed by the statute itself and the statute is a
complete code with respect to the procedure and practice of arbitration. The award resulting from statutory
arbitration is enforceable as provided in the statute itself and such statute, generally, expressly exclude the
application of the arbitration statutes. In Mysore State Electricity Board v. Bangalore Woollen Cotton and Silk
Mills Ltd., MANU/SC/0007/1962 : AIR 1963 SC 1128 (1134), the Supreme Court in view of the provisions of
section 76(1) of the Indian Electricity Act, 1910, held that the dispute relating to revision of rates of tariff was
not arbitrable under the Arbitration Act.
III. RECEIPT OF WRITTEN COMMUNICATIONS
When a written communication is deemed to have been received under the provisions of the Arbitration and
Conciliation Act, 1996
Section 3(1) lays down that unless otherwise agreed by the parties,-
(a) any written communication is deemed to have been received if it is delivered to the addressee personally or
at his place of business, habitual residence or mailing address, and
(b) if none of the places mentioned to in (a) above can be found after making a reasonable inquiry, a written
communication is deemed to have been received if it is sent to the addressee's last known place of business,
habitual residence or mailing address by registered letter or by any other means which provides a record of the
attempt to deliver it.
The arbitration award was duly sent by the arbitration with acknowledgment due. The envelop was returned with
endorsement "not claimed" was sufficiently stamped. It was held that since petitioner failed to prove that award was not
served though endorsed "not claimed". The petitioner filed after lapse of statutory period of 120 days hence the
application was barred by limitation (New Globe Transport Corporation v. Magma Shrachi Finance Ltd.,
MANU/WB/0102/2011 : AIR 2011 Cal 72).
Section 3(2) then lays down that the communication is deemed to have been received on the day it is so delivered.
Thus, under the provisions of sub-sections 1 and 2 of section 3, the service of a written communication can be made in
the following ways-

1. By delivering it personally to the addressee.
2. By delivering it at his place of business, habitual residence or mailing address; or
3. If the places mentioned in 2 above cannot be found after making a reasonable inquiry, the communication will
be deemed to have been received by the addressee if it is sent to his last known place of business, habitual
residence or mailing address by a registered letter or by any other means which provide a record of the attempt
to deliver it.
4. The communication will be deemed to have been received by the addressee on the date when it is so delivered
to him.
How service of a written communication is made under the Arbitration and Conciliation Act, 1996?
In an arbitration proceeding, it is necessary to inform a party about certain procedural step or that there are arbitration
proceedings going on to which he is a party. Sometimes, addresses of a party is not known. Section 3 of the Act thus
deals with the issue as to when written communication is deemed to have been received by the addressee. The words
'unless otherwise agreed by the parties' in section 3(1) indicate that the parties are free to choose a particular
procedural rule for the receipt of their communication and in cases where they have not choosen any such rules, the
provisions of section 3 applies. If a person, to whom the communication is addressed, refuses to receive it, the serving
officer shall affix a copy of the document on the outer door or some other conspicuous part of the house in which the
addressee ordinarily resides or carries on business or personally works for gain. If that is not done, the service will not be
effective [Surinder Kumar v. Union of India, 1994 (1) Arb LR 16 (Del)]. The burden of showing that the addressee has
duly received the communication lies on the serving party. [Schumacher v. Laurel Island Ltd., The Santa Cruz Tres,
(1995) 1 Lloyd's Rep. 208]. The written communication shall be deemed to have been received by the addressee when
his place of business, habitual residence or mailing address cannot be found after mailing a reasonable inquiry and the
communication is sent to the addressee's last known place of business, habitual residence or mailing address by
registered letter, it will be deemed to have been received on the date the communication is delivered to the addressee
at his last known place of business etc. and not when it was sent.
Section 3(3) provides that the provisions of section 3 does not apply to written communication in respect of proceedings
of any judicial authority.
IV. WAIVER OF RIGHT TO OBJECT
What a party is said to have waived him right to object? What are the pre-conditions for waiver of the right to object?
Section 4 of the Act provides that a party who knows that-
(a) any provision of this Part from which the parties may derogate, or
(b) any requirement under the arbitration agreement, has not been complied with and 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, he shall be deemed to have waived his right to so object.
The word waiver means voluntary relinquishment or abandonment, express or implied, of a legal right or
advantage. The party alleged to have waived a right must have had both knowledge of the existing right and the
intention of forgoing it.1 The term waiver has been judicially defined as the abandonment of a right in such a
way that the other party is entitled to place the abandonment by way of confession and avoidance if the right is
thereafter asserted.2 Waiver is an intentional relinquishment of known right or such conduct as warrants an
inference of the relinquishment of that right. It is an intentional act and implies consent to disperse with or
forego something to which a person has a right. Waiver on the part of a party is referable to a conduct signifying
intentional abandonment of right. It may be express or even may be implied but should be manifest from some
overt act. It is a mixed question of fact and law and must, therefore, be considered in the light of facts of each

case. [Ram Babu v. Ramprasad, 1981 Jab LJ (SN) 39]. Under the provisions of section 4, there are four pre-
conditions for waiver of the right to object:-
(i) Non-Compliance of a non-mandatory provision of the Act or arbitration agreement.-There must be non-
compliance with a non-mandatory provision of Part I of the Act or with any covenant of the arbitration
agreement by a party to the arbitral proceedings. If a party has not complied with the requirements of
any of such provisions the other party has the right to object to the arbitral proceedings and if he does
not so object he will be deemed to have waived his right to so object. Similarly, non-compliance with any
covenant of the arbitration agreement by a party entitles the opposite party to object to such non-
compliance and if he does not object to the non-compliance, he will be deemed to have waived his right
to so object.
(ii) Knowledge of non-compliance.-The defaulting party must have the knowledge of such non-compliance
of a non-mandatory provision or any provision of the arbitration agreement before it can be deemed to
have waived its right to object. Such knowledge may be inferred from the circumstances because
existence of knowledge may be
________________
1. Black 's Law Dictionary, 7th Edn., p. 1574.
2. A/e N9/264, Art. 5, para. 2.
proved by proof of circumstances from which the knowledge can be inferred. In the absence of the knowledge of
such non-compliance, there is no occasion for the party to raise his objection, and the other party cannot set up
the plea of waiver.
(iii) Proceeding with the arbitration.-If a party proceeded with the arbitration proceeding without objecting to the
breach of the statutory or contractual right, he will be deemed to have waived his right to object. Thus, once a
party has participated in the arbitration proceedings, despite some disability, of which the party had knowledge,
which would otherwise render the arbitration proceedings invalid, he cannot later challenge it on the ground of
such illegality. If a party allows the arbitrator to proceed with the reference without objecting to his jurisdiction
or competence, he will not subsequently be heard to say that the award be set aside on any such ground [New
India Assurance Co. v. Dalmia Iron & Steel Ltd., MANU/WB/0017/1965 : AIR 1965 Cal 42].
(iv) Failure to state objection without delay.-For the purpose of establishing the plea of waiver, it must be shown
that the defaulting party failed to state his objection as to non-compliance of the statutory or contractual
requirement without undue delay or if a time limit is provided for stating that objection, within that period of time.
If the\ party does not state his objection without undue delay or if a time limit is provided, within that period of
time, he will be deemed to have waived his right to object. If any irregularity comes to the knowledge of a party
at the time of reference, he must state his objection in his pleading before the arbitral tribunal and then proceed
with the arbitral proceedings. In cases where the] irregularities comes to the knowledge of a party during the
arbitration proceedings but before the award is made, he must state his objection\ forthwith and then continue
with the proceedings. By so objecting, he preserves his right to challenge the arbitral proceedings and the
resulting award at a later stage on the ground of such irregularity. But if a party comes to know about the
irregularity after the making of the award, the provision of section 4 are not attracted. However, the party can
file an application under section 34 of the Act for setting aside the award.
Distinction between Waiver and Estoppel
Distinguish between waiver and estoppel
Estoppel Waiver

1. Estoppel accentuates intentional representation by 1. Waiver does not involve any
one person to another to believe something to be true representation by one of the parties to
and act upon such belief. If the latter has acted upon the other.It is an intentional
such belief, the former will not be allowed by the Court relinquishment of known right or such
to deny the truth of his representation in legal conduct as warrants an inference of the
proceeding. relinquishment of that right.
2. Estoppel is governed by the rule of evidence and it is 2. Waiver is contractual and is an

a matter only of proof. It is a matter of conduct of the agreement to release or not to assert a
person concerned who by his representation to another right.
has induced the latter to alter his position.
3. In case of estoppel by representation, the fact that 3. Waiver is created upon knowledge of
the plea of estoppel. all the facts by both the parties.
4. Estoppel is a rule of evidence and it does not create 4. Waiver may constitute a cause of
any substantive right. action when a person agrees to waive
his right.
5. The principle behind estoppel is that if a person has 5. The principle behind waiver is that
acted to his detriment or altered his position on the when an irregularity is committed in
basis of any declaration, act or omission of another arbitration proceedings, the party who
person, that other person will not be allowed in any suit considers himself to be adversely
or proceedings between himself and the other person or affected by it, must object to it without
his representative to go back upon it to the detriment undue delay. If he does not, the court
of the opposite party. [Haji Muhammad Yunus v. and would not permit him to lie by or act is
endeaHaji Muhammad Ismail, PLD vors to set it aside if it an indecisive manner, so as to obtain
is not in 159 (WP) Kara 755] his favour. the benefit of the award if it is in his
favour
[Pioneer Engg. Works v. Union of India,
MANU/BH/0102/1959 : AIR 1959 Pat
374]
Certain illustrative cases where waiver was held to have taken place
In Kripa Sindhu v. Sudha Sindhu, AIR 1993 Cal 496, a dispute was referred without intervention of court to three
arbitrators under an arbitration agreement. After the hearing was concluded, one of the three arbitrators died. Only two
remaining arbitrators then made the award. Before the death of the third arbitrator, the parties had entered into an
agreement providing that if one of the arbitrators became incapable of acting, the unanimous award by the remaining
two arbitrators would be binding on the parties. It was held that the condition that the award was to be by three
arbitrators was waived by the parties when they entered into a record agreement providing that award by two
arbitrators would be binding.
In Hindustan Construction Co. Ltd. v. Governor of Orissa, MANU/SC/0436/1995 : (1995) 3 SCC 8, in course of arbitral
proceedings it was noticed that the dispute under reference was beyond the pecuniary jurisdiction of the arbitral
tribunal. The State Government then referred the dispute to a special tribunal which proceeded with the arbitration and
made its award. In view of the fact that the State Government itself had constituted the special tribunal and had
participated in the proceedings without raising any objection, till the award was made, the Supreme Court held that the
government could not be permitted to raise the belated objection merely because the award was made against it.
In R.C. Bhalla v. N.C. Bhalla, AIR 1996 Del 24, both the parties to an arbitration proceedings, in relation to a dispute
regarding distribution of assets, participated in the proceedings. The parties argued on all questions in issue and also

participated in the division of assets. One of the parties was, thereafter, not permitted to raise an objection before the
court that the question of division of assets and liabilities was beyond the scope of the reference.
In Jagmohan v. Suraj Narain, AIR 1935 Oudh 499, an objection was taken against the award that there had been no
proper reference to arbitration inasmuch as there was no written application as required by Paragraph 1 of Schedule II,
C.P.C., and also because the matters in difference which the arbitrator was required to determine were not clearly set
forth. It was held that when the arbitrator started his proceedings, no objection was raised on behalf of the applicant
about the arbitrator having no jurisdiction to proceed with the matter. The applicant took his chance before the
arbitrator, and the award having gone against him, he could not be permitted to raise that objection.
In Board of Trustees of Paradeep Port Trust v. Natwar Iron and Steel Works Co., 1994 (1) Arb LR 54, there was contract
between the parties for the purchase of scrap from the Paradeep Port Trust. The entire stock of the scrap could not be
removed by the purchaser. Thereafter, the Port Trust forfeited the security deposit and terminated the contract. The
dispute which thus arose was referred for arbitration to an employee of the Paradeep Port Trust. Both the parties put
their respective claim and counter-claim before the arbitrator and also placed materials before him. The arbitrator made
an award which went against Paradeep Port Trust. The Port Trust then challenged the award inter alia on the ground
that there was no arbitration clause in the agreement and therefore reference to arbitration was invalid. It was held that
the Paradeep Port Trust having itself referred the dispute to one of its employees and having also participated in the
arbitration without objection, it was not entitled to raise an objection that in the absence of an arbitration clause, the
reference was bad in law.
Certain illustrative cases where waiver was held not to have taken place
In President of India v. Kesar Singh, AIR 1966 J&K 113, there were two contracts between the parties. The new
contract replaced the old one. There was no arbitration clause in the new contract. However, reference was made to
the arbitrator under the new contract. The contractor objected to the jurisdiction of the arbitrator but participated in
the arbitration proceedings. It was held that the contractor's participation thereafter did not constitute
waiver. The whole arbitration proceeding was invalid and the whole award was liable to be set aside.
In Dilip Singh v. Khilan Singh, MANU/MP/0025/1979 : AIR 1979 MP 117, an application was made under section 14 of the
Arbitration Act, 1940, for making an award rule of the court, no step was taken for appointment of guardian ad litem of
minor non-applicant. It was held that order of the court making the award rule of the court was void ab initio. The order
was set aside and the trial court was directed to proceed with the appointment of guardian ad litem for minor and
thereafter to proceed afresh in accordance with law.
In Paramjit Singh v. State of Himachal Pradesh, MANU/HP/0003/1979 : AIR 1979 HP 17, the person acting as an
arbitrator was transferred and did not thereafter wish to continue as an arbitrator, but was required to continue under
the directions of his superior officer, and who thereafter made the award. It was held that an arbitrator could not be
compelled to work in the face of his refusal and the entire proceedings in which the arbitrator had been compelled to
work in spite of his refusal were void ab initio. Submission to such proceeding could not validate the proceedings.
It is to be noted that an objection regarding inherent want of jurisdiction in the arbitrator can be allowed to be raised at
any stage. The mere fact that the party objecting had appeared before the arbitrator at earlier stages of the
proceedings and also participated would not operate as estoppel against it in challenging the jurisdiction. [Jagannath
Kapoor v. Premier Credit and Instalment Co. (P) Ltd., MANU/UP/0018/1973 : AIR 1973 All 49]. It is also to be noted that
mere signature by a party to an award does not necessarily in all cases estop the party from afterwards disputing the
correctness of the award. It must be clear that when the party attached his signature he was aware that the
irregularity had been committed. [Alagappa v. Chidambaram, MANU/TN/0246/1930 : AIR 1931 Mad 619].
V. EXTENT OF JUDICIAL INTERVENTION
To what extent courts can interfere with an arbitration proceedings?

Section 5 of the Arbitration and Conciliation Act, 1996 lays down that in matters governed by Part I of the Act, no
judicial authority shall intervene except where so provided in this Part.
This section intends to minimise the intervention of judicial authorities in arbitration proceedings. Sometimes, the parties
to arbitration proceedings take recourse to dilatory tactics by obtaining stay of the arbitration proceeding by an order of
the court.
This section, by allowing less chance to delay or stall proceedings by intentionally taking recourse to dilatory court
proceedings, functions to accelerate the arbitration proceedings.
This section prohibits not only the law courts from interfering with the arbitration proceedings except so far as provided
by Part I of the Act, but it also prohibits any other authority on which the judicial power of the state is conferred.
Part I of the Act permits judicial intervention in the arbitration proceeding in the following cases-
(1) Section 8: Power to refer parties to arbitration where there is an arbitration agreement.
(2) Section 9: Power of the Court to pass interim orders.
(3) Section 13(5): Where an arbitral award is made, after a party to the arbitration proceeding challenged the
arbitrator, either under any procedure agreed upon by the parties or under section 13(2), and has failed, the
party challenging the arbitrator may make an application under section 34 for setting aside the award.
(4) Section 14(2): If a controversy remains regarding whether the mandate of an arbitrator terminated on the
ground of his becoming de jure or de facto unable to perform his functions or for other reasons failing to act
without undue delay, a party may, unless otherwise agreed by the parties, apply to the Court to decide on the
termination of mandate.
(5) Section 16(6): When a contention is raised before an arbitral tribunal regarding its jurisdiction or competence
and the tribunal made an award rejecting such contentions, the party aggrieved by such an arbitral award may
make an application under section 34 for setting aside the award.
(6) Section 27: Court's power to provide assistance to the arbitral tribunal in taking evidence.
(7) Section 34: Power of the Court to set aside an arbitral award or to remit the award to the arbitral tribunal.
(8) Section 37: Appellate Court's jurisdiction to hear appeals from:-
(i) Original decrees of the court passing an order granting or refusing to grant any measure under section
9.
(ii) Original decrees of the Court setting aside or refusing to set aside an arbitral award under section 34.
(iii) Arbitral Tribunal's order accepting the plea referred in sub section (2) or sub-section (3) of section 16.
(iv) Arbitral tribunal's order granting or refusing to grant an interim measure under section 17.
9. Sub-sections (2) and (4) of Section 39: If in any case, an arbitraltribunal refuses to deliver its award except
on payment of the costsdemanded by it, the Court may, on an application in this behalf,order that the arbitral
tribunal shall deliver the arbitral award to theapplicant on payment into Court by the applicant of the
costsdemanded. The Court then, after such inquiry as it thinks fit, orderthat out of the money so paid into Court
there shall be paid to thearbitral tribunal by way of costs such sum as the Court may considerreasonable and the
balance, if any, shall be refunded to theapplicant.
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.

10. Section 43(3): Where the arbitration agreement provides that any claim relating to a dispute to which the
agreement applies shall be barred unless some step to commence the arbitral proceedings is taken within a time
fixed by the agreement, the Court may extend the time for such period as it thinks proper.
VI. ADMINISTRATIVE ASSISTANCE
When an arbitral tribunal can take administrative assistance?
Section 6 of the Act provides that in order to facilitate the conduct of the arbitral proceedings, the parties, or the
arbitral tribunal with the consent of the parties, may arrange for administrative assistance by a suitable institution or
person.
The object of this section is to expedite the arbitral proceedings. This section gives freedom to the parties to an
arbitration proceeding to engage an arbitration institution (e.g. Indian Council of Arbitration), or a person who has
specialisation in conducting arbitration proceedings.

Chapter 2
ARBITRATION AGREEMENT
I. DEFINITION AND MEANING OF ARBITRATION AGREEMENT
What is meant by the term 'arbitration agreement'?
Section 7(1) of the Act provides that an 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.
Section 7(2) lays down that an arbitration agreement may be in the form of an arbitration clause in a contract or in the
form of a separate agreement.
An arbitration agreement must be in writing.1 An arbitration agreement is in writing if it is contained in-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the
agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one
party and not denied by the other.2
Section 7(5) provides that 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.
An arbitration agreement stands on the same footing as any other agreement. It is binding upon the parties unless it is
influenced by fraud or coercion or undue influence, etc. An essential requirement of an arbitration agreement under
section 7 is that the agreement must be in writing. An oral arbitration agreement is not recognised as arbitration
agreement under this section. The implied requirement of sub-section (1) of section 7 is the
___________
1. Section 7(3).
2. Section 7(4).
competency of parties to enter into contract. Lack of such capacity invalidates the contract. Section 34(2)(i) makes an
arbitral award liable to be set aside if a party was under some incapacity at the time of entering into the arbitration
agreement.
Whether there is any prescribed form for an arbitration agreement?
There is no specific form in which an arbitration agreement is required to be drawn. The arbitration agreement may be a
single document containing all the terms signed by both the parties or it can comprise of two documents one containing
all the terms signed by one party and the other a plain acceptance by the other party of the first document or it can be
an unsigned document containing the terms of which both parties agree either orally or by a separate acceptance.
Arbitration agreement may be express or can be spelt out by implication or it may be referential incorporation [Atlas
Export Industries v. Kotak and Co., MANU/SC/0538/1999 : AIR 1999 SC 3286].
Essential Elements of an Arbitration Agreement
What are the essential elements of an arbitration agreement?

