THE PRE-EMINENCE OF THE COURT

SYSTEM
• OTHER FORMS OF DISPUTE RESOLUTION ARE COMMONLY CALLED ‘ALTERNATIVE’
• LITIGATION IS THE NORMAL FIRST CHOICE
• BLEAK HOUSE BY CHARLES DICKENS (DELAY, COMPLEXITY AND COST)- INDIAN JUDICIAL SYSTEM HAS BEEN VERY
TIME TAKING, COSTLY AND COMPLEX AND NO. OF JUDGES ARE ALSO VERY LESS WHICH MAKES IT INJUSTICE TO
THE PARTIES AS THE ADAGE GOES THAT JUSTICE DELAYED IS JUSTICE DENIED.
• IN THE LAST FEW DECADES THERE HAS BEEN FAST INCREASING GROWTH IN THE USE AND VARIETY OF FORMS OF
ADR.
• TERMINOLOGY AND METHODOLOGIES ARE STILL EVOLVING. SUCH AS ODR IS THE NEWEST FORM OF
ARBITRATION. OBVIOUSLY NOT A LOT OF DISPUTES CAN BE SOLVED IT AS IT HAS A LOT OF DISADVANTAGES LIKE
NON- TECH SAVY PEOPLE OR THOSE WHO DON’T HAVE AVAILABILITY OF TECH DEVICES OR INTERNET WONT BE
ABLE TO GET THEIR DISPUTES THROUGH THE PROCESS.
• THIS SYSTEM HAS BEEN RECOGNISED IN THE INDIAN STATUTES. FOR INSTANCE—NOW THE CIVIL PROCEDURE
CODE, 1908, ORDER XXXII-A, RULE 3 CONTAINS SCOPE FOR COMPROMISE AND THE DECREE EVOLVED FROM THAT
COMPROMISE IS NOT APPEALABLE. ALSO S. 89 IS THE SOURCE OF ADR. NOTABLY, SECTION 12 OF THE INDUSTRIAL
DISPUTES ACT, 1947 CONTEMPLATED PROVISION FOR CONCILIATION AS PRE-REQUISITE FOR ANY PRESSURE
TACTICS/COLLECTIVE BARGAINING. IN THE SAME MANNER SECTION 23 OF THE HINDU MARRIAGE ACT, 1955
PROVIDED THE NEED FOR ALTERNATIVE DISPUTE RESOLUTION. NEEDLESS TO MENTION ART. 39 OF COI IMPOSES A
DUTY ON THE STATE TO PROVIDE FREE LEGAL AID TO THOSE WHO CANNOT AFFORD A DEFENCE AND AN
APPRECIABLE STEP IN REALIZING THIS DUTY IS THE INTRODUCTION OF LSA, 1987 UNDER WHICH LEGAL SERVICE
AUTHORITIES HAVE ESTABLISHED AT VARIOUS LEVELS WHICH NOT ONLY PROVIDE LEGAL ASSISTANCE TO NEEDIES
BUT ALSO AMICABLE DISPUTE RESOLUTION BY ALTERNATIVE MECHANISMS.
 POTENTIAL ADVANTAGES OF ADR
• AMICABLE SETTLEMENT OF DISPUTES.—IT HAS BEEN SETTLED NOW THAT ADR PROVIDES A FRIENDLY SETTLEMENT
OF DISPUTES. IN BUSINESS IT IS A PRUDENT APPROACH TO HAVE A COMPETITOR NOT A RIVAL. IN BUSINESS;
WISDOM DO NOT HAVE SCOPE FOR ENMITY. IT LEADS TO A SETTLEMENT WHICH IS ACCEPTABLE TO BOTH PARTIES
AND SOMETIMES IT ALSO REACHES TO A WIN- WIN KIND OF SITUATION SO IT DOESN’T LET ANY ENMITY
TRANSPIRE BETWEEN THE PARTIES.
• LOWER COST- IT DELIVERS ECONOMICAL SOLUTION/SETTLEMENT OF DISPUTE. IN OTHER WORDS LITIGATION
EXPENSES AND EXORBITANT COUNSEL’S FEES COULD BE AVOIDED BY INVOKING SETTLEMENT OF DISPUTE BY
MEANS OF CONCILIATION AND MEDIATION. ALSO THE AMOUNT OF COMPENSATION AWARDED THROUGH
MECHANISMS LIKE MEDIATION IS THE ONE ACCEPTED T BOTH PARTIES SO IT IF OFTEN LOWER THAN THE AMOUNT
OF COMPENSATION WHICH THE COURT OF LAW WOULD HAVE AWARDED HAD THE MATTER BEEN IN THE
TRADITIONAL FORUM OF COURT. SOMETIMES ARBITRATION BECOMES COSTLY LIKE FUTURE GROUP AND AMAZON
ARBITRATION.
• SPEED OF SETTLEMENT- ALTERNATIVE DISPUTE RESOLUTION PROVIDES SPEEDY DISPOSAL OF DISPUTE. UNDER THIS
SYSTEM THERE IS NO MUCH SCOPE OF ADJOURNMENT, STAY OR LENGTHY SESSION OF ARGUMENTS ETC. IT IS
LESS TIME CONSUMING BECAUSE IN MECHANISM LIKE MEDIATION AND ARBITRATION A TIME LIMITATION IS SET BY
LAW SUCH AS 12 MONTHS FOR ARBITRATION WITH MAXIMUM POSSIBLE EXTENSION OF 6 MONTHS AND IN
MEDIATION 3 MONTHS. ALSO IN OTHER CASES BECAUSE THE PARTIES HAVE THE LIBERTY TO DECIDE FORT THE
PROCESS OF THE DISPUTE RESOLUTION THEY CAN S WELL PUT A TIME LIMITATION FOR THE RESOLUTION OF THE
DISPUTE. ADDITIONALLY DUE ITS NON- FORMAL APPROACH FOR DISPUTE RESOLUTION UNLIKE THE TRADITIONAL
COURTS, IT HELPS RESOLVE THE DISPUTE WAY FASTER. ALSO IN CASE OF COMMERCIAL DISPUTES TIME IS AN
IMPORTANT FACTOR, SO SUCH DISPUTE RESOLVING MECHANISM WHICH WORKS AS AN ALTER TO THE TIME
TAKING TRADITIONAL COURT SYSTEM NEEDS TO BE LESS TIME CONSUMING.
Control of Process- the parties themselves decide which ADR they shall submit to and
what process they shall follow for the resolution so the parties are wholly in control of
the process. with the advent of industrialisation and onset of globalisation through
nep,1991 a lot of Multi national companies of foreign origin found place in the country
and also get caught up in disputes as where there are transactions disputes are
inevitable. It would become very difficult for them to contest trials or suits as it is not
possible to know the law of each country so extra judicial mechanisms of dispute
resolution become very helpful as one can control the process and skip the use or
involvement of any law in the discussion.

