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yedhash (n/a)     30 September 2007

Arbitration Act

Can any members provide with a Frequently Asked Questions (FAQ) on Arbitration?


 5 Replies

Shambasiv (n/a)     30 September 2007


[font=""trebuchet ms""]Q. What is Arbitration?
Arbitration is a method whereby parties can resolve their disputes privately. It is known as an alternative dispute resolution mechanism. Instead of filing a case in a court, parties can refer their case to an arbitral tribunal, which is the forum where arbitration proceedings are conducted. The arbitral tribunal will consider the questions over which the parties are in conflict and will arrive at a decision. This decision is known as an 'award'.
[font=""trebuchet ms""]Q. Who can enter into Arbitration Agreement?                               

Following persons can enter an Arbitration agreement:-

a. Every person (including a foreigner) who is competent to contract can enter into an arbitration agreement. He must have attained the age of majority according to the law to which he is subject and must be of sound mind and must not be disqualified from contracting by the law by which he is governed.

b. In the case of a partnership, a partner may enter into an arbitration agreement on behalf of the partnership, only if he is so authorised in writing by the other partners or in the partnership agreement itself.

c. The Directors or other officers of a company can enter into an arbitration agreement on behalf of the company, subject to the restrictions, if any, contained in the Memorandum of Association or Articles of Association of the Company.

d. Central and State Governments can enter into such agreement, subject to fulfillment of Constitutional requirements.

e. Public undertakings can enter into an arbitration agreement like any private party. Such agreement can be with private parties within the country or with foreign parties or foreign States and State agencies. [/font]


[align=justify][font=""trebuchet ms""]Q. What are the basic requirements of Arbitration Agreement

Section 7(3) of the new Act requires that the arbitration agreement must be in writing. Section 7(2) provides that it may be in the form of an arbitration clause in a contract or it may be in the form of a separate agreement. Under Section 7(4), an arbitration agreement is in writing, if it is contained in: (a) a document signed by the parties, (b) an exchange of letters, telex, telegrams or other means of telecommunication, providing a record of agreement, (c) or an exchange of claims and defence in which the existence of the agreement is alleged by one party and not denied by the other. In section 7(5), it is provided that a document containing an arbitration clause may be adopted by ""reference"", by a contract in writing. 


bupesh (n/a)     30 September 2007

[font=""courier new""]Q.[/font][font=""courier new""]What are the duties and Responsibilities of an Arbitrator?[/font][font=""courier new""] [/font]

[font=""courier new""]a. An arbitrator should be fair and absolutely impartial. He should have no bias and should decide the dispute referred to him in a judicious manner and not capriciously or whimsically. The terms of reference under the arbitration agreement should be strictly followed.[/font]

[font=""courier new""]b. He should not disregard the principles of natural justice. He must have scrupulous regard to the ends of justice. He should have no interest, direct or remote, in the subject matter of the dispute or in any of the parties and should not act as an advocate of the party appointing him.[/font]

[font=""courier new""]c. He should not misconduct himself or the proceedings. Failure to perform essential duties of an arbitrator is deemed to be misconduct.[/font]

[font=""courier new""]d. He should not accept any illegal gratification or receive any pecuniary inducement which may affect the fair determination of the matters submitted for arbitration.[/font]

[font=""courier new""]e. An arbitrator should not engage in private discussion or conference with one of the parties on any matter connected with the case, in the absence of the opposite party. [/font]

[font=""courier new""]When there are two or more arbitrators, every stage of the proceedings must be conducted in the presence of all the arbitrators. Every judicial act must be performed after due notice to the parties. However, arbitrators may delegate some ministerial matters and functions to one of them or to a third person.[/font]

[font=""courier new""]f. An arbitrator must give the parties notice of hearing and sufficient opportunity to present their case. Both the parties must be given equal opportunity to produce evidence and to put forward their case.[/font]

[font=""courier new""]g. The arbitrator is entitled to proceed ex parte if it is clear that the party to whom reasonable notice has been given does not appear or if there is clear indication that he has no intention of appearing.[/font]

[font=""courier new""] [/font]

P.V.Poornima (Lawyer)     04 March 2008

What is arbitration?

Arbitration is the submission for determination of disputed matters to private unofficial persons selected in a manner provided by law or agreement.

Does arbitration consume time?

Arbitration is efficacious and not time-consuming. It is common knowledge that the judiciary in our country is slow-moving . Arbitration, on the other hand, is platonic, definite, un-enigmatic, easily enforceable and executable; unlike regular lawsuits which are replete with complexities and procedural rigmaroles.

Will there be court's interference in arbitration?

Arbitration by itself is independent, leaving a very little opportunity for the courts to interfere with its procedure, which ranges from enforcement to execution.

How should an arbitration agreement be?

