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ARBITRATION[1]

Table of Contents

QUESTION BANK

Q.1. What is Arbitration? Explain in detail the scope and various types of Arbitration.

Q.2. Define Arbitration Agreement and state essentials of valid Arbitration Agreement.

Q.3. Define ‘Arbitration agreement’. State its essentials with the help of relevant provisions and case laws.

Q.4. Explain the provisions relating to appointment and jurisdiction of Arbitral Tribunal provided under Arbitration and Conciliation Act, 1996.

Q.5. Explain in detail provision relating to Hearing and Written Proceedings of Arbitral Tribunal.

Q.6. Write in detail the difference between Arbitration and Conciliation Act of 1940s and 1996.

Q.7. Explain the provisions relating to arbitration tribunal and its powers.

8. Explain Arbitration agreement and state its essentials.

Q.9. Explain fully the composition and jurisdiction of Arbitral Tribunal.

Q.10. State the grounds for setting aside Arbitral Award.

Short Notes

Arbitration Agreement.
Reference to Arbitration.
Interim measures by court and arbitral tribunal.
Place of Arbitration.
Costs of Arbitration proceeding.
UNCITRAL Model law on arbitration.
Duties and powers of Arbitral Tribunal.
Court assistance.
Grounds for challenge.
UNCITRAL

Table of Contents

Introduction:- 9
Definition of Arbitration:- 9

III. Ingredients or attributes of arbitration:- 9

Arbitrator:- 9
Arbitration agreement:- 9
Arbitration award:- 10
Confidentiality –. 10
Kinds of arbitration:- 10
Ad hoc arbitration:- 10
Institutional arbitration:- 10
Fast track arbitration:- 11
Domestic arbitration:- 11
International arbitration:- 11
Foreign arbitration:- 11
Statutory arbitration:- 11
Arbitration agreement (S. 7 and 8):- 12
Arbitration agreement (S. 7):- 12
Power to refer parties to arbitration (S. 8):- 13
Arbitral Tribunal:- 13
As to number of arbitrators (S. 10):- 13
Person of any nationality (S. 11 (1)):- 13
Procedure of appointment (S. 11 (2), (6)):- 14
In case of three arbitrators (S. 3, 4):- 14
In case of a sole arbitrator (S. 11 (5) and (9)):- 14
Challenge of the appointment (12):- 14

VII. Jurisdiction:- 15

(1) Jurisdiction of Arbitral Tribunal (S. 16):- 15

(2) Time for filing objection as to jurisdiction (S. 16 (2)):- 15

(3) Plea as to exceeding the scope of authority (S. 16 (3)):- 16

(4) Condonation of delay (S. 16 (4)):- 16

(5) Decision on objections (S.16 (5)):- 16

VIII. Interim measures by Tribunal (S. 17):- 16

Arbitral Proceeding (Ss. 18 to 27):- 17
Equal treatment to the parties (S. 18):- 17
Place of arbitration (S. 20):- 17
Commencement of arbitral proceeding (S. 21):- 17
Language of proceeding (S. 22):- 18
Statements of claim and defence (S. 23):- 18
Hearing and written proceedings (S. 24):- 18
Default of a party (S. 25):- 19
Appointment of expert by the Tribunal (S. 26):- 19
Court’s assistance in taking evidence (S. 27):- 19
Making of Arbitral Award and termination of proceedings:- 20
a) Making of Arbitral Award:- 20
Rules applicable to substance of dispute (S. 28):- 20
Form and contents of arbitral award (S. 31):- 23
Application for setting aside the arbitral award (S. 34):- 23
b) Termination of proceedings:- 24
Termination of proceedings (S. 32):- 24
Corrections, interpretation and additional award (S. 33):- 25
Finality and enforcement of award (Ss. 35 and 36):- 25
Finality of arbitral award (S. 35):- 25
Enforcement of award (S. 36):- 25

………………………………………………………………………………………………………………………………….

Short Notes

Alternate dispute resolution in Banking sector:- 26
Arbitration and Conciliation:- 26

Debt Recovery Tribunals:- 26

Lok-Adalats:- 27
Court annexed mediator:- 2

|. Introduction:-

Arbitration is one mode of alternative dispute resolution. It is one of the ways to resolve dispute outside the court. The dispute is decided by an independent, impartial third person or persons. Such person, persons or a body is called as an ‘arbitrator’ or ‘arbitrators’ or ‘arbitration tribunal’. Arbitrator renders judgement on the dispute which is called as “arbitration award”. It resembles court.