Choice of Forum- There is a lot of [arty autonomy as the parties can choose the forum
of ADR through they want to get their disputes resolved, venue and time of the process,
the law to be used in the process are all decided by the parties themselves. Until the
parties don’t want there is no court intervention in the process like in court- referred
arbitration the parties themselves find an arbitrator and in case they don’t find it then
the court intervenes and appoints one. In mediation referred by court, if the dispute is
not resolved in 3 months then the case is automatically returned to the court.

A wide range of issues may be considered- unlike in court process where only the issues
central to the dispute are discussed, in ADR a lot of subsidiary issues are discussed as
well which leads to the salvation of the roots of the dispute between the parties so the
ADR not only resolves but also dissolves the dispute.
• WIDE RANGE OF POTENTIAL OUTCOMES- UNLIKE COURT PROCESS WHERE THE GUILTY IS PUNISHED IN CRIMINAL CASES AND
THE RIGHT CLAIM IS GRANTED IN CIVIL CASES, IN ADR THERE IS SCOPE OF PLENTY OF MIDWAY SOLUTIONS. IT ENABLES THE
PARTIES TO BE CREATIVE WITH PROVIDING REMEDIES AND MORE OFTEN THAN NOT MERRY RELATIONS OFTEN THRIVE
BETWEEN THE PARTIES.

• FLEXIBILITY OF PROCESS- THIS SYSTEM PROVIDES FLEXIBLE PROCEDURE AS STRICT PROCEDURE OF LAW IS NOT APPLICABLE TO
ALTERNATIVE MEANS OF DISPUTE REDRESSAL. THE COURT HAS TO FOLLOW THE LEGALLY FIXED PROCEDURE ENSHRINED IN THE
CRPC AND CPC BUT IN CASE OF ADR PROCESSES THE PARTIES HAVE FULL CONTROL TO DECIDE WHICH LAWS ARE TO BE
APPLICABLE AND IN WHAT MODE THE DISPUTE RESOLUTION IS TO TAKE PLACE AS WELL AS PARTIES CAN CREATE AND ADOPT
WHAT PROCEDURE IS ONE TO BE BOUND BY.

• FLEXIBILITY WITH REGARD TO EVIDENCE- PARTIES HAVE FREEDOM TO CHOOSE IF THE RULES OF EVIDENCE UNDER THE IEA
WOULD APPLY OR NOT.

• CONFIDENTIALITY- IN SOME ISSUES ONE DOESN’T WISH THEIR DISPUTE TO BE KNOWN TO OTHER PEOPLE LIKE FAMILY ISSUES
WHICH INVOLVE INTIMATE MATTERS OF THE HUSBAND – WIFE OR OTHER FAMILY MEMBERS OR HOUSEHOLD AS WELL AS
COMMERCIAL ISSUES INVOLVING TRADE SECRET, IPR, REPUTATION OF THE FIRM IN THE INVESTMENT AND GOODS MARKET,
ETC. SUCH THINGS CAN BECOME DISADVANTAGEOUS FORT HE PARTIES IF THEY COME OUT IN THE OPEN SO THE ADR
PROCESS BECOMES VERY ADVANTAGEOUS HERE BECAUSE THE PROCESS REMAINS TOTALLY CONFIDENTIAL. EVEN THE NEUTRAL
PARTY CANT REVEAL SUCH MATTERS IN THE COURT IN HIS TESTIMONY IN ANY FURTHER PROCEEDINGS.

• USE OF PROBLEM SOLVING APPROACH- IN ADR THE MOTIVE IS TO COME TO A SOLUTION AND NOT TO DECIDE WHO IS AT
FAULT SO THE CHANCES OF GETTING QUICK AND LONG LASTING CHANCES ALSO BECOME HIGH HERE AND

• CLIENT SATISFACTION

• THE ALTERNATIVE MEANS OF DISPUTE REDRESSAL CAN BE INVOKED AT ANY TIME, EVEN IF THE MATTER IS PENDING IN THE
COURT OF LAW. SIMILARLY IT CAN BE TERMINATED AT ANY TIME EXCEPT IN CASE OF COMPULSORY ARBITRATION.
 History and development of Arbitration Law in India
• Long before the king came to adjudicate disputes between
persons such disputes were peacefully decided by the
intervention of the kulas, srenis, pugas and such other non-state
bodies. Prevalent in India from Vedic times.
• a reference about arbitration is in Brhadaranayaka Upanishad
• 'Puga' the local courts
• 'Srenis' the people engaged in the same business or profession
• 'Kulas', who were members concerned with the social matters of a particular
community
• all these three bodies were cumulatively known as Panchayats.
• The members of the same were the Panchas, the then
arbitrators, used to deal with the disputes under a system, we
now refer to as Arbitration.
• the decision taken by them are binding on the parties
 History and development of Arbitration Law in India
• In muslim era also a similar system existed. The Hedaya
contains provisions for arbitration between the parties.
• the Arabic word for arbitration is Tahkeem and arbitrator
is Hakam
• An arbitrator was required to posses the qualities essential for a
Kazee.
• The Modern Arbitration Law was enacted in India as early as
1772 by Bengal Regulation Act of 1772
• the same was promulgated to other presidency towns namely
Bombay and Madras through Bombay Regulations Act of 1799
and Madras Regulation Act of 1802.
• The first enactment devoted solely to arbitration in India was
the Indian Arbitration Act, 1899.
• its application was limited only to the Presidency Towns of
Calcutta, Bombay and Madras and was based on 1889 English
act.
 History and development of Arbitration Law in India
• It was further codified in Section 89 and Schedule II of the Code of Civil
Procedure, 1908.
• Arbitration Act, 1940 came into existence and repealed the Act of 1899 along
with the relevant provisions of the Code of Civil Procedure, 1908.
• The Arbitration Act, 1940 was based on the English Arbitration Act, 1934 but it
was centered only on domestic arbitration. Also in practice a lot of problems
associated with the court system crept in arbitration process as envisaged in
this act.
• The working under the regime was slow, complex, expensive, hyper-technical
and fraught with judicial interference.
• the Act did not contain any provisions related to enforcement of foreign
awards. After the world-wars were over, international trade got a lot of
impetus. Now as the trade and transaction progressed disputes also arose.
Thus following two conventions were made to which india was also a party,
namrly Geneva Convention and New York Convention.
• the Arbitration (Protocol and Convention) Act, 1937 (for Geneva Convention
Awards)
• the Foreign Awards (Recognition and Enforcement) Act, 1961 (for New York
Convention Awards)- under this act award of foreign country was taken to be
normal civil court judgment. It was agreed under these conventions that
arbitral awards will be recognized and enforced in the country.
