Introduction

Modes of Alternative Dispute

Resolution

Arbitration
Arbitration, a type of alternative dispute
resolution (ADR), is a strategy for resolving
conflicts outside of the court system in which
the parties to a disagreement refer it to one or
more people, known as arbitrators, to whom
they intend to be bound by their judgement.

Lok Adalat
It is a judicial body and a dispute settlement
organization established for social justice by the
citizens themselves, based on the settlement or
agreement obtained through formal
negotiations.
Conciliation
It is a form of alternative dispute resolution in
which the parties to a dispute hire a conciliator to
help them resolve their issues individually.
They do this by reducing conflicts, strengthening
coordination, identifying problems, offering
technical assistance, discussing possible solutions
and bringing about a negotiated settlement.

Judicial settlement Mediation

Today, mediation is a voluntary and
The term “Judicial Settlement” is however
informal method of dispute resolution
specified in Section 89 of the Code. It was
throughout the world.
provided that the provisions of the Legal
Services Authority Act, 1987, would apply It is a simple, voluntary, party-centered
when there is a judicial settlement. and structured negotiation process in
which a neutral third party helps parties
This means that the Judge concerned,
resolve their disputes friendly through
seeks to settle the dispute between the
the use of specified communication and
parties in a legal settlement amicably.
negotiation techniques.
The main types of ADR are as under

1st • Voluntary Arbitration

2nd • Compulsory Arbitration.

Other Types of Arbitration

Ad-hoc Institutional
Arbitration Arbitration

Domestic or
Statutory
International
Arbitration
Arbitration
 Definition of Alternative Dispute Resolution
✓ Alternative Dispute Resolution (ADR) is defined as encompassing all
legally-permitted processes of dispute resolution other than litigation
✓ It is also seen as an umbrella term that refers generally to alternatives
to the court adjudication of disputes such as negotiation, mediation,
arbitration, mini-trial and summary trial
✓ ADR is also known as appropriate dispute resolution
✓ Also known as Amicable dispute resolution
✓ It is seen as «a colloquialism for allowing a dispute to drop or as an
alternative to violence

ADR as a Legal Institution

✓ ADR is a product of the legal institution to offer the best possible service
to its clients. In fact, lawyers are sometimes urged to use ADR.

ADR as a Process
✓ There are different kinds of ADR processes. One process differs from
the other. The notable ADR processes are: «negotiation, mediation,
arbitration, settlements, summary jury trial, early neutral evaluation,
the mini-trial, consensus building, and negotiated rule-making.

✓ ADR practitioners have well-defined process of resolving conflicts within

their jurisdiction. The choice of a particular process depends on the
kind of conflicts and the interests of the parties involved. In mediation
process, with the aid of the mediator, disputants resolve their conflict
themselves. On the other hand, in arbitration process, there is
adjudication, which binds the parties.

ADR aims at Resolving Conflicts

✓ Conflicts or disputes are everyday life experience both in private and
public life. Whenever there is a dispute, which is «an expressed struggle
between at least two interdependent parties who perceive incompatible
 goals, scarce resources, and interference from others in achieving their
goal. there is the need for resolution. There are various ways in which
disputants try to resolve their differences. Some resolve conflicts by the
use of violence like killing the other disputant. Some use court of law
by going through litigation. ADR aims to be an alternative to litigation
and violence.

ADR is the Opposite of Litigation

✓ The word alternative is used as an option to litigation. ADR is a
recognised and a time-tested alternative to litigation across the globe.
In common law tradition, it is becoming increasingly one of the best
ways of resolving many disputes.

ADR is Voluntary
✓ Disputants decide voluntarily to use ADR to resolve their differences.
ADR thrives under the principle of self-determination of the disputants
to use legally accepted procedure to resolve a conflict other than
litigation. No one is coerced to enter into ADR. It is a voluntary process
unlike litigation where respondents can be subpoenaed to respond to
charges or provide evidence in public court of law.

ADR can be Mandatory

✓ Arbitration as ADR process is mandatory if there is arbitration clause
in a contract. The arbitration clause stipulates that, in case of a dispute
among the parties, ADR process will be used to settle the dispute. Pre-
dispute arbitration clause is an expression of the will of the two parties
to use ADR.

ADR is Confidential
✓ Often there is much public interest when a case is under litigation and
with the media sometimes giving details of court proceedings. However,
 ADR is private and confidential. Its practitioners are bound by their
code of ethics to preserve the privacy of their clients.

ADR process maybe Non-binding

✓ Some ADR processes have no legal binding effect. Negotiation, for
instance, as ADR process, is non-binding. It is often an agreement
between the disputants, which is subject to their goodwill. Since it is
non-binding it cannot be enforced in public law court. It is a private
approach to conflict. For this reason, the disputants decide themselves
what is fair and abide by it.

ADR process can produce Legally Binding Results

✓ ADR process is legally binding in two ways. First, the disputants have
the obligation to honour their pre-dispute agreement to use ADR to
settle their dispute. Second, they have to abide by the adjudication of
the arbitrator, which is enforceable in a public government court of
competent jurisdiction. Nevertheless, they can also challenge the
outcome of arbitration in court, which is often difficult.

