ADR

MEANING AND NATURE OF ADR

 Alternative Dispute Resolution (ADR) refers to any means of setting disputes outside of the Court
Room.
 Alternative Dispute Resolution (ADR) refers to a variety of processes that help parties to resolve
disputes without a trial.

Definition
The process by which disputes between the parties are settled or brought to an amicable result without the
intervention of Judicial Institution and without any trail is known as Alternative Dispute Resolution
(ADR.

 ADR offers to resolve all type of matters including civil, commercial, industrial and family etc.,
where people are not being able to start any type of negotiation and reach the settlement.
 Generally, ADR uses neutral third party who helps the parties to communicate, discuss the
differences and resolve the dispute.
 It is a method which enables individuals and group to maintain co-operation, social order and
provides opportunity to reduce hostility.

Advantages of Alternative Dispute Resolution

 Less Time Consuming: people resolve their dispute in short period as compared to courts
 Cost effective method: it saves lot of money if one undergoes in litigation process.
 It is free from technicalities of courts; here informal ways are applied in resolving dispute.
 People are free to express themselves without any fear of court of law. They can reveal the true
facts without disclosing it to any court.
 Efficient way: there are always chances of restoring relationship back as parties discuss their
issues together on the same platform.
 It prevents further conflict and maintains good relationship between the parties.
 It preserves the best interest of the parties.

Section 89 of Civil Procedure Code, 1908, provides for Conciliation, Arbitration, Mediation or Lok
Adalat as alternative dispute resolution mechanisms in the instance when it appears to the court that
the dispute can be solved by usage of given techniques.

Types of ADR
1. Arbitration ----------- in India is governed by The Arbitration and Conciliation Act, 1996.

 The dispute is submitted to an arbitral tribunal which makes a decision (an "award") on the
dispute that is mostly binding on the parties.
 It is less formal than a trial, and the rules of evidence are often relaxed.
 Generally, there is no right to appeal an arbitrator's decision.
 Except for some interim measures, there is very little scope for judicial intervention in the
arbitration process.
Arbitration in India is governed by The Arbitration and Conciliation Act, 1996. It is a form of dispute
resolution where one or more parties are appointed to adjudicate the dispute. They act as third parties.
This third party should be neutral and this party is referred to as an ’arbitrator’ while the decision of
the arbitrator, which is essentially a determination of merits in the case, is known as ‘arbitration
award’.
Arbitral decisions are final and binding on the parties, who have limited scope of objecting to the
decisions.
Non-binding arbitrations also exist wherein the party can request a trial if it is not satisfied with the
arbitrator’s decision.

Main Types of arbitral proceedings

Ad Hoc Arbitration (10-15)

Under ad hoc arbitration, the parties involved in the dispute determine the conduct of the arbitration
proceedings themselves, without going to an arbitral institution. In case if the parties are not able
to settle on one arbitrator, or one of the parties is reluctant to appoint that particular arbitrator,
then Section 11 of The Arbitration and Conciliation Act 1996 will be invoked by the other party.

Under Section 11 of the Act, the arbitrator for that dispute will be appointed by either the Chief
Justice of the Supreme Court or his designate or the Chief Justice of the High Court or his
designate.

 If it is a domestic arbitration, then the Chief Justice of the High Court or his designate
will appoint the arbitrator.
 If it is international commercial arbitration, then the Chief Justice of India or his
designate will appoint the arbitrator. In ad hoc arbitration, the fee of the arbitrator is
decided mutually by the parties and the arbitrator.

Institutional Arbitration (22-25)

In this kind of arbitration, the parties decide in the agreement itself, that an arbitration institution
will administer the arbitration.