 History and development of Arbitration Law in India
The Arbitration and Conciliation Act, 1996
• based on the UNCITRAL Model Law on International Commercial
Arbitration, 1985 and the UNCITRAL Conciliation Rules, 1980.
• This was meant to bring universalization in law relating to
arbitration and mediation. That is why the internationally
recognized UNCITRAL model law was also adopted in India.
• Creating a consolidated legal framework dealing with arbitrations
(both domestic and international) and conciliation
• Minimizing judicial interference and supervision as s. 5 clearly says
that judicial interference is unwelcomed in arbitration process
unless called for under the act.
• Creating a speedy and cost-effective dispute resolution mechanism
though sometimes arbitration process is costly.
• Providing a robust enforcement system for arbitration awards
• Amendment of 2015- time limit of 12 months and possible to
extension of 6 months was set.
• Amendment of 2019
 Categories of Arbitration
Domestic Arbitration
• both the parties must be Indians and the proceedings take
place in India
• according to Indian substantive and procedural law
• the dispute must arise in India, and parties are subjected to
the Indian jurisdiction
International Arbitration
• takes place within the territory of India or outside India or it
has any element which has foreign origin is termed as
international arbitration
• The law applicable can be Indian or foreign depending upon
the facts and circumstances of the case and the contract in
this regard
 Categories of Arbitration
Ad hoc arbitration
• parties mutually arrange the arbitration for the settlement of
the dispute.
• The parties are free to submit their own set of rules and
procedures
Institutional arbitration
• arbitration process which is carried out by an arbitration
institution
• institutions have their own set of rules and give a framework
for the arbitration to settle the dispute between the parties.
• It has its form of administration to assist in the process.
• London Court of International Arbitration, Singapore
International Arbitration Centre
 Categories of Arbitration
Statutory Arbitration
• arbitrations conducted in accordance with the provisions of
certain special Acts which provide for arbitration in respect of
disputes arising on matters covered by those Acts
• Cantonments Act, 1924, the Indian Electricity Act, 1910, the
Land Acquisition Act, 1894, the Railways Act, 1890
Flip-flop Arbitration
• Pendulum arbitration
• Quantum disputes
• Parties will formulate their respective cases beforehand.
• The arbitrator will choose one of the two.
 Categories of Arbitration
Fast Track Arbitration
• A short period is fixed by the parties for speedy disposal of
arbitral proceedings and for making the award
• Section 29(b)
Med Arb
• This is a form of Arbitration followed by Mediation
Look Sniff (Quality Arbitration)
• Combination of arbitral process and expert opinion
• The parties place the relevant documents including the basic
contracts before him
• No formal hearing
• To determine the quality or price of the goods
 Arbitration Agreement
• The arbitration agreement constitutes the heart of any
arbitration.
• The parties make an agreement that instead of going to the
court, they shall refer the dispute to arbitration.
• Without a valid arbitration agreement, no arbitration can take
place or award can be rendered
• Section 7 of the Act, 1996 is on the pattern of Article 7 of the
Model Law, which has been taken from Article II (1) of the
New York Convention, 1958.- an arbitration award may be set
aside if the party making the application furnishes proof that
the said agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon,
under the law of the seat of the arbitration.
 Arbitration Agreement
Section 7. Arbitration agreement
(1) In this Part, "arbitration agreement" means an agreement by the parties to
submit to arbitration all or certain disputes which have arisen or which may
arise between them in respect of a defined legal relationship, whether
contractual or not.
The term "agreement" has been defined by the Contract Act as every promise and
‘every set of promises forming the consideration for each other is an agreement’.
The consideration for an arbitration agreement is willingness of either side to
abide by the decision (award) of the arbitrator. The phrase ‘ contractual or not’ is
a qualifying phrase thus the dispute can be the one arising out of contract as well
as tortious.
(2) An arbitration agreement may be in the form of an arbitration clause in a
contract or in the form of a separate agreement.
any valid arbitration agreement must reflect the conscious, mutual and free will
of the parties to resort to arbitration and not to other means of dispute
resolution, including State courts. Thus animus arbitendi must be there so mere
mentioning of arbitration or giving an option to the parties to go to the arbitration
would not suffice, strict prescription of arbitration as the form of dispute
resolution between the parties is required. The test to determine whether a
particular clause amounts to a valid submission is whether both parties are bound
by the clause and not whether a right has been expressly given to both the parties
to initiate arbitral proceedings.
(3) An arbitration agreement shall be in writing.
(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 [including communication through electronic
means] which provide a record of the agreement; or

(c) an exchange of statements of claim and defense in which the

existence of the agreement is alleged by one party and not denied
by the other.

(5) The reference in a contract to a document containing an arbitration

clause constitutes an arbitration agreement if the contract is in
writing and the reference is such as to make that arbitration clause
part of the contract.
 # Jagdish Chander v. Ramesh Chander, (2007) 5 SCC 719
principles for determining factors that constitute an arbitration agreement
• The intention of the parties to enter into an arbitration agreement shall have to
be gathered from the terms of the agreement. If the terms of the agreement
clearly indicate an intention on the part of the parties to the agreement to refer
their disputes to arbitration and willingness to be bound by the decision thereto
it is arbitration agreement.
• Even if the words “arbitration” and “Arbitral Tribunal (or arbitrator)” are not used
with reference to the process of settlement … it does not detract from the clause
being an arbitration agreement if it has the attributes or elements of an
arbitration agreement. They are : (a) The agreement should be in writing. (b) The
parties should have agreed to refer any disputes (present or future) between
them to the decision of a private tribunal. (c) The private tribunal should be
empowered to adjudicate upon the disputes in an impartial manner, giving due
opportunity to the parties to put forth their case before it. (d) The parties should
have agreed that the decision of the Private Tribunal in respect of the disputes
will be binding on them.
• But mere use of the word “arbitration” or “arbitrator” in a clause will not make it
an arbitration agreement, if it requires or contemplates a further or fresh consent
of the parties for reference to arbitration. Any agreement or clause in an
agreement requiring or contemplating a further consent or consensus before a
reference to arbitration, is not an arbitration agreement, but an agreement to
enter into an arbitration agreement in future.
 Arbitration Agreement
# Bihar State Mineral Dev. Corpn. v. Encon Builders (I) Pvt. Ltd
AIR 2003 SC 3688
• There must be a present or a future difference in connection
with some contemplated affair
• There must be the intention of the parties to settle such
difference by a private tribunal.
• The parties must agree in writing to be bound by the decision
of such tribunal.
• The parties must be ad idem.
