BANGALORE UNIVERSITY

UNIVERSITY LAW COLLEGE AND

DEPARTMENT OF STUDIES IN LAW

Report on

‘ VISIT TO ARBITRATION CENTRE - KARNATAKA

’

Submitted to
Dr Chandrakanthi L
Assistant Professor
University law College and Department of Studies in Law
Bangalore University, Bangalore- 560056

Submitted by
Mohan Krishna
15LUL09049
X Semester B.A, LLB (5 Years)
University law College and Department of Studies in Law
Bangalore University, Bangalore- 560056

2020
 Contents

1. Acknowledgement
2. Purpose of Visit
3. Arbitration Centre - Karnataka
4. Introduction
5. Arbitrators
6. Mechanism of Arbitration in India
7. Advantages of Arbitration
8. Challenges of Institutional Arbitration
9. Recommendations of B N Srikrishna Committee
10. Case Study
11. Personal Observation
 I, Mohan Krishna, student of B.A.,LL.B , X Semester, would like to pay my
Sincere gratitude towards our Ast. Professor Dr Chandrakanthi L for arranging
our visit to Arbitration Centre, Karnataka for the purpose of
understanding its organization and functioning.

I am also thankful to Sri M Ramachandra,

Director, Arbitration Centre and Sri Prakash Sangappa Helvar, Deputy Director,
Arbitration Centre to make us understand the Role of Arbitration Centre and the role
of Arbitrators in a much practical way.

Mohan Krishna
 Particulars of Visit

Name:
Arbitration centre - Karnataka

Location:
Arbitration & Conciliation Centre – Bengaluru (Domestic & International)
has been established under aegis of High Court of Karnataka at 3rd Floor, ‘Khanija
Bhavan’ (East Wing) vide G.O. No. LAW 273 LAC 2012 dated 06.12.2012.

Date and Day of Visit

Date Time Day

14-02-2020 10:00 AM TO 5:00 PM Friday
 Purpose of Visit

The purpose of the visit was to understand the working of a Arbitration centre, the
nature of duties of the Arbitrators. The visit was to help us understand the role of
Arbitration centre in dispensing justice in any case, the role of advocates in a case,
the way cases proceed in a Arbitration centre, the way Arbitrators, plaintiff”s and
defendant’s lawyers handle the case. This gave us an opportunity to understand the
complete mechanism of an Arbitration Centre

The purpose of the visit as told by our college were:

 To understand the working of an Arbitration Centre and Organization of

Arbitrator’s office
 The nature of duties of Arbitrators
 To help us understand the role of Arbitration centre in Arbitrating a case and
pronouncing an Arbitral award.
 The Arbitration agreement
 Role of Advocates and their parties in an Arbitration
 Termination of an Arbitrator
 Other Miscellaneous functions of an arbitration centre
 ARBITRATION CENTRE - KARNATAKA

The Arbitration & Conciliation Centre – Bengaluru (Domestic & International) is an

initiative of the High Court of Karnataka. It is “non-profit “venture totally dedicated
to facilitate all arbitration proceedings-Domestic and International.

It is conceived as a project to promote dispute resolution under the provisions of the

Arbitration and Conciliation Act, 1996 and in furtherance of the Object of Section 89
of the Code of Civil Procedure. The centre facilitates both voluntary and Court
annexed arbitration.

Facilities Provided

 The Centre is spread over a carpet area of 7000 Sq.Ft. and is centrally air-
conditioned with latest safety and security systems.
 Five Meetings varying in size from 185 to 410 Sq.Feet (See Website for floor
plan)Video Conferencing Facilities.
 State-of-the art office equipment.
 Total Secretarial Services.
 A fully equipped legal library and data base.
 Catering facility, pantry.
 Independent lounge areas for visitors, Lawyers and Arbitrators.
 Co-ordination of Proceedings.
 Digital Archives.
 More facilities are in the offing.
 INTODUCTION
Arbitration, a form of alternative dispute resolution (ADR), is a technique for the
resolution of disputes outside the Courts, where the parties to a dispute refer it to one
or more persons (the “Arbitrators”, “Arbiters” or “Arbitral Tribunal”), by whose
decision (the “Award”) they agree to be bound. It is a resolution technique in which a
third party reviews the evidence in the case and imposes a decision that is legally
binding for both sides and enforceable.