ADR is Efficient, Saves Time and Costs Less

✓ Low-cost is one of the key advantages of ADR process. The exponents
of ADR emphasise its low-cost as compared to often high-cost of
litigation. It does not only cost less but it also saves time.
 Major Alternative Dispute Resolution Processes

(Memes Edition)

Negotiation Conciliation Lok Adalat Mediation Arbitration

 Arbitration
✓ Arbitration in India is governed by The Arbitration and Conciliation Act,
1996. It is a form of dispute resolution where one or more parties are
appointed to adjudicate the dispute. They act as third parties. This third
party should be neutral and this party is referred to as an ’arbitrator’
while the decision of the arbitrator, which is essentially a determination
of merits in the case, is known as ‘arbitration award’.
✓ The arbitration process is informal and this process allows the dispute
to be resolved amicably and efficiently as it takes less time and involves
lesser costs for the parties. Therefore, parties frequently choose to
arbitrate when disputes arise, especially in the business world. Big
corporations would rather settle disputes quickly, rather than fighting
long cases in the courts.
✓ Before the arbitration process begins, an arbitration agreement is
required to be formed. This agreement lays down the terms and
conditions on which the arbitration process is carried out. It is
determined through this agreement as to how the process will be made
cheaper, efficient and and how the rules of evidence would be applied
etc. This agreement should be valid as per The Indian Contract Act
1972 and the parties must have the capacity to contract under Sections
11 and 12 of the same Act.
✓ Arbitral decisions are final and binding on the parties, who have limited
scope of objecting to the decisions. Non binding arbitrations also exist
wherein the party can request a trial if it is not satisfied with the
arbitrator’s decision.
 Negotiation
✓ Negotiation can be defined as a bilateral or multilateral process in which
parties who differ over a particular issue attempt to reach agreement or
compromise over that issue through communication.
✓ Negotiation is about communication, which entails dialogue,
deliberation and round table conference with the aim of reaching an
agreement or settlement over a determined subject or object.
✓ Negotiation is a voluntary ADR process. There is no third party to
facilitate the resolution process or impose a sentence.
✓ It is an act of goodwill through back and-forth communication designed
to reach an agreement between two or more parties with some interests
that are shared and others that may conflict or simply be different.
✓ Negotiation demands a lot of listening. It works when the parties are
ready to listen to each other and come to an agreement or compromise.
Negotiation has also a legal dimension.
✓ The settlement agreement has certain legal requirement to fulfill for
example; it cannot evade tax and in some cases a court approval of the
settlement34 is needed.
✓ Even though negotiation is everyday life experience, dispute negotiation
is an art to learn. It is like a science with prediction and
experimentation.
✓ Most ADR professionals are very good in the art of negotiation. With
techniques and understanding they are able to help disputants
negotiate well.
✓ There are two kinds of negotiation; namely, transactional and dispute
or adversarial negotiations.
➢ Essentials of negotiation-
o It is a process of communication which helps to resolve conflicts.
o It can be entered into voluntarily and its outcome is non-binding.
o The parties are benefitted here as they have control over the
outcome and procedure and the process is carried out keeping
their interests in mind.
 Conciliation
✓ In conciliation, the third party, who is called the conciliator, talks to the
parties involved separately so that the parties can arrive at a mutually
acceptable solution through facilitating talks between the parties.
Conciliation is also governed in India under The Arbitration and
Conciliation Act, 1996. Under Section 61, conciliation is provided for
disputes arising out of legal relationships, whether they are contractual
or not.

Difference between mediation and conciliation

In mediation, the mediator plays a more active role in the the
process by proposing compromise solutions after hearing all
parties while in the case of conciliation, the conciliator has to
bring the parties into such a state of mind as to facilitate the
parties to come to an acceptable compromise.
 Mediation

✓ In mediation, a third neutral party aims to assist two or more disputants

in reaching a settlement. This third party is referred to as the mediator.
The mediator needs to properly communicate with both the parties and
use proper negotiation techniques, in order to make one party fully
aware of the other party’s perspective, through empathy and dialogue.
This process is controlled by the parties.
✓ One of the characteristics of this type of dispute resolution is that the
mediator is not allowed to give an outcome of the dispute. The solution
is given mutually, and the agreements are generally non binding. Parties
are in significant control of the mediation process and it is strictly
confidential. The parties can even go for litigation if they are not satisfied
with the mediation process.
✓ It must be observed that the main aim of the mediation process is to
build relationships, and not to make a decision. It is more of an amicable
resolution of differences with potential form future business between the
parties.
 Lok Adalats
✓ In a country like India where there are many illiterate people, the
concept of Lok Adalats is a necessity. This was first introduced in 1982
in Gujarat. This concept mainly focused on reducing the burden of
pending cases on the Courts and has incorporated the concept keeping
in mind various factors like social justice.

