Q1. What do you mean by Q6. What is the procedure for Grounds for challenging the appointment Q12.

Grounds for challenging the appointment Q12. What is a foreign award?

Arbitration? What are the various reasons appointment of arbitrator? What is the of arbitrators: Discuss the conditions for enforcement of
for internationalization of Arbitration Act? ground to challenge the appointment of Sec.12 of the Arbitration and Conciliation Act, a foreign award (New York Convention
Write the salient features of the Arbitration arbitrator? What is the procedure for 1996 provides for grounds for challenging in the Awards) by a Court. 10M
Act, 1996. challenging the appointment of arbitrator? appointment of arbitrators. According to Chapter I, Sec.44 of the
Ans: The term arbitration has been Appointment of arbitrators: When a person is approached in Arbitration and Conciliation Act, 1996 that
derived from the nomenclature of Roman law. Sec.11 of the Arbitration and Conciliation Act connection with his possible appointment as an deals with New York Convention Awards,
arbitrator, he shall disclose in writing any
It is applied to an arrangement for taking and provides for the appointment of arbitrator. It unless the context otherwise requires ‘foreign
circumstances likely to give rise to justifiable
abiding by judgment of a selected person in provides that a person of any nationality may doubts as to his independency or impartiality. award” means an arbitral award on difference
some disputed matter instead of carrying to an be appointed as an arbitrator unless otherwise An arbitrator from the time of his between persons arising out of legal
established Court of Justice. The term agreed by the parties. It provides to the parties appointment and throughout the arbitral relationships, whether contractual or not,
Arbitration has been defined in Halsbury’s the liberty to agree on a procedure for proceedings he is under a duty to disclose to the considered as commercial under the law in
Laws of England as the reference of dispute appointing the arbitrator(s). parties any circumstanced refused above without force in India, on or after the 11 th day of
or difference between not less than two If the parties fails to come to an delay unless the parties are already informed October, 1960 –
parties for determination after hearing both agreement to the appointment of arbitrator in about such by him. a) in pursuance of an agreement in writing for
sides in a judicial manner by a person or an arbitration of three arbitrators, each party An arbitrator may be challenged only under the arbitration to which the Convention set forth in
persons other than a Court of competent shall appoint on arbitrator and this appointed following circumstances: the First Schedule applied, and
jurisdiction. two arbitrators shall appoint the 3rd arbitrator i) There is justifiable doubt as to his b) in one of such territories as the Central
independency and impartiality.
Under Sec.2 of the Arbitration and Conciliation and this third arbitrator shall act as presiding Government, being satisfied that reciprocal
ii) That he does not possess the qualifications
Act, 1996 the term Arbitration means any arbitrator. for being an arbitrator as agreed by the
provisions have been made may, by
arbitration whether or not by permanent If the parties fails to appoint an parties. notification in the Official Gazette, declare to
arbitral institution. arbitrator within 30 days from the date of In Jiwan Kumar Lohia vs. Durga Dutt Lohia, AIR be territories to which the said Convention
The various reasons for internationalization of receipt of the request to do so from the other 1992 SC 188, the Court held that reasonable applied.
Arbitration Act were that the Arbitration Act of party, such appointment shall be made upon apprehension of bias in the mind of a reasonable Sec. 47 of the Act deals with the evidence,
1940 has become outdated and were not request of the party by the Chief justice of any man can be a good ground for the termination of which is to be produced before the Court at
responsive when economic reforms taken person or institution designated by him. the appointment of the arbitrator. the time of filing the application for
place worldwide. The expert bodies like the Sec.11(4) deals with the Sec. 13 of the Arbitration Act, 1996 provided enforcement of the foreign award. Party which
Law Commission of India and other domestic circumstances on which a party fails to the procedure for challenging the appointment intends to enforce a foreign award has to
and international conciliation and arbitration appoint an arbitrator within the prescribed of Arbitrator. Subject to Sec.13(4), the parties are produce the arbitral award and agreement of
bodies have proposed amendments and period of time. The two appointed arbitrators if free to agree on a procedure for challenging the arbitration in original or its certified copy to the
appointment of arbitrator. The circumstances on
modifications to the then existing Act of 1940 failed to agree in the appointment of the third Court having jurisdiction over the subject
which an arbitrator can be challenged are:
so as to enable to make the law more arbitrator within the prescribed time limit to i) Failing any agreement referred to above a party matter of the award.
responsive, effective and suitable for deal with such situation the Chief Justice of who intends to challenge an arbitrator shall Sec.48, on the other hand, provides the
settlement of disputes relating to both India or Chief Justice of High Court is within 15 days from the date of knowledge of grounds on which the enforcement, which is
domestic and international commercial matter. authorised to make an appointment of the constitution of Arbitral tribunal, or after sought for under Sec.47, could be refused.
The General Assembly of the UN arbitrator on the request of the parties. becoming aware of any circumstanced under According to Sec.48, enforcement of a foreign
recommended that all member countries shall In Ador Samia Pvt. Ltd. –vs- P.K. Sec.12(3) may send a written statement of the award may be refused, at the request of the
give due consideration to the UNCITRAL Holdings Ltd. AIR 1999 SC 3246, the Court reasons for challenge of the arbitral tribunal. party against whom it is invoked, only if that
which is the model law on international held that the power of the Chief Justice under ii) Unless the arbitrator challenged or withdraws party furnishes to the Court proof that –
commercial arbitration which was adopted in Sec.11 of the 1996 Act are only administrative from his office or the other party agrees to the a) the parties to the agreement referred to in
1985. The UN Commission on International powers and the Chief Justice while exercising challenge the arbitral tribunal shall decide on sec.44 were, under the law applicable to them,
the challenge.
Trade Law also adopted a set of conciliation power under Sec. 11 does not act as court. under some incapacity, or the said agreement
iii) If a challenge under any procedure agreed
rules in 1980 which was recommended by Similar view was taken in Konkan Railway Co- upon by the parties or under the procedure
is not valid under the law to which the parties
General Assembly of UN to be followed by operation Ltd. –vs- Mehul Construction Ltd. given in the section is not successful, the have subjected it or, failing any indication
member countries for settlement of disputes 2000 Vol. (vII) SCC 201. arbitral tribunal shall proceed with the arbitral thereon, under the law of the country where
amicably and without taking recourse of strict In Konkan Railway Co-operation proceeding and may make an arbitral award. the award was made; or
legal system. Ltd –vs- Rani Construction Pvt. Ltd. 2000 Vol. iv) If an arbitral award is made in spite of b) the party against whom the award is
The salient features of the Arbitration and VIII SCC 159, the Court observed in opposite challenging the arbitrator the party may make invoked was not given proper notice of the
Conciliation Act, 1996 are as follows: to the above two cases stating that if such an an application for setting aside the award under appointment of the arbitrator or of the arbitral
1) It is a comprehensive statute which fully order of the Chief Justice is to be treated as Sec.34. proceedings or was otherwise unable to
dealt with domestic, international along with an administrative order even the order of the v) Where an arbitral award is set aside on an present this case; or
international interstate arbitration. This Act Chief Justice of India or his nominee could be application made by one of the parties as c) the award deals with a difference not
provides the importance of enforcement of challenged initially before a single Judge of a stated above, the Court may decide as to contemplated by or not falling within the terms
whether the arbitrator who is under challenged
international arbitral award as well as High Court and then before a division bench of the submission to arbitration, or it contains
would be entitled for receiving any fees.
