Prof.

Rajinder Kaur
 The Arbitration and Conciliation Act, 1996

The Act is based on UNCITRAL Model Law on International
Commercial Arbitration, 1986
Object of the Act: to make provision for an arbitral procedure
which is-
-Fair, efficient and capable of meeting the needs of specific
arbitration
-Minimize the supervisory role of courts in the arbitral process
-To permit an arbitral tribunal to use mediation, conciliation
during the arbitral proceedings in settlement of dispute.
 Intent

 Act is applicable to resolve all or certain dispute arise out of legal
relationship whether contractual or not.
 All commercial disputes are covered.
 But depends upon two things
 1. Parties have arbitration Agreement
 2. Matter is Arbitrable
 Scheme of Act

 Part 1- Arbitration- place of Arbitration in india
 Part IA- Arbitration Council of India (2019 Amendment)
 Part II- Enforcement of Foreign Awards
 Part III- Conciliation
 Part IV- Supplementary Provisions
 Arbitration Agreement

 Arbitration Agreement means an agreement to submit to arbitration all or
certain disputes in respect of a defined legal relationship, whether
contractual or not –
 Which have arisen (present disputes) or
 Which may arise (future dispute)
 Arbitration Agreement may be in the form of an arbitration clause in a
agreement or a separate agreement.
 Arbitration must be in writing.
Arbitration Agreement is always a separate agreement and the validity of
the arbitration agreement can be decided according to its terms only
and not according to terms of the main agreement
 Arbitration Agreement

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 party.
 What is Defined Legal Relationship

 The word ‘defined’ would signify the known categories of legal
relationships and also the upcoming categories. e.g. partnership, agent,
buyer-seller, service contract and so on.
 If the matter or transaction is outside the known categories of relations
under which legal rights or liabilities are likely to be created, it would
not be an arbitrable matter.
 Matters of moral or spiritual relations are not fit subjects for arbitration.
 What is Valid Arbitration Agreement?

 When the terms of the agreement clearly indicates an intention on
the part of the parties to the agreement to refer their disputes to a
private for adjudication and an willingness to be bound by the
decision of such tribunal on such dispute, is a arbitration
agreement.
 The words used in the agreement should disclose a determination
and obligation to go to arbitration and not merely contemplate the
possibility of going for arbitration.
 Where there is merely a possibility of the parties agreeing to
arbitration in future, as contrasted from an obligation to refer
dispute to arbitration, there is no valid and binding arbitration
agreement.
Pre-requisite of Valid Arbitration Agreement

 Agreement must be in Writing
 Willingness should be clear not ambiguous
 Intention to refer dispute to arbitration
 Willingness to accept the award as final decision
 Is this a Valid Arbitration Agreement?

 “parties can, if they so desire, refer their dispute to arbitration”
 “in the event of any dispute, the parties may also agree to refer the
same to arbitration”
 “If any disputes arise between the parties, they should consider
settlement by arbitration”
 “If the parties so decide, the disputes shall be referred to
arbitration”
 “any disputes between parties, if they so agree, shall be referred to
arbitration”
 Not Valid Arbitration Agreement?

 “parties can, if they so desire, refer their dispute to arbitration”
 “in the event of any dispute, the parties may also agree to refer the
same to arbitration”
 “If any disputes arise between the parties, they should consider
settlement by arbitration”
 “If the parties so decide, the disputes shall be referred to
arbitration”
 “any disputes between parties, if they so agree, shall be referred to
arbitration”
 Why Not Valid Arbitration Agreement

 The Clause merely indicate a desire or hope to have the dispute
settled by arbitration or a tentative arrangement to explore
arbitration as a mode of settlement if and when a dispute arises.
 Such clauses requires the parties to arrive at a further agreement
to go to arbitration, as and when the dispute arise.
 Any agreement or clause in an agreement requiring or
contemplating a further consent or consensus before a reference
to arbitration, is not an arbitration agreement, but an agreement
to enter into an arbitration agreement in future.
 Arbitrability

 The subject matter of dispute can be referred to arbitration only if it
Arbitrable and not otherwise
 The (Indian) Arbitration and Conciliation Act, 1996 does not specify
which disputes are Arbitrable and which are not. The Arbitrability of
disputes is a contested issue and has been left for the courts to decide on
a case-by-case basis
 all disputes which can be decided by a civil court, involving private
rights, can be referred to arbitration. Thus, disputes about property or
money, or about the amount of damages payable for breach of contract
etc., can be referred to arbitration.
 Arbitrability