The United Nations have given due recognition to Model Law of International
Commercial Arbitration and Conciliation rules given by the United Nations
Commission on trade and law ( UNCITRAL). The model law and rules have
played a significant role in the settlement of commercial disputes and provided rules
to various other countries. These can be adapted and made according to their
municipal laws as earlier there was no unified law related to trade and its need was
felt with globalization which further gave rise to disputes related to it.

Based on UNCITRAL model law India enacted the Arbitration and Conciliation

Act, 1996 further amended in 2015 which deals with domestic and international
commercial arbitration in India. The amended Act especially emphasizes minimizing
the role of judiciary court in arbitration proceedings and further to consider every
arbitration order or award as a decree as it is been considered in civil procedure
code. The Act is categorized in two, Part I deals with significant provisions which
deal with domestic and International commercial arbitration procedure to be
conducted in India irrespective of nationality and Part II talks about
enforcement of foreign arbitration award.

Defined under Section 2(b) read with Section 7 of the Arbitration and

Conciliation Act 1996

It can be defined as a written statement or exchange of communication between the

parties or any statement made through means of telecommunication. It is not
compulsory for the parties to sign or not sign it. Even if an arbitration clause is
present in the agreement it would be considered as an arbitration agreement.

Rickners Verwaltung Gmbh vs. Indian Oil Corporation, 1998 stated that the intention
of the party in arbitration gathers information in the form of expression and the
meaning it conveys. An arbitration agreement would be a statement made by one
party regarding the claim in dispute and not denied by the other party.
Non Intervention of Court in the Arbitration process

As per Section 5 of the Arbitration and Conciliation Act, 1996 the court cannot
interfere in the arbitration proceeding except wherein provided by the act in the
following situations:

Where an arbitrator needs to be appointed when the parties cannot appoint a mutually
independent arbitrator.
In cases of taking the shreds of evidence.
Where the court is ruling in the cases as the arbitrator is terminated due to incapacity
or other sufficient reasons mentioned under the Act.
Section 8 is a companion section which says “where a party has approached the
judicial court to dissolve a dispute and it is exclusively to be trialled by the arbitrator,
then the court must direct the person to start the arbitration proceeding first without
any delay and may come later to the court when arbitration award has been made.”

ARBITRATORS
Appointment of the Arbitrator

The appointment of arbitrator is given under Section 11 of the Act. The Act
provides full freedom to the parties to appoint an arbitrator as of any nationality
unless agreed by the parties. However, in the case of failure to appoint an arbitrator
the parties can approach the court to make such an appointment. In case of
domestic arbitration, the Chief Justice of the High Court has the authority to
appoint an arbitrator to the parties and in case of International Commercial
Arbitration, the Chief Justice of India has the authority to make such appointment
as in India, the foreign disputes must be dealt by the highest judicial officers.
In the case of Konkan Railway Corporation v. Rani Construction Pvt Ltd, 2002 the
Supreme Court held that the function of Chief Justice of India and his designates is
to ensure the nomination of an arbitrator who is independent, competent and
impartial and settles the dispute between the parties to the best of his knowledge.

Power and Duties of Arbitrator

Power Duties

Pass Interim Order Order of Appointment

Decide the Process of Arbitration

Timely adjudicate the matter
Proceedings

He has the power to Terminate the

Act Judicially and Impartial
procedure

Encourage settlement of the

Appointing an Expert person
matter

Seeks Court permission in taking

Misconduct is not allowed
evidence
 Challenging an Arbitrator

An arbitrator can be challenged under Section 12 of the Act in the following two
circumstances as

Grounds related to his independence or impartiality.

If he does not possess sufficient qualifications as to agreed by the parties.
Section 13 talks about the challenge procedure and specifies the time limit under
Section 13(2) as within 15 days after becoming aware of the constitution of the
Arbitral Tribunal and any other circumstance, the party can make a written
statement specifying the reasons to the Arbitral Tribunal and it is the Arbitral
Tribunal and not the court who will decide on the matter of challenge.

Termination of an Arbitrator

The Act provides for the termination of an arbitrator under Section 14 of the Act
and it can be made in two circumstances which are:

If he fails to act without undue delay, &

If he is unable to perform his function due to De jure or De facto.
In case of any controversy in regard to the situation, the parties can approach the
court.
 MECHANISM OF ARBITRATION IN INDIA
Arbitration in India is regulated by the Arbitration and Conciliation Act, 1996.