✓ Lok Adalats are governed under The Legal Services Authorities

Act,1987. Sections 19, 20, 21 and 22 specifically deal with Lok Adalats.
They have been organised by the State Legal Aid and Advice Boards with
the aid of District Legal Aid and Advice Committees. These have helped
poor people to avoid the inefficiencies of litigation. The aim of The Legal
Services Authorities Act was to provide access to justice for all, whether
he be poor or rich. Since the poor masses of the society were not being
delivered on this promise, this Act was formed. This access has been
further strengthened by judgements of various courts, such as the Delhi
High Court, in the case of Abul Hasan and National Legal Service
Authority v. Delhi Vidyut Board & Ors. AIR 1999 Del 88, where it gave
an order for setting up permanent Lok Adalats.

✓ Further, the decision given by the Lok Adalat is binding and shall be
treated akin to the order of a civil court., thereby increasing poor
people’s access to justice.
 Pros of ADR

It is free from
It is less
the
expensive.
technicalities

It is less time
consuming.
 Cons of ADR

Not helpful
ADR is less where a dispute
suitable when is to be decided
there is a need on the basis of
for a precedent.
enforcement.

When there is a need

for court and interim
orders, ADR would
not be useful.
Some Important
Sections

of ADR with

the

detailed
Explanation
 Section 7

Arbitration Agreement Explained

⚫ Section 7 of the Arbitration and Conciliation Act of 1996 defines
arbitration agreement as an agreement by the parties to refer to arbitration
all or some disputes which have arisen or will arise on a future date
between them with reference to a defined legal relationship, whether
contractual or not. A doctor’s relationship with his patient or a lawyer’s
with his client are both examples of relations that are legal but not
necessarily contractual.

⚫ An Arbitration agreement is made by any two parties entering into a

contract by which any disputes arising between them with regard to the
contract agreement is to be resolved, without going to the Courts and with
the help of an Arbitrator. The agreement should mention who should
select the arbitrator, regarding what kind of dispute the Arbitrator should
give decision, the place of arbitration, etc.

⚫ The parties need to sign the Arbitration Agreement and the decision shall
be binding on the parties. If you are a party to any contract and if you
wish to resolve any disputes with the help of an Arbitrator, without going
to court, then you should make this agreement.

⚫ Arbitration agreement is like a contingent contract, meaning thereby that

these agreements come into being or become enforceable contingent to the
happening of a dispute between the parties. It is only enforceable in case
there arises a dispute between the parties.

Essentials of Arbitration Agreement

The existence of a dispute is an essential condition for arbitration. Where
parties have effectively settled their disputes, they cannot refute the
settlement and invoke an arbitration clause.
1. Written Agreement

An arbitration agreement must be in writing. As per Section 7 (4) of the Act,

arbitration agreement is considered to be 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 which provide a record of the agreement; or

c) An exchange of statements of claim and defence in which the existence

of the agreement is alleged by one party and not defined by another.

2. Intention

Intention of the parties is of prime importance. No form has been

prescribed for an arbitration agreement and nowhere has it been
mentioned that terms like arbitration, arbitrator are essential prerequisites
in an arbitration agreement. According to a leading case law in this subject,
the intention of the parties to refer their dispute to arbitration should be
clearly discernible from the arbitration agreement.

3. Signature

An arbitration agreement needs to be signed by the parties. The agreement

may be in the form of a signed document by both the parties containing all
the terms or it may also be a signed document by one party which contains
the terms and an acceptance signed by the other party. It will suffice if one
party puts his signature in the written submission and the other party
accepts it.

Points To Remember While Drafting Arbitration

Agreement
1. Seat of Arbitration – This clause specifies the seat or place of arbitration.
The seat of arbitration determines the procedural laws that govern the
arbitration procedure. It need not be the same as the place of hearings.
Seat of arbitration is considered to be a place where arbitrations are held
 even if the place of hearings differ. Place of hearings don’t by any means
affect the chosen seat of arbitration.

2. Procedure for Appointing Arbitrators – Section 11 of the Arbitration and

Conciliation Act talks about the appointment of arbitrators. It provides
that a person of any nationality may be appointed as an arbitrator, unless
otherwise agreed by the parties. The parties are free to agree on a
procedure for appointing the arbitrator(s). If the parties fail to reach an
agreement, in an arbitration with 3 arbitrators, each party shall appoint
one arbitrator, and the two arbitrators shall thereafter appoint a third
arbitrator, who shall be the presiding arbitrator. The appointment of
parties may be by the parties themselves, or by the designated authority
or by the arbitral institutions. In places where the dispute involves
international commercial transaction, then the arbitrator to be appointed
shall not be of the same nationality as the parties to the dispute.

3. Language of Arbitration – It is important to mention the language of

arbitration in the agreement itself. Especially, in a country like ours,
where Hindi and English aren’t the only two languages spoken, it would
get very difficult to decide and settle the disputes. Choosing the language
of arbitration is also very cost effective, because it would save you from
paying exorbitant fees to the translators.

4. Number and Qualifications of Arbitrators – According to Section 10 of the

Arbitration and Conciliation Act of 1996, parties can determine the
number of arbitrators, provided that the number is an odd number.
Failing to determine the no. of arbitrators, the arbitral tribunal shall
consist of a sole arbitrator.

