Law relating the applicability of Arbitration procedure

Meaning

Arbitration is the means by which parties to a dispute get the same settled through the intervention of a third person or more, but without recourse to a court of law. The settlement of dispute is arrived by the judgment of the third person or more  who are called Arbitrators. The parties repose confidence in the judgment of the arbitrator and show their willingness to abide by his decision. The essence of arbitration is thus based upon the principle of keeping away the dispute from the ordinary court enabling the parties to substitute by a domestic tribunal. It is therefore reference of the matter of disputes to the decision of one or more persons between the disputing parties.

With a view to consolidate and amend the law relating to domestic arbitration, International commercial arbitration a new law called Arbitration and Conciliation Act 1996 has been passed.

OBJECT: Major changes have been brought in the new law to attract foreign investors by creating such circumstances so that they may have confidence in the system of commercial disputes resolution and enforcement of foreign awards in India. Some of the main objectives of the Act. are as under :

a) To cover domestic and international Commercial arbitration and conciliation.

b) To make provision for an arbitral procedure which is fair, transparent, efficient and capable of meeting needs of the specific arbitration.

c) To ensure that arbitral tribunal gives solid reasons for its arbitral award

d) To ensure that the arbitral tribunal remains within the prescribed limits of its jurisdiction.

e) To minimize the supervisory and intervensionary  role of the court in the arbitral process.

f) To permit an arbitral tribunal to use the means of mediation, conciliation or other procedure during the arbitral proceedings to encourage settlement.

g) To provide that every final arbitral award is enforced in the same manner as if it were a decree of the Court.

Scope and Application of the Act.

The Act contains 86 section and three schedules and is divided into four parts – Part I deals with Arbitration. Part II deals with enforcement of certain foreign award. Part III deals with ‘Conciliation’ which is unique feature in the new Act. Part IV deals with supplementary provision.

Sec 2(2),(3),(4) and (5) specially deal with the scope and applicability of Part I of the Act which is pointed below:-

a) Part I is applicable where the place of arbitration is in India, irrespective of whether the parties are Indian or foreigner.

b)Part I does not affect any law by which certain disputes may not be referred to arbitration.

c) Part I applicable to all arbitration, falling under other enactments, except where inconsistent.

d)Part I does not override any agreement between India and other Country.

The Features of Arbitral Award:

As per sec 2(1)( c ) “arbitral award” includes interim award. The definition does not give much details of the ingredients of an arbitral award. The features of Arbitral Award is pointed below :

1. An arbitral award required to be made in writing on proper value stamp paper as prescribed.

2. The award must be signed by the member of tribunal or majority of signature is enough if the reason for any omitted signature is stated.

3. The award should be dated.

4. Place of arbitration is important for determination of rules applicable to substance of disputes, and recourse against  the award.

5. The arbitral tribunal may include in the sum for which award is made interest up to the date of award and also a direction regarding future interest.

6. The award may also include decision and direction of the arbitrator regarding the cost of the arbitration.

7. After the award is made, a signed copy should be delivered to each party for appropriate action like implementation or recourse against arbitral award.

Arbitration Agreement

There should be an agreement mentioning all terms and condition regarding arbitration procedure. Arbitration Agreement means an agreement referred  under sec 7 that an agreement by parties to submit the arbitration or certain disputes which have arisen between them in respect of legal relation ship whether contractual or not. Agreement shall be in writing with containing the following fact.

a) a document signed by the parties.

b) an exchange of letters, telex, telegram or others means of telecommunication which provide a record of the agreement.

c)An exchange of statement of claims and defence in which the existence of the agreement is alleged by one party and not denied by the other.

Appointment of Arbitrator

Sec 11 of the Act deals with the appointment of the Arbitrator and the following provision should be taken in to consideration.

a) The parties may agree to a procedure of appointment of arbitrator otherwise the following procedure shall apply:-

i. Arbitrator could be any nationality.

ii.In case of three arbitrator each party appoint its own arbitrator and two appointed arbitrator appoint the 3^rd arbitrator.

iii.If within 30 days party fail to appoint arbitrator than Chief Justice shall appoint the arbitrator.

b) Decision of  Chief Justice on appointment of arbitrator  is final.

c) Chief Justice or Person designated would have due regard to qualification of arbitrators.

d) Chief Justice can make any scheme, he consider appropriate for appointment.

Number of Arbitrator

Sec 10 provides that parties are free to determine the number of arbitrators provided that such number shall not be an even number. If they fail to determine the arbitral tribunal shall consist of a sole arbitrator.

According to sec 12 of the Act when a person is approached in connection with his possible appointment as an arbitrator he shall disclose in writing any circumstances likely to give rise to justifiable doubts to his independence or impartiality. A party can challenged the appointment of arbitrator if the circumstances giving justifiable doubts as to his independence or he does not posses the qualification agreed by the parties.