The Supreme Court in Bihar State Mineral Development Corporation v. Encon Builder Pvt. Ltd., 2003 (3) Arb LR 133 (137)
(SC), held the following as the four essential elements of an arbitration agreement:-
(i) There must be a present or future difference in connection with some contemplated affair.
(ii) The parties must have the intention to settle such difference by a private tribunal.
(iii) The parties must agree in writing to be bound by the decision of such tribunal.
(iv) The parties must be ad idem.
In K.K. Modi v. K.N. Modi, MANU/SC/0092/1998 : AIR 1998 SC 1297, the Supreme Court held that the following attributes
must be present in an arbitration agreement-
(i) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to
the agreement.
(ii) That the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the
parties or from an order of the court or from a statute, the terms of which make it clear that the process is to be
an arbitration.
(iii) The agreement must contemplate that substantive rights of the parties will be determined by the arbitral
tribunal.
(iv) That the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal
owing an equal obligation of fairness towards both sides.
(v) That the agreement of the parties to refer their disputes to the decision to the tribunal must be intended to
be enforceable in law; and
(vi) The agreement must contemplate that the tribunal will make a decision upon a dispute which is already
formulated at the time where a reference is made to the tribunal.
Time-bar clause in an arbitration agreement
Write a short note on time-bar clause
Where a clause in an arbitration agreement provides that claims to which the argument applies shall be barred unless
some step to commence the arbitration is taken within a stated time, such clause in an arbitration agreement is called a
time-bar clause. Time-bar clause is also known as Atlantic Shipping clause as it takes its name from a decision in
Atlantic Shipping and Trading Company v. Louis Dreyfus and Company, (1922) 2 AC 250. In that case, it was held that it
was lawful to have a clause that the arbitration must be commenced within a certain time and that if it was not so
commenced, the claim would be barred. It is to be noted that a time-bar clause does not fall within the mischief of
section 28 of the Contract Act as it does not shorten the period of limitation to enforce a right, but brings an end to the
right itself.
Time-bar clauses are to be strictly construed against the party relying on them. However, in a case where the time-bar
clause applies, if the court is of the opinion that in the circumstances of the case undue hardship would be caused, it
may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.1
Scott v. Avery clause
Write a short note on Scott v. Avery clause
In Scott v. Avery, (1856) 5 HL Cas 811, a marine insurance policy provided that the insured was not entitled to maintain
any action on that policy until the matter had been decided by the arbitrators. Thus obtaining the decision of the

arbitrator was made a condition precedent to maintain an action. The House of Lords decided that though it is a
principle of law that the parties cannot, by contract oust the jurisdiction of the courts, any person may covenant that
no right of action shall accrue till an arbitrator has decided on any difference that may arise between the two parties to
the covenant. The House of Lords upheld the legality of this condition holding that until an award was made, no action
could be maintained.
Thus, when a clause in an arbitration agreement provides that no right of action shall arise unless and until an award has
been made, the clause is called a Scott v. Avery clause. The Supreme Court in Vulcan Insurance Co. Ltd. v. Maharaj
Singh, MANU/SC/0333/1975 : AIR 1976 SC 287 observed that a clause like Scott v. Avery has repeatedly been held to
be a valid one.
Construction of the Arbitration Agreement
What are the principles to construe an arbitration agreement?
The Halsbury's Laws of England,2 lays down the following principles for construction of an arbitration agreement-
(i) words must be understood in their plain, ordinary and popular sense unless they have generally acquired a
peculiar sense distinct from the popular sense;
(ii) if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion
that flouts
_____________
1. Section 43(3).
2. Vol. 2(3), 4th Edn., p. 15
business common sense, it must be made to yield to business common sense;
(iii) to the extent that the drafting of a term gives rise to lacunae or lacks clarity, the considerations of the court
should not be driven by semantic niceties, but should be guided by the intentions of the parties;
(iv) in ascertaining the intention of the parties, the court should seek to ascertain the meaning which the
document would convey to a reasonable person having all the background knowledge which would reasonably
have been available to the parties in the situation in which they were at the time of the contract; the court is
therefore entitled to consider any factual material which would have affected the way in which the language of a
document would have been understood by a reasonable man, save for previous negotiations between the parties
and declaration of subjective intent (which are excluded for reasons of practical policy).
In Bihar State Mineral Development Corporation v. Encon Builders (I) Pvt. Ltd., 2003 (3) Arb LR 133 (SC), it was held
that if the intention of the parties to refer the dispute to arbitration can be clearly ascertained from the wording of the
agreement or is otherwise clear, it is immaterial whether or not the expression 'arbitration or arbitrator' has been used. In
State of Uttar Pradesh v. Sardul Singh Kulwant Singh, MANU/UP/0134/1985 : AIR 1985 All 67, it was held that the mere
absence of the words 'arbitrator or arbitration' does not make it any the less an arbitration agreement. But in K.K. Modi
v. K.N. Modi, MANU/SC/0092/1998 : (1998) 3 SCC 573, it was held that the mere use of the words 'arbitration',
'arbitrator' or the 'decision will be final', will not necessarily constitute an arbitration agreement if from the language it
appears that the parties had no intention of submitting their dispute to arbitration. In Union of India v. D.N. Revry and
Co., (1974) SCC 147, it was held that the meaning of a contract must be gathered by adopting a commonsense
approach and must not be allowed to be thwarted by a pedantic and legalistic interpretation.
The intention of the parties to refer a matter to arbitration is to be gathered from the expressions used in the
correspondence and the meaning it conveys. In case it shows that there had been a meeting of minds between the
parties and they had actually reached an agreement upon all material terms, then and then alone can it be said that a

binding contract was capable of being spelt out from the contract or the correspondence [Rickmers Verwaltung GmbH v.
Indian Oil Corpn. Ltd., MANU/SC/0726/1998 : (1999) 1 SCC 1].
II. POWER OF JUDICIAL AUTHORITIES TO REFER PARTIES TO ARBITRATION
Discuss the power of judicial authorities to refer the parties to arbitration
Section 8(1) of the Act provides that a judicial authority before which an action is brought in a matter which is the
subject of an arbitration agreement shall refer the parties to arbitration if a party so applies not later than when
submitting his first statement on the substance of the dispute.
An application for so referring the parties to arbitration must be accompanied by the original arbitration agreement or a
duly certified copy thereof. [Section 8(2)]
Section 8(3) lays down that an arbitration proceeding may be commenced and an arbitral award may be made
notwithstanding the fact that an application for referring the parties to arbitration has been made and the issue is
pending before the judicial authority.
The object of the Arbitration and Conciliation Act, 1996 is to help the parties to settle their disputes privately.
Sometimes, the parties to an arbitration agreement take recourse to dilatory tactics. The provisions of section 8 ensures
that a matter covered by an arbitration agreement shall not be litigated upon in any court of law whatsoever, except for
the purpose of making the arbitration really effective. Thus, section 8(1) of the Act lays down 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 an order of reference to arbitration. In P. Anand Gajapati Raju v. P.V.G. Raju,
MANU/SC/0281/2000 : AIR 2000 SC 1886, the Supreme Court held that the following requirements must be there for
passing an order of stay in a suit and referring the parties to the suit to arbitration:
(i) there must be an arbitration agreement;
(ii) a party to the agreement brings an action in the court against the other party;
(iii) the subject-matter of the action is the same as the subject-matter of the arbitration agreement;
(iv) the other party moves the court for referring the parties to arbitration before submitting the first statement
on the substance of the dispute.
The provisions of section 8 are mandatory and if the basic requirements are there, the court must ask the parties to
refer to arbitration and declare that the suit is not maintainable. In Hindustan Petroleum Corpn. Ltd v. Pinkcity Midway
Petroleums, MANU/SC/0482/2003 : AIR 2003 SC 2881, the Supreme Court held that if in an agreement between the
parties before the civil court, there is a clause for arbitration, it is mandatory for the civil court to refer the dispute to
an arbitrator. In T.N. Electricity Board v. Sumathi, (2000) 4 SCC 543, the Supreme Court held that if during the
pendency of the proceedings in the Court, the parties have entered into an arbitration agreement, then they have to
proceed with the matter in accordance with the provisions of the Arbitration and Conciliation Act. When the award is
made, it is a decree. It has to be filed in the 'Court' as defined in section 2(e) of the Act for its enforcement as a decree
under section 36.
Though section 8 does not prescribe any time-limit for filing an application and only states that the application under it
should be filed before submission of the first statement on the substance of dispute, the scheme of the Act and the
provisions of section clearly indicate that the application thereunder should be made at the earliest. (Booz Allen and
Hamilton Inc. v. SBI Home Finance Ltd., MANU/SC/0533/2011 : AIR 2011 SC 2507).
Judicial Authority
The term judicial authority has not been defined in the Act. In S.B.P. and Co. v. Patel Engineering Ltd,

MANU/SC/1787/2005 : (2005) 8 SCC 618, the Supreme Court opined that the expression judicial authority means a court
as defined in section 2(1)(e) of the Act or any other Judicial fora including a special tribunal like the Consumer Forum.
The expression 'Judicial authority' is wider than the expression 'court' and includes those authorities upon which the
judicial power of the state in conferred. In Managing Committee, Senior Secondary School v. Vijay Kumar,
MANU/SC/0556/2005 : AIR 2005 SC 3549, the Supreme Court held that the Tribunal constituted under section 11 of the
Delhi School Education Act, 1973 was covered by the expression judicial authority. Under the provision of section 8, the
judicial authority is authorised to refer the parties to arbitration, before which an action in a matter which is the subject
of an arbitration agreement is pending, if an application is made to it by a party. The jurisdiction under section 8 can
only be invoked by a party making an application to the judicial authority in opposition to an action that has been
brought before it in a matter, which in the subject-matter of an arbitration agreement [W.B.S.E.B. v. Shanti Conductors
Pvt. Ltd., 2004 (2) Arb LR 159 (Gau)].
The question as to the arbitral tribunal's jurisdiction including existence or validity of the arbitration agreement, can only
be decided by the arbitral tribunal and not by the judicial authority. 1 But if the action is brought before the judicial
authority in a matter which is the subject of an arbitration agreement, the judicial authority can go into the question as
to whether the matter is the subject of an arbitration agreement. When a judicial authority receives an application for
referring the parties to arbitration, it is the judicial authority who is to consider whether the subject-matter of the
action is the same as the subject-matter of the arbitration agreement. If the judicial authority finds that the subject-
matter in both cases is the same, it will refer the parties to arbitration.
Two simultaneous proceedings under section 8(3)
Section 8(3) lays down that notwithstanding that an application has been made to a judicial authority, under section
8(1), for referring the parties to arbitration, the arbitration proceedings may, if already have commenced may continue
or an arbitration may be commenced and the arbitral tribunal may make an award. Section 8(3) thus permits two
proceedings at the same time, one before the judicial authority on the jurisdictional issues and the other before the
arbitral tribunal on merits of the case. The pendency of an action before a judicial authority does not preclude a party
from initiating arbitral proceedings. Similarly, where an arbitration has already been commenced, the parties are not
barred from continuing the arbitration proceedings, resulting in an arbitral award, while the issue is pending before the
judicial authority.
III. INTERIM MEASURES, ETC. BY COURT
Discuss the power of courts to grant interim measures in an arbitration proceeding
Section 9 of the Arbitration and Conciliation Act, 1996, provides that a party may, before or during arbitral proceedings
or at any time after the making of the arbitral award but before enforcement, apply to a court for the appointment of a
guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings.
_________
1. Section 16(1).
Section 9 also provides that a party may, before or during arbitral proceedings or at any time after the making of the
arbitral award but before it is enforced, apply to a court for an interim measure of protection for-
(i) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration
agreement;
(ii) securing the amount in dispute in the arbitration;
(iii) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute
in arbitration, 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;
(iv) interim injunction or the appointment of a receiver;
(v) such other interim measure of protection as may appear to the Court to be just and convenient.
The Court has the same power for making an interim order under section 9 of the Act, for the purpose of appointing a
guardian or for preservation, interim custody etc. of goods, as it has for the purpose of, and in relation to, any
proceedings before it. [Section 9]
Section 9 like section 8 of the Act is an exception to the general rule provided under section 5 of the Act, that in
connection with the matters governed by Part I of the Act, no judicial authority shall intervene except where so
provided in this Part I. These provisions i.e. sections 8 and 9 specifically provide for judicial intervention in arbitration
proceedings. The power of the Courts under section 9 is mandatory and the parties cannot avoid the provision of this
section by agreeing otherwise. This section is not subject to party autonomy. It is to be noted that the powers of the
Court under the provisions of section 9 can be exercised only where the place of arbitration is in India.
The object of interim measures of protection as provided under section 9 is to support the arbitration by making it
effective. The Court may intervene in support of arbitration by granting interlocutory injunctions.
A telephone call or telex message could, within seconds of the service of a writ, put all liquid assets out of the reach of
the creditor. So, court intervention by way of ordering interim measures of protection, is essential in urgent situations
particularly when granting relief is beyond the jurisdiction of the arbitral tribunal, or where the arbitral tribunal is yet to
be constituted.
The purpose which section 9 serves is to ensure that the property which is the subject-matter of arbitration, is not
diverted or destroyed and also to ensure that the parties are able to fully exploit the evidentiary value of the property in
dispute. For this purpose, the court has been expressly vested with the same powers for making orders as it has for the
purpose of, and in relation to, any proceedings before it. Thus, the court will act according to the powers vested in it by
the procedural laws such as the Code of Civil Procedure and the Indian Evidence Act.
Interim Measure: Breach of Agreement
There was breach of agreement to supply iron by way of export. No specific allegation was made in case that appellant
had started transferring his assets for payment. It was held that interim relief directing applicant to furnish security by
way of bank guarantee of value of 20% of sale price and in default attachment of immovable property was in nature of
attachment before award was illegal and it was also held that the court should be guided by some principles which were
required to be followed while disposing of applications under sections 38-40 of C.P.C. (Rashmi Cement Ltd. v. Trafigura
Becheer B.V., AIR 2011 Cal 7)
Protection of Goods
The term 'goods' has not been defined in the Arbitration and Conciliation Act, 1996. Section 2(7) of the Sale of Goods
Act, 1930 defines "goods" as every kind of movable property other than actionable claims and money and includes stock
and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed
before sale or under the contract of sale. This definition of the term 'goods' is relevant for the purposes of section 9 of
the Arbitration and Conciliation Act. Section 9(ii)(a) of the Act confers power on the court for preservation, interim
custody or sale of any goods which are the subject-matter of the arbitration agreement. The court can protect the
subject-matter of the arbitration agreement from damage, deterioration or destruction and also from being
misappropriated by the party who has control or custody of them. If the goods are of perishable nature or likely to
deteriorate, the court can order sale of such goods and secure the proceeds of sale by paying into court or otherwise.
Securing the amount in dispute in arbitration

How the amount in dispute in arbitration is reward?
Section 9(ii)(b) of the Act conferred on court the power of attachment before judgment. The provision of section 9(ii)
(b) will not be attracted unless the amount sought to be secured is actually in dispute in the arbitration. For making an
order under section 9(ii)(a), it is not necessary for the court to find out whether the respondent is seeking to dispose of
the property or taking the property outside the jurisdiction of the Court. The provision contained in Rule 5 of Order 38 of
the Code of Civil Procedure is not applicable in cases falling under section 9(ii)(b) of the Act, although analogus
principles may be kept in mind while passing an order under this section. Each case under section 9(ii)(b) of the Act has
to be considered in its own facts and circumstances and on the principles of equity, fair play and good conscience. In
Golbal Company v. National Fertizers Ltd., AIR 1998 Del 397, it was held that for obtaining an order under this section
the applicant must produce adequate material before the court on the basis of which the court can form its opinion that
unless the jurisdiction is exercised under this provision, there is a real danger of the respondent defeating, delaying or
obstructing the execution of the award made against it.
Detention, preservation or inspection of any property
Discuss the provisions regarding detention, preservation or inspection of any property which is the subject-matter of
dispute in arbitration
Under the provision section 9(ii)(c) of the Act, the Court can pass order for detention, preservation or inspection of any
property or thing which is the subject-matter of the dispute in arbitration. The purpose of such interim measures is to
prevent the property or thing from being altered, destroyed or disposed of, before the evidence of existing state can be
secured for the purpose of the arbitration. An interim measure under section 9(ii)(c) can also be ordered by the Court in
relation to property or thing regarding which any question may arise in the arbitral proceedings.
The Court has power under section 9(ii)(c) of the Act or order an inspection for obtaining full information and evidence,
regarding the property which is the subject-matter of the dispute in arbitration or as to which any question may arise in
the arbitration. The Court may authorize any person for this purpose to enter upon any land or building which is in
possession of any party to the arbitration proceeding. The Court may also authorise such person to take any samples or
make any observation or conduct any experiment for obtaining full information or evidence. The arbitrator has the power
to inspect the property in respect of which an issue arises in the arbitration. He may do so on being authorised by the
Court under section 9 or ex officio under section 17 of the Act.
It is to be noted that as section 9 expressly vests the court in exercising its power under this section with the same
power as it has for the purpose of, and in relation to, any proceedings before it, the court can exercise its powers
vested in it by the Code of Civil Procedure for summoning and compelling the attendance of witness or production of
documents or by the Evidence Act for examination of witnesses and production of documents.
In Sundaram Finance Ltd. v. NEPC India, MANU/SC/0012/1999 : (1999) 2 SCC 479, the Supreme Court held that an
application can be made to the Court for an interim measure of protection under section 9, even before the
commencement of the arbitration proceedings.
Principles governing grant of injunction under section 9
What are the principles which govern the grant of injunction under section 9 of the Arbitration and Conciliation Act,
1996
The principles governing grant of ad interim injunction in case of arbitration matters, are the same as in other civil
matters. It is on the plaintiff to show that he has a prima facie case and that the balance of convenience lies in his
favour and if the injunction is not granted he is likely to suffer irreparable injury [D.M. Fabricks v. Sand Plast India Ltd.,
1995 (1) Arb LR 282]. The grant of interim injunction is a discretionary remedy and the courts is exercising such
discretion will take into consideration the following, namely,-

1. Whether the person seeking temporary injunction has made out a prima facie case.
2. Whether the balance of convenience is in his favour, that is, whether it could cause greater inconvenience to
him if the injunction is not granted than the inconvenience which the other party would do if the injunction is
granted.
3. Whether the person seeking temporary injunction would suffer irreparable injury [Dorab Cawasji Warden v.
Coomi Sorab Warden, MANU/SC/0161/1990 : (1990) 2 SCC 117].
It is not necessary that all the conditions stated above must be present for obtaining an order of temporary injunction.
The condition 1 must be present which is a sine qua non and along with it at least any one of the other two conditions
must be present. A mere proof of one of the three conditions does not entitle a person to obtain temporary injunction.
Temporary injunctions are regulated by Order 39 of the Code of Civil Procedure. Rule 1 of Order 39 of the Code of Civil
Procedure provides that an order of temporary injunction can only be granted, if the plaintiff proves by affidavit or
otherwise that-
(a) any property in dispute in a suit is in danger of being wasted, damaged or alienated by any party to the suit,
or wrongfully sold in execution of a decree; or
(b) the defendant threatens, or intends to remove or dispose of his property with a view to defrauding his
creditors, or
(c) the defendant threatens to dispossess, the plaintiff or otherwise cause injury to the plaintiff in relation to any
property in dispute in the suit.
The object of interlocutory injunction in to protect the plaintiff against injury by violation of his right for which he could
not be adequately compensated by damages recoverable in the action if the uncertainty were resolved in his favour at
the trial.
Appointment of Receivers
A receiver is a disinterested person appointed by a court, or by a corporation or other person, for the protection or
collection of property that is the subject of diverse claims.1 The court can under section 9(ii)(d) appoint a receiver on
an application made to it by a party to the arbitration proceedings. Such application can also be made during the course
of arbitral proceedings or at any time after the arbitral award has been made, but before it is enforced. The receiver
who is so appointed by the court is under a duty to collect in the property over which he is appointed and thereby
ensuring its protection and preservation pending the arbitration. The procedure for appointment of receivers is provided
in Order 40 of the Code of Civil Procedure.
_______________
1. Black 's law Dictionary, 7th Edn., p. 1275.


Chapter 3
COMPOSITION OF ARBITRAL TRIBUNAL
I. NUMBER OF ARBITRATORS
What should be the number of arbitrators to be appointed for an arbitration proceeding under the Arbitration and
Conciliation Act, 1996?
Section 10(1) of the Arbitration and Conciliation Act provides that the parties to an arbitration agreement are free to
determine the number of arbitrators, provided that such number shall not be an even number.
Section 10(2) of the Act lays down that failing the determination referred to in section 10(1), the arbitral tribunal shall
consist of a sole arbitrator.
The number of arbitrator is dealt with in section 10 of the Act which is a part of machinery provided for the working of
arbitration agreement. Section 10 leaves it to the parties to determine the number of arbitrators subject to the condition
that such number shall not be an even number. In case the parties fail to determine the number of arbitrators, the
arbitral tribunal shall consist of a sole arbitrator.
In M.M.T.C. Ltd. v. Sterlite Industries Ltd., MANU/SC/1298/1996 : (1996) 6 SCC 716: AIR 1997 SC 605, an arbitration
clause in a contract provides that each party shall nominate one arbitrator and the two arbitrators shall then appoint an
umpire before proceeding with the reference. Disputes arose between the parties whereupon the respondent appointed
an arbitrator under the agreement after the coming into force of the Arbitration and Conciliation Act, 1996. But the
appellant contended that the arbitration clause providing for the appointment of even number of arbitrators was not a
valid arbitration agreement in view of section 10(1) of the Act and that the only remedy in such a case was by way of
suit and not by arbitration. It was further contended that there was no failure to determine the number of arbitrators in
the arbitration agreement and as such section 10(2) of the Act providing that the arbitral tribunal shall consist of a sole
arbitrator was not attracted.
The Supreme Court held that there is noting in section 7 of the Act which defines arbitration agreement to indicate that
the requirement of the number of arbitrators is a part of the arbitration agreement and therefore, the validity of an
arbitration agreement does not depend on the number of arbitrators
specified therein. An arbitration agreement specifying an even number of arbitrators cannot be a ground to render the
arbitration agreement invalid. In the instant case, in view of the term in the arbitration agreement that the two
arbitrators would appoint an umpire, the requirement of section 10(1) was satisfied i.e., the arbitration agreement was
not for an even number of arbitrators and sub-section 2 of section 10 was not attracted. The arbitration agreement was
deemed to be one providing for three arbitrators. As each of the parties had appointed their own arbitrators, section
11(3) was attracted, according to which the two arbitrators were required to appoint a third arbitrator to act as the
presiding arbitrator.
Since in the instant case, both the arbitrators had failed to appoint a third arbitrator, the Supreme Court directed the
Chief Justice of Bombay High Court to appoint the third arbitrator under section 11(4)(b) of the Act.
In Narayan Prasad Lohia v. Nikunj Kumar Lohia, 2002 (1) Arb LR 493 (SC): 2002 AIR SCW 898, the parties agreed to
resolve their disputes through two named arbitrators. Both the parties participated in the arbitral proceedings. But after
award was given, the respondents applied to the Calcutta High Court for setting aside the award, inter alia, on the
ground that arbitration by two arbitrators was invalid as it was inconsistent with the mandatory requirements of section
10(1). The High Court accepted this contention but the Supreme Court in appeal overturned the decision of the High
Court. The Supreme Court held that the provision of section 10 providing that the number of arbitrators shall not be an
even number, is a derogable provision and objection based on it could be waived. Thus, an award is not liable to be set
aside on the mere ground that the number of arbitrators was an even number, when the parties had agreed upon an

even number.
II. APPOINTMENT OF ARBITRATORS
What is the procedure for the appointment of arbitrators under the Arbitration and Conciliation Act, 1996?
Section 11(1) of the Arbitration and Conciliation Act, 1996 provides that a person of any nationality may be an
arbitrator, unless otherwise agreed by the parties.
Regarding the procedure for appointment of an arbitrator, Section 11(2) of the Act lays down that the parties are free
to agree on a procedure for appointing the arbitrator or arbitrators.
Section 11(3) of the Act provides that in an arbitration with three arbitrators, if the parties fail to agree on a procedure
for appointment of arbitrator or arbitrators, each party shall appoint one arbitrator and the two appointed arbitrators
shall appoint the third arbitrator who shall act as the presiding arbitrator. But if a party fails to appoint an arbitrator
within 30 days from the receipt of a request to do so from the other party; or the two appointed arbitrators fail to agree
on the third arbitrator within 30 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.1
_______
1. Section 11(4).
Section 11(5) of the Act then lays down that in an arbitration with a sole arbitrator, if the parties fail to agree on the
arbitrator within 30 days from receipt of a request by one party from the other party to so agree, then upon request of
a party, the appointment shall be made by the Chief Justice or any person or institution designated by him.
Section 11(6) of the Act provides that 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 it under that procedure,
a party may request the Chief Justice or any person or institution designated by him to take the necessary
measure, unless the agreement on the appointment procedure provides other means for securing the
appointment.
Section 11(7) lays down that a matter entrusted by sub-section (4) or subsection (5) or sub-section (6) of section 11
of the Act to the Chief Justice or the person or institution designated by him is final.
For dealing with the matters entrusted by sub-section (4) or sub-section (5) or sub-section (6) of section 11, the Chief
Justice may make such scheme as he may deem appropriate.1
In appointing an arbitrator, the Chief Justice or the person or institution designated by him 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 arbitrator.2
Section 11(11) of the Act provides that 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 shall alone be competent to decide on the request.
Section 11(12)(a) of the Act lays down that in case of an international commercial arbitration, the reference to Chief

