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CAM Arbitration Act Primer PDF
CAM Arbitration Act Primer PDF
- Arbitration Primer
TABLE OF CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARBITRATION
5. Arbitration Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7. Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8. Seat of Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9. Commencement of Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
19. Timelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4. Interim Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5. Con dentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
IMPORTANT NOTE: All information given in this handbook has been compiled from credible, reliable
sources and updated up to December 15, 2019. Although reasonable care has been taken to ensure that the
information in this handbook is true and accurate, such information is provided as is, without any warranty,
express or implied, as to the accuracy or completeness of any such information. Cyril Amarchand Mangaldas
shall not be liable for any losses incurred by any person from any use of this publication or its contents. is
handbook has been prepared for informational purposes only and nothing contained in this handbook
constitutes legal or any other form of advice from Cyril Amarchand Mangaldas. Readers should consult their
legal, tax and other advisors before making any investment or other decision with regard to any business in
India.
e Arbitration Act of 1940 ran its course In 1996, at the time it came into force, the
and with the liberalisation of the Indian Act was considered to be as a shot in the arm
economy in the early nineties, it became for a quick and cost e ective form of
apparent that the Indian Government alternative dispute resolution through
needed to respond to the fast-changing arbitration. However, after almost two
nature of business in the country along with decades, it became apparent that further
increased globalisation, including in amendments were critically needed. Indian
relation to measures and processes for courts were seen to be particularly
alternative dispute resolution. interventionist, exercising jurisdiction even
Arbitration Agreement10
An arbitration agreement must be in writing (including through electronic
means), but need not be signed. e form of the arbitration agreement is not
critical it may be in the form of a formal arbitration agreement, a clause in a
contract, in exchange of correspondence, emails, or other electronic
communication, or statements of claim and defence where its existence is alleged
by one party and not denied by the other. Courts will look at the language of the
document to determine if it expresses the intention of parties to enter into an
arbitration agreement.
If a contract refers to a document which contains an arbitration clause, such
reference would constitute an arbitration agreement if (i) the contract is in
writing and (ii) the reference is such so as to make that arbitration clause part of
the contract. e latter requirement has been interpreted by the Supreme Court
to mean that: (i) the contract should contain a clear reference to the documents
containing an arbitration clause; (ii) the reference to the other document should
clearly indicate an intention to incorporate the arbitration clause into the
contract, and (iii) the arbitration clause should be appropriate, that is, capable of
application in respect of disputes under the contract and should not be
repugnant to any term of the contract.
Where the arbitration agreement is an independent agreement, and is treated so
even it is part of a composite agreement; the arbitration clause is severable from
the rest of the agreement of which it forms a part. e concept of severability is
important to ensure that the intention of the party to resolve the dispute by
arbitration remains intact and can be given e ect to. e arbitration clause
survives the invalidity or termination of the main agreement.
Choice of Law
e substantive law chosen by the parties is Indian law, to govern the agreement,
the law that governs the underlying notwithstanding the fact that the
agreement. e parties may also provide arbitration may be in India.
separately for the law governing the
arbitration agreement, failing which it is If the substantive law is not expressly chosen
usually deemed to be the same as the law of by parties, the arbitral tribunal/court will
the seat. take various factors into account for
determining applicable law, such as: (i)
Where the parties are Indian residence of the parties; (ii) place of
nationals/resident in India and the execution of the agreement; (iii) place of
arbitration is being held in India, Indian law performance of the agreement; (iv) place of
would compulsorily apply. It is open to accrual of the cause of action; (v) place
parties in an international commercial where the assets/subject matter is located
arbitration to choose a law other than and reliefs sought.