The Indian institutions are International Centre for Alternative Dispute Resolution and the Indian
Council of Arbitration. These institutions formulate the rules for arbitration owing to their
experience in observing arbitral procedures and situations, therefore they are prepared for all
possible situations that may arise in future arbitration cases.
2. Conciliation

 A non-binding procedure in which an impartial third party, the conciliator, assists the parties to a
dispute in reaching a mutually satisfactory agreed settlement of the dispute.
 Conciliation is a less formal form of arbitration.
 The parties are free to accept or reject the recommendations of the conciliator.
 However, if both parties accept the settlement document drawn by the conciliator, it shall be final
and binding on both.
 A neutral third party called a conciliator is appointed who assists the conflicting parties in resolving
their disputes in an amicable manner.
 The process of conciliation initiates when the party opting for it sends a formal invitation to another
party. On acceptance of the invitation (in writing), the proceeding commences. However, if the
party rejects the invitation, it will result in the commencement of no such proceedings.
 Conciliation is also governed in India under The Arbitration and Conciliation
Act, 1996. Under Section 61, conciliation is provided for disputes arising
out of legal relationships, whether they are contractual or not. Mediation

 In mediation, an impartial person called a "Mediator" helps the parties try to reach a mutually
acceptable resolution of the dispute.
 The mediator does not decide the dispute but helps the parties communicate so they can try to
settle the dispute themselves.
 Mediation leaves control of the outcome with the parties.
In mediation, a neutral third party called a mediator is involved. The mediator assists two or
more conflicting parties in resolving their disputes amicably and reaching a common agreement.
He takes into consideration issues of both parties and advises accordingly. However, this
mechanism is entirely controlled by the parties. This, the role of the mediator is only limited to
express his views and not impose or direct on the parties.

The procedure of mediation functions in the following manner:

 1) Opening statement
 2) Joint session
 3) Separate session
 4) Closing

Difference between mediation and conciliation

In mediation, the mediator plays a more active role in the process by proposing compromise
solutions after hearing all parties while in the case of conciliation, the conciliator has to bring the
parties into such a state of mind as to facilitate the parties to come to an acceptable compromise .
Negotiation

 A non-binding procedure in which discussions between the parties are initiated without the
intervention of any third party with the object of arriving at a negotiated settlement to the dispute.

The parties may choose to be represented by their attorneys during their negotiations. Negotiation
is not statutorily recognized in India. There are no set rules for conducting a negotiation.

Essentials of negotiation-

 It is a process of communication which helps to resolve conflicts.

 It can be entered into voluntarily and its outcome is non-binding.
 The parties are benefitted here as they have control over the outcome and procedure and
the process is carried out keeping their interests in mind.

It is the most common method of Alternative Dispute Resolution.

Lok Adalat
Popularly known as People’s Court, Lok adalat consists of retired judicial officers, members of legal
fraternity, social activists and others. The crucial role played in expanding the functioning of Lok adalat is
that of National Legal Services Authority (NALSA) along with other legal institutions.

 The Legal Services Authorities Act was passed in 1987 to encourage out-of-court settlements, and
 The new Arbitration and Conciliation Act was enacted in 1996.
 The order of the Lok-Adalat is final and shall be deemed to be a decree of a civil court and shall
be binding on the parties to the dispute.
 The order of the Lok-Adalat is not appealable in a court of law

Lok Adalats are governed under The Legal Services Authorities Act, 1987.

Sections 19, 20, 21 and 22 specifically deal with Lok Adalats.

The aim of The Legal Services Authorities Act was to provide access to justice for all, whether he be poor
or rich. This access has been further strengthened by judgements of various courts,

such as the Delhi High Court, in the case of Abul Hasan and National Legal Service Authority v. Delhi
Vidyut Board & Ors. AIR 1999 Del 88, where it gave an order for setting up permanent Lok Adalat.
Further, the decision given by the Lok Adalat is binding and shall be treated akin to the order of a civil
court. Thereby increasing poor people’s access to justice.
 LEGAL SERVICE AUTHORITIES ACT, 1987
The Legal Services Authority Act, of 1987 came into effect on 9th November 1995, following the
Amendment Act of 1994.
According to this Act, the economically weak, the backward, and the disabled are eligible to receive legal
aid. In 1971, Justice [Link] introduced the legal aid scheme, which was overseen by the Legal
Aid Committee. On 5th December 1995, the National Legal Services Authority was established by Justice
R.N. Mishra, which was an important contribution to the implementation of the Act.
There are different levels of legal aid, including provisions for legal assistance to illiterate, poor, and
physically challenged individuals who are unable to access the courts due to their ignorance of the law or
financial limitations. Anyone who qualifies for legal aid under Section 12 of the Act, may obtain legal
assistance under the Act.
Types of services under Legal Services Authority Act
1. Free legal awareness
This Act is primarily intended for the public to make them aware of laws and schemes issued by public
authorities. The Legal Service Authority teaches some portions of the rules of law to the individuals.
Legal camps and legal aid centres are organized by authorities so that the general public can seek advice
from the legal aid centres located near their homes or places of work.

