UNIT-2: -

Topic 1. Arbitration agreement: essentials, kinds, and validity

Arbitral Agreement
An Arbitral agreement is essential point in the law of Arbitration. The particular form of arbitral
agreement is not provided under this Act. but there must be legal, valid and binding agreement
between the parties. This Act specifically provided that arbitration agreement must be in the
form of document and document must be signed by the parties to operate as an arbitration
agreement.
Meaning of Arbitral agreement-
According to Sec.7(1) of arbitration & conciliation Act 1996 ,
"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.
Essential features of an "arbitral agreement"
The essential features of an arbitration agreement, as defined by clause (b) of S.2(1) read with S.
7, are as follows
1) Valid & binding Agreement -
There should be a valid and binding agreement between the parties.
2) Such agreement may be -
in the form of an arbitration clause in a contract or in the form of a separate agreement.
3) Written Agreement -
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.
Who can enter into arbitration agreement?
Every person who is competent to contract can enter into arbitration agreement. In case of
partnership a partner can enter into on behalf of partnership into arbitration agreement. The
directors or other officers of the company may enter into an arbitration agreement.
A Karta of Hindu joint family can make a valid reference to the arbitration and where he acts
Bonafide the award binds other members.
A) Minor and lunatics -
contract by minors and lunatics are void and therefore by themselves they cannot enter into valid
agreement of arbitration. however, they can enter into arbitration agreement with their natural
or legal guardian's
B) Agent -
Agent recognized agent of a party can enter into an arbitration agreement on behalf of his
principal.
C) Manager of Hindu joint family-
A manager of Hindu joint family can refer the final dispute to arbitration.
Case law -
1) Sadashiv Ramchandra Datar v. Trimbak Keshar AIR 1920 Bom 32.
In this case Bombay high Court held that if a minor is not properly represented and his guardians
fails in this duty to protect his interest, the award is not binding on minor.
2) Sunderlal Haveliwala Vs. Bhagwati Devi AIR 1967 All 400
In this case of dispute among the partners inter se, if the deed of partnership provides for Such
disputes being referred to arbitration, a partner shall be entitled to make reference to arbitration.
Kinds: -
A few types of arbitrations in India on the basis of jurisdiction
Domestic Arbitration
Domestic arbitration is that type of arbitration, which happens in India, wherein both parties
must be Indians and the conflict has to be decided in accordance with the substantive law of
India. The term ‘domestic arbitration’ has not been defined in the Arbitration and Conciliation
Act of 1996. However when reading Section 2 (2) (7) of the Act 1996 together, it is implied that
‘domestic arbitration’ means an arbitration in which the arbitral proceedings must 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 event 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 in relation to the parties or the subject of the dispute, it is called 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 between the respective parties. To fulfill
the definition of International Arbitration it is sufficient if any one of the parties to the dispute is
domiciled outside India or if the subject matter of dispute is abroad.
International Commercial Arbitration
International Arbitration is considered to be ‘commercial’ if it related to disputes arising out of a
legal relationships irrespective of their contractual nature and are considered as commercial
under the law in force in India and where at least one of the parties is-
(1) A national of, or habitual resident in, any country other than India or
(2) a body corporate which has to be incorporated in any foreign country, or
(3) An association or a body of individuals whose core management and control in a country
which is not India or
(4) The government of a country other an India. In International Commercial Arbitration the
arbitral tribunal is bound to decide the conflict according to the rules of law chosen by the parties
as applicable to the substance of the dispute; any designation by the parties of the law or legal
system of a given country can be interpreted, unless it has been expressed otherwise, one which
directly refers to the substantive law of that country and does not refer to its conflict of laws
rules.
Types of arbitrations that are primarily recognized in India on the basis of procedure and rules:
a. Institutional arbitration
b. Ad hoc arbitration
c. 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. One or more arbitrators
can be appointed from a pre-selected panel by the governing body of the institution or the
disputants themselves can select their panel, but it has to be restricted to the limited panel.
Arbitration and Conciliation 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. The Act also explicitly
provides that where Part I ‘refers to the fact that the parties have agreed or that they may agree,
or in any other way refers to an agreement of the parties, that agreement shall include any
arbitration rules referred to in that agreement’.
To sum up, the rules of these institutions follow a similar pattern, however they are specifically
created for arbitrations that have to be administered by the institution concerned; for example,
ICC recommends this clause be used by the states: “All disputes arising in connection with the
present contract shall be finally settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by one or more arbitrators appointed in accordance with
the said Rules.” Such a clause is clearly helpful, because even if at a future stage, if either party is
reluctant to proceed further with arbitration proceedings, it will still be possible to arbitrate
effectively, due to the existence of a set of rules that regulate the way in which the arbitral
tribunal is to be appointed and the arbitration is to be administered and conducted.
An institution that has the relevant experience will ordinarily have a list of possible arbitrators
who have expertise in the field, from which one can potentially appoint one or more especially
in a case where the parties will not appoint the arbitrators on their own. Some arbitral institutions
do not allow the parties to designate an arbitrator or a co arbitrator. They may, according to their
rules, select parties to choose an arbitrator from a list, which the institution provides. Some
arbitral institutions can limit the arbitrators that appear on this list to people of their own nation,
or to individuals, with a specialist background. Other arbitral institutions may not necessarily use
a list system at all and might give the parties complete freedom to select the arbitrator or
arbitration at their choice.
Ad-hoc arbitration
If the parties agree among themselves and arrange for arbitration, it is called Adhoc Arbitration
without having an institutional proceeding. It can either be domestic, international, or foreign
arbitration. Russell on Arbitration says that, “The expression ‘Ad Hoc’, as in ‘Ad Hoc Arbitration’
or ‘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.” Ad Hoc Arbitration means that the arbitration should not be conducted according
to the rules of an arbitral institution. Since, parties do not have an obligation to submit their
arbitration to the rules of an arbitral institution; they are free to state their own rules of
procedure. The geographical jurisdiction of Adhoc Arbitration is of essence, since most of the
issues concerning arbitration will be resolved in accordance with the national law of the seat of
arbitration
The number of arbitrators and the party to appoint them is generally dependent on the
arbitration and procedural rules of the nation, which is the seat of arbitration. If for example, the
seat of arbitration is in India, then it will be decided according to The Arbitration and Conciliation
Act 1996, if the parties are unable to determine the number of arbitrators, the arbitral tribunal
shall consist of one arbitrator, who shall be appointed by the Chief Justice of the Supreme Court
of India or the Chief Justice of a High Court of India. Another example is in the event the place of
arbitration is determined to be Cairo, then the Egyptian Arbitration Law 1994 will be followed,
failing a determination by the parties of the number of arbitrators, the number of arbitrators
appointed shall be three, and the court of appeals of Cairo will then appoint the co arbitrator of
that has been unable to appoint an arbitrator. The two co arbitrators have 30 days time period
to agree on the third arbitrator, if they unable to, then the court of appeals of Cairo will also
appoint the third arbitrator. ‘Ad Hoc Arbitration’ is, thus, arbitration, which is agreed to and
arranged by the parties themselves. Although the parties are free to take the Rules framed by a
particular arbitral institution without actually submitting its disputes to such institution. ‘Ad Hoc
Arbitration’ can be either domestic or international commercial arbitration. The Arbitration and
Conciliation Act 1996 also provides that in order to conduct arbitral proceedings, either the
parties or the arbitral tribunal, after taking the consent of the parties can arrange for such
administrative assistance by a suitable institution or persons.
Fast track arbitration
Even the other processes of arbitration can be lengthy and tedious and thus this process of
arbitration works like a remedy to the issue of time. 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.