Arbitration is simple. It is not a must that there should be a separate arbitration agreement in respect of every contract. It is enough to have an arbitration clause among other clauses in a contract. Even if there is no arbitration clause in the contract, an exchange of letters, telex, telegrams or others means of communication which provide a record of the agreement (for arbitration) will be construed as an arbitration clause in such a contract under the provisions of the Arbitration and Conciliation Act, 1996.

Can an arbitration agreement be by-passed?

When there is an arbitration agreement, either separately or in the form of clause in a contract, no party to it can invoke the jurisdiction of courts to resolve any dispute which is the subject-matter of the arbitration agreement vis-à-vis the contract. Even if a court's jurisdiction is invoked, they are bound to relegate the dispute to arbitration if objection to the court's jurisdiction is made by a party not later than submitting his/her statement of defence.

In arbitration is it possible to obtain interim relief?

Either before or after commencement of arbitration proceedings, the party to the arbitration agreement vis-à-vis the contract can obtain interim orders from a court for protecting his/her interest against the arbitral dispute, such as injunction, attachment, seizure and the like.

For example, in a hire purchase contract, the financier can, in a court of law, seek against the hirer an order of seizure of the vehicle or equipment given on hire, or can seek an injunction order restraining the hirer from using the vehicle/equipment given on hire, in the event of non-payment of hire instalments.

Can an arbitrator grant interim relief?

Even the arbitral tribunal, be it a single- or three-member tribunal, has powers to grant interim relief to protect the interests of the parties in the arbitral disputes.

Will the rules of evidence be strictly followed in arbitration?

In an arbitration, the arbitral tribunal need not be bound by the provisions of the Civil Procedure Code or the Indian Evidence Act which prescribe a series of procedures to be followed in the determination of disputes — the determination of trial of contentious issues, besides being cumbersome, is time-taking. Arbitration is free from procedural hassles and inconveniences and, thereby, result in speedy disposal of arbitral disputes.

Is settlement of disputes possible in arbitration?

It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of disputes. With the agreement of the parties to a contract, the arbitral tribunal may use mediation or conciliation at any time during the arbitral proceedings and pass an arbitral award on agreed terms.

Can an arbitral award (judgment of arbitrator) be set aside?

There are limited grounds for setting aside an arbitral award. It can be set aside within 90 days from the date of receipt of the award by a party. Only on five grounds can an arbitral award be set aside, namely, incapacity of party, invalidity of arbitration agreement or award, lack of proper notice of appointment of arbitrator or of arbitral proceedings, excess of jurisdiction or incomplete award, and improper composition of arbitral tribunal and its proceedings.

The party challenging the award has to establish any of these grounds beyond reasonable doubts to set aside the award, failing which, the court will uphold the arbitral award.

How to enforce an arbitral award?

An arbitral award can be easily enforced. The award shall be enforced under the provisions of the Code of Civil Procedure in the same manner as it were a decree of the court. An award can be enforced within 12 years from its date. Like a civil court decree, an arbitral award can be enforced by bringing the property of the judgment-debtor (the party against whom the award is passed) to sale with the intervention of court, by detaining him in the civil prison, attaching his salary, and so on.

In what issues of arbitration, parties can agree?

In an arbitration the parties are free to agree on the number of arbitrators, the procedure for arbitration and appointment of arbitrators, place, language and costs of arbitration.

What is the biggest advantage in arbitration?

It is not that only if there is an arbitration clause in a contract a party can refer a dispute arising under such a contract to arbitration. Even after the execution of contract sans an arbitration clause before or after any dispute in respect of such a contract coming to light, an arbitration agreement in writing can be entered into between the parties to the contract in respect of such a dispute.

Several courts have held many a time that even when a contractual dispute is pending in the court in the form of a civil suit, such a dispute can be referred to arbitration if both the plaintiff and defendant agree for such a reference, and, in such circumstances, the arbitral tribunal shall proceed with the dispute from where it was left by the court.

SANJAY DIXIT (Advocate)     04 March 2008

Thanks all of you for the useful information.

Shree. ( Advocate.)     18 April 2008

1.What is divorce mediation?
Divorce mediation is a process whereby you and your spouse meet with an individual, the mediator, for as long as necessary to identify and resolve the issues existing between you. A mediator can be a lawyer, but usually does not provide legal advice. Once an agreement is reached, the mediator writes it up, and may recommend that each of you take it to a lawyer for review.

2.Who should use a divorce mediator?
Divorce mediation seems most useful for couples who are very much in agreement on how they want to resolve the issues in their marriage (custody, support, property distribution), but who have some disputes and do not want to use lawyers for fear the lawyers may make the case more difficult or expensive than it need be. Mediation works for couples who have gotten along during the marriage, and are in agreement about becoming divorced. In addition, it works best for couples who are each fully aware of the income, assets and expenses of the other.

