Arbitration Law
Frequently Asked Questions on Arbitration Law(i) Puga
(ii) Sreni
(iii) Kula.
Disputes of civil or sometimes even of criminal nature were referred to "Panch" upon complaint. Oral or written complaint of one party, and which was sufficient to initiate proceedings before "Panchayat", other party used to be called by Panchayat and given opportunity to submit its version of dispute and thereafter `Panchs' after consultation with each other used to give decision of "Panchayat". Decision of "kula" could be revised by "Sreni" and whose decision was revisable by "Puga" and decision of `Puga' was appealable to "Prangviveka" and then finally to king. While observing the importance of this system, Marten, Chief Justice has observed in a decision AIR 1927 Bom. 565 (FB) :"It (Arbitration) is indeed a striking feature of ordinary Indian life and I would go further and say that it prevails in all ranks of life.........."
British rulers of India found such dispute settlement by person on one's own choice to be useful because of its' advantage of quickness of decisions, acceptability and simplicity of procedure. First attempt of codifying the law of Arbitration was made by Bengal Regulations 1772 and 1780. The Bengal Regulation Act, 1772 provided that in all cases of disputed accounts and other matters, it should be recommended to the parties to submit their cause to arbitration for decision and the award of the arbitration shall become a decree of the Court. Rules for arbitration were provided. Several Regulations of Bengal, Bombay and Madras developed the scope of arbitration. These were the Bengal Regulations of 1772, 1780, 1781, 1795, 1813 and 1814, Bombay Regulation of 1827, Madras Regulations V and VII of 1816. These regulations remained in force till the enactment of the Civil Procedure Code, 1859 which extended by the Presidency Town in 1862. The Bombay Regulations were repealed by Act X of 1861 and the Madras Regulations were revealed by Act VII of 1870. The Bengal Regulation of 1781 imported the idea that a panchayat was a tribunal of the parties own choice and as such in the absence of misconduct, decisions of the panchayats were binding on the parties. It was open to the parties to challenge the award as resulted by misconduct, corruption or partiality or prejudice, ill will and the like. Regulation of 1787 empowered the Courts to refer certain suits to arbitration with the consent of the parties where the value of the suit did not exceed Rs. 200/- and the suits were for accounts, partnership, debts, non-performance of contracts etc. In 1834, the Legislative Council for India was constituted and Act VIII of 1859, the first Code of Civil procedure for India, was enacted in 1859 and Chapter VI of the Code contained provisions relating to arbitration. The Code, however, was not applicable to the Supreme Court, or the Presidency Small Cause Courts or non-regulation provinces. The Act was repealed and consolidated by the Civil Procedure Code of 1877; but the provisions relating to arbitration remained unchanged. Act XIV of 1882 revising the Code did not touch the provisions. The arbitration provisions so far provided for arbitration of disputes after they had arisen. There was no provision for reference to arbitration of future disputes. To remedy this, "Indian Arbitration Act 1899" was enacted basing on the English Arbitration Act 1889. The Arbitration Act, 1899 was extended only to Presidency Towns and to such areas to which it might be extended by the appropriate Provincial Government. Its scope was contained to arbitration and by agreement without intervention of Court. The second Schedule to the Code of Civil Procedure was made applicable outside the scope of Arbitration Act, 1899. Then Arbitration Act, 1940 consolidated the law on arbitration repealing the former laws aforesaid on arbitration. Ultimately due to the United Nations Commission on International Trade Law (UNCITRAL) having adapted thee UNCITRAL Model Law on International Commercial Arbitration in 1985, the Arbitration and Conciliation Ordinance, 1906 was promulgated. After six months this ordinance lapsed and a new ordinance was promulgated to revive the prior Ordinance of 1996. Ultimately the Arbitration and Conciliation Act, 1966, was passed by the Parliament which was extended to the whole of India subject to certain limitations for the State of Jammu and Kashmir.(i) to comprehensively cover international and commercial arbitration and conciliation as also domestic arbitration and conciliation;
(ii) to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration;
(iii) to provide that the arbitral tribunal gives reasons for its arbitral award;
(iv) to ensure that the arbitral tribunal remains within the limits of its jurisdiction;
(v) to minimise the supervisory role of courts in the arbitral process;
(vi) to permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings to encourage settlement of disputes;
(vii) to provide that every final arbitral award is enforced in the same manner as if it were a decree of the court;
(viii) to provide that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal; and
(ix) to provide that, for purposes of enforcement of foreign awards, every arbitral award made in the country to which one of the two international Conventions relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award.
The Arbitration and Conciliation Act, 1996 has brought about qualitative changes in the law of Arbitration. New Act contemplates minimal role of Court during the conduct of arbitral proceedings till the making of the award. It is intended that Court will not interfere in the arbitral proceedings till the arbitral award is made. It proposes to amend and consolidate the laws of Arbitration in India. It has also harmonised the legal principles of Common Law and Civil Law by providing Conciliation as a mode of settlement of disputes. The Act of 1996 is based on Model Law which intends to bring about global uniformity in the Arbitration Laws. The Model Law is close to the Rules of the International Chambers of Commerce (ICC). The present Act has four parts. First part deals with the Domestic as well as International Commercial Arbitration taking place in India The second part is in respect of Foreign Awards falling within the ambit of New York and Geneva Conventions relating to their recognition and enforcement. The third part covers hitherto unknown branch of Law of Conciliation. It was foreign to Common Law Jurisprudence but is well entrenched in the Civil law following nations and has been internationally accepted form of Alternative Dispute Resolution System. The fourth part contains supplementary proceedings. The Act has the following salient features :(1) The introduction of Principle of waiver.
(2) Involvement of Chief Justice in the process of appointment of Arbitrator.
(3) Presiding Arbitrator replaces the Umpire.
(4) Arbitral Tribunal is empowered to decide the question of jurisdiction.
(5) Separation of arbitration clause from contract.
(6) The arbitral tribunal deciding challenge against its own competence.
(7) Role of Civil Court removed during the conduct of arbitral proceeding. The arbitral proceeding cannot be challenged during its conduct.
(8) It is mandatory for Arbitral Tribunal to make speaking award.
(9) Arbitral Tribunal empowered to correct and interpret the award. The Act has limited the powers of Court and enhanced those of Arbitrators.
(10) Limited grounds for setting aside of award. Error apparent on the face of award no more a ground for setting aside of arbitral award.
(11) Introduction of settlement during the arbitral proceedings.
(12) The requirement of filing the award done away with and the same is given status of decree.
(a) A difference or dispute actually in existence between two or more parties.
(b) A reference for determination of such difference or dispute.
(c) Determination of such difference or dispute by such person or persons known as `Arbitrator'.
(d) Such determination shall be after hearing both the parties in a judicial manner.
(B) Arbitration Agreement :- According to Section 2(1)(b) of The Arbitration and Conciliation Act 1996 `Arbitration Agreement' means an agreement referred to in Section 7. Then Section 7 of the Act provides -"(1) In Part-I "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in-
(a) a document singed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
The definition of arbitration agreement is made comprehensive. It not only gives the essentials of arbitration agreement but also explains the same. Sub-section (1) of Section 7 defines the meaning of arbitration agreement. Sub-section (2) provides inclusive forms of agreements. Sub-section (3) again deals with essentials of arbitration agreement. Sub-section (4) explains when a presumption of the arbitration agreement being in writing is raised and existence in certain cases is presumed. Sub-section (5) explains the existence of arbitration agreement in some cases. So following are essentials of "Valid Arbitration Agreement":-(A) There should be a valid and binding contract.
(B) There should be intention to refer the dispute to arbitration and to be bound by its decision.
(C) The agreement must be in respect of present or future disputes.
(D) Agreement must be in writing.
(A) Valid and Binding Contract - First essential of an Arbitration agreement is that it must be contained in or in respect of a valid binding contract between two parties. By `Valid contract' means it must satisfy all requirements of it being valid under Indian Contract Act. If there is no valid or binding contract or where parties to contract are not on consensus on any or many issues then existence of arbitration agreement, which could enable them (Parties) for referring their present or future disputes to Arbitrator, can also not be invoked. (B) Intention To Refer The Dispute To Arbitrator - Second essential Condition for a valid Arbitration agreement is that there should be intention of parties to refer the dispute to arbitration. In other words there must be "animus arbitrandi". Such intention of referring the dispute for arbitration should be explicit and clear from record. It is not only essential that parties are agreed to refer the disputes for arbitration it is also necessary that they agreed to be bound by arbitration award. In K.K. Modi v. K.N. Modi, AIR 1998 SC 1297 - A Memorandum of Understanding was drafted containing Settlement of various disputes between group A and B. In terms of settlement, shares and assets of various companies were required to be valued as per terms contained in settlement, it was also contained in Memorandum of Understanding, that disputes are to be referred to chairman I.F.C.I. or his nominees whose decision will be final and binding. However that clause did not contemplate any judicial determination by chairman I.F.C.I., It was held that it was not intended by parties for referring to dispute for a new decision, infact it was meant for proper implementation of terms of already settled disputes, so intention of parties was not to have judicial determination of any dispute by Chairman I.F.C.I. and thus important element for creating "Arbitration Agreement" i.e. intention of parties to refer the present or future disputes to Arbitrator and to be bound by his decision as required under section 7 of Act was missing thus, decision Chairman I.F.C.I was not held to be arbitration award. (C) Present or Future Disputes :- Third requirement of `Arbitration agreement' is that it must relate to any present or future disputes between parties. In Delux Silk Traders v. M/s Satyanarayan Mahender Kumar and Others., AIR 1979 Bom. 149 it was observed that if there is no dispute within the meaning of an agreement to refer i.e. where there is no controversy in being as when party admits liability but simply fails to pay, there can be no arbitration. (D) The Agreement Must Be In Writing :- Other important condition for valid arbitration agreement is that it must be in writing, as sub-section (3) to Section 7 provides that an arbitration agreement shall be in writing and then Sub-section (4) says that an arbitration agreement is in writing if it is contained in -(a) document signed by parties.
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of agreement.
