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41. In which matter part I, II and IV of arbitration and conciliation act 1996 extended to Jammu and Kashmir?
According to Section 1(2) of the Arbitration and Conciliation act, 1996, parts I, III and IV shall extend to the State of Jammu and Kashmir only in so far as they relate to international commercial arbitration or, as the case may be, international commercial conciliation.
This provision is now omitted by the Jammu and Kashmir Reorganization (Adaptation of Central Laws) Order, 2020, vide notification No. S.O. 1123(E) dated (18-3-2020) and vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, notification No. S.O. 3774(E), dated (23-10-2020). Now this Act extends to the whole of India.
Q42. Explain the term “award conflict with public policy”.
Provisions of Section 34 (2) (b) (ii), for setting aside of an arbitral award, of the Arbitration and Conciliation Act, 1996 clarifies that an arbitral award may be set aside by the court only if the court finds that the arbitral award is in conflict with the public policy of India.
Explanation 1 (i) given therein clarifies that an award is in conflict with the public policy of India, only if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 91 of the Act.
Explanation 1 (ii) states that an award is in conflict with the public policy of India, only if it is in contravention of the fundamental policy of Indian law.
Explanation 1 (iii) states that an award is in conflict with the public policy of India, only if it is in conflict with the most basic notions of morality and justice.
Provisions of Section 48 (2)(b), on conditions for enforcement of foreign awards, also contains a similar clarification with regard to the public policy of India, though there exists a small difference between the two.
Q43. Within how many days the two appointed arbitrators shall appoint a presiding arbitrator?
Section 10(1) of the Arbitration and Conciliation Act, 1996 gives provision for the number of arbitrators in the arbitration tribunal. The parties to the dispute are allowed to mutually choose the number of arbitrators that shall establish the arbitral tribunal to adjudicate the dispute. It is, in any case, necessary that the number of arbitrators appointed shall be an odd number and not an even. This provision guarantees that there are no ties. Failing the determination referred to in sub-section (1), the arbitral tribunal shall consist of a sole arbitrator: Section 10(2) of the Act.
Section 11(4)(b) of the Act, provides that if the two appointed arbitrators fail to agree on the third arbitrator within thirty 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. Thus the two arbitrators must appoint presiding arbitrator within thirty days from the date of their appointment
Q44. Explain the maxim “Nemo Judex in Causa Sua”.
This principle “Nemo debet esse judex in propria causa” of natural justice is also known as the Rule of Bias or the Doctrine of Bias. The first principle of impartiality roughly translated into English means nobody shall be a judge in his own cause or in a cause in which he is interested. That is the authority sitting in judgment should be impartial and act without bias.
The maxim ” Nemo debet esse judex in propria causa” is based on three well-known principles:
- No man can be judge and the prosecutor at the same time.
- It is not enough that justice is done; it is also necessary that it must be seen to be done.
- Judges, like Caesar’s wife, should always be above suspicion.
In R v. Bath Compensation Authority, (1925) 1 KB 635 case, the Court observed: “the object is not merely that the scales be held evenly; it is also necessary that they may not appear to be inclined”.
Q45. Can award be given according to agreed terms of settlement?
Section 30 of the Act provides for settlement after invocation of arbitration clause. Consent Awards are settlement agreements recorded between the parties after the parties have invoked arbitration to settle disputes. The consent award is different from a normal arbitration award as the dispute is not considered on the merits, but reflects the mutually agreed settlement terms of the parties. Settlement of disputes through consent awards ensures that the disputes end in amicable terms leaving each party satisfied. The consent award will have the same status and effect as arbitral award provided on merits. The consent award, including form and contents, is similar, to any other arbitral award and has same effect of any other arbitral award. Termination of arbitral proceedings does not necessarily result in consent award. The parties may prefer not to obtain approval from the tribunal and can settle the dispute by entering into an agreement under Section 73 of the Arbitration and Conciliation act, 1996.
Q46. Within how many days an arbitral tribunal is empowered to make corrections in award on its own initiative.
Section 33 of the Arbitration & Conciliation Act talks about the correction of an arbitral award after having been pronounced. In cases where any of the parties require correction of clerical mistakes, typographical errors, or such other mistakes; or seek an interpretation from an issue of the award, they are allowed to do so. They may approach the arbitral tribunal to seek clarification and corrections on the above-mentioned points.
If the parties do not recognize the clerical errors but the tribunal themselves do, then they can suo moto correct the award for the same. The arbitral tribunal, within thirty days, can correct the clerical errors by themselves and send fresh copies of the award, highlighting the corrected portions, to the parties. However, the tribunal does not have the authority to provide interpretation or issue an additional award, by themselves.
Q47. When should the award be considered as the final award?
Arbitration is a procedure in which parties submit present or future disputes, to one or more arbitrators (arbitral tribunal) who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. The decision given by the arbitral tribunal is called an arbitration award.
An award by an arbitral tribunal is final when:
- The Period that is provided to make an appeal challenging the award in the court expires;
- And in circumstances when a party has filed an application in the court challenging the award and the same gets rejected.