Validity: -
Supreme Court Clarifies Validity Of Arbitration Agreements In MoUs:-
• An arbitration clause is a separate and independent agreement.
• The arbitration agreement survives and does not necessarily come to an end even if the
MoU does not materialize into a full-fledged agreement.
• Parties are bound to refer disputes arising out of and in relation to the MoU to arbitration
if provided in the dispute resolution clause.
Introduction
The Supreme Court of India ("Supreme Court") in the recent case of Ashapura Mine-Chem
Ltd ("Appellant") v. Gujarat Mineral Development Corporation1 ("Respondent") has addressed
the issue of separability and survival of an arbitration clause contained in a Memorandum of
Understanding ("MoU"). The Supreme Court held that the arbitration agreement in the MoU was
valid as it constitutes a stand-alone agreement independent from its underlying contract.
Facts
The parties entered into a MoU in 2007 for setting up an alumina plant in Gujarat by way of a
Joint Venture with a Chinese company. The MoU provided for an arbitration agreement in the
event of parties' failure to settle disputes amicably. The relevant clause provided that (a) the
arbitration proceedings would be held at Ahmedabad; and (b) it would be governed and
construed in accordance with the laws of India.
Subsequent to the signing of the MoU, the Respondent decided to approve the MoU subject to
certain modifications. After considerable exchange of correspondence, the Respondent sought
amendments to the original MoU due to major change in State policy. However, eventually the
Respondent cancelled the MoU on the pretext that Appellant had failed to comply with the terms
and conditions contained therein.
The parties failed to resolve their disputes amicably and no consensus could be reached on
appointment of Arbitrator between them. The Appellant filed an application under Section 11 of
the Indian Arbitration & Conciliation Act, 1996 (Act) for appointment of Sole Arbitrator.
The Gujarat High Court ("Gujarat HC") dismissed the application for appointment of Arbitrator
on the ground that the MoU never resulted in a complete contract, and accordingly held that no
enforcement could be sought for the same. The Gujarat HC held that the MoU was "stillborn" as
it did not fructify into a joint venture. The present ruling arises out of an appeal from the decision
of the Gujarat HC.
Issue
The issue before Supreme Court was whether the MoU was a concluded contract, if not, whether
the arbitration clause survives and continues to bind the parties being a stand-alone provision.
Arguments
The Appellant submitted that even if the MoU did not ultimately fructify, the dispute resolution
clauses, by virtue of specific terms contained therein, operated as a stand-alone agreement for
arbitration with reference to the terms of the MoU. On the other hand, Respondent submitted
that due to complete absence of consensus between the parties, even with regard to the MoU,
there was no scope for making a reference to arbitration as per certain clauses contained therein.
Judgment
The Supreme Court relying on several judgments including Reva Electric Car Co. Pvt Ltd. v. Green
Mobil2 and Today Homes and Infrastructure Pvt. Ltd. v. Ludhiana Improvement Trust3 and
Enercon v Enercon4 concluded that in addition to the fundamental nature of the separability
presumption, the dispute between the parties relates to the relationship created by way of the
MoU and so the arbitration agreement contained therein would bind the parties.
The Supreme Court found that irrespective of whether the MoU fructified into a full-fledged
agreement, the parties had agreed to subject all disputes, arising out of and in connection to the
MoU, to arbitration. Such an agreement would constitute a separate and independent
agreement in itself. Since no consensus was reached on the appointment of a Sole Arbitrator, it
would be open to the parties to invoke Section 11 of the Act. Based on this ground alone, the
Supreme Court set aside the order of the Gujarat HC and appointed a Sole Arbitrator due to
existence of a valid arbitration agreement.
Analysis
The position with respect to whether an arbitration agreement contained in a contract is
separable is settled law and the separability doctrine is respected by all courts. 5 However, there
continues to be instances where the court finds exception. Such exceptions are often raised in
the context of MoUs or agreements claimed to be unconcluded by one of the parties. The
contention is essentially that MoU is a contract non-est i.e. it is a contract that has not come into
existence.
Survivability and separability of arbitration clauses contained in agreements that are novated or
superseded by subsequent agreements have also been tested to ascertain their validity.
In Mulheim Pipecoatings v. Welspun Fintrade6, the Bombay HC while dealing with this issue held
that the separability presumption enshrined in the Act requires the impugned arbitration
agreement to be directly impeached in order to be considered inapplicable. Therefore, a
superseding agreement not containing an arbitration clause would not invalidate the arbitration
clause in the previous one.
However, the Supreme Court in M/S Young Achievers v. IMS Learning Resources7 gave a
completely contradictory view that "an arbitration clause in an agreement cannot survive if the
agreement containing arbitration clause has been superseded/novated by a later agreement."
The reasoning of the Supreme Court was that superseded agreements are void ab initio or non-
est. The decision in Ashapura might lead the way with respect to issue of separability of
arbitration clauses and provide clarity on enforcement of such clauses in MoUs.

Topic 2. Parties to arbitration agreement

In certain situations, the arbitration agreement signed by two or more parties may be applicable
to a non-signatory to said arbitration agreement. There have been various cases in India wherein
this issue has been discussed across different courts. In the case of Prabhat Steel Traders Private
Limited vs. Excel Metal Processors Private Limited, the Bombay High Court in 2018 dealt with the
issue concerning the locus of a non-signatory to the arbitration agreement under the Arbitration
and Conciliation Act, 1996 with respect to section 37 of the Act which provides for Appealable
orders, that a non-signatory to the arbitration agreement can challenge the interim orders issued
by a sole arbitrator or an arbitral tribunal under section 17 of the Act.
Case Background
In the aforesaid mentioned case, arbitration petitions filed under section 37 of the Act, the
petitioners, who were non-signatories to the arbitration agreement, prayed for leave to appeal
against the order passed by an arbitral tribunal and also prayed for setting aside the said
impugned order, on the grounds that the interim measure was causing severe prejudice to the
interests of the petitioners. The Court first summarized the facts in one of the arbitration
petitions which was argued as the lead matter and in view that the facts in the other petitions
were identical, the judgment in the lead matter was applied to the other petitions.
Judgment
The Court accepts the contention that section 37 of the Act does not provide that an appeal
under said provision can be filed only by the parties to the arbitration agreement. Section 34 of
the Act refers to the expression “party” which is absent in section 37 of the Act.
The fact that the expression “party” is absent in section 37 of the Act makes the legislative intent
clear that the said expression “party” is deliberately not inserted so as to provide a remedy of an
appeal to a third party who is affected by any interim measures granted by the arbitral tribunal
or by the Court in the proceedings filed by and between the parties to the arbitration agreement.
There is a possibility of collusive proceedings and collusive order of interim measures being filed
and obtained by the parties to the arbitration agreement which may affect the interest of third
parties.
The Court further observed that the Division bench of the Bombay High Court in the case of Girish
Mulchand Mehta and Durga Jaishankar Mehta vs. Mahesh S. Mehta and Harini Cooperative
Housing Society Ltd. has dealt with an issue whether the appeal under section 37 of the Act could
have been filed by the third party arising out of the order passed under section 9 of the Act.
The Division bench construed Rule 803E of the Bombay High Court (Original Side) Rules and has
held that section 9 of the Act is distinct from section 17 of the Act, in as much as a petition under
section 17 of the Act is moved before the arbitral tribunal for an order against a party to the
proceedings, whereas section 9 of the Act vests remedy in a party to arbitration proceedings to
seek interim measure of protection against a person who need not be either party to the
arbitration agreement or to the arbitration proceedings. In the said proceedings under section 9
of the Act, a third party was also impleaded since the grant of the proposed relief may incidentally
affect those third parties.
The Court entertained the appeal under section 37 of the Act filed by such third party who was
affected by the order passed by the learned Single Judge under section 9 of the Act, though
dismissed the said appeal on merit.
The High Court was of the view that the fact that powers of the Court under section 9 of the Act
to grant interim measures and powers of the arbitral tribunal under section 17 of the Act are
identical in view of the amendment to section 17 of the Act with effect from 23rd October 2015,
therefore, 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. The principles
of law laid down by the Division bench of the Court in Girish Mulchand Mehta’s case were
extended to the present case.
By this landmark judgment the Court observed that, in view of an order obtained by the parties
to the arbitration agreement under section 17 of the Act, directly affecting the independent
rights of the Petitioner (a third party), such third parties cannot be made to suffer on the ground
that the remedy of appeal under section 37 of the Act could not be availed of by such third
parties, given that the said provision does not specifically bar appeals filed by the third parties.
Conclusion
An essential part of arbitration law in India includes determining whether a non-signatory party
falls under the scope of an arbitration agreement. Before initiating arbitration proceedings in
India, parties need to clearly review the provisions of the Arbitration and Conciliation Act 1996,
which is the key law governing arbitration matters in India. Arbitration lawyers possess significant
expertise in handling domestic arbitration matters and international commercial arbitration
proceedings. Arbitration law firms in India routinely represent clients before a sole arbitrator or
an arbitration turbinal so as to provide arbitration as an alternate dispute resolution mechanism
for clients in India and outside India.

Topic 3: Interim measures by Courts and Arbitral Tribunals

As similar to the UNCITRAL Model Law, the Indian Arbitration Act 1996 also conferred on the
courts the similar ability to order “interim measures” as it was granted to the arbitral tribunals.
As per the Indian Arbitration act, 1996, the ability to issue interim measures of protection was
vested concurrently on both the domestic courts and the arbitral tribunals under “Section 9” and
“Section 17” respectively.
The rules of arbitration were based on the “principles of party autonomy” which is an established
principle of law in both common and civil law jurisdictions. The philosophy that outlines this
principle is that “the contract between the parties is the fundamental constituent of international
arbitration and it is the common intention of the parties through which the arbitrator deciding
the dispute derives their powers”. This legal relationship between the individuals by the will of
the parties must be given primacy in arbitral proceedings which implies the private and
consensual nature of arbitration. However, it is said that the efficiency of this technique would
be hampered if concurrent authority is conferred on the judiciary over arbitral proceedings.

