Meaning of Arbitration: As per OXFORD Advanced Learner’s DICTIONARY, it means the official process of settling an argument or a disagreement by somebody who is not involved.
Arbitration & Conciliation Act, 1996: The Arbitration & Conciliation Act, 1996, consolidated and amended the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards.
This Act is based on the lines of model law on International Commercial Arbitration and Model Conciliation Rules adopted by United Nations Commission on International Trade Law (UNCITRAL).
Why Arbitration is important? Arbitration is less time consuming and less expensive method of settling disputes arising out of a contract. It is preferred and encouraged by court of law. A judicial authority before which an action is brought in a matter, which is subject matter of Arbitration shall refer the Parties to Arbitration. [Sec. 8 of Arbitration & Conciliation Act, 1996]
Who can appointed as an Arbitrator? A person of any nationality may be appointed as an Arbitrator. But the parties may agree to appoint a person of any specific nationality as an Arbitrator. [Sec.11(1) of the Arbitration & Conciliation Act,1996]
The appointment of an Arbitrator can be challenged on the grounds of doubt about the arbitrator’s independence or impartiality. The appointment of an Arbitrator may also be challenged on the ground that he/she does not possess the qualification agreed between the Parties. [Sec.12 of the Arbitration & Conciliation Act,1996]
Number of Arbitrators: The Parties are free to determine the number of Arbitrators but this number shall not be an even number However, the validity of an arbitration Agreement does not depend on the number of arbitrators specified therein.
Language & place of Arbitration: It is very important to specify the language and place of Arbitration in the Arbitration Agreement itself in order to avoid any confusion at later stage. The parties are free to agree upon the language and place of Arbitration. If the parties fail to decide, then Arbitral Tribunal shall decide the same as per the circumstances of the case.
Rule of Procedure: The arbitral tribunal shall neither be bound by the Code of Civil Procedure, 1908 nor by the Indian Evidence Act, 1872. Freedom has been given to the Parties to decide the procedure to be followed by the arbitral tribunal in conducting its proceedings. If the Parties to the Abitration fail, then Arbitration Tribunal may conduct the proceedings in the manner it considers appropiate.
EQUAL TREATMENT TO PARTIES: The Parties to Arbitration shall be treated with equality and each party shall be given a full opportunity to present his/her case.
Role of Court in Arbitration: A party may, before or during arbitral proceedings or at any time after making of the arbitral award but before it is enforced in accordance with S.36 apply to a court for interim measure of Protection. However, there has to be manifest intention on the part of applicant to take recorse of arbitral proceeding at the time of filing application under this provision. The applicant for an order under this provison should be a party to arbitration Agreement. It must be noted that it should not be used to frustrate the arbitration proceedings. [Sec. 9 of the Arbitration & Conciliation Act,1996]
Binding nature of Arbitral Award: An arbitral award shall be final and binding on the Parties. However, an application for set aside the Arbitral award can be made on certain grounds mentioned in Sec.34 of the Arbitration & Conciliation Act, 1996. But once the time to make application is expired or applied but refused by the Court, the Arbitral award shall be enforced as if it were a decree of the Court.
Standard Arbitration Clause:
(a) Any dispute which is not settled by mutual agreement shall be at the option of either party and, upon written notice to the other party, be settled through arbitration and the proceeding shall be held under the provisions of Arbitration and Conciliation Act, 1996.
(b) Except as otherwise provided herein, any Dispute shall be resolved exclusively by binding arbitration in accordance with the India’s Arbitration and Conciliation Act, 1996 and the rules and regulations framed there under, as modified from time to time by three (3) arbitrators. Both Parties shall appoint one (1) arbitrator each, and the two (2) arbitrators so appointed shall appoint the third arbitrator. The seat of arbitration shall be Delhi, India. The language of the arbitration shall be English. The arbitration proceedings shall be completed within a period of thirty (30) days from the date of constitution of the arbitration panel. Notwithstanding the foregoing, before the appointment of the arbitrators and in exceptional circumstances even thereafter, a Party to the Dispute may apply to any court of competent jurisdiction to pursue equitable relief (including immediate, preliminary and permanent injunctive relief) to which it may be entitled, in order to preserve the status quo pending resolution of the Dispute at issue, through arbitration.
(c) The costs and expenses of the arbitration, including, without limitation, the fees of the arbitrators and the Arbitration board, shall be borne equally by each Party to the Dispute or claim and each Party shall pay its own fees, disbursements and other charges of its counsel, except as may be determined by the Arbitration board. The Arbitration board shall have the power to award interest on any sum awarded pursuant to the arbitration proceedings and such sum shall carry interest, if awarded, until the actual payment of such amounts.
(d) Any award made by the Arbitration board shall be final and binding on each of the parties that were parties to the Dispute.
YOUR COMMENTS & SUGGESTIONS:
Comments and suggestions are read and very welcome. We really appreciate your time. Thanks in advance.
DISCLAIMER:
The opinions expressed herein are for informational purposes only. Nothing herein shall be deemed or construed to constitute legal advice or opinion. Discussions on, or arising out of this, blog between contributors and other persons shall not create any attorney-client relationship.
(I am thankful to my Seniors and friends for helping me to write this blog.)