Justice under section 11 shall be construed as a reference to the Chief Justice of India.
In any other arbitration, the reference to Chief Justice under section 11 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 situated and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that
High Court.3
_________
1. Section 11(10).
2. Section 11(8).
3. Section 11(12)(b).
Section 11(9) of the Act provides that 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 him may appoint an arbitrator
of a nationality other than the nationalities of the parties where the parties belong to different nationalities.
Bar of Limitation
There is right to apply for appointment of arbitrator for seeking reference to arbitration on receipt of respondent's reply
to notice. The period of limitation of 3 years would start running from that date. Hence it was held that the application
filed under section 11 beyond 3 years would be barred by limitation (A.P. Beverages Corpn. Ltd. v. M/s. IBM Global
Services India Ltd., MANU/AP/0026/2011 : AIR 2011 AP 122).
Requirements of a Valid Appointment
What are the requirements of a valid appointment of an arbitrator?
The following are the requirements of a valid appointment of arbitrator/s-
1. The party appointing an arbitrator must give proper notice of appointment of the arbitrator to the other party
or parties. If the party appointing an arbitrator, do not give notice to the other party informing about the
appointment of an arbitrator, the appointment of the arbitral tribunal will be invalid and the resulting award void.
2. The person who is to be appointed as the arbitrator must be informed about his appointment. This is necessary
because, before giving his consent, he has to consider whether he should accept the appointment.
3. The consent of the person who is to be appointed as arbitrator to act as the arbitrator must be obtained
before his appointment. He has to review all aspects before accepting appointment. [Trader Export S.A. v.
Valkswagenwerk AG, La Loma, (1970) 1 Lloyd's Rep 62 (64)]
Appointment of an arbitrator will not be made unless there is an arbitration agreement between the parties. If the
arbitration agreement is denied, the court must decide that question before passing an order for appointment of an
arbitrator [Chhogalal v. N.G. Finance and Co., AIR 1966 Raj 181].
In I.S. Rekhi v. Delhi Development Authority, MANU/SC/0271/1988 : AIR 1988 SC 1007, the Supreme Court held that the
existence of a dispute is essential for appointment of an arbitrator.
A plea at the time of appointment of an arbitrator that the claims that would be referred to arbitrator are barred by
limitation or are covered within excepted matters, is not entertained. Whether the claims are barred by limitation or are
covered by excepted matters will be matters for consideration of the arbitrator when he is appointed. At the time of the
appointment of an arbitrator, it is not for the court to decide such question [Wazir Chand v. Union of India,
MANU/SC/0262/1966 : AIR 1967 SC 990].

Appointment of the Arbitrator as per the Agreement between the Parties
One of the advantages of arbitration is that it allows parties to submit a dispute to judges of their own choice. The
parties are free to determine any odd number of arbitrators. Failing such determination, the arbitral tribunal shall consist
of a sole arbitrator. The parties may mention the name of a person who is to be appointed as the arbitrator. In cases of
arbitration with more than one arbitrator, the parties may agree on all the arbitrators to be appointed or each of the
parties may appoint one arbitrator who in turn appoint a third arbitrator. Usually it is difficult to reach an agreement
upon a sole arbitrator. In cases where the agreement is silent as to the constitution of the tribunal, it will be presumed
that the reference is to the single arbitrator. Appointment of an arbitrator is a contract between the arbitrator on the
one side, and the parties on the other and therefore, if the appointment of the arbitrator is not consensual, the
arbitrator has no power to make a binding order or award and if he makes any award it will be a nullity.
In Dharma Prathishthanam v. Madhok Construction Pvt. Ltd., (2004) 3 Arb LR 432 (SC), the respondent appointed an
arbitrator and gave notice to the appellant of the appointment to which the appellant did not respond. Then, the
respondent referred certain disputes to the arbitrator who heard the matter and made an arbitral award. But the
appellant did not participate in the arbitration proceedings. After the making of award by the arbitrator, the respondent
filed an application to the court for making the award rule of the court to which the appellant filed objection. The
Supreme Court held that the impugned award was a nullity, and hence liable to be set aside.
In case of consensual appointment of an arbitrator by parties, there is no particular formalities or procedure to be

followed. However, usually one of the parties submit to his opponent a name or list of names, for choice of arbitrator. If
the opponent agrees with the choice, one or both of the parties may approach the person for his appointment. If he
consents, they send to him a written invitation to accept the reference, in response to which he sends a written
acceptance. However, acceptance of the offer to be appointed as an arbitrator is not necessary to complete the
appointment [K.S. Dwarka Dass Kapadia v. Indian Engineering Co., MANU/MH/0035/1969 : AIR 1969 Bom 227, affirmed by
Supreme Court in K.S. Dwarka Das Kapadia v. Indian Engineering Co., AIR 1972 SC 1528]. The appointment is complete
as soon as it is made. Appointment of an arbitrator by a party is complete only on its communication to the other party.
Thus, if a party makes the appointment within the statutory period of 30 days on receipt of a request from the other
party, but does not communicate it to the other party within 30 days, he cannot be said to have appointed his
arbitrator within 30 days of receipt of the request from the other party to appoint an arbitrator.
Appointment of Arbitrator by Chief Justice
When an arbitrator is appointed by the Chief Justice?
Section 11(4) of the Act provides that in case of an arbitration with three arbitrators under section 11(3),-
i. if a party fails to appoint an arbitrator within 30 days from the receipt of a request to do so from the other
party; or
ii. the two appointed arbitrators fail to agree on the third arbitrator within 30 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.
Section 11(5) lays down that in case of an arbitration with a sole arbitrator, if the parties fail to agree on a procedure or
on the arbitrator within 30 days from receipt of a request by one party from the other party to so agree, then on
request of a party, the appointment shall be made by the Chief Justice or any person or institution designated by him.
Section 11(6) provides that where under an appointment procedure agreed upon by the parties,-
i. a party fails to act as required under that procedure; or
ii. the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that
procedure; or

iii. a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a
party may request the Chief Justice or any person or institution designated by him to take the necessary
measure, unless the agreement on the appointment procedure provides other means for securing the
appointment.
Appointment of Arbitrators by Designated Authority
An arbitration clause may provide that appointment of an arbitrator shall be made by a person designated in the
agreement either by name or as the holder for the time being of any office or appointment. Such a clause is usually
found in government & contracts. In cases where the persona designate defaults in making an appointment, the case
would be covered by the provisions of section 11(6)(c) and a party may request the Chief Justice or his designate to
take a necessary measure. If the appointment is made by any person other than the person designated in the
agreement, an award made by such arbitrator is null and void. It is to be noted that it is not necessary for the
designated authority conferred with the power to make appointment of an arbitrator, to consult the parties to the
agreement before appointing an arbitrator.
In P. Kumaran v. Executive Engineer, 1999 (3) Arb LR 98, there was a term in the arbitration clause that no person other
than a person appointed by Chief Engineer or Administrative Head of Goa, Daman and Diu P.W.D. should act as
arbitrator, and if for any reason, that was not possible, the matter was not to be referred to arbitration at all. It was
held that this term was inconsistent with the provision of section 11(6)(c) of the Arbitration and Conciliation Act, 1996,
and therefore there is no hindrance to allowing the application for appointment of arbitrator. The application for
appointment of arbitrator was allowed and an arbitrator appointed.
In National Research Development Corporation of India v. Synthetic Industrial Chemicals Pvt. Ltd., 1998 (1) Arb LR 114,
the arbitration clause provided for arbitration of dispute between the parties by the Chairman of National Research
Development Corporation or his nominee. The Chairman of NRDC, Mr. G.S. Sidhu accepted the reference and proceeded
with the arbitration. Meanwhile, he was transferred and consequently ceased to hold the office of Chairman. One of the
parties raised the objection that since he ceased to hold the office of Chairman his authority as arbitrator had come to
an end. But rejecting the objection, he proceeded with arbitration and gave an award. The Delhi High Court held that
crucial date to be seen was when the reference was made. Dr. Sidhu was the Chairman when reference was made. The
reference was validly made to him. Once an arbitrator validly entered upon the reference, he alone was competent to
continue the arbitration and take it to its logical end by giving the award. In the circumstances of the present case, Dr.
Sidhu, despite the fact that he ceased to hold the office of Chairman subsequent to entering upon the reference, was
competent to continue the arbitration proceedings.
Scheme made by the Chief Justice
Section 11(10) empowers the Chief Justice of India and Chief Justices of the High Courts to make such schemes as they
may deem appropriate for dealing with matters regarding appointment of arbitrator under sub-sections 4, 5 and 6 of
section 11 of the Act. The Chief Justice of India, in exercise of this power has made the scheme.
The scheme provides the procedural machinery for processing the request for appointment of arbitrators. It also
empowers the Chief Justice to amend the scheme from time to time.
The Chief Justices of the High Courts have also made their own schemes for appointment of arbitrators when an
application is made for the purpose.
III. CHALLENGE TO ARBITRATOR
Grounds for Challenge
What are the grounds on the basis of which an arbitrator can be challenged?

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 qualification agreed to by the parties. [Section 12(3)]
When an arbitrator can be challenged?
The appointment cannot be challenged on any other ground.
Section 12(1) of the Act provides that 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.
Section 12(2) then lays down that an arbitrator, from the time of his appointment and throughout the arbitral
proceedings, shall, without delay, disclose to the parties in writing any circumstances likely to give rise to justifiable
doubts as to his independence or impartiality.
An arbitrator ought to be an indifferent and impartial person between the disputants. He must be disinterested and
unbiased. He should have no connection, direct or indirect, with a party so that it creates an appearance of partiality.
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 [Metropolitan Properties v. Lannon, (1969) 1 QB 577; Simmons v.
Secy. of State for the Environment, 1985 JBL 253]. In International Airports Authority of India v. K.D. Bali,
MANU/SC/0197/1988 : (1988) 2 SCC 360, the Supreme Court held that it is not every suspicion felt by a party which
must lead to the conclusion that the authority hearing the proceedings is biased. The apprehension must be judged from
a healthy, reasonable and average point of view and not on mere apprehension of any whimsical person.
In V.K. Dewan and Co. v. Delhi Jal Board, 2004 (2) Arb LR 444 (Del), it was held that mere suspicion cannot be made a
ground for concluding that the arbitrator would not act fairly or impartially. Only a well founded and justifiable doubt
about the arbitrator covered by this section can be made a ground for terminating the mandate of an arbitrator.
In the Mission Insurance case,1 the presiding arbitrator was found to have spent two nights in a hotel room of a female
lawyer representing the successful party. This facts gave rise to a strong presumption of a justifiable doubt as to the
impartiality of the arbitrator and as a result the arbitral award of US $ 92 million made by the arbitrator was overturned.
An arbitrator must be independent i.e., there must not be a dependant relationship between the parties and the
arbitrators, which may effect or at least appear to affect the arbitrators freedom of judgment. Impartiality denotes that
quality of the arbitrators' mind which enables him or her to decide the issues without a disposition to favour one side
over the other. Impartiality is the antonym of bias. The question whether an arbitrator is impartial, is a question of fact,
and depends on whether he can resolve the dispute objectively.
Regarding the qualification of the arbitrator, the parties may agree upon certain qualifications, required of an arbitrator
which may be necessary for the subject-matter of the dispute. Such qualification may be expressly specified in the
arbitration clause or the submission agreement.
Challenge Procedure
Discuss the procedure for challenging an arbitrator
Section 13(1) of the Arbitration and Conciliation Act, 1996, provides that the parties are free to agree on a procedure
for challenging an arbitrator.
Section 13(2) then lays down the if the parties fail to agree on a procedure for challenging an arbitrator, a party who
intends to challenge an arbitrator shall, within 15 days after becoming aware of the constitution of the arbitral tribunal
or after becoming aware of any circumstances that give rise to justifiable doubts as to his independence, or impartiality,

or that he does not possess the qualification agreed to by the parties, send a written statement of the reasons for the
challenge to the arbitral tribunal.
Section 13(3) provides that unless the arbitrator who is challenged under section 13(2) withdraws from his office or the
other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
Section 13(4) lays down that if a challenge under any procedure agreed upon by the parties or under the procedure
prescribed by sub-section (2) of section 13 is not successful, the arbitral tribunal shall continue the arbitral proceedings
and make an arbitral award.
__________
1. Reported in W all Street Journal, 14 Feb, 1990.
Where an arbitral award is made under sub-section (4) of section 13, the party challenging the arbitrator may make an
application for setting aside such an arbitral award in accordance with section 34 of the Act, and if the arbitral award is
set aside on such an application, the court may decide as to whether the arbitrator who is challenged is entitled to any
fees.
In Asiatic Salvors v. Dodsal Pvt. Ltd., MANU/MH/0299/1987 : AIR 1987 Bom 335, it was held that where the parties are
aware of the bias of the arbitrator some months prior to the commencement of the arbitration, and although they did
not participate in the arbitration proceedings, yet allowed the proceedings to continue and culminate into an award, it
was held that the petitioners could not be allowed to raise objection and seek setting aside of the award on the ground
of bias.
In Ramsahai Sheduram v. Harishchandra Duttchandji, MANU/MP/0051/1963 : AIR 1963 MP 143, it was held that if a party
discovers that the arbitrator suffers from a personal disqualification which the party could not have ascertained with due
diligence at the time of reference, the party must take immediate steps to stop arbitration. If the party fails to go to the
court for revocation of reference and takes part in arbitration proceedings, he cannot later on challenge the award on
that ground.
Cases where Arbitrator is an Employee of one of the Parties
Usually in contracts with Government on Corporations, there is an arbitration clause which provides that in case of any
dispute arising between the parties it will be referred for arbitration to any officer of the Government or the corporation.
This by itself is no ground to hold that the officer will be biased in discharging his duty as an arbitrator.
In State of Andhra Pradesh v. Balineni Subba Reddy, 1990 (1) Andh LT 398, it was held that the general presumption
must be that all the officers are honest and they are discharging their duties lawfully, unless the contrary is proved. The
general presumption cannot be drawn that merely because a named arbitrator has already worked in that department or
is working, he is having a bias. There is no hard and fast rule that Government officials should not be appointed as
arbitrators. The parties are bound by the agreement under which they agree that an arbitrator from out of the panel of
arbitrators can be appointed.
In Union of India v. V.S. Ravindra Reddy, 1998 (2) Arb LR 557, where the procedure agreed for appointment of
arbitrators as incorporated in one of the clauses of a contract was that there would be two arbitrators who would be
railway officers, it was held that it was not open to a contractor to contend that as the two arbitrators were railway
officers, they were under the influence of the Railway and would be biased.
But there are certain circumstances under which a presumption can be drawn that the arbitrator who is an employee of
one of the parties is biased, e.g., in Union of India v. P.M. Imbichibi, MANU/KE/0383/1998 : AIR 1998 Ker 72, there was
dispute as to revision of rates for licence fee of railway lands. The designated arbitrator was the railway general
manager. In his capacity as general manager, he had filed a counter affidavit in the proceedings in which he had taken a
definite stand in favour of the enhancement of licence fee. It was held that the application for removal of the arbitrator

on this ground must have entertained a serious apprehension about the general manager's ability to arrive at a fair
decision. It was held that the court was justified in appointing another arbitrator.
IV. TERMINATION OF THE MANDATE OF AN ARBITRATOR
When the mandate of an arbitrator terminates?
Section 14(1) of the Arbitration and Conciliation Act, 1996, provides that the mandate of an arbitrator shall terminate if-
(a) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue
delay; and
(b) he withdraws from his office or the parties agree to the termination of his mandate.
Section 15(1) of the Act lays down that in addition to the circumstances referred to in section 13 or section 14, the
mandate of an arbitrator shall terminate-
(a) where he withdraws from office for any reason; or
(b) by or pursuant to agreement of the parties. Section 14(2) lays down that if a controversy remains concerning
the arbitrator becoming de jure or de facto unable to perform his functions or for other reasons failing to act
without undue delay, a party may, unless otherwise agreed by the parties, apply to the Court to decide on the
termination of the mandate. Where the mandate of an arbitrator terminates, a substitute arbitrator shall be
appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
[Section 15(2)] Where an arbitrator is replaced under section 15(2), any hearings previously held may be
repeated at the discretion of the arbitral tribunal. [Section 15(3)] Unless otherwise agreed by the parties, an
order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator shall not be invalid solely
because there has been a change in the composition of the arbitral tribunal. [Section 15(4)] An arbitrator is de
jure unable to perform his functions when he is debarred by law from continuing in office. An arbitrator is de facto
unable to perform his function when due to certain fact situations he is unable to perform his functions e.g., ill
health etc. It is to be noted that termination of arbitral proceedings is different from termination at the mandate
of arbitrator or arbitrators. Termination of arbitral proceedings is governed by section 32. In a given case, an
arbitral proceeding may not come to an end though the mandate of the arbitrator might have come to an end.
In Sarathy Engg. Corpn v. Municipal Corpn. of Delhi, 1988 (1) Arb LR 79, it was held that where the arbitrator does not
start arbitration proceedings with reasonable dispatch and so much so that he fails even to issue notice to the parties,
he is liable to be removed and another arbitrator should be appointed in his place.
In Assudomal Dwarkadas v. Jessmal Jethanand, AIR 1933 Sind 115, it was held that where an arbitrator did not act for
nearly three years, he neglected to act and it was open to the court to appoint another arbitrator in his place.
In Union of India v. Prabhat Kumar and Bros., 1995 Supp (4) SCC 525, 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. It was held by the Supreme Court 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.


Chapter 4
JURISDICTION OF ARBITRAL TRIBUNAL
I. COMPETENCE OF ARBITRAL TRIBUNAL TO RULE ON ITS JURISDICTION
Whether an arbitral tribunal can rule on its jurisdiction?
Section 16(1) of the Arbitration and Conciliation Act, 1996, provides that 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,-
(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.
Section 16(2) then lays down that 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.
Section 16(3) provides that 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.
The arbitral tribunal may in either of the cases referred to in section 16(2) or section 16(3), admit a later plea if it
considers the delay justified. [Section 16(4)]
The arbitral tribunal shall decide on a plea referred to in section 16(2) or section 16(3) and, where the arbitral tribunal
takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award. [Section 16(5)]
A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in
accordance with section 34 of the Act. [Section 16(6)]
Question as to Jurisdiction of Arbitral Tribunal
A question as to jurisdiction arises when the arbitral tribunal is improperly constituted. It is open to the aggrieved party
to require the arbitral tribunal to decide this question. Under the provision of section 16 of the Act, the arbitral tribunal
may rule on its own jurisdiction. The arbitral tribunal may under the provisions of section 16 rule on any objection with
respect to the existence or validity of the arbitration agreement.
In N.M. Varma and Co. Ltd. v. Alexandra Jute Mills Ltd., MANU/WB/0002/1989 : AIR 1989 Cal 6, it was held that the
existence of a dispute is an essential condition and a prerequisite for assumption of jurisdiction by an arbitrator.
Similarly, in Dilip Construction v. Hindustan Steel Ltd., MANU/MP/0059/1973 : AIR 1973 MP 261, it was held that the
jurisdiction of an arbitrator depends not upon the existence of a claim or accrual of a cause of action, but upon the
existence of a dispute. For the jurisdiction of the arbitral tribunal, there must be an arbitration agreement. In Waverly
Jute Mill's case, MANU/SC/0004/1962 : AIR 1963 SC 90, it was observed that an agreement for arbitration is the very
foundation on which the jurisdiction of the arbitrator to act rests, and where there is not in existence at the time when
they enter on their duties, the proceedings must be held to be wholly without jurisdiction.
In Ion Exchange (India) Ltd. v. Paramound Ltd., 2003 Arb WLJ 355 (Bom), an arbitrator appointed by one of the parties
assumed jurisdiction as sole arbitrator of the parties. Objection was raised by the other party that the said arbitrator
could not act as sole arbitrator of the parties. It was held that this question could properly be decided by the arbitral
tribunal itself under section 16 of the Act, for the reason that the language of section 16 is not limited to the width of
the jurisdiction of the arbitral tribunal but goes to the very root of its jurisdiction.

