Professional Documents
Culture Documents
Internship Report
Internship Report
ON
BY
ANUSHEEL SHARMA
10FLUHH010102
FACULTY OF LAW (IFHE)
ORGANIZATION
RAO & CO LAWYERS
A REPORT
ON
BY
ANUSHEEL SHARMA
10FLUHH010102
FACULTY OF LAW (IFHE)
ACKNOWLEDGEMENT
I am thankful to Icfai Foundation for Higher Education (IFHE), faculty
of law for providing summer internship program in the legal firm Rao
& Co. Lawyers, Hyderabad.
I am honored to have been deputed to one of the most prestigious law
firm in Hyderabad i.e. the RAO & CO LAWYERS. My sincere gratitude
towards Advocate Mr. Mohan Rao and his employees who were kind
enough to track and monitor the project progress from time to time; and
always made us feel like a part of their Firm.
I shall take the opportunity to express my gratefulness to my faculty
guide Ms. Veena who was there to steer us all this while and for the
encouragement which made the entire internship experience worth while.
I express my sincere thanks to one and all helped me in completion of
the project.
TABLE OF CONTENTS
Chapters Content
Page No.
Abstract
Introduction
II
11
III
17
IV
21
36
VI
39
VII
Conclusion
45
References
46
ABSTRACT
The concept of Arbitration and conciliation play a prominent role in resolving the
disputes between the parties. The process does not involve intervention of the courts
except in some circumstances. This process was in some other form in olden days
such as Ratchabanda, panchayat and other institutions.
liberalization that began in the year 1991. As a result of the economic reform process,
there was tremendous grow in Foreign investment and trade in early 1990s But, it
soon became clear that the Indian Arbitration Act, 1940 did not provide a speedy,
effective and transparent mechanism to address disputes arising out of foreign trade
and investment transactions. The 1996 Act which is based on UNCITRAL model
law on international commercial arbitration was passed to fill this emerging need.
Prior to 1996 enactment, there were lengthy procedures existing. To overcome such
lengthy procedures, it was felt necessary to re-design and re-frame the system and the
present enactment is a born baby in that process. The 1996 enactment brought about
sea-saw changes in the arbitration system and provides transparency in the
proceedings.
In the project, an attempt is made to analyze and study the issues in relation to the
importance of Arbitration and conciliation, Arbitration-pre-independence, postindependence, Need and the problems arising under the Arbitration & Conciliation
Act, 1996, deficiencies in 1940 Act, need of 1996 Act and their related issues.
CHAPTER I
INTRODUCTION
With the advent of 1996 Act, the legislature has brought a tremendous change
in relation to the laws emerging out of the arbitration process. The old Act 1940
confined itself to a limited scope whereas the 1996 Act embraced the real issues in
controversy arising out of the arbitration. For example, under the old Act, once the
award was passed, it was mandatory on the part of the party to approach civil court to
file an application to pass a decree in terms of the arbitral award. Then only, the party
had a right to enforce the award. But, with the advent of the 1996 Act, such narrow
scope has been widened and under Sec. 36 of the 1996 Act, the award can straight
away be executed without making it rule of law.
The Arbitration Act, 1979 of England has brought about number of changes in
the law of Arbitration. English courts have been deprived of the power to compel the
arbitrator to state a special case which is also the position according to the Indian
law. The Courts in England have also been deprived off the power of judicial review
of an award on the ground of error of law on the face of it and to set aside or remit
the same for such error, excepting in special cases. The power of the English courts
to set aside an award on the ground of mis-conduct of the arbitrator or the empire still
remains intact. Unlike Sec. 69 of the Arbitration Act, 1940, the corresponding
Section in the English Act does not specify any ground upon which the award can be
remitted. To the corresponding changes in the 1996 Act, the legislature has also
brought certain amendments to the Code of Civil Procedure, 1908.
In the case of M/s. Sundaram Finance Vs. NEPC (India) Limited, reported in
AIR 1999 SC 565, the Honble Apex Court observed that the interpretation of the
1996 Act should not be based upon the provisions of the old Act, but on
UNCITRAL reports, explanatory notes and analysis of the model law.