In India, the exercise of concurrent authority became obvious when the Supreme court delivered
judgements of “Bhatia International v Bulk Trading” and “Venture Global v Satyam Computer
Services ltd.” which confirmed the interventionist approach of the Indian judiciary. The law laid
down by the Apex court attracted wide criticisms from the global community because it acted in
a manner contrary to the spirit of UNCITRAL Model Law. However, subsequently the Indian
judiciary started interpreting arbitration agreements giving importance to the “Seat theory” of
arbitration as a means of damage control to prevent judicial intervention in arbitral proceedings.

Under “Section 9” of the “Indian Arbitration Act 1996”, the domestic courts were allowed to issue
interim relief in support of arbitration whenever a party requests them. The courts were
permitted to issue interim measures “before, during and even after the making of the arbitral
award but before such award was enforced”. Granting of such wide powers to courts led to the
belief of the parties that the arbitrators are not bestowed with any power to grant interim
measures at the request of the parties and they were always obliged to apply to domestic court
for interim measures at any time of the arbitral process. The only condition which was made
necessary for seeking an interim relief from the courts under the Indian Arbitration Act was that
when a party wanted an interim measure “there must be a manifest intention on the part of that
party to refer the dispute to arbitration” and “it was incumbent upon the applicant of interim
measures thereafter to commence the arbitral proceedings within a reasonable time on the
failure of which court may recall such measure”.
Under “Section 17” of the 1996 Act, the arbitral tribunal was granted the power to issue interim
measures at the request of the party, however, the power was not that wide as of given to the
domestic courts, because of which the parties were always reluctant to file an application before
the tribunal asking interim measures.
Supreme court of India in “M.D. Army Welfare Housing Organisation v Sumangal Services Pvt.
Ltd.” held that “the power which was conferred on the arbitral tribunal under ‘Section 17’ of the
Indian Arbitration Act is limited as compared to powers which are bestowed to the court under
‘Section 9’ of the Act”. The court further asserted that a bare perusal of the provision clearly
suggests that the tribunal is not empowered to issue any orders which can go beyond the
arbitration agreement. The order of the arbitral tribunal in this connection was supposed to
relate to the “subject matter of the dispute” and the order can only be addressed to “the parties
to the arbitration and cannot be addressed to the third parties”. The court finally stated that, the
arbitral tribunal has also not been conferred with the power of enforcement of its order, nor any
provision is made for its judicial enforcement, therefore, an order by any arbitral tribunal is being
“coram non judice” and was wholly without jurisdiction and thus, of nullity.
The Supreme Court of India while delivering this judgement clearly identified the possible
limitations in the Arbitration and Conciliation Act, 1996 regarding the issuance of interim
measures at the request of the parties, where the tribunals were not allowed to issue these
measures at any time of the arbitral proceedings. The limitations which have been discussed in
chapter 1 were clearly seen to be the problems in the Indian Arbitration Act too.
“Section 17” of the Indian Arbitration Act was considered as nothing more than a toothless tiger
because the powers granted to the arbitral tribunal under the legislation was very limited. The
tribunal was also not competent to enforce its own order, cannot issue orders against third
parties, cannot entertain ex-parte applications, and as provided under the provision, such power
can also be excluded through agreement between the parties. These limitations on their powers
always allowed possible forms of judicial intervention, where the parties were obligated to
approach the domestic courts for issuance of interim measures under “Section 9” of the Indian
Arbitration Act. This defeated the whole purpose of the process of arbitration because the parties
never intended to go to the courts while choosing the arbitration process and it was also against
the principles of party autonomy.
Until 2015, the arbitral tribunal did not have the ability to order interim measures in India,
however, “the Amendment Bill of 2015” was introduced which suggested various far-reaching
changes in the “Arbitration and Conciliation Act, 1996”. The amendment was aimed to address
the major issue of copious judicial interference in arbitration procedures which was in
contradiction to the whole agenda of establishing this regime that is to unburden Indian judiciary
and to provide the parties opting arbitration, an alternative and easy means of settlement of
disputes.