conciliation matter. It is the result of United and subsequently under Art.136 of the decisions on matters beyond the scope of the
Nation’s Commission on International Constitution. Q17. Foreign award. 5M submission to arbitration. Provided that, if the
Commercial Arbitration 1985 because the Sec.11(5) states that if the parties Enforcement of Foreign Awards is covered under decisions on matters submitted to arbitration
general Assembly of UN have fails to come to an agreement for appointment of Part II in which Chapter I entails awards made can be separated from those not so submitted,
recommended the model law to all the arbitrator then there would be only the sole under New York Convention (sections 44-52) and that part of the award which contains
member states with an aim to maintain a arbitrator where the parties could not arrived to an Chapter II deals with Geneva Convention Awards decisions on matters submitted to arbitration
uniform model law on arbitration amongst agreeable condition on the appointment of (Sections 53 – 60) may be enforced; or
arbitrator within 30 days from the date of receipt of According to Chapter I, Sec.44 of the Arbitration
the countries. d) the composition of the arbitral authority or
the request made by the other party, under such and Conciliation Act, 1996, unless the context
2) The Indian Arbitration Act of 1940 has no circumstances the Chief Justice or institution or the arbitral procedure was not in accordance
scope for International arbitration as otherwise requires ‘foreign award” means an with the agreement of the parties, or, failing
person designated by Chief Justice should make arbitral award on difference between persons
compared to the new Act of 1996 which is a an appointment of the arbitrator failing which the such agreement, was not in accordance with
arising out of legal relationships, whether
self-explanatory as well as a complete other party is impowered to seek gravity from court the law of the country where the arbitration
contractual or not, considered as commercial
code. for the appointment of the arbitrator. under the law in force in India, on or after the 11 th took place; or
3) The Arbitration Act, 1996 limited the powers Sec.11(6) is the mandatory day of October, 1960 – e) the award has not yet become binding on
of the Court and confined only to the extent provision and it comes into play when the parties a) in pursuance of an agreement in writing for the parties, or has been set aside or
of judicial intervention as provided by Sec.5 had agreed on any appointment procedure as arbitration to which the Convention set forth in the suspended by a competent authority of the
of the Act. agreed upon by the parties, or when the two First Schedule applied, and country in which, or under the law of which,
4) The Arbitration Act 1996 at its Chapter V arbitrators failed to appoint a third arbitrator, the b) in one of such territories as the Central that award was made.
person including an institution fails to perform any Government, being satisfied that reciprocal
provides the detail procedure, practice According to Sec.48(2) enforcement of an
function entrusted to it under the procedure, then provisions have been made may, by notification in
under which the procedure of arbitration one of the party may request the Chief Justice or
arbitral award may also be refused if the court
must be carried out. the Official Gazette, declare to be territories to finds that the subject-matter of the difference
any person designated by him to make the which the said Convention applied.
5) This Act is precise the power of the Court necessary measures unless the agreement on the is not capable of settlement by arbitration
In Chapter II “foreign award” means
by taking assistance from the Court only in appointment procedure provides other means for under the law of India; or the enforcement of
an arbitral award on differences relating to matters
specific matters such as taking evidence, securing the appointment. considered as commercial under the law in force the award would be contrary to the public
etc. Sec.11(7) states that a decision in India made after the 28th day of July, 1924 – policy of India.
6) Part III of the Act provides for new taken under the above method are final and no a) in pursuance of an agreement for arbitration to Under Sec.49 when the Court
internationalised conciliation approach and appeal lies against such method. which the Protocol set forth in the Second comes to the conclusion that the award is
explained the application and scope of Sec11(8) provides for the Schedule applies, and enforceable, it becomes a deemed decree.
conciliation. guidelines in the matter of appointment of b) between persons of whom one is subject to the Sec.49 empowers the Court to declare the
7) Under the old Act of 1940, there was no arbitrator by the Chief Justice or the person or jurisdiction of some one of such Powers as the foreign award as enforceable under the
institution designated by him. Central Government, being satisfied that
provision for applicability of any interim provisions of Chapter I of Part II of the Act.
Sec.11(9) also provides for guidelines to reciprocal provisions have been made, may, by
award passed by a foreign arbitral tribunal, functionary in an international commercial
however under the new Act, provision for notification in the Official Gazette, declare to be Q19. Waiver of right to object. 5M
arbitration that such functions should appoint an parties to the Convention set forth in the Third
applicability of foreign Arbitral Tribunal arbitrator of a nationality other than the Ans: Sec.4 of the Arbitration Act, 1996
Schedule, and of whom the other is subject to the deals with waiver. A party who knows that any
interim award has been provided. nationalities of the parties in case the parties jurisdiction of some other of the Powers aforesaid, provision of this part form which the party may
belongs to different nationalities. This Section is and
aimed to eliminate the scope for partiality by derogate or any requirement under the arbitration
c) in one of such territories as the Central agreement has not been complied with and yet
nationality of different countries. Government, being satisfied that reciprocal
Sec.11(10) empowers the Chief proceeds with the arbitration without stating his
provisions have been made, may, by like objection to such non-compliances without undue
Justice to make an appropriate scheme as he may notification, declare to be territories to which the
deemed fit and appropriate for dealing with delay or if a time-limit is provided for the objection
said Convention applies, and for the purposes of within the period of time shall be deemed to have
matters entrusted upon him for the appointment of this Chapter an award shall not be deemed to be
arbitrator. waive his right to object.
final if any proceedings for the purpose of In the event that either of the
Sec.11(11) provides the solution to contesting the validity of the award are pending in
the problem where different parties approaches to parties knows of a provision from which either
the country in which it was made. party derogate, or any part of the agreement has
different Chief Justices of different High Courts or Under Sec.49 when the Court comes to the
their designates. The Chief Justice or his not been complied with, if no obligation is raised to
conclusion that the award is enforceable, it such con-compliance, it is taken that the party has
designates where the request has been made first becomes a deemed decree. Sec.49 empowers the
shall alone be competent to decide the request. given up his right to object and that right will be
Court to declare the foreign award as enforceable waived.