The Act is based on the 1985 UNCITRAL (The United Nations Commission on
International Trade Law) Model Law on International Commercial Arbitration and the
UNCITRAL Arbitration Rules 1976.

In 2015, Arbitration and Conciliation (Amendment) Act was enacted to improve the
arbitration in India.

How the Arbitration Process Works

According to the Indian Arbitration Association (IAA), here is the general process for
arbitration.

 Filing and Initiation: An arbitration case begins when one party submits a
Demand for Arbitration to the Arbitration Centre. The other party (the
respondent) is notified by the Arbitration centre and a deadline is set for a
response.
 Arbitrator Selection: The Arbitration centre works with the parties to identify and
select an arbitration based on the criteria determined by the parties.
 Preliminary Hearing: The arbitrator conducts a preliminary hearing with the
parties, to discuss the issues in the case and procedural matters, such as witnesses,
depositions, sharing information, and other matters.
 Information Exchange and Preparation: The parties then prepare for presentations
and exchange information.
 Hearings: At the hearing, both parties may present testimony and evidence to the
arbitrator. Unless the case is very complex, this is usually the only hearing before
the arbitrator.
 Post-Hearing Submissions: After the hearing, both parties may present additional
documentation, as allowed by the arbitrator.
 The Award: Finally, the arbitrator closes the record on the case and issues a
decision, including an award, if applicable.
 Advantages / Features of Arbitration:
 Arbitral proceedings and an Arbitral award are generally non-public, and can be
made confidential

 In most legal systems there are very limited avenues for appeal of an Arbitral
award, which is sometimes an advantage because it limits the duration of the
dispute and any associate liability.

 An alternative to National Court.

 A private mechanism for dispute resolution.

 Arbitrators selected by the parties.

 Final and binding determination of parties’ right and obligations.

 Easy enforcement of awards

 Neutrality.

 Confidentiality.

 Expeditious.

 Cost Advantage.

The Catalytic Benefit of Arbitration Under The Centre’ s Rules

Arbitration proceedings at the Centre will ensure conclusion of proceeding within 90
days from the date of drawing up of the terms of Reference and communication of the
time Schedule to the parties.

It is cost effective as speedy resolution of disputes is ensured, Arbitration fee and

administration charges are fixed as per the schedule determined on the basis of
valuation of claim and counter claim with ceiling of on the Arbitration fee and fixed
Administration expenses.Parties have a wide choice of Arbitrators.Secretarial and
other facilities are provided and included in the Administration expenses.
 challenges of institutional arbitration in India 
 Lack of credible Arbitral institutions
 Misconceptions relating to institutional arbitration related to costs
 Lack of governmental support for institutional arbitration
 Lack of legislative support for institutional arbitration
 Judicial attitudes towards arbitration in general.
 The rules and practices followed are often outdated and inadequate
 Fails to upgrade their administrative and working style as only provide hearing
venues with basic facilities and lack more advanced facilities such as multi-
screen video conferencing, sound-proof caucus rooms, audio/video recording,
court recorders, etc.
 Inflexible as it takes away the exclusive autonomy of the parties over
arbitration proceedings
 Delays in Indian courts and excessive judicial involvement in Arbitral
proceedings contributed to discouraging foreign parties to arbitrate in India.
 Parties often delay arbitration proceedings by initiating court proceedings
before or during Arbitral proceedings, or at the enforcement stage of the
Arbitral award.

In addition to the above-mentioned negatives of Institutional arbitration, following

are the challenges of the institutional arbitration in India.

Issues relating to administration and management of arbitral institutions.