1. Powers of the arbitral tribunals to issue interim measures ‘Prior to the

Amendment Act of 2015’:
As already discussed above, the arbitral tribunals were allowed to issue interim relief only during
the ongoing arbitral proceedings under “Section 17” of the Act. The concurrent powers vested in
the courts and the arbitral tribunals was mentioned under “Part I of the Arbitration and
Conciliation Act, 1996” which only applied to the arbitration which was seated in India. Section
2(2) of the Act expressly provides that “the provisions of Part I of the act will apply where the
place of arbitration is in India”. This meant that order for interim measures from courts was
subjected to both the parties residing and carrying out their business in India or in the case of
international commercial arbitration, the seat of the arbitration in India.
“Section 17 of the Indian Arbitration Act”, gave minimal authority to arbitral tribunals for issuing
of interim measures during the pre-amendment era. The article stated that:
 1. “Unless otherwise agreed by the parties, the tribunal may, at the request of a party to the
dispute, order a party to take any interim measure of protection as the tribunal may
consider necessary in respect of the subject matter of the dispute.”
2. “The arbitral tribunal may require a party to provide appropriate security in connection
with the interim measure ordered.”
A bare reading of the above-mentioned provision of the arbitration act shows that it was quite
open textured in the “scope of reliefs” that the arbitral tribunal was allowed to order during the
arbitral proceedings before it. It permitted the arbitral tribunals to issue any kind of interim
measures, at the behest of a party to the dispute. The open-textured and vague nature of the
above-mentioned section compelled the arbitral tribunals to accept the impression that the
scope of interim measures was limited under this section. Consequently, various courts and
tribunals developed the incorrect notion that the arbitral tribunals could not grant interim
measures such as ‘grant of security’.
Another limitation that could be identified on the reading of the “Section 17” was that it did not
provide that at what time a request can be made to the arbitral tribunal for interim relief by the
parties. This was in contrast to “Section 9” of the act, where it was expressly stated that a request
for interim measure can be made “before, during the arbitral proceedings or even after the
rendering of the arbitral award but before its enforcement”. It can only be assumed that the
request was to be made during the arbitral proceedings, however, a party has to approach the
courts and make an application under “Section 9”, when they seek an interim relief before the
formation of the arbitral tribunal or after the award is rendered. Also, there was no clarity on
provisions made regarding emergency relief, where until the arbitral tribunal is formed, the
parties had to advance to the courts for emergency reliefs.
The other flaw in “Section 17” of the Act was that there was no express provision for the
“enforceability of interim measures” rendered by the arbitral tribunals. Despite the arbitral
tribunals authority to award interim relief, the fact that the Indian Arbitration Act fails to provide
an enforcement mechanism for arbitral tribunals led to the arising of doubts by the parties
regarding the efficacy of the arbitral process in India.
The High Court at Delhi in “Sri Krishan v Anand”, held that “a person who fails to comply by the
orders of the arbitral tribunal would be considered to be ‘making any other default’ or guilty of
any contempt to the arbitral tribunal during the conduct of the proceedings’ under “Section
27(5)” of the Act”. The court asserted that “Section 27(5)” is the only mechanism in the current
act for enforcing arbitral tribunals orders. Thus, such party would be liable under contempt of
court and will be penalized under the “Contempt of Courts Act”. It was further decided in a
successive case by the Delhi High Court that an order which is passed by the arbitral tribunal will
be “enforceable as the order of the court” if an appeal is filed against it under “Section 37” of the
act and that appeal is upheld by that court.
This difficulty of the enforcement of the order and even provisional measures by the arbitral
tribunals was fulfilled by the High Court while deciding the case law mentioned above. Otherwise,
there were no specific or express provisions in the act that provided for the enforcement of
interim relief passed by the Arbitral tribunals. This lack of specific enforcement provisions made
the tribunal arrive at a conclusion that they are not vested with powers to pass orders for interim
measures, which ultimately led parties in an arbitration to approach the domestic courts and
leading to intervention of courts in the arbitral process.
These limitations and flaws in the Indian Arbitration Act of 1996 attracted huge criticism from
the lawyers and even from the Indian courts while deciding the dispute between the parties. The
need for the amendment of the old “Arbitration and Conciliation Act, 1996” was felt when the
Supreme Court of India gave the decision of Bhatia International v Bulk Trading and rendered
the BALCO judgement which restricted the jurisdiction of the Indian courts over the foreign-
seated arbitration in 2012. To get the arbitration laws of India in conformity with the global
standards, significant changes were made time to time. It was finally in 2014, when the Law
Commission of India calling for the substantial amendments to the Indian arbitration law in lights
of the problems that “plague the present arbitration regime in India” gave their 246th report to
recommend the law ministry to make changes to the old Arbitration Act.
The Law Commission of India approved to the Ministry of Law in India to make various
amendments to the existing “Indian Arbitration Act” with an aim of segregating the arbitral
regime from excessive judicial interference. The aim of these amendments was to preserve the
sanctity of the arbitral regime and to relieve the overburdened courts of India, which was getting
dissolved by cause of excessive judicial interference in the arbitral proceedings. India’s desire to
become a major international centre for arbitration disputes led to the introduction of the bill on
the amendments to Indian Arbitration Act which closely followed the recommendations of the
Law commission of India. The amendments went a long way to reform the Indian arbitration law
especially in the case of minimizing judicial intervention.
2. Powers of the arbitral tribunals to issue interim measures ‘Post the Amendment
Act of 2015’:
To amend the existing Indian Arbitration Act and remove the flaws and anomalies in it, the
government promulgated “Arbitration and Conciliation (Amendment) Ordinance, 2015”. This led
to a restriction on the part of judiciary in the matters which was dealt by arbitration. The
ordinance was majorly based on the “246th report” of the “Law Commission of India”, which
proposed significant changes in different sections of the Act.
The “Amendment Act of 2015” made significant changes in the matter of “interim measures”
where the courts and the arbitral tribunals held coincident authorities to grant them. The
amendment recognized the independence of the arbitral tribunals under “Section 17” of the act
which it did not had prior to the amendment of 2015. The motive of the amendment was to
equate the arbitral tribunals authority with the domestic courts for granting of interim relief
under “Section 9” of the Indian Arbitration Act.
Post the Amendment Act of 2015, several insertions were made in “Section 9” which permitted
the courts to issue “interim relief” at any time of the arbitral process. These insertions were to
be read considering “Section 17” where the concurrent and a limited authority was granted to
the arbitral tribunal to issue interim measures.
1. Amendments made to “Section 9” of the Indian Arbitration Act:
Subsection (2) was newly inserted in “Section 9” of the Act which gave authority to the court to
provide ‘interim measures’ only before the commencement of the arbitral proceedings and prior
to the constitution of arbitral tribunal. It was further added to this provision that once the court
has granted a measure exercising its power, the arbitral proceedings should commence “within
a period of 90 days” or within a period of time as the court determines.
The addition of this subsection in “Section 9” was a big step towards minimizing the role of courts
in arbitral proceedings that is described under “Section 5 of the Act”. However, even after the
addition of this section, no provisions were made to reduce the role of courts before the arbitral
tribunal is formed. Most of the pro-arbitration jurisdictions and even various arbitral institutions
have accepted the provisions relating to “emergency arbitrators” which helps the parties for
granting of interim relief until the arbitral tribunal is formed. The other flaw in this subsection
was the time period allowed to the parties that is 90 days from the day of giving of interim
measures by the court in which the arbitral proceedings should commence. The last line of the
subsection is open ended and allows the court to exercise its discretion to determine the time
period after they grant interim measures in which the arbitral proceedings should commence.
This loophole leaves a window for the intervention of courts when the proceedings does not start
in a period of 90 days. The parties in arbitration can approach the courts to extend the time
period in which the arbitral proceedings should commence. At the end, it is only on the court to
decide and not the arbitral tribunal.
Subsection (3) was also inserted in “Section 9” that “restricted the powers of the courts” to not
deal with applications for ‘interim measures’ once the arbitral tribunal has been formed and the
arbitral proceedings were commenced. If any application under “Section 9” is filed by the parties,
the same should be referred to the arbitral tribunal by the court entertaining the application. It
is then the discretion of the tribunal and not the courts to decide that whether the interim relief
should be granted or not. However, the last proviso to this sub-section still conferred the power
on the court to decide that “If the circumstances are present which may render the remedy under
‘Section 17’ efficacious, the court can entertain the application even during the arbitral
proceedings”.
The addition of this sub-section was to restrict the authority of the court to order interim relief
as “Section 9(1)” of the Act allows the court to order them “before the beginning of proceedings,
during the proceedings and also post the arbitral award has been granted but prior to its
enforcement”. After the amendment, once the proceedings have begun, the parties were
obligated to take interim relief from the arbitral tribunal. A court would not grant the relief
ordinarily until the existence of circumstances is proven by the parties that the relief if granted
by the arbitral tribunal will be inefficacious. This introduction of this provision was to avoid
prejudice to any party once the arbitral tribunal comes into existence.
The insertion of this subsection was made with an intention to limit judicial intervention by
adding that no applications should be considered by the courts, once the arbitral tribunal was
constituted. However, a window was left open which provided for judicial intervention where
the party approach the court during the arbitral proceedings and convince the court that the
remedy which will be provided by the arbitral tribunal under “Section 17” will be insufficient and
efficacious. No express provisions were made as to how to deal with the disputes before the
arbitral tribunal is formed or after the award is rendered. The only option left with the parties is
to approach courts rather than the arbitral tribunals as they can only entertain application for
interim relief during the arbitral proceedings.
Another lacuna in this provision was that when an application for interim relief was pending
before the court and the arbitral tribunal is constituted, is the court liable to relegate the
application to the arbitral tribunal?
This question was addressed in the recent case by the High Court of Delhi in “Benara Bearings &
Pistons Ltd. v Mahle Engine Components India Pvt. Ltd.”], the division bench held that “If the
argument is accepted that the court is not allowed to entertain the applications under ‘Section
9’ for interim measures once the arbitral tribunal comes into existence, it becomes ‘coram non
judice’ and further serious vacuum is created as there are no provisions for handling the pending
matters before the court for interim measures. All powers granted to the courts before, during
the arbitral proceeding and after the rendering of award in accordance with Section 36 are left
intact (and even not altered by the amendment) as contained in ‘Section 9(1)’ of the Act. ‘Section
9(3)’ itself provides that if the court finds that circumstances exist which may render the remedy
under ‘Section 17’ of the act efficacious, the court can entertain an application under ‘Section
9(1)’. Therefore, there is no provision in the act, even of a transitory measure, that requires the
court to assign a pending application to the arbitral tribunal, the moment the tribunal is formed.”
Therefore, to avoid a position where the parties are left without interim relief in the proceedings
pending in a court and during which the arbitral tribunal is formed, the court may exercise its
discretion and continue with the proceedings before it and grant appropriate reliefs, where
necessary. Therefore, this practice allowed the courts to entertain the application prior to the
formation of the arbitral tribunal and even when the arbitral tribunal is formed during the
pendency of proceedings before the court for interim relief, the court will exercise discretion to
decide whether to transfer it to the arbitral tribunal or not. This allows for judicial intervention
in arbitral proceedings.
 2. Amendments made to “Section 17” of the Indian Arbitration Act:
The Law Commission of India in its report clearly stated that “Section 17” was an important
provision for the smooth and efficient working of the arbitral process, since it ensures that the
parties rather than waiting for the court orders, seek measures from the tribunal itself. The report
further stated that the efficacy of this provision is seriously compromised because of the lack of
a suitable statutory mechanism for the enforcement of such interim measure ordered by the
arbitral tribunal. Even the Supreme Court while deciding a case recognized that “though “Section
17” gives tribunal the powers to grant orders, these orders cannot be enforced as the orders of
the court and only because of this reason a concurrent authority has been granted to the courts
under section 9 of the Act”.
As already discussed, the High Court of Delhi, while deciding “Sri Krishan v Anand” undertook to
find a suitable legislative basis for enforcement of arbitral tribunals orders under “Section 17”,
however, the Law Commission of India believed that the solution provided by the Delhi High
Court was not complete and it was important to provide a suitable enforcement mechanism for
the orders of the arbitral tribunal. The commission, therefore, prescribed various amendments
to the section and provided for the statutory enforcement of such orders in the similar manner
as they were the orders of the court. The commission prescribed these amendments while
keeping in mind that they should be in consistence with the recent 2006 amendments made to
the Model Law.
The Amendment Act brought significant changes to the wordings of “Section 17” of the Act and
the open-textured nature of the provisions in the old 1996 act were omitted. The wording of
subsection (1) which said that “unless and otherwise agreed by the parties”, “the tribunal may”
and “in relation to subject-matter of the dispute” was omitted. New wordings were added to
sub-section (1) which were exactly similar to “Section 9(1)” of the Act. The arbitral tribunals were
now allowed to pass orders of interim measures, “during the ongoing arbitral proceedings” and
“after the making of the arbitral award but prior to its enforcement.”
The other major change which was brought in effect by way of amendment was to specify the
“scope of reliefs” which the arbitral tribunal was capable to order which were not specified
earlier. Now the arbitral tribunal was empowered to grant interim reliefs as specified under “sub-
section (1) of Section 17 of the Act”. This amendment brought the powers of the arbitral tribunals
to issue interim measures at parity with those of the courts under the other provision of the act.
Following were the reliefs that the tribunal was now allowed to order, which was confirmed by
the courts in different cases.

1. “Securing the amount of the dispute in arbitration.”