Subsequently, plethora of decisions which have been rendered from time to time by
the Honble Apex Court as well as various High Courts, have endorsed such view.
The Arbitration & Conciliation Act, 1996 does not render judicial decisions
on the 1940 Act completely irrelevant. From the stand point of a practicing lawyer,
these decisions remain important for two reasons. First, Arbitration proceedings that
were commenced prior to introduction of 1996 Act continued to be governed by the
1940 Act. Secondly, some of the provisions of the 1996 Act are based on concepts
that are also found in the 1940 Act.
The Arbitration & Conciliation Act, 1996 has provided considerable leverage
in the process of arbitration and there is no need to follow the procedures as required
before the courts. It is left to the choice of the parties to choose an Arbitrator in
consultation with each other. The Arbitrator is empowered to look into the disputes
between the parties, in various angles and has adjudicate upon the issues involved.
The Arbitrator has vital role to play in the process of Arbitration. The award passed
by the Arbitrator is binding on both the parties. The award of the Arbitrator attains
the status of a decree passed by the regular courts. Either of the aggrieved parties can
prefer appeal against the award.
CONCILIATION:
Conciliation plays a prominent role in settling disputes. It avoids procedural
wrangles. Conciliation is more informal in nature. There cannot be Arbitration
during conciliation.
Conciliation Act, 1996. The act further says the conciliator cannot be the Arbitrator.
Conciliator formulate certain terms for settlement and if they are not agreed,
reformulate them to bring the issue to a logical conclusion. To arrive at the same, the
capability to settle the dispute through the process of Conciliation depends more
upon the Strength, power and determination of the Conciliator. Part III of the
Arbitration & Conciliation Act, 1996 relates to conciliation which is an alternative
mechanism for settlement of disputes. The law relating to conciliation process has
been codified for the first time in part III, following the footsteps of UNCITRAL
conciliation rules.
Conciliation is not defined in the Act. Article I of UNCITRAL conciliation rules
corresponding to Section 61 (1) refers to The parties seeking an amicable settlement
of their disputes. Section 67 of the Act relating to role of conciliator requires the
conciliator to assist the parties in an independent and impartial manner in an attempt
to reach an amicable settlement of the disputes. Conciliation is defined as a method
used by parties to a dispute to reach an amicable settlement with the assistance of an
b)
c)
d)
From the above observations, it can be inferred that parties may workout their
remedies through negotiations, conciliation and other discussions prior to
commencement of arbitration.
In HOOPER BAILEE ASSOCIATED LIMITED Vs NATION GROUP PTY.
LTD., (1992) 28 NSWLR 194, it was observed that an agreement to conciliate or
mediate is not to be likened to an agreement to agree nor is it an agreement to
negotiate or negotiate in good faith, perhaps necessarily lacking certainty and
obliging a party to act contrary to its interest. Depending upon its express terms and
any terms to be implied, it may require of the parties participation in the process by
conduct of sufficient certainty for legal recognition of the agreement. Unlike the
case of arbitration, a written conciliation agreement is not necessary. This reflects the
voluntary and non-binding nature of conciliation. This may also encourage parties for
conciliation by oral agreement.
require that the invitation to conciliate and acceptance thereof should be in writing.
On receipt of the invitation to conciliate, the other party can accept the invitation or
reject the invitation. The acceptance or rejection has to be conveyed to initiating
party in writing within 30 days of the date of invitation. The invitation itself may
specify a time limit (a shorter or longer period than 30 days) for acceptance or
rejection of the invitation.