2. Free legal aid counsel

A person who wants to defend or file a case in a court of law but does not have the means to hire an
advocate can seek the assistance of a free legal aid attorney. The Act states that free legal aid counsel is
available, and the Council is responsible for assisting needy individuals to obtain justice. By adopting and
establishing this philosophy, the Indian Courts should be freed from the burden of adjudicating the cases.

A Lok Adalat was held for the first time in Gujarat on 14th March 1982 and succeeded in resolving many
disputes pertaining to labour disputes, family disputes, and bank recoveries. Lok Adalats are the primary
method by which the legal services authorities decide disputes.

Structural Organization under Legal Services Authority Act

1. NALSA------In response to Section 4 of the Act, NALSA has been established to provide free legal aid
to all citizens of the country. Established by the government. Headed by the Chief Justice of India, patron-
in-chief. The executive chairman of the organisation is a retired or serving judge of the Supreme Court of
India. -------- A significant objective of the NALSA is to ensure that justice is equally distributed among
citizens, regardless of economic or other factors. The main responsibilities of NALSA are the following:

 Through legal aid camps, the organization promotes legal aid in slums, rural and labour
colonies, as well as disadvantaged areas. It plays an important role in providing education
about the rights and needs of the people who live in such areas. Lok Adalats are also formed
by the authority to settle disputes between these people.
 Amongst other things, it is primarily concerned with providing legal services through clinics
in law colleges, universities, etc.
  Arbitration, mediation, and conciliation are all methods that are used by these organizations to
settle disputes.
 The organisation provides grant aid to institutions that provide social services at the grassroots
level to marginalised communities from various parts of the country.
 Research activities are also conducted to improve legal services for the poor.

CASE LAW---------- NALSA v. Union of India (2014) -- (NALSA) filed this case to recognize those
who are outside the binary gender distinction, including individuals who identify as “third gender”. There
was a question that the Court had to address regarding the recognition of people who do not fit into the
male/female binary as “third gender” individuals.

SLSA--------Each state has a legal service authority, which provides free legal advice to those who cannot
afford it. This is covered under Section 6 of the Act. They provide preventative and strategic legal
assistance programs. Lok Adalat sessions are also conducted by the authorities to assist clients. Among
their main duties is to implement the policies and schemes as directed by NALSA. The respective High
Court’s chief justices serve as patrons-in-chief. These bodies are supervised by an executive chairman
who is a retired or serving judge. A high court legal service committee is usually formed by the state
authority. This body is headed by a sitting High Court judge, who is the chairman and is administered by
the Chief Justice of the respective High Court.

LEGAL AID------- under Legal Services Authority Act, 1987

In 1971, Justice P.N. Bhagwati formed the Legal Aid Committee to introduce the Legal Aid scheme. In
his opinion, the legal aid system is aimed at making the missionary of administration of justice easily
available to the people able to enforce their legal rights. The poor and the illiterate will be able to
approach the courts and as a result, they will get justice faster from the courts.

According to---- Article 39A of the Indian Constitution, ---- duty of the State to ensure that the legal
system operates on the basis of equality, it must ensure the provision of free legal aid to ensure that
citizens of every economic category have access to justice. ------Articles 14 and 22(1) make it mandatory
for the State to ensure equality under the law and a legal system that promotes justice from an equal
opportunity standpoint. --------It is the aim of legal aid to ensure that the law is enforced in its letter and
spirit, and equally just treatment is provided to the weakest, poorest, and most downtrodden sections of
society.