These goes to explain that the Chief Justice or his under the provisions of Chapter I of Part II of the
designate who first receives and accepts the In Narayan Prasad Lohia Case SC held that if a
Act. party to arbitration does not object to the
request shall be competent to decide the entrusted
matter. composition of the arbitral tribunal before the
Sec.11(12) provides that in case of tribunal itself within the time prescribed under
International Commercial Arbitration the reference Sec.16(2) of the Arbitration Act, it would be
to chief Justice in the other sub-sections shall be deemed that the party has waived his right to
construed as reference to the Chief Justice of object.
India.
Q28. Arbitration Agreement. 5M 7) Arbitrators are usually lawyers or people Q3. “Equal Treatment to parties
Ans: Sec.7 of the Arbitration Act, associated with the law while facilitators may Q4. Write on the grounds for must be the conduct of Arbitral
1996 defines arbitration agreement as an not have a law background. challenging an Arbitration Award by proceedings”. Explain with the provisions
agreement by the parties to submit to Arbitral award: discussing case laws. 10M under the new Act of 1996. 10M
arbitration all or certain disputes which have An arbitral award may be said to be the Discuss the power of the court to setting According to Sec.18 of the Arbitration and
arisen or may arise between the parties in decision of an arbitral tribunal in respect of a aside an arbitral award. Conciliation Act, 1996, the parties shall be
respect of a defined legal relationship whether dispute referred by the parties for declaring As provided under Sec.34(2) of the Arbitration treated with equality and each party shall be
contractual or not. An arbitration agreement their respective rights, titles or obligations and Conciliation Act, 1996, an arbitral award given a full opportunity to present his case.
may be in the form of an arbitration clause under the arbitration agreement between may be set aside by the court only if – This Section provides that the arbitrators are
found in the contract or it may be in the form them. a) the party making the application furnishes supposed to perform their functions honestly
of separate agreement. According to Sec.291)(c) of the Arbitration and proof that – and impartially. They should provide equal
An Arbitration Agreement shall be in writing. Conciliation Act, 1996, the term ‘arbitral i) a party was under some incapacity, or opportunity to the parties to present their case
An arbitration agreement is deemed to be in award’ shall include an interim award also. ii) the arbitration agreement is not valid under without taking sides. Thus they are to follow
writing if it contains in: Generally speaking, an award is a judgment the law to which the parties have subjected it the principles of natural justice in dispensation
i) A document signed by the parties pronounced by an arbitral tribunal on disputes or, failing any indication thereon, under the of justice through arbitral proceedings.
ii) Exchange of letters, telegram or other or differences referred to it for arbitration. law for the time being in force; or In International Airport Authority
means of telecommunication which An award supposes an agreement between iii) The party making the application of India –vs- KD Bali, AIR 1988 SC1099 the
provide a record of the agreement. the parties and contains no more than the was not given proper notice of the Apex Court is of the view that “once the
There is no provision in the Arbitration and terms of that agreement ascertained by a third appointment of an arbitrator or of the arbitral arbitrator enters in an arbitration, he must not
Conciliation Act, 1996 for inferring the matter person, called arbitrator. An award stands at proceedings or was otherwise unable to be guilty of any act which can be construed as
to an arbitrator by intervention of the Court. eh same footing as a decree of a court present his case; or indicative of partiality or unfairness.
However, if the parties have entered into an whether it has passed into a decree or not and iv) The arbitral award deals with a It is well settled doctrine that
arbitration agreement during the pendency of therefore it is binding on the parties. dispute not contemplated by or not falling equality before law and equal protection of law are
case before the Court than they may proceed An arbitral award may either be a final award within the terms of the submission to the essential ingredients of natural justice. Even in
the arbitration in accordance with the new Act or an interim award. It may also be a domestic arbitration, or it contains decisions on matter the context of law of arbitration, according to
award or a foreign award. An arbitral award Sec.18 of the Act, the arbitral tribunal is under
and any award made therein is the decree. beyond the scope of the submission to
must be in writing and must be duly signed by statutory obligation to abide by the principle of
This was held in P. Anand Gajapathi Raju’s arbitration. Provided that, if the decisions on equality and not be allowed to discriminate the
case. the arbitrator. matters submitted to arbitration can be parties arbitrating before tribunal. It means the
Sec. 8 of the Act provides the power to refer An arbitral award must state the reasons upon separated from those not so submitted, only parties are entitled to be given a full opportunity to
parties to arbitration where there is an which it is based. However, the parties may that part of the arbitral award which contains put up their point of argument and must be allowed
arbitration agreement. If the parties so applies agree that no reasons for the award need be decisions on matters not submitted to to submit materials in support of their contentions.
before the judicial authority where an action given. Again, where the award is based on arbitration may be set aside; or The concept of natural justice has
has already been brought up for referring the mutual settlement of the dispute by the v) The composition of the arbitral widened over the years and it expects the
subject matter to an arbitration Clause the parties, no reasons need be given. tribunal or the arbitral procedure was not in arbitrator –
Court may refer the parties to arbitration. accordance with the agreement of the parties, i) To act fairly without bias in a dispassionate
Such application shall not be entertained Forms and contents of arbitral award: unless such agreement was in conflict with a manner;
As provided by the Sec.31 of the Arbitration ii) To give proper notice of hearing to parties
unless it is accompanied by the original provision of this Part from which the parties
and Conciliation Act, 1996, an arbitral award and opportunity to contradict the case of the
arbitration agreement or a certified copy of the cannot derogate, or, failing such agreement, opponent;
same. shall be made in writing and shall be signed was not in accordance with this Part; or iii) Not to hear one side or accept evidence
Notwithstanding that an application is made as by the members of the arbitral tribunal. It must b) the Court finds that – behind the back of the other party; and
required under the Act and that issue is state the reasons for the award unless the i) the subject-matter of the dispute is not iv) State reasons in the award.
pending before the Court, an arbitration may parties have agreed that no reason for the capable of settlement by arbitration under the It may be stated that he parties should not
be commenced and continued and arbitral award is to be given. The award should be law for the time being in force, or consider themselves an advocates for the party
award may be passed. dated and place where it is made should be ii) the arbitral award is in conflict with the appointing them, but they should extend an equal
mentioned. Copy of award should be given to public policy of India. opportunity to the other party as well so that the
Arbitration and negotiation: each party. The arbitral tribunal can make According to Sec.34(3) of the Act the arbitral justice is done to both the parties.