Perceptions regarding arbitrators and expertise issues relating to resources and
government support, lack of initial capital, poor and inadequate infrastructure, lack of
properly trained administrative staff, lack of qualified arbitrators, etc.
Issues in developing India as an international arbitration seat.
To address the challenges and shortcoming of the Institutional arbitration, a High-
Level Committee (HLC) to Review the Institutionalization of Arbitration Mechanism
in India under Mr Justice B N Srikrishna was constituted in 2016. The committee
submitted its report on 3 August 2017.
 RECOMMENDATIONS OF B N SRIKRISHNA
COMMITTEE

 Set up an autonomous body, styled the Arbitration Promotion Council of India

(APCI), having representatives from all stakeholders for grading arbitral
institutions in India.
 The APCI may
 recognize professional institutes providing for accreditation of arbitrators.
 hold training workshops and interact with law firms and law schools to train
advocates with interest in arbitration.
 create a specialist arbitration bar comprising of advocates dedicated to the field.
 A good arbitration bar could help in the speedy and efficient conduct of arbitral
proceedings.
 Creation of a specialist Arbitration Bench to deal with such commercial disputes,
in the domain of the Courts.
 Changes suggested in various provisions of the 2015 Amendments of the
Arbitration and Conciliation Act with a view to making arbitration speedier and
more efficacious and incorporate international best practices (immunity to
arbitrators, confidentiality of arbitral proceedings, etc.).
 The Committee is also of the opinion that the National Litigation Policy (NLP)
must promote arbitration in government contracts.
 Government’s role: The Central Government and various state governments may
stipulate in arbitration clauses/agreements in government contracts that only
arbitrators accredited by any such recognised professional institute may be
appointed as arbitrators under such arbitration clauses/agreements.

CASE STUDY AND EXPERIENCE AT CENTRE

As instructed by the college, we reached the Arbitration centre at 10:00 AM. The staff
at the Arbitration Centre verified our identities and then let us meet Deputy Director
of Arbitration Centre, Sri Prakash Sangappa Helavar and later Director, Sri M
Ramachandra. Our team along with students of Bangalore Law College were
addressed in Arbitration Hall 1 by Deputy Director. The Deputy Director briefly
explained us about the Arbitration and Conciliation Act, 1996, it's provisions,
Mechanism of Arbitration, Arbitrators and their role in Arbitration. The Deputy
director also interacted with students in the hall.

Post Lunch break, we were let to observe Arbitration proceedings and record the
observation of same. The case which we were alloted to observe is mentioned below;

Case No :. Arbitration ( 124/ 2019)

Place: Bengaluru

Governance: Arbitration and Conciliation Act, 1996 ( Section 34 )

Arbitrator: Justice V Jagannath

Proceedings: Examination in cheif, Cross Examination

Summary

Section 34 of the Arbitration and Conciliation Act, 1996 ("Act") provides for setting
aside of an arbitral award by making an application to the Court, on the grounds stated
therein. Recently, a number of judgments have been passed while interpreting Section
34. The same have been briefly discussed in the present article.

Emkay Global Financial Service Limited v. Giridhar Sondhi, Civil Appeal No. 8367
of 2018, decided on August 20, 2018.
In the aforesaid case, an award was passed against the Respondent by the Sole
Arbitrator. The award was challenged by the Respondent under Section 34 of the Act
before the District Court of Delhi, which was rejected in view of the exclusive
jurisdiction clause. In Appeal, the High Court of Delhi referred back the parties to the
District Judge, to first frame issues and then decide on evidence, including the
opportunity to cross examine witnesses who give depositions. The question before the
Supreme Court was whether there is any requirement to lead evidence in an
application to challenge an award under the Act?

The Supreme Court interpreted the words "furnishes proof" appearing in Section
34(2)(a) and relied on the following case-laws:

(i) Sandeep Kumar v. Dr. Ashok Hans, (2004) 3 Arb LR 306, wherein the High Court
of Delhi held that there is no requirement under the provisions of Section 34 for
parties to lead evidence. The record of the Arbitrator was held to be sufficient in order
to furnish proof of whether the grounds mentioned in Section 34 had been made out.

(ii) Sial Bioenergie v. SBEC Systems, AIR 2005 Del 95 wherein the High Court of
Delhi inter alia held:

"...the whole purpose of the 1996 Act would be completely defeated by granting
permission to the applicant/JD to lead oral evidence at the stage of objections raised
against an arbitral award. The 1996 Act requires expeditious disposal of the
objections and the minimal interference by the Court...

... At the stage of the objections which are any way limited in scope due to the
provisions of the Act to permit oral evidence would completely defeat the objects
underlying the 1996 Act. The process of oral evidence would prolong the process of
hearing objections and cannot be countenanced..."