5. Type of Arbitration – Parties can choose between Institutional or Ad hoc

arbitrations. If the parties choose the former, then they have to be bound
by the rules of the arbitration institutions. All these institutions have their
own set of rules for arbitration and these rules would be applicable to
arbitral proceedings conducted by them. Whereas, in case of Ad-hoc
arbitrations, arbitrations are both agreed to and arranged by the parties
 themselves. No help is sought from the arbitral institutions in Ad-hoc
arbitrations.

6. Governing Law – This is the law that governs the main point of contention
between the parties to a dispute. It is even known as the substantive law.
The parties should mention the law they want to be governed by, failing
which may give way to disputes in the future.

7. Name and Address of the Arbitration Institution – If the parties to the

dispute are referring their disputes to an arbitration centre, then it is
pertinent that they mention the name and address of the arbitration
facility in clear and unambiguous words. Such inadvertent mistakes can
lead to the nullification of the arbitration clause.
 SECTION 8
⚫ Section 8 deals with the power of the judicial authority to send parties to
arbitration. It states that a judicial authority before which an action is
brought in a matter that is the subject of an arbitration agreement shall,
unless it finds that prima facie, refer the parties to arbitration, if a party
to the arbitration agreement or any person who claims through or under
him, so applies not later than the date of submission his first statement
on the substance of the dispute.

⚫ Section 8 (2) states that the original arbitration agreement or a properly

certified duplicate of it must be included with the application referred to
in sub-section (1).

⚫ The party applying for arbitration under subsection (1) must submit the
application along with a copy of the arbitration agreement and a petition
asking the court to order the other party to produce the original arbitration
agreement if either the original arbitration agreement or a certified copy
thereof is not available to the party applying for the reference to arbitration
and the other party has retained the original arbitration agreement or
certified copy.

⚫ Section 8 (3) provides that arbitration may be initiated or continued, and

an arbitral award may be given, notwithstanding that an application has
been made under subsection (1) and that the matter is pending before the
judicial authority.

⚫ If the conditions of section 8 are satisfied, it is the court's bounden duty

to refer the parties to arbitration whenever a lawsuit is filed in a civil court
and the base of that lawsuit is a contract in which the parties had freely
and voluntarily agreed to settle their dispute through arbitration.

⚫ When Section 8 of the Act is compared to Article 8 of the UNCITRAL Model

Law, the position of Section 8 of the Act becomes even more evident.
According to Article 8, a court may decide against referring parties to
 arbitration if it is determined that the arbitration agreement is invalid,
ineffective, or unable to be carried out.

⚫ The fact that Section 8 has deviated shows how broad and inclusive the
statutory mission is. The terms "unless it deems that the agreement is null
and void, inoperative, and incapable of being performed" do not appear in
section 8, which instead refers to "judicial authority" in a broad sense.

⚫ This distinction makes it quite evident that the legislators purposefully

gave judicial courts less authority over section 8 petitions in order to
facilitate the arbitration procedure and prevent needless judicial
interference.

⚫ Despite the fact that the situation is so obvious, this clause has often been
interpreted differently by our courts, which has caused a lot of confusion.
When the requirements of section 8 are met, regardless of the current
situation, courts have taken the literal interpretation approach and have
interpreted the clause as it is intended to be, referring the dispute to
arbitration.

⚫ However, there have been cases where the courts have completely
disregarded legitimate precedents, interpreted a part hazily, refused a
reference, and otherwise deviated from the legitimate line of precedents.

⚫ Furthermore, the deviation is not the only issue; in one case, the SC
actually went so far as to establish a few exceptions to the rule, which is
entirely incorrect in my opinion. In the event that there had been a need
for such exclusions, the legislature would have added them to the act
itself.
 Section 9 and Section 17:
⚫ Analysis of Section 9 and Section 17 would lead us to the following
conclusions:-
– The new arbitration Act empowers the arbitral tribunal to pass orders
for giving interim relief while such power is not vested under the Old Act.
– Powers under Section 17 can be exercised only after the arbitral tribunal
is constituted and it stats functioning.
– Powers of court under section 9 are wide as the words “before, during or
after indicate so. A party can approach the court to seek interim measures
of protection even before the arbitration commences.
– Court’s powers are wide and have supremacy in granting interim relief.
However interference of court when Tribunal is constituted is minimum.

Recourse against Arbitral Award

The arbitration may be a method of dispute resolution between the parties
through an arbitral tribunal appointed by parties to the dispute or by the
Court at the request of a party. there's no provision for appeal against an
arbitrational award and it's final and binding between the parties. However,
an aggrieved party could take recourse to a law court for setting aside the
arbitration award on bound grounds per Section thirty-four of the Arbitration
and Conciliation Act, 1996.

Section thirty-four provides that an arbitral award is also put aside by a court
on bound grounds such as that. These grounds are:

✓ Incapacity of a party

✓ Arbitration agreement not being valid

✓ Party not given correct notice of proceedings

✓ Nature of dispute not falling at intervals the terms of submission to arbitration

✓ The arbitral procedure not being in accordance with the agreement

 Section 34
Application for setting aside arbitral awards

To ascertain the proper conduct of the arbitration proceedings, the law allows
certain remedies against an arbitral award. An aggrieved party may resort to
the law Court for setting aside the arbitral award on certain Grounds mentioned
under Arbitration and Conciliation Act, 1966.