II. Definition of Arbitration:-

The term ‘arbitration’ is derived from the Roman law. In fact the Aarbitration and Consolation Act, 1996 (Henceforth called as “the Act”) does not descriptively define the term arbitration. To understand the concept very well we will discuss some of the definitions as follows-

As per section 2 (a) of the Act. “Arbitration” means any arbitration, whether or not administered by permanent arbitral institution.
As per Article 2 (a) UNICTRAL Model Law “Arbitration” is the means by which parties to a dispute get the matter settled through the intervention of an agreed third Person[2].
As per Halsebury “Arbitration” mean “the reference of 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 a competent jurisdiction[3]”

III. Ingredients or attributes of arbitration:-

From the above definitions. We may lay down the following characteristics or attributes of arbitration viz[4].

1. Arbitrator[5]:-

Arbitrator is a person appointed by the parties to the Arbitration agreement. His position is akin to a judge of a court. (We will discuss his position in detail in this topic)

2. Arbitration agreement:-

‘Arbitration agreement’ is pre-condition for referring the dispute for arbitration. The arbitration document is very important one which states that the parties want to resolve their future disputes by arbitration. (We will discuss arbitration agreement in detail next in this topic).

3. Arbitration award[6]:-

The decision rendered by arbitrator is called as ‘arbitration award’. (Will discuss it in detail next in this topic)

4. Confidentiality[7] –

Confidentiality is an important attribute of arbitration. Arbitration proceeding is expected to be conducted in an unbiased manner and with confidentiality. The success of arbitration process depends upon the confidentiality of the proceeding.

IV. Kinds of arbitration:-

There are following kinds / types of arbitration –

1. Ad hoc arbitration[8]:-

Ad hoc Arbitration takes place when parties have agreed to settle their dispute through arbitration, without referring to the rules of any arbitral institutions. Ad hoc arbitration is that which is not administered by an institution and therefore the parties are required to determine all aspects of the arbitration themselves. Since this type of arbitration is selected by the parties they need to select arbitrator, design rules, decide applicable laws, procedure to be followed etc.

In other words, an ad-hoc arbitration is an arbitration in which the parties have not selected any institution to administer the administration but they themselves name the arbitrator.

2. Institutional arbitration[9]:-

2 (ca) of the Act, defines “arbitration institution” means an arbitrary institution designated by the Supreme Court or a High Court under this Act.”

Arbitral institution conducts arbitration, it is called an ‘institutional arbitration’. The parties in this case have a choice of specifying in the arbitration agreement, to refer the differences to be determined in accordance with the rules of selected arbitrator institution. In this case, parties name specific arbitral institution or generally ‘any arbitral institution’ to which future dispute is referred.

3. Fast track arbitration[10]:-

Fast track arbitration is a form of arbitration where the rules are stricter and the process of disposal is time bound, which excludes the chance of any type of delay. It is a useful type of arbitration wherein hearing or examination of witnesses is not necessary.

4. Domestic arbitration[11]:-

When the arbitration proceedings takes place within India, under the Indian laws and when the cause of dispute occurs in India, such arbitration is described as domestic arbitration.

5. International arbitration:-

As per S. 2 (1) (f), ‘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.

As per S. 28 (1) (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 the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.

6. Foreign arbitration:-

When the arbitration proceedings is conducted in a place outside India, it is called as “Foreign arbitration”.

7. Statutory arbitration[12]:-

When the statute of Parliament or a state legislature provides for referring a matter to arbitration such arbitration is called as ‘statutory arbitration’.

In this type of arbitration consent of the party is not necessary. if law provides for arbitration.

This shows that even though there is no formal agreement for referring dispute through the arbitration but if law provides to referring the dispute for Arbitration, the matter needs to be referred to arbitrator.

V. Arbitration agreement (S. 7 and 8):-

1. Arbitration agreement (S. 7):-

“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.

Such an arbitration agreement maybe in the form of an arbitration clause in a contract or in the form of a separate agreement.