In Centrotrade Minerals & Metals Inc. v. Hindustan Copper Ltd., (2006) 11 SC 245, it was held by the Supreme Court
that the question as to jurisdiction can be raised both by participation in the proceedings or by staying out of them. If
raised in proceedings, it has to be done during continuation or at initiation.
Time Limit for Filing Objection to Jurisdiction
An objection 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.1
But the arbitral tribunal may admit an objection as to its jurisdiction at a later time if it considers that the delay is
justified.2
II. INTERIM MEASURES ORDERED BY ARBITRAL TRIBUNAL
Section 17(1) of the Arbitration and Conciliation Act, 1996, provides that unless otherwise agreed by the parties, the
arbitral tribunal may, at the
_______
1. Section 16(2).
2. Section 16(4).
request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider
necessary in respect of the subject-matter of the dispute.
Section 17(2) of the Act then lays down that the arbitral tribunal may require a party to provide appropriate security in
connection with an interim measure under sub-section (1) of section 17.
Under the provisions of section 17, the arbitral tribunal may, if it considers it necessary in respect of the subject-matter
of the dispute, order any interim measures of protection in respect of the detention, preservation or inspection of any
property or thing which is the subject matter of dispute in arbitration. In cases where the applicant makes out a prima
facie case that the defendant is about to remove his assets and bank balances out of the jurisdiction of the court or the
tribunal, or is about to destroy the incriminating evidence against him, it is expedient to order immediate ex parte interim
relief. But it is to be noted that an arbitral tribunal do not have the coercive power to enforce its order. It is therefore,
dependant on the goodwill of the parties. If the tribunal's order is not honoured, the party seeking interim relief will have
to apply to the Court under section 9 of the Act for an order of interim measure of relief.
An order of an arbitral tribunal granting or refusing to grant an interim measure of protection under section 17 is not
final. Such an order is appealable under the provisions of section 37(2)(b) of the Act to the Court authorised by law to
hear appeals from original decrees of the Court passing the order. A second appeal does not lie against the appellate
court's order [section 37(3)]. However, a party aggrieved by the appellate court's order can appeal against it to the
Supreme Court under Article 133 or Article 136 of the Constitution of India.


Chapter 5
CONDUCT OF ARBITRAL PROCEEDINGS
I. EQUAL TREATMENT OF PARTIES
Section 18 of the Arbitration and Conciliation Act, 1996, provides that the parties to an arbitration proceedings shall be
treated with equality and each party shall be given a full opportunity to present his case.
This section contains two fundamental principles. Firstly, that the arbitral tribunal shall treat the parties with equality
and, Secondly, that each party shall be given a full opportunity to present his case. The essence of this section is to
ensure a fair trial by an impartial tribunal.
The provisions of this section is mandatory and must be complied with by the tribunal.
Arbitral Tribunal's Duty to Treat the Parties with Equality
Russel in his book 'Russel on Arbitration'1 states:
"The first principle is that the arbitrator must act fairly to both parties, and in the proceedings throughout the
reference he must not favour one party more than another, or do anything for one party which he does not do or
offer to do for the other. He must observe in this the ordinary well-understood rules for the administration of
justice."
The parties shall be treated with equality means that the tribunal shall act with impartiality to the parties and that no
party shall be given an advantage over the other. This is a concept of natural justice and a breach thereof usually
render an arbitral tribunal's award void. In Vengamma v. Kesanna, MANU/SC/0002/1952 : AIR 1953 SC 21, an arbitrator
examined the defendant in the absence of the plaintiff, who was the widow of the testator. The Will was also considered
by the arbitrator without giving an opportunity to the plaintiff to have her say in the matter. It was held that the
arbitrator was guilty of legal misconduct, which was sufficient to vitiate the award.
____________
1. 19th Edn., (1979), p. 225.
In Sehodutt v. Pandit Vishnudatta, MANU/NA/0066/1954 : AIR 1955 Nag 116, the arbitrators made private enquiries and
collected evidence of which no record was made. The award was, however, based on the enquiry so made. The
appellant had no opportunity to meet and controvert the evidence thus collected. It was held that the award was
vitiated.
In Husein Ebrahim v. Kesardeo Kanaria & Co., MANU/WB/0042/1954 : AIR 1954 Cal 111, the arbitrators asked for certain
information from a third person without any reference to the parties and the arbitrators also did not disclose the letter
which they wrote to the third person, to the parties. It was held that the arbitrators were guilty of misconduct.
Russel observed in 'Russel on Arbitration1-
"Not every meeting between an arbitrator and one party alone will amount to misconduct or invalidate the award:
there must be a substantial suggestion of injustice".
Thus, in Re, Morphett, [1845] 2 D&L 967, a meeting took place of which one of the parties had no notice. Nothing was,
however, done in that meeting, except to discuss the question of adjournment. The meeting was adjourned and the
subject of reference was not entered upon. The court refused to set aside the award on the mere ground of the party
having had no notice of the meeting. In Black v. John Williams & Co., 1924 SC (HL) 22, a witness was examined in the
absence of one of the parties or its representative. The question on which the witness deposed was decided in that
party's favour. It was held that the complainant had suffered no injustice and his application to set aside the award was

refused. In Anderson v. Wallace, [1835] 3 Cl&F 26, the arbitrator called one of the parties in the absence of other and
asked him whether he admitted or disputed certain items in an account, and he merely recorded his answer to that
question. It was held by the House of Lords that no objection to the award could be taken.
Arbitral Tribunal's duty to give each party a full opportunity to present his case
The arbitral tribunal should give each party full opportunity to present his case. Section 34(2)(a)(ii) of the Act provides
that where a party was not given proper notice of the arbitral proceedings or was otherwise unable to present his case
in the arbitral proceedings, the resulting award is apt to be annulled. The objective of these two sections i.e., sections
18 and 34(2)(a)(ii) is to ensure that the arbitrator must act impartially and give full opportunity to the parties by giving
them proper notice and every possible opportunity to present their respective case and thereby to ensure a fair trial by
an impartial tribunal. The tribunal should make such arrangements that a party has full opportunity to be present in
person with his legal advisors and witnesses whom he wishes to bring with him.
_____________
1. 19th Edn., (1979), p. 228.
To deny such right directly or indirectly will militate against the requirement of fair trial and vitiate the resulting award. It
is to be noted that the expressions 'fair opportunity', 'reasonable opportunity' or proper hearing etc., are not capable of
any clear definition. What opportunity may be regarded as reasonable would necessarily depend on the practical
necessity of a situation. The rule is sufficiently flexible to permit modifications and variations to suit exigencies of myriad
situations which may arise [[Maneka Gandhi v. Union of India, MANU/SC/0133/1978 : AIR 1978 SC 597]. Thus, the
parties who are to be directly affected by the proceedings or the award must be given adequate notice of the
appointment of the arbitrator, subject-matter of the dispute, time and venue of the proceedings so that they may be
able to effectively prepare their case and to answer the case of the opponent. It is the duty of the arbitrator to inform
the parties to the proceedings in writing about the particulars of the reference. A party has the right to be present
throughout the arbitral proceedings and the tribunal has no right to exclude one party at any stage of the arbitral
proceedings unless he consents, or does not wish to attend the proceedings throughout. The requirement that each
party shall be given a full opportunity to present his case, applies equally both to the presentation of evidence as well
as argument. However, the mode and manner of adducing documentary and oral evidence can be agreed upon by the
parties. Shutting out the evidence or cutting short the argument may result in remission or annulment of the award. This
rule, however, has certain restrictions. The arbitral tribunal is not required to receive evidence which is not relevant to
the issues in dispute.
II. DETERMINATION OF RULES OF PROCEDURE
Section 19(1) of the Arbitration and Conciliation Act, 1996, lays down that the arbitral tribunal shall not be bound by the
Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872.
Section 19(2) of the Act provides that subject to Part I of the Act, the parties are free to agree on the procedure to be
followed by the arbitral tribunal in conducting its proceedings.
If the parties fail to agree on any procedure for the conduct of arbitral proceedings, the arbitral tribunal may, subject to
the provisions contained in Part I of the Act, conduct the proceedings in the manner it considers appropriate.1
The arbitral tribunal in determining the manner of conducting the arbitral proceedings under the provisions of section
19(3) has the power to determine the admissibility, relevance, materiality and weight of any evidence.2
Section 19 is one of the most important provisions of the Act inasmuch as it establishes procedural autonomy by
recognising the parties' freedom to lay down the rules of procedure. If the parties fail to agree on a procedure, it
____________

1. Section 19(3).
2. Section 19(4).
grants the arbitral tribunal a wide range of discretionary powers as to how to conduct the proceedings. The possibility of
choosing the procedural rules for the arbitration proceedings constitutes one of the major attractions for parties
contemplating resolution of their dispute by arbitration. The freedom conferred upon the parties to agree on the
procedure to be followed by the arbitral tribunal is regulated by Part I of the Act but subject to that regulation parties
are otherwise free to agree on arbitral procedure, and the conduct of proceedings. It is to be noted that the arbitral
tribunal in exercising its jurisdiction to adopt the procedure which it considers appropriate, must act judicially [Henry
Sotheran Ltd. v. Norwich Union Life Assurance Society, [1992] ADRLJ 245].
Applicability of the Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872 to the Arbitral Proceedings
Under the provisions of section 19(2) of the Act, the parties are free to determine the rules of procedure of arbitration
proceedings. This allows them to design the procedural rules according to their specific needs and wishes. The parties
may also opt for a procedure, which is anchored in a particular legal system. They may agree to adopt the principles of
the procedure prescribed in the Code of Civil Procedure, 1908 or for the purpose of taking evidence the provisions
contained in the Evidence Act, 1872. If the parties refer to a given law on civil procedure or evidence, such law would
be applicable by virtue of their choice, and not by virtue of being the national law.
III. PLACE OF ARBITRATION
Section 20(1) of the Arbitration and Conciliation Act, 1996, provides that the parties are free to agree on the place of
arbitration.
Section 20(2) of the Act then lays down that if the parties fail to agree on a place of arbitration, the arbitral tribunal
shall determine the place of arbitration. The arbitral tribunal in determining the place of arbitration shall have regard to
the circumstances of the case, including the convenience of the parties.
Section 20(3) provides that unless otherwise agreed by the parties, the arbitral tribunal may meet at any place it
considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection
of documents, goods or other property.
Determination of the place of arbitration is of paramount importance because the law of the place of arbitration plays a
fundamental role in the arbitral process. This law regulates the appointment of arbitrators, challenge to the award of
arbitrators, enforcement of awards etc. The parties may expressly select the place of arbitration. If the parties choose
to conduct their arbitration under any arbitration institutional rules, then those rules may specify the seat of the
arbitration.
Section 20(1) of the Act gives the parties freedom to choose the place of arbitration. If the parties fail to agree on a
place of arbitration, the arbitral tribunal may fix the seat of arbitration keeping in view the circumstances of the case
and convenience of the parties under the provisions of section 20(2) of the Act. Under the provisions of section 20(3) of
the Act, the arbitral tribunal may meet at any place it considers appropriate, unless otherwise agreed by the parties, for
hearing witnesses, experts or the parties or for inspection of documents, goods or other property. The discretion of the
arbitral tribunal to determine the place of arbitration under section 20(2) has to be exercised in a judicial manner. In
determining the place of arbitration, the arbitral tribunal cannot take a despotic decision, regardless of the
circumstances of the case. Its decision is conditional by the circumstances of the case, particularly the convenience of
the parties. The discretion of the arbitral tribunal to decide upon the place of meetings is of wide amplitude but is
subject to the general mandate of section 18 i.e., impartiality and fair trial. In international arbitrations, meetings or
hearings may take place in several countries, without changing the seat of arbitration.
IV. COMMENCEMENT OF ARBITRAL PROCEEDINGS

Section 21 of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties, the
arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be
referred to arbitration is received by the respondent.
Section 21 of the Act gives the parties freedom to agree on how to determine when the arbitration has officially
commenced. If the parties fail to arrive at such agreement, the arbitral proceedings in respect of a particular dispute
commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.
In order to determine the date of receipt, the provisions of section 3 must be looked into. Section 3 provides that unless
otherwise agreed by the parties, a written communication is deemed to have been received when it is delivered to the
addressee personally or at his place of business, habitual residence or mailing address. If none of these places can be
found after making a reasonable enquiry, a written communication is deemed to have been received if it is sent to the
addressee's last known place of business, habitual residence or mailing address by registered letter or by any other
means which provides a record of the attempt to deliver it. Further, the communication is deemed to have been received
on the date it is so delivered. Section 43 of the Arbitration and Conciliation Act, 1996 provides that the Limitation Act,
1963 shall apply to arbitrations as it applies to proceedings in court. Thus, the date of commencement of arbitral
proceeding assumes relevancy for calculating the time-limit for arbitral proceedings under the Limitation Act, 1963. The
date of commencement of arbitral proceedings is also relevant when there is a time-bar clause in an arbitration
agreement, i.e., when the parties have agreed that arbitration must be commenced within a particular specified time and
if the arbitration proceedings does not commence within this specified time, the right to go to arbitration or the claim
itself would be barred. The request for arbitration must indicate the particular dispute in respect of which the date of
commencement of the arbitral proceedings is to be determined. The request should make it clear that the arbitration
proceedings are commenced and it is irrelevant whether the communication is called 'request', 'notice', 'application' or
'statement of claim'.
V. LANGUAGE TO BE USED IN THE ARBITRAL PROCEEDINGS
Section 22(1) of the Arbitration and Conciliation Act, 1996 provides that the parties are free to agree upon the language
or languages to be used in the arbitral proceedings.
Section 22(2) of the Act provides that if the parties fail to arrive at any agreement as to the language or languages to
be used in the arbitral proceedings, the arbitral tribunal shall determine the language or languages to be used in the
arbitral proceedings.
Section 22(3) provides that unless otherwise specified, the agreement or determination shall apply to any written
statement by a party, any hearing and any arbitral award, decision or other communication by the arbitral tribunal.
Section 22(4) then lays down that the arbitral tribunal may order that any documentary evidence shall be accompanied
by a transaction into the language or languages agreed upon by the parties or determined by the arbitral tribunal.
The parties to the arbitration are free to choose the language or languages to be used in the arbitral proceedings. If the
parties fail to arrive at any such agreement the arbitral tribunal will determine the language or languages to be used in
the arbitral proceedings. Unless otherwise specified, the agreement of the parties or determination by the arbitral
tribunal as to the language shall also apply to any written statement by a party, any hearing and any arbitral award,
decision or other communication by the arbitral tribunal. The arbitral tribunal may order that any documentary evidence
shall be accompanied by a translation into the language agreed by the parties or determined by the arbitral tribunal. It is
to be noted that in determining the appropriate language under section 20(2) and whether any translations are required
under section 20(4), the arbitral tribunal must exercise is power in conformity with section 18 of the Act i.e., impartiality
and fair trial. The arbitral tribunal must ensure that all the parties are able to follow and understand the proceedings. In
international commercial arbitrations the language must be selected with utmost care and caution.
VI. STATEMENT OF CLAIM AND DEFENCE

Section 23(1) of the Arbitration and Conciliation Act, 1996 provides that within the period of time agreed upon by the
parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue
and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the
parties have otherwise agreed as to the required elements of those statements.
Section 23(2) of the Act provides that the parties may submit with their statements all documents they consider to be
relevant or may add a reference to the documents or other evidence they will submit.
Section 23(3) of the Act then lays down that unless otherwise agreed by the parties, either party may amend or
supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it
inappropriate to allow the amendment or supplement having regard to the delay in making it.
Section 23 provides for pleadings of the parties before the arbitral tribunal. The pleadings of the claimant shall consist of
statement of claim which shall state (a) the facts supporting the claim; (b) the points at issue; and (c) the relief or
remedy sought. When the respondent receives the statement of claim, he will file the statement of defence, which shall
state (a) the defence in respect of each of the claims made in the statement of claim; and (b) any other information or
statement rebutting the claim. Further, the parties have to submit all the documents they consider to be relevant with
their statement. The parties may annex with their statement a list of documents or other evidence they will submit. The
pleadings can be amended or supplemented at any stage of the arbitration proceedings unless otherwise agreed by the
parties and unless the arbitral tribunal considers it inappropriate to allow the amendment or the supplement having
regard to the delay in making it. Section 23 of the Act gives the parties a wide range of options relating to the filing of
pleadings. The parties may agree upon the time for filing the pleadings. In the absence of such agreement, the arbitral
tribunal may determine the time for filing the pleadings. The parties are free to agree on the elements required to be
stated in the pleadings. The parties may evolve their own procedure, e.g., they may adopt the principles prescribed in
Order 7 and Order 8 of the Code of Civil Procedure, 1908 or they may adopt procedural rules prescribed by the rules of
any arbitral institution. After the arbitral tribunal has been established, the usual practice is to exchange and file their
pleadings before the tribunal. The claimant states the facts and other relevant matters on which he relies, while the
respondent opposes the facts and the averments made in the claim statement and contests the relief claimed by the
claimant. The contents of pleading may vary from case to case depending upon the facts and circumstances of each
case.
VII. HEARINGS AND WRITTEN PROCEEDINGS
Section 24(1) of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties, the
arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or
whether the proceedings shall be conducted on the basis of documents and other materials:
Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a
request by a party, unless the parties have agreed that no oral hearing shall be held.
Section 24(2) of the Act provides that the parties shall be given sufficient advance notice of any hearing and of any
meeting of the arbitral tribunal for the purpose of inspection of documents, goods or other property.
Section 24(3) provides that all statements, documents or other information supplied to, or applications made to the
arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document
on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.
Under the provisions of section 24(1) of the Act, the parties are free to decide the question whether to hold oral
hearings for presentation of their evidence or whether the proceedings should be conducted on the basis of documents
and other materials. In the absence of such agreement between the parties, the arbitral tribunal is empowered to decide
whether to hold oral hearings for the presentation of evidence or for oral arguments or whether the proceedings shall be
conducted on the basis of documents and other materials only. In the absence of any agreement by the parties that no

oral hearings shall be held, the arbitral tribunal shall, on a request by a party, hold oral hearings at an appropriate stage
of the proceeding. Under the provisions of section 24(2), for the purposes of inspection of documents, goods or any
other property, the parties shall be given sufficient advance notice of any hearing and any meeting of the arbitral
tribunal. This provision enunciates the general principle contained in section 18 of the Act i.e., fair and equitable trial.
Under the provisions of section 24(3), each party shall communicate to the other, all statements, documents or other
information supplied to, or applications made to the arbitral tribunal by it. Further, any expert report or any other
evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.
The purpose of producing evidence in an arbitration proceeding is to assist the arbitral tribunal in deciding the disputed
issues of fact or issues of opinion presented by the experts. Usually, the parties submit written statements of the
witnesses on whose evidence they intend to rely. If in an arbitration proceeding after taking oath, a party or a witness
gives evidence which he knows to be false or does not believe to be true, he is liable to be criminally prosecuted for
perjury. A party to an arbitration proceeding may adduce evidence-(a) by production of relevant documents; (b) by oral
or written evidence of witnesses of fact; (c) by oral or written opinions of expert witnesses; and (d) by inspection of
the subject-matter of the dispute. Regarding the examination of witnesses, generally the arbitral tribunals follow the
principles set forth in sections 135 to 166 of the Indian Evidence Act, 1872. Section 137 of the Indian Evidence Act,
1872 provides that firstly a witness shall be subjected to examination-in-chief i.e., the examination of a witness by the
party who calls him. Secondly, the witness shall be subjected to cross-examination, i.e., the examination of a witness by
the adverse party. Thirdly, the witness shall be subjected to re-examination, i.e., examination of a witness subsequent
to the cross-examination by the party who called him. Section 138 of the Indian Evidence Act, 1872 sets forth the order
of examination of witnesses and provides that witnesses shall be first examined-in-chief, then (if the adverse party so
desires) cross-examined and then (if the party calling him so desires) re-examined. After the production of evidence by
the parties, the arbitral tribunal inspects the subject-matter of the dispute in certain particular type of contracts (e.g.
building contracts). The tribunal in proceeding with the inspection of the site or subject-matter of the dispute has to be
careful that the inspection should be made in the presence of all the parties or their representatives.
VIII. DEFAULT OF A PARTY
Section 25 of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties, where
without showing sufficient cause,-
(a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23,
the arbitral tribunal shall terminate the proceedings;
(b) 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;
(c) 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.
Clause (a) of section 25 lays down the consequences that will result when the claimant, without sufficient cause, fails
to communicate his statement of claim within the period of time agreed upon by the parties or determined by the arbitral
tribunal. In such situation, unless otherwise agreed by the parties, the arbitral tribunal shall terminate the proceedings.
Clause (b) of section 25 provides the consequences that will result when the respondent fails without sufficient cause to
communicate his statement of defence within the time agreed upon by the parties or determined by the arbitral tribunal.
As per clause (b), in such situation, unless otherwise agreed by the parties, the arbitral tribunal shall continue the
proceedings without treating that failure in itself as an admission of the allegations by the claimant. Under the provisions
of clause (c) of section 25, if either party without sufficient cause fails to appear at an oral hearing or to produce
documentary evidence, after the pleadings have been filed before the arbitral tribunal, then unless otherwise agreed by
the parties, the arbitral tribunal may continue the proceedings and make the arbitral award on the basis of the evidence

before it.
IX. EXPERT APPOINTMENT BY ARBITRAL TRIBUNAL
Section 26(1) of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties, the
arbitral tribunal may-
(a) appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal, and
(b) require a party to give the expert any relevant information or to produce or to provide access to, any
relevant documents, goods or other property for his inspection.
Section 26(2) of the Act provides that unless otherwise agreed by the parties, if a party so requests or if the arbitral
tribunal considers it necessary the expert shall, after delivery of his written or oral report, participate in an oral hearing
where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on
the points at issue.
Section 26(3) provides that unless otherwise agreed by the parties, the expert shall, on the request of a party, make
available to that party for examination all documents, goods or other property in the possession of the expert with which
he was provided in order to prepare his report.
Sometime the determination of any question in an arbitration proceedings may involve determination of questions as to
any scientific or technical matters e.g., engineering, accountancy etc. For determination of such issues, the arbitral
tribunal may appoint an expert for technical assistance. The function of an expert so appointed is to give impartial
advice to the arbitral tribunal on matters within his expertise. Section 26(1) of the Act deals with the appointment of
one or more experts to assist the arbitral tribunal on specific issues to be determined by it. Under the provisions of
section 26, the arbitral tribunal may direct a party to give relevant information to an expert appointed by the tribunal or
to produce any relevant documents, goods or other properties for his inspection. The arbitral tribunal may also direct a
party to give the expert access to these things. The expert shall submit his report to the arbitral tribunal in writing
stating his conclusions on the specific technical issue. The arbitral tribunal shall take technical guidance from the
expert's report so submitted in arriving at its decision. It is to be noted that the expert must be impartial. If there is lack
of independence on the part of the expert, the parties may challenge the expert. After the expert submits his report,
the parties shall be given an opportunity to put questions to the expert. For this purpose, the parties can appoint and
produce experts, known as expert witnesses. Regarding the admissibility of the expert evidence, the arbitral tribunal has
the power to determine the admissibility of such evidence. Under the provisions of section 26(3), on the request of a
party, the expert shall make available to that party for examination all documents, goods or other property in the
possession of the expert with which he was provided in to prepare his report.
X. COURT ASSISTANCE IN TAKING EVIDENCE
Section 27(1) of the Arbitration and Conciliation Act, 1996 provides that the arbitral tribunal or a party with the approval
of the arbitral tribunal may apply to the Court for assistance in taking evidence.
Section 27(2) provides that such an application shall specify-
(a) the names and addresses of the parties and the arbitrators;
(b) the general nature of the claim and the relief sought;
(c) the evidence to be obtained, in particular-
(i) 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;
(ii) the description of any document to be produced or property to be inspected.