The final award is an award which is complete on all matters of dispute referred to arbitration. This should usually be in writing and signed by all the arbitrators. The award must contain reasons and state where the arbitration took place. It must also be dated (this is important for calculating interest on payments). Once the final award is made it ends proceedings.
Q48. Can a conciliator be presented as a witness in the court?
Section 70 of the Arbitration and Conciliation Act, 1996, provides provision of disclosure of information. According to Section 70 of the Act, when the conciliator receives factual information concerning the dispute from a party, he shall disclose the substance of that information to the other party in order that the other party may have the opportunity to present any explanation which he considers appropriate: Provided that when a party gives any information to the conciliator subject to a specific condition that it be kept confidential, the conciliator shall not disclose that information to the other party.
Section 75 of the Act, deals with confidentiality. According to Section 75 of the Act, 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.
Thus, mediator is bound to keep confidentiality of all the matters in the conciliation proceedings. Hence, he cannot be presented as a witness in the court.
Q49. State the number of conciliators can be appointed by the parties?
Conciliation is a process of persuading parties to reach settlement in existing and ongoing conflict with the help of third impartial party called conciliator with the to preserve the relationship they have with each other. There is no need of pre-agreement for starting the process of conciliation but acceptance to the process by both parties is necessary.
Once the proposal of conciliation is accepted by the other party the next important step is to have a conciliator. Section 63 of the Arbitration and Conciliation Act, 1996 act provides that there under usual circumstances there will be only one conciliator and in no case the number of conciliators shall exceed three [section 63(2)] which is the maximum limit and the general rule is that they shall act jointly.
Q50. What is the object of Lok Adalat?
The word “Lok Adalat” means ‘People’s Court. The Legal Services Authority Act makes provisions in relation to the establishment, powers and functions etc. of the Lok Adalat. he Preamble of the Act makes it clear that the it has been connected to constitutes the Legal Services Authorities to provide free and Competent legal services to the weaker sections of the society to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities and organise Lok Adalats to secure that operation of the legal system promotes Justice on a basis of equal opportunity.
The object of establishment of Lok Adalat is to settle the disputes quickly by counselling and discussions, etc. Its basis is to provide quick justice with the mutual and free consent of the parties. Other objects are to reduce burden on the Courts so that the problem of law’s delay may be solved and people may get justice within due time. Lok Adalat provides alternative resolution or devise for expeditious and inexpensive justice.
Q51. What does Arbitration agreement mean?
A valid arbitration agreement is the founding stone of the arbitration procedure. It is a written agreement between the parties to submit their existing or future disputes or differences to arbitration. The jurisdiction of the arbitral tribunal emanates from the agreement between the parties. By agreeing to arbitration, the parties voluntarily opt-out of the right to have their disputes settled through adjudication by a civil court. It is to be noted that the underlying agreement or contract creates a relationship of obligation between the parties, the arbitration agreement solely addresses the settlement of disputes between the parties.
According to Section 7(1) of the Arbitration and Conciliation act, 1996, “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. According to Section 7(2) of the Act an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
Q52. What is the status of an arbitral award in the judicial process?
It is provided under section 35 of the Arbitration and Conciliation Act, 1996 that the award after an arbitration proceeding shall be binding on the parties to the proceedings. When an arbitral award is made it is in totality concerning all the dimensions and implies that no more steps can be further taken by the arbitral tribunal. The award has a binding effect on the parties.
Section 34 of the Arbitration and Conciliation Act 1996 deals with the setting aside of the arbitral award. In order to set aside an arbitral award, individual needs to file an application in the court. The court in general accepts an application of challenge only if it comes under ambit of Sec. 34 only. Prior to filing an application in the court to set aside the award, the party filing the application has to hand over a notice of such filing to the opposite party. Application for setting aside award to the Court as defined in the Act (Principal Civil Court of Original Jurisdiction) should be made within 3 months from the date of receipt of final award of arbitration. Extension of further 30 days can be given at discretion of the Court. Section 20 and Section 44 of CPC are applicable. The effect of order setting aside the arbitral award is that where only a part of reward is set aside, the rest of the award is final and binding on parties and can be enforced under the Code of Civil Procedure.
Q53. What is an arbitrable dispute?
Arbitrability indicates whether a dispute is “arbitrable”, i.e., capable of being settled by arbitration. Generally, all disputes involving private rights (disputes about property or money, or about the amount of damages payable for breach of contract etc.) and which can be decided by a civil court, can be referred to arbitration. However, according to the general practice, following matters are not referred to arbitration. It is to be noted that the list is not exhaustive. Any matter involving morality, status and public policy cannot be referred to arbitration.
Before proceeding with the arbitration, every arbitral tribunal is obliged to look into the arbitration agreement. Arbitral tribunal considers whether dispute is arbitrable according to the national public policy of the seat of arbitration as they affect tribunal’s jurisdiction with respect to the dispute. National public policy varies considerably from one jurisdiction to the other based on the socio-economic structure of the society.
Q54. What is the nationality of an arbitrator?