Parties are free to agree on the place , i.e. Where the seat is outside India, Part I of the
seat, of the arbitration. Failing any Act does not apply and Indian courts do not
agreement between the parties, the venue have jurisdiction over such arbitration.
and seat will be determined by the arbitral However, unless otherwise agreed, parties
tribunal, having regard to circumstances of would have recourse to Indian courts to seek
the case, and the convenience of the parties. interim relief and court assistance in taking
evidence (as also in relation to appeals from
e seat of the arbitration is important
such orders).
inasmuch as, unless otherwise speci ed, it
determines the curial law applicable to the ere are con icting High Court decisions
arbitration. Where the arbitration over whether two Indian parties can choose
agreement does not speci cally specify a a foreign seat. While there is no speci c
seat , Indian courts have looked at prohibition against such a choice in the Act,
provisions relating to governing law of the unless and until some clari cation is
underlying agreement, designation of brought into the Act or the Supreme Court
arbitral institutions and other factors to decides the issue, there is a risk that such an
determine the location of the seat. award may be treated as being against public
policy.
Commencement of Arbitration
©
162020 Cyril Amarchand
| Arbitration Primer Mangaldas © 2019 Cyril Amarchand
ArbitrationMangaldas
Primer 13
Appointment of Arbitrators
Parties are free to determine the number of A person of any nationality may be an
a r b i t r a t o r s a n d t h e p ro c e d u re f o r arbitrator, unless otherwise agreed by the
constituting the arbitral tribunal. e only parties, and further that in the case of an
condition is that the number of such international commercial arbitration, the
arbitrators must not be an even number. In Court may appoint an arbitrator of a
the event that the parties have not agreed on nationality other than the nationalities of
the number of arbitrators, the default the parties concerned. However, the 2019
position is that of a sole arbitrator. Amendments brought in a new Part IA, for
the establishment on the Arbitration
In the absence of any agreement as regards
Council of India ( ACI ), which is
the procedure, or if either party does not
empowered to inter alia recognise
abide by the prescribed procedure for
professional institutes providing
appointment, a party may approach a court
accreditation of arbitrators and review the
for appointment of the arbitrator. Failing
grading of arbitral institutions and
any agreement as to manner of
arbitrators. e new Eighth Schedule sets
appointment, if a party fails to appoint an
out rather detailed quali cations,
arbitrator within 30 days from the receipt of
experience and norms for accreditation of
a request to do so from the other party; or,
arbitrators, which list appears to exclude
the two appointed arbitrators fail to agree
foreign quali ed lawyers therefrom. Part IA
on the third arbitrator within 30 days from
has not as yet been noti ed (as of September
the date of their appointment, the
20, 2019), and it remains to be seen whether
appointment shall be made, upon
the huge criticism of these proposed
application by a party, by the Supreme
amendments, will lead to a re-think by the
Court (in the case of international
Indian Government.
commercial arbitrations), or the High
Court, or any person or institution
designated by such Court. e application
is required to be disposed of by the
designated arbitral institution within 30
days from the date of service of notice on the
opposite party.
When appointing an arbitrator, the court
shall con ne itself to examination of the
existence of an arbitration agreement; the
intention being to minimise judicial
intervention.
Challenge to Arbitrators
Interim Relief
By the Court:
- Parties may approach a court for - e recourse to Indian courts is now
interim reliefs before or during also available to parties to a foreign
arbitral proceedings or at any time seated arbitration (unless otherwise
after making the arbitral award but agreed).
before it is enforced. e court shall
- Interim reliefs sought from the
not entertain any application for
Court may include orders for:
interim relief after the tribunal has
been constituted unless it nds that i. the appointment of a guardian
circumstances exist which may not for a minor, or person of
render the remedy granted by the unsound mind, for the
tribunal, e cacious. arbitration;
An appeal lies (under Section 37), from only Orders from the arbitral tribunal:
following orders, namely:
i. a c c e p t i n g a c h a l l e n g e t o its
Orders from the court: jurisdiction under Section 16
(pertains to competence of an
i. refusing to refer the parties to arbitral tribunal to rule on its
arbitration (as aforesaid, an order jurisdiction); or
which refers parties to arbitration, is
not open to appeal, although the ii. granting, or refusing to grant an
nal award may be challenged); interim measure under Section 17
(pertains to interim measures
ii. granting, or refusing to grant any ordered by an arbitral tribunal).
interim measure or relief;
No second appeal lies from an order passed
iii. setting aside, or refusing to set aside in appeal; but an aggrieved party may
an arbitral award. nevertheless approach the Supreme Court
for special leave to appeal against any order.