Section 27(3) provides that the Court may, within its competence and according to its rules on taking evidence, execute
the request by ordering that the evidence be provided directly to the arbitral tribunal. While making such an order, the
Court may issue the same process to witness as it may issue in suits tried before it.1
Section 27(5) lays down that 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
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 offence in suits tried before the Court.
In section 27, the expression "processes" includes summons and commissions for the examination of witnesses and
summons to produce documents.2
An arbitral tribunal has no power to compel the attendance of witnesses who refuse to attend and give evidence. It also
has not the power to order production of documents which are in the possession of third party, even when such
documents may be relevant to the matters in issues. That is why section 27(1) provides that an arbitral tribunal or a
party with the approval of the arbitral tribunal, may apply to the Court for assistance in taking evidence. On receipt of
an application from the tribunal or a party, the Court, within its competence, in accordance with the rules of taking
evidence, may order that the evidence be provided directly to the arbitral tribunal. While making such order, the Court
may issue the same process to witnesses as it may issue in suits tried before it under the Code of Civil Procedure, 1908.
Section 27 of the Code of Civil Procedure, 1908 (C.P.C.) provides that where a suit has been duly instituted, a summons
may be issued to the defendant to appear and answer the claim and may be served in the manner prescribed. Order 5 of
C.P.C. lays down the detailed rules regarding issue and service of summons. Section 31 of C.P.C. further provides for
issue of summons to witnesses to give evidence or to produce documents or other material objects. Section 32 of C.P.C.
lays down the penalty for default in order to compel the attendance of any person to whom a summons has been issued.
Section 32 of C.P.C. provides that the Court may compel the attendance of any person to whom a summons has been
issued and for that purpose may-(a) issue a warrant to his arrest; (b) attach and sell his property;
___________
1. Section 27(4).
2. Section 27(5).
(c) impose a fine upon him not exceeding five thousand rupees; (d) order him to furnish security for his
appearance and in default commit him to the civil prison. Section 30 of C.P.C. provides that subject to such
conditions and limitations as may be prescribed, the Court may, at any time either of its own motion or on the
application of any party-
(a) make such orders as may be necessary or reasonable in all matters relating to the discovery and
answering of interrogatories, the admission of documents and facts, and the discovery, inspection,
production, impounding and return of documents or other material objects producible as evidence;
(b) issue summons to persons whose attendance is required either to give evidence or to produce
documents or such other objects as aforesaid;
(c) order any fact to be proved by affidavit.
The purpose of discovery, inspection and production of documents is to enable a party to an arbitration proceedings to
obtain necessary information regarding the material facts constituting the case of the opposite party. Under the
provisions of Order 11, rule 14, the Court has the power to order the
production by any party thereto, upon oath, of such of the documents in his possession or power relating to any matter
in question in such suit.


Chapter 6
MAKING OF ARBITRAL AWARD AND TERMINATION OF PROCEEDINGS
I. RULES APPLICABLE TO SUBSTANCE OF DISPUTE
Discuss the rules applicable to the substance of dispute under the Arbitration and Conciliation Act, 1996
Section 28(1) of the Arbitration and Conciliation Act, 1996 provides that where the place of arbitration is situated in
India-
(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the
dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;
(b) in international commercial arbitration-
(i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the
parties as applicable to the substance of the dispute;
(ii) any designation by the parties of the law or legal system of a given country shall be construed, unless
otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of
laws rules;
(iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply to
rules of law it considers to be appropriate given all the circumstances surrounding the dispute.
Section 28(2) of the Act provides that the arbitral tribunal shall decide ex aequo et bono or as amiable composite only if
the parties have expressly authorised it to do so.
Section 28(3) lays down that in all cases, the arbitral tribunal shall decide in accordance with the terms of the contract
and shall take into account the wages of the trade applicable to the transaction.
Section 28 of the Arbitration and Conciliation Act, 1996 deals with the determination of the rules applicable to the
substance of the dispute. Section 28 applies to an arbitration other than an international commercial arbitration as well
as to an international commercial arbitration, where the place of arbitration is in India. The provisions of section 28 will
not apply to an arbitration where the place of arbitration is outside India. As per the provisions of section 28(1)(a),
where the place of arbitration is in India and the arbitration is not an international commercial arbitration, the arbitral
tribunal shall decide the dispute submitted to it in accordance with the substantive law for the time being in India, e.g.
the Indian Contract Act, 1872 the Sale of goods Act, 1930 etc. Under the provisions of section 28(1)(b)(i), the parties
are free to choose the rules of law as applicable to the substance of the dispute. Section 28(1)(b)(ii) gives the parties
freedom to choose the law or legal system of any country that they wish to be applied to their dispute, by determining
that any chosen law or legal system has to be construed, unless otherwise expressed, as directly referring to the
substantive law of that country and not to its conflict of laws rules. If the parties fail to designate the rules of law
applicable to the substance of dispute, then under the provisions of section 28(1)(b)(iii), the arbitral tribunal has the
power to apply the rules of law it considers to be appropriate considering all the circumstances surrounding the dispute.
The right of the parties to choose a law applicable to the merits of the dispute, to the procedure of arbitration
proceedings and to the arbitration agreement is recognised by most arbitration legislation, arbitration rules and
international treaties and conventions.
Ex aequo et bono
What is meant by the expression 'Ex aequo et bono'?
This phrase means injustice and fairness; according to what is just and good; according to equity and good
conscience.1 Section 28(2) of the Arbitration and Conciliation Act, 1996 provides that if the parties to an arbitration

proceedings expressly authorise an arbitral tribunal, it shall decide an issue ex aequo et bono. It is to be noted that the
arbitral tribunal cannot decide an issue ex aequo et bono, it can do so only if authorised by the parties by express
agreement. Even in a case where the parties have expressly authorised the arbitral tribunal to decide ex aequo et bono,
the tribunal should not bypass any mandatory requirements relevant to the dispute.
An arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. He has no power apart
from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has
acted without jurisdiction. A conscious disregard of law or the provisions of the contract from which he has derived his
authority, vitiates the award [Associated Engg. Co. v. Government of Andhra Pradesh, MANU/SC/0054/1992 : AIR 1992
SC 232.]
Amiable Compositeur
Write a short note on Amiable compositeur
Section 28(2) provides that if the parties have expressly authorised an arbitral tribunal to that effect, the tribunal shall
decide issues in an arbitration proceeding as amiable compositeur. The expression amiable compositeur is a French term
which means a person who adopts a flexible approach reflecting
__________________
1. Black 's Law Dictionary, 5th Edn., (1979), p. 500.
fairness and reality in deciding an issue. Under the provisions of section 28(2), the arbitral tribunal can decide as amiable
compositeur only if the parties have expressly authorised it to do so. It is to be noted that even in a case where the
parties have expressly authorised an arbitral tribunal to decide as amiable compositeur, the tribunal should not bypass
any mandatory requirement relevant to the dispute. An amiable compositeur has the authority to rule in equity, but only
after determining the legal outcome to the dispute and concluding that the outcome is inappropriate or unacceptable in
the circumstances of the case. It is said that the concept of amiable compositeur provides a 'safety valve' of avoiding
an inapposite legal result. The concept of amiable compositeur places reliance upon the knowledge, ability and
experience of the arbitrators to arrive at a practical solution to the dispute.
Lex arbitri
Write a short note on Lex arbitri
The expression lex arbitri means the law governing the existence and proceedings of the arbitral tribunal. It is a set of
mandatory rules of law applicable to arbitration at the seat of the arbitration. In Paul Smith Ltd. v. H & S International
Holding Inc., [1991] 2 Lloyd's Rep 127 (130), it was observed that the law governing the arbitration is a body of rules
which sets a standard external to the arbitration agreement, and the wishes of the parties, for the conduct of the
arbitration. The lex arbitri would cover the situations like arbitrability of the subject-matter of the dispute under the law
for the time being in force in India, point of time for commencement of arbitral proceedings, form and validity of the
award, recourse against arbitral award and appeals etc.
II. DECISION MAKING BY PANEL OF ARBITRATORS
How an arbitral tribunal make its decisions?
Section 29(1) of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties, in
arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by majority of all its
members.
Section 29(2) of the Act provides that notwithstanding what is stated in section 29(1), the questions of procedure may
be decided by the presiding arbitrator if authorised by the parties or all the members of the arbitral tribunal.

Section 29 of the Arbitration and Conciliation Act, 1996 determines the arbitral tribunal's decision making process. During
the course of an arbitral proceedings, the arbitral tribunal makes various decisions, orders and awards. In an arbitration
with more than one arbitrator, all the arbitrators comprised in the arbitral tribunal shall take part in the arbitral
proceedings and its deliberations and is only then that the decision made by majority of all its members shall prevail. It is
necessary that all the arbitrators must have participated in the arbitral proceedings and must have acted together. In
Abu Hamid v. Golam Sarvar, AIR 1918 Cal 865, it was held that as the arbitrators must all act, so must they all act
together. They must each be present at every meeting; and the witnesses and the parties must be examined in the
presence of them all.....Thus where one or some of the arbitrators were not present during any part of hearing of the
arbitration or its deliberations, it was held that the award given was vitiated. But in Varanasi Ramanna v. Killamsetti
Appanna, AIR 1920 Mad 288, it was held that an award is not vitiated on the ground that at one of the meetings of the
arbitration, one of them was absent, where it is shown that nothing material was done at that meeting, which in any
way affected the award.
Section 29(2) is an exception to section 29(1) and provides that if the parties to the arbitration proceedings or all the
members of the arbitral tribunal authorise the presiding arbitrator, he may decide the questions of procedure.
III. SETTLEMENT
Discuss the power of an arbitral tribunal to encourage the parties to arrive at settlement of their dispute
Section 30(1) of the Arbitration and Conciliation Act, 1996 provides that it is not incompatible with an arbitration
agreement for an arbitral tribunal to encourage settlement of 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.
What an arbitral tribunal will do if the parties arrive at settlement of their dispute?
Section 30(2) of the Act provides that 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 or agree terms.
What is the status of an arbitral award on agreed terms? Can it be enforced like an arbitral award?
An arbitral award on agreed terms shall be made in accordance with section 31 of the Act and shall state that it is an
arbitral award.1 An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on
the substance of the dispute.2
Under the provisions of section 30(1), the arbitral tribunal may encourage the parties to an arbitral proceedings to settle
their dispute and with the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other ADR
procedures at any time during the arbitral proceedings to encourage settlement. Section 30(1) gives the arbitral tribunal
statutory authority to promote resolution of dispute between the parties by settlement. But in encouraging the parties
to resolve their dispute by settlement, the arbitral tribunal cannot bypass the arbitral procedure agreed upon by the
parties. The parties are entitled to settle their disputes at any time and in any manner they choose.
The conciliation procedure provided under the provisions of section 30(1) is different from conciliation referred to in Part-
III of the Act. Whereas a conciliation initiated under Part-III is a separate proceeding in accordance with the detailed
scheme envisaged under that part, a conciliation under the provisions of section 30(1) of the Act will be more informal
and flexible.
_______________
1. Section 30(3).
2. Section 30(4).

Section 30(2) provides that if during the arbitral proceedings the parties arrive at a settlement of their dispute, the
arbitral tribunal shall terminate the proceeding and on the request of the parties and if the arbitral tribunal has no
objection, record the statement in the form of an arbitral award on agreed terms. It is to be noted that an arbitral
tribunal can record a settlement award only if requested by the parties. A settlement award shall have the same status
and effect as any other arbitral award on the substance of the dispute. The award will be final and binding on the
parties and persons claiming under them respectively. It shall be enforceable under the Code of Civil Procedure, 1908 in
the same manner as if it were a decree of court.1
In Nathan Steels Ltd. v. Associated Constructions, 1995 Supp (3) SCC 324, it was held that once the parties arrived at
a settlement, it is not open to one of the parties to the settlement to spurn it on the ground that it was a mistake and
to proceed to invoke the arbitration clause. If this is permitted, the sanctity of contract, the settlement also being a
contract, would be wholly lost.
IV. FORM AND CONTENTS OF ARBITRAL AWARD
What is the form of an arbitral award?
Section 31(1) of the Arbitration and Conciliation Act, 1996 provides that an arbitral award shall be made in writing and
shall be signed by the members of the arbitral tribunal.
What are the contents of an arbitral award?
Section 31(2) of the Act provides that in arbitral proceedings with more than one arbitrator, the signatures of the
majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is
stated.
Section 31(3) provides that the arbitral award shall state the reasons upon which it is based, unless-
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under section 30. Section 31(4) provides that the arbitral
award shall state its date and the place of arbitration and the award shall be deemed to have been made at that
place. Section 31(5) provides that after the arbitral award is made, a signed copy shall be delivered to each
party. Section 31(6) lays down that the arbitral tribunal may at any time during the arbitral proceedings, make an
interim arbitral award on any matter with respect to which it may make a final arbitral. Section 31(7)(a) provides
that unless otherwise agreed by the parties, where and insofar as an arbitral award is for the payment of money,
the arbitral tribunal my include in the sum for which the award is made interest at such rate as it deem
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.
_____________
1. Section 36.
Section 31(7)(b) then lays down that a sum directed to be paid by an arbitral award shall, unless the award otherwise
directs, carry interest at the rate of 18% per annum from the date of the award to the date of payment.
Section 31(8) provides that 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.
The explanation appended to section 31 provides that for the purposes of clause (a) of sub-section 8 of section
31 "costs" means reasonable costs relating to-
(i) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the arbitration, and
(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award.
Formal Requirements of an Award
What are the formal requirements of an arbitral award?
(i) An arbitral award must be in writing.1 An oral award is invalid.
(ii) An arbitral award must be signed by the members of the arbitral tribunal.1 In an arbitral proceedings with
more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be
sufficient if the reason for any omitted signature is stated.2
(iii) The arbitral award must be dated. Section 31(4) provides that the arbitral award shall state its date. The
date of the award is the date on which it has been made by signing it. The date of the award is relevant in
calculating the amount of interest due on the award and also for deciding whether the award has been made
within the time limit agreed by the parties
(iv) An arbitral award must state the place of arbitration as determined in accordance with section 20 of the Act
and the award shall be deemed to have been made at that place.3
(v) An arbitral award shall state the reasons upon which it is based, unless-(a) the parties have agreed that no
reasons are to be given; or (b) the award is an arbitral award on agreed terms under section 30.4
_______________
1. Section 31(1).
2. Section 31(2).
3. Section 31(4).
4. Section 31(3).
In the absence of an agreement to the contrary between the parties or if the award is not on agreed terms
under section 30, it is an obligation of the arbitrators to give reasons of an arbitral award. The court can order
reasons to be given for the award for the purpose of determining whether the arbitrators have exceeded their
jurisdiction.
(vi) An arbitral award should specifically name the parties to the arbitration proceedings for the purpose of
identification in the award [Gabela v. Aris (Owners), [1927] 29 Lloyds Rep 289].
(vii) An arbitral award usually states the nature of the dispute and the circumstances in which the dispute arose
and come to the stage of arbitration. Such statements are known as recitals.
(viii) The award must be notified to the parties immediately after its making. Section 31(5) provides that after

the arbitral award is made, a signed copy shall be delivered to each party. The provisions of section 31(5) are
not subject to party autonomy and the parties cannot agree otherwise.
(ix) An arbitral award must be registered. Section 17(1)(e) of the Registration Act, 1908 provides that any award
which purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any
right, title or interest, whether vested or contingent, of the value of one hundred rupees or upwards, to or in
immovable property requires compulsory registration. Thus, if an award which is required to be compulsorily
registered but has not been registered within the prescribed time, it is not admissible in evidence because it
would be nullity.1
(x) After the arbitral award is made, signed copy shall be delivered to each party [section 31(5)].
(xi) An arbitral award which directs partition falls within the definition of "instruments of partition' under section
2(15) of the Indian Stamp Act, 1899 and is liable to stamp duty without any exception under Art. 45 of the Act.
An arbitral award which is made on a reference made by courts in pending suit or other proceedings are not liable
to any stamp duty. But an arbitral award which is given on private reference is liable to stamp duty under Art. 12
of the Stamp Act, 1899 Darshan Singh v. Forward India Finance Pvt. Ltd., AIR 1984 Del 140]
Arbitral Tribunal's Power to make Interim Award
Discuss the power of an arbitral tribunal to make interim award
Section 31(6) provides that the arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral
award on any matter with respect to which it may make a final arbitral award. Thus, under the provision of section 31(6)
it is open to an arbitral tribunal to make an interim award on any matter on which it may make a final arbitral award. In
an interim award, the arbitral tribunal may decide some of the issues or some of the claims, so
_______________
1. Section 25, Indian Registration Act, 1908.
that the remaining matters will be dealt with later. An interim arbitral award must be made in the same way as an award,
after hearing the parties, and on consideration of the evidence adduced [Anand Prakash v. Asstt. Registrar,
MANU/UP/0007/1968 : AIR 1968 All 22]. An interim award may be intended to have effect only so long as the final award
is not delivered. In that case, it will have the force of interim award and will cease to have effect after the final award is
made. But if the interim award is intended to finally determine the rights of the parties, it will have the force of complete
award and will have effect even after the final award is delivered. An interim award is final to the extent it goes. It binds
the parties [Satwant Singh Sodhi v. State of Punjab, MANU/SC/0212/1999 : (1999) 3 SCC 487]. Interim awards are
enforceable under section 36 of the Act, as decrees of the court. In Uttam Singh Duggal & Co. Pvt. Ltd. v. Hindustan
Steel Ltd., MANU/MP/0057/1982 : AIR 1982 MP 206, it was held that a decision by the arbitration on the preliminary
issue of their jurisdiction is not an interim award. An interim award must decide the claim or part of it or any issue of
liability. Usually, in practice, interim awards are made in rare cases. The arbitrators prefer to dispose of the entire matter
in the final award. It is to be noted that an interim arbitral award would be as much liable to be set aside as the final
arbitral award, because under section 2(c) of the Act, the arbitral award is defined to include an interim award.
Arbitral Tribunal's Power to Award Interest
Discuss the power of an arbitral tribunal to award interest
Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 provides that 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.
Section 31(7)(b) of the Act then lays down that a sum directed to be paid by an arbitral award shall, unless the award
otherwise directs, carry interest at the rate of 18% per annum from the date of the award to the date of payment.
Under the provisions of section 31(7)(a), subject to the agreement between the parties, the arbitral tribunal may grant
interest-(1) at a rate it considers reasonable, (ii) on the whole or part of the money found due, (iii) for the whole or any
part of the period. This provision gives the arbitral tribunal direction to award interest it deems reasonable. The parties
may, by agreement, specify the rate of interest for the unpaid sum. If the parties fail to or does not arrive at such
agreement, the tribunal may adopt a rate at or above the bank borrowing rates for the period in question. Under the
provisions of section 31(7)(b), the arbitral tribunal may award interest on the sum of money awarded for the period from
the date of the award to the date of payment and unless the arbitral award direct otherwise, the rate of interest shall
be 18% per annum.
In Jagdish Rai and Bros. v. Union of India, MANU/SC/0181/1999 : (1999) 3 SCC 257, the Supreme Court observed that
there are four stages for grant of interest by an arbitral tribunal, namely-
(i) from the stage of accrual of cause of action till filing of the arbitration proceedings,
(ii) during pendency of the proceedings before the arbitrators,
(iii) future interest arising between the date of award and the date of the decree, and
(iv) interest arising from date of decree till realisation of the award.
The four stages referred to in Jagdish Rai and Bros. v. Union of India, MANU/SC/0181/1999 : (1999) 3 SCC 257, is now
reduced to two situations under the provisions of section 31(7)(a) and (b), namely-(i) the period on which the cause of
action arose and the date on which the award is made, i.e, period of pre-award interest, and (ii) from the date of the
award to the date of payment i.e., the period of post-award interest.
In P.T. George v. State of Kerala, (2001) 2 SCC 758, it was held that the arbitral tribunal has the power to award
interest in all the four stages. It is to be noted that pre-reference as well as pendente lite interest could not be
awarded by an arbitrator unless the same had not been claimed in the claim or counter-claim or petition. [Tulsi
Constructions v. Oil and Natural Gas Corporation Ltd., (2002) 10 SCC 108. Regarding the award of interest pendente lite,
the Supreme Court in Secy. Irrigation Department, Government of Orissa v. G.C. Roy, MANU/SC/0142/1992 : (1992) 1
SCC 508, observed that where the agreement between the parties does not prohibit grant of interest and where a party
claims interest and that dispute (along with the claim for principal amount or independently) is referred to the arbitrator,
he shall have the power to award interest pendente lite. But this does not mean that in every case the arbitrator should
necessarily award interest pendente lite. It is matter within his discretion to be exercised in the light of all the facts and
circumstances of the case keeping the ends of justice in view.
The discretion of the arbitral tribunal to award the rate of interest has to be exercised judicially on the principles of
fairness, equity and good conscience. The tribunal must exercise its power to award interest in the absence of a good
reason not to do so [Wildhandel N.V. v. Tucker and Cross, (1976) 1 Lloyd's Rep 341].
Award of Cost by Arbitral Tribunal
What are 'Costs' in relation to an arbitration proceedings?
Discuss the power of an arbitral tribunal to award cost
Costs in relation to an arbitration proceeding (within the meaning of the Explanation appended to section 31(8), means
reasonable costs relating to-
(i) the fees and expenses of the arbitrators and witnesses,

