Alternate Dispute Resolution Questions 61 to 80 (3 Marks)

Law > Civil Laws > Alternate Dispute Resolution > Concept of ADR

Q61. When arbitration proceeding is deemed to have commenced?

The prescribed method of commencing arbitration proceedings will depend on the provisions of the arbitration agreement, the law governing the arbitration proceedings and any institutional or other rules that the parties have agreed should apply to the arbitration.

According to Section 21 of the Arbitration and Conciliation Act, 1996, 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.

Q62. What is UNCITRAL?

In an increasingly economically interdependent world, the importance of developing and maintaining a robust cross-border legal framework for the facilitation of international trade and investment is widely acknowledged. The United Nations Commission on International Trade Law (UNCITRAL) plays a key role in developing that framework in pursuit of its mandate to further the progressive harmonization and modernization of the law of international trade. UNCITRAL does this by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial law. UNCITRAL maintains close links with international and regional organizations, both inter-governmental and non-governmental, that are active participants in the work programme of UNCITRAL and in the field of international trade and commercial law.

Q63. What is the status of Arbitration clause in void agreement?

According to Section 7(2) of the Arbitration and Conciliation Act, 1996, the arbitration agreement may be in the form of arbitration clause in a contract or in form of a separate agreement. An arbitration clause in a contract is generally regarded as an autonomous agreement that may survive the termination of the contract that contains it. This presumption is often referred as “separability” or the “doctrine of separability”, according to which an arbitration clause is a “separate contract” whose validity and existence are independent from the substantive contract.

As per Section 16(1) of the Act which is based on kompetenz kompetenz principle, the arbitral tribunal would be competent to rule its own jurisdiction including ruling on any objection regarding the validity of the arbitration agreement. The Act emphasizes that an arbitration clause which forms part of a contract shall be treated as an agreement independent of the terms of the contract. It further provides that a decision by the Arbitral tribunal that the contract is null and void shall not entail ispo jure the invalidity of the arbitration clause.

Q64. What do you mean by foreign Arbitration?

‘International arbitration’ or ‘Foreign arbitration’ is often taken to mean ‘international commercial arbitration’. Companies frequently include international arbitration agreements in their commercial contracts with other businesses, so that if a dispute arises with respect to the agreement, they are obligated to arbitrate rather than to pursue traditional court litigation.

According to Section 2(f) of the Arbitration and Conciliation Act, 1996, “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 for in India and where at least one of the parties is-

1. an individual who is a national of, or habitually resident in, any country other than India; or
2. a body corporate which is incorporated in any country other than India; or
3. a company or ail association or a body of individuals whose central management and control is exercised in any country other than India; or
4. the Government of a foreign country;

Q65. When Arbitration Conciliation Act, 1996 came into force?

The Arbitration and Conciliation Bill, 1995, was passed by both the Houses of the Parliament in August 1996 and received the assent of the President on 16 August 1996, which became the Arbitration and Conciliation Act, 1996. However, it is deemed to have commenced from 25 January 1996. Therefore, the provisions of this Act will only be application on arbitrations  

Q66. How many minimum and maximum number of arbitrator are permitted to be appointed on an Arbitrary Tribunal?

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.

According to Section 10(2) of the Arbitration and Conciliation Act, 1996, if the parties to the dispute are unable to choose the number of arbitrators, in that case, just a single arbitrator shall be appointed.

Thus minimum 1 and maximum any odd number can be appointed.

Q67. What should be the place of arbitration?

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.

Q68. State the extent of Judicial intervention u/s 5 of the Act.

Generally, Court of other Judicial Authority does not intervene in any arbitration proceedings or arbitration award. The law of non-intervention is based on the premise that when parties to any commercial contract by their own consent have decided to resolve their disputes, by way of mediation and conciliation through the process of arbitration, then judiciary would not have any reason to intervene in this proceeding of arbitration.

According to Section 5 of the Arbitration and Conciliation act, 1996,notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.

According to Section 9 of the Act, party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court for interim measures.

Q69. Stages in which the court can grant interim measures in Arbitration

Generally, Court of other Judicial Authority does not intervene in any arbitration proceedings or arbitration award. The law of non-intervention is based on the premise that when parties to any commercial contract by their own consent have decided to resolve their disputes, by way of mediation and conciliation through the process of arbitration, then judiciary would not have any reason to intervene in this proceeding of arbitration.

According to Section 9 of the Act, party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court for interim measures.

Q70. When award is considered as foreign award?

Part II of the Act deals with foreign awards based on New York and Geneva conventions. An arbitral award is said to be a foreign award if it has a foreign element in it or has one or more of the following factors:

• If the award is made in a foreign country.
• If the subject matter of the arbitration agreement involves international transaction that, is it is related to international trade, commerce, investment, etc.
• Where a tleast one of the parties to arbitration agreement is a foreign national
• If the award is made in accordance with the foreign law.

The New York Convention defines “foreign award” as 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

Q71. What are the points of objection that can be raised to Set Off the Arbitration Award? Write relevant Sections?

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.

The following are the grounds on which an award can be set aside:

• Incapacity of a party.
• Unlawful agreement.
• No notice to the other party.
• Subject matter extent to the scope of the arbitration agreement.
• Formation of Tribunal not as per the agreement.
• Subject matter not under the arbitration law.
• Award in conflict with the public policy of India.