2. “Detention, preservation or inspection of any property or thing which is the subject
matter of the dispute in arbitration.”
 3. “Interim injunctions and appointment of receiver.”
A special provision was added to grant the arbitral tribunal with the similar authority as of courts
for ordering of interim measures in the form of ‘subsection 17(1)(ii)(e)’. This provision gave
explicit powers to the arbitral tribunal which was succinctly expressed from the wordings of the
section that is “Such other interim measure of protection as may appear to the arbitral tribunal
as ‘just and convenient’”. The provision is further followed by the wordings that say, “the arbitral
tribunal shall have the same powers for making orders, as the court enjoy for the purpose of any
proceedings before it.”
The Law commission of India while adding this provision to “Section 17” of the Act gave their
opinion by adding a ‘note’ to the amendment that this amendment is made with the special
purpose of granting the arbitral tribunal, similar authority as a civil court in relation to granting
of interim relief. It was further mentioned that when this provision will be read in conjunction
with “Section 9(2) of the Indian Arbitration Act” which provides that “the court can only pass an
interim measure before the constitution of the arbitral tribunal,” parties will approach the
arbitral tribunals by default for interim relief. The purpose specified by the Law Commission was
that the change in this scenario will eventually lead to relieving the court from the burden and
excessive workload.
‘Subsection (2)’ was also added to “Section 17” by way of Amendment Act of 2015, which
empowered the tribunals order of interim measures “enforceable” as if it was the order of the
court. The inclusion of this provision solved a major concern of the law community in India that
even when the arbitral tribunal grants an award for interim measure, how it was enforceable and
how its compliance is ensured. Eventually, to enforce the order of the arbitral tribunal, the parties
still had to approach the courts which in the end will allow judicial interference. The parties to
the arbitration, therefore, always considers reaching out to courts rather than requesting the
arbitral tribunal for interim measures. This amendment identified this problem and rectified it by
making the order of the arbitral tribunals order enforceable as that of the court.
Besides statutory recognition of enforceability of interim measures and making them enforceable
as court orders, the Supreme court of India while deciding a case, asserted that “any party found
in non-compliance with an arbitral tribunal’s order or conduct will amount to contempt during
the course of arbitration proceedings and will be triable under the Contempt of Courts Act”. This
view of the courts in the end allows for judicial intervention in arbitration, where if a party was
found in non-compliance with the order of the tribunals for interim measures, the other party
will approach the court and a proceeding will commence against him before the court under “the
Contempt of Court Act.”
 Reference to arbitration:
The Arbitration and Conciliation Act, 1996 (hereinafter the "1996 Act") supplants the Arbitration
Act, 1940. In the 1996 Act, intervention by Courts was limited so that the object behind speedy
justice could be well achieved. To further the aforesaid objective, the 1996 Act harbors many
provisions. Section 8 of the 1996 Act denotes one such provision which provides for limited
judicial intervention and furthers the objective by directing the parties to get involved in
arbitration on the basis of the arbitration agreement. In domestic arbitrations, the uses of Section
8 applications in the Courts have spiraled over the years. This piece provides an in-depth analysis
of Section 8 of the 1996 Act by focusing on the judicial precedents.
Section 8: The Golden Eagle:
A. Condition Precedent Stipulated under Section 8
Section 8 of the Arbitration and Conciliation Act, 1996 is peremptory in nature. It provides that a
judicial authority shall, on the basis of the arbitration agreement between the parties, direct the
parties to go for arbitration. It also enlists conditions precedent, which need fulfillment before a
reference can be made as per the terms of the 1996 Act.1 In P. Anand Gajapathi Raju & Ors. v.
P.V.G. Raju (Died) & Ors2., while iterating the periphery of Section 8 of the 1996 Act, the Supreme
Court said that "The conditions which are required to be satisfied under Sub-sections (1) and (2)
of Section 8 before the Court can exercise its powers are (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. .... The language of Section 8 is per-emptory."
The following factors are to be considered before entertaining an application under Section 8 of
the 1996 Act:
• First question to be analyzed is whether it can be made applicable to a civil dispute. The
Supreme Court while answering the aforesaid question in H. Srinivas Pai and Anr. v. H.V.
Pai (D) thr. L.Rs. and Ors.3, said that "The Act applies to domestic arbitrations,
international commercial arbitrations and conciliations. The applicability of the Act does
not depend upon the dispute being a commercial dispute. Reference to arbitration and
arbitability depends upon the existence of an arbitration agreement, and not upon the
question whether it is a civil dispute or commercial dispute. There can be arbitration
agreements in non-commercial civil disputes also."
• The presence of arbitration agreement is another pre-requisite for seeking a reference
under Section 8.4 Section 7 of the 1996 Act provides the diameter of the term "arbitration
agreement". The importance of arbitration agreement, for seeking a reference under
Section 8, was emphasized by the Supreme Court in Smt. Kalpana Kothari v. Smt. Sudha
Yadav and ors.5 wherein the Court said that "As long as the Arbitration clause exists,
 having recourse to Civil Court for adjudication of disputes envisaged to be resolved
through arbitral process or getting any orders of the nature from Civil Court for
appointment of Receiver or prohibitory orders without evincing any intention to have
recourse to arbitration in terms of the agreement may not arise."
• Next question which might arise in the step wise analysis of Section 8 is whether the
validity of the arbitration clause can be disputed before the Court, in front of which an
application for reference is made. The answer to the question was laid in the negative by
the Supreme Court in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums6.
The Court in this case held that if the existence of the arbitration clause is admitted, in
view of the mandatory language of Section 8 of the Act, the courts ought to refer the
dispute to arbitration. The Supreme Court, while raising a presumption for the validity of
an arbitration clause in an agreement, in India Household and Healthcare Ltd. v. LG
Household and Healthcare Ltd.7, said that the Courts would construe the agreement in
such a manner so as to uphold the arbitration agreement.
• Section 8 further mandates that the subject matter of the dispute is the same as the
subject matter of the arbitration agreement. While articulating on this pre-requisite, the
Supreme Court in Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr.8, said that "The
relevant language used in Section 8 is-"in a matter which is the subject matter of an
arbitration agreement". Court is required to refer the parties to arbitration. Therefore, the
suit should be in respect of 'a matter' which the parties have agreed to refer, and which
comes within the ambit of arbitration agreement."
• An application under Section 8(1) cannot be entertained unless accompanied by original
arbitration agreement or a certified copy thereof. Laying emphasis on section 8(2) for the
grant of reference, the Supreme Court in The Branch Manager, Magma Leasing and
Finance Limited and Anr. v. Potluri Madhavilata and Anr.9 said that "An analysis of Section
8 would show that for its applicability, the following conditions must be satisfied: (e) that
along with the application the other party tenders the original arbitration agreement or
duly certified copy thereof."
B. Implied Inclusion under Section 8
Though not implicit in the reading of Section 8 of the Act, the Court in the case of Haryana
Telecom Ltd. v. Sterlite Industries (India) Ltd.10 brought in the competence of the arbitral tribunal
as one of the grounds for the grant of reference. The proposition that Section 8, despite providing
the explicit grounds on which reference can be made, also lays down the implicit ground of
competence of the Arbitral Tribunal, was also read in the affirmative by the Court in the case
of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.11 wherein it was held that where the
cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer the parties to
arbitration, under Section 8 of the Act.
Effect of the Arbitration and Conciliation (Amendment) Ordinance, 2015:
On 23rd October 2015, the President promulgated the Arbitration and Conciliation (Amendment)
Ordinance, 2015. The said Ordinance amended Section 8 by stipulating that joinder of non-
signatories to an arbitration agreement was not permissible. Further amendment to Section 8
requires that the judicial authority compulsorily refer parties to arbitration irrespective of any
decision by the Supreme Court or any other court, if the judicial authority finds that a valid
arbitration clause prima-facie exists. The amendment essentially nullifies the judgment of the
Supreme Court in Booz Allen Hamilton v. SBI Home finance12, where it had ruled that serious
allegations of fraud are not arbitrable.