(c) an exchange of statements of claims and defence in which the existence of agreement is alleged by one party and not denied by other.
What would constitute the agreement in writing was decided by the Supreme Court in Vaidya Hari Shanker Laxmiram Rajyaguru v. Protojirary Hari Shanker Rajyaguru, (1988) 3 SCC 21. The award was challenged on the ground that there was no written arbitration agreement. The Court found that the parties had agreed to refer dispute to arbitration, and award was signed by both the parties. It was held that the conduct of parties showed the existence of arbitration agreement and the agreement was also reiterated by signing endorsement on the award. When the second petitioner has not signed the lease agreement containing the arbitration clause, as such, he cannot enforce the arbitration agreement [I.T. Classic Finance Ltd. v. Grapco Mining Co. Ltd., AIR 1997 Cal 397]. (C) Arbitral Award - According to Section 2(1)(c) "Arbitral award" includes an interim award. "Arbitral award" in simple words means the judicial determination, arrived at by Arbitrator after making enquiries, recording evidence and hearing all parties. An arbitral award must dispose off the entire controversy submitted to arbitrator so that there cannot be future litigation. An arbitral award must contain following particulars :-(i) It must contain all those facts which led to refer the dispute to Arbitrator.
(ii) It must contain all the submission, claims-counter-claims of each parties.
(iii) It must contain all necessary inquiries made by arbitrator.
(iv) It must contain short description of evidence (if any) recording for determination of disputes.
(v) It must contain its determination and reasoning thereof.
In Tamil Nadu Electricity Board v. M/s Bridge Tunnel Constructions, AIR 1997 SC 1376 : 1997(3) J.T. 467 it was observed that the law on the award as governed by the new Act, is other way about of the pre-existing law; it mandates that the award should state the reasons upon which it is based. In other words unless (a) the parties have agreed that no reasons are to be given or (b) the award is an arbitral award on agreed terms under section 30 of the new Act, the award should state reasons in support of determination of liability/Non-liability. It was held by Supreme Court in Goa, Daman and Diu Housing Board v. Ramakant V.P. Darvodkar, 1991(1) CCC 265 (SC) that it is evident from the awards made by the arbitrator that the arbitrator had considered all the specific issues raised by the parties in the arbitration proceedings and came to his finding after giving cogent reasons. The above awards cannot in any circumstances be considered to be made by the arbitrator without recording any reasons for the same. Therefore, in such circumstances, it is not proper to hold that the arbitrator has misconducted himself or in the proceedings in the matter of giving awards. (D) Arbitral Tribunal - This term has been newly constituted in the Arbitration and Conciliation Act, 1996. It simply means a panel of arbitrators, whereas in the former Act of 1940 there would be arbitrators in equal number appointed by the parties and one umpire appointed by the arbitrators of both the parties. (E) Court - Under Section 2(e) of the Act "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the question forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes; A revenue Court is not included in the expression "Civil Court" as used in the section, AIR 1949 All 360 : AIR 1962 H.P. 10. The Civil Court includes a Court of revision, AIR 1972 Patna 29. "Civil Court" includes an appellate Court. [Dutt v. Kheru, ILR 33 All 645; Nachippa Chettiar v. Subramanya Chettiar, AIR 1960 SC 367]. When Civil Court can inference in the order of instrument A.I.R. 1993. Ker 125 (F.B.) (F) Legal representative - Under Section 2(g) of the Act it means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased, and, where a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting. This word has been defined by Section 2(11) C.P.C. also. A person who represents the estate of the deceased is a legal representative. [Paramsarumi v. Allumu, AIR 1919 Mad 510]. A person who inter-meddle with the estate of the deceased is also a legal representative. [Nagendra v. Harendra, AIR 1933 Cal 865]. A person on whom the estate devolves on the death of a party to arbitration is also legal representative where the claim is of a representative.(a) any written communication is deemed to have been received if it is delivered to addressee personally or at his place of business habitual residence or mailing address, and
(b) if none of the places referred to in clause (a) can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last known place of business, habitual residence or mailing address by registered letter or by any other means which provides a record of the attempt to deliver it.
(2) The communication is deemed to have been received on the day it is so delivered. (3) This section does not apply to written communications in respect of proceedings of any judicial authority. When an arbitration agreement is deemed to have been waived - Section 4 provides that - A party who knows that -(a) any provision of this Part from which the parties any derogate, or
(b) any requirement under the arbitration agreement,
has not been complied with any yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object. Extent to which a Court can intervene in an arbitration agreement - Section 5 lays down that - Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. This section plainly states that no judicial authority is empowered to interfere with the arbitration matter which have been provided in Part I (relating to arbitration samples) of this view Act. The Part I particularly concerns with all probable rules relating to arbitration proceedings. This section has curtailed the powers of the Court which had been utilised by it under the former Arbitration Act of 1940.(i) In arbitration, an arbitrator is appointed with the mutual consent of are parties to dispute, whereas the adjudication is done by the court of competent jurisdiction,
(ii) An arbitrator acts as an quasi judicial body, while a court or the tribunal, which adjudicate upon the dispute, is and acts as a judicial body.
(iii) The decision or award of the arbitrator is deemed `final' and binding upon the parties, while the order of adjudication made by the court is subject to correction through appeal, revision on review.
(iv) In arbitration, an arbitrator is not bound to follow strictly the technical rules of procedure. He conduct the arbitration proceedings as a quasi judicial nature. He is not supposed to record separate findings on the various issues raised before him by the parties according to the terms of arbitration agreement, while for doing adjudication the courts are bound to strictly follow the rules of procedure;
(v) In arbitration proceedings an arbitrator is not legally bound by the rules of evidence, while the courts are bound to follow the rules of evidence.
(vi) An arbitrator can determine a dispute or difference between the parties on the basis of `law and equity' as well, while the adjudication, in a case, is done by the court on the basis of law.
(b) Difference between arbitration and valuation :- The following are some of the differences :-(i) The question of arbitration arises only when there is difference or dispute, in fact, between the two or more parties, while the valuation is done to prevent differences between the parties.
(ii) The arbitration aims to determine a difference or dispute existing between two parties; while its valuation does not aims to do so.
(iii) In arbitration, an arbitrator cannot apply his own sense or knowledge in the case. He has to act upon and rely only on the facts and materials of the dispute which are presented by the parties before him; while a valuer can utilise his own sense, knowledge and skill while doing valuation.
(iv) In arbitration, the award given by an arbitrator is final and it is enforceable according to the provision of Arbitration Act 1940; while the valuation is not a award or judgment.
(c) Arbitrator and referee - Sir Suleman C.J. of the Allahabad High Court has conspicuously pointed out the distinction between an arbitrator and a referee in Akbari Begum v. Rahman Hussain, AIR 1933 All 861 as follows :"An agreement to abide by the statement of a particular witness is in substance not a reference to arbitration. The essence of arbitration is that the arbitration decides the case and his award is in the nature of the judgment which is later on incorporated in a decree of the Court. The arbitrator can either proceed on the basis of his knowledge or make enquiries and take evidence and then give his decision on such evidence. But where parties agree to abide by the statement of a third person or a referee, the referee makes a statement according to his knowledge or belief and the Court then decides the case and pronounces its judgment on the basis of such a statement and passes a decree thereon. The referee is not authorised to make enquiries and to take evidence and then to announce his decision on the basis of such evidence. He is called upon to make a statement according to his knowledge or belief. In the case of an arbitration, as the arbitrator's award is an expression of an opinion and his procedure resembles that of a court, a party is entitled to file objections and challenge the validity of the award. The making of a statement by a referee of a third person has no resemblance to a proceeding conducted by him as if he were a court of law, and accordingly there can be no procedure for filing objection as to its validity.
The main differences between those two are as under :-(i) An Arbitrator is bound to give award on a difference of a dispute presented before him without a stipulated period. His award is deemed final and binding on all the parties, while a referee makes only a statement according to his own knowledge and believe. The court then decide the difference or dispute on the basis of such statement.
(ii) An award is made after hearing both the parties and conducting the judicial enquiry, while the statement of referee is based merely upon his own knowledge and belief.
(iii) The parties to dispute are bound by the terms of arbitration agreement. Once they enter into it, they afterwards cannot resile from it; while a party can resile from the agreement to abide by the statement of the referee.
(d) Difference between arbitrator and mediator - There is vast different between arbitrator and mediator. An arbitrator is a legally authorise person to determine the difference or dispute between the parties to such dispute according to the terms of arbitration agreement while an mediator acts only to submit will of the parties and his suggestion are not deemed final. (ii) An arbitrator gives award on the dispute and such award is held legally final and binding on the parties, while a mediator gives an statement and his statement is not held binding on the parties. He can merely persuade the points to follow the same. (iii) The mediator persuades parties to dispute for compromise, while an arbitrator hears the case before giving his final decision on the dispute."(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under Sub- section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
So Section 8 says that when a matter is pending before a Court, which is subject to an arbitration agreement, Court shall, upon application by parties to dispute, duly accompanied by original or certified copy of arbitration agreement, refer the parties to arbitration, however, such application is required to be made before submitting first statement upon substance of dispute in court. However, Sub-section (3) of Section 8 clarifies that it would not matter if such an application has been made and the issue is pending before the judicial authority, the parties may commence arbitration proceedings or continue them and an arbitral award may be made therein. This provision lefts the restrictions of lingering the matter in Court by any deviceful tactic and put off arbitration proceedings till then. So even if the judicial authority is seized of the matter, the arbitration proceedings may commence and continue and an arbitral award may be made. In Kalpana Kothari v. Sudha Yadav, AIR 2001 SC 404 it was observed that the scope and object of Section 8 of Arbitration and Conciliation Act 1996 and Section 34 of Arbitration Act 1940 is different. Therefore these two respective provisions of different Acts have no application to deprive the party of legitimate right to invoke Section 8 of Arbitration and Conciliation Act to have the matter relating to disputes referred to arbitration, in terms of arbitration agreement. An application for stay of the suit proceedings is not to be made in the suit itself. All that the provisions of Section 34 of the old Act or even under Section 8 of the new Act require is that the defendant should invite attention of the judicial authority hearing the suit to the arbitration agreement and pray for the suit proceedings to be stayed so as is enable the arbitration agreement to be carried out. Whether this is done by filing an application in the same suit or through so-called independent application before the same court is a matter of no consequence. [Varun Seacon v. Bharat Bijlee Ltd., AIR 1998 Guj 99]. Under the Arbitration Act, 1940, there were four circumstances where the matter could be referred to the Arbitration :(1) Firstly, under Section 8(2) where the party to dispute may move the Court for appointment of arbitrator on the failure of the appointment of arbitrator by the other party.