Eligibility criteria for free legal aid

The following are the people eligible for free legal aid under Section 12 of the Act:

 a member of a Scheduled Caste or Scheduled Tribe;

 a victim of trafficking in human beings or beggars as referred to in Article 23 of the
Constitution;
  a woman or a child;
 a person with a disability as defined in Section 2(i) of the Persons with Disabilities (Equal
Opportunities, Protection of Rights and Full Participation) Act, 1995;
 a person under circumstances of undeserved want such as being a victim of a mass disaster,
ethnic violence, caste atrocity, flood, drought, earthquake or industrial disaster; or
 an industrial workman; or
 in custody, including custody in a protective home within the meaning of Section 2(g) of
the Immoral Traffic (Prevention) Act, 1956 or in a juvenile home within the meaning of
Section 2(j) of the Juvenile Justice Act, 1986 or in a psychiatric hospital or psychiatric nursing
home within the meaning of Section 2(g) of the Mental Health Act, 1987; or
 in receipt of annual income less than rupees nine thousand or such other higher amount as
may be prescribed by the State Government, if the case is before a court other than the
Supreme Court, and less than rupees twelve thousand or such other higher amount as may be
prescribed by the Central Government, if the case is before the Supreme Court.

LOK ADALAT-------under Legal Services Authority Act, 1987

Section 19 of the Act provides for the establishment of Lok Adalats. Legal service authorities at all levels,
including the central, state, and district levels, shall hold Lok Adalats. Lok Adalats serve as –ADR sytem.
It consists of judicial officers or an authorized person under the jurisdiction of the state, central
government, or local government.

Award of Lok Adalat (Section-21)

The Award of the lok adalat is treated same as the decree of civil court.

According to the case of B.P. Moideen Sevamandir and others v. AM Kutty Hassan (2008), the parties can
communicate directly through their attorneys, which is far more convenient than speaking in a regular
courtroom. Because Lok Adalats are dynamic, they are able to balance the interests of both parties and
pass orders that both sides find acceptable.

Functions of Lok Adalat

 Lok Adalat members should be impartial and fair to the parties.

 Lok Adalat is responsible for handling pending cases in court. In the case of a Lok Adalat
settlement, the court fee paid to the court on the petition will be reimbursed
 When filing a dispute with Lok Adalat, you do not have to pay a court fee.
TYPES------of Lok Adalat

National level Lok Adalat ----NALSA

The Lok Adalat held at the national level is held regularly throughout the country at the Supreme Court
level and taluk level, where thousands of cases are disposed of. Every month a different topic is discussed
in this Adalat.

Permanent Lok Adalat

The body is governed by Section 22B of the Act. There is a mandatory pre-litigation mechanism in
Permanent Lok Adalat that settles disputes concerning----- public utilities--- such as transport, telegraph,
postal service, etc. -----As a result of the case Abdul Hasan and National Legal Services Authority v.
Delhi Vidyut Board and other (1999), the courts directed that permanent Lok Adalats be established.

Permanent Lok Adalats are charged with resolving public utility disputes quickly. Therefore, if parties
neglect to show up at the settlement or compromise, then it has a further advantage of choosing the
dispute based on merit. In this way, the possibility of postponement in the resolution of questions is
eliminated. Rather than following the formal procedure for resolving disputes, it is bound to follow the
principle of natural justice in order to save time.

Establishment of the Permanent Lok Adalat is fundamental to settling disputes with public utility
administrations in a quick and amicable manner. The awards of the Permanent Lok Adalat made under
this Act are conclusive and binding. ------In case the Permanent Lok Adalat makes an award, that award
will be communicated to a civil court having nearby jurisdiction, which will then execute the order as if it
were a decree made by the particular court.

Mobile Lok Adalat

Mobile Lok Adalat is a method of settling disputes that travels from place to place. Over 15.14 lakh Lok
Adalats have been held in the country as of 30th September 2015, and over 8.25 crore cases have been
settled.

Mega Lok Adalat

The Mega Lok Adalat is an ad hoc body that is constituted at the state level on a single day in all courts.