An arbitration agreement shall be in writing. It should be a documentary form signed by the parties.

In fact, the Act does not lay down any format of agreement.

However, in K.K.Modi v. K. N. Modi[13]

The Supreme Court in this landmark judgement has laid down attributes/ requirements of an arbitration agreement as follows –

(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 tribunal to decide the rights of parties must derive either from the (a) consent of the parties or (b) from an order of the Court or (c) 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,

(4) 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,

(5) That the judgment of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law.

(6) The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal.

2. Power to refer parties to arbitration[14] (S. 8):-

Where there is an arbitration agreement.—

(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.

In P. Anand Gajapathi Raju v. P.V. G. Raju[15]

The Supreme Court has laid down the requirements of referring the dispute to arbitration as- (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.

VI. Arbitral Tribunal[16]:-

Arbitrator plays an important role in arbitration. However, there should be an agreement between the parties in which there is an arbitration clause to resolve the future arising dispute by appointing an arbitrator. The procedure of appointment, name or number of arbitrators may or may not be mentioned in the agreement.

Therefore, we will discuss the provisions as to the appointment of arbitrators as follows:-

1. As to number of arbitrators (S. 10):-

The Parties are free to determine the number of arbitrators, provided such number shall be even number. If there is no mention as to number of arbitrators in the agreement the arbitral tribunal shall consist of a sole arbitrator[17].

2. Person of any nationality (S. 11 (1)):-

A person of any nationality maybe an arbitrator, unless otherwise agreed by the parties.

3. Procedure of appointment (S. 11 (2), (6)):-

The parties are free to agree on a procedure for appointment of an arbitrator or arbitrators.

However, if –

A party fails to act as required under the procedure, or
The parties, or the two appointed arbitrators, fail to reach an agreement expected from them under the procedure, or
If a person including any institution, fails to perform any function entrusted to him or it, under an agreement, then a party may request to the Supreme Court or as the case may be to the High Court or to any person or institution designated by such court to take necessary measures (unless the agreement on the appointment procedure provides other means for securing the appointment).

4. In case of three arbitrators (S. 3, 4):-

In the absence of an agreed procedure, where the arbitration has to be by three arbitrators each party has to appoint one arbitrator. The two appointed arbitrators have to appoint a third arbitrator who will act as a presiding arbitrator. Where the two appointed arbitrators fails to agree on the third arbitrator within 30 days from the date of their appointment, a party may make a request to the Supreme Court or a High Court. The appointment will then be made by the Chief Justice of the Supreme Court or the High Court or his nominee. Moreover in the case of an agreed procedure, if the two appointed arbitrators fails to reach an agreement expected of them under the agreed procedure, a party may make request to the Supreme Court or a High Court or their nominee to take necessary measures, unless the agreement on the appointment procedure provides for some other means for securing the appointment.

5. In case of a sole arbitrator[18] (S. 11 (5) and (9)):-

If the parties fail to agree upon appointment of the arbitrator (as mentioned above) within 30 days from receipt of a request by one party form the other party to so agree, the appointment shall be made, upon request of a party, by the Chief Justice or any other person or institution designated by him.

In the case of appointment of a sole or third arbitrator in an international commercial arbitration, the Supreme Court or the High court or the person appointed by them, may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nations.

6. Challenge of the appointment[19] (12):-

Where a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstance likely to give rise to justifiable doubts as to his independence or impossibility. Such doubt maybe of any nature like financial, business, professional or any other kind. An arbitrator may be challenged only if –

(a) circumstances exist that gives rise to justifiable doubts as to his independence or impartiality, or

(b) he does not possess the qualifications agreed to by the parties.

The applicable grounds have been stated in the fifth schedule. The disclosure has to be made in the form specified in the 6th schedule.

Where, the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that are applicable to the appointment of the arbitrator being replaced (S. 15).

VII. Jurisdiction[20]:-

(1) Jurisdiction of Arbitral Tribunal[21] (S. 16):-

The Tribunal has power to decide-

the question as to its jurisdiction, and
the objections as to the existence or validity of the arbitration clause.

For this purpose an arbitral clause in a contract shall be treated as an arbitration agreement.

The question as to jurisdiction needs to be decided as a preliminary issue by the Tribunal.

