Arbitration, an alternative dispute resolution mechanism is expected to afford faster and cheaper alternative dispute resolution mechanism. As a part of economic reforms that triggered in early 1990s, the Arbitration & Conciliation Act, 1996 (1996 Act) was enacted, to ensure that arbitration proceedings are just, fair and effective; and to minimize the intervention of the courts. To make arbitration practical and faster remedy, it is important that technical rules of evidence as applicable to conventional judicial trial and consequent dependency on legal professionals is minimized. This write-up examines the extent to which the technical rules of evidence apply to arbitration proceedings governed by the 1996 Act.
Statutory recognition of Inapplicability of Technical Rules
As per section-1 of the Indian Evidence Act, 1872 the said Act does not apply to proceedings before the Arbitrator. Further, section 19(1) of the 1996 provides that Arbitral Tribunal shall not be bound by the Indian Evidence Act. Thus the inapplicability of technical rules of evidence is statutorily recognized.
Procedure for admissibility of any evidence in arbitration
In absence of applicability of Evidence Act a question arises, as to how arbitral tribunal will determine admissibility of any evidence. The answer is provided by sub-section (2) to (4) of section 19 of 1996 Act. Under sub-section (2) of section-19, the parties to the arbitration agreement are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceedings. Under sub-section (3) of section-19, failing such agreement, the Arbitral Tribunal is at liberty to conduct proceedings in the manner it considers appropriate. Under sub-section (4) of section-19, the Arbitral Tribunal for conducting its proceedings in manner it considers appropriate, has the power to determine the admissibility, relevance, materiality and weight of any evidence.
Consequently, the Arbitral Tribunal can consider the documents produced before it, without insisting for formal proof by examining the executant thereof. The quality and quantity of evidence is for the Arbitrator to decide.
Applicability of Principles of Law of Evidence
While provisions of the Evidence Act, 1872 do not in terms apply to arbitration proceeding, the principles of Law of Evidence generally apply to arbitration proceeding. Section 18 of the 1996 Act insists that the parties shall be, treated with equality and each party shall be given a full opportunity to present his case. Under section-24 the parties are entitled to sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property. Further, all statements, documents etc. supplied to, or applications made to, the arbitral tribunal by one party is required to be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision ought to be communicated to the parties. Thus, the Arbitral Tribunal is bound to see that there is no violation of principles of natural justice and no evidence is taken behind the back of any party or that no evidence is taken without allowing the other party to scrutinize the same. Similarly, if there is no evidence before an arbitrator or award is based on no evidence, the Court can set aside such an award.
Use of Arbitrator’s expertise
In many arbitrations, persons with technical knowledge in business/trade relevant to the dispute (like construction, engineering, capital market, finance), are appointed as arbitrators. They are expected to be well-versed with the practices and customs in their respective fields. The Arbitral Tribunal can use its expert or technical knowledge or the general knowledge about the particular business/trade in deciding a matter. This is in contradistinction to the rule that Arbitral Tribunal cannot of make use of its personal knowledge of the facts of the dispute, which is not a part of the record, to decide the dispute.
Only the application of technical rules of evidence is dispensed in arbitration proceedings. This is expected to aid less dependence on trained legal professionals, lengthy arguments concerning applicability of rules of evidence and consequently cheaper and faster resolution of disputes. At the same time principles of law of evidence continue to apply to ensure that no injustice is done.
 Rashtriya Chemicals and Fertilizers Limited v. Mohinder Singh & Co., AIR 1985 Bom 381
 Prakashnarayan Shaktia v. Hotel Corporation of India Limited, (1998) 1 Mah LJ 66
 Union of India v. D. Bose AIR 1981 Cal 95; Rashmi Housing Private Limited vs. Pan India Infraprojects Private Limited MANU/MH/2271/2014
 Delhi Development Authority v. Alkaram, AIR 1982 Del 365; Chhogmal Rawatmal v. Sankalchand G. Shah (1949) 53 Cal WN 828
 P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd., (2012) 1 SCC 594