Arbitral tribunal: appointment, jurisdiction and powers, procedure, oral and written
proceedings:
The Arbitration and conciliation Act of 1996 states that parties can determine the number of
arbitrators they wish to appoint however, this should not be an even number. If they are unable
to do so, the arbitral tribunal shall consist of a sole arbitrator. The statutory requirement of odd
numbers of arbitrators is can be moved away from, which means that if they wish to exercise an
option of choosing even number of arbitrators and agree to not to challenge the award
thereafter, the award rendered would be a valid and binding. If neither of the parties challenge
the composition then any challenge to the composition must be raised by a party before the time
period prescribed under the Act, failing which it will not be open to that party to challenge the
award after it has been passed by the arbitral tribunal. The Act enables the arbitral tribunal to
rule on its own jurisdiction. A challenge to the jurisdiction of the arbitral tribunal cannot be raised,
after the submission of the statement of defense although the party might have participated in
the appointment of the arbitrator and might have appointed the arbitrator himself. Both parties
can choose the arbitrators.
Qualification of Arbitrators
The parties should ideally follow an agreed procedure for appointing the arbitrators. However if
that fails and an application is filed in court for appointment, the Chief Justice or the person or
institution designated by him, in appointing an arbitrator, shall have due regard to any
qualifications required of the arbitrator by the agreement of the parties.
A clause in the agreement, which provides for settling the dispute by arbitration through
arbitrators having certain qualifications or in certain agreed manner is ordinarily followed by the
courts and not derogated from unless there are strong grounds for doing so. The appointment of
an arbitrator can be challenged within 15 days after he learns of the constitution of the arbitral
tribunal or after becoming aware of the circumstance that he does not possess the necessary
qualification.
It is not open to a party, especially in government contracts, to contend that appointment of only
one arbitrator only by one of the parties to the dispute will violate the principle that no man can
be a judge in his own cause if that party had voluntarily entered into the contract with knowledge
of this fact and had thus accepted the terms and conditions of the contract. The question of its
maintainability before the arbitral tribunal stating that the arbitration clause in the contract
between the parties is void and unenforceable law cannot be accepted.
Requirements for Filing an Application for the appointment of an arbitrator
The essential pre-conditions to be satisfied before an application for appointment of arbitrator
by Court is filed are:
(i) There should be an arbitration clause in the contract in terms of section 7;
(ii) The party filing the application should have knowledge of the arbitration agreement;
(iii) There is a dispute between the parties in relation to the contract containing the arbitration
agreement.
(iv) A notice invoking an arbitration clause has been issued and received by the other party.
Appointment of Arbitrator through Court Assistance
An arbitration agreement as defined under Section 7 of the Act is a condition precedent in order
to exercise the power to appoint an arbitrator or an Arbitral Tribunal, according to Section 11 of
the Act by the Chief Justice or his designate.
The Supreme Court has identified the duties of the chief justice or his designate. First they
identified and separated the preliminary issues that arise from the application under Section 11
of the Act into three categories, that is:
(i) Issues that the Chief Justice or his designate must decide.
(ii) Issues which the Chief Justice or his designate choose to decide
(iii) Issues that have to be left to the Arbitral Tribunal to decide.
Section 11 of the Act provides for the procedure to appoint an arbitrator or arbitrators with court
assistance. The primary objective of seeking court interference under the Act is so that securing
the constitution of the arbitral tribunal can happen expeditiously. Parties can agree upon a
procedure for appointment of a sole arbitrator or arbitrators as under sub-section (2) of section
11 and can approach the court in the event they don’t have a procedure. The court’s jurisdiction
and the nature of its power as per section 11 has been quoted directly from the judgment:
“(i) The power of the Chief Justice of the High Court or the Chief Justice of India under Section
11(6) of the Act is a judicial power.
(ii) The power under Section 11(6) of the Act, in its entirety, could be delegated, by the Chief Justice
of that court to another judge of that judge.
(iii) The Chief Justice or the designated Judge will have to decide the preliminary aspects as
indicated earlier. These will be his own jurisdiction to entertain the request, the existence of a
valid arbitration agreement, the existence or otherwise of a live claim, the existence of the
condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators.
The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution
in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need
arises but the order appointing the arbitrator could only be that of the Chief Justice or the
designated Judge.
(iv) Designation of a District Judge as the authority under Section 11(6) of the Act by the Chief
Justice of the High Court is not warranted on the scheme of the Act.
(v) Once the matter reaches the Arbitral Tribunal or the sole arbitrator, the High Court would not
interfere with orders passed by the arbitrator or the Arbitral Tribunal during the course of the
arbitration proceedings and the parties could approach the Court only in terms of Section 37 of
the Act or in terms of Section 34 of the Act.
(vi) Since an order passed by the Chief Justice of the High Court or by the designated Judge of that
Court is a judicial order, an appeal will lie against that order only under Article 136 of the
Constitution to the Supreme Court.
(vii) There can be no appeal against an order of the Chief Justice of India, or a Judge of the
Supreme Court designated by him while entertaining an application under Section 11(6) of the
Act.
(viii) In a case where the parties have constituted an Arbitral Tribunal without having recourse to
Section 11(6) of the Act, the Arbitral Tribunal will have the jurisdiction to decide all matters as
contemplated by Section 16 of the Act.
(ix) Orders under Section 11(6) of the Act have been made based on the position adopted in an SC
decision, we clarify that appointments of arbitrators or Arbitral Tribunals thus far made, are to
be treated as valid, all objections being left to be decided under Section 16 of the Act. As and from
this date, the position as adopted in this judgment will govern even pending applications under
Section 11(6) of the Act.
(x) Where District Judges had been designated by the Chief Justice of the High Court under Section
11(6) of the Act, the appointment orders thus far made by them will be treated as valid; but
applications if any pending before them as on this date will stand transferred, to be dealt with by
the Chief Justice of the High Court concerned or a Judge of that Court designated by the Chief
Justice.”
For the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act,
1996, two things have to be taken care of:

(i) That there is a dispute between the parties to the agreement and it is alive
(ii) That the arbitrator has to be appointed according to the terms and conditions of the
agreement and as per the need of the dispute.
Jurisdiction of Arbitral Tribunal:
The matter of jurisdiction of arbitral tribunal corresponds to Art.16 of the UNCITRAL Model Law
and also to Art.21 of the UNCITRAL Arbitration Rules. Under the English Arbitration Act, 1996
there are similar provisions to those of s.16 of the Arbitration and Conciliation Act, 1996.
Scope and Effect of Jurisdiction Of Arbitral Tribunal
This is a new authority conferred on the arbitral tribunal to decide its own jurisdiction by itself.
Though by the provisions of this section the autonomy or separability of the arbitration clause
has been statutorily recognized, yet there ought to have been some limits on the power of the
arbitral tribunal to rule on its own jurisdiction, such as “competence/competence”.
In Olympus Superstructures Pvt.Ltd v. Meena Vijay Khetan, it has been held that under the
Arbitration and Conciliation Act, 1996, the arbitral tribunal is vested with power under s.16(1)
to rule on its own jurisdiction including ruling on any objection with respect to the existence or
validity of arbitration agreement.
Competence of arbitral tribunal to decide its own jurisdiction
The arbitral tribunal may rule on its own jurisdiction like a court. It can also decide any
objection with regard to the existence or validity of the arbitration agreement. In deciding
these questions, the arbitral tribunal shall take into account the following factors:
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.
The plea of lack of jurisdiction of the arbitral tribunal shall be raised not later than the
submission of the statement of defense. A party may, however, raise such a plea even if he has
appointed or participated in the appointment of an arbitrator. Similarly, a plea may be raised
that the arbitral tribunal is exceeding the scope of its authority during the course of arbitral
proceedings. The arbitral tribunal may raise any such plea even at a later stage if sufficient
cause of the delay is shown to be justified. Where the arbitral tribunal takes a decision rejecting
the plea, the arbitral tribunal shall continue with the arbitral proceedings and make an arbitral
award. A party aggrieved by such an arbitral award may make an application for setting aside
such an arbitral award in accordance with s.34.
Court’s power to remove the impasse
It was held that when an arbitration for any reason becomes abortive, the Indian court has the
power to take upon itself any burden which was placed by the arbitration agreement on the
arbitrators in order to help the parties out of tier impasse.
Section 5 and 16(5) of the Arbitration and Conciliation Act, 1996
Section 5 of the Arbitration and Conciliation Act, 1996 categorically provides that no judicial
authority shall intervene except where it is so provided in Part I of the Act. On perusal of the
provisions of Part I of this Act it is apparent that nowhere it is provided that a court may
intervene and entertain a petition challenging the order passed by the arbitral tribunal under s.
16(5) of this Act taking a decision that the arbitral tribunal has jurisdiction to proceed with the
arbitration case.
The validity of s. 16(5) of the Act
The fact that the appropriate court can challenge the jurisdiction of the arbitrator only after
passing an award by the arbitrator and not at any penultimate stage by the appropriate court is
not a ground for contending that such an order under s.16(5) of the Act is not subject to judicial
scrutiny.
Interim measures ordered by an arbitral tribunal
In the absence of any agreement to the contrary the tribunal may, at the request of a party,
order a party to take any interim measure of protection in respect of the subject-matter of the
dispute. It may also order a party to provide appropriate security in connection with a measure
ordered as above.