• Arbitration Award given without a dispute between the parties is
Nullity
• The Arbitration clause must give bilateral rights of reference. It
means either party may, in the event of dispute arising, refer to
arbitration. In Union of India v. Bharat Engineering Corporation "In
the event of any dispute or difference between the parties....the
contractor, after 90 days of his presenting his final claim on
disputed matters, may demand in writing that the dispute or
difference be referred to arbitration, such demand for arbitration
shall specify the matters which are in question, a dispute or
difference, and only such dispute or difference of which the
demand has been made and no other, shall be referred to
arbitration. Delhi High Court has held that this Arbitration clause
did not amount to an arbitration agreement.
• In M/s. Sankor Sealing Systems P. Ltd. v. M/s. Jain Motor Trading
Co. & another, where a clause in agreement provided that "settled
by the arbitration of a neutral person agreed to by both", is vague
and uncertain in view of language used therein. Thus being vague
an agreement cant be a valid arbitration agreement.
 Arbitration Agreement
# K.K. Modi v K.N. Modi AIR 1998 SC 1297
• Disputes arose between the two groups of the Modi family and to
resolve these conflicts, many financial institutions were called,
including the one who invested in the companies and they were
made responsible for the asset division and accounting of the three
companies which were to be divided in an MOU
• MOU specified that the consultation of all matters will be done by
the Chairman of IFCI (Industrial Finance Corporation of India) Or his
nominees, whose decision will be final and binding in cl. 9 of MOU.
1. Whether clause 9 in the memorandum of agreement Constituted
an arbitration clause?
2. Whether the decision of IFCI constituted an arbitration award?
• The court declared that the clause did not constitute an arbitration
clause
 Ques 1 .
Court enumerated the principle on arbitration agreement given by Mustill and Boyd: (1) The arbitration
agreement must contemplate that the decision of the tribunal will be binding on the parties to t he
agreement
(2) That the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of
the parties or from an order of the Court or from a statute.
(3) The agreement must contemplate that substantive rights of parties will be determined by the agreed
tribunal
(4) That the tribunal will determine the rights of the parties in an impartial and judicial manner.
(5) Judgment of parties to refer to arbi. Must be enforceable by law and
(6) Must relate to the dispute which is already formulated at the time when a reference is made to the
tribunal.
Court gave following major reasons for holding that the alleged clause is not an arbitration clause.
1. Clause 9 is intended to clear any other difficulties which may arise in the implementation of the
agreement by leaving it to the decision of the Chairman, IFCI. This clause does not contemplate any
judicial determination by the Chairman of he IFCI.
2. Clause 9 is not intended to be for any different decision that what is already agreed upon between the
parties to the dispute. It is meant for a proper implementation of settlement already arrived at.
3. It is possible that the Valuers nominated in the Memorandum of Understanding or the firm entrusted
with the responsibility of splitting some of the companies may require some clarifications or may find
difficulties in doing the work.
4. Nor was the Chairman, IFCI required to base his decision only on the material placed before him by the
parties and their submissions. He was free to make his own inquiries. He had to apply his own mind
and use his own expertise for the purpose. He was free to take the help of other experts. He was
required to decide the question of valuation and the division of assets as an expert and not as an
arbitrator. He had been authorise to nominate another in his place.
5. The Chairman, IFCI has framed issues before answering them in his decision. These issues have been
framed by himself for the purpose of enabling him to pinpoint those issues which require his decision.
There is no agreed reference in respect of any specific disputes by the parties to him.
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• is in pattern of Article 5 of the Model law.
• The expression "Judicial Authority" in Section 5 of the Act, 1996
means that the judicial authority may not necessarily be a court,
in other words, all the authorities which are vested with judicial
powers conferred by the State are judicial authorities.
• Section 5 brings out clearly the object of the new Act, namely,
that of encouraging resolution of disputes expeditiously and less
expensively and when there is an arbitration agreement, the
court’s intervention should be minimal.
• Section 8 of the Arbitration and Conciliation Act, 1996 is
peremptory in nature.
• a judicial authority shall, on the basis of the arbitration
agreement between the parties, direct the parties to go for
arbitration.
8. (1) A judicial authority, before which an action is brought in a matter which is
the subject of an arbitration agreement shall, if a party to the arbitration
agreement or any person claiming through or under him, so applies not later
than the date of submitting his first statement on the substance of the
dispute, then, notwithstanding any judgment, decree or order of the
Supreme Court or any Court, refer the parties to arbitration unless it finds
that prima facie no valid arbitration agreement exists.
• # P. Anand Gajapathi Raju & Ors. v. P.V.G. Raju, AIR 2000 SC
1) there is an arbitration agreement.
2) a party to the agreement brings an action in the Court against the
other party
3) subject matter of the action is the same as the subject matter of the
arbitration agreement
4) the other party moves the Court for referring the parties to
arbitration before it submits his first statement on the substance of
the dispute
5) This last provision creates a right in the person bringing the action to
have the dispute adjudicated by Court, once the other party has
submitted his first statement of defence. But if the party, who wants
the matter to be referred to arbitration applies to the Court after
submission of his statement and the party who has brought the
action does not object, as is the case before us, there is no bar on
the Court referring the parties to arbitration
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• .
• Section 8 uses the expansive expression “judicial authority” rather than
“court” which is Wider than court, includes those authorities upon which
the judicial power of the state is conferred
legislature has intentionally endowed less power on judicial courts with
respect to section 8 applications to make sure the arbitration process is
facilitated and unnecessary intervention by courts be avoided. But
enabled a court to decline to refer parties to arbitration if it is found that
the arbitration agreement is null and void, inoperative or incapable of
being performed. section 8 of the act differs from Article 8 of model law in
this sense.
• “first statement on the substance of the dispute”
• The expression 'first statement on the substance of the dispute' contained
in Section 8(1) of the 1996 Act must be contra-distinguished with the
expression 'written statement'. It employs submission of the party to the
jurisdiction of the judicial authority. What is, therefore, is needed is a
finding on the part of the judicial authority that the party has waived his
right to invoke the arbitration clause.
[Rashtriya Ispat Nigam Limited v M/S Verma Transport Company 2006
(3) ArbLR 210 SC]
#Sukanya Holdings (P) Ltd v. Jayesh H. Pandya [(2003) 5 SCC 531
• non-signatory parties could not be referred to a single arbitration
• unless the entire “matter” or dispute was held to be arbitrable,
a part of it could not be bifurcated and referred to arbitration.
The words 'a matter' indicates entire subject matter of the
suit should be subject to arbitration agreement.
• In our view, it would be difficult to give an interpretation
to Section 8 under which bifurcation of the cause of action
that is to say the subject matter of the suit or in some
cases bifurcation of the suit between parties who are
parties to the arbitration agreement and others is
possible. This would be laying down a totally new
procedure not contemplated under the Act.