(2) Secondly, under Section 20, where the Court can direct the filing of the arbitration agreement in the Court.
(3) Thirdly, under Chapter IV, if the dispute is pending in the Court and the parties apply to Court for an order of reference to settle the matter under arbitration.
(4) And, lastly, under Section 34, the party to the dispute may ask for the stay of proceedings and reference to the arbitration.
However, in the present Act, there is no provision where the party can apply to the Court for reference to the arbitration in respect of matter which is covered in the arbitration agreement. The Court can only refer the matter to the arbitration when the matter is pending before it. Section 8 of the new Act intends that if there is an arbitration agreement between the parties, let them go for arbitration. Thus, Section 8 covers that at first instance the Court should not determine the validity of an arbitration agreement and should encourage arbitration. Although under Section 8(1) the Court cannot adopt on its own motion to avail this provision, the parties have to apply with request, however while considering such request, the Court cannot go into the merits of the dispute.(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely :-
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the court to be just and convenient,
and the Court shall have the same power for making orders as it has been the purpose of, and in relation to, any proceedings before it. This section provides for interim application as to causes arising both before or during arbitral proceedings relating to the matters enumerated, thereunder, that is to say -1. Appointment of guardian of minor or unsound person.
2. protection relating to :-
(1) preservation, interim custody or sale of any goods subjected to arbitration.
(2) securing the amount in dispute;
(3) detention, preservation or inspection of property in dispute or the subject-matter of dispute and such other matters;
(4) interim injunction or appointment of a receiver.
(5) other interim measure as may deemed just and convenient.
The court will have the same powers as it has in other matters. In M/s Buddha Films Pvt. Ltd. v. Prasar Bharti, AIR 2001 Delhi 241 - Delhi High Court while relying on Apex Court judgment in Sunderam Finance Ltd. v. NEPC India Ltd., AIR 1999 SC 565 has observed that initiation of arbitration proceedings would not be pre-condition for filling petition under section 9 of the Act. What is important is manifest intention to have the dispute referred to an arbitral Tribunal.........a situation may so demand that party may choose to apply under section 9 for an interim measures even before issuing a notice contemplated by Section 21 of the said Act..........while passing order under section 9 and in order to ensure that effective steps are taken to commence the arbitral proceedings, the Court while exercising jurisdiction under section 9 can pass a conditional order to put the applicant to such terms as it may deem fit with a view to see that effective steps are taken for commencing arbitral proceedings. In Baby Arya v. D.V.B. AIR 2002 Del 50 - It was observed by Delhi High Court that a party or person is entitled to interim protection if the action of other party is either in breach of the terms of agreement or militates against equity, fair play or natural justice, otherwise not. In M/s Kamala Solvent v. Manipal Finance Corp. Ltd., AIR 2001 Mad. 440 it was observed that under section 9(ii)(e) of the Act court is vested with the jurisdiction to pass interim orders to safeguard and protect the interests of parties but not to challenge the appointment of arbitrator and venue. In Bhatia International v. Bulk Trading S.A. and others, AIR 2002 SC 1432 - It was observed that Part II of Act which deals with enforcement of foreign awards does not contain any provision similar to Section 9 or 17 and there is nothing to indicate the intention of legislature not to apply Section 9 and 17 to Arbitrations, which are taking place in foreign country, therefore, application under section 9 for seeking interim measures is maintainable in India even when arbitration proceedings are taking place in foreign country."(1) A person of any nationally may be an arbitrator, unless otherwise agreed by the parties.
(2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
(3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
(4) If the appointment procedure in sub-section (3) applies and -
(a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
(b) the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment,
the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. (6) Where, under an appointment procedure agreed upon by the parties,-(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an agreement expected to them under that procedure; or
(c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure,
a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. (7) A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub-section (6) of the Chief Justice or the person or institution designated by him is final. (8) The Chief Justice or the person or institution designated by him, in appointing an arbitrator, shall have due regard to -(a) any qualifications required of the arbitrator by the agreement of the parties; and
(b) other considerations as are likely to secure the appointment of an independent and impartial arbitrator.
(9) In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. (10) The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or Sub-section (6) to him. (11) Where more than one request has been made under sub-section (4) or Sub- section (5) or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request. (12) (a) Where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the "Chief Justice of India". (b) where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall be construed as a reference to the "Chief Justice of the High Court itself within whose local limits the principal Civil Court referred to in clause (e) of sub-section (1) of section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief Justice of that High Court." The Act of 1940 provided for appointment of Arbitrator or Umpire under Section 8 on various ground by Court, namely (a) where the Arbitral Agreement provide for reference to one or more arbitrator to be appointed by parties and parties do not concur after the dispute arises, (b) Arbitrator or Umpire neglects or refuses to act or has become incapable of acting or dies and arbitral agreement does not provide for supply of vacancy, and (c) where the parties or Arbitrators are required to appoint umpire and they do not appoint him and in such case one of the parties may move the Court for such appointment. The important changes are made, apart from removing the role of Civil Court from the appointment procedure, in the new Act. In the present Act, there is no provision for notice and hearing by the Court. The same is done away with. It would imply that challenge regarding the services of notices or ancillary matters would not at all require the judicial scrutiny before the appointment is made. Section 11 of the new Act makes provision for appointment of a person of any country, it may be India or any foreign country, as agreed by the parties. Sub-section (2) provides a new thing that the parties are free to choose or adopt any procedure to appoint such arbitrator(s). It may even be by casting lots in case of non-agreement. Sub-section (3) provides that of the parties fail to appoint arbitrator(s) by mutual consent, then each party shall appoint one arbitrator and both such appointed arbitrators shall appoint a third person who shall be called the `Presiding Officer' under the old Act of 1940 such person was called `Umpire'. Sub-sections (4) and (5) provide that if a party or the appointed arbitrators fail to appoint an arbitrator or Presiding Officer as the case may be, the Chief Justice of the High Court having territorial jurisdiction, or a person or institution designated by him shall make such appointment. In Kamla Solvent v. Manipal Finance Corp. Ltd. AIR 2001 Mad. 440 - It was observed that it is well settled that where an arbitrator is named in the arbitration agreement, provisions Section 11 of the Act are not attracted and court will not have jurisdiction to try and decide the petition filled by party for appointment of another arbitrator. In M.M.T.C. Ltd. v. Sterlite Industries (India) Ltd., AIR 1997 SC 605 - It was observed that the appointment of arbitrator is governed by Section 11 of the new Act. When each of the two parties have appointed their own arbitrators, Section 11(3) was attracted and two appointed arbitrators were required to appoint third arbitrator to act as Presiding arbitrator, falling which the Chief Justice of High Court or any person or institution designated by him would be required to appoint third arbitrator as required under section 11(4) of new Act. In Sri Venkateshwara Construction Co. v. Union of India, AIR 2001 A.P. 284 - It was observed that section 11 of New Act made significant departure from the Old Law, now Section 11 confers power of appointment an arbitrator/arbitrators, where parties failed to do so or where the person or institution invested with such power under the agreed procedure fail to do so, not upon the Court, but upon Chief Justice in case of domestic arbitration and upon Chief Justice of India, in case of International Commercial Arbitration--------keeping in view the nature of power conferred upon Chief Justice under section 11 of new Act, it would be clear that Chief Justice or his designate, while exercising power under section 11 of new Act, cannot entertain to decide the disputes that are sought to be referred to his arbitration. The duty of the Chief Justice or his designate is only to appoint an Arbitrator/Arbitrators if the parties fail to do so or if the person or institution empowered under the agreed procedure to make appointment fails to do so and leave all such questions to the decisions of Arbitrator/Arbitrators. In [Nucon India (P) Ltd. v. D.V.B., AIR 2001 Del. 227 - It was observed that under section 11(6) of Act where no time limit is prescribed if opposite party has not made an appointment within a period of thirty days of the demand to appoint an arbitrator, the right to appoint is not forfeited and continues, but such right of opposite party ceases to exist or forfeited if an application under section 11 is moved for appointment of arbitrator. That is to say that an appointment has to be made by the opposite party of an arbitrator before filing of application under section 11(6) of Act. If the appointment is made after the filing of application under section 11 then such an appointment is a nullity.(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made." In Jiwan Kumar Lohia v. Durga Dutt Lohia (AIR 1992 SC 188), the Supreme Court said that "Reasonable apprehension of bias in the mind of a reasonable man, can be a good ground for the termination of the mandate of an arbitrator." However, the parties shall be precluded from challenging the same if they had the knowledge of facts affecting impartiality and continue with proceeding on the principle of `waiver'. Section 13 of the Act provides as to procedure for challenging the appointment of arbitrator. Section 13 lays down that -"(1) Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.
(2) Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.
(3) Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
(5) Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.
(6) Where an arbitral award is set aside on an application made under Sub- section (5), the Court may decide as to whether the arbitrator who is challenged is entitled to any fees."