The formats and nature of arbitration and interim award also under Sec.31(6) of the Act award may set aside on receipt of an In Godrej Properties & Investments
negotiation are different from each other. In on any matter about which it has the authority application for setting aside made within three Ltd. –vs- Tripura Construction, the Bombay High
to make a final award. According to Sec.31(7) Court held that the Sec.18 by itself is not a ground
arbitration, both parties appoint a third party month from the date on which the party
of the Act, unless otherwise agreed by the to challenge an award. Sec.18 merely provides
arbitrator or arbitrators. The number of making that application had received the that the parties shall be treated equally and at the
arbitrator/s is usually an odd number of one or parties, where and in so far as an arbitral arbitral award. Provided that if the Court is highest; Sec.18 can be invoked only to point out
three to deter tied decisions. Arbitrators are award is for the payment of money, the arbitral satisfied that the applicant was prevented by that the petitioner were denied an opportunity of
usually appointed by parties, existing tribunal may include in the sum for which the sufficient cause from making the application presenting the case.
arbitrators or an external party like a court. award is made interest, at such rate as it within the said period of three months if may
The job of the arbitrator is to hear both parties deems reasonable, on the whole or any part of entertain the application within a further period Q10. Discuss the conduct of arbitral
and seceded on all terms of dispute. The the money, for the whole or any part of the of thirty days, but not thereafter. proceedings. 10M
decision is often promulgated in an ‘award’ – a period between the date on which the cause In Narayan Prasad Lohia –vs- Chapter V of Part I of the Arbitration and Conciliation
of action arose and the date on which the Act, 1996 deals with conduct of arbitral proceedings
document which gives and explains the Nikunj Kumar Lohia AIR 2002 SC 1139, and the same has been dealt in Sections 18-27. Sec.18
decision. An award is as legally binding as a award is made. The costs payable by the Hon’ble Supreme Court held that Sec.34(2) states that there should be equal treatment of parties
court verdict. Arbitration is under the State and respective parties shall also be determined by (a)(v) provides for setting aside of the arbitral and both parties must be given equal opportunity to
federal law, which is why the award is as the arbitral tribunal specifying eh manner in award if the composition of the arbitral tribunal present the case. Sec.19 lays down that the arbitral
binding and legal. A decision or award is which the costs shall be paid including fees or the arbitral procedure was not in tribunal is not bound by the Code of Civil Procedure,
and expenses of the arbitrator(s) and 1908 or the Indian Evidence Act, 1872. The parties are
usually not appealed to a court. The cost of accordance with the agreement of the parties. free to determine the procedure to be followed by the
arbitrators are usually included in the award, witnesses as also the legal fees and other If such composition or procedure was in arbitral tribunal in the course of proceedings. In the
unless both parties already negotiated the administrative expenses. accordance with the agreement of the parties event that no such procedure is established by the
costs between themselves. though in conflict with the provisions of Part I parties, the tribunal may follow any procedure it deems
On the other hand, negotiation, Arbitral tribunal: of the Act, the award cannot be challenged. fit. The power of the arbitral tribunal includes the power
According to Sec.2(1)(d) of the Arbitration to determine the admissibility, relevance, materiality
as its name implies, involves two parties and a Same is true of vice-versa i.e. a composition and weight of any evidence. According to Sec.20, the
facilitator. It is the process we use to satisfy and Conciliation Act, 1996, Arbitral Tribunal or procedure not in accordance with the parties are free to agree upon the place of arbitration.
our needs when someone else controls whet means a sole arbitrator or a penal of agreement but in accordance with the Act, will However, if the parties do not agree to the place, the
we want. The facilitator allows both sides talk arbitrators. Chapter III of part I of the Act attach validity to the award and such an award same will be decided by the tribunal. In Sanshin
and negotiate their disputes. The facilitator contains provisions regarding the composition cannot be challenged under Sec.34. Chemicals Industry Case, the Hon’ble Supreme Court
of an Arbitral Tribunal. The parties to an held that the decision of the arbitral tribunal on the
records the whole process including the In Sanshin Chemicals Industry – question of venue under Sec.20 would not come within
parties’ positions, their agreements and arbitration agreement are free to determine vs- Oriental Carbons and Chemicals Ltd. making of an arbitral award.
discussions. Negotiation results in a the number of arbitrators they want provided (2001) 3 SCC 341 the Hon’ble Supreme Court Sec.21 provides that arbitration
memorandum of agreement. The agreement that such number shall not be an even number held that the decision of Arbitration Tribunal as proceedings, unless otherwise agreed by the parties,
spells out the dispute, the methods of and any person of any nationality may be to the venue of Arbitration is not an award commence immediately on the date on which a request
appointed as the arbitrator. The parties are for that dispute to be referred to arbitration is received
resolving the said dispute and the conclusion within the meaning of Sec.2(6). This is by the respondent. According to Sec.22, all documents
of the dispute of parties. The parties involves also free to decide on the procedure of because such conclusion is not an submitted and received should be in the language
usually spilt the costs for the negotiation. arbitration. The Chief Justice or any other independent judicial determination but the one adopted in the proceedings or must be agreed.
Unlike arbitration the resolution in negotiation institution may on request by either party based upon the guidelines given in the Otherwise, arbitral tribunal can decide. Under Sec.23
is not as legally binding. appoint the arbitrator. Chapter IV of the Act arbitration agreement. Hence it cannot be the claimant should submit statement of claims, points
deals with the jurisdiction of arbitral tribunals. of issue and relief or remedy sought. The respondent
1) Both arbitration and negotiation are two forms of challenged under Sec.34 of the Act. But it shall state his defence in respect of these particulars.
alternative dispute resolutions and alternative Sec. 16 clearly emphasizes that the arbitral does not signify that such a decision cannot Such claim or defence can be amended or
processes to court litigation. Both are private, tribunal may rule on its own jurisdiction even
speedy, less costly and ensure confidentiality. be assailed in the ultimate arbitration award. If supplemented any time. Sec.24 deals with hearing and
with regards to any objection raised on the the decision as to venue has affected the written proceedings. It states that in the absence of a
2) Negotiation and arbitration differ in function and the
people who play a part in each process. In validity of the arbitration agreement itself. procedure followed in the arbitration particular clause, the arbitral tribunal shall decide
Chapter V deals with the basic conduct of an whether to carry on the proceedings orally or on the
arbitration, an arbitrator is appointed by both parties proceedings, and then it can be challenged basis of documents and evidence. It also says that he
while a facilitator overseas a negotiation. arbitration proceeding. Sec.18 states that under Sec.34(2) but only as a part of ultimate parties should be given sufficient notice of any meeting
3) In arbitration, the arbitrator decides on the there should be equal treatment of parties and arbitration award. and all documents submitted must be shown to the
outcome of the dispute after hearing both sides. both parties must be given equal opportunity other party. Sec.25 deals with the default of the party to
The resolution is called an award, which is final to present the case. Sec. 19 lays down that claim or to respond or to appear for the oral hearings. In
and legally binding. Meanwhile, a facilitator When can an arbitral award be set aside?