Daily Lok Adalat

On a daily basis, these Lok Adalats are held.

Continuous Lok Adalat

It is held continuously for a specific number of days.

JURISDICTION ---of Lok Adalats

Lok Adalats fall under the jurisdiction of the courts which organize them, thus, they cover any cases
heard by that Court under its jurisdiction. This jurisdiction does not apply to cases regarding offences
which are not compoundable by law and the Lok Adalats cannot resolve these cases.

The respective courts may accept cases presented to them by parties concurring that the dispute should be
referred to the Lok Adalat. The Courts may accept such cases in situations where one party makes an
application to the court for the referral of the case to the Lok Adalat and the court might consider that
there is a possibility of compromise through the Act.

Major limitations under Legal Services Authority Act

Section 3

The National Legal Services Authority --- established under Section 3 of Act. The organization chart of
the body reveals, that the members are all already overcharged with the assigned duties of their primary
work; therefore, a light modification of Section 3 is needed. As the government builds up the National
Legal Services Authority, it should emphasize the importance of recruiting young legal professionals who
do not hold other legal positions so they can devote as much time to the purpose of the Act as possible.

Section 3-A of Act, there is a requirement that the chairman of the Supreme Court Legal Services
Committee shall be a judge of the Supreme Court. Now, respective judge is already overburdened with
his entrusted duties of day-to-day litigation. Therefore, if Section 3-A of the Act is to be implemented
properly, then it will be essential to amend this section.

Section 6

A State Legal Services Authority is established by Section 6 of Act. Although the organization of the
body appears to be fairly straightforward at first glance, a closer look at it reveals that each of the
members is to a certain extent occupied with duties outside the body, and therefore, a minor alteration of
Section 6 is required. It is important for the government to emphasize when establishing the State Legal
Services Authority that it will be recruiting young qualified legal professionals who have the zeal to work
in the field with utmost devotion to achieve the core objective stated in the Act.
Difference between Lok Adalat and Permanent Lok Adalat

No Permanent Lok Adalat Lok Adalat

1. Permanent Lok-Adalat is Lok-Adalat is temporary in nature.

Permanent, It is permanent in
nature.
Any Party to a dispute may
2. make an application to the In Lok-Adalat, there is no such
Permanent Lok-Adalat for Condition like Permanent Adalat.
settlement of the dispute before
the dispute is brought before
any Court.

3. Permanent Adalat has A Lok-Adalat has Jurisdiction to

jurisdiction in respect of one or determine and arrive at a
more public utility services as compromise or settlement between
defined in clause (b) of Section the Parties to a dispute in respect of
22A. [Legal services Authority –
(Amendment) Act, 2002]
[Link] case pending before ; or
2. Any matter which is falling within
the Jurisdiction of and is not brought
before, any court for which the lok-
Adalat is organized. However, The
Lok-Adalat has no Jurisdiction in
respect of any case relating to an
offence which is not compoundable
under any law.

4. Jurisdiction of Permanent Lok- In case of the Lok-Adalat there is no

Adalat is limited to the matter such limitation .
where the value of the Property
in dispute does not exceed ten
lakh rupees. This limit may be
increased by the central
Government in consultation with
the Central Authority.
 UNIT 2 ----- Arbitration and Conciliation Act, 1996

Objectives:

 Cover international and domestic commercial arbitration and conciliation comprehensively.

 Make a procedure which is fair, efficient and capable of meeting the needs of the society for
arbitration and conciliation.
 Provides reasons by the tribunal for granting any arbitral award.
 Ensure that the tribunal does not exercise its jurisdiction beyond the limits.
 Minimise the role of courts and reduce the burden on the judiciary.
 It permits the tribunal to opt for arbitration and conciliation as a method of dispute
settlement.
 It makes sure that every award is enforced in the same manner as the decree of the court.
 It provides that the conciliation agreement reached by the parties has the same effect as the
award granted by an arbitral tribunal.
 It also works on the enforcement of foreign awards.