The Arbitral Tribunal is empowered to decide the challenge to the appointment of arbitrator on the grounds under Section 12(3). The challenge can be preferred within 15 days from the constitution of arbitral tribunal. In case of becoming aware of such circumstances regarding doubt about independence during the conduct of proceedings, the challenge can be preferred within 15 days. The parties intending to challenge shall send written statement of reasons to the Arbitrator. The Arbitrator may withdraw upon the receipt of written statement. However, if both parties agree to challenge, the Arbitrator is automatically removed. The Arbitral Tribunal shall decide the challenge and in case of rejecting the challenge; it shall continue with the proceedings. The party who had challenged the Arbitrator unsuccessfully may challenge the arbitral award under Section 34 [Section 13]. The Act provides adequate safeguards and incentives to the Arbitrator to proceed only if he is independent or impartial. The Act provides that withdrawal of Arbitrator shall not imply correctness of challenge and encourage independent person to withdraw. Further it cautions the unscrupulous arbitrator that even if he continues as a Tribunal, the Court can deny him the fee of arbitrator, having found him on wrong foot. The present Act makes significant departure from the Act of 1940 where Court was empowered to remove arbitrator and/or Umpire -(1) if he has misconducted himself or the proceedings, and
(2) on the application made by the party that the arbitrator has failed to use all reasonable despatch upon entering on and proceedings with the reference and making the award.
(a) he becomes dejure or de facto unable to perform his functions or for other reasons falls to act without undue delay; and
(b) he withdraws from, his office or the parties agree to the termination of his mandate.
(2) If a controversy remains concerning any of the ground referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the Court to decide on the termination of the mandate. (3) If, under this section or sub-section (3) of Section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of Section 12." This section mentions the circumstances in which an arbitrator's authority shall terminate. These are :-(a) where the arbitrator as a person in law (the same person) or as a person in fact has become unable to perform his functions, i.e., he has become insane or disabled in law or in fact to acts as such, if he has become insolvent, he cannot function as such. He is de jure incompetent to act as such. If he has become physically unfit to do his work he is physically incompetent to perform his functions as arbitrator. In both these cases his authority shall terminate.
(b) Where the arbitrator himself withdraws from the office or the parties agree to terminate his authority. In these two cases also his authority shall terminate.
Sub-section (2) mentions that if some controversy arises as to termination of the arbitrator as aforesaid, a party may apply to the Court for determination of the controversy and the Court shall decide as to his termination. (b) Under Section 15. Termination of mandate and substitution of arbitrator - (1) In addition to the circumstances referred to in Section 13 or Section 14, the mandate of an arbitrator shall terminate :(a) where he withdraws from office for any reason; or
(b) by or pursuant to agreement of the parties.
(2) Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. (3) Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2) any hearings previously held may be repeated at the discretion of the arbitral tribunal. (4) Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of contract; and
(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope its authority is raised during the arbitral proceedings. (4) The arbitral tribunal may, in either of the cases referred to in Sub- section (2) or sub-section (3), admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on plea referred to in sub-section (2) or sub-section (3), and where the arbitral tribunal takes a decision rejecting the plea, continuing with the arbitral proceedings and make an arbitral award. (6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34. So Section 16 of the Act empowers the Arbitral Tribunal to adjudicate the objections regarding its own jurisdiction or validity of arbitration agreement as arbitration agreement or clause in contract is considered to be independent and separate from main contract and even if arbitral tribunal decides the contract to be null and void, does not necessarily makes arbitration clause contained in it, to be invalid. However objection regarding jurisdiction have to be raised by any party before submission of statement of defence. It is important to point out that such objection can lawfully be raised by the party who has appointed or has participated in the process of appointment of arbitrator. Objection regarding Arbitral tribunal exceeding from scope of its authority shall be raised immediately the party found it to be. It is also provided that arbitral tribunal will decide any objection as provided under sub-sections (2) and (3) and thereafter proceed with arbitral proceeding. Sub-section (6) of Act enable the aggrieved party of any decision on objection to make application for setting aside the order as according to provisions of Section 34. In Konkan Railway Corp. Ltd. v. Rani Construct (P) Ltd., AIR 2002 SCW 426 Supreme Court has held that Section 16 enables the arbitral tribunal to rule on its own jurisdiction. Arbitral Tribunal can rule on any objection with respect to existence or validity of the arbitration agreement and Arbitral tribunal's authority under section 16 is not confined to the width of jurisdiction but goes also to the root of its jurisdiction. Similarly in Narayan Prasad Lohiya v. Nikunj Kumar Lohia, AIR 2002 SC 1139 Full Bench of Supreme Court has observed that under section 16 of the Act can challenge the composition of arbitral tribunal before arbitral tribunal itself. Such challenge must be taken under section 16(2), not later than the submission of statement of defence. Section 16(2) makes it clear that such challenge can be taken, even though the party may have himself appointed the arbitrator. Needless to state a party would be free, if he so choose, not to raise such a challenge. Thus a conjoint reading of Section 10 and 16 of the Act shows that an objection to composition of arbitral tribunal is a matter which is derogable. (B) Power of arbitrators to make an interim award. Section 17 of the act provides as follows -"(1) Unless otherwise agreed by the parties, the tribunal may, at the request of a party, order a party to take interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.
(2) The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1).
In Section 27(1) of the Arbitration Act, 1940 also it was provided that unless a different intention appears in the arbitration agreement, the arbitrators or umpire may if they think fit, make an interim award. Section 17 of the new Act of 1996 provides for interim measures which may be taken or obtained from the arbitral tribunal. Sub-section (1) states that if a party so requests, the arbitral tribunal may order a party to take any interim measure of protection as is necessary regarding the subject-matter of the dispute. Sub-section (2) provides that the arbitral tribunal may require a party to provide proper security relating to the measure ordered by the tribunal. In State of U.P. v. Janki Saran, AIR 1973 SC 2071, the Supreme Court had observed that "taking other steps in the suit proceeding" connotes the idea of doing something in aid of the progress of the suit or submitting to the jurisdiction of the Court for the purchase of adjudication of the merits of the controversy in the suit. The real test for determining whether an act is a step in the proceeding is not so much the question as to whether it is an application filed by the defendants, but whether the act displays an unequivocal intention to proceed with the proceeding before the arbitral tribunal which has been conferred power under Section 17 of the new Act to order a party to the arbitral proceedings to take or observe interim measures as ordered by the arbitral tribunal, pending the disposal of the proceedings before him/it."(1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872.
(2) Subject to this part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.
(3) Failing any agreement referred to sub-section (2), the arbitral tribunal may, subject to this Part (Part I) conduct the proceedings in the manner it considers appropriate.
(4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence."
So Section 19 is another important section which lays down that arbitral tribunal and parties are free to agree for any procedure and arbitral tribunal is neither bound by provisions of C.P.C. 1908 nor by Indian Evidence Act 1972. Generally the courts are duly bound to follow procedure as laid down in C.P.C. or Evidence Act. In this regard in Velunai v. Vella Kutty, AIR 1990 Ker. 92 it was observed - "The tribunal is not a court thought it performs functions similar to a court. The tribunal is free to follow any procedure which it considers expedient in the interest of justice so long as the procedure is not inconsistent with the rules of natural justice and does not contravene the provisions of the Act or the Rules. In order to do justice for which it has been constituted, the tribunal would have power to apply the principles underlying the provisions of the Code of Civil Procedure, even though not rendered specially applicable.(1) The parties are free to agree on the place of arbitration.
(2) Failing of any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.
(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.
In this section it is laid down as to where the proceedings of arbitration will be conducted. Firstly it is up to the parties to the arbitrations to agree for the place where the proceedings of arbitration should be conducted. In case they do not agree, then the arbitral tribunal may fix a place where the said proceedings shall take place. But in this case it is the duty of the arbitral tribunal to consider the convenience of the parties along with the circumstances of the case. It is clear from this that the arbitral tribunal is not free like the parties as laid down in sub-section (1) of this Section regarding fixing the place because it will have to consider the circumstances of the case and convenience of parties before it fixes the place for conducting the arbitral proceedings. In the end it is laid down that the arbitral tribunal shall also meet for consultation among its members for hearing witnesses, experts and for inspection of documents goods or other property. In Sunshine Chemicals Industry v. Orient Carbons and Chemical Ltd., AIR 2001 SC 1219 - It was observed that a conjoint reading of Section 2(6) and Section 20 of Act leads to the conclusion that in the event, parties do not agree with regard to place of arbitration then they had the right to authorise any person including an institution for deciding the venue of the arbitration. (B) Commencement Of Arbitral Proceedings - Section 21 of the Arbitration and Conciliation Act says -"Unless otherwise agreed by the parties the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent."
So this section provides for commencing the proceedings of arbitration and it is laid down that it will be deemed to have been started from such date on which the information from one party is received by the other, regarding referring the dispute to arbitration. In Shetty Construction Co. (P) Ltd. v. Konkan Railway Construction, AIR 1999 SC 1535 it was observed -".........Section 21 of the new Act lays down that unless otherwise agreed to between the parties, the arbitration suit in respect of arbitration dispute commenced on the date on which the request for referring the dispute for arbitration is received, therefore it must be found out whether the request for referring the disputes for arbitration were moved on and after 26/1/1996 (date when new Act came in force) or prior thereto. If such request were made prior to that date then on conjoint reading of Section 21 and Section 85(2)(a) of new Act, it must be held that these proceeding will be governed by the old Act.........."
Similarly reference may made of Union of India and others v. Monoranjan Mondal and other, AIR 2000 Cal. 148."(1) Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of these statements.
(2) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.
(3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it."
So Section 23 of Act provides regarding mode of putting up claims and defence by parties in arbitral proceedings. It is laid down that within time as agreed upon by parties or fixed by arbitral tribunal claimant shall state the facts in support of claim and for relief and then respondent shall put up his defence in respect of those facts and particular parties shall be at liberty to submit any statements, documents etc. which in their view is relevant for determining the dispute. Sub-section (3) of Section 23 enables either party to amend or supplement his claim or defence during course of arbitral proceeding provided that -(A) Parties have agreed for not making any amendment or supplement to claim or defence
or
(B) Arbitral tribunal consider the proposed amendment or supplement, to be inappropriate or belated.
So in contradistinction to language as used in amended provisions of Order 6 Rule 17 of Civil Procedure Code 1908, The Arbitration and Conciliation Act, 1996 as a matter of general rule allow parties to amend or supplement their respective claims/defences unless parties themselves have decided against it or arbitral tribunal found such amendments to be belated, however arbitral tribunal will always be guided by principle enunciated u/order 6 Rule 17 C.P.C.Provided that the arbitral tribunal shall hold oral hearing at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed than no oral hearing shall be held.