the arbitral tribunal is not bound by the CPC, the case of the former, the proceedings are terminated
allows both parties talk to each other about the The Arbitration and Conciliation Act, 1996 by the arbitral tribunal whereas in the case of the latter
1908 or the Indian Evidence Act, 1872. Sec.35 does not provide for an appeal against an
dispute and aids in making a settlement. The two instances, the proceedings would continue with the
result of a negotiation is called a memorandum makes it final and binding on the parties to arbitral award. However, the party who is document evidence on hand. Under sec.26 the arbitral
of agreement. This document is not as legally adhere to the arbitral award and Sec.36 gives aggrieved with an arbitral award may take tribunal may appoint an expert to seek opinion, to
binding as an award. the arbitral award the power under the Code recourse to a court against he said award on collect information, and to produce a report backed up
of Civil Procedure, 1908 and in the same by relevant documents unless otherwise agreed by the
4) Bothe facilitators and arbitrators are usually any of the grounds stated in Sec.34(2). parties.
third parties. The arbitrators solely and directly manner as if it were a decree of court. In order to set aside the arbitral award, it is According to Sec.27 the arbitral tribunal
decide on the outcome of the dispute while the necessary for the aggrieved party to make an or the party with the approval of the arbitral tribunal may
facilitators let both parties come into their own application under Sec.34 stating the grounds apply to the court for evidence. The court may order the
agreement. To sum up, a facilitator is a non- evidences to be given directly to the arbitral tribunal or it
of challenge. An application for setting aside
direct party in the process. may furnish details about processes in earlier cases of
5) The costs of arbitration can be decided by the
the award has to be made by a party to similar nature. Disregard to this order by personnel in
arbitrator or by both disputing parties, arbitration agreement and not a stranger. But absenting themselves to attend to the arbitral tribunal or
depending on the situation meanwhile, the a legal representative can apply for it because for any other default in producing the relevant evidence,
negotiator’s fee is usually split between the two he is a person who is bound by the award as invites punishment and penalties.
per Sec.35 of the Act which states that an It was held by Apex Court in KP
parties.
Poulose Case that non-consideration of material
6) An award in arbitration cannot be appealed to a award is final and binding on the parties and evidence by the arbitral tribunal, and making of arbitral
court. On the other hand, a court can question the persons claiming under them. award, amounts to unfair arbitral proceedings and the
or overturn a memorandum of agreement that arbitral award would be rendered invalid which is liable
transpired as a result of negotiation. to be set aside.
Legal Representatives. Evidence under the Arbitration Act./ Power Appointment of Conciliators: What is an ADR?
Sec.2(1)(g) of the Arbitration and Conciliation of the Arbitrator regarding admissibility of Sec.64 deals with appointment of conciliators ADR is a bouquet that consists of various
Act, 1996 defines the term “Legal evidence. 5M which provides that in a conciliation techniques being utilized to determine
representative”. It means a person who in law Ans: The general principal under the proceeding with only one conciliator, the disputes involving a structural process with
represents the estate of a deceased person, Act is that Indian Evidence Act 1872 does not parties may agree on the name of sole third party intrusion. It is an endeavour to work
and includes any person who intermeddles apply in the arbitral proceedings. On the other conciliator and in the proceeding with 2 out a mechanism which can work as an
with the estate of the deceased, and, where a hand, an arbitrator is legally authorised person conciliator each party may appoint one alternative to long-established litigation
party acts in a representative character, the to take evidence, therefore it can be said that conciliator and in the proceeding with 3 method. It is a set of mechanisms or strategic
person on whom the estate devolves on the the proceedings before the arbitrator is judicial conciliator each party may appoint one tactics for resolving a dispute outside the
death of the party so acting. in nature. In a case of AIR 1937 Bom 410, the conciliator and parties may agree on the third typical practice of litigation. ADR procedures
A legal heir who succeeds the Court held that an arbitral tribunal has the conciliator as the presiding conciliator. are extra-judicial in makeup. Techniques of
deceased person so as to acquire title to the characteristic of a judicial Court but the Sec.64 further provides that in ADR are an attempt to devise feasible and fair
property of the deceased is the legal provisions of the Indian Evidence Act would the proceeding of conciliation the parties may alternative to our conventional judicial system.
representative of the deceased by the not be applied. It may be inferred that the enlist the assistance of suitable institution or It is by and large a non-judicial procedure for
operation of law. The term legal representative arbitrators are persons who had no person in connection with the appointment of the resolution of disputes. In its
also includes Executor of the will of the acquaintance with the law of Evidence. conciliators and also for the following comprehensive sense, the term refers to
deceased, or Administrator of the estate of the It is to be mentioned that the strict law or rules particulars: - everything from assisted settlement
deceased person. of Evidence Act do not applied in the i) A party may request such an institution negotiations in which parties enjoy freedom to
When there is dispute between arbitrational proceedings. The arbitrator has to or person to recommend the name of some other legal process, to arbitration
the rival legal representatives of the deceased follow the basic rules of evidence with the suitable individual to act as conciliator. systems or mini trials that seem and sense
party, the matter has to be independently tried view to comply with the principles of natural ii) The parties may agree that appointment very much like a court room process. It is not
and decided in separate proceedings and the justice. of 1 or more conciliators be made projected to replace or supplant the courts of
arbitrator is not empowered to settle the issue. directly by such institution or person. the land but is besides the traditional system
An arbitration agreement is Conciliation: Further provided that in recommending or ADR is not an alternative in a
enforceable by or against the legal Part III of the Arbitration and Conciliation Act, appointing individuals to act as conciliators, restrictive sense the need for public
representatives by compelling them to step 1996 dealt with Conciliation under Sections 61 the institution or person shall have regard to adjudication and normative judicial
into the shoes of the deceased person. So to 81. Sec.61 provides for the application and such conciliation as are likely to secure the pronouncements on the momentous issues of
also an arbitration award can be enforced by scope for conciliation. It states that save as appointment of an independent and impartial the day is fundamental to the evolution of the
or against a legal representative provided the otherwise provided by law for the time being in conciliator and with respect to a sole or third laws of the land. ADR is necessary to
legal representative who has been allowed to force and unless the parties have otherwise conciliator shall take into account the complement and conserve the functions of
participate in the arbitration proceedings has agreed, this Part shall apply to conciliation of advisability of appointing a conciliator of a Courts.
represented the case on behalf of the disputes arising out of legal relationship, nationality other than the nationalities of the In actuality arbitration,
deceased party. whether contractual or not and to all party. conciliation and mediation are diverse
proceedings relating thereto. This Part shall varieties of dispute resolution outside courts;
not apply where by virtue of any law for the Submission of statements to Conciliator: ADR and arbitration are complementary.