(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the arbitration, and
(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award.
Section 31(8)(a) of the Arbitration and Conciliation Act, 1996 provides that unless otherwise agreed by the parties the
costs of an arbitration shall be fixed by the arbitral tribunal
Section 31(8)(b) of the Act then lays down that unless otherwise agreed by the parties, 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.
The arbitrator has full discretion to pass orders about costs incurred by the parties in connection with the arbitration
proceedings [Eastern and North Frontier Railway Co-operative Bank Ltd. v. B. Guha & Co., MANU/WB/0027/1986 : AIR
1986 Cal 146]. An arbitral tribunal has no jurisdiction to award costs in respect of the proceedings which do not arise
out of the terms of the agreement or which are not matter of submission to arbitration [Skanska Cementation India Ltd.
v. Bajranglal Agarwal, 2004 (2) Arb LR 67 (Bom.)]. The discretion exercised by the arbitrator in regard to award of costs
cannot be interfered with unless it is shown that the discretion was arbitrarily exercised [Kapila Textile Mills Ltd.,
Bangalore v. Madhava & Co., AIR 1963 Mys 39]. It is to be noted that in exercising its discretion to award costs, the
arbitral tribunal must act judicially. An arbitral award may be reviewable by the court under section 34 for failure to
exercise discretion and for abuse of discretionary power resulting in injustice to a party on account of bias.
V. TERMINATION OF PROCEEDINGS
How an arbitration proceeding comes to an end?
Section 32(1) of the Arbitration and Conciliation Act, 1996 provides that the arbitral proceedings shall be terminated by
the final arbitral award or by an order of arbitral tribunal under section 32(2)
When an arbitral tribunal issues an order for termination of the arbitral proceedings?
Section 32(2) of Act lays down that the arbitral tribunal shall issue an order for the termination of the arbitral
proceedings where-
(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 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.
Section 32(3) provides that 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.
Section 32 of the Act deals with the termination of the arbitral proceedings. But the provisions of section 32 are not
exhaustive of the situations in which arbitral proceedings may terminate. Besides the termination of an arbitral
proceedings under section 32(1) by making of final award by an arbitral tribunal or by an order of the arbitral tribunal
terminating the arbitral proceedings on any of the grounds mentioned in section 32(2) of the Act, an arbitral proceeding

may terminate-(a) under section 25(a) on default of the claimant to communicate his statement of claim, (b) under
section 30(2) when the parties arrive at a settlement of their dispute, and (c) under section 38(2), when the parties fail
to pay the amount of deposit fixed by the arbitral tribunal
Under the provisions of section 32(2), an arbitration proceeding come to an end with the making of the final arbitral
award and no formal order is necessary for terminating the arbitration proceedings. The award itself constitutes the
order of termination of the proceedings. With the making of the final award the authority of the arbitral tribunal ceases
to operate and the reference terminates.
Under the provisions of section 32(2), an arbitral tribunal shall issue an order for the termination of the arbitral
proceedings if-(i) the claimant withdraws his claim; (ii) the parties agree on the termination of the proceedings; or (iii)
continuation of proceedings becomes unnecessary or impossible.
A claimant is free to withdraw his claim at any time, but if such withdrawal adversely affects the rights of the
respondent, he may object to such withdrawal and termination of proceedings due to such withdrawal. Sometimes, the
parties may agree to terminate the arbitral proceedings. Further, the arbitral tribunal may issue an order terminating the
proceedings if it finds that the continuation of proceedings has become unnecessary or impossible.
VI. CORRECTION AND INTERPRETATION OF AWARD; ADDITIONAL AWARD
How the computational, clerical or typographical errors in an arbitral award are corrected?
What is the period of limitation for making an application for such correction?
Section 33(1) of the Arbitration and Conciliation Act, 1996 provides that within thirty days from the receipt of the
arbitral award, unless another period of time has been agreed upon by the parties-
(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors,
any clerical or typographical errors or any other errors of a similar nature occurring in the award;
(b) if so agreed by the parties, a party, with notice to the other party may request the arbitral tribunal to give
an interpretation of a specific point or part of the award.
Section 33(2) provides that if the arbitral tribunal considers the request made under section 33(1) to be justified, it shall
make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation
shall form part of the arbitral award.
Section 33(3) lays down that the arbitral tribunal may correct any computation, clerical, typographical or any other
errors of a similar nature, on its own initiative, within thirty days from the date of the arbitral award.
What is the procedure for obtaining an additional arbitral award as to claims presented in the arbitral proceedings but
omitted from the arbitral award?
Section 33(4) provides that unless otherwise agreed by the parties, a party with notice to the other party, may request
the arbitral tribunal within thirty days from the receipt of the arbitral award, to make an additional arbitral award as to
claims presented in the arbitral proceedings but omitted from the arbitral award. If the arbitral tribunal considers the
request to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request
within [section 33(5)].
Section 33(6) provides that the arbitral tribunal may extend, if necessary, the period of time within which it shall make a
correction, give an interpretation or make an additional arbitral award under section 33(2) or section 33(5)
Section 33(7) provides that the provisions of section 31 regarding the form and contents of arbitral awards shall apply to
a correction or interpretation of the arbitral award or to an additional arbitral award made under the provisions of section
33.

Can an arbitral tribunal suo motu give interpretation of an arbitral award made by it?
The word 'error' refers to an act involving an unintentional deviation from accuracy. A clerical error is an unintentional
deviation from accuracy in a statement or a wrong action resulting from inadvertence, family judgment or ignorance. A
clerical error must be an error of the nature committed while copying, writing or doing official work. It is a mistake or
error relating to a peripheral matter and not to the substance or content [Instrumentation Ltd.
v. E. Kuttappan, 1992 (1) Arb LR 284]. The provision of section 33 does not authorize the arbitral tribunal to have
second thoughts on matter on which it has made a conscious act of judgment. It is to be noted that the arbitral tribunal
cannot also suo motu give any interpretation of the arbitral award. Such interpretation of an arbitral award can only be
made when an application is made by one of the parties to that effect. An interpretation of an arbitral award forms part
of the arbitral award.

Chapter 7
RECOURSE AGAINST ARBITRAL AWARD
I. APPLICATION FOR SETTING ASIDE ARBITRAL AWARD
When can an application for setting aside an arbitral award be made? What is the period of limitation for making such
an application?
Discuss the grounds on which an arbitral award can be set aside
Section 34(1) and (2) of the Arbitration and Conciliation Act, 1996 provides that a party aggrieved by an arbitral award
may make an application to the court for setting aside the arbitral award and the award may be set aside by the court
only if-
(a) the party making the application furnishes 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 matter 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 set 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 Part-I from which the
parties cannot derogate, or failing such agreement was not in accordance with part-I; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time
being in force, or 83
(ii) the arbitral award is in conflict with the public policy of India. The Explanation appended to section
34(2) provides 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 of the Act.
Section 75 of the Act provides that notwithstanding anything contained in any other law for the time
being in force, the conciliator and the parties shall keep confidential all matters relating to the conciliation
proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is
necessary for purpose of implementation and enforcement. For the purposes of section 34(2)(b)(ii), the
words 'conciliator' and 'conciliation' used in section 75 shall have to be substituted for the words
'arbitrator' and 'arbitration'. Thus, where in an arbitral proceedings, the arbitrator or the parties fail to
maintain confidentiality, an arbitral award made in such proceeding shall be regarded as an award which is
in conflict with the public policy of India. Section 81 of the Act provides that the parties to a conciliation
proceedings shall not rely on or introduce as evidence in arbitral or judicial proceedings whether or not
such proceedings relate to dispute that is the subject of the conciliation proceedings,-

(a) views expressed or suggestions made by the other party in respect of a possible settlement of
the dispute;
(b) admissions made by the other party in the course of the conciliation proceedings;
(c) proposals made by the conciliator;
(d) the fact that the other party had indicated his willingness to accept a proposal for settlement
made by the conciliator.
Thus, where in an arbitral proceeding, anything mentioned in section 81(a) to (d) was introducted or relied on as
evidence, the award made in such proceedings is in conflict with the public policy of India under the provisions of
section 34(2)(b)(ii).
Incapacity of Parties
Discuss 'incapacity of parties' as a ground for setting aside an arbitral award under section 34 of the Arbitration and
Conciliation Act, 1996
Incapacity of parties is a ground for setting aside the arbitral award under the provisions of section 34(2)(a)(i) of the
Arbitration and Conciliation Act, 1996. Section 11 of the Indian Contract Act, 1872 provides that every person is
competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound
mind and is not disqualified from contracting by any law to which he is subject. This provision deals only within the
incapacity of natural persons. But the expression 'incapacity' under section 34(2)(a)(i) covers the incapacity of natural
as well as of legal persons. The general rule regarding the capacity of a person to enter into an arbitration agreement is
that any natural or legal person who has the capacity to enter into a valid contract, has the capacity to enter into an
arbitration agreement.
Thus, an arbitration agreement in which one of the parties is a minor would be void. But a minor may enter into an
arbitration agreement through his guardian. In Ponnaya v. Suppamal, MANU/TN/0282/1946 : AIR 1946 Mad 391, it was
held that a natural and legal guardian of a minor is competent to make a reference to arbitration on behalf of the minor,
if the reference is for the benefit of the minor. In Vasudeva v. Sundararaja, MANU/TN/0277/1929 : AIR 1930 Mad 38, it
was held that a reference to arbitration by a natural and legal guardian of a minor must fulfil the following two
conditions,-
(i) the guardian must not have an interest adverse to that of minor, and
(ii) the reference must be for the benefit of the minor. In Vasudeva Ayyar v. Sundararaja Ayyar,
MANU/TN/0277/1929 : AIR 1930 Mad 38, it was held that a minor is bound by the award, only when he is not
injuriously affected by the arbitration, when it is fair and when he has been duly represented. But is Sadashiv
Ramchandra Datar v. Trimbak Keshav, AIR 1920 Bom 32, it was held that if the minor is not properly represented
and his guardian fails in his duty to protect his interest, the award is not binding on the minor. In Ram Nagina
Singh v. Governor-General in Council, MANU/WB/0022/1952 : AIR 1952 Cal 306, and also in Dharmeswar Kalita v.
Union of India, AIR 1955 Assam 86, it was held that a statutory person can exercise its power subject to the
formalities imposed by statute, and any restriction on the exercise of power does not amount to inherent
disqualification or incapacity. In certain cases, the statute which creates a corporation expressly confer upon the
corporation the capacity to enter into contract. The statute may confer the authority to enter into contract
upon a body within the corporation. Regarding the capacity of a company to enter into contract, the Companies
Act, 1956 assumes that a company can enter into a contract. Section 46 of the Companies Act, 1956 provides
the mode of executing contracts by the company and also lays down that such contracts shall bind the
company.
Non-validity or Non-existence of the Arbitration Agreement

Discuss invalidity or non-existence of the arbitration agreement on a ground for setting aside an arbitral award by
court
Invalidity of the arbitration agreement in pursuance of which an arbitral award is made is a ground for setting aside the
arbitral award under the provisions of section 34(2)(a)(ii) of the Arbitration and Conciliation Act, 1996. An arbitral
tribunal derives its jurisdiction to arbitrate from the arbitration agreement and if the arbitration agreement is invalid or
does not exist, the arbitral tribunal will have no jurisdiction to arbitrate any dispute submitted to it by such arbitration
agreement. In Tarapore and Co. v. State of Madhya Pradesh, MANU/SC/0689/1994 : (1994) 3 SCC 521, it was held that
invalidity or non-existence of the arbitration agreement results in patent lack of jurisdiction of the arbitral tribunal, which
cannot be conferred on the tribunal by the acquiescence or agreement of the parties. It is to be noted that the plea
about invalidity of the arbitration agreement is different from the plea about non-existence of arbitration agreement. A
plea of non-existence of the arbitration agreement must be taken before the arbitral tribunal itself and if the arbitral
tribunal rejects such plea, only then the plea can be raised in proceedings under section 16(6) of the Act. The non-
existence of an arbitration agreement is not expressly mentioned in any of the clauses of section 34 as a ground for
setting aside an arbitral award and unless the case falls within section 16(6) of the Act, it may not be open to take the
plea about non-existence of arbitration agreement. Invalidity of the arbitration agreement as a ground for setting aside
an arbitral award is expressly mentioned in section 34(2)(a)(ii) of the Act, and a plea on that ground may be raised even
for the first time before the court in a proceeding for setting aside the arbitral award.
An arbitration agreement to refer to arbitration a matter which could not be referred to arbitration is invalid. In Khelawati
v. Chetram, AIR 1952 Punj 67, it was held that question relating to genuineness of Will cannot be referred to arbitration
and so an arbitration agreement to refer such a question to arbitration would be invalid because that question must be
decided in accordance with law dealing with probate of Wills under the Succession Act, 1925. In Gopalchandra v.
Lakshmikanta, MANU/WB/0129/1933 : AIR 1933 Cal 816, it was held that where the consideration for the reference to
arbitration was dropping of criminal proceedings relating to a non-compoundable offence, the reference was invalid and
the award given thereon was illegal and inoperative. In Union of India v. Jai Society Wood Works, the High Court
remitted the award to the arbitrator for determining the existence or validity of the arbitration agreement between the
parties where the arbitrator had failed to examine the plea that the arbitration agreement was invalid for non-compliance
of the requirements of Article 299 of the Constitution.
Non-compliance of due Process
Discuss how noncompliance of due process during an arbitral proceeding vitiates an arbitral award?
Non-compliance of due process is a ground for setting aside an arbitral award under the provisions of section 34(2)(a)
(iii) of the Arbitration and Conciliation Act, 1996. Non-compliance of due process may arise under section 34(2)(a)(iii) if
a party to the arbitration agreement was-
(a) not given proper notice of the appointment of an arbitrator; or
(b) not given proper notice of the date, time and place of the arbitral proceedings; or
(c) otherwise unable to present his case. While appointing an arbitrator, the party so appointing the arbitrator
must give notice of appointment of the arbitrator to the other party. After the appointment, the arbitrator must
give to the parties notice of the date, time and place of the arbitration proceedings. In Lovely Benefit Chit Fund
and Finance Pvt. Ltd. v. Purandutt Sood, AIR 1983 Del 413, it was held that the first duty of the arbitrator is to
give notice of time, date and place of meeting to the parties to enable them to appear before the tribunal and
put up their case. In Damodar Pershad Gupta v. Saxena & Co., AIR 1959 Punj 476, it was held that the parties to
an arbitration proceedings are entitled to a reasonable notice of the time and place of the hearing and have an
absolute right to be heard and to present their evidence before the arbitrators. If they are deprived of this right,
the court will not hesitate to set aside the award, even though there may have been no improper intention. In
Jose Antao R. Carvalho v. C.S. Raje, AIR 1976 Goa 56, it was held that if an arbitrator takes evidence or hears

agreements in the absence of one of the parties without having given due notice of the time and place for the
meeting, he is guilty of misconduct. But in Gurumurthy v. Narsimha, MANU/OR/0073/1954 : AIR 1954 Ori 234, it
was held that the mere absence of formal notice to the parties will not invalidate an award, if the arbitrator gave
the parties a reasonable opportunity of being heard.
Section 18 of the Arbitration and Conciliation Act, 1996 provides that the parties shall be treated with equality and each
party shall be given a full opportunity to present his case. Thus, if a party to an arbitration proceedings is unable to
present his case, the proceedings will be in violation of the mandate of section 18 of the Act, In Godrej Properties and
Investments Ltd. v. Tripura Constructions, Mumbai, 2003 (2) Arb LR 195 (Bom), it was held the requirement of section
18 is that the parties shall be treated with equality and each party shall be given a full opportunity to present his case.
In Lovely Benefit Chit Fund & Finance Pvt. Ltd. v. Pawandutt Sood, AIR 1983 Del 413, it was held that an arbitrator
ought not to proceed ex parte against a party, if he has failed to appear at one of the sittings. The arbitrator should fix
another date for hearing and give notice to the defaulting party of his intention to proceed ex parte on specified date,
time and place. If even after such notice, the defaulting party does not take part in the proceedings, the arbitrator may
proceed in his absence. In Skanska Cementation India Ltd. v. Bajranglal Agarwal, 2004 (2) Arb LR 67 (Bom), it was held
that refusal by the arbitral tribunal to allow the parties to be represented by lawyers in the arbitral proceedings, cannot
be a ground for setting aside the award because it does not in any manner disable any particular party to present his
case. It is to be noted that the objection of non-compliance with the procedural requirements of section 34(2)(a)(ii)
goes to the root of jurisdiction of the arbitral tribunal and must be raised, in the first instance, before the tribunal itself.
Jurisdictional error on the part of the Arbitral Tribunal
How jurisdictional error on the part of the arbitral tribunal affords a ground for setting aside an arbitral award under
section 34 of the Arbitration and Conciliation Act, 1996?
Section 34(2)(a)(iv) of the Arbitration and Conciliation Act, 1996 provides that an arbitral award may be set aside by
the court if the party making the application furnishes proof that 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. But 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 set aside.
The provisions of section 34(2)(a)(iv) contemplates two situations-
(a) cases where the arbitral award deals with a dispute not contemplated by or not following within the terms of
the submission to arbitration i.e., where the arbitral tribunal acts outside its jurisdiction or without jurisdiction
(extra petita) and
(b) cases where the award contains decision on matter beyond the scope of the arbitration agreement (ultra
petita).
In the cases where the arbitral award deals with a dispute not contemplated by or not falling within the terms of the
submission to arbitration, the award is wholly void for complete lack of jurisdiction, but where the arbitral award contains
decisions on matters beyond the scope of the arbitration agreement, it may be partially valid and partially void. If the
void part of the award is separable from the valid part, only the void part of the award may be set aside but if the valid
and the void part of the award are so connected with one another that the one is inseparable from the other, the whole
award will have to be set aside.
The arbitrator(s) derive his/their authority to arbitrate from the arbitration agreement and as such the arbitrator(s) must
operate within the four corners of the arbitration agreement and cannot travel beyond it. If the arbitrator travels outside
the bounds of the arbitration agreement from which he derives his authority, he acts without jurisdiction.
In D.C.M. Ltd. v. Municipal Corporation of Delhi, MANU/SC/0814/1997 : (1997) 7 SCC 123, a reference was made to an

arbitrator by a court with a direction inter alia, that it would not be open to the arbitrator to examine the correctness of
the formula for fuel adjustment charges in the tariff. But the arbitrator could examine whether the formula had been
correctly applied and the amount of increase in fuel adjustment charges correctly calculated. But the arbitrator in
arriving at his award distorted the formula. He removed the factor of transmission and distribution from calculation of the
units sold. It was held by the Supreme Court that the arbitrator in doing so had not only committed an error of law
apparent on the face of the record but had also exceeded his jurisdiction by acting beyond the scope of reference. The
Apex Court thus held that the award was properly set aside in part to the extent it excluded transmission and
distribution losses. In Hindustan Shipyard Ltd. v. Essar Oil Ltd., 2005 (1) Arb LR 454 (AP) (DB), it was held that if the
award is in excess of jurisdiction of arbitrator, then it is liable to be set aside, but if the award is within the jurisdiction
on the basis of construction of the contract, which the arbitrator was required to do, then the court cannot set it aside
only because another view is possible. In Rajendra Krishan Khanna v. Union of India, MANU/SC/0652/1998 : (1998) 7 SCC
129, a reference was made to an arbitrator to determine a dispute with respect to 'damage to the crops and land by
excessive pressure by effluents'. But the arbitrator in addition to the compensation for the damage to the crops and the
land, also awarded compensation for 'loss of the potential of the land and interest thereon'. The award was set aside by
the Supreme Court on the ground that it fell outside the scope of the reference to arbitration and was not in relation to
the dispute contemplated in the submission to arbitration. In Soudamino Ghose v. Gopalchandra Ghose, AIR 1915 Cal
745, as well as in Kherchand v. Dharamchand, 1976 Punj LR 382, it was held that when an arbitrator touches the
interest of a stranger, his authority and the award becomes void.
Improper Composition of the Arbitral Tribunal or the Arbitral Procedure
Improper composition of the arbitral tribunal or the arbitral procedure is a ground for setting aside an arbitral award
under the provisions of section 34(2)(a)(v) of the Arbitration and Conciliation Act, 1996. Section 34(2)(a)(v) provides
that an arbitral award may be set aside by the court if the party making the application furnishes proof that 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 Part-I from which the parties cannot derogate, or failing such
agreement, was not in accordance with this part.
Discuss improper composition of the arbitral tribunal or the arbitral procedure as a ground for setting aside an arbitral
award under section 34 of the Arbitration and Conciliation Act, 1996
Section 10(1) of the Arbitration and Conciliation Act, 1996 provides that the parties are free to determine the number of
arbitrators, provided that such number shall not be an even number. Section 10(2) of the Act provides that if the parties
fail to agree on the number of arbitrators, the arbitral tribunal shall consist of a sole arbitrator. As far as the procedure
for appointment of the arbitrator is concerned, section 11(2) of the Act provides that the parties are free to agree on a
procedure for appointment of the arbitrator. If the parties fail to agree on a procedure for appointment of the arbitrator,
the appointment is to be made as per the procedure provided under section 11 of the Act. But if the appointment of the
arbitral tribunal is not in accordance with the number determined by the parties or the procedure agreed to by them, the
arbitral proceedings will be invalid and the resulting award will be liable to be set aside as nullity.
In Faze Three Exports Ltd. v. Pankaj Trading Co., 2004 (2) Arb LR 163 (Bom), a dispute was referred to an arbitral
tribunal of three arbitrators. But all the three arbitrators were not present in the arbitral proceedings. One of the
arbitrators was not present at all during the arbitral proceedings and as a result there were no deliberations between all
the arbitrators. Although all the arbitrators signed the arbitral award, but in fact it was not an award by all the
arbitrators as the third arbitrator has merely put his signature without hearing the parties or without being a party to
any deliberations. On the above grounds, the award was vacated by the court. In N. Chelleppan v. Secretary, Kerala
State Electricity Board, MANU/SC/0002/1974 : (1975) 1 SCC 289, it was held that a party who submits to the
jurisdiction of the arbitrator and takes party in the proceedings before him without any demur cannot be allowed to
challenge his jurisdiction after the award is made. He would be precluded by his acquiescence from challenging the
award for lack of jurisdiction.