 The subject matter of dispute can be referred to arbitration only if it
arbitrable and not otherwise. These matters are non-arbitrable
 i) disputes relating to rights and liabilities which give rise to or arise out
of criminal offences;
 (ii) matrimonial disputes relating to divorce, judicial separation,
restitution of conjugal rights, child custody;
 (iii) guardianship matters;
 (iv) insolvency and winding up matters
 (v) testamentary matters (grant of probate, letters of administration
and succession certificate); and
 Arbitrability

 (vi) eviction or tenancy matters governed by special statutes where
the tenant enjoys statutory protection against eviction and only the
specified courts are conferred jurisdiction to grant eviction or decide the
disputes.
 To put it in simple words, the matters which falls in the category of
right in rem are non-arbitrable
 Secondly, where the law has given jurisdiction to determine, certain
matters to specified tribunals only, such matters cannot be referred
to arbitrations.
 Arbitrability

 Arbitrability in the Indian context would require a two-fold enquiry. At
the first stage, it needs to be determined whether the subject matter of
the dispute is a right in rem, in which case, the dispute would not be
amenable to arbitration example insolvency, divorce but can decide
maintenance If, however, the dispute involves a right in personam,
then the next question to be answered is whether the adjudication of
such a dispute is reserved as a matter of public policy. An affirmative
answer to the second question would imply that arbitration in the
subject matter is not permissible.
 Arbitrability of IP disputes- Nature

 If the nature of the dispute relates to validity or registration of IPR, the
dispute is not Arbitrable. However, in all other IPR disputes involving
contractual rights or IPR rights arising out of a contract, the disputes
have to be said to be Arbitrable. One rule of thumb that can be
formulated is that when validity of the IPR is not in dispute and the
dispute is restricted to enforcement of IPR, the dispute can be safely
categorized Arbitrable.
 Steel Authority of India Limited (SAIL) vs. SKS Ispat and
Power Limited

 SAIL is the owner of registered Trade Mark “SAIL” and holds a
registration in respect of this trade mark. There was an agreement
between the SAIL and the SKS Ispat. According to the subject matter of
the agreement SAIL entrusted the job work of conversion of steel
materials at a designated place to SKS Ispat. In return SAIL was to make
payment of conversion charges. According to the agreement SKS Ispat
was required to emboss all the materials produced by them on behalf of
SAIL with the SAIL’s registered Trade Mark “SAIL” and also to
prefix/suffix the unique code that will be given by SAIL on the
materials, to be branded as per the design given by SAIL from time to
time.
 
 According to SAIL, SKS Ispat misused the brand name “SAIL” by
embossing it on the materials rolled in its mills which neither bore any
vendor code nor fell within the range of products covered by the
conversion contract contained in the agreement dated 1 June
2011.According to SAIL, SKS Ispat has not only breached the contract
dated 1 June 2011 but has infringed SAIL’s Trade Marks and also passed
off the goods of SKS Ispat as those of SAIL. After serving show cause
notice to SKS Ispat, SAIL terminated the suit contract dated 28 January
2013. According to the arbitration agreement, any dispute between the
parties, at the first place, shall be settled by conciliation. In the event any
dispute/difference is not resolved through conciliation, either party
may, upon giving notice to the other party, refer the same to arbitration
 Steel Authority of India Limited (SAIL) vs. SKS Ispat and
Power Limited

 Supreme Court held a claim of ‘trademark infringement’ is inarbitrable,
“the rights to a trademark and remedies in connection therewith are matters in
rem and by their very nature not amenable to the jurisdiction of a private
forum chosen by the parties”. Accordingly, the dispute was held to be
inarbitrable on the basis of the first test of arbitrability that makes
actions in rem inarbitrable.
 The dispute arising in the present case cannot be covered under the
arbitration agreement between the parties.
 Eros case