Definitions under the Arbitration and Conciliation Act, 1996

Section 2 of the Act gives various definitions of some important terms given in the Act. These are:

1. Arbitration – Section 2 (1)(a) of the Act defines arbitration as to any arbitration which is either
administered or not by a permanent arbitral institution.
2. Arbitration agreement – Section 2(1)(b) of the Act says that for arbitration agreement Section
7 of the Act must be referred.
3. Arbitral award – this has not been defined clearly in Section 2(1)(c) but mentions that it
includes interim award.
4. Arbitral tribunal – it means a sole arbitrator or panel of arbitrators who help in arbitration.
(Section 2(1)(d))
5. Courts – Section 2(1)(e) defines courts. It includes civil courts having original jurisdiction in a
district and the High Court having jurisdiction to decide issues related to the subject matter of
the arbitration.
ARBITRATION -- It is defined under Section 2 (1)(a) of the Act. It is an alternative to litigation in
courts and is advantageous as it provides flexibility and confidentiality. According to Black Law
Dictionary, it means a method of resolving disputes which includes two parties and a neutral third party
whose decision is binding on both parties.

Section 8 of the Arbitration and Conciliation Act, 1996 deals with the power of the judicial authority to
refer the parties to arbitration. The crux of the provision is that if there is an arbitration agreement
between the parties and a dispute arises between the parties which is a subject matter of arbitration, then
the judicial authority before whom either of the parties has brought the case is obligated under Section 8
of the Arbitration and Conciliation Act, 1996 to direct the parties to resolve their dispute through
arbitration.

Section 8 ----- talks about the powers of any judicial authority to refer a case to arbitration. It must be
followed by an arbitration agreement. SC in case P. Anand Gajapati Raju v. P.V.G Raju (2000) gave
certain requirements necessary for referring parties to arbitration:

 An arbitration agreement must be there.

 A party must bring an action in court against others.
 The subject matter must be the same as in arbitration.
 One party demands arbitration in court.

Essential ingredients of Section 8 of Arbitration and Conciliation Act,1996

By the plain reading of the Section, it can be inferred that the following are the essential ingredients of it-

1. There should be a valid arbitration agreement between the parties.

2. Action should be brought before the judicial authority and that action should be a subject
matter of the arbitration.
3. Either of the parties or any person related to the dispute should invoke the arbitration clause or
agreement before the date of submitting their first statement on the substance of the dispute
before the judicial authority.
4. The application of the party to refer the case to arbitration should be filed with the original
arbitration agreement or its duly certified copy.

Types of Arbitration

1. Domestic arbitration – It means that the proceedings of arbitration will take place as per
Indian laws and be subject to Indian jurisdiction.
2. International and commercial arbitration – This is done in cases involving disputes out of
a legal relationship where one of the parties is a foreign national, body corporated in some
other country, a company or group which is under the control of some other country and
government of a foreign country.
 3. Institutional arbitration – It is administered by arbitration institutions like the Indian
Council of Arbitration, the International Centre for Alternative Dispute Resolution (ICADR)
etc.
4. Statutory arbitration – some acts provide for the resolution of disputes by arbitration. In
case there is any inconsistency between any Act and Part I of the Arbitration Act then the
provisions given in that Act will prevail.
5. Ad hoc arbitration – It means an arbitration where parties agree without any assistance from
the Arbitral tribunal.
6. Fast track arbitration – It is also called documentary arbitration. The arbitration proceedings
are very fast and time-saving. It is solely based on the claim statement by one party and its
written reply by another.
7. Look–sniff arbitration – It is a combination of an arbitral process and the opinion of an
expert. There are no formal submissions and hearings under this.
8. Flip–flop arbitration – It is also called pendulum arbitration. The parties in this type of
arbitration create the cases before and then invite the arbitrator to decide any one of the two
options.