(iii) Fiza Developers & Inter-Trade Pvt. Ltd. v. AMCI (India) Pvt. Ltd. and Anr.,
(2009) 17 SCC 796, the Supreme Court dealt with the question whether issues as
contemplated under the Code of Civil Procedure, 1908 should be framed in challenge
to the award under Section 34 of the Act. The Supreme Court inter alia held:

"...Applications under Section 34 of the Act are summary proceedings with provision
for objections by the respondent-defendant, followed by an opportunity to the
applicant to "prove" the existence of any ground under Section 34(2). The applicant is
permitted to file affidavits of his witnesses in proof. A corresponding opportunity is
given to the respondent-defendant to place his evidence by affidavit. Where the case
so warrants, the court permits cross-examination of the persons swearing to the
affidavit. Thereafter, the court hears arguments and/or receives written submissions
and decides the matter. This is of course the routine procedure. The court may vary
the said procedure, depending upon the facts of any particular case or the local rules.
What is however clear is that framing of issues as contemplated under Rule 1 of Order
14 of the Code is not an integral part of the process of a proceeding under Section 34
of the Act."

(iv) WEB Techniques and Net Solutions Pvt. Ltd. v. M/s. Gati Ltd. and Anr, wherein
the High Court of Calcutta after referring to Fiza Developers, held that oral evidence
is not required under a Section 34 application when the record before the Arbitrator
would show whether the petitioners had received notice relating to his appointment.

The Court also referred to the Arbitration and Conciliation (Amendment) Bill of
2018, being Bill No.100 of 2018, which provides for an amendment to Section 34(2)
(a) of the principal Act, and proposes substitution of the words "furnishes proof that",
with "establishes on the basis of the record of the arbitral tribunal that".

In view of the above, the Supreme Court concluded that:

"An application for setting aside an arbitral award will not ordinarily require anything
beyond the record that was before the Arbitrator. However, if there are matters not
contained in such record, and are relevant to the determination of issues arising under
Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits
filed by both parties. Cross-examination of persons swearing to the affidavits should
not be allowed unless absolutely necessary, as the truth will emerge on a reading of
the affidavits filed by both parties."

Both chief examination and cross examination was recorded by the Arbitrator in
Case number (124/2019) and was put forth for further examination in next date.

PERSONAL OBSERVATION AND CRITICAL ANALYSIS

The Arbitration centre started it's functioning on 6th of December, 2012 and is much
modern in its infrastructure. Every Hall is properly furnished and air conditioned
along with necessary gadgets too required for its functiong. Though Arbitration is an
in camera proceedings, there was enough room for even visitors. There are around
seven Arbitration halls. According to the website of Arbitration Centre, Karnataka,
there are about 100 Arbitrators, 14 technical Arbitrators. The centre also consists
panel of experts meant to deal with special cases of Arbitration. Directorate and
Governance board foresees administrative aspects of the centre. The Chief Justice of
The High Court of Karnataka is the Patron-in-Chief of the Centre and the Centre is
governed by a Board of Governors consisting of Five Sitting Judges of the High Court
of Karnataka, the senior most among them is nominated by the Chief Justice as the
President of the Board of Governors.

How do parties avail facility at centre?

Parties are required to agree to refer any disputes arising out of their contractual
relationship, to arbitration in accordance with the Rules of the Centre, by insertion of
a clause to the effect in the contract.

The parties may enter into a separate and independent agreement to refer any dispute
to arbitration in accordance with the Rules of the Centre, de hors any earlier
agreement as regards arbitration or conciliation. Parties can also seek reference
through the process of Court.

Critical analysis

This facility comes at a cost, The Arbitration Centre charges a basic fee of
Rs 50,000 for all dispute sum valuing less than Ten Lakhs and this goes up to Rs 8, 70,
000 for dispute sum value exceeding Twenty Crore rupees.

The first and foremost problem faced by Indian Judiciary are of speedy
and fair trials. Though, there is a great success rate in delivering justice through
Alternative dispute Resolutios like Arbitration, they too have some shortcomings.
The main shortcome of Arbitration is its fee structure, which many parties cannot
afford. As the proverb says, every Mechanism has its own pros and cons. The success
rate of Arbitration Centres is indeed a great work to be appreciated. In my opinion,
Arbitration and Conciliation Act should become friendly mainly in terms of economic
aspects to parties to settle the disputes and reduce the burden on judiciary!!!