Arbitration: Procedures and Practice in India

Arbitration procedures and practice in India: overview

Author: Veera Lakshmi Satya Triveni, Rajiv Gandhi Institute of Law, Kakinada

*Author has written this article while pursuing training program on article writing by indianlegalsolution.com

Introduction:

Arbitration refers to Alternative Dispute Resolution (ADR) which is a method for resolving disputes outside of the official judicial mechanisms.  Arbitration is a procedure in which the parties in the agreement can decide the output of the procedure whether oral arguments are to be heard or oral evidence is to be heard or by documents they can decide the arbitral proceedings.  If the parties said that they don’t want to lead any evidence, willing there to doesn’t want to put any witness then the arbitrator can decide the case by the documents that are present before the arbitrator.

Use of Commercial Arbitration and Recent Trends:

Commercial Arbitration means settling disputes by a neutral person i.e., an arbitrator.  The commercial arbitration in India is under the law, as amended by the 2019 Amendment, on an application by a party to a dispute, the appointment of an arbitrator under section 11 of the Arbitration and Conciliation Act, 1996 shall be made by the institution designated by the Supreme Court or the relevant High Court.  The arbitral institution we required to dispose of the application within 30 days from the date of service of notice on the opposite party.

     There are many recent trends to improve arbitration in India. Some of them are:

• Remarkable time limits.
• Uplift institutional arbitration, etc.

Legislative Framework:

The Arbitration and Conciliation Act, 1996 applies Section 41 of the Act itself provides that the provisions of C.P.C shall apply to all proceedings before the court[1].  There is no provision in the Act so as to take away the provisions of Order XXIII C.P.C. from being applied to applications filed under Section 34 of the Act, in a suit[2].  And the rules applicable to the substance of the dispute is where the place of arbitration is situated 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; in commercial arbitration, the arbitral tribunal shall decide the dispute I accordance with the rules of law designated by the parties as applicable to the substance of the dispute.       

Order rejecting the application under section 5 of the Limitation Act is not revisable under section 115 CPC but appealable under the Arbitration Act.

Arbitration institutions:

The Arbitration and Conciliation (Amendment) Act, 2019 has been introduced the definition of ‘arbitral institution’ in Section 1(ca) of the act as an arbitral institution designated by the Supreme Court or a High Court under the Act[3].  The arbitral institutions play role in the arbitration proceedings.  In India, there are more than 35 arbitral institutions.  Some of the Indian arbitral institutions are:

• Indian Council of Arbitration (ICA) – New Delhi,
• LCIA India – New Delhi,
• ICC Council of Arbitration – Kolkata, etc.

Jurisdictional issues:

The jurisdictional issues of Arbitration and Conciliation Act, 1996 is not necessary to frame the issue but the Tribunal or the Bench may do so for the sake of expediency in a particular case.  In Pure Helium India Pvt. Ltd. vs. Oil and Natural Gas Commission[4],  where arbitrators were called upon to decide a legal issue like an interpretation of contract it was held that it cannot be said that acted without jurisdiction or beyond jurisdiction in making the award.  In Lalit Kala Academy v. Svapan Coast[5] it was held.  That objection as to jurisdiction and validity of arbitration agreement to be considered by the Arbitral Tribunal before deciding the claims on merits.  The liberty to raise all issues by appointment of Arbitrator by Chief Justice or his nominee – Not amenable to writ jurisdiction.  The arbitrator was appointed by the nominee judge after hearing both parties.  The correctness of the said order cannot be questioned.  Parties are at liberty to raise all issues including counterclaim before the Arbitrator who had already entered upon reference[6].

Arbitration Agreements:

Section 7 of the Arbitration and Conciliation Act, 1996 deals with the ‘Arbitration Agreement’ and Section 2 (1) (b) of the act defines the term arbitration agreement.  Where a clause does not contain any express or implied reference to the arbitrator it is difficult to spell out the existence of an arbitration agreement[7].  While dealing with what is an arbitration agreement in K.K. Modi vs. K.N. Modi[8], it was held:

Among the attributes which must be present for an agreement to e considered as an arbitration agreement are:

1. The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement.
2. That the jurisdiction of the tribunals 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,
3. The agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal, and etc.