➢ Grounds

Section 34 of the Arbitration and Conciliation Act provides the provisions of

certain specific grounds on the basis of which an arbitral award rendered in
India can be set aside. They are-

1. Incapacity of a party while making an application to enter the

agreement.
2. Arbitration agreement not being valid under the law.
3. Parties were not given proper notice of the appointed Arbitrators
or the Arbitral Tribunal.
4. Nature of dispute not capable of settlement by arbitration.
5. Composition of the arbitral award was not in accordance with the
agreement of parties.
6. The Arbitral award is in the violation of the public policy of a state.
7. The Arbitral award deals with a dispute not falling within the terms
of submissions to an arbitration.

➢ Constitutional Validity of Sec 34

In the case of TPI Ltd. V. Union of India, in a writ petition, it was contended
by the petitioner that an inherent right to set aside an arbitral award on the
grounds provided, should be present and in the absence of the same, section
34 should be considered as unconstitutional. Here, the court dismissed the writ
petition by stating that the arbitration is an alternate forum for the resolution
of a dispute and it is on the wish of the parties to opt in on their free will for
their matters and if they agree to the decision of the arbitral tribunal by mutual
agreement. There is no compulsion by any statute forcing the parties to resort
to the arbitration procedure.

Setting aside the foreign award

The Part 1 (Section 34) of the Indian Arbitration Act 1996 furnishes the
grounds to challenge or set aside the award to be applicable only to the awards
within a state and not to the foreign awards. On 6th September 2012,
In Bharat Aluminium company V. Kaiser Aluminium Technical Service, the
Supreme Court held that the Indian Arbitration Act should be interpreted in a
way to give effect to the objective or purpose of the Indian parliament who
drafted this legislation. Such findings of the Supreme Court are applicable only
to the arbitration agreement executed after 6 September 2012.

So part 1 of the Arbitration and Conciliation Act has no application to the

arbitrations occurring in matters outside India irrespective of the fact that
whether parties chose to apply Indian Arbitration Act or not.

In Bhatia Int. V. Bulk Trading case, the Supreme Court held that even though
there was no provision in Part 2 of the act providing for the challenge to a
foreign award, a petition to set aside the same would lie under section 34 (part
1) of the act which provides provisions of the domestic award will be applicable
to the foreign awards. The court held that the property in a dispute related to
the shares in the Indian Company situated in India necessarily needed Indian
laws to be followed to execute the award. The Court stated that in such a
situation the award must be attested on the measurement of public policy of
India and the Indian public policy cannot be affirmed through the
implementation of the award on any foreign strand/support.
 Section 35

Arbitral award
The arbitral award or arbitration award refers to an arbitration hearing
decision made by an arbitration tribunal. An arbitral award is equal to a court
judgment. An arbitral award may be non-monetary in nature where the claims
of the entire claimant fail and there is no need for any party to pay any money.

An arbitration award may be given for payment of a sum of money, judgment

of any matter to be decided in the arbitration proceedings, injunctive relief,
substantive fulfilment of a contract and rectification, setting aside or
cancelling an act or other document.

The arbitral award shall be defined as any arbitral tribunal’s judgment on the
nature of the dispute referred to it and shall include a temporary,
interlocutory or partial arbitral award. The arbitral tribunal may grant an
interim arbitral award on any matter for which it will make a final arbitral
award at any time during the arbitral proceedings. The interim award may be
applied in the same way as a final award of arbitration. Unless otherwise
decided by the parties, a party may ask the arbitral tribunal to make an
additional arbitral award in respect of the claims raised in the arbitral
proceedings but omitted from the arbitral award within 30 days of receipt of
the arbitral award.

An arbitral award can be categorised into:

Domestic Award: Domestic award are those awards which are the outcomes
of domestic arbitration. It is confined to the territory of India, the parties
should have a nexus or birth of Indian origin, the territory essentially comes
into play for domestic arbitration purposes. The award given by an arbitral
tribunal in India or an award, even if it is given by a foreign state for a dispute
in which both parties are of Indian origin and the nationality is also regulated
by Indian law, also falls within the scope of domestic arbitration.
Domestic awards are governed by Part I of the Arbitration and Conciliation
Act, 1996. A domestic award is an award granted pursuant to Section 2 to 43
of the Act.

Foreign Award: Foreign Award is the outcome of Foreign Arbitration. If the

parties choose a foreign arbitration institution or agree to an ad hoc
arbitration overseas, the award granted after such proceedings shall be
referred to as foreign award.

Part II of the Arbitration and Conciliation Act of 1996 deals with International
Arbitration or Foreign Arbitration. Section 44 of the Act defines with Foreign
Award.