Section 28(1)(a) of the Arbitration and Conciliation Act, 1996 provides that where the place of arbitration is situate in
India, in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute
submitted to arbitration in accordance with the substantive law for the time being in force in India. Section 43 of the
Act further provides that the Limitation Act, 1963 shall apply to arbitration as it applies to proceedings in court. Thus,
where an award is given by an arbitral tribunal of time-barred claim, it is a violation of section 28(1)(a) and section
43(1) of the Act affording a ground under section 34(2)(a)(v) of the Act for setting aside the award. In Ramdutt Ram
Kissen v. E.D. Sassoon & Co., AIR 1929 PC 103, it was held that except in the case of statutory arbitrations, if an
arbitrator failed to apply the law of limitation, the award will be liable to be set-aside.
Where arbitrator is biased, an application can be made for setting aside the arbitral award under section 13(5) read with
section 34(2)(a)(v) of the Act. If a party become aware of the bias of the arbitrator before the making of the award, he
must make a challenge against that arbitrator. The arbitral tribunal then considers the challenge and it after so
considering rejects the challenge, the arbitral tribunal continues its proceeding and make the arbitral award. After making
of the arbitral award, the aggrieved party may make an application under section 13(5) for setting aside the arbitral
award.
If a party became aware of the bias of the arbitrator after the arbitral award was made, but within a period of 3 months
[allowed under section 34(3)] or a further period of 30 days [allowed under proviso to section 34(3)], the party may
make an application for setting aside the arbitral award on the ground of bias of the arbitrator.
Inarbitrability of the Subject-matter
What will be the consequence when a matter which is not arbitrable under the law is arbitrated upon and an award is
made?
Section 34(2)(b)(i) provides that an arbitral award may be set aside by the court if it finds that the subject-matter of
the dispute is not capable of settlement by arbitration under the law for the time being in force.
The ground set forth in section 34(2)(b)(i) is an ex afficio ground for setting aside an arbitral award, i.e. the party
challenging the award on the ground of inarbitrability of the subject-matter need not plead or prove the existence of
these grounds. The arbitral tribunal has ex officio jurisdiction to set aside an award made in an arbitration proceeding
where the subject-matter of the dispute is inarbitrable under the law for the time being in force. In Mangilal
v. Devicharan, MANU/NA/0022/1947 : AIR 1949 Nag 110, it was held that proceedings in insolvency including the
question whether or not a certain person should be declared an insolvent cannot be referred to arbitration. In Ghellabhai
v. Nandubai, ILR 21 Bom 335, it was held that a dispute involved in probate proceedings cannot be referred to arbitration
as these end in judgement in rem. In Trilokchand Jain v. Swastika Stripes (P) Ltd., (1990) 2 Punj LR 655, it was held that
the proceedings for winding up of a company under the Companies Act, 1956 cannot be referred to arbitration. In Malka
v. Sardar, AIR 1929 Lah 394, it was held that a criminal complaint as such cannot be referred to arbitration. In
Kalikanath Barman v. Rajnath Barman, AIR 1952 Assam 118, it was held that the matter in proceedings under section 145
of the Code of Criminal Proceedure (dispute concerning land or water likely to cause breach of the place) cannot
properly be referred to arbitration.
Arbitral award in conflict with the public policy of India
Section 34(2)(b)(ii) provides that an arbitral award may be set aside by the court if it finds that the arbitral award is in
conflict with the public policy of India.
The Explanation appended to this section provides that for the avoidance of any doubt, it is hereby declared 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 of the Act.
What is the meaning of the expression public policy of India as mentioned in section 34(2)(b)(ii) of the Arbitration

and Conciliation Act, 1996? Can an award which is in conflict with the public policy of India be enforced by the court?
The ground stated in section 34(2)(b)(ii) for setting aside an arbitral award is an ex officio ground, i.e., the party
challenging the award on the ground that the award is in conflict with the public policy of India need not plead or prove
the existence of these grounds. The court has ex officio jurisdiction to set aside an arbitral award under the provisions
of section 34(2)(b)(ii), if the award is in conflict with the public policy of India. The expression 'public policy' has not
been defined in the Arbitration and Conciliation Act, 1996. The expression 'public policy' is not capable of a precise
definition because it is a variable notion, depending on changing manners, morals and economic conditions. In Maxim
Nordenfelt Guns and Ammunition Co. v. Nordenfelt, [1893] 1 Ch 630, it was observed that rules which rest on the
foundation of public policy, not being rules which belong to the fixed customary law, are capable, on proper occasion, of
expansion or modification. Circumstances may change and make a commercial practice expedient which formerly was
mischievous to commence. In Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd., [1968] AC 169, it was held
that it may so happen that a practice which was once permissible, may now be proscribed. In Oil and Natural Gas
Corporation Ltd v. Saw Pipes, MANU/SC/0314/2003 : (2003) 5 SCC 705, it was held that the concept of 'public policy' is
considered to be vague, susceptible to narrow or wider meaning depending upon the context in which it is used. The
expression 'public policy' does not admit of precise definition and may vary from generation to generation and from time
to time. Lacking precedent, the court has to give its meaning in the light and principles underlying the Arbitration Act,
Contract Act and Constitutional provisions.
Public policy as a ground for setting aside an arbitral award sometimes overlaps with the ground of inarbitrability of the
subject-matter. Sometimes, violation of public policy refers to procedural violation of minimum due process requirements.
Although parties are free to enter into any agreement as they like, but they cannot make a binding contract in violation
of law or of public policy. Public policy imposes certain restriction on the freedom to enter into contract. It prohibits
conduct or determination that offend fundamental juridical values in the jurisdiction where enforcement is sought. Public
policy is a principle of law, under which freedom for contract or private dealings is restricted by law for the good of the
community. However, the concept of public policy is not a static concept and varies with time and changing needs of
the society. In Renusagar Power Co. Ltd. v. General Electric Co., (1994) Supp 1 SCC 644, it was held that the
enforcement of a foreign award would be refused on the ground that it is contrary to the public policy of India, if such
enforcement would be contrary to-
(i) fundamental policy of Indian law; or
(ii) the interest of India; or
(iii) justice or morality.
Although the above observation was made in the Renusagar case while dealing with section 7(1)(b)(ii) of the Foreign
Awards (Recognition and Enforcement) Act, 1961, it has been held to be relevant for setting aside arbitral awards under
the provisions of section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996 [Municipal Corporation of Greater
Mumbai v. Jyoti Construction Co., 2003 (3) Arb LR 489 (Bom)]. In Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd.,
MANU/SC/0314/2003 : (2003) 5 SCC 705, it was held that the expression 'public policy' should be given a wider and not
a narrower meaning. In this case, it was also held that the court can set aside the award if it is-
(i) contrary to-
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality; or
(ii) patently illegal; or
(iii) so unfair and unreasonable that it shocks the conscience of the court. In the same case, it was held that a

patent illegality is an illegality which goes to the root of the matter and if the illegality is of a trivial nature, it
cannot be held that the award is against the public policy. In Kesar Enterprises v. DCM Sriram Industries Ltd.,
2001 (1) RAJ 378 (Del), the arbitrator, a former Chief Justice of India, did not return a finding on every question
that was raised. It was contended that the arbitrator did not appreciate and duly consider all the questions
raised before him. It was held that failure of the arbitrator to return a finding on every question raised before him
did not amount to infraction of public policy. In such circumstances, it would be deemed that the arbitrator
rejected the contention. Where the arbitrator is a former Chief Justice of India, it would be extremely sanguine to
predicate that he had not appreciated and duly considered all the questions raised before him.
Fraud or Corruption-Grounds for setting aside an Arbitral Award under Section 34(2)(b)(ii)
Discuss fraud or corruption as a ground for setting aside an arbitral award under section 34(2)(b)(ii) of the Arbitration
and Conciliation Act, 1996
The Explanation appended to section 34(2)(b)(ii) provides that an award induced or affected by fraud or corruption is in
conflict with the public policy of India and the same can be set aside by the court under section 34(2)(b)(ii). Where an
award is obtained by fraud or by corrupt inducement, it is improper and can be set aside by the court. Section 17 of the
Indian Contract Act, 1872 defines the term 'fraud' as-
'Fraud' means and includes any of the following acts committed by a party to a contract or with his connivance,
or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the
contract-
(i) the suggestion, as to a fact, of that which is not true by one who does not believe it to be true;
(ii) the active concealment of a fact by one having knowledge or belief of the fact;
(iii) a promise made without any intention of performing it;
(iv) any other act fitted to deceive;
(v) any such act or omission as the law specially declares to be fraudulent.
The Explanation appended to section 17 provides that mere silence as to facts likely to affect the willingness of a person
to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is
the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.
Misconduct on the part of the arbitrator is a ground under Explanation to section 34(2)(b)(ii) for setting aside an arbitral
award so far such misconduct lies in fraud or corruption. In Payyavule v. Payyavule Kesanna, MANU/SC/0002/1952 : AIR
1953 SC 21, the Supreme Court set aside an award where the arbitrator took statements from each of the parties in the
absence of the other and made the award. In Dewan Singh v. Champat Singh, MANU/SC/0001/1969 : AIR 1970 SC 967,
it was held that it is a misconduct on the part of an arbitrator to use personal knowledge for deciding the dispute before
him unless so authorised by the reference
Corruption on the part of an arbitrator means moral obliquity. For an allegation of corruption, it is not always necessary
that the arbitrator should have been bribed, nor is it necessary that there should be some other form of venality or gross
immorality or flagitious conduct. Corruption may take a milder form. But there must be some privity of mind; some
perversion of the moral feeling, either by interest or passion or partiality [Cameron v. Menzies, [1868] 6 M 279].
Violation of Section 75 as a Ground for Setting Aside an Arbitral Award
What will be the consequence when an arbitral award is made in violation of section 75 of the Arbitration and
Conciliation Act, 1996?
An arbitral award passed in violation of section 75 of the Arbitration and Conciliation Act, 1996 is in conflict with the

public policy of India and is liable to be set aside by the court under the provisions of section 34(2)(b)(ii) of the Act.
Section 75 provides that notwithstanding anything contained in any other law for the time being in force, the conciliator
and the parties shall keep confidential all matters relating to the conciliation proceedings. Confidentiality shall extend
also to the settlement agreement, except where its disclosure is necessary for purposes of implementation and
enforcement. It is to be noted that although in section 75 only the words 'conciliation' and 'conciliator' are used, but for
the purpose of section 34(2)(b)(ii), the words 'conciliation' and 'conciliator' used in section 75 shall have to be
substituted for the words 'arbitration' and 'arbitrator'. Thus, if the arbitrator does not maintain the confidentiality as
required under the provision of section 75, the resulting arbitral award in liable to be set aside.
Violation of Section 81 as a Ground for Setting Aside an Arbitral Award
Discuss the consequences of failure on the part of the arbitrator (s) or the parties to maintain confidentiality during
an arbitration proceeding
Discuss violation of section 81 of the Arbitration and Conciliation Act, 1996 in making an arbitral award as a ground for
setting aside the award
If an arbitral award is made in violation of section 81 of the Arbitration and Conciliation Act, 1996 it is in conflict with the
public policy of India and is liable to be set aside by the court under the provision of section 34(2)(b)(ii) of the Act.
Section 81 of the Act provides that the parties shall not rely on or introduce as evidence in arbitral or judicial
proceedings, whether or not such proceedings relate to the dispute that is the subject of the conciliation proceedings,-
(a) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute;
(b) admissions made by the other party in the course of the conciliation proceedings;
(c) proposals made by the conciliator;
(d) the fact that the other party had indicated his willingness to accept a proposal for settlement made by the
conciliator.
It is to be noted that for the purpose of section 34(2)(b)(ii), the words 'conciliation' 'conciliator' and 'settlement' in
section 81 have to be read as 'arbitration', 'arbitrator' and 'award'. As a result, section 81 will be read as-
The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings
relate to the dispute that is the subject of the arbitration proceedings,-
(a) views expressed or suggestions made by the other party in respect of a possible award of the disputes;
(b) admissions made by the other party in the course of the arbitration proceedings;
(c) proposals made by the arbitrator;
(d) the fact that the other party had indicated his willingness to accept a proposal for award made by the
arbitrator. Thus where in any arbitral proceedings anything stated in section 81(a) to (d) is relied upon or
introduced as evidence, the resulting award is liable to be set aside under section 34(2)(ii) as it is in conflict with
the public policy of India.
Whether a proceeding for setting aside an arbitral award under section 34 be adjourned by the court? If so, why?
Discuss the jurisdiction of the court, to which an application for setting aside an arbitral award was made, to remit the
award to the arbitral tribunal
Adjournment of Proceeding under Section 34 for Setting Aside an Arbitral Award by the Court and Remission of the
Award to the Arbitral Tribuna
Section 34(4) of the Arbitration and Conciliation Act, 1996 provides that on receipt of an application under section 34(1)

for setting aside an arbitral award, 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 arbitral tribunal an opportunity to resume the
arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for
setting aside the arbitral award. Under the provisions of section 34(4), where it is appropriate and it is so requested by a
party, the court to which an application is made for setting aside an arbitral award to remit the award to the arbitral
tribunal for eliminating the grounds on which the award in liable to be set aside. The court, while remitting the award,
will specifically mention in the remission order the period of time within which the tribunal shall resume the arbitral
proceedings and eliminate from the award the grounds for setting it aside. The period of time mentioned in the remission
order cannot be extended. Thus, if the arbitral tribunal fails to resume the arbitral proceedings or to rectify the award by
removing from the award the grounds for setting it aside within the prescribed time, the court will resume the
proceedings for setting aside the arbitral award. It is to be noted that when an award is remitted to the arbitral tribunal,
the tribunal is conferred with the jurisdiction to reconsider the matter remitted to it afresh. If the arbitral tribunal
decides a matter which has not been remitted to it, such decision is without jurisdiction and hence a nullity.
Discuss the jurisdiction of an arbitral tribunal in deciding matter remitted to it under section 34(4) of the Arbitration
and Conciliation Act, 1996
Time limit for making an Application for Setting Aside an Arbitral Award under Section 34
What is the time limit for making an application for setting aside an arbitral award under the provisions of section 34
of the Arbitration and Conciliation Act, 1996? Whether the provisions of the Limitation Act, 1963 applies to the making
of such application?
Section 34(3) of the Arbitration and Conciliation Act, 1996 provides that an application for setting aside an arbitral
award 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 for correction and interpretation of award or
additional award, from the date on which that request had been disposed of by the arbitral tribunal.
The proviso appended to the section lays down that if the court is satisfied that the applicant was prevented by
sufficient cause from making the application for setting aside the arbitral award within the period of three months it may
entertain the application within a further period of thirty days but not thereafter.
The Arbitration and Conciliation Act, 1996 prescribes under section 34(3) the period of limitation for making an
application for setting aside an arbitral award on any of the grounds stated in section 34(2). The limitation in three
months from the date on which the party making the application had received the arbitral award or, if a request is made
under section 33, from the date on which that request was disposed of by the arbitral tribunal. However, the court may
condone a delay of 30 days in the maximum 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 is to be noted that although section 43(1)
provides that the Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court does not have the
effect of overriding the provisions of section 34(3) in view of the expression 'but not thereafter' mentioned in the proviso
of section 34(3). In Union of India v. Popular Construction Co., MANU/SC/0613/2001 : (2001) 8 SCC 470, it was held
that the time limit prescribed by section 34(3) to make an application for setting aside an award is absolute and
unextendable by the court under section 5 of the Limitation Act, 1963. In M.I.C. Electricals Ltd. v. Union of India,
Department of Telecommunications, 2002 (1) Arb LR 63 (AP), an order condoning delay of 80 days, instead of maximum
of 30 days was held to be illegal and was set aside in revision. In Union of India v. Tecco Trichy Engineers and
Contractors, MANU/SC/0214/2005 : (2005) 4 SCC 239, it was held that a delay of 27 days in filing the application under
section 34 deserves to be condoned and the application of the appellant deserves to be heard and decided on merits. In
Vastu Finvest &
Holdings Pvt. Ltd. v. Gujarat Lease Financial Ltd., 2001 Arb WLJ 371 (Bom),
it was held that where the prescribed time limit has expired an application for amendment to raise an independent ground

of challenge cannot be entertained.
Right to get an award set aside in statutory right
In the Supdtg. Engineer (Highway and Rural Works), Chennai v. D.G. Deivasigamani, AIR 2005 Mad 59, it was held that
the right to file an application under section 34 to set aside an award is statutory and the same is unconditional and
unqualified.
Proper Approach of the Court in Setting Aside an Arbitral Award
What should be the proper approach of the court in setting aside an arbitral award? Support your answer with decided
cases
While considering the legality and validity of award, the court cannot substitute its own findings as if sitting in appeal
over award. The court has no jurisdiction to interfere with the award [Ram Prasad Sharma v. Jharkhand State Housing
Board, AIR 2006 NOC 258 (Jhar)]. In Union of India v. Pam Developments Pvt. Ltd., AIR 2004 NOC 353 (Cal), it was held
that the court cannot interfere with the award on the ground that the award is erroneous if the award is otherwise
proper. It is not open to the court to reapprecite reasonableness of reasons in the arbitral award. In Puri Construction
(P) Ltd.
v. Union of India, MANU/SC/0427/1989 : AIR 1989 SC 777, it was held that when a court is called upon to decide the
objection raised by a party against an arbitral award, it has no jurisdiction to sit in appeal and examine the correctness
of the award on merits. The court cannot sit in appeal over the views of the arbitrator by re-examining and re-assessing
the materials. In E. & N.E.F. Railway Co-op. Bank Ltd. v. B. Guha & Co., MANU/WB/0027/1986 : AIR 1986 Cal 146, it was
held that it is not open to the court to reassess the evidence to find whether the arbitrator has committed any error or
to decide the question of adequacy of such evidence. In Bihar State Electricity Board v. Khalsa Bros.,
MANU/BH/0048/1988 : AIR 1988 Pat 304, it was held that an arbitrator is a tribunal selected by the parties and his
adjudication is binding on them. If it were permissible for the court to re-examine the correctness of the award, the
entire proceeding would amount to an exercise in futility. In
Yeshwantrao Ganpatrao v. Dattartrayarao Ramchandrarao, MANU/NA/0006/1946 : AIR 1948 Nag 162, it was held that
the arbitrators are judges of fact as well as law and have jurisdiction and authority to decide wrongly as well as rightly,
and thus, if they reach a decision fairly after hearing both sides, their award cannot be attacked. In Sarkar Enterprise v.
Golden Reach Ship Builders and Engineers Ltd., MANU/WB/0312/2001 : AIR 2002 Cal 65, it was held that insufficiency of
evidence cannot nullify an award. In Municipal Corporation of Delhi v. Jagan Nath Ashok Kumar, MANU/SC/0013/1987 :
(1987) 4 SCC 497, it was held that appraisement of evidence by the arbitrator is ordinarily never a matter which the
court questions and considers. It may be possible that on the same evidence the court might have arrived at a different
conclusion than the one arrived at by the arbitrator but that by itself is no ground for setting aside the award of an
arbitrator.
Constitutional Validity of Section 34
Discuss the constitutional validity of section 34 of the Arbitration and Conciliation Act, 1996
In T.P.I. Ltd. v. Union of India, 2001 (3) Raj 70 Del, by a writ petition, the petitioner contended that there should be a
right to challenge the award on merits and in the absence of such a provision, section 34 would be unconstitutional. The
writ petition was dismissed and it was held that the matter in question does not relate to judicial review of an
administrative action or of a tribunal decision created under any statute. In arbitration, the alternative forum is selected
by the parties on their own free will and they agree to the arbitrator's decision by an agreement or contract, which
gives a go by to the normal judicial forum otherwise available to the parties. There is no compulsion or imposition by any
statute compelling the parties to resort to arbitration if a dispute arises.
When the parties have chosen the forum of arbitration and the arbitrator of their choice, it is not necessary to make a

provision for appeal against the award rendered by the arbitrator. The legislature has the power to specify the grounds
on which an award can be challenged and it would be permissible for the party to challenge the award only on those
grounds. If it were permissible for the court to re-examine the correctness of the award, the entire proceedings would
amount to a futile exercise.

