professional practice

Arbitration
 Arbitration
 Arbitration is the mechanism to settle disputes between parties to a contract,
determined in a quasi-judicial manner
 "Arbitration is the reference of dispute 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.”
 Arbitration is an arrangement agreed upon by the parties concerned to refer
the disputes to a third party for settlement
• Modern concept of harmonious working partnership between the Court
and Arbitration
• Has far reaching effect on reducing court proceedings
• Gives more importance to Arbitration and Conciliation by adding speed
and economy to settlement of disputes

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 Acts addressing Arbitration in India

 The Arbitration Act, 1940

 The Arbitration & Conciliation Act, 1996
• At present, The Arbitration and Conciliation Act 1996 provides
legal frame
• work for settlement of disputes by mutual settlement out side the
court
• Central Government may make rules for carrying out the
provisions of this act subjected to the approval of the Parliament

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 Principles of procedure

Principles of Procedure

1) Independence and impartiality

The Arbitrator/ conciliator should be independent and impartial
2) Fairness and justice
The conciliator/ Arbitrator should be guided by the principles of fairness and
justice. He should take into consideration the rights and obligations of the
parties, the usages of the trade concerned and the circumstances surrounding
the dispute etc.
3) Confidentiality
The conciliator/ arbitrator and the parties are duly bound to keep
confidential all matters relating to proceedings

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 Principles of procedure
Principles of Procedure

4) Disclosure of the information

When the conciliator/ Arbitrator receives a information about any fact
relating to the dispute from a party , he should disclose the substance of that
information to the other party. The purpose of this provision is to enable the
other party to present an explanation which he might consider appropriate

5) Co-operation of the parties with Conciliator /Arbitrator

The parties should in good faith cooperate with the conciliator. They should
submit the written materials , provide evidence and attend meetings when the
conciliator requests them for this purpose

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 Powers & Duties of Arbitrators
(1) Arbitrators shall have the duty to conduct fair and impartial hearings, to
take all necessary actions to avoid delay in the disposition of proceedings, to
maintain order, and to meet time frame required for the rendering of a decision.
They shall have all powers necessary to meet these :
(a) To consider any and all evidence offered by the parties which the arbitrator
deems necessary to an understanding and determination of the dispute;
(b) To regulate the course of the hearings and the conduct of the parties, their
representatives and witnesses;
(c) To schedule vehicle inspection by the technical experts, if deemed necessary,
at such time and place as the arbitrator determines;
(d) To continue the arbitration hearing to a subsequent date if, at the initial
hearing, the arbitrator determines that additional information is necessary in
order to render a fair and accurate decision.
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 Powers & Duties of Arbitrators
(2) The board is responsible for the assignment of arbitrators to arbitration
hearings
(3) Arbitrators must not have a personal interest in the outcome of any
hearing
(a) An arbitrator shall sign a written oath prior to the commencement of
each arbitration hearing to which he or she has been assigned, attesting to
his or her impartiality in that case.
(b) There shall be no direct communication between the parties and the
arbitrators other than at the arbitration hearing. Any other oral or written
communications between the parties and the arbitrators shall be channeled
through the board. Any prohibited contact shall be reported by the
arbitrators to the board and noted in the case record.

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 Arbitration agreement
 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

Appointment of Arbitrator
 Any person can be appointed as an arbitrator, Generally impartial and
independent persons
 Parties are free to determine the number of arbitrators, Number shall not be
an even number
 If they are unable to agree-
• Each party will appoint one arbitrator and the two appointed arbitrators
will appoint the third arbitrator who will act as a presiding arbitrator
 If not appointed within 30 days, the party can request Chief Justice of High
Court to appoint an arbitrator
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 Revoking Authority
 Appointment of Arbitrator can be challenged only if,
• Circumstances exist that give rise to justifiable doubts as to his
independence or impartiality
• He does not possess the qualifications agreed to by the parties

 The parties may not revoke the authority of an arbitrator, except by leave of
the court under subsection (2),
• A party to an arbitration may apply to the court for an order revoking the
authority of an arbitrator

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 Revoking Authority

 In considering whether to revoke the authority of an arbitrator, the court

must consider whether
(a) the arbitration agreement was freely made,
(b) the matters in dispute are factually or legally complex,
(c) the intended arbitrator is qualified to settle the factual or legal matters in
dispute,
(d) the intended arbitrator is potentially biased, and
(e) fraud is alleged by a party to the court proceeding

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 Revoking Authority

 The mandate of an arbitrator shall terminate if-

• he becomes unable to perform his functions or for other reasons fails to
act without undue delay; and
• he withdraws from his office or the parties agree to the termination of
his 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

 If the appointed arbitrator fails to perform, the court may replace him by a
suitable arbitrator as per the request of the party

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Advantages
It is private - there is no public record of any
proceedings, although not necessarily
confidential
Speed, although this depends very much on
the manner in which the arbitrator conducts
the arbitration.
The parties can agree on an arbitrator with
relevant expertise in the matter.
The arbitrators award can be enforced as a
judgement of the court
Disadvantages
The parties must bear the costs of both
the arbitrator and the venue.
Sometimes arbitration simply mimics
court processes and so you do not get the
advantage of informality and speed.
Limited powers of compulsion or sanction
if one party fails to comply with directions
of the arbitrator, which can significantly
slow down the process.
The arbitrator has no power to make
interim measures, such as for the
preservation of property
Limited appeal rights