 The Respondent was granted a copyright license to distribute the Petitioner’s
films. The license contained an express negative covenant which prohibited the
use of copyrighted films upon termination of contract. Respondent violated this
term. Thus, the Petitioner initiated arbitration for ‘violation of the contractual
covenant’ – a claim although sourced purely in contract.
 Two factors – violation is in rem and second dispute arising out of special
statute. For instance, labour disputes are made inarbitrable by Industrial
Disputes Act, 1947, for the reason that a public fora can address the power
imbalance prevalent between employers and employees in labour disputes.
However, in such IP disputes, similar considerations are not always in play so it
was arbitable.
 Disputes in Corporates

 Arbitrable- Disputes between shareholders may arise out of three
different contracts:
 Share purchase agreements;
 Joint venture agreements;
 Shareholders agreements.
 Non-arbitrable- Winding up. Liquidation, insolvency and oppression
and mismanagement
 Scope of the Act

The Act is applicable when the place/seat of arbitration is in
India
In case of International Arbitration, the act is applicable even
if the place/seat of arbitration is outside India for -
- Seeking interim relief from Court before the commencement
of the arbitral proceedings and subject matter of dispute is in
India
- Seeking Court assistance in taking evidence (2015
Amendment)
 International Arbitration, the act is applicable even if the
place/seat of arbitration is outside India

 In 2002, the Indian Supreme Court decided, in Bhatia International v Bulk
Trading SA ('Bhatia') that Indian courts had exclusive jurisdiction to test
the validity of an arbitral award made in India even when the proper
law of the contract was the law of another country. The court
interpreted Section 2 of the Indian Arbitration and Conciliation Act 1996
(the 'Act') to mean that Part I of the Act applied even to arbitrations
seated outside India, thereby giving the Indian courts broad scope to
intervene in foreign arbitrations..
 BALCO

 In 2012, in Bharat Aluminium Corporation v Kaiser Aluminium Technical
Services, a five-judge constitutional bench of the Supreme Court
overruled these controversial decisions. The court in Bharat held that
Part I of the Act only applies to arbitrations seated within India and
therefore, Indian courts cannot order interim relief in support of foreign
seated arbitrations. The court further ruled that awards rendered in
foreign seated arbitrations are only subject to the jurisdiction of Indian
courts when they are to be enforced in India under Part II of the Act.
This set the tone for reduced intervention by the Indian courts in
arbitrations seated outside India. The decision reflects the principles of
certainty, commerciality and party autonomy.
 
 The choice of the country as the seat of arbitration inevitably imports an
acceptance that the law of that country shall be applicable to the
arbitration proceedings. “Seat” of arbitration and “place” of arbitration
are used interchanging but the seat shall remain the place mentioned in
the arbitration agreement. Parties of different nations are involved in
international commercial arbitration and hence the venue for arbitration
might change but the seat shall remain the same.
 Appreciated at international but has serious implication in attaching
property
 
 The choice of the country as the seat of arbitration inevitably imports an
acceptance that the law of that country shall be applicable to the
arbitration proceedings. “Seat” of arbitration and “place” of arbitration
are used interchanging but the seat shall remain the place mentioned in
the arbitration agreement. Parties of different nations are involved in
international commercial arbitration and hence the venue for arbitration
might change but the seat shall remain the same.
 Appreciated at international but has serious implication in attaching
property
 After 2015 amendment

 Section 2(2) This Part shall apply where the place of arbitration is in
India:
 [Provided that subject to an agreement to the contrary, the provisions of
sections 9 (interim relief) , 27 (Court assistance in taking evidence) shall also
apply to international commercial arbitration, even if the place of arbitration is
outside India, and an arbitral award made or to be made in such place is
enforceable and recognised under the provisions of Part II of this Act.]
 Intervention of Court

 Court can intervene in the arbitration process in the –
 Court can refer the dispute to arbitration if the parties have signed
an arbitration agreement
 Appointment of the arbitrator if the parties fail to appoint an
arbitrator. High Court can appoint arbitrator in case of domestic
arbitration and Supreme Court in case of International Commercial
Arbitration.
 Supreme Court and High Court can designate an institution also to
appoint arbitrator on its behalf (after 2019 amendment)
 Granting Interim Orders/Injunction to party
 Court can assist the party in taking evidence
 Appointment of Arbitrator

Number of Arbitrator: Odd number (1,3,5)
Appointment of Arbitrator : 1) A person of any nationality
2) Parties are free to agree on procedure of appointment
3) If the parties decides the number of arbitrators are 3 than they
will appoint 1 each and the 2 arbitrators will appoint the 3rd
who acts as presiding arbitrator
 Appointment of Arbitrator