Section 64 lays down the manner of appointment of conciliation and reflects
the principle of party autonomy in this regard. Alternatively, the parties can agree for
appointment of conciliators, directly by the institution or the third person. There is
nothing in Section 64 which prohibits enlistment of assistance even if there was no
prior agreement. For instance, if the parties had agreed for conciliation by a sole
arbitrator but had failed to agree on the name of the conciliator, Section 64 (2) can be
invoked by mutual consent. Conciliators are not bound by code of civil procedure,
1908 or Indian Evidence Act. This is only to provide flexibility and discretion to
them in a conduct of conciliation proceedings. Conciliators may conduct the
proceedings in a manner they consider appropriate in the circumstances of the case.
The cost of the administrative assistance to the conciliator so provided will be
included in cost of the conciliation proceedings which are to be borne equally by
both parties, unless a different apportionment has been agreed upon. A successful
conciliation proceedings culminates in settlement agreement which reflects the
agreed terms of settlement of dispute. Section 73 of 1996 Act which deals with
settlement agreement is based on Article 13 of UNCITRAL Conciliation Rules.
If conciliator feels that the continuation of the conciliatory proceedings is
nothing but a futile exercise, he can forthwith terminate the conciliatory proceedings
and has to be intimated to both parties. The proceedings can be terminated by one of
the parties or jointly by the parties under intimation to the other party or to the
conciliator. The termination is effective from the date of declaration. The termination
of the proceedings under Clause (b) to (d) of Section 76 of 1996 Act enable the
parties to take recourse to arbitral or judicial proceedings for settlement of their
disputes. Conciliator is precluded from acting as an arbitrator or as a representative
or counsel of a party in any subsequent arbitral or judicial proceedings relating to the
dispute that was subject matter of the conciliation proceedings, nor could he be
represented as a witness in any proceedings. However, it is left to the parties
concerned to decide between themselves whether the conciliators can so act.
From the above, it can be observed that the conciliation proceedings prior to
commencement of arbitration play a significant role in settling the disputes. The
process of conciliation avoids the journey of arbitration if it is materialized. It has to
be mandated to go through the process of conciliation before the process of
arbitration so that there is every possibility of settling the disputes at threshold.
Conciliation in the midst of arbitration proceedings is also a positive step for
effective settlement of disputes amongst the parties.
CHAPTER - II
ARBITRATION PRE & POST INDEPENDENCE
The concept of arbitration was unknown in ancient India. Hindus recognize
decisions of the panchayaths or bodies consisting of wealthy, influential and elderly
men of the community and entrusted them with the power of management of their
religion and social functions. The sanction against disobedience to their decision was
ex-communication and exclusion from all religious and social functions of the
community. When power came to East India Company, the company framed
regulations in exercise of the power vested in it by the British Parliament. Bengal
10
regulations empowered the courts to submit the matters in dispute in a suit, to the
decision of the Arbitrator mutually agreed to, by the parties. If the parties did not
consent, the case was not to be referred to Arbitration, but was to be tried by the
courts. Subsequent legislation, viz. Sec. 312 and 314 of Code of Civil Procedure,
1859 and Arbitration Act, 1899 prescribes the mode of appointment of Arbitrator as
agreed upon by the parties. The court had no power to refer the decision of any issue
raised in the suit to the arbitrators nominated by the courts against the protests of the
parties. Such observation was made in Sheonath Vs. Ramnath (1905) (a decision
under code of civil procedure, 1859).
Shortly before the middle of 18th century, it was a conception that an
Arbitrator is a private extraordinary judge between party and party chosen by their
mutual consent to determine controversies between them and Arbitrators are so called
because they have an arbitrary power. SIR ROBERT RAYMOND, CJ had stated
about the same and the same has been reported in Evidence and procedure in
Arbitration
11
OBJECTS:
The Arbitration & Conciliation Act, 1996 takes into account the UNCITRAL
model law which was adopted by the United Nations Commission on International
Trade Law in 1985 for the purpose of International Commercial Arbitration and the
conciliation Rules adopted in the year 1980. The UNCITRAL model law and rules
have hormonized concept of Arbitration & Conciliation of different legal systems of
the world. The main objectives of the enactment of the act are :
i)
12
ii)
to make provision for an arbitral procedure which is fair, efficient and capable
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)
vi)
to provide that every final arbitral award is enforced in the same manner as if
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.