Procedure:
The parties are free to decide on the number of arbitrators, as long as this is not an even
number. Appointment of the arbitrator is the most important step in the arbitration process. If
the parties fail to specify the number of arbitrators, the tribunal will consist of one arbitrator.
When the parties fail to agree on a procedure for appointing a three-member tribunal, each
party will nominate one arbitrator and the two party-appointed arbitrators will then appoint
the presiding arbitrator. If a party fails to appoint an arbitrator within the stipulated period, the
other party can apply to the Supreme Court or the High Court seeking the appointment of the
arbitrator.
Indian Arbitration and Conciliation Act provides no specific guidance on the manner and
method in which the parties must communicate with the tribunal. In practice, all substantive
communications are in writing. The parties can agree on the language(s) to be used in the
arbitration process. In the absence of such agreement, the tribunal can determine the
language(s).
The Arbitration and Conciliation Act does not require unanimous agreement from the tribunal.
Unless otherwise agreed by the parties, any decision of the tribunal can be made by a majority
of all its members. If the parties and the tribunal agree, the presiding arbitrator may be
authorized to decide questions of procedure. In case of disagreement, a dissenting arbitrator
can issue a separate opinion, but the Arbitration and Conciliation Act prescribes no rules as to
the form of such a dissenting opinion.
Following are the stages of arbitration or arbitration process step by step:
• Arbitration Clause - An agreement or the clause specifically stating that if the dispute
arises between the parties, they will resolve it through the process of arbitration.
• Arbitration notice - In case a dispute has arisen and the party has opted to follow the
procedure of arbitration then the party against whom the default has been committed
will send an arbitration notice for invoking arbitration process steps between the
parties.
• Appointment of Arbitrator- After receiving the notice by other parties both the parties
will appoint the arbitrators in the manner as specified in the arbitration agreement or
arbitration clause.
• Statement of Claim- Next step in an arbitration proceeding in India is to draft a
statement of claim. Statement of claim contains the dispute between the parties, events
which lead to the dispute and the compensation claimed from the defaulting party. The
other party can file a statement of counterclaim along with reply to the statement of
claim. Get your statement of claim, reply to the statement of claim or counterclaim
through top arbitration lawyers.
• Hearing of Parties - Arbitral tribunal will hear both the parties and their evidence.
• Award - After hearing the parties, the arbitral tribunal will pass the decision. The
decision of the tribunal is known as ‘Award’ and is binding on the parties. However, an
appeal against the arbitral award can be filed before the High Court.
• Execution of Award - Once the award has been passed by the tribunal it has to be
executed. The party in whose favor the award has been passed has to file for execution
or enforcement of award with the help of a good arbitration lawyer.
Arbitration process in India does not follow the procedure of the Civil Procedure Code and the
arbitrator also the arbitration proceeding does not need to follow the procedures enlisted in
the Civil Procedure Code, 1908. Arbitrator in India, however, has the following powers:
• To make awards
• To take assistance
• To rule on its jurisdiction
• To pass interim relief
• To determine procedures
 • To decide on the official language of the proceedings
• To appoint an expert
• To seek the court’s assistance for evidence
• To terminate proceedings
• To impose interest and deposits
Other than the above powers, the arbitrator has also given certain powers of civil court as
under the Civil Procedure Code:
• To administer the oath to parties and witnesses appearing before him.
• To state a special case for the opinion of the court on any question of law or state the
award in the form of a special case for the opinion of the court.
• To make the award conditional or in the alternative.
• To correct in an award any clerical mistake or error arising from any accidental slip or
omission.
• To administer any party interrogatories
The Limitation Act 1963 applies to all proceedings under the Arbitration and Conciliation Act,
just as it applies to proceedings in the Indian courts, except to the extent expressly excluded by
the Arbitration and Conciliation Act. Any arbitration proceedings commenced after the
limitation period (three years from the date on which the cause of action arose) will be time-
barred.
Local courts can intervene in domestic arbitration proceedings. This includes the power to issue
interim orders and appoints arbitrators.
While arbitrators cannot compel third parties to appear before them, the tribunal or a party,
with the tribunal’s approval, may apply to the court for assistance in taking evidence. The court
may make an order requiring third parties to provide evidence directly to the tribunal. If a
person fails to attend in accordance with such order of the court, it is subject to the same
penalties and punishments as it may have incurred during court proceedings.

oral and written proceedings:

Written Arbitration Agreement Must Be Produced - Oral Evidence, No Substitute
An application under Section 11 of the Arbitration and Conciliation Act, 1996 ("Act") for
appointment of arbitrator cannot be made in case where an arbitration agreement is not in
writing and is not produced at the first instance.
Section 7(4) is exhaustive. It does not contemplate that an oral account of a document signed
by the parties would also be an arbitration agreement.

The Bombay High Court ("Bombay HC") in its recent judgment of Yashvant Chunilal Mody v.
Yusuf Karmali Kerwala & Ors.1("Respondents") dealt with the issue of admissibility of oral
evidence to establish the existence and validity of an arbitration agreement not produced
before the court. This issue arose in the context of Yashwant Mody's ("Applicant") inability to
produce the written arbitration agreement / clause relied upon for the purposes of
appointment of an arbitrator under Section 11(6) of the Act.

Facts
In the present case, the Applicant had made an application for appointment of a sole arbitrator
under Section 11 of the Act. The application was made after the Respondents failed to appoint
a sole arbitrator under the arbitration clause in a purported written partnership deed
("Partnership Deed") which the Applicant claimed had been entered into by the parties in 1975.
This fact was disputed by the Respondents. Interestingly, the Applicant was unable to produce
the written Partnership Deed or a copy of the same.

Issue
The primary issue before the Bombay HC, was "whether the party invoking arbitration must,
therefore, produce that mandatory written agreement or whether such party can only allege
that an agreement is in writing and seek to prove it by oral evidence."

Judgment
The Court considered the following two aspects before ruling on the issue:

The mandate under Sections 7(3) and 7(4)2 of the Act, which require that an arbitration
agreement must compulsorily be in writing and in the form prescribed therein.

The Applicant's contention that though the Partnership Deed and the arbitration clause,
thereunder, could not be produced before the Court, the existence of the same could be
established by oral evidence of the Applicant and his cross examination, as envisaged under
Section 63(5) of the Indian Evidence Act, 1872.3

The Court held that a mere oral evidence of a document signed between the parties does not
fall within the ambit of written arbitration agreement as defined under Section 7(4) of the Act.
Hence, such oral account could not be considered as a valid arbitration agreement. The Bombay
HC held that Section 7(4) was an exhaustive section and any agreement which did not fulfill the
criteria prescribed thereunder could not be considered to be a valid written arbitration
agreement for the purposes of the Act.

In light of the above reasoning, the Bombay HC further held that allowing a party to prove a
written arbitration agreement by oral evidence of its contents, in accordance with Section 63(5)
of the Indian Evidence Act, 1872, would be dissonant with the legislative intent towards
enactment of Section7(4) of the Act.

The Bombay HC relying on the jurisprudence stated that Section 7 had been enacted with the
intent of weeding out oral arbitration agreements and if the parties are allowed to establish the
existence of an arbitration agreement by such oral evidence then it would open floodgates of
litigation and defeat the very legislative intent.

Further, the Bombay HC also considered the Supreme Court judgment in M/s. SBP & Co. v. M/s.
Patel Engineering Ltd. and Anr.,4 ("Patel Engineering Case") to determine the issue at hand. The
Supreme Court in this case had held that when a court is approached under Section 11 of the
Act then the Chief Justice must decide whether there exists an arbitration agreement as
defined in the Act. Moreover, in arriving at such decision , the Chief Justice "can either proceed
on the basis of affidavits and the documents produced or take such evidence or get such
evidence recorded, as may be necessary."5 However, the Bombay HC, while dealing with the
Patel Engineering Case, held that the Supreme Court's ruling was with regard to interpretation
of whether or not a particular written document would qualify as an arbitration agreement and
was not applicable to a circumstance where a party seeks to prove the existence of a written
agreement which was not produced before the Court.

Thus, the Bombay HC held that, in view of the exhaustive ambit of Section 7(4), a party was
required to produce, at the first instance, a written arbitration agreement when making an
application under Section 11 of the Act. In light of the above, relying on the provisions of the
Act and judicial precedents, the Bombay HC rejected the application due to the Applicant's
failure to produce the purported written Partnership Deed and the arbitration clause therein.

Conclusion / Critical Analysis

The judgment is appreciable considering that the Bombay HC dwelled deep into the legislative
intent of Sections 7(3) and 7(4) of the Act. The Bombay HC rejected the application considering
that if courts admit oral evidence as secondary evidence for determining the existence of a
written arbitration agreement which is not produced before the court, the same could lead to
numerous frivolous litigations initiated under Section 11 of the Act with parties seeking to
further their own mala fide intentions. However, this restrictive approach in admission of oral
evidence for the purposes of determining the existence of an arbitration agreement suffers
from its own unique flaws.

Firstly, such an approach may not be in the best interests of the parties who are unable to
produce the written arbitration agreement owing to genuine and bona fide reasons such as the
arbitration agreement being lost or destroyed. A party's inability to produce an arbitration
agreement does not negate the fact that such an agreement may have been entered into
between the litigating parties with the intention of submitting the disputes to arbitration.