In International Pharmaceutical v. Union of India[22]

Delhi High Court observed that the legislative intention is manifested in view of the enactment of S. 16, to have the disputes between the parties adjudicated by arbitral forum expeditiously.

(2) Time for filing objection as to jurisdiction[23] (S. 16 (2)):-

The application as to the objection that the Tribunal does not have jurisdiction to entertain the matter shall be filed along with or before the submission of the statement of defense. A party will not be stopped from raising this plea merely because he was a party to the appointment of the arbitrator, or that he participated, in his appointment.

(3) Plea as to exceeding the scope of authority (S. 16 (3)):-

An objection that the Tribunal is entertaining the matter beyond its jurisdiction or authority can be raised before the tribunal. Such an objection shall be raised as soon as such matter is raised before the tribunal. The Tribunal has also to decide whether it has territorial jurisdiction or not.

(4) Condonation of delay (S. 16 (4)):-

The Tribunal can entertain the objections regarding lack or excess of jurisdiction even after the time for raising them has expired, if it considers the delay justified. The mater relating to the limitation can also be considered and decided by the arbitrator.

(5) Decision on objections (S.16 (5)):-

Where, objection as above-mentioned are raised, the Tribunal shall decide them first. If it rejects the objections, it shall continue with the arbitral proceedings. The order as to jurisdiction of the Tribunal can be challenged as an arbitral award under S. 34 before the Court having jurisdiction (S. 16 (6)).

VIII. Interim measures by Tribunal[24] (S. 17):-

A party may, during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with S. 36, apply to the arbitral tribunal—

for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
for an interim measure of protection in respect of any of the following matters, namely—
the preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement;
securing the amount in dispute in the arbitration; the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing 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;
interim injunction or the appointment of a receiver;
such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient, and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it.

Any order issued by the arbitral tribunal under this section shall be deemed to be an order of the court for all purposes and shall be enforceable under the Code of Civil Procedure, in the same manner as if it were an order of the court. However, the order is subject to any order passed in an appeal under S. 37.

IX. Arbitral Proceeding[25] (Ss. 18 to 27):-

There are no hard and fast rules of procedure applicable to an arbitration proceeding. The Tribunal is not bound by the procedure laid down in CPC or in the Indian Evidence Act. The parties are free to select the arbitrator and also to decide procedure to be adopted by the arbitrator. However in absence of specific procedure adopted by the parties in an agreement, the Act has laid down from S. 18 to 27 minimum or important rules of procedure to be followed by the arbitrator (S. 19). The procedure mention the rules from start to the end i.e. till passing award by the arbitrator. We will discuss the rules as follows:-

1. Equal treatment to the parties (S. 18):-

The parties shall be treated with equality and each party shall be given a full opportunity to present his case.

The section cast two fold duty upon the Tribunal viz.-

to treat parties equally, and
to give a full opportunity to present their case.

These, duties are cast upon Tribunal to act unbiased, impartial and indecent to resolve dispute between the parties. These are natural rights of the parties in any proceeding.

2. Place of arbitration (S. 20):-

The parties are free to agree on the place of arbitration. If they don’t agree, the arbitrator shall determine the place of arbitration. In spite of the place fixed by the parties or the tribunal, the tribunal may (unless otherwise agreed by the parties) determine any other place which it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods of other property.

3. Commencement of arbitral proceeding (S. 21):-

Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commences upon the date on which a request for the dispute to be referred to arbitration is received by the respondent.

It is open to the parties by agreement to determine the date of commencement of the proceedings. However, in the absence of such provision in an agreement S. 21 provides that such date shall be the date on which a request is received by one party from the other to make a reference of the dispute to arbitration.

4. Language of proceeding (S. 22):-

The parties are free to agree upon the language to be used in the arbitral proceedings. However, in absence of such agreement the Tribunal shall determine the langue or languages to be used in the arbitral proceedings. The language determined shall apply to written statements 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 or languages agreed upon by the parties or determined by the Arbitral Tribunal.

5. Statements of claim and defence (S. 23):-

Within the period of time agreed upon by the parties or determined by the Arbitral Tribunal-

(i) the claimant shall-

(a) state the facts supporting his claim,

(b) the points at issue, and

(ii) the respondent-

shall state his defence in respect of these particulars.
may submit a counter claim or plead a set–off (if any).