Domestic Arbitration: Chief Justice of the High Court or the
judge to whom he delegated his powers to appoint arbitrator
OR the institution which is designated by him can appoint the
arbitrator
International Arbitration: Chief Justice of India can appoint
the arbitrator or his designated person or institution can
appoint an arbitrator
The Supreme Court and the High Court may maintain a panel
of arbitrators to discharge the functions or duties of arbitral
institution
 Grounds for Removal of Arbitrator

 Obligation on the Arbitrator
1) Arbitrator shall disclose in writing any relationship or interest in
any of the party or subject matter in dispute
2) The inability of the arbitrator to complete arbitration within 12
months
 Arbitrator shall also disclose any circumstances referred above if
arise during the arbitral proceedings and has not already informed.
 Any party can challenge appointment only if-
A)There are justifiable doubts as to his independence of impartiality
B) Does not possess the qualification agreed to by the parties
 Disclosure of Interest

 any person whose relationship, with the parties or counsel or the
subject-matter of the dispute, falls under any of the categories specified
in the Seventh Schedule shall be ineligible to be appointed as an
arbitrator:
 19 clauses including employee, lawyer, close family relation
 Challenge Procedure

Parties are free to decide the procedure to challenge the
appointment of arbitrator.If parties fail than it is as per the
Arbitration and Conciliation Act
Any party can challenge appointment within 15 days after
becoming aware of circumstances relating to any relationship
or interest in any of the party or subject matter in dispute
When the party file challenge on any such ground then the
arbitrator shall first decide that application (if s/he accept the
ground then will withdraw from the office or otherwise will
reject the application and continue the arbitral proceedings)
 Challenge Procedure Cont…

If the arbitrator rejects the application which challenge its
appointment then the arbitral proceedings such continue and
the party challenged the application have to weight till
tribunal give an arbitral award.
After the arbitral award the same party can raise the same
challenge in the court under section 34.
Purpose of the provision: 1) the Court should not be allowed
to intervene when arbitration is going on and 2) Arbitration
shall continue and concluded in a time bound manner
 Termination of Arbitrator Mandate

Mandate of an Arbitrator can be terminated if
a) He become de jure (elevated as Judge) or de facto (death or
medically unfit) unable to perform his function or to perform
with unreasonable delay
b) He withdraws from office or parties agree to terminate
 Substitution of Arbitrator

 If mandate of arbitrator is terminated then-
A Substitute Arbitrator shall be appointed according to
procedure decided by parties or court
The substitute arbitrator may order for repetition of the
previous hearings
 
 ABC Co Ltd. has made an arbitration agreement as a part of the contract
with XYZ Co ltd. The parties went into the dispute the contract is
challenged as void. whether the arbitration agreement will also be
declared void?
 Does an arbitrator have the jurisdiction to determine his or her own
jurisdiction under an arbitration agreement?
 The law’s response has been to develop two doctrines: separability and
competence-competence
 Separability Principle

 The concept of separability means that the validity of the arbitration
clause does not depend on the validity of the remaining parts of the
contract in which it is contained. As long as the arbitration clause itself
is validly entered into by the parties and worded sufficiently broadly to
cover non-contractual disputes, an arbitrator may declare a contract
invalid but still retain jurisdiction to decide a dispute as to the
consequences of the invalidity By treating arbitration agreements as
distinct from the main contract, separability rescues many arbitration
agreements from failing simply because they are contained in contracts
the validity of which is questioned.
 
 The Arbitration and Conciliation Act, 1996 recognizes the principle of
kompetenz-kompetenz. Section 16(1) of the Act empowers an arbitral
tribunal to “rule on its own jurisdiction, including ruling on any
objections with respect to the existence or validity of the arbitration
agreement
 Jurisdiction of the Arbitral Tribunal

Doctrine of Kompetenz-kompetenz: The doctrine requires
that the arbitral tribunal must exercise jurisdiction over the
dispute under the arbitration agreement and also on the
issues relating to the validity of the arbitration agreement
itself.
 this doctrine is enshrined in Sec 16. Sec 16 (1) empowers an
Arbitral Tribunal to decide:
(i) the question as to its jurisdiction, and
(ii) the objection as to the existence or validity of the
arbitration agreement.
 Explanation of Sec 16 (1)