Secondly, the judgment seems wanting in so far as it states that oral evidence regarding the
contents of a written arbitration agreement is not a valid arbitration agreement under Section
7(4) of the Act. While the same is undeniably true, distinction can be drawn between oral
evidence sought to be tendered in order to establish the existence of the contended arbitration
clause and for establishing an oral arbitration agreement. Though the credibility of the oral
evidence provided by the Applicant may have been questioned on other grounds, the oral
evidence could not have been rejected on the grounds of non-conformity with Section 7(4) as
the same was not an arbitration agreement.

To conclude, Bombay HC's ruling in the present case may be successful in containing frivolous
litigations under Section 11 of the Act. However, it does not completely put to rest the issue
posed in the case and opens it to further interpretation and analysis.

Further, the judgment does not completely clear the ambiguity surrounding the issues of law
which were raised in the present case. On the contrary, it leaves the door open for further
interpretation and analysis.
 Grounds of Challenge:
Grounds for challenging the appointment of the Arbitrator
• Disclosure of certain circumstances
Section 12(1) of the Act, amended in 2015, compels a prospective arbitrator to provide a written
disclosure of certain circumstances which may give rise to suspicions to his independence or
impartiality. Whether a circumstance is suspicious to the independence of an arbitrator, is to be
decided by the arbitrator himself.
Section 12(1)(a) states that the arbitrator should disclose if he has any direct, indirect, past or
present relationship to the parties, or if he has any financial, business, professional or any other
kind of interest in the subject-matter of the dispute, which would affect his impartiality in the
case.
For example, Company X and Company Z while entering into a particular contract, add an
arbitration clause naming Mr. A as an arbitrator. Mr. A is the owner of Company C. A dispute
concerning payment of bills to Company X by Company Z arose and Mr. A was approached for
presiding as an arbitrator. Company Z is a client of Company C and forms a considerable part of
its income.
In such a scenario, Mr. A would have an interest in the dispute and that might give rise to doubts
to his impartiality.
Section 12(1)(b) similarly points to any circumstances that would affect an arbitrator’s capacity
to devote enough time to finish the arbitration within twelve months.
There are two explanations given under the sub-section. The first one states that the Fifth
Schedule should be referred to understand whether circumstances under Section 12(1)(a) exist.
The second one states that such a disclosure should happen in the format under Sixth Schedule.
Fifth Schedule
The fifth schedule deals with following types of relations which might give rise to reasonable
doubts:
1. Arbitrator’s relationship with parties or counsel
2. Arbitrator’s relationship to the dispute
3. Arbitrator’s interest in the dispute
4. Arbitrator’s past involvement with the dispute
5. Relationship of co-arbitrator’s
6. Relationship of the arbitrator with parties and others in the dispute
 Other Circumstances
If the factual scenario of a case falls under any of the above headings, then the arbitrator may be
challenged. These are extensive headings which cover many scenarios to ensure maximum
impartiality. However, ‘Explanation 3’ to this schedule, points out that if it’s a specialized
arbitration involving niche fields, and it’s a custom to appoint same arbitrators from a small
specialized pool, then this should be noted by applying these rules. None of these headings
provides for an immediate bar to the appointment of an arbitrator.
Section 12(2) reinforces sub-section 1, by stating that unless a written disclosure has already
been given, an appointed arbitrator should disclose any conflict of interest as soon as possible.
• Other Grounds for Challenge
The actual grounds for challenge under this section are illustrated under Section 12(3).
If an arbitrator’s independence and impartiality are doubted due to the circumstances under
Section 12(1) then he may be challenged or in the event that he doesn’t possess the necessary
qualifications agreed to by the parties.
A party to the dispute which appoints an arbitrator may challenge such appointment for reasons
he becomes aware only after the appointment.
Section 12(5), inserted by the 2015 amendment, automatically disqualifies any potential
arbitrator who falls in any category under the Seventh Schedule of the Act.
Seventh Schedule
This schedule also covers most of the headings under the Fifth Schedule. The list isn’t as
exhaustive as the Fifth Schedule but as stated above, simply acts as a bar to appointment as
arbitrator. However, this bar can be waived by the parties by an agreement in writing.
The Schedule covers:
1. Arbitrator’s relationship with the parties or counsel
2. Relation of Arbitrator to the dispute
3. Arbitrator’s interest in the dispute.
• Interpretation of Section 12 in recent case laws
• Voestalpine Schienen v. Delhi Metro Rail Corporation
This was the first case adjudicated by the Supreme Court after the 2015 amendment was passed.
It is thus significant in clarifying the scope of this important section.
Facts: The Delhi Metro Rail Corporation (DMRC), a public sector undertaking, had entered into a
contract with M/s Voestalpine. Due to some disputes that arose in the course of business, the
arbitration clause was invoked and as per the contract. In the contract, it was provided that,
arbitration proceedings should be done in compliance of Clause 9.2 of the DMRC General
Conditions of Contract (DMRC GCC) and Clause 9.2 of the special conditions of the contract
(DMRC SCC).
According to these clauses, DMRC was to make a list of arbitrators consisting of serving or retired
engineers with requisite qualifications and professional experience. These engineers were to be
from ‘government departments or public sector undertakings. Furthermore, DMRC and
Voestalpine were to choose one arbitrator each from this list and both of these arbitrators shall
choose the third arbitrator from the same list.
The petitioner, Voestalpine challenged this provision under Sections 11(6) and 11(8) of the Act.
Issues
• Whether in light of the 2015 Amendment, the above-mentioned clauses become invalid
by virtue of Section 12(5)?
• Whether DMRC being a public sector undertaking cannot appoint former or retired
employees of the government as arbitrators?
• Whether such a clause destroys the very foundation and spirit behind the amendment?
Held
The Supreme Court pointed that the main purpose of amending Section 12 was to maintain a
higher level of arbitrator impartiality. In light of this, it stated that in the event that the arbitration
clause was in contradiction to Section 12 (5), the latter would prevail. In such a case the court
would appoint an arbitrator and a party cannot claim appointment as per the agreement.
However, in the case, the Court held that only because of the fact that the suggested arbitrators
were former or current government employees they won’t be automatically disqualified from
being arbitrators. If they didn’t have any relation to any of the parties, they were not barred
under Section 12(5).
The court differentiated between the concepts of ‘impartiality’ and ‘independence’. Thus, the
court held, any question on impartiality or independence would surface when the arbitrator
discloses any interest in writing. The Court declined jurisdiction in the case.
The Court directed DMRC to delete the clauses from SCC and GCC and asked it to constitute a
broader panel.
• DBM Geotechnics v. Bharat Petroleum Ltd
Facts: In 2003, the respondent BPCL had issued an e-tender for construction works. In 2014, DBM
Geotechnics, the applicant was given the letter of intent and subsequently, an agreement was
concluded.
In October 2015, BPCL abruptly terminated the agreement by alleging performance delays and
appointed another contractor. In June 2016, BPCL initiated arbitration proceedings under the
Agreement. As per the terms of the agreement, the Director of Marketing (DM) was to be the
sole arbitrator or he was to appoint another person as an arbitrator.
Issues
• Whether such a clause in the arbitration agreement would be rendered ineffective in light
of Section 12 (5) of the Arbitration Act.
Held
The applicants argued that the nomination procedure would be unlawful in light of Section 12.
The Court rejected this argument and held that in spite of the fact that the DM was barred from
presiding as the arbitrator, he could still nominate someone else as the presiding arbitrator.
• TRF Ltd v. Energo Engineering Projects
Facts: Energo Engineering Projects, the respondent-company dealt in the procurement, handling
and installation of equipment in thermal power plants, for various clients like NTPC, Moser Baer
etc.
In 2014, the respondent issued a purchase order to the appellant for various articles. The
appellant had also given an advance bank and performance guarantee. The dispute arose with
the enforcement of the bank guarantee. The appellant approached the High Court to restrain the
encashment of the guarantee.
In the meanwhile, the appellant invoked the arbitration clause of the General Terms and
Conditions of the Purchase Order (GTCPO). It also argued that the HC should appoint the
arbitrator under Section 11 (6) because in light of Section 12 (5) the Managing Director was
ineligible to act as an arbitrator and thus ineligible to arbitrate as well. The High Court rejected
this argument and stated that merely because the MD is disqualified to act as an arbitrator, he
isn’t devoid of his power to nominate. The nominated arbitrator will have his own independent
views. This ruling was challenged in the Supreme Court.
Issues
• Whether the High Court had rightfully rejected the applications under Section 11(6)?
• Whether a statutory disqualification also meant a disqualification of the power to
nominate?
Held
The Supreme Court analyzed the clause under GTCPO which mentioned the MD as the sole
arbitrator or any of his nominees. It arrived at the conclusion that, although the MD may be a
respectable person and otherwise eligible to arbitrate, he is ineligible in the present case. Thus,
that makes him ineligible to nominate anyone else as an arbitrator as well. The Court said, once
the infrastructure collapses, the superstructure collapses as well.