Introduced by the 2019 Amendments, no suit or other legal proceedings shall lie against the
arbitrator for anything which is in good faith done or intended to be done under this Act or
the rules or regulations made thereunder.
Arbitral Award13
e arbitral proceedings are terminated by (ii) the parties agree to terminate the
the nal arbitral award or by an order of the proceedings, or, (iii) the arbitral tribunal
arbitral tribunal terminating the nds that the continuation of the
proceedings where (i) the claimant proceedings has for any other reason
withdraws his claim, unless the respondent become unnecessary or impossible. e
objects to the order and the arbitral tribunal mandate of the arbitral tribunal terminates
recognises a legitimate interest on his part in with the termination of the arbitral
obtaining a nal settlement of the dispute, proceedings.
Enforcement of awards
Award passed under Part I of the Act enforced in accordance with the
(domestic award): provisions of the Code of Civil
Procedure, 1908, in the same manner as
Where the time for making an
if it were a decree of the court.
application to set aside the arbitral
award has expired, then, subject to the e ling of an application to set aside
award not having been stayed, it shall be an award does not of itself render that
There has been some confusion over the in court or furnishing appropriate security.
applicability of the 2015 Amendments
(which came into force on October 23, The 2019 Amendments clarified the
2015). position under the 2015 Amendments and
in a sense overruled BCCI, by deleting
In 2018, the Supreme Court ruled Section 26 altogether and introducing a
(interpreting Section 26 of the 2015 new Section 87,17 which provided that
Amendment Act15), in the case of BCCI v. (unless the parties agreed otherwise) the
Kochi,16 that the 2015 Amendments as a 2015 Amendments would apply
whole would apply prospectively (i.e. to prospectively to all arbitral and court
arbitral proceedings commencing after proceedings commenced after October 23,
October 23, 2015), but that in relation to 2015, and not otherwise.
court proceedings challenging an award, the
2015 Amendments would apply even to Section 87 was struck down as being
pending proceedings (the rationale for unconstitutional and arbitrary, by the
which can be seen from the ruling). The Supreme Court in Hindustan Construction
result of the BCCI judgment was that a Company v. Union of India.18 The position
purported automatic stay of an award which then today, is that BCCI will continue to
appeared to fall in place the moment an apply so as to make the 2015 Amendments
award was challenged under the old regime, applicable to all court proceedings initiated
would fall away (in line with the intent of after October 23, 2015 (whether or not the
the 2015 Amendments). A party would arbitration itself commenced prior thereto).
then have to file a separate stay application
for the purpose, which may be granted on
such conditions as the Court deemed fit,
including by depositing the award amount
e NDIAC Act, 2019 came into force on mediation and conciliation proceedings,
the March 2, 2019, and provides for the and (iii) maintaining a panel of accredited
e s t a b l i s h m e n t o f t h e Ne w D e l h i arbitrators, mediators and conciliators.
International Arbitration Centre
e key functions of the NDIAC include,
( NDIAC ) to conduct arbitration,
(i) facilitating conduct of arbitration and
mediation, and conciliation proceedings.
conciliation in a professional, timely and
e key objectives of the NDIAC include, cost-e ective manner, and (ii) promoting
(i) promoting research, providing training studies in the eld of alternative dispute
and organizing conferences and seminars in resolution. e NDIAC will also establish a
alternative dispute resolution matters, (ii) Chamber of Arbitration which will
providing facilities and administrative maintain a permanent panel of arbitrators.
assistance for the conduct of arbitration,
Key Objectives
New Delhi
International Arbitration Act, 2019
(NDIAC Act)
Mediation and conciliation are recognized during the arbitral proceedings to encourage
and separate forms of alternate dispute settlement .
resolution ( ADR ) and are in contrast to
Part III of the Arbitration Act, deals with
the adversarial approach used in court and
conciliation . ough the term
arbitration proceedings.