Chapter 8
FINALITY AND ENFORCEMENTS OF ARBITRAL AWARDS
I. FINALITY OF ARBITRAL AWARDS
"Subject to Part I of the Arbitration and Conciliation Act, 1996 an arbitral award shall be final and binding on the
parties and persons claiming under them respectively". Comment
Section 35 of the Arbitration and Conciliation Act, 1996 provides that subject to Part-I of the Act an arbitral award shall
be final and binding on the parties and persons claiming under them respectively.
With the making of the arbitral award, the arbitral proceedings terminates and the arbitral tribunal become functus
officio. A final arbitral award, subject to the provisions of Part-I of the Act, and particularly sections 28 to 37, is binding
on the parties and persons claiming under them. If a party refuses to comply with the award, enforcement proceedings
may be commenced to secure compliance. As between the parties, a valid award is conclusive evidence of the law and
facts found by it. In K.V. George v. Secretary to Government, Water and Power Department, Trivandrum,
MANU/SC/0253/1989 : (1989) 4 SCC 595, it was held that the principle res judicata is based on the principles that there
shall be no multiplicity of proceedings and there shall be finality of proceedings. Thus, the principle of res judicata or for
that matter the principle of constructive res judicata applies to arbitration proceedings. Thus, if one of the parties to an
arbitration proceedings brings a court action against the other in relation to the subject-matter of the arbitration, based
on the same cause of action, the court would dismiss the action on the ground that the issues have been disposed of
and are res judicata, thus giving rise to issue of estoppel. In Uttam Singh Duggal and Co. v. Union of India, Civil App No.
162 of 1962 which was cited with approval in Satish Kumar v. Surinder Kumar, MANU/SC/0264/1968 : AIR 1970 SC 833,
it was held that it is well-settled that as a general rule, all claims which are the subject-matter of a reference to
arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after an award has
been pronounced, the rights and liabilities of the parties in respect to the said claims can be determined only on the
basis of the said award. After an award in pronounced, no action can be started on the original claim which has been
the subject-matter of the reference.
Discuss the applicability of the principle of res judicata to an arbitral award
In Hope Plantations Ltd. v. Taluk Land Board, Peermade, MANU/SC/0686/1998 : (1999) 5 SCC 590, it was held that it is
settled law that the principles of estoppel and res judicata are based on public policy and justice. Rule of res judicata
prevents the parties to a judicial determination from litigating the same question over again even though the
determination may even be demonstrably wrong. When the proceedings have attained finality, parties are bound by the
judgment and are estopped from questioning it. They cannot litigate again on the same cause of action nor can they
litigate any issue which was necessary for decision in the earlier litigation. In Sheoparsan Singh v. Ramnandan Prasad
Narayan Singh, AIR 1916 PC 78 [which if followed by the Supreme Court in Iftikhar Ahmed
v. Syed Meharban Ali, MANU/SC/0009/1974 : (1974) 2 SCC 151, it was held that in applying the rule of res judicata to
arbitration proceedings, the court should be influenced not by technical considerations of form, but by matters of
substance within the limits allowed by law.
II. ENFORCEMENT OF ARBITRAL AWARDS
How an arbitral award is enforced?
When can an arbitral award be enforced?
Section 36 of the Arbitration and Conciliation Act, 1996 provides that 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 in the same manner as if it were a decree of the court.
In S. Kumar v. Delhi Development Authority, 2003 (2) RAJ 161 (Del), it was held that in terms of the provisions of section

36, the award becomes enforceable in two eventualities; firstly, where the time for making an application to set aside
the award under section 34 has expired and secondly if such application having been made, is refused. When an arbitral
award becomes final and binding, it can be enforced in accordance with the provision of section 141 and order 21 of the
Code of Civil Procedure, 1908. Section 141 of the Code of Civil Procedure, 1908 provides that the procedure provided in
this Code in regard to suit shall be followed, as far as it can be made applicable, in all proceedings in any court of civil
jurisdiction. Order 21 of the Code lays down in detail the procedure for execution of decrees and orders. In M. Banerjee
and Sons v. M.N. Bhagbati, 2002 (3) Arb LR 131 (Gau), it was held that for the purpose of execution, the award is to be
treated as a decree of the court. Thus, when an arbitral award becomes final and binding upon the person or persons
claiming under and bound by the award, the award is impressed with the character of a decree and can be enforced
under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court. In I.C.D.S. Ltd.v.
Mangala Builders Pvt Ltd., MANU/KA/0627/2001 : AIR 2001 Kant 364, it was held that a right to enforce the award arises
only after the period for setting aside the arbitral award under section 34 has expired or such an application having been
made is rejected. That is to say, the court exacting the decree has to satisfy itself, before entertaining the application
for execution, that the period for setting aside the award has expired or such as application having been made has been
refused.
In Union of India v. M/s Kamal Construction, Mehdauli, MANU/BH/1304/2010 : AIR 2011 Pat 38 no steps were taken by
Railways to challenge award within 3 months. Instead it sought clarification of award which was totally irrelevant. The
period spent in seeking clarification as was held could not be excluded and the award would become executable.
Which Court can enforce an Arbitral Award?
In I.C.D.S. Ltd. v. Mangala Builders Pvt. Ltd., MANU/KA/0627/2001 : AIR 2001 Kant 364, it was held that the court that
can exercise the power under section 34 of the Arbitration and Conciliation Act, 1996 can alone entertain the steps to
enforce the arbitral award. It means that the 'court' as understood in section 34 of the Act has alone the jurisdiction to
entertain the enforcement of the arbitral award.
Power of the Executing Court
Comment on the power of the executing court while executing an arbitral award
It is well-settled that an existing court cannot go beyond the decree and question its legality or correctness. In R.K.
Textiles Mumbai v. Sulabh Textiles Pvt Ltd., 2003 (2) RAJ 236 (Bom), it was held that the executing court is not
expected nor warranted to enter into an investigation of the facts whether there is absence of arbitration agreement or
not; and if not, whether the alleged incorporation of the terms in the bills amount to a valid arbitration agreement or
not, etc. These questions clearly fall out of the jurisdiction of the executing court which need not and cannot record its
findings on these factual aspects. If the executing court goes beyond its limits and takes upon itself to examine the
validity of the decree or factual details, then it ceases to an executing court and usurps the jurisdiction or assumes the
role of an appellate court. Therefore, the plea that there was not an arbitration agreement or that it was not within the
ambit of section 7 cannot be entertained in the execution proceedings.
However, there is an exception to the rule that the executing court cannot go behind the decree. If the award is a
nullity for lack of inherent jurisdiction of the tribunal making it, the validity of the award can be set up in execution
proceedings. In Sunder Das v. Ram Parkash, MANU/SC/0368/1977 : (1977) 2 SCC 662, it was held that the executing
court can entertain an objection that the decree is a nullity and can refuse to execute the decree. By doing so, the
executing court would not incur the reproach that it is going beyond the decree, because the decree being null and
void, there would really be no decree at all. In Khaleel Ahmed Dakhani v. The Hatti Gold Mines Co. Ltd., AIR 2000 SC
1925, it was held that entertainment of execution application for the enforcement of the award, when application to set
aside that award was still pending in another competent court, is not proper vide section 36 of the Act.


Chapter 9
APPEALS
I.APPEALABLE ORDERS
What are the appealable orders under section 37 of the Arbitration and Conciliation Act, 1996?
Section 37(1) of the Arbitration and Conciliation Act, 1996 provides that 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 interim measure under section 9;
(b) setting aside or refusing to set aside an arbitral award under section 34.
What is the remedy available to a party to an arbitration proceeding where the arbitral tribunal has refused to grant
an interim measure under section 17 of the Arbitration and Conciliation Act, 1996?
Section 37(2) of the Act provides that an appeal shall also lie to a court from an order granting of the arbitral tribunal-
(a) accepting the plea referred to in section 16(2) that the arbitral tribunal does not have jurisdiction, or the plea
referred to in section 16(3) that the arbitral tribunal is exceeding the scope of its authority; or
(b) granting or refusing to grant an interim measure under section 17. Sub-section (3) of section 37 provides that
no second appeal shall lie from an order passed in appeal under the provisions of section 37, but nothing in this
section shall affect or take away any right to appeal to the Supreme Court.
Under the provisions of section 37(1) of the Act, an appeal shall lie against the order of a court (a) granting or refusing
to grant any interim measure under section 9; and (b) setting aside or refusing to set aside an arbitral award under the
provisions of section 34 to the court authorised by law to hear appeals from original decrees of the court passing the
order. It is to be noted that an appeal under section 37 against the order of a court lies only in the abovementioned two
cases and in no other. Under the provisions of section 37(2), an appeal shall lie to a court from the orders of an arbitral
tribunal-(a) accepting the plea that the arbitral tribunal does not have jurisdiction or that the arbitral tribunal is
exceeding the scope of its authority; or (b) granting or refusing to grant an interim measure under section 17. In Pandey
and Co. Builders Pvt. Ltd. v. State of Bihar, MANU/SC/8643/2006 : AIR 2007 SC 465, it was held that the forum of
appellate court must be determined with reference to the definition of court in section 2(1)(e) of the Act. If a High
Court does not exercise the original civil jurisdiction, it would not be a 'court' within the meaning of section 2(1)(e) of
the Act. In Jabalpur Cable Network Pvt. Ltd. v. ESPN Software India Pvt. Ltd., AIR 1999 AP 271, it was held that an
order passed by the court under section 9 refusing to grant ex parte injunction under section 9 would be appealable
since it is a formal expression of an adjudication. In Harbhajan Singh Kaur v. Unimode Finance (P) Ltd., 1998 (2) RAJ 389
(Cal), it was held that section 37 (1)(a) which provides for an appeal against an order of the court granting or refusing
to grant any measure under section 9 does not reflect the projection of a truncated portion of section 9, but it tends to
cover section 9 in its entirety. There is no doubt that section 9(ii)(c) is very much within the ambit of section 9 and if
section 9 is not capable of being split up or fragmented or if it is to be viewed as a comprehassive genus, then any
species of orders coming under section 9 becomes appealable.
Section 34 of the Act lays down certain grounds on which an arbitral award can be set aside by the court. Under the
provisions of section 37(1)(b), an appeal lies against an order of the court setting aside or refusing to set aside an
arbitral award under section 34. In U.P. Co-operative Sugar Factories Federation Ltd. v. P.S. Misra, 2003 (2) Arb LR 102
(All), it was held that an order refusing to set aside an award would be appealable, even when the objection was not
entertained on the ground of want of jurisdiction. In Makeshwar Misra v. Laliteshwar Prasad Singh, MANU/BH/0127/1967
: AIR 1967 Pat 407 (FB), it was held that an appeal will lie against an order of the court which has the effect of setting
aside the award though factually it does not order to set aside the award. In State of Bihar v. Khetan Bros., AIR 1985

Pat 74, it was held that if the court treats the award as non est, then such an order does not amount to setting aside
or refusing to set aside an award and, therefore, is not appealable.
What is the remedy available to an aggrieved party when-
(a) The arbitral tribunal rejects a plea that it does not have jurisdiction to deal with the subject-matter of arbitration
or that it is exceeding the scope of its jurisdiction?
(b) The arbitral tribunal accepts the plea that it does not have jurisdiction to deal with the subject matter of
arbitration?
Under section 16(1) of the Act, an arbitral tribunal has jurisdiction to rule on its own jurisdiction in any objection with
respect to the existence or validity of the arbitration agreement. A plea as to lack of jurisdiction of the arbitral tribunal
shall be raised not later than the submission of the statement of defence [section 16(2)]. A plea that the arbitral
tribunal is exceeding the scope of its authority shall be raised an soon as the matter alleged to be beyond the scope of
its authority is raised during the arbitral proceedings [section 16 (3)]. However, the arbitral tribunal may admit in both
the above cases a later plea, it if considers the delay to be justified [section 16(4)]. In State of Orissa v. Surendranath
Kanungo, MANU/OR/0334/2003 : AIR 2004 Ori 153, it was held that the arbitral tribunal himself in exercise of power
conferred on him by or under section 16 can decide the question whether or not the arbitration clause in question was
scored out at time of agreement between the parties and as such, whether or not he has jurisdiction to decide the
matter or adjudicate the dispute. The arbitral tribunal shall decide on a plea referred to in section 16(2) and section
16(3) and if it rejects the plea, it will continue with the arbitral proceedings and make an arbitral award [section 16 (5)].
Where an arbitral tribunal makes an award rejecting a plea that the tribunal does not have jurisdiction or that it is
exceeding the scope of its authority, the remedy available to the aggrieved party is by way of an application under
section 34 for setting aside the award. But if the arbitral tribunal decides to accept the plea that it has no jurisdiction,
than, such an order is appealable under section 37(2) of the Act [The Pharmaceutical Products of India Ltd. v. Tata
Finance Ltd., 2003 (Supp) Arb LR 98 (Bom)].
In Karnataka State Road Transport Corporation v. M. Keshava Raju, 2004 (1) Arb LR 507 (Kant) (DB), the appellant
acquiesced in the jurisdiction of the arbitral tribunal without any demur or protest and participated in the arbitral
proceedings till the award was made, and raised the plea that the arbitral tribunal did not have jurisdiction for the first
time only in the memorandum of appeal under section 37(2)(a) before the appellate court. It was held that such a plea
cannot be entertained because the appellant did not raise the plea as to lack of jurisdiction of the arbitral tribunal either
directly or by necessary implication before the arbitral tribunal or the court under section 34.
Section 17(1) provides that unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party,
order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the
subject-matter of the dispute. Under section 17(2), the arbitral tribunal may require a party to provide appropriate
security in connection with a measure ordered under section 17(1). An appeal shall lie to a court under section 37(2)(b)
against an order of the arbitral tribunal granting or refusing to grant an interim measure under section 17.
Proper approach of the Appellate Court while Setting Aside an Award
What should be the proper approach of the appellate court while setting aside an arbitral award?
In Union of India v. Kalinga Construction Co. (P) Ltd., MANU/SC/0007/1970 : AIR 1971 SC 1646, it was held that it is not
open to the appellate court to sit in appeal over the conclusion of the arbitrator in proceedings for setting aside the
award. In U.P. Co-operative Federation Ltd. v. Sunder Bros., MANU/SC/0002/1966 : AIR 1967 SC 249, it was held that it
is well-established that where the first court has exercised the discretion vested in it, the appellate court should be slow
to interfere with the exercise of that discretion. In dealing with the matter raised before it at the appellate stage, the
appellate court would normally not be justified in interfering with the exercise of the discretion under appeal solely on
the ground that if it had considered the matter at the trial stage it may have come to a contrary conclusion. If the

discretion has been exercised by the trial Court reasonably and in a judicial manner, the fact that the appellate Court
would have taken a different view may not justify interference with the trial Court's exercise of discretion. As is often
said, it is ordinarily not open to the appellate court to substitute its own exercise of discretion for that of the trial judge.
But if it appears to the appellate court that in exercising its discretion, the trial Court has acted unreasonably or
capriciously or has ignored relevant facts than it would certainly be open to the appellate court to interfere with the trial
Court's exercise of discretion. In Food Corporation of India v. Thakar Shipping Co., MANU/SC/0001/1974 : AIR 1975 SC
469, it was held that unless the discretionary powers vested in the trial Court is found to be used arbitrarily or
perversely, the appellate court will not interfere with the discretionary order passed by the trial Court.
No Second Appeal lies from an Order passed in Appeal under Section 37
Discuss whether a second appeal lies from an order passed in appeal under section 37?
Section 37(3) provides that no second appeal shall lie from an order passed in appeal under section 37, but nothing in
this section shall effect or take away any right to appeal to the Supreme Court.
Discuss whether an order passed in appeal under section 37 is revisable? Support your answer with appropriate case
law
It is to be noted that expression 'second appeal' used in this section means a further appeal from an order passed in
appeal under this section and not an appeal under section 100 of the Code of Civil Procedure, 1908. In Nirma Ltd. v.
Lurgi Lent Jes Energietichnik GmbH, MANU/SC/0650/2002 : AIR 2002 SC 3695, following the decision in Shyam Sunder
Agarwal and Co. v. Union of India, MANU/SC/0350/1996 : AIR 1996 SC 1321, a two-judge Bench of the Supreme Court
held that merely because a second appeal against the appellate order is barred by the provisions of section 37(3) of this
Act, the remedy of revision under section 115 of the Code of Civil Procedure does not cease to be available to the
petitioner. In I.T.I. Ltd. v. Siemens Public Communications Network Ltd., MANU/SC/0502/2002 : (2002) 5 SCC 510, it
was held although no second appeal lies against an appellate order passed by a court under section 37, a revision of
such an order lies under section 115 of the Code of Civil Procedure 1908. An appeal can be preferred to the Supreme
Court against an appellate order passed under section 37 of the Act. If the appellate court is a High Court, an
application can be made for a certificate under Article 133 of the Constitution and if the certificate is granted by the
High Court, an appeal can be preferred to the Supreme Court. But if the High Court refuses to grant such a certificate,
an appeal can be preferred to Supreme Court, under Article 136 of the Constitution, as a special leave to appeal. No writ
petition lies against an arbitral award. In Moideem Kutty v. Divisional Forest Officer, Nilambur, 1988 (2) Arb LR 37, it was
held that as an arbitrator being a private forum agreed upon by the parties, no writ lies against him or his award. The
only remedy is what has been provided in the Arbitration Act.
None Appealable of Order under section 37
The order was made returning the application for interim injunction to be presented before proper court also no
procedure had been prescribed for return of application nor C.P.C. was applicable in strict sense, as was held, to
arbitration proceedings. And since court has returned application or said order was not appealable under section 37 of
the Act. (D.T.M. Construction (India) Ltd. (M/s) v. Capt. P.K. Srivastava, MANU/OR/0027/2010 : AIR 2011 Ori 61).
Period of Limitation for Preparing an Appeal under Section 37
What is the period of limitation for preferring an appeal under section 37 of the Arbitration and Conciliation Act, 1996?
Section 37 does not lay down any specific period of time within which an appeal must be preferred on the grounds
mentioned in it. However, section 43(I) of the Act provides that the Limitation Act, 1963 shall apply to arbitration as it
applies to proceedings in court. Thus, by virtue of section 43(1), the period of limitation for preferring an appeal under
section 37 is regulated by Article 116 of the Limitation Act, 1963. Under Article 116 of the Limitation Act, 1963 an appeal
to a High Court from any decree or order has to be filed within 90 days from the date of the decree or order whereas an
appeal to any other court from any decree or order has to be filed within 30 days from the date of the decree or order

appealed against.

ADR - An Alternative to Litigation

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INTRODUCTORY

Alternative Dispute Resolution (ADR)

19-11-2021 (Page 1 of 11) www.manupatra.com Symbiosis Law School, NOIDA

When ADR is useful and recommended?

What is the difference between ADR and civil suit in a court?

What is an 'ADR Neutral'?

What are the features of ADR?

What are the advantages of ADR?

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1. Ronald Bernstein Derek W ood in Handbook of Arbitration Practice, 2nd Edn., p. 9.

What are the advantages of Arbitration over litigation?

What type of disputes can be settled by Arbitration?

Matrimonial matters, like divorce or maintenance;

Insolvency matters, like declaring a person as insolvent;

Dissolution or winding up of a company;

Disputes relating to age.

What is statutory Arbitration?

19-11-2021 (Page 3 of 11) www.manupatra.com Symbiosis Law School, NOIDA

What is Ad hoc Arbitration?

Fast Track Arbitration

What is Fast Track Arbitration?

Attributes of Arbitration Agreement

1. Michael Kerr in Handbook of Arbitration Practice, Introduction, p. 3.

Conciliation and Mediation

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How is Mediation different from Conciliation?

What are the limitations of Conciliation?

What is 'Pre-Trial Mediation'?

What do you mean by the expression 'Med-Arb'?

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How is a dispute resolved by Negotiation?

What is 'Position-Based Negotiation'?

What are Facilitated Negotiations and what is the role of a Facilitator?

What is Expert Determination?

When Expert Determination is useful?

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What are the advantages of Expert Determination?

How does the Expert Determination proceed?

(b) providing relevant information or evidence to the expert;

(c) a visit to the site of dispute for determination by the expert;

(d) decision by the expert;

(e) consideration of the decision by the parties;

(f) settlement of the dispute.

Early Neutral Evaluation

What is 'Early Neutral Evaluation'?

How does 'Early Neutral Evaluation' proceed?

19-11-2021 (Page 7 of 11) www.manupatra.com Symbiosis Law School, NOIDA

What is Lok Adalat? Write a short note on Lok Adalat

(a) serving or retired judicial officers; and

(b) other persons,

(i) any case pending before; or

Nayaya Panchayat and Gram Nayayalaya

What is Nyaya Panchayat?

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What is the History of Nyaya Panchayat?

What is the jurisdiction of Nyaya Panchayats?

(a) All cases under Panchayati Raj Act.

How Nyaya Panchayats are constituted?

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Tribunals and Commissions

What are tribunals and why they are established?

Development of Alternative Dispute Resolution System in India

What is the history of development of law of Arbitration in India?