International commercial arbitration. time being in force certain disputes may not Sec.65 provides for provisions for the In the Australian Family Law Act,
Sec.2(1)(f) of the Arbitration and Conciliation be submitted to conciliation. submission of statements to the conciliator. negotiation, counselling and mediation are
Act, 1996 defines the term “international This Section is purely on the On the appointment of the conciliator, the identified as primary dispute resolution. By
commercial arbitration” means an arbitration pattern of Art.1 of the UNCITRAL Conciliation conciliator may request each party to submit definitional implication and statistics, litigation
relating to disputes arising out of legal rule. It deals with the application and scope of to him a brief written statement describing the is now alternative dispute resolution.
relationships, whether contractual or not, conciliation machinery. It state that the general nature of the disputes and the points
considered as commercial under the law in provision of sec.61 shall apply to all disputes in issue. Each party is under the duty to Arbitration and Conciliation:
force in India and where at least of the parties whether contractual or non-contractual supply the copy to the other party. Further the As defined under Sec.2(1)(a) of the Arbitration and
is – however if the provision of any other law has conciliator may request each party to submit Conciliation Act, 1996 which covers any arbitration
i) An individual who is a nation of, or been applied for conciliation of dispute then to him further written statement of his whether it is administered by any permanent
habitually resident in, any country other the provision under Part III of the Act shall not possession and facts and founds in support Arbitral institution or not, it also covers arbitration
than India; or relied on voluntary agreement by the private
be applied. The parties are given freedom to thereof to be supplemented by any document
ii) A body corporate which is incorporated parties or by operation of law.
follow the provisions of Part III or not. It gives and other evidences that such party may deal The Act does not provide definition
in any country other than India; or more emphasis to the voluntary conciliation as appropriated. The parties to supply a copy of
iii) A company or an association or a body of the word Arbitration but its literally recognised
reflected in Sec.61 of the Act. The object of such statement, document and evidences to meaning is that settlement of differences or
of individuals whose central living option to the party is to confirm principle the other party. disputes by mutual understanding or agreement by
management and control is exercised in of part autonomy. Sec.61 further provides that The conciliator may at any stage the parties where the rights and liability of the
any country other than India; or whereby operation of law for the time being in of the proceeding request a party to submit to parties determined in judicial point of view which
iv) The Government of a foreign country. force specify disputes may not be submitted to him such additional document as he deemed are binding to them. Such settlement may be
The UNCITRAL Model Law has given a wide conciliation and in such cases Part III shall not appropriate. Sec.65 is enacted on the basis of before the Arbitral tribunal but not by the court of
coverage to the term commercial which apply. That means if the law which is in Art.5 of the UNCITRAL Conciliation Rule. law.
includes but not limited to the transactions of operation declares that certain disputes are A conciliation is often held to be a
banking, financing, insurance, licencing, constructive approach to commercial dispute
not to be submitted for conciliation, the Termination of Conciliation Proceedings:
leasing, factoring, engineering, construction of which are justiciable in nature. A conciliator
provision of this Part shall not be applied. Sec.76 of the Arbitration and conciliation Act himself draws up the terms of an agreement for
works, extraction agreements, supply or provides that the conciliation proceedings
exchange of goods, agency, joint industrial or settlement after having detailed discussion with
Commencement of Conciliation shall be terminated – the parties to the dispute. Generally conciliation is
business ventures, carriage of goods or Proceedings: a) By the signing of the settlement agreement made through a conciliator or conciliation
passangers by air, rail, road or sea etc. Commencement of conciliation proceedings by the parties; on the date of the committee.
In Fateh Chand –vs- State of has been laid down in Sec.62 of the agreement; or In Part III of the Act, conciliation process has been
Maharashtra, AIR 1977 SC 1825, the Arbitration and Conciliation Act, 1962 which b) By a written declaration of the conciliator, introduced. It is provided how in a pending dispute
Supreme Court held that “any service or states that the party initiating conciliation shall after conciliation with the parties, in the conciliation proceedings may be commenced, one
activity which in modern complexities of send to the other party a written invitation to effect that further efforts at conciliation are party may initiate by its proposal to conciliate. If
business would be considered to be a conciliate under this Part briefly identifying the no longer justified, in the date of the the other party accepts the proposal the matter
lubricant for the wheels of commerce is subject of the dispute. The proceeding of declaration; or may be submitted to a conciliator. The number of
commercial”. conciliators may be one, two or three as agreed by
conciliation shall commence when the other c) By a written declaration of the parties
the parties. The conciliator may formulate the
party accepts to conciliate in written. If the addressed to the conciliator to the effect terms of a possible settlement and submit them to
Court assistance in taking evidence. other party rejects the invitation there will be that the conciliation proceedings are
Sec.27 of the Arbitration and Conciliation Act, the parties for this observation. The conciliator and
no any conciliation proceeding. Further if the terminated, on the date of the declaration; the parties shall keep the confidential all matters
1996 provides for the Court assistance in party initiating conciliation proceedings does or relating to conciliation proceedings except where
taking evidence. According to Sec.27 the not receive a reply within 30 days from the d) By a written declaration of a party tot h discloser would be essential for implementation
arbitral tribunal or the party with the approval date of sending the invitation or within such other party and the conciliator, if appointed, and enforcement of the settlement.
of the arbitral tribunal may apply to the court other period of time as specified in the to the effect that the conciliation
for evidence. The application shall specify the invitation, he may elect to treat as a rejection proceedings are terminated, on the date of
names and addresses of the parties and the of the invitation to conciliate and if he so elects the declaration. Lok Adalat:
arbitrators; the general nature of the claim and he shall inform the other party in writing. Sec.76 of the Act has been enacted in tune Lok Adalat is another alternative to the judicial
relief sought; the evidence to the obtained. justice. This is a recent strategy for delivering
Sec.63 provides for the number with Article 15 of UNCITRAL Conciliation
The court may order the evidences to be given informal, cheap and expeditious justice to the
of conciliators to be only one unless the Rules. common man. Lok Adalat may be defined as a
directly to the arbitral tribunal or it may furnish parties agree that there shall be two or three In Mysore Cements Ltd. –v- Svedala Barmac
details about processes in earlier cases of forum where effort aimed at bringing about
conciliators. Further provides that if there is Ltd. (2003) 8 CLA-BL Supp. (Srn) 1 (SC) it settlement of disputes between the parties is made
similar nature. Disregard to this order by more than one conciliators, all the conciliators was held that a memorandum of conciliation through conciliatory and pervasive efforts.