#Magic Eye Developers Pvt. Ltd. (“Plaintiff”) v. Green Edge
Infra Pvt. Ltd. & Ors. (“Defendants”) Delhi HC 2020
• whether non-signatories to an arbitration agreement are
amenable to arbitration under Section 8 A&C Act, by
applying the group of companies doctrine.
• The Plaintiff contended that in addition to recovery of the
loan, the Plaintiff had also claimed damages for which
there was no arbitration agreement between the parties.
• The Court rejected the argument based on decision in
sukanya holdings case and held that the claim for damages
was based on the failure of Defendant No.1 to perform its
contractual obligations.
• the two reliefs were not required to be bifurcated and
could be decided by arbitration.
• The Plaintiff claimed that since Defendant Nos. 2 and 3 who
were not signatory to the various agreements, the disputes
could not be referred to arbitration.
• The Court said adjudicatory trends indicated that in certain situations, an
arbitration agreement between two or more parties may operate to bind
other parties as well and referred to the case of Chloro Controls India (P)
Ltd. Vs. Severn Trent Water Purification Inc.
• a non-signatory or third party could be subjected to arbitration without
their prior consent in exceptional cases.
• direct relationship to the party signatory to the arbitration agreement,
direct commonality of the subject matter and the agreement between the
parties being a composite transaction.
• arbitration agreement concluded in proper form between two or more
parties may also bind other parties by operation of the group of
companies doctrine, or by operation of law such as agency, assignment,
agency or succession.
• Court took in view, Plaintiff’s averments to the effect that Defendant Nos.
1, 2 and 3 belonged to the Hooda family. As such, the Plaintiff had itself
averred that the Defendants formed a group of companies. Also the fact
that Defendant Nos.2 and 3 did not oppose the plea of Defendant No.1 to
the effect that disputes should be referred to arbitration.
• Thus the Court accordingly referred all parties to arbitration.
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• After 2015 amendment, not only the parties to an arbitration
agreement but any person claiming through or under the
party to arbitration can seek reference of the dispute to
arbitration.
• possibility of non-signatories being referred to arbitration in
arbitrations seated in India.
# Swiss Timing Ltd v. Commonwealth Games 2010 Organising
Committee (2014) 6 SCC 677
• The main contention of the defendant was that since a
complaint case has been filed against petitioner for
corruption, hence the reference of dispute to arbitration is
not tenable.
• To support this contention, the respondent placed reliance
on N. Radhakrishnan V. Maestro Engineers (2010) 1 SCC 72
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• In the said case, even after finding that the subject matter of the
suit was within the ambit of arbitration, the court refused to refer
the dispute to arbitration by holding that once the contract is held
to be void ab initio, the arbitration clause dies then and there.
• the court held that, the law laid down in the Radhakrishnan runs
counter to the ratio laid down in Hindustan Petroleum Corpn Ltd v.
Pinkcity Midway Petroleums (2003) 6 SCC 503
• where the court observed that in an agreement the parties before
the civil court, there is a clause for arbitration, The language of
Section 8 is peremptory. It is, therefore, obligatory for the Court to
refer the parties to arbitration in terms [pic]of their arbitration
agreement.
• The court gave two reasons on the basis of which it
invalidated Radhakrishnan’s judgment i.e.
• (a) the judgment in Hindustan Petroleum though referred, was not
distinguished nor followed and
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
• (b) provisions mentioned under section 16 of arbitration act
were also not brought before the court.
• The arbitration act emphasizes that an arbitration clause
which forms part of a contract shall be treated as an
agreement independent of the other terms of the contract.
• there is no inherent risk of prejudice to any party in
permitting arbitration to proceed simultaneously with
criminal proceedings since findings recorded by arbitral
tribunal are not binding in criminal proceedings.
• in an eventuality where ultimately the award is rendered by
arbitral tribunal, and criminal proceedings result in conviction
rendering the contract void, such conviction can be placed on
record to resist the enforcement of the award.
# A. Ayyasamy V. A. Paramasivam, (2016) 10 SCC 386
• The Courts have held that certain disputes like criminal offences of a public nature,
disputes arising out of illegal agreements and disputes relating to status, such as
divorce, cannot be referred to arbitration. Fraud is one such category spelled out by
the decisions of this Court where disputes would be considered as non-arbitrable.
• In Booz Allen & Hamilton Inc. v. SBI Home Finance Limited and others, those cases
where the subject matter falls exclusively within the domain of public fora, viz. the
Courts, such disputes would be non-arbitrable and cannot be decided by the Arbitral
Tribunal but by the Courts alone.
• In Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak[6], serious allegations
of fraud were held by the Court to be a sufficient ground for not making a reference to
arbitration.
• A distinction has also been made by certain High Courts between a serious issue of
fraud and a mere allegation of fraud and the former has been held to be not arbitrable
(SeeIvory Properties and Hotels Private Ltd v. Nusli Neville Wadia, clarified that
allegations of fraud are arbitrable as long as it is in relation to simple fraud.
• Where court finds very serious allegation of fraud that makes a virtual case of criminal
offence
• Where allegations of fraud are so complicated that it becomes essential that such
complex issues can be decided only by civil court on appreciation of voluminous
evidence
• Where serious allegations of forgery/fabrication of documents
• Where fraud is alleged against arbitration provision itself
• Where fraud alleged permeates the entire contract, including agreement to arbitrate
where fraud goes to the validity of contract itself or contract that contains arbitration
clause or validity of arbitration clause itself.
 Section 8: Power to refer parties to arbitration where there is
an arbitration agreement
8 (2) The application referred to in sub-section (1) shall not be
entertained unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof:
[Provided that where the original arbitration agreement or a certified
copy thereof is not available with the party applying for reference
to arbitration under sub-section (1), and the said agreement or
certified copy is retained by the other party to that agreement,
then, the party so applying shall file such application along with a
copy of the arbitration agreement and a petition praying the Court
to call upon the other party to produce the original arbitration
agreement or its duly certified copy before that Court.]
(3) Notwithstanding that an application has been made under sub-
section (1) and that the issue is pending before the judicial
authority, an arbitration may be commenced or continued and an
arbitral award made.
 Interim Reliefs
• Under the Act, the parties can seek interim relief from courts and
arbitral tribunals under Sections 9 and 17 respectively. It’s a
discretionary power.
• before the constitution of the tribunal and after the passing of the
award, the power to grant interim protection lies only with the
court. After the constitution of the tribunal the power lies with the
tribunal under sec. 17. an order passed by the Arbitral Tribunal
under Section 17 is deemed to be an order of court for all purposes
and is enforceable as an order of court.