(2) The parties shall be given sufficient advance notice of any hearing and any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property. (3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties." Procedure for hearing arbitral claims and defence. Section 24 provides procedure for hearings and written proceedings before arbitral tribunal. Sub-section (1) lays down that if the parties have not agreed relating to the mode of proceedings, the arbitral tribunal may decide whether it will hold the proceedings on oral hearing of parties and their witnesses, or the proceedings shall be conducted in writing on the basis of documents and other materials. The parties may decide to have no oral hearings. Sub-section (2) lays down about giving sufficient time notice as to hearing or as to meeting of the arbitral tribunal for inspection of documents, goods or other property concerning the dispute referred to it. Sub-section (3) makes it incumbent upon the arbitral tribunal to issue copies of all documents, applications or information supplied by one party to the other party. Similarly, copies of any expert report received by the arbitral tribunal relies, are to be supplied to all parties. Section 25 of the Act deals with default of party to arbitral proceedings. It lays down as under :- "Unless otherwise agreed by the parties, where, without showing sufficient cause, -(a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant;
(c) a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it."
So Section 25 of the new Act makes express provision to deal with the absence of either of the party. It lays down that in case of claimant failing to communicate his claim; the arbitral tribunal shall terminate the proceeding without making any award. In the event of respondent failing to communicate his defence, the tribunal shall continue with the proceedings and decide the dispute on merits. It shall not treat the failure of submission of defence, as admission of claim. It also takes care of the situation where one of the parties fails to appear at oral hearing or fails to produce documentary evidence. In such eventuality the tribunal may continue with proceedings and make the award. However, an ex parte award can be set aside under Section 34(iii) by the court of law. The respondent proceeding ex parte shall have two options : one, to show sufficient cause and join the proceedings where it left and second, in case the arbitral tribunal decides not to permit him to join the proceedings the party to the dispute shall have right to join subsequent proceedings which are in progress. Section 32(3) lays down that the mandate of Arbitral Tribunal shall terminate with termination of arbitral proceedings. Section 25(a) makes mandatory on the part of arbitral tribunal to terminate its proceedings. Once the proceedings before the arbitral tribunal terminates, it becomes functus officio. Therefore it can not even entertain an application for showing the sufficient cause for not appearing before the arbitral tribunal. The conjoint reading of the provisions would mean that there has to a be fresh constitution of arbitral tribunal before which the claim can be laid fresh, subject, of course, to law of limitation. Section 26 deals with Expert appointed by arbitral tribunal - (1) Unless otherwise agreed by the parties, the arbitral tribunal may :(a) appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal, and
(b) require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.
(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in an oral hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue. (3) Unless otherwise agreed by the parties, the expert shall, on the request of a party, make available to that party for examination all documents, goods or other property in the possession of the expert with which he was provided in order to prepare his report. Under this section the arbitral tribunal may require an expert opinion on a certain point, then an expert shall be appointed by the tribunal and parties shall be directed to supply the expert relevant information alongwith documents, goods or other property. Section 27 deals with Court assistance in taking evidence - (1) The arbitral tribunal or a party with the approval of the arbitral tribunal, may apply to the Court for assistance in taking evidence. (2) The application shall specify :(a) the names and addresses of the parties and the arbitrators;
(b) the general nature of the claim and the relief sought;
(c) the evidence to be obtained, in particular :
(i) the name and address of any person to be heard as witness or expert witness and a statement of the subject-matter of the testimony required;
(ii) the description of any document to be produced or property to be inspected.
(3) The Court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the arbitral tribunal. (4) The Court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it. (5) Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the Court. (6) In this Section the expression "Process" includes summonses and commissions for the examination of witnesses and summonses to product documents. The arbitral tribunal can take assistance of the Court in securing the attendance of witnesses or for the production of documents. The arbitral tribunal can also make the application with the Court specifying details for securing the attendance of witnesses or production of documents. The Court may issue process to the witnesses in the same manner as if the suit is being tried by it, directing the witnesses to provide the evidence directly to the tribunal. In addition to it, the parties to the dispute may also approach to the Court with permission of tribunal for the same purpose. The Court may also issue summons to the Commission for examination of witnesses and for production of documents (section 27).(i) the arbitration tribunals shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute;
(ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, directly referring to the substantive law of that country and not to its conflict of laws rules;
(iii) failing any designation of the law under sub-clause (ii) by the parties, the arbitral tribunal shall apply the rules of the law it considers to be appropriate given all the circumstances surrounding the dispute.
Section 28(2) mandates that the arbitral tribunal shall decide ex aequo et bone or as amicable compositeur only if the parties have expressly authorised it to do so. That is to say, the arbitral tribunal shall decide the application of rules of laws of a country of his own choice only if the parties law expressly authorised to do so. Section 28(3) lays down that in all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. This sub-section lays down the general rule that the arbitral tribunal shall decide according to the terms of the contract having in view the usages of trade applicable to that transaction before him."(1) It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of the dispute and, with the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement.
(2) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties, and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.
(3) An arbitral award on agreed terms shall be made in accordance with section 31 and shall state that it is an arbitral award.
(4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute."
Sub-section (1) lays down that it is desirable for an arbitral tribunal to try to get the dispute settled by mutual agreement therefor. For this purpose, the arbitral tribunal may use the way of mediation by some person or Conciliation as provided in the Act, or other procedures, at any time during the arbitral proceedings for encouraging settlement between the parties. Sub-section (2) provides that if the parties arrive to a settlement the arbitral tribunal shall terminate the proceedings and record the settlement in the form of arbitral award, according to the terms of the agreement arrived at. For this purpose the parties should request the arbitral tribunal and the arbitral tribunal should not object to the request but allow such request and grant him for arriving at such settlement. Sub-section (3) mandates that such arbitral award shall be in the form and content as provided in section 31. Sub-section (4) provides that such arbitral award shall have the same status as any other arbitral award on the substance of the dispute.(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under section 30.
(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place. (5) After the arbitral award is made, a signed copy shall be delivered to each party. (6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award. (7)(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment. (8) Unless otherwise agreed by the parties, -(a) the costs of an arbitration shall be fixed by the arbitral tribunal;
(b) the arbitral tribunal shall specify -
(i) the party entitled to costs,
(ii) the party who shall pay the costs,
(iii) the amount of costs or method of determining that amount, and
(iv) the manner in which the costs shall be paid.
Explanation. - For the purpose of clause (a), "costs" means reasonable costs relating to -(i) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the arbitration, and
(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award.
In T.N. Electricity Board v. M/s Bridge Tunnel Construction, AIR 1997 SC 1376 it was observed that the law on the award as governed by the new Act, is other way about of the pre-existing law; it mandates that the award should state the reasons upon which it is based. In other words, unless (a) the parties have agreed that no reasons are to be given or (b) the award is an arbitral award on agreed terms under section 30 of new Act, the award should state the reasons in support of determination of the liability/non-liability. Thereby legislature has not accepted the ratio of the Constitution Bench in Chokhamal Contractor's case that the award, being in the private law field, need not be a speaking award. In T.P. George v. State of Kerala and Others, AIR 2001 SC 816 while interpreting sub-section (7) of Section 31 of new Act, Supreme Court observed that Arbitrator can award interest for all four stages (1) From the stage of accrual of cause of action till filling of arbitration proceedings, (2) during pendency of the proceedings before arbitrator, (3) future interest arising between date of award and date of decree and (4) Interest arising from the date of decree till realisation of award.(a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute.
(b) the parties agree on the termination of the proceedings, or
(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.
(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings." So arbitral proceedings culminate either by passing of final arbitral award or when arbitral tribunal issue order of termination, upon -(i) withdrawal of claim by claimant unless respondent object the termination of arbitral proceedings and Tribunal also recognize that final settlement of dispute would legitimately be in the interest of respondent.
(ii) agreement of parties for termination of proceeding.
(iii) finding of arbitral tribunal to the effect that continuation of proceeding is unnecessary or impossible. In Kifayatullah Haji Gulam Rasool v. Bilkish Ismail Mehsania, AIR 2000 Bom. 424 - It was observed that Section 32 makes provision for the termination of the arbitral proceedings. Under this section it is provided that the arbitral proceedings shall automatically stand terminated when final award is made...............The arbitral proceedings can also be terminated by an order of arbitral tribunal which order can only be passed when claimant withdraws the claim or when the parties to the reference agree on the termination of proceedings or the arbitral tribunal finds that continuation of the arbitral proceeding has become unnecessary or impossible. Since no final award was passed nor any joint request of parties was made to terminate proceedings, arbitral proceedings cannot be said to have come to an end.
(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;
(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.
(2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award. (3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award. (4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award. (5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request. (6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub-section (5). (7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section." Section 33 of the Act is more or less on similar line as Section 152 of C.P.C. is. Section 33 empowers the arbitral tribunal to not only correct the typographical error but can also give an interpretation on a specific point on the request of the party after making of arbitral award. This provision is different from the well settled legal principle that after the making of award the arbitral tribunal become functus officio. The arbitral tribunal giving the `interpretation award' was unknown to arbitration jurisprudence. It is intended to remove the ambiguities in award so as to make it sustainable. It also eliminates the grounds for the setting of the awards. The arbitral tribunal can also give additional award, if certain issue remains undecided. Not only parties to the arbitration agreement or dispute can call upon the arbitrator to interpret or correct the additional award on the question left undecided but such request can be made when the matter is in the civil court under Section 34(4). Sub-section (4) of Section 34 empowers the Court to adjourn matter on the request of party and provide an opportunity to Arbitral Tribunal to eliminate the grounds for setting aside the arbitral award.(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that -(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
In this connection it may be noted that - Without prejudice to the generality of sub-clause (ii) of clause (b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81. Period for making application to set aside an arbitral award - Section 34(3) lays down that - An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award, or if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal; But if the court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. What the Court should do on arising such a situation. Section 34(4) makes the solution to this problem in the way that On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. In Rail India Technical and Economic Services Ltd., Bangalore v. Ravi Construction, AIR 2002 NOC 30 Karnataka High Court while relying on the Supreme Court judgment reported in AIR 1999 SC 2102 has observed: The claim for setting aside of the award on the ground of it being erroneous, illegal and opposed to public policy would not be maintainable under Section 34 of Arbitration and Conciliation Act (1996). An award can be challenged only on the grounds enumerated in Section 34 of the new Act (1996). The scope of the provisions for setting aside an award under Section 34 of the Arbitration and Conciliation Act (1996) is far less than the scope under Sections 30 and 33 of the Arbitration Act (1940). Even under the old Act i.e. Arbitration Act (1940) the award could be challenged only on limited grounds. The term `Public Policy of India' is not defined in the Act, though they are used in Section 34(2)(b)(ii) and Section 48(2)(b) of the Act. Hence, the "Public Policy of India" for purposes of Section 34, refer to the principles and standards constituting the general or fundamental policy of the State, established by the Constitution and the existing laws of the country, and the principles of justice and morality. Thus, it is not permissible for the Court exercising power under Section 34 of the Act to examine the correctness of validity of the award on any ground other than what is specified in Section 34. Therefore, the challenge to the award on the ground other than what is specified in Section 34. Therefore, the challenge to the award on the ground that it is erroneous, is liable to be rejected."(a) granting or refusing to grant any measure under Section 9 :
(b) setting aside or refusing to set aside an arbitral award under Section 34.