In, Serajuddin v. Michael Golodetz The Calcutta High Court established the
necessary conditions for an arbitration to be referred to as ‘ foreign arbitration
‘ or the essential elements of a foreign arbitration where the award could also
be referred to as a foreign arbitration award. The important points laid were
as follow:

1. “Arbitration should have been held in a foreign country.”

2. ”By a foreign arbitrator.”
3. “Arbitration by applying foreign laws.”
4. “One of the parties consists of foreign nationals.”

Essential Elements of Arbitral Award

Shall contain the reason

for the passing of Award.

Date and place at which

the arbitration took
Should be place. Signed by
in written the
form Arbitrator.
Limitation Period for Enforcement of Arbitral Award
In the case of domestic arbitral awards, the 1963 limitation law applies to
arbitrations because, according to section 21, the arbitral proceedings in
respect of a specific dispute start on the date on which the respondent receives
a petition to refer the dispute to arbitration. Arbitral awards are deemed to be
a decree. The Arbitration Act does not place any restriction on the execution
of a foreign award, and the usual limitation period (12 years) is likely to apply.

Different high courts have given different definitions of the limitation period
within which a party can impose an award in the case of foreign awards. The
Bombay High Court observed a foreign award in ‘Noy Vallesina v Jindal Drugs
Limited’ not to be a judgment, rendering it non-binding on parties unless it
was reported as enforceable by a competent court. In the ‘Compania Naviera
‘ Sodnoc ‘ v. Bharat Refineries Ltd.,’ on the other hand, the Madras High Court
referred to international awards as considered decrees.

In M/s. Fuerst Day Lawson Ltd v. Jindal Exports Ltd, the Supreme Court ruled
that there could be different stages in a single proceeding. A court can agree
on the enforceability of the award in the first proceeding. Once the
enforceability has been determined, more successful steps can be taken to
implement the same.
 Section 37

Appeal in Court against Appealable Orders

Section 37 of the Arbitration and Conciliation Act, 1996 refers to appealable
orders wherein (1) An appeal shall lie from the following orders (and from no
others) to the Court authorised by law to hear appeals from original decrees
of the Court passing the order, namely:-- [(a) refusing to refer the parties to
arbitration under section 8; (b) granting or refusing to grant any measure
under section 9; (c) setting aside or refusing to set aside an arbitral award
under section 34.] (2) An appeal shall also lie to a Court from an order granting
of the arbitral tribunal. (a) accepting the plea referred in sub-section (2) or
sub-section (3) of section 16; or (b) granting or refusing to grant an interim
measure under section 17.

Only in exceptional circumstances, a court can be approached under the Act.

The aggrieved party can approach the court only after an arbitral award is
made or in case of an order passed under Section 17 of the Act, after the order
is passed, and even a third party, who is directly or indirectly affected by
interim measures granted by the arbitral tribunal, will have a remedy of an
appeal under Section 37 of the Act. Appeal to the courts is now permissible
only on certain restricted grounds.

An appeal lies from the following orders, and from no others, to the court
authorized by law to hear appeals from original decrees of the court passing
the order:

1. granting or refusing to grant any measure under Section 9;

2. setting aside or refusing to set aside an Arbitral Award under
Section 34

However, a three judge Bench of the Supreme Court has recently held, in
Centrotrade Minerals & Metal v. Hindustan Copper, that the parties may
provide for an appeal to lie from the award to an appellate arbitral tribunal.
Such a clause was held not to be contrary to the laws of the country and,
thus, enforceable. It appears that the scope of appeal in such cases is far
wider than an appeal to a court.

Applicability of Amendment Act

The Amendment Act has widened the ambit of appeal by including the order
refusing to refer the parties to arbitration under Section 8 of the Act.

Appeal shall also lie to a court from an order of the Arbitral Tribunal:

1. accepting the plea referred to in sub-section (2) or sub-section (3) of

Section 16; or
2. granting or refusing to grant an interim measure under Section 17.

Moreover, no second appeal shall lie from an order passed in appeal under
this Section but nothing in Section 37 shall affect or take away any right to
appeal to the Supreme Court.
 Section 89
Section 89 of the Code of Civil Procedure, which gives the Court the power to
refer the dispute for settlement or conciliation was introduced with a purpose
of an amicable, peaceful and mutual settlement between parties without the
intervention of the court. However, the issue is that even after more than a
decade of its implementation, the provision provided for ADR under Section
89 suffers from many anomalies. The constitutional validity of this section
was upheld but the frequency with which ADR is utilized for resolution of
disputes remains minute, which arises due to lack of knowledge about the
same or on account of the reluctance of the parties.