The procedure shall be followed unless parties otherwise agrees.

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.

The parties may, during the arbitral proceedings, amend or supplement their claim or defence unless- (a) the parties have agreed otherwise, or (b) the Arbitral Tribunal considers it inappropriate to allow the amendment or supplement due to the delay in making it.

6. Hearing and written proceedings (S. 24):-

Unless otherwise agreed by the parties, the Arbitral Tribunal shall 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.

The Tribunal has to allow oral hearing if asked for, by a part, unless the parties have agreed that no oral hearings shall be held.

The Tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.

The parties shall be given sufficient advance notice of any hearing and of any meeting of the Tribunal for the purpose of inspection of documents, goods or other property.

All statements, documents or other information supplied to or application made to the Tribunal by one party shall be communicated to the other party and any expert report or evidentiary document on which the Tribunal may rely in making its decision shall be communicated to the parties.

7. Default of a party[26] (S. 25):-

If the claimant fails to submit the statement of his claim within the time determined, the Tribunal shall terminate the proceedings. If the respondent fails to submit the statement of defence within the time determined, the proceedings shall be continued, and the award shall be made on the material and evidence before the Tribunal and the failure will not be treated as an admission of the allegations made by the claimant. If either of the parties fails to appear at an oral hearing or to produce documentary evidence, the Tribunal may continue the proceedings and make the award on the evidence before it.

8. Appointment of expert by the Tribunal (S. 26):-

The Tribunal can appoint one or more experts unless there is a contrary agreement between the parties. The expert has to report Tribunal on specific issue to be determined by the Tribunal. The Tribunal may require a party to give ot the expert any relevant information or to produce, or to provide access to any relevant documents, goods or other property for his inspection.

If a party so requests or if the Tribunal considers it necessary (and there is no contrary agreement), 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 witness in order to testify on the points at issue.

If there is no contrary agreement, 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.

9. Court’s assistance in taking evidence (S. 27):-

The Tribunal or any party with the approval of the Tribunal, may apply to the Court for assistance in taking evidence. The application shall specify details as to the name and address of any party or person to be heard as a witness, or of expert witness, and a statement of the subject-matter of the testimony required, giving the description of any document to be produced, or of the property to be inspected.

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 Tribunal. The Court may issue the same process of summons, commission etc. to witnesses as it issues in suits tried before it.

Persons who disobey court’s order shall be subject to the same disadvantage, penalties and punishments as they would incur for the like offences in suits tried before the Court.

X. Making of Arbitral Award and termination of proceedings:-

a) Making of Arbitral Award:-

An ‘Arbitral Award’ refers to a decision made by an Arbitral Tribunal in an arbitration proceeding. It is analogous to a judgment.

Ss. 28 to 35 of the Act, deal with the making of arbitral award and termination of proceedings. We will discuss them as follows:-

1. Rules applicable to substance of dispute (S. 28):-

Where the place of arbitration is situated in India and the matter is domestic i.e. within India, the Tribunal shall decide the dispute in accordance with the substantive law of India. However, in case of international commercial arbitration, the law applicable is (i) that which is designated by the parties, (ii) failing by parties to decide applicable law, the Tribunal shall apply the rules of law it considers to be appropriate taking into consideration all the circumstances surrounding the dispute.

The Tribunal shall decide the dispute by applying principle of equity and good conscience[27] or amicable settlement[28].

While deciding and making an award, the arbitral tribunal shall, in all cases, take into account the terms of the contract and trade usages applicable to the transaction.

In National Thermal Power Corporation v. Singer Co[29].

Facts– The contract was between an Indian company and a foreign company. There was arbitration clause in the agreement mentioning that the Indian law shall apply to all matters arising out of the contract and in case of arbitration, it has to be governed by the Rules of the International Chamber of Commerce, Paris.

Issue– the issue before the Supreme Court was as to which law applies?

The Court Observed that– the dispute between the parties had the closet connection with India therefore, Indian law shall apply. The parties have further opted for Indian law to be applied for all contracts, therefore Indian law should be applied.

Decision making by panel of arbitrators (S. 29):-

Unless otherwise agreed, in arbitration proceedings with more than one arbitrator, any decision of the tribunal shall be made by a majority of all its members. However, the question of procedure may be decided by (1) all members of the tribunal or if authorized by the parties or all the members of the Tribunal, (2) by the presiding arbitrator.