ix)
award made in a 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 & Conciliation Act, 1996 contains 4 parts in which part I
contains 10 chapters and part II contains 2 chapters. The Act contains 86 sections and
deals with general provisions, arbitration agreements, composition of Arbitral
Tribunal, jurisdiction of Arbitral Tribunals, conduct of Arbitral proceedings, making
of arbitral awards, termination of proceedings, recourse against arbitral awards,
penalty and enforcement of arbitral awards, appeals, miscellaneous, enforcement of
certain foreign awards, New York convention awards, Geneva convention Awards,
conciliation awards and supplementary provisions.
PANCHAYATHS, NYAYA PANCHAYATHS:
Hindus recognize decisions of the panchayaths or bodies consisting of
wealthy, influential and elderly men of the community and entrusted them with the
power of management of their religion and social functions. Panchayath literally
13
means a body of five persons and a pancha means a member of that body.
Nowadays, a panchayath has come to denote an arbitration tribunal constituted by the
consent of the parties and the pancha denotes an arbitrator. Sarpanch means, a head
pancha who may be an empire with the parties so intend.
ARBITRARY TRIBUNAL :
Arbitrary tribunal has been defined to mean a sole arbitrator or a panel of
Arbitrators i.e. the Arbitration by a sole arbitrator or by a body consisting of three or
more arbitrators. The term, Arbitrator used in the Act denotes an individual arbitrator
as opposed to the body of arbitrators. Thus, there can be either a one man tribunal or
a tribunal of three or more arbitrators. The composition of Arbitral tribunal is well
explained in Sections 10 and 11 of the Arbitration & Conciliation Act.
DEVELOPMENTOF ARBITRATIONPOST INDEPENDENCE
Foreign Investment and Trade grew rapidly during the early 1990s as a result
of the economic reforms process. The old Act 1940 could not address some areas
arising out of foreign trade which resulted in bringing the 1996 Act in force which is
based upon on United Nations Commission on International Trade Law
(UNCITRAL). There has been exciting developments in the law and procedure of
Arbitration in India after 1947.
14
15
CHAPTER - III
IMPORTANT PROVISIONS OF ARBITRATION &
CONCILIATION ACT 1996
a)
ARBITRATION AGREEMENT :
An arbitration agreement means an agreement by the parties to submit to
arbitration, all or certain disputes which have arisen or which may arise between
16
The relevant sections to that effect are Section 2 (1) (d), 7 (1) under the
17
PROCEDURAL ASPECTS:
A challenge to the validity of an arbitration agreement is inadmissible without
an application to the court. The application, however, does not mean to be in any
particular form. The court can take further evidence when contrary to the affidavits
are filed in a dispute about the validity of the agreement.
e)
VOID AGREEMENTS:
An arbitration agreement is void if a party is a minor or is of not sound mind
MATRIMONIAL MATTERS:
18
DOMESTIC TRIBUNAL:
Although the jurisdiction of a domestic tribunal is founded on a contract,
express or implied, nevertheless, the parties are not free to make any contract they
like. There are important limitations imposed by the public policy. The tribunal must
observe the principles of natural justice. They must give the man notice of the charge
and reasonable opportunity of meeting it. Any stipulation to the contrary would be
invalid. Another limitation
not by contract oust the courts of their jurisdiction (1909 CH at page No.625 in
between Lee Vs Showmens guild of Great Britain).
If parties seek by agreement to take the law out of the hands of the courts and
place it in the hand of private tribunal without any recourse at all to the courts even in
case of error of law, then the agreement to that extent is contrary to the public policy.
The trade union rules can not by implication or express provision make the
interpreter of the rules free from the courts interference.
The court will not interfere with the decision of the members of the club
unless it be shown that the rules are contrary to natural justice or that what has been
done is contrary to the rules. The doctrine of audi alteram partem is of universal
application and the same was discussed in Wood Vs Wood reported in 1871 LR 9
Exch. 190. A domestic tribunal authorized by the rules of the society to expel a
member must give him an opportunity of being heard and give him notice of the
charge against him. An arbitrator must also give the parties an opportunity of being
heard and inform them of the claims and defense which are being put forward.