 The Arbitral Tribunal can decide on its own jurisdiction including the
validity of the arbitration agreement because the tribunal drives its
powers from a valid arbitration agreement only.
 If a party challenge the validity of the arbitration agreement and the
tribunal decides that the arbitration agreement is null and void than it
can decide the same and as a result the tribunal will not decide the main
dispute.
 However, if the party challenge the validity of the main agreement and
the tribunal decides that the main contract between the parties is null
and void, it will not result in the automatic invalidity of the arbitration
agreement. (Reason: if the arbitration agreement is valid then the
arbitral tribunal is competent to decide any issue relating to arbitration).
 Explanation of Sec 16 (2)

 The Party Challenging the jurisdiction of the Arbitral Tribunal shall
challenge it before submitting the statement of defence. Statement of
Defence means before party submit itself to the jurisdiction to the
tribunal or to the judicial authority of the tribunal. 16(2)
 The Party cannot be denied the right to challenge the jurisdiction of the
Arbitral Tribunal merely because he has appointed or participated in the
appointment of the arbitrator.
 Explanation of Sec 16 (3)

 In case, the arbitral tribunal is exceeding the scope of its authority is
raised during the arbitral proceedings the affected party may challenge
it but the arbitral tribunal will decide the application. 16(3)
 For example: the rate of construction meant or agreed upon for ground
floor could not be applied to the construction of the basement area. So if
the arbitral tribunal is expanding the rate of construction of ground
floor to the basement area means the arbitral tribunal is exceeding its
jurisdiction.
 Explanation of Sec 16 (4)(5)(6)

 The Arbitral Tribunal can condone delay in filling objections regarding
jurisdiction or scope of the authority if it finds a reasonable justification
for the delay. 16(4)
 The Arbitral Tribunal shall decide on the plea or objections raised by the
party. If it decides to reject the plea or objection than afterwards it can
continue with the arbitral proceedings and make an arbitral award.
16(5)
 A party aggrieved by the rejection of plea or objection have to wait for
the arbitral award and after the tribunal give arbitral award, the party
can make an application to set aside arbitral award under section 34. Sec
16(6)
 Objective of this doctrine

 The purpose of the doctrine is that the challenge to the existence or
validity of the arbitration agreement will not prevent the arbitral
tribunal from proceeding with hearing and ruling upon jurisdiction.
 The negative effect of the doctrine is first arbitrator is entitled to decide
the validity of the arbitration agreement but it can be reviewed by the
Court after the arbitral award.  
 Jurisdiction of the Arbitral Tribunal

 In Chloro Controls P. Ltd. v. Severn Trent Water Purification Inc., JT
2012(10) SC 187 , the Court must not intervene in the jurisdiction of the
arbitral tribunal if the arbitration agreement is patently void,
inoperative or incapable of being performed.
 During pendency of arbitration, civil court has no jurisdiction to
entertain petition and decide nature of objections raised therein.
Questions can be raised before and decided by arbitrator.
 Interim measures by Arbitral Tribunal

 A party may during the arbitral proceeding apply for
1) appointment of a guardian for a minor or person of unsound mind
for the purposes of arbitral proceedings; or
2) An interim measure of protection for:
a) The preservation, interim custody or sale of any goods which are the
subject matter of the arbitration agreement
b) Securing the amount in dispute in the arbitration
c) The detention, preservation or inspection of any property or thing
which is the subject matter of the dispute in arbitration or as to which
any question may arise therein and authorising for any of the aforesaid
 Interim measures by Arbitral Tribunal

Purposes any person to enter upon any land or building in the possession
of any party, or authorising any samples to be taken, or any observation to
be made, or experiment to be tried, which may be necessary or expedient
for the purpose of obtaining full information or evidence.
d) Interim injunction or the appointment of a receiver,
e) Such other interim measures of protection as may appear to the arbitral
tribunal to be just and convenient.
The arbitral tribunal have the same power for making the orders, as the
court has the purpose of arbitration.
 Rules applicable to substance of dispute