In short the section provides method of decision making by the panel of arbitrators.

In Numaligarh Refnery Ltd v. Daelim Industrial Co. Ltd[30]

The Supreme Court declined to interfere into arbitral award passed by majority of arbitrators and affirmed by the High court.

Time limit for passing arbitral award (S. 29-A):-

This section and S. 29-B are inserted to impose time limit for completion of arbitration proceeding. The object is obvious, to complete the proceeding speedily and within time. The section provides that the award shall be made within a period of twelve months from the date the arbitral tribunal enters upon the reference. The date of entering upon the reference by arbitral tribunal is the date of receiving notice in writing of their appointment.

If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the tribunal shall be entitled to receive such amount of additional fees as the parties may agree.

The parties by consent may extend the period of one year for next six months.

If the award is not made within one year or in extended six months, the mandate of the arbitrator shall terminate, unless the court has, either prior to or after the expiry of the period so specified, extend the period. While extending such period if court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order reduction of fees of arbitrator by not exceeding five per cent for each month of such delay. The court should dispose-off the application for extending period within 60 days from the date of service of the notice on opposite party.

Such extension of period by the court may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court. While extending the period the Court may substitute one or all of the arbitrators. In such case, the arbitral proceedings shall continue from the stage already reached and on the basis of the evidence and material already on record and the arbitrator appointed under this section shall be deemed to have received the said evidence and material. The tribunal so reconstituted shall be deemed to be in continuation of the previously appointed Tribunal.

It shall be open to the court to impose actual or exemplary costs upon any of the parties under this section.

Fast track procedure[31] (S. 29-B):-

The parties to an arbitration agreement may, at any stage either before or at the time of appointment of an arbitral tribunal, agree in writing to have their dispute resolved by fast track procedure. The fast track procedure is specified in sub-section 3 of this section as-

The award under this section shall be made within a period of six months from the date the tribunal enters upon the reference. If the award is not so made, the provisions of S. 29-A shall apply to the proceeding.
The Arbitral Tribunal shall decide the dispute on the basis of written pleadings, documents and submissions filed by the parties without any oral hearing;
The Arbitral Tribunal shall have power to call for any further information or clarification from the parties in addition to the pleadings and documents filed by them;
An oral hearing may be held only, if, all the parties make a request or if the Arbitral Tribunal considers it necessary to have oral hearing for clarifying certain issues;
The Arbitral Tribunal may dispense with any technical formalities, if oral hearing is held, and adopt such procedure as deemed appropriate for expeditious disposal of the case.

The fees payable to the arbitrator and the manner of payment of the fees shall be such as may be agreed between the arbitrator and the parties.

Settlement[32] (S. 30):-

The Tribunal may encourage the parties to settle their dispute at any time during the arbitration proceedings. The Tribunal for that purpose can take initiative and find out whether there is an element of settlement, and for this purpose it may use mediation, conciliation and other procedures. If a settlement is reached, the same may be incorporated in an arbitral award and signed by the arbitrators. However, this can be done only if requested by the parties and not objected to by the Arbitral Tribunal. An arbitral award on such agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute.

6. Form and contents of arbitral award (S. 31):-

An award shall be made in writing and shall be signed by the members of the Tribunal. However, in arbitral proceedings where there are more than one arbitrators, the signatures of the majority of all the members of the Tribunal shall be sufficient so long as the reason for an omitted signature (if any) is stated.

The award shall state the reasons upon which it is based, unless,:-

(i)The parties have agreed that reasons are not to be given.

The award is the outcome of settlement and on agreed terms as mentioned in S. 30.

Thus, we may say that, the award shall be speaking one. The award shall state its date and the place of arbitration. After the arbitral award is made, a signed copy shall be delivered to each party.

In Tamil Nadu Electricuty Coard v. M/s Bridge Tunnel Constructions[33]

The Supreme Court observed that- the award should state the reasons in support of determination of the liability or no liability. It is mandatory requirement to state.

The 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 award. In practice, a request for interim award by a party is entertained by arbitrators, when there are numerous subject matters in the same dispute and each one of them is separate and distinct from the other.