Q72. Parties in dispute constituted an Arbitral tribunal with four Arbitrators according to an arbitration agreement between them.

1. Is the Award declared by such tribunal valid?
2. Who can appoint a preceding arbitrator in this Case?
3. When court has authority to appoint an arbitrator?

1. The award given by such arbitration tribunal is not valid.

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.

Thus, parties are free to appoint any number of arbitrators, but that number should not be even and in this case the number of arbitrators is 4 which is even. Thus, the constitution of the arbitration panel itself is not as per the act. Hence its award is not valid.

2. In this case Chief Justice of India can appoint the presiding officer.

3. If parties fail to appoint an arbitrator or arbitrators, the court can appoint arbitrator.

73. What are the condition for enforcement of Foreign Award under the New York Convention?

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done in New York, 10 June 1958 (the New York Convention), is described as the most successful treaty in private international law. It is adhered to by more than 160 nations. Sections 44 to 52 of the Arbitration and Conciliation (Amendment) Act, 2015 deals with foreign awards passed under the New York Convention.

Two pre-requisites for enforcement of foreign awards under the New York Convention. These are:

1. The country must be a signatory to the New York Convention.
2. The award shall be made in the territory of another contracting state which is a reciprocating territory and notified as such by the Central Government.

Q74. What do you mean by Non-Speaking Award and Discuss the situation when it can be Non-Speaking Award?

Section 31 of the Arbitration and Conciliation Act, 1996, deals with the form and contents of the award, in the subsection 3, specifically states that the award shall be a reasoned award in normal circumstances barring two situations. Firstly, if the parties in their agreement agreed that no need for reasons or secondly if it an award passed on agreed terms under Section 30 of the Act. The Section 30 of the Act deals with the arbitration awards passed by way of a settlement arrived at between the parties. The first case is that the parties themselves enter an agreement and expressly state that the arbitrator award need not state reasons. In such a situation, a question arises whether an arbitration award can be set aside since it is not a reasoned award, as specified in S.31(3) of the Act.

In Praveen Diwan and others Vs Himachal Pradesh Agro Industries Corporation Limited 2017 SCC online 1006, The Court held that the award cannot be set aside on the ground that it is not a speaking award. The judgment upheld an award stating that the “reasonableness of the reasoning of an arbitrator cannot be challenged” as held by the Supreme Court of India in Sudharshan Trading Company Vs Government of Kerala 1989 (2) SCC 38.

Q75.What do you mean by termination of Arbitral proceedings discuss?

Section 32 of the Act deals with the termination of proceedings of arbitration. Section 32(1) of the Act unequivocally provides that only ‘final award’ shall terminate the arbitral proceedings.  In Kifayatullah Haji Gulam Rasool Vs Bilkish Ismail Mehsania (2001) case, the Court held that arbitration proceedings shall automatically stand terminated only after making of final award, which decides or completes decision of claims which are presented.

Under Section 32(2) of the Act arbitral proceedings can also be terminated by an order of the Tribunal, which order can only be passed

• when the claimant withdraws the claim or
• when the parties agree on the termination of the proceedings or
• when the Tribunal finds that continuation of proceedings has become unnecessary or impossible.

Subject to section 33 and subsection (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of arbitral proceedings.

Q76.What is Conciliation and what do you mean by the term Confidentiality in Conciliation proceedings?

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.

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.

Q77. A Mediator in process of mediation have received the documents, of which Mr. Purab a practical mediator, was not aware which will be helping to prove his case. After Mediation failed, Mr. Purab has applied to court to issue summons to the mediator to produce the said document before the Court. Can the court issue summons and apply? Substantiate your answer with reasons?

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 Court cannot issue summons to the mediator.

Q78. Define International Commercial Arbitration

‘International arbitration’ or ‘Foreign arbitration’ is often taken to mean ‘international commercial arbitration’. Companies frequently include international arbitration agreements in their commercial contracts with other businesses, so that if a dispute arises with respect to the agreement, they are obligated to arbitrate rather than to pursue traditional court litigation.

According to Section 2(f) of the Arbitration and Conciliation Act, 1996, “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 for in India and where at least one of the parties is-

1. an individual who is a national of, or habitually resident in, any country other than India; or
2. a body corporate which is incorporated in any country other than India; or
3. a company or ail association or a body of individuals whose central management and control is exercised in any country other than India; or
4. the Government of a foreign country;

Q79. What do you mean by Settlement award State the Relevant Section?

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.

Q80. A Clause is provided in a works contract to the effect that “For any dispute between the Contractor and the Department, the decision of the Chief Engineer, PWD will be final and binding upon the Contractor only” Can it be held to be an Arbitration Agreement support your answer with Sections and Case Laws?

No, the clause cannot be called as arbitration agreement. The clause is “For any dispute between the Contractor and the Department, the decision of the Chief Engineer, PWD will be final and binding upon the Contractor only”. Arbitration agreement implies the decision of the arbitrator is binding on both the parties. Here it is binding only one party. It looks like administrative arrangement and not an arbitration agreement.

There is no particular form of arbitration agreement. According to Section 7(1) of the Arbitration and Conciliation Act, 1996, the “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. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

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