Chapter III of the Arbitration and Conciliation Act, 1996 lays down the arrangements for the Composition of an Arbitral Tribunal. According to Section 11(2) of the Arbitration and Conciliation Act, 1996, the parties are free to agree on the procedure of appointment of the arbitrator or arbitrators.
Section 11(1) of the Arbitration and Conciliation Act, 1996, a person of any nationality may be an arbitrator unless otherwise agreed by the parties.
Q55. What is de jure and de facto impossibility to act for an arbitrator?
Section 14 of the Arbitration and Conciliation Act, 1996, governs the situation of termination of the mandate of the arbitrator because of his failure to act. One of the grounds for termination of the mandate under Section 14 is that the arbitrator becomes de jure or de facto unable to perform his function.
De Jure refers to an arbitrator’s legal incapacity to perform his functions under the law and relates to circumstances under which the arbitrator by law is barred from continuing in office. For example: if an arbitrator becomes bankrupt or convicted for a criminal offence, then he becomes de jure unable to adjudicate the case. De Facto refers to factual inability. It relates to a factual happening during the process of arbitration. For example: if the arbitrator falls seriously ill or has some physical incapacity, then he becomes de facto unable to perform his function.
Q56. Which is a place of arbitration?
Chapter III of the Arbitration and Conciliation Act, 1996 lays down the arrangements for the Composition of an Arbitral Tribunal. Section 20 of the Arbitration and Conciliation act, 1996, deals with the place of arbitration. According to Section 20 of the Act, the parties are free to agree on the place of arbitration. Failing any agreement referred to in sub-section 20(1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. Notwithstanding sub-section 20(1) or sub-section 20(2), the arbitral tribunal may, unless otherwise agreed by the parties, 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.
Q57. What is consent award?
Section 30 of the Act provides for settlement after invocation of arbitration clause. Consent Awards are settlement agreements recorded between the parties after the parties have invoked arbitration to settle disputes. The consent award is different from a normal arbitration award as the dispute is not considered on the merits, but reflects the mutually agreed settlement terms of the parties. Settlement of disputes through consent awards ensures that the disputes end in amicable terms leaving each party satisfied. The consent award will have the same status and effect as arbitral award provided on merits. The consent award, including form and contents, is similar, to any other arbitral award and has same effect of any other arbitral award. Termination of arbitral proceedings does not necessarily result in consent award. The parties may prefer not to obtain approval from the tribunal and can settle the dispute by entering into an agreement under Section 73 of the Arbitration and Conciliation act, 1996.
Q58. State the expenses included in the cost of arbitration?
Section 31(8) of the Arbitration and Conciliation Act, 1996, deals with the cost of arbitration. The costs of arbitration include arbitrator’s fee, administrative and secretarial expense, expenses on travel of arbitrator and others concerned, stenographic, translation and interpretation charges, stamp duty on award, expenses of witnesses, cost of legal or technical advice and other incidental expenses arising out of or in connection with the arbitration proceeding or award.
Under Section 31(8) of the Arbitration and Conciliation Act, 1996, unless otherwise agreed by the parties, the cost of an Arbitrator shall be fixed by the Arbitral Tribunal. The tribunal shall specify:
- the party entitled to costs;
- the party who shall pay the costs;
- the amount of costs or method of determining that amount; and
- the manner in which the costs shall be paid.
Q59. What is Lok Adalat?
The word “Lok Adalat” means ‘People’s Court. The Legal Services Authority Act makes provisions in relation to the establishment, powers and functions etc. of the Lok Adalat. Lok Adalat is one of the alternative dispute redressal mechanisms, it is a forum where disputes/cases pending in the court of law or at pre-litigation stage are settled/ compromised amicably. Lok Adalats have been given statutory status under the Legal Services Authorities Act, 1987. Under the said Act, the award (decision) made by the Lok Adalats is deemed to be a decree of a civil court and is final and binding on all parties and no appeal against such an award lies before any court of law.
The object of establishment of Lok Adalat is to settle the disputes quickly by counselling and discussions, etc. Its basis is to provide quick justice with the mutual and free consent of the parties. Other objects are to reduce burden on the Courts so that the problem of law’s delay may be solved and people may get justice within due time. Lok Adalat provides alternative resolution or devise for expeditious and inexpensive justice.
Q60. What is conciliation?
Conciliation is a process of persuading parties to reach settlement in existing and ongoing conflict with the help of third impartial party called conciliator with the to preserve the relationship they have with each other. There is no need of pre-agreement for starting the process of conciliation but acceptance to the process by both parties is necessary. Sections 62 – 81 of the Arbitration and Conciliation Act thus provide a complete and a comprehensive procedure for Conciliation from initiation of the process of Conciliation to the settlement of dispute, evidence, roles of Conciliator etc. are completely covered in the aforesaid sections.
Conciliation is a voluntary proceeding, where the parties involved are free to agree and attempt to resolve their dispute by conciliation. The process is flexible, allowing parties to define the time, structure and content of the conciliation proceedings. These proceedings are rarely public. They are interest-based, as the conciliator will when proposing a settlement, not only take into account the parties’ legal positions, but also their; commercial, financial and / or personal interests. Like in mediation proceedings, the ultimate decision to agree on the settlement remains with the parties.
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