Arbitrators:

The arbitrators are appointed under section 11 of the Arbitration and Conciliation (Amendment) Act, 2015.  Application for appointment of an independent Arbitrator – General Conditions of Contract, Clauses 63, 64(1) (i) and 64(1) (ii).  No merit therefore in the contentions raised by respondent authorities.  Application allowed appointing a sole arbitrator[9].  Accordingly, Sri Justice D. Reddeppa Reddi, a retired judge of this Court is appointed as an arbitrator for adjudication of the dispute between the parties.  The arbitrator is at liberty to fix up his fee.  The parties are at liberty to raise all issues before the arbitrator[10].   The agreement does not intend non – supply of vacancy – Notice under Section 8(1), if complied with, has to be communicated with utmost expedition to notice giver and in case appointment of Arbitrator is not made within the prescribed time, then the other party would be within his right to approach the Court and request for appointment of Arbitrator.

Conclusion:

Though the procedure is distinct from the system of Court litigation, arbitration fulfills the same purpose as adjudication of disputes in the Court system.  Moreover, the arbitral award is enforceable in the same manner as that of a decision given by a Court.

Reference:

https://www.polity.org.za/article/arbitration-in-south-africa-2017-05-05

https://www.mondaq.com/india/arbitration-dispute-resolution/284570/commercial-arbitration-in-india–an-update

https://uk.practicallaw.thomsonreuters.com/Cosi/SignOn?redirectTo=%2f9-502-0625%3ftransitionType%3dDefault%26contextData%3d(sc.Default)%26firstPage%3dtrue

https://www.mondaq.com/advicecentre/content/2804/Arbitration-Organisations

https://www.jus.uio.no/lm/en/html/un.arbitration.model.law.1985/7.html

https://www.dictionary.com/browse/arbitrator

https://singhania.in/blog/selection-and-appointment-of-arbitrators-in-india

https://www.britannica.com/topic/arbitration

https://www.mondaq.com/india/arbitration-dispute-resolution/78362/arbitration-in-india-an-introduction#:~:text=Conclusion%3A,or%20spirit%20of%20the%20Act.

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[1] The Arbitration and Conciliation Act, 1996[Act no.26 of 1996], India.

[2] RMC Dill vs. Gowri Shankar: 1991 (2) S.C.C. 548.

[3] The Arbitration and Conciliation (Amendment) Act, 2019 [Act No.33 of 2019], India.

[4] Pure Helium India Pvt.  Ltd.  vs. Oil and Natural Gas Commission:  AIR 2003 SC 4519: 2003(8) SCC 593: 2003 (8) Supreme 264: 2003 (8) Scale 553 : 2003(Supp – 2) JT 596: 2003(3) Arb.LR 409.

[5] Lalit Kala Academy v. Svapan Coast: (2005) 83 DRJ 292: AIR 2006 NOC 32 (Del.).

[6] General Manager, South Central Railway vs. Ch. Kotaiah, Railway Contractor: 2002(1) ALT 401.

[7] AIR 1996 SC 942 = 1980(4) SCC 556; No longer good Law in view of AIR 1980 SC 1522.

[8] K.K. Modi vs. K.N. Modi: 1998(1) CCC 113: 1998(1) SCALE 43: 1998(3) SCC 573: AIR 1998(3) SCW 573: 1998(1) Supreme 484: AIR 1998 SC 1297 at 1302: 1998(1) Arb. LR 296.

[9] R.P.  Agrawal vs.  General Manager, S.C. Railway, Secunderabad: 2002(6) ALT 703.

[10] M/s. Siri Engineering Contractors, Vijayawada vs. Union of India: 2002(2) An. W.R. 209 (A.P.).

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