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Negotiation, Conciliation and Arbitration Aspects: Role of Company Secretary in The Said Process
Negotiation, Conciliation and Arbitration Aspects: Role of Company Secretary in The Said Process
Ms.Ms.
Kavita Jha, Jha,
Kavita
Principal Associate, Vaish Associates
Advocate, Vaish
Advocates
Associates
Advocates
Mediation and Conciliation
and
Companies Act, 2013
COMPANIES ACT, 2013:
Section 442
• The Central Gov. shall maintain a panel of
experts to be called as “Mediation and
Conciliation Panel” for mediation between
parties during the pendency of any
proceedings before the Central Govt. or the
Tribunal or the Appellate Tribunal under the
new law.
Object of Arbitration
• Settlement of dispute in an expeditious,
convenient, inexpensive and private manner to
prevent it fro, becoming a subject of future
litigation.
Types of Arbitration Practice - Institutional
Arbitration and Ad Hoc Arbitration
AD HOC ARBITRATION INSTITUTIONAL ARBITRATION
A. The procedures have to be agreed upon by A. In institutional arbitration, the procedural
the parties and the arbitrator. This requires co- rules are already established by the institution.
operation between the parties and involves a The fees are also fixed and regulated under
lot of time rules of the institution.
B. Infrastructure facilities for conducting B. In contrast, the institution will have ready
arbitration pose a problem and parties are facilities to conduct arbitration, trained
often compelled to resort to hiring facilities of secretarial/administrative staff, as well as
expensive hotels, which increase the cost of library facilities.
arbitration. Other problems include getting
trained staff and library facilities for ready
reference.
C. No such panel per se is available here. C. The arbitral institutions maintain a panel of
arbitrators along with their profile. The parties
can choose the arbitrators from the panel.
Such arbitral institutions also provide for
specialized arbitrators.
Inspite of the numerous advantages of institutional arbitration over ad hoc arbitration, there is
currently an overwhelming tendency in India to resort to ad hoc arbitration mechanisms.
Evolution of Arbitration Act
• The Pre-1996 Position (1940 Act): This Act was largely premised on
mistrust of the arbitral process and afforded multiple opportunities
to litigants to approach the court for intervention. Coupled with a
sluggish judicial system, this led to delays rendering arbitrations
inefficient and unattractive.
• The 1996 Act: The 1996 Arbitration Act based on the UNCITRAL on
International Commercial Arbitration and the Arbitration Rules of
the United Nations Commission on International Trade Law 1976
was enacted.
• The Statement of Objects and Reasons to the Act said that the old
Act had ‘become outdated’ and there was need to have an Act
‘more responsive to contemporary requirements’. Amongst the
main objectives of the 1996 Act were ‘to minimize the supervisory
role of courts in the arbitral process’ and ‘to provide that every
final arbitral award is enforced in the same manner as if it were a
decree of the Court.
Arbitration and Conciliation Act, 1996
• Section 11(6A) has been inserted to provide that the Supreme Court or
High Court, while considering application for appointment of arbitrator,
shall examine only existence of arbitration agreement (and not merits of
the case).
• Now, fifth schedule has been inserted specifying grounds to guide on which
independence and impartiality of Arbitrator can be doubted.
• Section 12(5) also inserted by Amendment Act, 2015, which provides that if
arbitrator has interest ( direct or indirect) as specified in schedule seven of
the Arbitration and Conciliation Act, 1996, he cannot be appointed as
Arbitrator, unless both parties agree in writing, after dispute has arisen.
• This is a very good provision. The reason is that, at the time of contract,
one of the parties is usually in dictating position and other party has
practically no option to sign on dotted lines.
3. FEES OF
ARBITRATORS
• Unilateral and disproportionate fixation of fees by
several arbitrators.
• Subsequently, SC in ONGC Ltd. vs. Saw Pipes Ltd. (2003 5 SCC 705)
expanded its definition to include cases of ‘’patent illegality’’.
• Article 1(2) of the UNCITRAL Model Law provides: “The provisions of this
Law, except articles 8, 9, 35 and 36, apply only if the place of
arbitration is in the territory of this State
• The Supreme Court in BALCO decided that Parts I and II of the Act are
mutually exclusive of each other.
JUDICIAL INTERVENTIONS IN FOREIGN
SEATED ARBITRATIONS (contd.)
Cost of Arbitration
• Section 31A of Arbitration and Conciliation Act, 1996 as inserted by
Amendment Act, 2015 contains detailed guidelines on determination
and award of costs to the successful parties.
• As per provisions of section 31A(5), an agreement to pay whole or
part of costs of arbitration in any even shall be valid only if such
agreement is made after dispute has arisen.
• Thus, a mere clause in Arbitration Agreement about payment of cost
by one of the parties is not sufficient.
• This is a very good provision. The reason is that, at the time of
contract, one of the parties is usually in dictating position and other
party has practically no option to sign on dotted lines.
Other Amendments
Appeal if Court refuses to refer parties to arbitration
• Section 37(1)(a) of Arbitration and Conciliation Act, 1996 as
inserted by the Amendment Act, 2015 now provides that
appeal can be filed before appellate Court if the Court refuses
to refer parties to arbitration.
• There was no parallel provision earlier.
• Section 205 has also been added in the Companies Act, 2013.
According to Section 205 of the Companies Act, 2013 the
Company Secretary shall discharge following functions and
duties, this is the first time that the duties of the company
secretary have been specified in the company law.
New Horizons for CS in Practice under
The Companies Act, 2013
• Corporate Restructuring & Insolvency
• Company Liquidators & Professional assistance
to them [Sec.275] [Sec.291]
• Appointment as an Administrator [ Sec.259]
• Technical member of NCLT [Sec.409]
• E- Filing
• Voting through electronic means [Sec.108]
• Adjudication of penalties [Sec.454]
• Mediation & conciliation Panel [Sec.442]
Role Of a Company Secretary As a
Mediator or Conciliator
• The Central Government is to maintain a panel of
experts to be called as “Mediation and Conciliation
Panel” for mediation between parties during the
pendency of any proceedings before the Central
Government or the Tribunal or the Appellate Tribunal
under the new law.