When the award is for the payment of money, the tribunal may include in the sum of the award, interest at such rate as it deems reasonable. Such interest may be awarded on the whole or any part of the awarded money for a specific period.

If the rate of interest is not specified in the award by the tribunal, a sum shall carry interest at the rate of two per cent higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.

7. Application for setting aside the arbitral award (S. 34):-

Recourse to a Court against an arbitral award may be made only by an application for setting aside such award. The award may be set aside

(1) by the Court only if-

the party making the application furnishes proof that-
the party was under some incapacity; or
the arbitration agreement is not valid under the law to which the parties have subjected it,
No proper notice- 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
Ultra virus award:- the 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.
Agreement is not followed:- the composition or the tribunal or the arbitral procedure was not in accordance with the agreement of the parties.
the court finds that-
the subject:-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or
the arbitral award is in conflict with the public policy of India.

(2) Patent illegality in award:- Domestic award may also be set aside by the court if the court finds that the award is vitiated by patent illegality appearing on the face of the award.

An application to set award aside on above grounds should be made within three months from the receipt of the award by the party.

Stay by the Court (S. 36 (3)):- Where an application to set aside the arbitral award is filed in the court, and an application for stay on execution is filed, the court may subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing.

Provided that the court while consideration the application for grant of stay in the case of an arbitral award for payment of money shall have due regard to the provisions for grant of stay of a money decree under C.P.C.

b) Termination of proceedings:-

Sections 32 and 33 deals with termination of proceedings after award.

1. Termination of proceedings (S. 32):-

This section contains the provisions regarding conditions and procedure for termination of arbitral proceedings. According to the section, the arbitration proceeding is terminated-

(i) as soon as the final arbitral award is made by the arbitrators, or

(ii) by an order of the Arbitral Tribunal where:

the claimant withdraws his claim,
parties agree for termination of proceeding,
the Tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.

Thus, by above-mentioned two ways arbitral proceeding terminates.

2. Corrections, interpretation and additional award (S. 33):-

The section provides that the arbitrator has the jurisdiction to correct and interpret his award and, if necessary for that purpose, may amend core award. According to the section,

(i) A party to a proceeding may within thirty days from the receipt of the award and by giving notice to the other party, request to the Tribunal to correct-

any computation error,
any clerical or typographical error, or
any other error of a similar nature occurring in the award.

The Tribunal even can correct such mistakes on its own within thirty days from the date of award.

(ii) If parties to the proceeding agrees and request to the Tribunal, to give an interpretation of a specific point or part of the award.

The tribunal may, if it considers the request justified, make the correction or give interpretation, within thirty days from the receipt of the request. Such correction or interpretation shall form the part of the award.

Similarly, an additional arbitral award may be passed on the claims presented in the proceeding but omitted from the award be passed.

XI. Finality and enforcement of award (Ss. 35 and 36):-

Ss. 35 and 36 deals with the topic finality and enforcement of award. These sections are related with the enforcement of domestic award. The provisions as to enforcement of foreign award are mentioned in Ss. 55 to 58.

1. Finality of arbitral award (S. 35):-

` An arbitral award shall be final and binding on the parties and persons claiming under them. However, the award is only final if appeal or review is not pending as mentioned under this topic.

2. Enforcement of award[34] (S. 36):-

The award of Tribunal shall be enforced in accordance with the provisions of the C.P.C. in the same manner as if it were a decree of the court. However, such execution can only be done

unless the time for making an application to set aside the arbitral award under S. 34 has expired,
If application is made but the stay for execution has not been granted by the Court.

In Leela Hotels Pvt. Ltd v. Urban Development Corp. Ltd[35].

The Supreme Court held that an arbitral award is to be enforced under C.P.C in the same manner as if it were a decree of the Court.

Note:-

1. Alternate dispute resolution in Banking sector:-

Non-recovery of debt, non-performing assets[36], (bad debts) etc. are serious problems before Banks and financial institutions. The problem is worsened due to so many pending cases before courts and delay in disposal of them. It adversely affects economy of India. It is being said that there is more than 1 lac-crore rupees bad debt in India.

To avoid problems in recovery of debts, alternate dispute resolution methods are adopted, by the banks or financial institution as follows-

a. Arbitration and Conciliation:-

The Arbitration and conciliation Act, 1996, is often used by the Banks to recover outstanding debts.