19
CHAPTER - IV
CRITICAL STUDY OF PROVISIONS OF ARBITRATION
& CONCILIATION ACT, 1996
As the project is in relation to critical study of Arbitration & Conciliation Act,
1996, I have embarked upon my journey with reference to various issues that have
cropped up in implementation of the new Act while interpreting the following
provisions. The Act applies to the whole of India except the state of Jammu &
20
Kashmir. The Act was deemed to have commenced from January, 25, 1996. If the
request for referring the dispute for arbitration was made prior to 26.01.1996, the old
act is to apply. Where such request was made on or after 26.01.1996, the 1996 would
apply.
a)
SCOPE OF SECTION 2:
Section 2 of the Act deals with the terms such as Arbitration, Arbitration
or not, the
question as to which court would have jurisdiction would depend upon where the
parties reside. The emphasis is not on residence but on subject matter of reference
and the same has been observed by various courts in Guardian Assurance Company
Limited Vs Thakur Shiva ILR 1937 ALL 234, AIR 1970 Delhi 14 in the matter
between Veerendra Saigal Vs Sumathilal Jamnalal.
Section 20 of the 1940 Act and its application (dropped subsequently from
1996 Act) could be filed in a court having jurisdiction in the matter to which the
agreement related, which meant the relief claimed. The value of the relief determines
21
jurisdiction, jurisdiction has to be decided on the basis of the amounts and not on the
amount awarded, as observed in Fort William Company Ltd., Vs Union of India
reported in 1986 Vol. II Arbitration Law Reporter 43 (Delhi). One has to look at the
substance of the reliefs claimed and not the mere form in which it is couched. When
the jurisdiction of the court depends on the extent of the amount due to the applicants
from the respondent and the amount is not mentioned in the application, the
application can not be rejected under Order VII Rule 11 CPC without giving an
opportunity to the applicant to amend the application, as reported in AIR 1979
Jammu & Kashmir 87 in between Amarnath Vs Union of India. Where the claim
contained in the petition was more than the pecuniary jurisdiction of the court, the
order of the court appointing the arbitrator and making the award a rule of the court
was held to be without jurisdiction and liable to be set aside. The real fact that the
amount awarded was within the pecuniary limit would not confer jurisdiction on the
court.
Parties can not, by consent confer upon a court, a jurisdiction,
it does not
22
no judicial
authority shall intervene except whereso provided in this part. This section is based
upon Article 5 of the UNCITRAL MODEL LAW which says that no court shall
intervene except whereso provided in this law. This article relates to the crucial and
complex issue of the role of courts with regard to arbitration. Divergent views were
expressed as to the appropriateness of Section 5. The discussion was focused on two
objections. The first objection was that the provision which addressed an issue of
fundamental practical importance did not give a clear answer to the question whether
in a given situation court intervention was available or excluded. The second
objection was that the provision, read together with the few provisions of the Model
Law which provided for court intervention, presented an unacceptably restrictive
scope of judicial control and assistance. In response to the second objection, it was
emphasized that Article 5 of UNCITRAL MODEL LAW and Section 5 of 196 Act
expressed an excessively restrictive view as to the desirability and appropriateness of
court intervention during an arbitration. It was the advantage of the business men
who engaged himself in international commercial arbitration to have access to the
courts while arbitration was still in process in order to have access to the courts while
the arbitration was still in process in order to stop an abuse of the arbitral procedure.
Further more, a limitation of the authority of the courts to intervene in the arbitral
proceedings might constitute an unwarranted interference in the prerogatives of the
judicial power and might even be contrary to the constitution in some states. Finally,
even if the authority of the court to intervene in the supervision of an arbitration
might have to be limited, the court should have broader power to act in aid of the
23
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
24
Therefore, that the parties resort to intervention by a court during the arbitral
proceedings was often used only as a delay in tactic and was more often a source of
abuse of process of law/arbitral proceedings than it was a protection against abuse.