• SECTIONS
• it is settled that the court has the power to pass direction against
third parties, the power of the tribunal to pass directions against a
third party is not clear.
• A proviso has been added to existing section 2(2) to provide that
provisions relating to interim measures (section 9) will apply, unless
excluded by parties, even to arbitrations not seated in India.
 Interim Reliefs
• Mareva injunction- A Mareva injunction or a freezing injunction is a form
of ad personam interim relief, which is usually sought during the pendency
of court or arbitration proceedings or once the proceedings are completed
and a verdict is rendered, but before the judgement/award is enforced
and executed. This form of injunction is essentially sought by a claimant or
judgement/award creditor against a respondent or judgement/award
debtor, to prevent the latter from dispersing his assets otherwise than in
the ordinary course of business, so as to ensure that the enforcement of a
judgement or arbitral award is not defeated. Unlike a regular injunction, a
freezing injunction covers even those assets which are not necessarily a
part of the subject-matter in dispute or those in which the claimant does
not claim any direct right.
• Anton Pillar order- so named because got popular through the case of
anton pillae KG v Manufacturing process, It can comprise of injunction to
restrain infringement, permission to plaintiff’s solicitor to enter into
defendant’s premises to inspect documents and removes originals or
permission to remove alleged wrongful goods and if necessary even
destroying the offending goods for the purpose of destroying defendant’s
business and reputation obtained by means of illegal way.
• Zaheer khan case- appellant calimed interim
relief that respondent 1 shall not be allowed
to make any agreement with responant no. 3.
• N.V. Chowdary v. Hindustan Steel Works
Construction Ltd., AIR 1984 A.P. 110: While
considering the grant of interim measures, the
court may see, among other things such as :—
(a) whether the applicant has made out a
prima facie case; (b) whether the balance of
convenience is in his favour; and (c) whether
he would suffer irreparable injury if such
measures are not granted.
 Composition of Arbitral Tribunal
Section 10: Number of arbitrators
• Section 10(1) is taken from Article 10(1) of the Model Law. Though
it differs from it in this respect that Model Law gives freedom to the
parties to appoint both even and uneven number of arbitrators.
• In M.M.T.C. Ltd. v. Sterlite Industries (India) Ltd.,1
the Apex Court has held that an arbitration
agreement specifying an even number of
arbitrators also cannot be a ground to render the
arbitration agreement invalid.
• Experience shows that arbitral proceedings
involving an even number of arbitrators is mostly
time consuming and is not economical.
 Composition of Arbitral Tribunal
• Section 11 provides comprehensive machinery for appointment of
arbitrator(s) through judicial intervention
Section 11. Appointment of arbitrators
• (1), (2), (6), (3), (4), (5), (6A), (6B), (11), (12), (8), (10), (7), (13) and
(14).

• The Supreme Court and the High Court shall have the power to
designate, arbitral institutions, from time to time, which have been
graded by the Council under section 43-I, for the purposes of this Act.
 Section 12: Grounds for challenge
• “There is universal agreement amongst jurists of all countries
that it is of the first importance that judicial tribunals should be
honest, impartial, and disinterested.” (Russel on Arbitration)
• Uberrima fides- It is submitted that an arbitrator has to follow
the principle of natural justice and fair play while conducting
arbitration.
• In Jiwan Kumar Lohia v. Durga Dutt Lohia,1 the Supreme Court of
India said, that "Reasonable apprehension of bias in the mind of
a reasonable man, can be a good ground for the termination of
the mandate of an arbitrator". As Likely to be biased. Actual bias
need not be proved
 Section 12: Grounds for challenge
• If any of the grounds set out in the Fifth Schedule exist, or if the
prospective arbitrator is aware that he may not be able to devote
enough time to the arbitration, he has to make a disclosure in
writing to the parties when he is approached for appointment as an
arbitrator.
• If any of the grounds set out in the Seventh Schedule exist, the
prospective arbitrator is automatically ineligible for appointment.
# Mission Insurance Case
# Saurabh Kalani Vs Tata Finance Ltd
court cane to the conclusion that there are any facts or any
circumstances which are likely to bias him, it would be
incumbent upon the arbitrator to disclose these facts to the
parties. If he fails to disclose these facts, then his award would
be liable to be successfully challenged.
 Section 13: Challenge procedure
• Two-level system
 Section 13: Challenge procedure
# M. Mohan Reddy Vs Union of India
• whether sections 13(4) or 16(5) are violative of the
Constitution.
• the unsuccessful challenge either under Section
13(4) or Section 16(5) has got no right of appeal.
• The Legislature has aimed to cut short the procedural aspects
for providing speedy and efficacious remedy
• invoke Section 34 for setting aside the award.
 Section 14: Failure or impossibility to Act
• 14. (1) The mandate of an arbitrator shall terminate and he shall be
substituted by another arbitrator, if—
(a) he becomes de jure or de facto unable to perform his functions or
for other reasons fails to act without undue delay; and: (a) ‘de jure’
impossibility means factors personal to an arbitrator to act, i.e.,
insanity, The circumstances may arise when an arbitrator goes
abroad, leaves India and settles down abroad or an arbitrator
appointed by virtue of his office rather ex-officio but his office has
been abrogated, would be treated to have become incapable of
acting "de fa'cto" as an arbitrator, and (b) ‘de facto’ impossibility
means factors beyond the control of an arbitrator, i.e., imprisonment
or war, not fit enough to act. ‘other reasons’ means— those reasons
which arise due to the failure of an arbitrator to act. Thus, if an
arbitrator fails to use "all reasonable dispatch" in the conduct of the
arbitral proceedings, his mandate is liable to be terminated.
(Kalicharan Sharma v. State of U.P., AIR 1985 Del. 389)
(b) he withdraws from his office or the parties agree to the
termination of his mandate.
 Section 15: Termination of mandate and substitution
of arbitrator.
15. (1) In addition to the circumstances referred to in section 13 or
section 14, the mandate of an arbitrator shall terminate—
(a) where he withdraws from office for any reason; or
(b) by or pursuant to agreement of the parties.
(2) Where the mandate of an arbitrator terminates, a substitute
arbitrator shall be appointed according to the rules that were
applicable to the appointment of the arbitrator being replaced.
(3) Unless otherwise agreed by the parties, where an arbitrator
is replaced under sub-section (2), any hearings previously held
may be repeated at the discretion of the arbitral tribunal.
(4) Unless otherwise agreed by the parties, an order or ruling of
the arbitral tribunal made prior to the replacement of an
arbitrator under this section shall not be invalid solely because
there has been a change in the composition of the arbitral
tribunal.
 Section 16: Competence of arbitral tribunal to rule on
its jurisdiction
• Section 16 of the Arbitration and Conciliation Act, 1996 has been
framed in accordance with Article 16 of the UNCITRAL Model law.