personnel in absenting themselves to attend as a general rule are ought to act jointly. proceedings that have not been legitimately The Lok Adalats have received statutory status
to the arbitral tribunal or for any other default Sec.63 is based on Art.3 of the UNCITRAL assigned the status of a ‘settlement under the enactment of the Parliament called the
in producing the relevant evidence, invites conciliation [Link].63 motivates in agreement” under Sec.73 cannot be Legal Services Authorities Act 1987. It is intended
punishment and penalties. appointing a sole conciliator for the following considered as an interim award and cannot be to secure the operation of the legal system in
It was held by Apex Court in KP reasons: enforced directly until the conciliation order to promote social justice, particularly for the
Poulose Case that non-consideration of i) He is likely to win the faith on the parties; proceedings are terminated as per Sec.76(a) weaker sections of society who, because of
material evidence by the arbitral tribunal, and ii) Scope of giving conflicting opinion and (b). economic and other disabilities, cannot afford the
making of arbitral award, amounts to unfair costs or delays involved in normal court
between the conciliators can be avoided;
arbitral proceedings and the arbitral award procedures. The decision of the Lok Adalat is
iii) It would be less expensive; binding on the parties to the dispute and its order
would be rendered invalid which is liable to be iv) It will provide speedy conciliation as
set aside. Sec.27 elaborates on the summons is capable of executing through legal process. No
meeting of conciliators is likely to cause appeal lies against the order of the Lok Adalat. It is
and commissions for the submission of delay. a boon to the litigant public, where they can get
witnesses and summon for submission of their disputes settled fast and free of cost.
documents. The main advantage of dispute
resolution through Lok Adalat is that the parties go
back as friends which is conducive to the harmony
in the society. The idea of Lok Adalat is based on,
the ancient Panchayat system where elders used
to settle the dispute in public.
Why Lok Adalat has been considered as an UNCITRAL. What role does a conciliator play in a
important Adalat? The United Nations Commission on International dispute referred to him? Q14. Distinguish between
It is because Lok Adalat is to settle Trade Law (UNCITRAL) is the core legal body arbitration and conciliation.
the disputes which are pending in the courts and within the United Nations system in the field of Role of Conciliator: Conciliation is an alternative dispute resolution
also those which have not yet reached the courts, international trade law. UNCITRAL was tasked by Sec.67 of the Arbitration and Conciliation Act, process whereby the parties to a dispute
by negotiation, conciliation and by adopting the General Assembly to further the progressive
1996 provides that – agree to utilize the services of a conciliator,
persuasive, common sense and humane approach harmonization and unification of the law of
to the problems of the disputants, with the international trade. The UNCITRAL is a body of 1) The conciliator shall assist the parties in an who then meets with the parties separately in
assistance of specially trained and experienced member and observer states under the auspices independent and impartial manner in their an attempt to resolve their differences. While
members of a team of conciliators. of the United Nations. It drafted the UCITRAL attempt to reach an amicable settlement of arbitration is the reference of dispute or
Many more cases of smaller Model law on International Commercial Arbitration their dispute. difference between not less than two parties
magnitude are being decided in the Lok Adalats in 1985. Agreements, which cite the UNCITRAL 2) The conciliator shall be guided by principles for determination after hearing both sides in a
organised in different parts of the Country. The Arbitration Rules, may be bound to this form of of objectivity, fairness and justice, giving judicial manner by a person or persons other
decision of the Lok Adalat is binding on the parties dispute resolution. Legislation based on the consideration to, among other things, the than a Court of competent jurisdiction.
to the dispute and its order is capable of execution UNCITRAL Model Law on International rights and obligations of the parties, the
through legal process. No appeal lies against the Commercial Arbitration has been enacted in many usages of the trade concerned and the Conciliation process, in and of
order of the Lok Adalat. There is no court fee. The different countries. circumstances surrounding the dispute, itself, has no legal standing, and the
procedural laws and the Evidence Act are nt The UNCITRAL Model Law has
including any previous business practices conciliator usually has no authority to seek
strictly followed while assessing the merits of the recognised that if a new legal regime is to be
claim by the Lok Adalat. So it secures the created to apply universally in the international
between the parties. evidence or call witnesses, usually writes no
operation of the legal system particularly for the commercial arbitration, the definition of the term 3) The conciliator may conduct the conciliation decision, and makes no award. Whereby
weaker sections of society who, because of ‘International” must be understood. In the Model proceedings in such a manner as he arbitration has legal status and the arbitrator
economic and other disabilities, cannot afford the Law an Arbitration is international if the following considers appropriate, taking into account call court assistance in taking evidence, award
costs or delays involved in normal court conditions are fulfilled – the circumstances of the case, the wishes is made in arbitration and it is legally binding
procedures. i) The parties to an arbitration agreement have the parties may express, including any to the parties.
at the time of conclusion of that agreement request by party that the conciliator hear Arbitration is dealt in Part I of the Arbitration
their places of business in different states; or oral statements, and the need for a speedy and Conciliation Act, 1996 where conciliation
Q2. Explain the scope of ii) One of the following places is situated settlement of the dispute. is dealt in Part III of the same Act.
Arbitration Law in India with reference to outside the state in which the parties have 4) The conciliator-may, at any stage of the The arbitration proceeding is
UNCITRAL Model Law. 10M their places of business – conciliation proceedings, make proposals provide under Chapter V of the Act starting
a. The place of arbitration if determined
Q5. State the object and reason for a settlement of the dispute, such from Sec.18 to Sec.27 that the proceeding
pursuant to the arbitration agreement.
for enacting the Arbitration and b. Any place where a substantial part of the proposals need not be in writing and need commenced immediately after a dispute is
Conciliation Act. 10M obligation of the commercial relationship is not be accompanied by a statement of the submitted for arbitration, unless agreed upon
India adopted the UNCITRAL model law as to e performed or the place where the reasons thereof. otherwise where the conciliation proceedings
well as the Conciliation Rules and enacted the subject matter of the dispute is closely The conciliator, when appointed, may request commence when a party taking initiative and
Arbitration and Conciliation Act, 1996 with connected. each party to submit a statement, setting out send invitation to conciliate after identifying
effect from 16th August, 1996. The Act as 86 iii) The parties have expressly agreed that the the general nature of the dispute and the the dispute and the other party accepts the
sections besides the preamble and there are 3 subject matter of arbitration agreement points at issue. Copy is to be given to the invitation under Sec.62 of the Act.