Debt Recovery Tribunals:-

The Recovery of Debts due to Banks and Financial Institutions Act, 1993, provides for establishment of Debt Recovery Tribunals for expeditious, less expensive adjudication and recovery of debts due to banks and financial institutions. The Act, came into existence on recommendation of Tiwari Committee Report. The Tribunal has pecuniary jurisdiction of rupees 20 lakh and above.

The Debt Recovery Tribunals play crucial role in recovery of debts of banks and financial institutions.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI) is also a special legislation for enforcement of security interest. It allows non-judicial or non- adjudicatory enforcement of security interest in addition to the judicial or adjudicatory remedies, available under other statutes.

b. Lok-Adalats:-

Through Lok Adalats, many cases of debt recovery are settled, even pre litigation cases are also settled.

c. Court annexed mediator:-

89 of the Civil Procedure Code, 1908, provides for referring cases pending in the Courts to Alternate dispute resolution, and mediation, through court annexed mediation.

In India, under the RBI, Financial Literacy and Credit Counseling Centers are being appointed for debt conciliation. Debt Conciliation is a process which is used to help individual debtor to come out of the debt crises through credit counseling.

Pre-Institution Mediation:-

Section 12-A of the Commercial Courts Act, 2015, provides parties with an alternative means to resolve disputes through discussions and negotiations with the help of a mediator. The provision states that a plaintiff must initiate mediation before filing a suit before a Court, except the suits filed with applications for urgent interim relief.

Thus, in conclusion, it can be said that alternate dispute resolution has played important role in recovering of bad debts of banks and of financial institutions, but taking into consideration pile of pending cases lot needs to be done through alternate dispute resolution.

*****

[1] लवाद / पंचफैसला

[2] “लवाद / पंचफैसला” “वह साधन है जिसके द्वारा किसी विवाद के पक्षकार, किसी तिसरी व्यकती के हस्तक्षेप के मध्यम से, मामले को सुलझाते है”|

[3] “लवाद / पंचफैसला” येणे कम से कम दो पक्षो के बीच के विवाद या झगडे को, किसी सक्षम क्षेत्रीय क्षेत्राधिकार के नायालय के अलावा, किसी व्यकती या व्यकर्तीयो द्वारा न्यायिक तरीके से दोनो पक्शो को सुनने के बाद निर्धारण करणा|

[4] Means ‘namely’ or “as follows”.

[5] लवाद / पंच

[6] पंच निर्णय / फैसला

[7] गोपनीयता

[8] किसी पंचव्यक्ती से निर्यण, ना-कि संस्थासे

[9] संस्थागत पंच

[10] तेजी से पंच निर्यण

[11] घरेलू पंच

[12] वैधानिक पंच याने कानुन के मुताबिक पंच

[13] (AIR 1998 SC 1297)

[14] पार्टीयो को उनके बीच का विवाद पंचप्रक्रिया के लिये संदर्भित करणे के लिये अदालत कि शक्ती

[15] AIR 2000 Supreme Court 1886

[16] पंच नायाधीकरण

[17] Single Arbitrator

[18] अकेला पंच

[19] नियुक्ती को चौनौती

[20] पंच का कार्यक्षेत्र

[21] Henceforth described as “the Tribunal”.

[22] 1998 (3) R.A.J 248 (Del).

[23] क्षेत्रअधिकार के संबंध में आप्पती दर्ज करणे का समय

[24] पंच के द्वारा अंतरिम उपाय

[25] लवाद/ पंच प्रक्रिया

[26] एक पार्टी कि अनुपस्थिती

[27] The term used in S. 28 (2) is “ex aeqo et bono”.

[28] The term used in S. 28 (2) is “amiable composieur”.

[29] (1992) 3 SCC 551

[30] (2007) 8 SCC 466

[31] तेज प्रक्रिया

[32] समझौता

[33] AIR 1997 SC 1376

[34] पंचनिर्णय लागू करणा

[35] (2012) 1 SCC 302

[36] जाब आदमी बँक का कर्ज चुकांनेमे असमर्थ होता है तो बँक उस लोन कोs Non-performing Asset or Bad debts कहते हैA