• It embodies the doctrine "Kompetenz – Kompetenz". Kompetenz-
kompetenz is the jurisdictional principle to empower an adjudicating
body to exercise on the issues on its own jurisdiction submitted
before it, i.e., it can decide on the pleas challenging its own
jurisdiction submitted before it.
• It empowers the arbitral tribunal to rule upon its 'own' jurisdiction,
brought forth by one of the parties to the dispute.
• Section 16 (1) of the A&C Act states that an arbitral tribunal may rule
on its own jurisdiction, including ruling on any objection with respect
to the existence or validity of the arbitration agreement.
• the arbitral tribunal has the authority to decide whether it has the
jurisdiction to adjudicate the dispute or not.
• The underlying object of this doctrine is to minimize judicial
intervention in order to ensure that the arbitral process is not
thwarted at the very threshold, merely because a preliminary
objection is raised by one of the parties.
• The first say to the objections raised on the jurisdiction of the
tribunal will be for the tribunal than the court.
• The SC (constitution bench) in the case of SBP & Co. vs. Patel
Engineering Ltd. held that all the preliminary/threshold issues with
respect to jurisdiction of the arbitral tribunal should be examined
by the Court under Section 11.
• This ruling chipped away the inherent importance of
the Kompetenz-Kompetenz principle incorporated in Section 16.
• Consequently, the 2015 Amendment inserted Section 11(6A) in
order to restrict the powers of the courts to merely examining the
existing of an arbitration agreement (and nothing more).
Post 2015 Amendment
# Indian Farmers Fertilizers Cooperative Limited vs. Bhadra Products
(2018) 2 SCC 534
i. whether an award on the issue of limitation can be said to be an
interim award and can be set aside under Section 34 of the A&C
Act.
ii. whether a decision on a point of limitation would go to jurisdiction
and, therefore, be covered by Section 16
• SC, on the First Issue, answered in the affirmative
• SC placed reliance on the Section 30 and 31 of the English
Arbitration Act, 1996 (which is also based on 'Kompetenz-
Kompetenz' principle.
• held that the issue of limitation is not a matter of tribunal's
jurisdiction under Section 16 of A&C Act.
• It also held that the term 'jurisdiction' mentioned in Section 16 of
the A&C Act means reference to a three part test only.
a) whether there is existence of a valid arbitration agreement;
b) whether the arbitral tribunal is properly constituted; and
c) whether the matters submitted for arbitration are in accordance
with the arbitration agreement ("Three Determinatives").
Post 2019 Amendment
• The 2019 Amendment omitted Section 11(6A).
• 11(6A) was not deleted in order to revive the law that was in place
prior to 2015 Amendment, but to enable the appointment of
arbitrator(s) by arbitral institutions(s) appointed by the SCI in case
of international commercial arbitrations or by the High Courts in
case of all other arbitrations.
• clarified that the scope of enquiry under Section 16 of A&C Act is
limited to the Three Determinatives only.
• As a result, issues (of preliminary nature) such as an issue of
limitation or non-joinder of necessary or proper parties could not be
raised under Section 16 of A&C Act.
• SCI (also a division bench), subsequently in Uttarakhand Purv Sainak
Kalyan Nigam Limited vs. Northern Coal Field Limited (2020) 2 SCC
455 observed that the arbitral tribunal (as and when constituted)
shall be empowered to determine the issue of limitation under the
Section 16 of the A&C Act.
• Relying on the UPSKNL Case, the High Court of Bombay recently in C.
Shamsuddin vs. Now Realty Ventures LLP and others (AIR Online
2020 Bom 76) also gave a similar finding and held that the question
of limitation will be kept open for decision by the arbitral tribunal
under Section 16 of A&C Act.
• In view of the divided findings of the SC in the IFFCO and UPSKNL
judgment (both division benches) and of the BHC in RVL Case, the
scope of jurisdiction under Section 16 of the A&C Act remains
unclear.
16 (1) (a) an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the
contract; and
(b) a decision by the arbitral tribunal that the contract is null and
void shall not entail ipso jure the invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have jurisdiction shall
be raised not later than the submission of the statement of defence;
however, a party shall not be precluded from raising such a
plea merely because that he has appointed, or participated in the
appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of its
authority shall be raised as soon as the matter alleged to be beyond
the scope of its authority is raised during the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases referred to in
sub-section (2) or sub-section (3), admit a later plea if it considers
the delay justified.
 (5) The arbitral tribunal shall decide on a plea referred to in sub-
section (2) or sub-section (3) and, where the arbitral tribunal takes a
decision rejecting the plea, continue with the arbitral proceedings
and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an
application for setting aside such an arbitral award in accordance
with section 34.
The High Court of Delhi, in Union of India v. M/s. East
Coast Boat Builders & Engineers Ltd., stated that
no appeal is provided against the decisions by the
tribunal to reject the plea that the arbitral tribunal
has no jurisdiction
 CHAPTER V Conduct of Arbitral Proceedings
Section 18: Equal treatment of parties.
• The parties shall be treated with equality and each party shall
be given a full opportunity to present his case.
• This section casts a twofold duty on the arbitral tribunal.
i. It must be independent and impartial and must mete out equal
treatment to each party.
ii. It must give each party a full opportunity to present its case.
Section 19: Determination of rules of procedure.
(1) The arbitral tribunal shall not be bound by the Code of Civil
Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1
of 1872).
(2) Subject to this Part, the parties are free to agree on the
procedure to be followed by the arbitral tribunal in conducting
its proceedings.
(3) Failing any agreement referred to in sub-section (2), the arbitral
tribunal may, subject to this Part, conduct the proceedings in the
manner it considers appropriate.
(4) The power of the arbitral tribunal under sub-section (3) includes
the power to determine the admissibility, relevance, materiality and
weight of any evidence.
#Jagjeet Singh Lyallpuri v. Unitop Apartments & Builders Ltd.,
(2020) 2 SCC 279
• Non granting of opportunity to cross examine the witnesses is not a
ground to set aside the award, when parties had agreed to such
procedure. There is estoppel against challenging agreed upon
procedure and raising contention of misconduct on part of
arbitrator for having following agreed upon procedure.
Section 20: Place of arbitration.
(1) The parties are free to agree on the place of arbitration.
 (2) Failing any agreement referred to in sub-section (1), the place of
arbitration shall be determined by the arbitral tribunal having
regard to the circumstances of the case, including the convenience
of the parties.
(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral
tribunal may, unless otherwise agreed by the parties, meet at any
place it considers appropriate for consultation among its members,
for hearing witnesses, experts or the parties, or for inspection of
documents, goods or other property.
Section 21: Commencement of arbitral proceedings.