3.Does an attorney play any role in the divorce mediation process?
Some divorce mediator are attorneys, but it is best for each spouse to have an attorney, independent of the mediator, review the agreement the parties and their divorce mediators have reached, just to be sure that no areas have been overlooked. In addition, because many mediators are not lawyers, a lawyer might still be needed to draft the legal documents the local court that grants divorces requires to process a divorce.

4.What qualities should I look for in a mediator?
Many states do not have licensing requirements for mediators, so be sure, either through references or by interviewing the mediator, that he is qualified. Courses taken, number of cases handled to agreement, references the mediator is willing to give can all be helpful in evaluating the mediator's competence. At a minimum, the mediator must be familiar with the matrimonial law of your state.

As with a lawyer, you should feel comfortable with the mediator. Your spouse must feel comfortable as well. Mediation has a better chance of success if you both feel the same way about the mediator. Avoid using a well meaning, however qualified, friend.

5.How much does a divorce mediator cost?
Some divorce mediators have a set fee for all sessions, from inception to agreement. Others, like lawyers, charge an hourly rate. Be sure this information is provided to you and your spouse before you hire a mediator, and that it is in writing. Make sure you and your spouse have agreed, in writing, on how the mediator's fees will be paid. Like some lawyers, some mediators require an advance fee to be paid before any work is undertaken.

6.Isn't divorce mediation cheaper than going to lawyers?
Not necessarily. While a divorce mediator may charge you less than a lawyer would, you and your spouse should each still have a lawyer (not the same lawyer) review the mediated agreement you have reached. That means you will be paying the mediator and two lawyers, rather than just two lawyers, if you had not gone to the mediator. However, you may save money because the lawyers' work should be minimized as a result of the work the mediator already did.

In other words, you may be paying three people, but the total fees may be less than if you had paid two. Still, they could be more. Try to estimate how much it would cost to have lawyers handle a relatively simple case first, and then compare that with adding a mediator.

7.What are the disadvantages of divorce mediation?
First, even if a lawyer does not go to court, reality is that he can to obtain a court order to compel the other party to do something. In contrast, divorce mediators do not have the authority of a judge behind them, and therefore lack any power to make binding demands on either party. Thus, the success of mediation depends entirely on the cooperation of the parties. Similarly, the mediator has no way to compel either party to do anything, such as reveal income or assets, within a reasonable period of time.

Second, one spouse sometimes perceives the mediator as favoring the other, and when this happens, the likelihood of reaching an agreement with the mediator diminishes.

Third, a mediator may not advise you fully of the law, and the possibility exists that you will reach an agreement unaware of rights you have lost.

Next, a mediated agreement should still be reviewed by a lawyer for each side.That is why there is a possibility that mediation can be more costly than a settlement with only lawyers.

Finally, there is no mediator/client privilege. That means that what you disclose to the mediator is not confidential.

8.What is arbitration?
Arbitration is the process whereby an arbitrator resolves the issues existing between you and your spouse following a proceeding that is conducted very much like a hearing or a trial. Arbitration is usually binding, which means that neither party can appeal the arbitrator's decision.

9.How is arbitration different from a trial?
The outcome of a trial can usually be appealed. Arbitration usually cannot be appealed. Arbitration is usually less formal than a trial--the rules of evidence may or may not be followed, depending on what rules everyone agrees to. An arbitrator can be more flexible than a judge, because before the arbitration begins, both sides can agree to what rules the arbitrator is to follow.

10.When is arbitration useful?
In a divorce, arbitration can be useful in cases that have been prolonged because of court schedules, provided disclosure of marital assets and income is complete. Use of an arbitrator may cut short the waiting period to have a case tried by years.

If the arbitrator's decision cannot be appealed, why would anyone use an arbitrator?
Some divorces become very prolonged and expensive, and arbitration becomes a means to stop what seems to be ceaseless litigation. Spouses who have been involved in literally years of litigation may welcome the chance to have their case heard, once and for all, and may have no intention of appealing the outcome, no matter what the result. Selection of a respected, knowledgeable arbitrator insures that results will be fair.

In addition, all the issues in a case except one--for example, support--may be resolved, and the parties may want to move the case along by having an arbitrator decide this final issue.

Finally, issues that arise after a divorce, which must be resolved within a certain period of time, such as payment of a child's college tuition, might be resolved more quickly by an arbitrator.

11.How do you select an arbitrator?
The attorneys for each party will usually agree on someone to arbitrate the case. The individual may be a matrimonial lawyer or a former judge, and certainly should be very familiar with matrimonial law. Unlike a judge, arbitrators are paid by the parties, not by the government. The issue of who will pay for the arbitrator should be resolved before the arbitration begins.

11.How is arbitration different from mediation?
Unlike a mediator, an arbitrator plays no role in trying to get the parties to resolve the case. Her job is to hear the case. However, like some judges, an arbitrator, before hearing the case, may try to convince both sides to settle based upon what she knows of the case up to that point. This is different from working with the parties to identify and come to mutual agreement about issues.

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