Conciliation is not formally de ned in the
Even during the course of the arbitral Act, it refers to assistance rendered to
proceedings, the arbitral tribunal is disputing parties by the conciliator, in an
empowered to encourage settlement of the independent and impartial manner in their
dispute and, with the agreement of the parties, attempt to reach an amicable settlement of
the arbitral tribunal may use mediation, their dispute .
conciliation or other procedures at any time
A conciliator may be more pro-active in areas of compromise, etc., the mediator also
persuading the parties to settle and the emphasises that it is the parties own
manner of settlement, rather than a responsibility for making decisions which
mediator. To that intent, the Act provides a ect them .
that the conciliator may, at any stage of the
Nevertheless, no matter which method is
conciliation proceedings, make proposals for a
chosen, the neither a mediator or conciliator
settlement of the dispute . Similarly, CP -
or any other authority, has the right to
ADR & Mediation Rules, note that a
impose his will, or opinion on the parties,
conciliator may make proposals for a
and they must reach an agreement mutually
settlement of the dispute and by formulating,
or reformulating the terms of a possible as to resolution of the dispute.
settlement; and has a greater role than a e conciliator/mediator is not bound by
mediator. the CPC, or the Evidence Act, but must be
e CP - ADR & Mediation Rules note guided by the principles of objectivity,
that while the mediator assists parties fairness and justice, rights and obligations of
towards a settlement by inter alia parties, usages of trade, surrounding
facilitating, identifying issues, exploring circumstances, and previous business
practices.
Con dentiality
Costs
India has signed (but is yet to ratify), the e Singapore Convention facilitates the
Un i t e d Na t i o n s C o n ve n t i o n o n recognition and enforcement of settlement
International Settlement Agreements agreements that meet the conditions
Resulting from Mediation (the Singapore mandated therein, in a manner similar to
Convention ), which was opened for the New York Convention. As a result, once
signature on August 7, 2019. rati ed by India a settlement agreement will
be enforced directly by an Indian court
Note that though the term used is
instead of it being treated only as a contract,
mediation , the condition to be met is that
with a civil suit having to be led for its
of a settlement of disputes through a
enforcement.
process, irrespective of the expression used, or
the basis upon which the process is carried out,
whereby parties attempt to reach an amicable
settlement of their disputes with the assistance
of a third person(s) lacking the authority to
impose a solution on the parties.
7. Current Rate of Current Rate of Interest means the highest of the maximum rates at
Interest which interest may be paid on di erent classes of deposits (other than
Interest Act, those maintained in savings account or those maintained by charitable
1978 or religious institutions) by di erent classes of scheduled banks in
Section 2(b) accordance with the directions given or issued to banking companies
generally by the Reserve Bank of India under the Banking Regulation
Act, 1949 (10 of 1949). Explanation. - In this clause, scheduled
bank means a bank, not being a co-operative bank, transacting any
business authorised by the Banking Regulation Act, 1949 (10 of 1949)
11. Lok Adalat Lok Adalat, is loosely translated as peoples court . It is set up under
the Legal Services Authority Act, 1987, and may be may organised at
such intervals and places and for exercising such jurisdiction and for
such areas as deemed t.
e procedure is consensual and is a form of ADR used in India and
litigating parties may be referred by a court to the Lok Adalat where
the court believe that there is some chance of settlement. Lok Adalat is
mandated to act with utmost expedition to arrive at a compromise or
settlement between the parties and shall be guided by the principles of
Justice, equity, fair play and other legal principles. A compromise or
settlement recorded by the Lok Adalat is deemed to be a decree of a
civil court. Failing settlement, the parties continue to litigate.
14. Section 87: Section 87: Unless the parties otherwise agree, the amendments made to
Effect of this Act by the Arbitration and Conciliation (Amendment) Act, 2015
arbitral
shall -
and related
court (a) not apply to -
proceedings
commenced (i) arbitral proceedings commenced before the commencement of
prior to the Arbitration and Conciliation (Amendment) Act, 2015;
23rd October,
2015. (ii) court proceedings arising out of or in relation to such arbitral
proceedings irrespective of whether such court proceedings are
commenced prior to or after the commencement of the
Arbitration and Conciliation (Amendment) Act, 2015;
(b) apply only to arbitral proceedings commenced on or after the
commencement of the Arbitration and Conciliation (Amendment) Act,
2015 and to court proceedings arising out of or in relation to such arbitral
proceedings.