Schedules . it is divided into 4 Parts in which relates to more than one country. other party. If necessary, the parties may be
Part I provides general provision on arbitration asked to submit further written statement and What are the ingredients of an
Part II provides the enforcement of certain other evidence. The conciliator shall assist the
foreign awards Part II deals with Conciliation Q8. Discuss the jurisdiction of
parties in an independent and impartial Arbitral Award?
arbitral tribunal. What interim relief can be
and Part IV supplementary provisions. The granted by arbitral tribunal? 10M
manner, in their attempt to reach an amicable Ans: According to Sec.31 of
object of the Act is reflected in the Preamble settlement. The conciliator is to be guided by the Arbitration Act, 1996 the
and the 3 Schedules are the model text of the the principled of objectivity, fairness and
Geneva Convention on the execution of
Chapter IV of the Arbitration and Conciliation Act,
justice. He enjoys considerable freedom in following are the ingredients of an
1996 deals with the jurisdiction of arbitral tribunals.
foreign award 1927, The Geneva Protocol on Sec.16 of the Act clearly emphasizes that the conducting the conciliation proceedings in any Arbitral Award:
Arbitration Clause 1923, the New York arbitral tribunal may rule on its own jurisdiction manner he considers proper and appropriate. i) The award must be in writing
Convention on recognition and enforcement of even with regards to any objection raised on the He may even agree to the wishes of the
foreign arbitral award 1958. validity of the arbitration clause, a part of the parties for hearing oral statements. The and signed by the members of
The UNCITRAL model law and agreement is treated as an independent contract paramount consideration is the need for the Arbitral Tribunal;
of its own. A decision by the arbitral tribunal that
the Conciliation Rules are intended to deal
the contract itself is null and void does not render
speedy settlement of the dispute through ii) It must state the reasons for
with international Arbitration and Commercial conciliatory measures.
Conciliation. The model law as well as the
the arbitration clause as invalid a plea that the the award unless the parties
arbitral tribunal does not have jurisdiction cannot
rules could served for legislation on domestic be raised later than after submitting the statement
have agreed that no reason for
as well as international arbitration and of defence and this plea should be submitted as the award is to be given;
conciliation with appropriate modification. The soon as the matter alleged to be beyond the scope Q20. Settlement of dispute.
man object of the model law may be of its authority is raised in the arbitral proceedings. Under Sec.72 of the Arbitration and iii) The award should be dated
categorised as under – In Wellington Associates Ltd. case, Conciliation Act, 1996 enacted in tune with and place where it is made
i) To comprehensively cover international AIR 2000 SCW 1165 Article 12 of UNCITRAL Conciliation Rules, a should be mentioned; etc.
and commercial arbitration and party may submit to the conciliator his own
conciliation as well as domestic Hon’ble Supreme Court held that Sec.16 of the suggestions to the settlement of a dispute. He
arbitration and conciliation. new Act is an enabling provision. It empowers the at his own initiative or on the conciliator’s
ii) To enable to provide and arbitral Arbitration Tribunal to decide upon the questions request may submit such suggestion.
relating to the existence of Arbitration Agreement Under Sec.73 of the Act, fi the
procedure which is fair, efficient and
and hence removes the disability, which once
capable of meeting the needs of the conciliator finds that there exist elements of a
existed. Section uses the word ‘may’ which
specific arbitration. indicates that it does not give an exclusive power
settlement, which may be acceptable to the
iii) The arbitral tribunal must give reasons to the arbitration tribunal to decide upon such parties, and then he shall formulate the terms
for reaching to the arbitral award. questions. The Chief Justice can also decide upon of a possible settlement and submit the same
iv) To ensure that the arbitral tribunal such questions if it is raised by the respondent in to the parties for their observation. On receipt
exercises its function within the limits of reply to the petition filed for the appointment of an of the observations of the parties, the
its jurisdiction. Arbitrator under Sec.11. conciliator may re-formulate the terms of a
v) To minimise the supervisory role of the possible settlement in the light of such
Court in arbitral process. observation. If ultimately a settlement is
vi) To permit an arbitral tribunal to apply the Interim measures ordered by arbitral tribunal: reached, then the parties may draw and sign a
method of mediation, conciliation or Sec.17 of the Act provides that – written settlement agreement. At their request,
(1) Unless otherwise agreed by the parties, the the conciliator can help them in drawing up
other procedures during the arbitral
arbitral tribunal may, at the request of a party,
proceedings and to encourage the same. The settlement agreement signed
order a party to take any interim measure of
settlement of disputes. protection as the arbitral tribunal may consider by the parties shall be binding on the parties.
vii) To ensure that the final arbitral award is necessary in respect of the subject matter of the The agreement is to be authenticated by the
enforced in the same manner as if it was dispute. conciliator.
a decree passed by the Court. (2)The arbitral tribunal may require a party to According to Sec.74 of the same Act, the
viii) A settlement agreement reached by the provide appropriate security in connection with a settlement agreement has the same status
parties as a result of conciliation measure ordered under sub-section(1) and effect as if it were an arbitral award
proceedings will have the same status Sec.17 empowers the arbitral rendered by the arbitral tribunal on agreed
and be effective as an arbitral award on tribunal or order interim measures for the terms.
the agreed terms. protection of the subject-matter of the dispute and
also provides for appropriate security in respect of
ix) For the purpose of enforcement of
such a measure.
foreign award, every arbitral award made Under this section the arbitrator can
in a county to which one of the two issue an order to stop a party from doing a
international conventions relating to particular thing for the protection of the subject-
foreign arbitral award to which India is matter of the dispute under reference. Though
the party will be treated as the foreign such orders are in the nature of ‘injunction’, but the
award. use of the word ‘injunction’ in arbitral proceedings
The Act of 1996 is very different from the Act is deliberately avoided since the expression
of 1940. The provision of Arbitration Act, 1996 ‘injunction’ exclusively pertains to the domain of
is to be interpreted and construed the court.
independently and without referring to 1940 The order for interim measures made by arbitral
Act to avoid misconstruction. tribunal under this Section is appealable under
Sec.37 of the Act.
In order to get help in construing
It is significant to note that the
the provision of 1996 Act, it would be more Arbitration and Conciliation Act, 1996 has not
appropriate and relevant to refer the United provided for any mechanism for execution of order
Commission on International Trade law which made by the arbitral tribunal under Sec.17, neither
adopted the model law on International in the section itself nor in any other section of the
Commercial Arbitration which was held in Act. Perhaps, this is a serious lacuna which has
Sundaram Finance Ltd –vs- NEPC India Ltd. escaped attention of framers of the new Act.
AIR 1999 SC 565. In Larsen and Toubro Ltd Case AIR
1996 SC 334 it was decided that since the
warranty period had expired the Bank Guarantees
therefore could not be enchased.
The Supreme Court in the case of
UP Coop Federation Case (2009) 10 SCC 374
has held that courts are in fact entitled to impose
interests on the costs which are awarded.