The High Court is empowered to make rules to all proceedings before the
Court under the provisions of the Arbitration and Conciliation Act, 1996
under Section 82. These rules however have to be consistent with the said
Act. The same power is conferred upon the Central Government under Section
84 of the Act. Contrary to this, when parties agree to go for arbitration under
section 89 of the code, the option of the parties to choose arbitration and the
procedure for the same is not contemplated by the Arbitration and
Conciliation Act, 1996 and Section 82 and 84 has no application under these
circumstances.
Alternative
Dispute
Resolution
AMARESH PATEL
ASSISTANT PROFESSOR
Arbitration: Meaning, scope and
types
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or
more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties
opt for a private dispute resolution procedure instead of going to court.
Key points of Arbitration
* Arbitration agreement- Existing and Future Disputes
* Excludes the court
* Not a judge
* Informal + formal
* Arbitration Award
* Binding like the decree
Principal Characteristics
•Arbitration is consensual
•The parties choose the arbitrator (s)
•Arbitration is neutral
•Arbitration is a confidential procedure
•The decision of the arbitral tribunal is final and easy to enforce
Arbitration
an arbitration is the reference of dispute or difference between not less than two
parties, for determination after hearing both sides in a judicial manner by a
person or persons other than a court of competent jurisdiction.
With the adoption of conciliation rules, 1980 by the UNCITRAL, the Parliament of
India also find it expedient and enacted Arbitration and Conciliation Act, 1996
which gave statutory recognition to conciliation.
With this, the post-litigation conciliation was recognised as ADR with the
incorporation of section 89 of Code of Civil Procedure, 1908 providing an option
for reference of sub judice matters to conciliation with the consent of the parties.
Mediation
Mediation is a process wherein the parties meet with a mutually selected impartial and
neutral person who assists them in the negotiation of their differences.
Key Characteristic:
* Mediation is a non-binding procedure controlled by the parties.
* Mediation is a confidential procedure.
* Mediation is an interest-based procedure.
Mediation key points
* Usually court enforced
* Trained mediators
* Aim to settle
* Does not affects the court proceedings
* Very effective in solving personal disputes
* Lok Adalat
Conciliation
Conciliation is an alternative out-of-court dispute resolution instrument. Like mediation,
conciliation is a voluntary, flexible, confidential, and interest based process. The parties seek to
reach an amicable dispute settlement with the assistance of the conciliator, who acts as a neutral
third party.
Conciliation key points
No agreement pre disputes
Industrial disputes
Aims to settle
Not able to enforce
Trade union etc
Labour related matters
 Key Difference Btwn
Mediator & Conciliator

The role of the ‘conciliator’ in India is pro-active and interventionist

as stated above, the role of the ‘mediator’ must necessarily be
restricted to that of a ‘facilitator’.
 In their celebrated book ‘ADR Principles and Practice’ by Henry J. Brown and Arthur L. Mariot
(1997, 2nd Ed. Sweet & Maxwell, Lord on Chapter 7, p 127), the authors say that ‘mediation’ is a
facilitative process in which “disputing parties engage the assistance of an impartial third party, the
mediator, who helps them to try to arrive at an agreed resolution of their dispute. The mediator has no
authority to make any decisions that are binding on them, but uses certain procedures, techniques and
skills to help them to negotiate an agreed resolution of their dispute without adjudication.”
“ Mediation is negotiation carried out with the assistance of a
third party. The mediator, in contrast to the arbitrator or
judge, has no power to impose an outcome on disputing
parties.
- ‘Dispute Resolution’ (Negotiation, Mediation and other processes’ by Stephen B. Goldberg, Frank E.A. Sander and Nancy H. Rogers (1999, 3rd Ed. Aspine Law & Business, Gaithesburg
and New York)(Ch. 3, p. 123)
Arbitration: Agreement-Essentials,
Kinds
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.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(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 which provide a record of the agreement; or
(c) an exchange of statements of claim and defence 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.
S.N. Prasad v. Monnet Findance
(2011)
* To constitute am arbitration agreement under Section 7 (4) © of the Act, what is required is a
statement of claim containing a specific allegation about the existence of an arbitration
agreement by the applicant and “non-denial” thereof by the other party.
* An arbitration agreement between the lender, the borrower and one of the guarantors, cannot
be deemed or construed to be arbitration agreement in respect of another guarantor who was not
a party to the arbitration agreement.
* There can be reference to arbitration only if there is an arbitration agreement between the
parties. If there is a dispute between a party to an arbitration agreement, with other parties to the
arbitration agreement as also non-parties to the arbitration agreement, reference to arbitration or
appointment of arbitrator can be only with respect to the parties to the arbitration agreement and
not the non-parties.
Kinds of Arbitration
* Domestic Arbitration: Under Section 2 (2) (7) of Arbitration Conciliation Act, 1996, ‘domestic
arbitration’ means an arbitration in which the arbitral proceedings much necessarily be held in
India, and according to Indian substantive and procedural law, and the cause of action for the
dispute has completely arisen in India, or in the even that the parties are subject to Indian
jurisdiction.
* International Arbitration: When arbitration happens within India or outside India containing
elements which are foreign in origin to the parties or the subject of the dispute, it is called as
International Arbitration.
* International Commercial Arbitration: International Commercial Arbitration’ is defined as ‘the
substitution of many burning questions for a smoldering one’.
Types of Arbitration based on
procedure and Rules
* Institutional Arbitration:
* Ad hoc Arbitration:
* Fast Track Arbitration:
Institutional Arbitration
When an arbitral Institution conducts arbitration, it is called Institutional Arbitration.
The parties have the choice of specifying, in the arbitration agreement, to refer the differences to
be determined in accordance with the rules of a selected arbitral Institution.
A & C Act, 1996 provides that where in Part I except section 28, the parties are free to determine
a certain issue, that liberty encompasses the right the parties have to authorize any person
including an institution, to determine that issue.
Ad-hoc Arbitration
If the parties agree among themselves and arrange for arbitration, it is called Ad hoc Arbitration
without having an institutional proceeding.
Russell on Arbitration says that, “The expression ‘Ad Hoc’ as in ‘Ad Hoc Submission’ is used in two
quite different senses: an agreement to refer an existing dispute, and/or an agreement to refer
either future or existing disputes to arbitration without an arbitration institution being specified to
supervise the proceedings, or at least to supply the procedural rules for the arbitration. This
second sense is more common in international arbitration.”
Fast Track Arbitration
Fast track arbitration is a method, which is time dependent in the provision of the arbitration and
conciliation act. Its procedure is established in a way that it has abandoned all the methods,
which consume time, and uphold the simplicity which is the originally the prime purpose of such
arbitration.
Arbitration Tribunals
Who is Arbitrator?
The present Arbitration and Conciliation Act, 1996 does not define the word “Arbitrator”. However,
in the common parlance the word “arbitrator”, means, a person/persons to whom a particular
matter or issue in dispute is referred with the view to settle on the basis of submission made by
the conflicting parties.
Definition by Russell
“ en arbitrator is neither more nor less then a private judge of a private court who gives a private
judgement. He is a judge in that a dispute is submitted to him, he is not a mere investigator not a
person before whom material is placed by the parties, being either or both of evidence and
submissions, he gives criticism in accordance with his duty to hold the scales fairly between the
disputant in accordance with some recognised system of law and the rules of natural justice.
In other words arbitrator is dis interested persons to whom dispute is it referred to by the
competing parties.
Read Section 10 from A & C Act
Read section 11 of Act, 1996
https://indiankanoon.org/doc/1841764/
Terms and conditions of
Arbitration
The arbitration tribunal is requested to into account the reason at the earliest and to complete
the present proceeding as early as possible, and preferably within two years or 18 months from
the date of entering upon the Arbitration. It is made clear that video of a mental people not be a
ground call Sharanjit the validity of the arbitration proceeding. The Arbitration Tribunal entitled to
decide on the terms and condition of arbitration, including the procedure, venue, time, fee etc.