 Where the place of arbitration is situate in India:
(a)In domestic arbitration, the substantive law which is for the time being
in force in India shall be applied.
(b)In International Arbitration: the arbitral tribunal shall decide the dispute
in accordance with the rules of law designated by the parties as
applicable to the substance of the dispute;
(c)The parties can designate any law or legal system of a given country
and the tribunal shall consider the substantive law of that country
 Rules applicable to substance of dispute

 (d) if the parties fails to designate any of the above 2 clauses than the
arbitral tribunal shall apply the rules of law it considers to be
appropriate given all the circumstances surrounding the dispute.
 2) The arbitral tribunal shall decide ex aequo et bono (what arbitrator
consider to be fair and equitable in the case at hand) or as amicable
compositeur (arbitrator can act as mediator and suggest the solution on
the basis of equity).
 3) The arbitral tribunal shall take into account the terms of the contract
and trade usages applicable to the transaction.
 Grounds for Setting Aside Arbitral Award

 An Arbitral Award may be set aside by the court only, if:
 A) the party making the application can furnishes proof that:
 (i) a party was under some incapacity;
 (ii) the arbitration agreement is invalid
 (iii) the party making the application was not given proper notice of
appointment of the arbitrator or of arbitral proceedings or inability to
present the case
 (iv) the arbitral awards deals with dispute beyond the scope of the
submission to the arbitration;
 (v) Composition of the arbitral tribunal was not in accordance with the
agreement of the parties
 Grounds for Setting Aside Arbitral Award

 B) the court finds that:
 (i) the subject matter of the dispute is non-arbitrable under the law
 (ii) the arbitral award is against the public policy of India
 Explanation: - an award is in conflict with the public policy of india if
the award was induced or affected by fraud or corruption or was in
violation of section 75 or 81 of the Indian Contract Act.
 The application to set aside arbitral award may not be made after 3
months have elapsed from the date of receiving the arbitral award.
 Public Policy

 The public policy of India includes :
 (a) fundamental policy of Indian law;
 (b) the interest of India
 (c) justice or morality
 (d) if it is patently illegal.
 Public policy means the principles and standards regarded by the
legislature or by the court as being of fundamental concern to the State
and the whole of the society.
State of Orissa v Orient Paper & Industries Ltd. (1999) 3 SCC566


 Facts: A licensee from govt was authorised to cut and remove bamboos.
A dispute arose over the method of determining the quantity of bamboo
which was removed.
 Award: The arbitrator gave the verdict that the method fixed by the
Chief Conservator of Forests was final and bound the parties.
 Court: the arbitrator should have considered the question whether such
method was scientific and could be applied universally in all cases. He
did not do so and blindly applied the method.
 That amounted to non-application of mind, making the award liable to
be set aside.
 
 In Dulal Podda v. Executive Engineer, Dona Canal Division, the court
held that appointment of an arbitrator at the behest of the appellant
without sending notice to the respondent, ex parte award given by the
arbitrator was illegal and liable to be set aside.
 ONGC v Saw pipes

 Oil and Natural Gas Commission had placed an order on Saw Pipes for
supply of equipment for off shore exploration, to be procured from
approved European manufacturers. The delivery was delayed due to
general strike of steel mill workers in Europe. Timely delivery was the
essence of the contract. ONGC granted extension of time, but it invoked
the clause for recovery of Liquidated Damages by withholding the
amount from the payment to the supplier. ONGC deducted from the
payment $3,04,970.20 and Rs 15,75,557 towards customs duty, sales tax
and freight charges. Saw pipes disputed the deduction and matter was
referred to arbitration.
 
 While the arbitral tribunal rejected Saw Pipe’s defence of force majure, it
required ONGC to lead evidence to establish the loss suffered by breach and
proceed to hold, in absence of evidence of financial losses, that the deduction
of Liquidated damages was wrongful. The award was challenged by ONGC;
inter alia as being opposed to public policy ONGC’s case was that the arbitral
tribunal failed to decide the dispute by not applying the prevailing
substantive law, ignoring the terms of the contract and customary practices of
usage of trade in such transactions. ONGC challenged the award as being
patently illegal. The single judge and division bench of Bombay High Court
dismissed the challenge. The Supreme Court set aside an arbitration award
Profilati Italia SRLv. Paine Webber Inc, 2001