SECTION 10 -----enables the parties to determine freely the number of arbitrators to settle their dispute.
The only restriction is that the number of such arbitrators must not be even. If the parties are not able to
decide then there will be only 1 arbitrator. But if there are even number of arbitrators then the agreement
cannot be held invalid merely on this ground.
(Narayan Prasad Lohia v. Nikunj Kumar Lohia, 2002)

SECTION 11----- provides the procedure for the appointment of arbitrators. The valid requirements for
any such appointment are:

 Party must give proper notice of appointment to the other party. If it does not do so, the
appointment is held invalid.
 A person appointed as an arbitrator must be duly informed and his consent must be taken.
 The consent must be obtained before finalising his appointment.
It also says that if the parties fail to appoint an arbitrator within 30 days of the request or if two arbitrators
are appointed and not the third one, then the appointment will be made by Chief Justice or any person on
his behalf designated by him but with the prior request of the parties.

CASE --- Oriental Insurance Company v. Narbhem power and steel

SECTION 12 ----- “every person who has been contacted by the parties to select an arbitrator
shall report in writing, expressly or indirectly, all the particulars of the past or current
relationship with the parties, the lawyer or the subject-matter concerned and also the result of the
arbitration, which could be financial, professional, commercial or some other kind likely to give
rise to justifiable concerns as to impartiality and freedom, which may also contribute to the
failure to commit adequate time to the arbitration and to the willingness of the arbitrator to
operate and to give the parties a verdict within 12 months”.

HRD Corporation [Link] (India) Ltd, 2017

Facts of the Case:

The respondent company entered into a contract with the petitioner Company on 1 April 1999
(the Agreement) for the supply of wax manufactured at the GAIL plant for a term of 20 years.
A similar conflict occurred between the parties on different occasions and, as a result, HRD
invoked the arbitration clause of the Deal at various times. In total, four different arbitrations
have taken place. However, Supreme Court has concentrated on the fourth arbitration. Below
are the grounds on which the appointment of the arbitrator was challenged:
a) Items 20 and 22 of the Fifth Schedule to the Act were applicable in this particular case
hence, it gave rise to justifiable doubts as to the arbitrator’s independence and
impartiality.
b) Items 1, 8, and 15 of the Seventh Schedule to the Act were also applicable in this case
and hence its makes the arbitrator ineligible to work in the arbitration proceedings.
Judgement of the Court:
The Supreme Court ruled that if a person comes under the category of Schedule Seven, that
person is ineligible to conduct an arbitration process.
On the other side, if the disclosure falls within the limits of the Fifth Schedule and gives rise to
justifiable suspicions, the impartiality and integrity of the arbitrator can be questioned before the
Arbitral Tribunal pursuant to Section 13 of the Act.
Termination of arbitrator – S. 14 -15
The grounds for termination are given under Section 14 and Section 15 of the Act. These are:

 If he is not able to perform his functions without undue delay (whether de jure or de facto),
 If he withdraws or is terminated by the parties,
 He shall be terminated where he withdraws himself or by agreement of the parties.
 On his termination, a substitute arbitrator will be appointed as per Section 15.
Jurisdiction

SECTION 16------- provides that the tribunal will act in its jurisdiction. If the arbitral tribunal has no
jurisdiction then a plea will be raised but not later than when the statement of defence is submitted. It also
provides that in case a party is not satisfied with the arbitral award, it can make an application to set it
aside according to Section 34 of the Act.

The Supreme Court in the case of Centrotrade Minerals and Metals v. Hindustan Copper Ltd. (2006),
held that any issue related to the jurisdiction can be raised by people in the proceedings or anyone from
outside. But if it is made by the party then it must be done during the proceedings or at the initial stage.

Arbitral award

It is a final determination of a claim or a part of it or a counter-claim awarded by the arbitral tribunal. It

must be written and duly signed by the members of the arbitral tribunal as given under Section 31 of the
Act. The Section further gives the power to the tribunal to make interim awards for any matter. In case of
payment of money, it can award the interest which seems reasonable, just and fair to the tribunal.

Section 32 - empowers the arbitral tribunal to terminate the proceedings by making a final arbitral award.
The procedure for any correction in the award or its interpretation is given under Section 33 of the Act.

It also gives the power to the tribunal or the arbitrator to amend, correct or remove any errors of any kind
within 30 days but is silent on judicial review. The tribunals cannot exercise their jurisdiction beyond
whatever has been mentioned in this section.