The purpose of Section 5 was to achieve certainty as the maximum extent of judicial
intervention including assistance or instances of court intervention. Thus, if a need
was felt for adding another such situation, it should be expressed in the model law.
The solution to that effect is to enable parties to agree on a wider scope of court
intervention, the question then rises whether the parties could be expected to draft an
agreement on the point that would adequately deal with the problem. The powers
with reference to the aforesaid sections have to be exercised cautiously as and when
the demand and need arises.
SCOPE OF SECTION 8:
This section is based upon Article 8 of the Model Law. This section is based
on the principle that the right to seek arbitration is a contractual right and the contract
can not be unilaterally abrogated so as to throw the arbitration clause. Failure of
either of the party to exercise his right would lead to an inference of an agreed
conduct of the parties to supersede or abandon the terms of the agreement, thus
vesting the judicial authority with the jurisdiction to decide the dispute which
required arbitration. The judicial authority does not enjoy suo moto power of
reference to arbitration. On an application under Sub-section 1, the judicial authority
is only concerned to see that the matter on which the suit has been instituted is also
the subject matter of the arbitration agreement. The observation was made in
ITC
Classic Finance Limited Vs Grapco Mining & Company Limited reported in AIR
1997 CALCUTTA 397. The onus of satisfying the judicial authority that the matter
raised before it is covered under the Arbitration agreement is on the defendant; the
plaintiffs failure to show to the contrary is sufficient to bring about a reference to
arbitration. This section does not employ the expression stay of proceedings on the
lines of section 34 of the repealed 1940 Act. Instead, it mandates the judicial
authority before whom an action has been brought in respect of subject matter of an
25
26
of
the
section
have
been
made
out,
there
is
no
27
28
obtained interim orders from the courts. Parties feel comfortable with interim orders
passed under Section 9, without taking recourse to commencement of arbitral
proceedings. This causes further delay in resolving the disputes between the parties.
Therefore, proper guidelines and strict adherence to conditional orders imposed by
the courts to be adopted. In such situation, there is no possibility of seeking
intervention of the courts to the exclusive benefit of either of the parties without
resorting to the process of commencement of arbitral proceedings. The words just
and convenient do not mean that the court is to pass orders in respect of interim
measures simply because the court thinks it convenient; they mean that the court
should pass the orders for the protection of the rights or for prevention of the injury
according to legal principles. The order is discretionary and the discretion must be
exercised in accordance with principles on which the judicial discretion is exercised.
SCOPE OF SECTION 11:
Section 11 deals with the appointment of Arbitrators. A person of any
nationality may be an arbitrator, unless otherwise agreed to by the parties. Subject to
Sub-section 6, the parties are free to agree on a procedure for appointing arbitrator or
arbitrators. The scope of the section has been elaborately dealt in SBP Company Vs
Patel Engineering reported in 2005 Vol. VIII SCC 618 by the Constitutional bench of
the Supreme Court of India. The Supreme Court of India has categorically pointed
out that the order under this section is purely an administrative one. The aspect of
appointment of arbitrator comes in to play where the procedure to appoint arbitrator
is agreed, but a party fails to act upon it. While exercising powers under this Section,
the court can not go into the merits of the dispute. The courts are precluded from
exercising powers in that regard to adjudicate the issues on merits. It is suggested that
the courts should confine themselves to see whether there is arbitrable dispute
between the parties which can be referred to arbitrator for adjudication. Prima facie,
the courts have to satisfy for themselves that there is existence of valid agreement
and a clause containing the arbitration.