Geophysical Institute of Israel versus Geoenpro petroleum Ltd., 2009

 Grounds for setting aside award
The parties may choose an arbitrator for various reasons. He may rely on his expertise skills at
the time when they choose the arbitrator. When the arbitrator his name, unless there is a clear
intention of spelt out in the agreement of reference to only so long as he holds a particular office,
Amir difference to office and by arbitrator will not disqualified from being an arbitrator after the
siege to pull back office.

- construction India versus secretary works department government of Orissa, 1998

Time limit for completing
Arbitration Proceedings
Section 11 (5) and 34
While directing the Arbitration tribunal to complete arbitration arbitration proceedings as early as
possible and preferably with 18 months from the date of entering upon arbitration, clarified that
expiry of that period would not be a ground to challenge the validity of arbitration proceedings.

- Geophysical Institute of Israel versus Geoenpro petroleum Ltd., 2009

 Appointment of arbitrator
There is no legal impediment for accepting suggestions made by parties. The element X duty
between the petitioner and respondent contends application) mentioned in the present petition
are covered by the suitable to sunflowers and hence the submission made by parties for
appointment of Arbitration Tribunal can be accepted.

- Geophysical Institute of Israel versus Geoenpro petroleum Ltd., 2009


Section 23
M.P. Housing Board v. Progressive
Writers & Publishers,
(2009) 5 SCC 678 : (2009) 2 SCC
(Civ) 652
In reference made under Section 23, Arbik Act, the arbitrator’s
power to determine the lis between the parties is much wider. The
arbitrator has all the powers which the court itself would have in
deciding the issues in the suit. The court’s power to frame an
additional issue if it is just and necessary for deciding the matter in
dispute cannot be denied and so also of the arbitrator where
disputes between the parties pending adjudication on suits have
been referred to the arbitrator for determination.
Hence, the arbitrator was not bound to adopt only the is-
sues submitted by the parties but was well within his juris-
diction to frame such other issue or issues as may be just
and necessary for the purpose of disposal of the reference
made under Section 23 of the aforesaid Act. Thus, there is
no merit in the submission that the arbitrator exceeded his
jurisdiction and committed a grave legal misconduct in fram
ing the said issue and determining the same.
 Arbitrator need to take into account if the claim is beyond
the period of 3 years, while granting and/or rejecting the
claim.

Section 24
Saraswat Cooperative Bank Ltd. V.
Jaynit Agencies, (2012) SC Online
Bom 759
 Held, an arbitration proceedings could not be dismissed
in default and arbitral was required to make the award
on the evidence available before it.

Section 25
Satgur Sewak Rice and General
Mills v. Punjab State Civil Supplies
Corpn Ltd, (2000) 2 ICC 639 (P &
H)
 2018 2020
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