 The allegation was that a party to an arbitration had wrongly failed to
disclose 2 material documents and that this failure had led to an award
being made in favour of one party that would have been made in favour
of the other party had the documents been disclosed.
 It was argued that if a document is wrongfully with held as a result of
negligence or an error of judgement, and it is demonstrated that the
award is different in consequence, then the award has been “procured
contrary to public policy”.
 The court held that it is against public policy.
 Finality of the Award

 An arbitral Award shall be final and binding on the parties. The party
cannot file any Appeal against an arbitral award.
 However the award must be in accordance with the principles of the
relevant law otherwise it will be illegal.
 In Bishop v. Bishop, (1639) the arbitrator awarded an ownership in
perpetuity, it was held to be void as offending the rule against
perpetuity.
 The arbitral award shall be enforced under the Code of Civil Procedure,
1908 in the same manner as if it were a decree of the court.
 Effect of Death of Party on Arbitration

 Sec 40: An arbitration agreement shall not be discharged by the death of
any party thereto, either as respects the deceased or any other party, but
shall be in such event be enforceable by or against the legal
representatives of the deceased.
 The mandate of an arbitrator shall not be terminated by the death of any
party by whom he was appointed.
 Enforcement of Foreign Awards

In India “foreign awards” are covered under Part II of the said Act
which specifically is in consonance with the provisions of the 1958 –
New York Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (“New York Convention“) or the Convention on the
Execution of Foreign Arbitral Awards 1927 – (“Geneva Convention”).
India is a signatory to both the New York Convention as well as
Geneva Convention. Section 44 of the Indian Act provides that in
order for a foreign award to be recognized as such under Part II,
Chapter I (New York Convention Awards).
 Definition of Foreign Award

 According to Section 44 of the Act a foreign award means an arbitral
award on disputes arising between parties to arbitration, whether in
contractual or non-contractual relationship, considered as commercial
under Indian laws enacted on or after the 11th day of October, 1960. But
the country must be a signatory to the New York Convention and
recognised by the Central Government of India as a Convention country
and the award shall be passed in the territory of another contracting
country which is a reciprocating territory, i.e the Central Government of
India has notified it as Convention country in its Official Gazette.
 Foreign Award as binding

 Section 46 of the Act provides that any foreign award which would be
enforceable under this Chapter shall be treated as binding for all
purposes on the persons as between whom it was made. It may be relied
upon by the parties in any legal proceedings in India.
 Evidence Required to Apply for
Enforcement of a Foreign Award

 According to section 47 of the Act a person seeking to enforce a foreign arbitral
award shall make an application to a court, i.e. high court having jurisdiction
in the matter as per the provisions of the Amendment Act, 2015 and provide
the original award or its certified copy; original arbitration agreement or its
duly certified copy; and if the award or agreement is in a foreign language, the
party seeking to enforce must produce a certified copy of a foreign award
translated into English and/or any other evidence to establish that the award
is a foreign award. The burden of proof is on the party seeking to enforce the
foreign arbitral award to prove that it is a genuine foreign award and the
aforesaid documents form a prima facie evidence to establish the same.
Section 48 of Act


Article V(1) of the New York Convention prescribes grounds that need to be proven by a
party to successfully resist enforcement of the award. It provides that enforcement of the
award may be refused if :
a party to the arbitration agreement was under some incapacity;
the arbitration agreement was invalid;
the procedure before the arbitral tribunal was affected by procedural unfairness;
the award deals with issues falling outside the scope of the submission to arbitration;
the composition of the arbitral authority or the arbitral procedure was not in accordance
with the agreement of the parties or, absent such an agreement, the law of the arbitral
seat;
the award has not yet become binding on the parties; or
the award has been set aside in the country where it was made.
 Enforcement of Foreign Awards

 As per section 49 of the Act if a court decides to uphold the foreign
award and enforce it then it shall be deemed to be a decree of the court
and no appeal shall lie against the award so upheld except for a
discretionary appeal to Supreme Court of India under Article 136 of the
Constitution of India when it is a question of fundamental importance
or public interest. But in the case of an award held to be non-enforceable
by the court, an appeal may be allowed under section 50 (1) (b) of the
Act.
 The decree shall be executed, on application by the decree-holder, in
accordance with the provisions of CPC by the court which passed it.
 