(2) As appeal shall also lie to a court from an order of the arbitral tribunal.(a) accepting the plea referred to in sub-section (2) or sub-section (3) or Section 16; or
(b) granting or refusing to grant an interim measures under Section 17.
(3) No second appeal shall lie from an order passed in appeal under this section but nothing in this section shall affected or take away any right to appeal to the Supreme Court. This section enumerates the various orders against which an appeal lies and it further provides that an appeal shall not be from any other order passed under this Act, [Union of India v. Mohd. Usman, AIR 1965 Allahabad 269 : 163 All LJ 771 : ILR (1964) 2 All 120]. It is not essential for the appellate court to set out reasons for confirming a reasoned award against which an appeal is submitted AIR 1955 S.C. 847. In Mulk Raj Chabra v. New Kenil Worth Hotels Ltd., AIR 2000 SC 1917 - it was observed that a Special Leave petition under Art. 136 of Constitution of India is not maintainable against an order which is appealable under Section 37 of The Arbitration and Conciliation Act, 1996 before a division bench of High Court.Provided that where, apart from the claim, a counter-claim has been submitted to the arbitral tribunal, it may fix separate amount of deposit for the claim and counter-claim.
(2) The deposit referred to in sub-section (1) shall be payable in equal shares by the parties :Provided that where one party fails to pay his share of the deposit, the other party may pay that share :
Provided further that where the other party also does not pay the aforesaid share in respect of the claim or the counter-claim, the arbitral tribunal may suspend or terminate the arbitral proceedings in respect of such claim or counter-claim, as the case may be.
(3) Upon termination of the arbitral proceedings, the arbitral tribunal shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the party or parties, as the case may be." So Sect. 38(1) of Act provides that Arbitral tribunal may fix amount of deposit or supplementary deposit as an advance for costs of arbitration and cost to be paid to entitled party, which as sub-section (2) of section 38 says shall be payable equally by parties, however if any one party fails to pay his share of deposit, the other party may pay that share, but if other party does not so pay, arbitral tribunal may suspend or terminate the claim or counter- claim of party who failed to pay his share of deposit. Then section 38(3) says that upon termination of arbitral proceedings, arbitral tribunal shall render the accounts of the deposits to parties and return unexpended balance amount to parties."(1) an arbitration agreement shall not be discharged by the death of any party thereto either as respects the deceased or as respects any other party but shall in such event be enforceable by or against the legal representative of the deceased.
(2) The mandate of an arbitrator shall not be terminated by the death of any party by whom he was appointed.
(3) Nothing in this section shall effect the operation of any law by virtue of which any right of action is extinguished by the death of a person."
So Section 40 in simple words says that upon death of any party to arbitration proceeding, there will be no effect on arbitration agreement. Section 40 of the Act is analogous to Section 6 of Arbitration Act 1940. In Laxami Ice Factory v. Union of India, (1972) 4 SCC 171 - it was observed that arbitration proceeding cannot become incompetent only because the legal representatives of the deceased partner, who died, during pendency of arbitration proceeding was not brought on record. (b) Effect of insolvency on arbitral proceeding - Section 41 of the Act of 1996 lays down the effect of insolvency of a party on the arbitral proceedings as follows -"(1) Where it is provided by a term in contract to which an insolvent is a party that any dispute arising thereout or in connection therewith shall be submitted to arbitration, the said term shall, if the receiver adopts the contract, be enforceable by or against him so far as it relates to any such dispute.
(2) where a person who has been adjudged an insolvent had, before the commencement of the insolvency proceedings, become a party to an arbitration agreement, and any matter to which the agreement applies is required to be determined in connection with, or for the purposes of, the insolvency proceedings, then, if the case is one to which sub-section (1) does not apply, any other party or the receiver may apply to the judicial authority having jurisdiction in the insolvency proceedings for an order directing that the matter in question shall be submitted to arbitration in accordance with the arbitration agreement, and the judicial authority may, if it is of opinion that, having regard to all the circumstances of the case, the matter ought to be determined by arbitration, make an order accordingly.
(3) In this section, the expression "receiver" includes an Official Assignee."
This section provides for the contingency when a party to the arbitration agreement becomes insolvent, what will happen as a consequence of such insolvency on the arbitration proceedings. Sub-section (1) lays down that if a party to the contract becomes insolvent, then if the receiver adopts that contract, the contract will be enforceable by or against the receiver so far as it relates to any such dispute. Sub-section (2) provides that if the insolvent was a party to an arbitration agreement, which was entered into before his insolvency, and the arbitral proceedings have commenced, then any other party or the receiver may apply to the judicial authority who has jurisdiction in the insolvency proceedings, for an order that the matter in question shall be submitted to arbitration according to the arbitration agreement. The judicial authority may order that the matter be decided by arbitration if he thinks it reasonable in the circumstances. Sub-section (3) assigns the meaning of the term "receiver" to include an Official Assignee.(a) in pursuance of an agreement in writing for arbitration to which the Convention on the Recognition and Enforcement of Foreign Awards, applies; and
(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in official Gazette, declare to be territories to which said convention applies.
Scope of Foreign Awards Section 44 defines "Foreign Award" that the foreign awards means an Arbitral award on differences between persons arising out of legal relationship, whether contractual or not, considered as "commercial" under the Indian Law. Article I of New York Convention does not lay down any distinction, in respect of commercial or other contracts. However, it left open for the signatories of the Convention that they may agree only on the arbitration in respect of commercial contracts. India has confined the scope of foreign awards to the "commercial contracts". India has accorded the importance to the word "commercial" for its commitments to the doctrine of permanent sovereignty over the natural resources. The doctrine finds place in the resolutions of General Assembly of UN. According to the doctrine, international commercial transactions must be strictly construed to refer to movement of goods across the national frontiers and must not extend to investment activities which confers proprietary interest in assets upon foreigners. Moreover, India was toeing the line of mixed economy and had recently liberated from the imperial forces. Therefore, the courts were taking narrow views of the expression "commercial". Power of judicial authority to refer parties to arbitration Section 45 lays down that notwithstanding anything contained in Part I of the Code of Civil Procedure, 1908, a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. This section gives power to judicial authority to refer parties to arbitration at the request of one of the parties or any person claiming through such party, the Court may refer the parties to arbitration according to the agreement entered into between them. The Court may refer reference only, when it finds that the agreement is null and void inoperative and incapable of being performed.(a) the original award or a copy thereof, duly authenticated in the manner required by th law of the country in which it was made;
(b) the original agreement for arbitration or a duly certified copy thereof; and
(c) such evidence as may be necessary to prove that the award is a foreign award.
(2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which taht party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. Explanation. - In this section and all the following sections of this Chapter, "Court" means the principal civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction over the subject-matter of the award if the same had been the subject-matter of a suit, but does not include any civil Court of a grade inferior to such principal civil Court, or any Court of Small Causes.(a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) the award not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
(2) Enforcement of an arbitral award may also be refused if the Court finds that -(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or
(b) the enforcement of the award would be contrary to the public policy of India.
Explanation - Without prejudice to the generality of clause (b) of this Sub- section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. (3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party give suitable security. Section 48 of Act lays down conditions for enforcement of foreign awards in India. These grounds are similar to those provided under section 38 with reference to domestic awards. Section 48(1) lays down that enforcement of a foreign award may be refused provided that the party makes such a request against whom it is applied, but that a party is required to submit the certain proof regarding his revocation. Clause (a) provides that if the parties made an arbitration agreement under Section 44 in compliance of law applied to the parties, but under some incapacity or that an arbitration agreement becomes invalid under the law to which the parties have subjected it (viz. due to fraud, etc.) and also contrary to law of the country (where the award was made), in such cases the court may refuse to enforce a foreign award by order. Section 48(1)(b) provides the condition where the principles of natural justice is not followed, viz. no proper notice is given to the aggrieved party regarding the appointment of arbitrator/arbitral proceedings or no proper opportunity given for presentation of his case. Section 48(1)(c) provides the principle that to ensure a valid award it must deal only with questions actually submitted to the arbitral tribunal by the parties. Section 48(1)(d) lays down that if the arbitral authority/arbitral procedure was inconsistent with the agreement of the parties, the award made cannot be enforced. Section 48(1)(e) provides that, when the award has been set aside/suspended by a competent authority of the concerned country, or it has not become binding on the parties, the award made cannot be enforced. Thus, the jurisdiction and competence to set aside the award vested with the courts of the country in which or under the law of which the award was made. Section 48(2) provides additional grounds and vested powers to the court to refuse enforcement of an arbitral award if it finds that (a) the subject matter of the difference between the parties is not capable of settlement by arbitration under the law of India, or (b) if the enforcement of such a foreign award is opposed to the public policy of India. Section 48(2)(b) provides that if the Court finds that the enforcement of award would be contrary to the public policy of India, it may refuse its enforcement. The expression "public policy" implies fundamental policy of Indian law, or the interests of India, or justice or morality. Further, the explanation provides that the award would be considered in conflict of public policy of India, if the making of award was induced or effected by fraud or corruption. The Supreme Court in Renusagar Power Company Ltd. v. General Electric Company (AIR 1994 SC 860), clarified that the word Public Policy are used to mean public policy of India and not the public policy of the place where the award has been made. The scope of public policy is narrower while looking at it for the enforcement of foreign award then in the domestic arbitration. Section 48(3) provides that when the party makes an application before the court with request to set aside or suspend the enforcement of a foreign award the court is empowered to adjourn its decision on enforcement and may also order the other party to give suitable security.(a) the duly authenticated original award or a duly certified copy thereof;
(b) the original agreement referred to in article II or a duly certified copy thereof.
2. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent. Article V 1. Recognition and enforcement of the award may be refused at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that -(a) the parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that -(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of that country; or
(b) the recognition or enforcement of the award would be contrary to the public policy of that country.
Article VI If an application for the setting aside or suspension of the award has been made to a competent authority referred to in article V(1)(e), the authority before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security. Article VII 1. The provisions of the present Convention shall not affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral awards entered into by the Contracting States nor deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon. 2. The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the extent that they become bound by this Convention. Article VIII 1. This Convention shall be open until 31st December, 1958 for signature on behalf of any Member of the United Nations and also on behalf of any other State which is or hereafter becomes member of any specialised agency of the United Nations, or which is or hereafter becomes a party to the Statute of the International Court of Justice, or any other State to which an invitation has been addressed by the General Assembly of the United Nations. 2. This Convention shall be ratified and the instrument of ratification shall be deposited with the Secretary-General of the United Nations. Article IX 1. This Convention shall be open for accession to all States referred to in article VIII. 2. Accession shall be effected by the deposit of an instrument of accession with the Secretary-General of the United Nations. Article X 1. Any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible. Such a declaration shall take effect when the Convention enters into force for the State concerned. 2. At any time thereafter any such extension shall be made by notification addressed to the Secretary-General of the United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary-General of the United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned, whichever is the later. 3. With respect to those territories to which this Convention is not extended at the time of signature, ratification or accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent of the Governments of such territories. Article XI In the case of a federal or non-unitary State, the following provisions shall apply :-(a) with respect of those articles of this Convention that come within the legislative jurisdiction of the federal authority, the obligations of the federal Government shall to this extent be the same as those of Contracting States which are not federal States;
(b) with respect to those articles of this Convention that come within the legislative jurisdiction of constituent States or provinces which are not, under the constitutional system of the federation, bound to take legislative action, the federal Government shall bring such articles with a favourable recommendation to the notice of the appropriate authorities of constituent States or provinces at the earliest possible moment;
(c) a federal State Party to this Convention shall, at the request of any other Contracting State transmitted through the Secretary-General of the United Nations, supply a statement of the law and practice of the federation and its constituent units in regard to any particular provision of this Convention, showing the extent to which effect has been given to that provision by legislative or other action.
Article XII 1. This Convention shall come into force the ninetieth day following the date of deposit of the third instrument of ratification or accession. 2. For each State ratifying or acceding to this Convention after the deposit of the third instrument of ratification or accession, this Convention shall enter into force on the ninetieth day after deposit by such State of its instrument of ratification accession. Article XIII 1. Any contracting State may denounce this Convention by a written notification to the Secretary-General of the United Nations. Denunciations shall take effect one year after the date of receipt of the notification by the Secretary General. 2. Any State which has made a declaration or notification under Article X may, at any time thereafter, by notification to the Secretary-General of the United Nations declare that this Convention shall cease to extend to the territory concerned one year after the date of the receipt of the notification by the Secretary General. 3. This Convention shall continue to be applicable to arbitral awards in respect of which recognition or enforcement proceedings have been instituted before the denunciation takes effect. Article XIV A contracting State shall not be entitled to avail itself of the present Convention against other Contracting States except to the extent that it is itself bounds to apply the Convention. Article XV The Secretary-General of the United Nations shall notify the States contemplated in Article VII of the following :(a) signatures and ratifications in accordance with Article VIII;
(b) accessions in accordance with Article IX;
(c) declarations and notifications under Articles I, X and XI;
(d) the date upon which this Convention enters into force in accordance with Article XII;
(e) denunciations and notification in accordance with Article XIII.
Article XVI 1. This Convention of which the Chinese, English, French, Russian and Spanish texts shall be equally authentic, shall be deposited in the achieves of the United Nations. 2. The Secretary-General of the United Nations shall transmit certified copy of this Convention to the States contemplated in Article XIII.(a) in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies, and
(b) between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and
(c) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, may, by like notification, declare to be territories to which the said Convention applies.'
and for the purposes of this Chapter an award shall not be deemed to be final if any proceedings for the purpose of contesting the validity of the award are pending in the country in which it was made." Power of Judicial Authority To Refer Parties To Arbitration - Section 54 of The Arbitration and Conciliation Act provides Notwithstanding anything contained in Part I or in the Code of Civil Procedure 1908 (5 of 1908), a judicial authority, on being seized of a dispute regarding a contract made between persons to whom Section 53 applies and including an arbitration agreement, whether referring to present of future difference, which is valid under that Section and capable of being carried into effect shall refer the parties on the application of either of them or any person claiming through or under him to the decision of the arbitrators and such reference shall not prejudice the competence of the judicial authority in case the agreement or the arbitration cannot proceed or becomes inoperative.(a) that the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto;
(b) that the subject-matter of the award is capable of settlement by arbitration under the law of the country in which the award is sought to be relied upon;
(c) that the award has been made by the Arbitral Tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure;
(d) that the award has become final in the country in which it has been made in the sense that it will not be considered as such if it is open to opposition, appeal or pourvoi en cassation (in the countries where such forms of procedure exist) or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending;
(e) that the recognition or enforcement of the award is not contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon.
Article 2. - Even if the conditions laid down in Article 1 hereof are fulfilled, recognition and enforcement of the award shall be refused if the court is satisfied -(a) that the award has been annulled in the country in which it was made;
(b) that the party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case; or that, being under a legal incapacity, he was not properly represented;
(c) that the award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration.
If the award has not covered all the questions submitted to the arbitral tribunal, the competent authority of the country where recognition or enforcement of the award is sought can, if it thinks fit, postpone such recognition or enforcement or grant it subject to such guarantee as that authority may decide. Article 3. - If the party against whom the award has been made proves that, under the law governing the arbitration procedure, there is a ground, other than the grounds referred to in Article 1(a) and (c), and Article 2(b) and (c), entitling him to contest the validity of the award in a Court of Law, the Court may, if it thinks fit, either refuse recognition or enforcement of the award or adjourn the consideration thereof, giving such party a reasonable time within which to have the award annulled by the competent tribunal. Article 4. - The party relying upon an award or claiming its enforcement must supply, in particular -(1) the original award or a copy thereof duly authenticated, according to the requirements of the law of the country in which it was made;
(2) documentary or other evidence to prove that the award has become final, in the sense defined in Article 1(d), in the country in which it was made;
(3) when necessary, documentary or other evidence to prove that the conditions laid down in Article 1, paragraph (1) and paragraph (2)(a) and (c), have been fulfilled.
A translation of the award and of the other documents mentioned in this Article into the official language of the country where the award is sought to be relied upon may be demanded. Such translations must be certified correct by a diplomatic or consular agent of the country to which the party who seeks to rely upon the award belongs or by a sworn translator of the country where the award is sought to be relied upon. Article 5. - The provisions of the above Articles shall not deprive any interested party of the right of availing himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon. Article 6. - The present Convention applies only to arbitral awards made after the coming into force of the Protocol on Arbitration Clauses opened at Geneva on September 24th, 1923. Article 7. - The present Convention, which will remain open to the signature of all the signatories of the Protocol of 1923 on Arbitration Clauses, shall be ratified. It may be ratified only on behalf of those Members of the League of Nations and Non-Member States on whose behalf the Protocol of 1923 shall have been ratified. Ratification shall be deposited as soon as possible with the Secretary- General of the League of Nations, who will notify such deposit to all the signatories. Article 8. - The present Convention shall come into force three months after it shall have been ratified on behalf of the High Courtracting Parties. Thereafter, it shall take effect, in the case of each High Courtracting Party, three months after the deposit of the ratification on its behalf with the Secretary-General of the League of Nations. Article 9. - The present Convention may be denounced on behalf of any Member of the League or Non-Member State. Denunciation shall be notified in writing to the Secretary-General of the League of Nations, who will immediately send a copy thereof, certified to be in conformity with the notifications, to all the other Contracting Parties, at the same time informing them of the date on which he received it. The denunciation shall come into force only in respect of the High Contracting Party which shall have notified it and one year after such notification shall have reached the Secretary-General of the League of Nations. The denunciation of the Protocol on Arbitration Clauses shall entail, ipso facto, the denunciation of the present Convention. Article 10. - The present Convention does not apply to the colonies, protectorates or territories under suzerainty or mandate of any High Courtracting Party unless they are specially mentioned. The application of this Convention to one or more of such colonies, protectorates or territories to which the Protocol on Arbitration Clauses opened at Geneva on September 24th, 1923, applies, can be effected at any time by means of declaration addressed to the Secretary-General of the League of Nations by one of the High Courtracting Parties. Such declaration shall take effect three months after the deposit thereof. The High Courtracting Parties can at any time denounce the Convention for all or any of the Colonies, Protectorates or territories referred to above. Article 9 hereof applied to such denunciation. Article 11. - A certified copy of the present Convention shall be transmitted by the Secretary-General of the League of Nations to every Member of the League of Nations and to every Non-member State which signs the same.(a) the original award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made;
(b) evidence proving that the award has become final; and
(c) such evidence as may be necessary to prove that the conditions mentioned in clauses (a) and (c) of sub-section (1) of section 57 are satisfied.