29
The issues such as limitation, jurisdiction and other related aspects have to be
left open to be adjudicated by the arbitrator and not by the courts by whom the
matters are referred to arbitrators. In full bench decision in Ved Prakash Mittal Vs
Union of India reported in AIR 1984 DELHI 325 The High Court of Delhi held that
when the designated person refused to make appointment of an arbitrator on the
ground that the request for appointment was made after the expiry of the period as
per arbitration clause, this was a wrong approach. Questions of that kind fell within
the provisions of arbitrator to whom the dispute was to be referred. The court was not
concerned with this question under the provisions for appointment of arbitrator. The
court was only to see whether there was a dispute and that the dispute was to be
referred as per the agreement between the parties.
CONDITIONS FOR APPLICABILITY:
a)
b)
more
d)
e)
The appointment is not made within 30 days from the service of a written
notice to do so.
f)
30
31
32
they are the masters of their own discovery. There are various grounds enshrined
under Section 34 such as incapacity of the party, invalidity of the agreement and
award, lack of proper notice of appointing of arbitrators, incomplete award,
composition of arbitration tribunal, misconduct etc. Arbitrators are expected to act
within the scope and ambit of the terms of the agreement between the parties. It is
unfair on the part of the arbitrators to find a new contract for the parties. It is
expected that the arbitrators are confined themselves to a limited point and bound by
rules and regulations made therein. Arbitrators, drawing inferences from various
issues, which have no relevance or proximity to the issues raised by either of the
parties, cause undue delay and brings about an inconsistent award without reference
to the pleadings and documents submitted before him. Such award gives large scope
of the parties to seek the intervention of the courts and becomes an access to remit
the award or set aside the same.
Though it can be appreciated that the intervention of the court while
exercising powers under Section 34 is minimal, there are no mandates in relation to
time period for disposal of the applications. It is apparent and manifest from the
language and terms employed in Section 34 of the Act. Under the guise of
applications filed under Section 34, the parties resort to delay the issue and thereby
deliberately deprive of the other party.
33
proceedings can be terminated by one of the parties or jointly by the parties under
intimation to the other party and/or to the conciliator.
Conciliation plays significant role and is a process of encouraging settlement
between the parties. For effective implementation of conciliation proceedings, there
should be a consensus ad idem between the parties and the conciliator. Conciliators
are expected to behave impartially. It is observed that the parties are not resorting to
34
the conciliation proceedings to the reasons best known to them. However, there is a
possibility of taking recourse to settlement/conciliation, during arbitration. It is
necessary to make an endeavour to enlighten the parties in relation to the rights that
are available in their hands.
CHAPTER-V
NEED OF ARBITRATION AND CONCILIATION ACT,
1996
35
In order to bring uniformity through out the world, the Act has come into
force. 1996 Act has embraced the issues in relation to Foreign Awards. Foreign
investment and trade developed subsequent to the year 1990 and in order to meet the
contingency, 1996 Act has come in to force as the old Act, 1940 could not achieve or
meet the objectives. Earlier, Foreign issues had to be dealt and governed by the
Foreign Awards Recognition and Enforcement) Act, 1961. Now the issues pertaining
to the same are elaborately covered in Part II of the Arbitration and Conciliation Act,
1996. Thus, 1996 Act came into being to consolidate and amend the law relating to
domestic arbitration, international commercial arbitration and enforcement of foreign
awards as also to define the law relating to conciliation and for matters connected
therewith or incidental thereto.
PROBLEMS OF ARBITRATION AND CONCILIATION ACT, 1996
Though the Act has come into force to meet the contingency, it is not used to
achieve the real issues in controversy. It envisages certain grounds under Sec. 34 of
Arbitration & Conciliation Act, 1996 in dealing with the issues to set aside the
arbitral award. The grounds mentioned therein are limited and section itself is
confined to a limited extent. The parties who are aggrieved by the award passed by
the Arbitrator may not be able to enlarge the scope of enquiry other than the grounds
mentioned in Sec. 34. Though the Honble Apex court has laid down certain
guidelines in that regard, no useful purpose is served to that effect.