 Similar provisions is there under chapter 2 Part II section 53-60 ( Geneva
Convention)
 Time Limit section 29A

 The Tribunal shall ensure speedy completion of arbitration proceedings
within a period of twelve months from the date of reference. However,
the parties may extend the time not exceeding six months. If the award
is made within six months, the Tribunal is entitled to receive additional
fees as parties agree. The mandate of the arbitrator may be terminated if
the award is not being made within the term of six months unless the
court extends the time
 Fast track Arbitration

 Section 29B: The new provision provides for fast-track procedures for
conducting arbitral proceedings if the parties agree to such proceedings.
In such cases, the award must be made within six months from the date
of reference.
 the Court may order reduction of fees of arbitrator by upto 5% for each
month such delay for reasons attributable to the arbitrator. Also, the
application for extension of time shall be disposed of by Court within 60
days from the date of notice to the opposite party.
CONSTITUTION OF ARBITRATION COUNCIL
OF INDIA (ACI): 2019 Amendment Act

 framing policies to grade arbitral institutions and accredit arbitrators (as
per the qualifications and norms contained in the Eighth Schedule, as
inserted vide the 2019 Amendment Act);
 to evolve policy and guidelines for the establishment, operation and
maintenance of uniform professional standards in respect of all the
matters relating to arbitration and ADR mechanism;
 hold training, workshops, etc. in areas of arbitration
 to establish and maintain an electronic depository of all the arbitral
awards made in India
 to promote and encourage ADR Mechanisms
 problem

 The main drawback of this scheme is that it limits party autonomy in
international arbitration through governmental and court interference.
The ACI is a government body which shall regulate the
institutionalization of arbitration in India and frame the policy for
grading of arbitral institutions. The fact remains that the court’s choice
in designating an arbitral institution will be limited by the options
presented to it by the ACI
 Time fixed under 2019 Amendment

 Section 23(4), the statement of claim and defence shall be completed
within a period of six months from the date of appointment of the
arbitrator(s) and as per Proviso to the amended Section 29(1), the award
in the matter of international commercial arbitration may be made as
expeditiously as possible with an endeavour to deliver it within 12
months from the date of completion of pleadings under Section 23(4).
 In international arbitration, the arbitrators routinely hold a case
management hearing, and after consultation with the parties, issue an
order on the procedural timetable for completion of pleadings, conduct
of hearings etc. (e.g., see Rule 24 of the 2017 ICC Arbitration Rules
 SECTION 42A - CONFIDENTIALITY: 2019
Amendment Act

 The 2019 Amendment Act proposes to a insert a new section - 42A
wherein the arbitration proceedings shall be kept confidential by the
arbitrator and the arbitral institutions, except the award where its
disclosure is necessary for the purpose of implementation and
enforcement of award.
 The
ICC recently released updates to its Note to Parties and Arbitral Tribu
nals on the Conduct of Arbitration under the ICC Rules of Arbitration
, effective 1 January 2019
in which it stated that all awards made as from 1 January 2019 may be
published, no less than two years after their notification, based on an
opt-out procedure
 Qualification of arbitrators

 The ACI is also entrusted with the function of reviewing the grading of arbitrators (Section
43D(2)(c)). The qualifications, experience and norms for accreditation of arbitrators shall
be such as specified in the Eighth Schedule, as introduced by the 2019 Amendment
(Section 43J). The Eighth Schedule stipulates nine categories of persons (such as an Indian
advocate or cost accountant or company secretary with certain level of experience or a
government officer in certain cases inter alia) and only those are qualified to be an
arbitrator.
 Thus, a foreign scholar or foreign-registered lawyer or a retired foreign officer is outrightly
disqualified to be an arbitrator under the 2019 Amendment. For obvious reasons, foreign
parties will be discouraged to opt for Indian institutional arbitration where the choice of
candidates as their potential arbitrators is limited by nationality, likelihood of lack of
experience and specialization – both academic and professional – in handling international
arbitrations.
 Some Observations

 Always specify the seat in the arbitration clause and use the word “seat”
to avoid any confusion.
 Specify the law governing the arbitration agreement separately or at
least state that the law governing the arbitration agreement is the same
as the substantive law of the contract if this is the intention.
 Carefully think of the arbitral mechanism you choose to adopt in your
contract as regards the appointment of arbitrators.
 Ensure that this is clearly set out or set out by reference to an
established set of rules or an arbitration law. 
 

Thanks