(2) Where any document requiring to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. Explanation. - In this section and all the following sections of this Chapter, "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction over the subject-matter, of the award if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes." (B) Conditions required to be fulfilled for enforcement of foreign awards - Section 57 of the Arbitration and Conciliation Act, 1996 provides the conditions which are required to be fulfilled for enforcement of foreign awards. Sub-section (1) of this section provides that In order that a foreign award may be enforceable under this Chapter, it shall be necessary that -(a) the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto;
(b) the subject-matter of the award is capable of settlement by arbitration under the law of India;
(c) the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure;
(d) the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition or appeal or if it is proved any proceedings for the purpose of contesting the validity of the award are pending;
(e) the enforcement of the award is not contrary to the public policy or the law of India.
In the Explanation to the sub-section, it has been declared that without prejudice to the generality of clause (e) for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption. Sub-section (2) lays down the situations when enforcement of an award may be refused by the Court. It provides that even if the conditions laid down in sub-section (1) are fulfilled, enforcement of the award shall be refused if the Court is satisfied that-(a) the award has been annulled in the country in which it was made;
(b) the party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case; or that, being under a legal incapacity, he was not properly represented;
(c) the award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submissions to arbitration;
But if the award has not covered all the differences submitted to the arbitral tribunal, the Court may, if it thinks fit, postpone such enforcement or grant it subject to such guarantee as the Court may decide. Sub-section (3) provides when the Court may either refuse enforcement of the award or adjourn consideration of it. It says that - If the party against whom the award has been made proves that under the law governing the arbitration procedure there is a ground, other than the grounds referred to in clauses (a) and (c) of sub-section (1) and clauses (b) and (c) of sub-section (2) entitling him to contest the validity of the award, the Court may, if it thinks fit, either refuse enforcement of the award or adjourn the consideration thereof, giving such party a reasonable time within which to have the award annulled by the competent tribunal."(1) Save as otherwise provided by any law for the time being in force and unless the parties have otherwise agreed, this part shall apply to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto.
(2) This part shall not apply where by virtue of any law for the time being in force certain disputes may not be submitted to conciliation."
What is visualised is some effort to resolve differences through informal negotiation before falling back on private arbitration or public litigation. The language of the provisions [Part III] have been made broad and general like Part I of the 1996 Act relating to domestic arbitration. Section 61 deals with the application and scope of conciliation machinery. It provides that `save as otherwise provided by any law for the time being in force and unless the parties have otherwise agreed, this Part shall apply to conciliation of disputes arising out of legal relationship (whether contractual or not) and to all proceedings relating thereto. This part shall not apply where by virtue of any law for the time being in force, certain disputes may not be submitted to conciliation' (viz. disputes on taxation, personal laws, etc.). Commencement of Conciliation proceedings - According to Section 62 a party willing to conciliate is required to send the written invitation to the other party containing the subject matter. The proceedings commences on acceptance in writing by the other party. However, the proceedings shall not commence if the invitation is rejected or no reply has been received within 30 days of the sending of invitation."(1) There shall be one conciliator unless the parties agree that there shall be two or three conciliators.
(2) Where there is more than one conciliator, they ought, as a general rule to act jointly."
So as a general rule there will be only one conciliator but parties agree, they may two or three who will then act jointly. Commencement of Conciliation Proceeding - Section 64 of the Act provides the procedure for appointment of conciliator. "(1) Subject to Sub-section (2) -(a) in conciliation proceedings with one conciliator, the parties may agree on the name of a sole conciliator;
(b) in conciliation proceedings with two conciliators, each party may appoint one conciliator.
(c) in conciliation proceedings with three conciliators, each party may appoint one conciliator and the parties may agree on the name of the third conciliator who shall act as the presiding conciliator.
(2) Parties may enlist the assistance of a suitable institution or person in connection with the appointment of conciliators, and in particular, -(a) a party may request such an institution or person to recommend the names of suitable individuals to act as conciliator; or
(b) the parties may agree that the appointment of one or more conciliators be made directly by such an institution or person;
But in recommending or appointing individuals to act as conciliator, the institution or person shall have regard to such considerations as are likely to secure the appointment of an independent and impartial conciliator and, with respect to a sole or third conciliator, shall take into account the advisability of appointing a conciliator of a nationality other than the nationalities of the parties. According to the provisions of this section, there are three options for the parties to appoint one or more conciliators :-(1) If they choose to appoint one conciliator both the parties must agree on the name of such sole conciliator;
(2) If they chose to appoint two conciliators, each party may appoint one conciliator.
(3) If they chose to appoint three conciliators, each party may appoint one conciliator and the third conciliator will be appointed by both the parties agreeing with each other on such appointment. Such third conciliator will act as the presiding conciliator.
Besides the above options, the parties may require the assistance of suitable institution or person for appointment of such conciliators as per sub-section (2) Procedure Of Conciliation Proceeding 1. Submission of Statements to Conciliator - Under the provisions of section 65, -(1) The conciliator, upon his appointment, may request each party to submit to him a brief written statement describing the general nature of the dispute and the points at issue. Each party shall send a copy of such statement to the other party.
(2) The conciliator may request each party to submit to him a further written statement of his position and the facts and grounds in support thereof, supplemented by any documents and other evidence that such party deems appropriate. The party shall send a copy of such statement, documents and other evidence to the other party.
(3) At any stage of the conciliation proceedings, the conciliator may request a party to submit to him such additional information as he deems appropriate.
In this connection the term "Conciliator" means the sole conciliator or two or three conciliators as the case may be. 2. Conciliator not bound by certain enactments - Section 66 provides that the conciliator is not bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. It means that the conciliator is not bound to follow the procedure as provided in the Code of Civil Procedure, 1908, nor the conciliator is bound to follow the rules of evidence as provided in the Indian Evidence Act, 1872. Role of Conciliator in Conciliation Proceedings - Section 67 of the Act enumerates the role of a Conciliator :-(i) To assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute.
(ii) The conciliator shall be guided by principles of objectivity, fairness and justice, giving considerations to, among other things, the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties.
(iii) The conciliator may conduct the proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute.
(iv) The conciliator may at any stage of the proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons thereof.
The term "fairness" embodies the concept of "equality", that means equal treatment and opportunity to the parties in conciliation, it is to be ensured by the conciliator. The parties are also required to co-operate in good faith with the conciliator [Section 71]. Section 70 provides privilege to the conciliator whether to disclose information made known to him by one party to the other party. In conciliation the conciliator is a confidential person who should win confidence of the parties primarily to conduct the proceedings. However, he may make disclosure of such factual information to the other party in order that the party may have the opportunity to present any explanation, which the conciliator considers appropriate. However, proviso to section 70 states that if, the party gives any information to the conciliator subject to a condition that it be kept confidential, in such cases the conciliator is not allowed to disclose such information to the other party. Settlement Agreement : Formulation and Authenticity Section 72 provides freedom to each party in respect of the conciliation to submit his own suggestions to the conciliator or to give suggestion at the invitation of the conciliator, for the settlement of the dispute. Section 73 prescribes procedure for successful end of conciliation proceedings. The conciliator when form the option that acceptable settlement agreement may be reached, he shall formulate a possible settlement and submit it to the parties for their observations. After receiving the observations of the parties, the conciliator may reformulate the terms of possible settlement in the light of such observations. If the settlement is accepted the parties shall sign it and the same shall be final and binding on them. The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties. Section 74 lays down that the settlement agreement shall have the same status and effect as if it is an arbitral award under Section 30 of the Act. As settlement agreement has been given similar status as to an award on agreed terms on the substance of dispute and also same effects, although a settlement agreement is the result of parties' choice by self-determination, a party to an agreement may be estopped from invoking the ground for setting aside it under Section 34. However, Section 34(2)(b)(i) provides that the court is not barred from setting aside the agreement if it finds that the subject matter of the dispute is not capable of settlement by conciliation. Further, the agreement could be set aside, under Section 61(2) if the settlement agreement is opposed to the public policy of India. A `settlement agreement' is to be treated like a decree of the court, but the executing court may refuse to grant prayer if it is of opinion that the settlement agreement has been made in contravention of Section 34(2)(b) and hence without jurisdiction [UOI v. M/s. Jagat Ram Trehan and Sons, AIR 1996 Del 191]. Confidentiality Of Proceeding Section 75 of The Arbitration and Conciliation Act 1996 provides as -"Notwithstanding anything contained in any other law for the time being in force, the conciliator and the parties shall keep confidential all matters relating to conciliation proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure is necessary for the purpose of implementation and enforcement."
Termination Of Conciliation Proceedings Section 76 of Act lays down four situations, when the conciliation proceedings can be terminated, which are -(a) by the signing of the settlement agreement by the parties on the date of the agreement; or
(b) by a written declaration of the conciliator, after consultation with the parties, to the effect that further efforts at conciliation are no longer justified, on the date of the declaration; or
(c) by a written declaration of the parties addressed to the conciliator to the effect that the conciliation proceedings are terminated, on the date of the declaration; or
(d) by a written declaration of a party to the other party and the conciliator, if appointed, to the effect that the conciliation proceedings are terminated, on the date of the declaration.
Resort To Arbitral or Judicial Proceedings According to Section 77 of the Act, during the continuance of conciliation proceedings parties are precluded from initiating the arbitral or judicial proceedings in respect of a dispute that is the subject matter of conciliation proceedings. However the parties may proceed with such proceedings if due to the limitation of any other legal requirement, non-prosecution may defeat their rights. Role of Conciliator In Other Proceedings Section 80 of Act says - "Unless otherwise agreed by the parties, -(a) the conciliator shall not act as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute that is the subject of the conciliation proceedings;
(b) the conciliator shall not be presented by the parties as a witness in any arbitral or judicial proceedings."
Admissibility Of Evidence Section 81 of The Arbitration and Conciliation Act provides - "The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute that is the subject of the conciliation proceedings, -(a) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute;
(b) admissions made by the other party in the course of the conciliation proceedings;
(c) proposals made by the conciliator;
(d) the fact that the other party had indicated his willingness to accept a proposal for settlement made by the conciliator."