In so far as Section 9 and 17 of Arbitration & Conciliation Act, 1996 are
concerned, both are overlapping. The powers of the Arbitrator in relation to
exercising powers under Section 17 is limited. Arbitrators are also required to be
given powers in relation to interim protection of the parties are concerned. The words
which are employed in Sec. 17 of the Act are also unambiguous. The intention of the
legislature in that regard is not clear. There is a difficulty of giving power to the court
during the arbitral proceedings to pass ad-interim orders. There may not be any
consistency in the proceedings before the arbitrator and the court.
36
37
CHAPTER-VI
RELEVANT LANDMARK CASE LAWS
1)
38
2)
3)
39
This decision was rendered by Honble Justice H.K. Sama and Dr. A.R.
Lakshmanan. In this case, the Supreme Court dealt with the aspect of
limitation in relation to reference of disputes to arbitration. While passing
the judgement, the Supreme Court pointed out that the arbitration
application has to be filed within a period of 3 years when the right to
apply accrues. The court elaborately dealt with Sec. 20 of the old Act,
1940 and 43 of Arbitration & Conciliation Act, 1996, with a background
of Article 137 of Limitation Act, 1963.
4)
2006 (11) SCC 245 (Centro Trade Minerals and Metals Inc. Vs
Hindusthan Copper Limited)
The Honble Supreme Court categorically pointed out that the 1996 Act
has introduced several changes of which three are worth taking note of.
a) Fair resolution of a dispute by an impartial tribunal without any unnecessary delay or expenses.
b) Party autonomy is paramount subject only to such safeguards as are
necessary in public interest and
c) The arbitrary tribunal is enjoined with a duty to act fairly and
impartially.
The Honble Apex court also pointed out shortcomings that are very much
apparent from a bear reading of Arbitration & Conciliation Act such as no
provision is made for expediting awards or the subsequent proceedings in
the court, where the applications are filed for setting aside the award. The
another shortcoming is that an aggrieved party has to start again from the
District court for challenging the award. This decision was rendered by
Honble Justice S.B. Sinha and Tharun Chatterjee on 09.05.06.
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5)
6)
7)
Reference under section 9 of the new Act - The Honble High Court of
A.P. while interpreting Section 9 of the new Act, observed that aggrieved
41
(i)
The function performed by the Chief Justice of the High Court or Chief
Justice of India under Sec. 11 (6) of the new Act is administrative, pure
and simple and neither judicial nor quasi judicial.
(ii)
The function to be performed by the Chief Justice under Sec. 11 (6) of the
Act may be performed by him or by any person or institution designated
by him.
(iii)
While performing the function under Sec. 11 (6), the Chief Justice should
be prima facie satisfied that the conditions laid down in Sec. 11 are
satisfied.
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(iv)
The arbitrary tribunal has power and jurisdiction to rule on its own
jurisdiction under Sec. 16 (1) of the Act.
(v)
Where the arbitrary tribunal holds that it has jurisdiction, it shall continue
with the arbitral proceedings and make an arbitral award.
(vi)
(vii)
Since the order passed by the Chief justice under Sec. 11 (6) of the Act is
administrative, a writ petition under Article 226 of the Constitution of
India is maintainable. A letter of patent appeal/intra court appeal is
competent. A special leave petition under Article 136 of the Constitution
also lies to this court.
(viii)
(ix)
(x)
(xi)
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part. The doctrine of duty to act fairly however, applies and the Chief
Justice must issue notice to the person or persons likely to be affected by
the decision under Sec. 11 (6).
(xii)
CHAPTER VII
CONCLUSION
Arbitration & Conciliation play a significant role in resolving the issues which
crop up between the parties and thereby the parties can avoid the process of long
drawn proceedings before the courts. Though there are shortcomings in 1996 Act,
the Act is rendering justice to the general public to their utmost satisfaction.
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REFERENCES
BOOKS
1.
2.
3.
4.
45
REPORTS/JOURNALS
1.
2.
3.
4.
5.
6.
ARTICLES
1. Justice V.R. Krishna Iyyers Article on Arbitration
WEBSITES
1.
www.google.co.in
2.
www.legalserviceindia.com
3.
www.adr.org
4.
www.mediate.com
5.
www.mondaq.com
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