21. Unless otherwise agreed by the parties, the arbitral proceedings
in respect of a particular dispute commence on the date on which a
request for that dispute to be referred to arbitration is received by
the respondent.
Section 22: Language.
(1) The parties are free to agree upon the language or languages to
be used in the arbitral proceedings.
(2) Failing any agreement referred to in sub-section (1), the arbitral
tribunal shall determine the language or languages to be used in
the arbitral proceedings.
(3) The agreement or determination, unless otherwise specified,
shall apply to any written statement by a party, any hearing and any
arbitral award, decision or other communication by the arbitral
tribunal.
(4) The arbitral tribunal may order that any documentary evidence
shall be accompanied by a translation into the language or
languages agreed upon by the parties or determined by the
arbitral tribunal.
Section 23: Statements of claim and defence.
(1) Within the period of time agreed upon by the parties
or determined by the arbitral tribunal, the claimant shall state the
facts supporting his claim, the points at issue and the relief or remedy
sought, and the respondent shall state his defence in respect of
these particulars, unless the parties have otherwise agreed as to the
required elements of those statements.
(2) The parties may submit with their statements all documents they
consider to be relevant or may add a reference to the documents or
other evidence they will submit.
(2A) The respondent, in support of his case, may also submit a
counterclaim or plead a set-off, which shall be adjudicated upon by
the arbitral tribunal, if such counterclaim or set-off falls within
the scope of the arbitration agreement.
(3) Unless otherwise agreed by the parties, either party may amend
or supplement his claim or defence during the course of the arbitral
proceedings, unless the arbitral tribunal considers it inappropriate to
allow the amendment or supplement having regard to the delay in
making it.
 (4) The statement of claim and defence under this section shall be
completed within a period of six months from the date the arbitrator
or all the arbitrators, as the case may be, received notice, in writing
of their appointment.
Section 24: Hearings and written proceedings.
(1) Unless otherwise agreed by the parties, the arbitral tribunal shall
decide whether to hold oral hearings for the presentation of evidence
or for oral argument, or whether the proceedings shall be conducted
on the basis of documents and other materials:
Provided that the arbitral tribunal shall hold oral hearings, at an
appropriate stage of the proceedings, on a request by a party, unless
the parties have agreed that no oral hearing shall be held:
[Provided further that the arbitral tribunal shall, as far as possible,
hold oral hearings for the presentation of evidence or for oral
argument on day-to-day basis, and not grant any adjournments
unless sufficient cause is made out, and may impose costs including
exemplary costs on the party seeking adjournment without any
sufficient cause.]
 (2) The parties shall be given sufficient advance notice of any
hearing and of any meeting of the arbitral tribunal for the purposes
of inspection of documents, goods or other property.
(3) All statements, documents or other information supplied to, or
applications made to the arbitral tribunal by one party shall be
communicated to the other party, and any expert report or
evidentiary document on which the arbitral tribunal may rely in
making its decision shall be communicated to the parties.
Section 25: Default of a party.
Unless otherwise agreed by the parties, where, without
showing sufficient cause,—
(a) the claimant fails to communicate his statement of claim in
accordance with sub-section (1) of section 23, the arbitral
tribunal shall terminate the proceedings;
 (b) the respondent fails to communicate his statement of defence in
accordance with sub-section (1) of section 23, the arbitral tribunal
shall continue the proceedings without treating that failure in itself
as an admission of the allegations by the claimant 1[and shall have
the discretion to treat the right of the respondent to file such
statement of defence as having been forfeited].
(c) a party fails to appear at an oral hearing or to produce
documentary evidence, the arbitral tribunal may continue the
proceedings and make the arbitral award on the evidence before it.
Section 26: Expert appointed by arbitral tribunal.
(1) Unless otherwise agreed by the parties, the arbitral tribunal
may—
(a) appoint one or more experts to report to it on specific
issues to be determined by the arbitral tribunal, and
(b) require a party to give the expert any relevant information
or to produce, or to provide access to, any relevant
documents, goods or other property for his inspection.
(2) Unless otherwise agreed by the parties, if a party so requests or
if the arbitral tribunal considers it necessary, the expert shall, after
delivery of his written or oral report, participate in an oral hearing
where the parties have the opportunity to put questions to him and
to present expert witnesses in order to testify on the points at issue.
(3) Unless otherwise agreed by the parties, the expert shall, on the
request of a party, make available to that party for examination all
documents, goods or other property in the possession of the expert
with which he was provided in order to prepare his report.
Section 27: Court assistance in taking evidence.
(1) The arbitral tribunal, or a party with the approval of the arbitral
tribunal, may apply to the Court for assistance in taking evidence.
(2) The application shall specify—
(a) the names and addresses of the parties and the arbitrators;
(b) the general nature of the claim and the relief sought;
(c) the evidence to be obtained, in particular,—
(i) the name and address of any person to be heard as
witness or expert witness and a statement of the subject-
matter of the testimony required;
(ii) the description of any document to be produced or
property to be inspected.
(3) The Court may, within its competence and according to
its rules on taking evidence, execute the request by
ordering that the evidence be provided directly to the
arbitral tribunal.
(4) The Court may, while making an order under sub-
section (3), issue the same processes to witnesses as it may
issue in suits tried before it.
(5) Persons failing to attend in accordance with such process,
or making any other default, or refusing to give their
evidence, or guilty of any contempt to the arbitral tribunal
during the conduct of arbitral proceedings, shall be
subject to the like disadvantages, penalties and
punishments by order of the Court on the representation
of the arbitral tribunal as they would incur for the like
offences in suits tried before the Court.
(6) In this section the expression “Processes” includes
summonses and commissions for the examination of
witnesses and summonses to produce documents.
 Rules applicable to substance of dispute
28. (1) Where the place of arbitration is situate in India,—
(a) in an arbitration other than an international commercial arbitration,
the arbitral tribunal shall decide the dispute submitted to arbitration
in accordance with the substantive law for the time being in force in
India;
(b) in international commercial arbitration,—
(i) the arbitral tribunal shall decide the dispute in accordance with the
rules of law designated by the parties as applicable to the substance
of the dispute;
(ii) any designation by the parties of the law or legal system of a given
country shall be construed, unless otherwise expressed, as directly
referring to the substantive law of that country and not to its
conflict of laws rules;
(iii) failing any designation of the law under clause (a) by the parties,
the arbitral tribunal shall apply the rules of law it considers to be
appropriate given all the circumstances surrounding the dispute.
(2) The arbitral tribunal shall decide ex aequo et bono or as amiable
compositeur only if the parties have expressly authorised it to do so.
(3) While deciding and making an award, the arbitral tribunal shall, in
all cases, take into account the terms of the contract and trade
usages applicable to the transaction.