FAQs ON ARBITRATION

COMPOSITION OF ARBITRAL TRIBUNAL

If the claimant fails to communicate his statement of claim the Arbitrator shall terminate the proceedings unless otherwise agreed by the parties and without showing sufficient cause.

If the respondent fails to communicate his statement of defense in time without showing sufficient cause and unless otherwise agreed the Arbitrator shall continue the proceeding without treating the failure in itself as an admission of the allegations by the claimant.

If a party fails to appear at an oral hearing or to produce documentary evidence than the Arbitrator may continue the proceedings and make the award on the evidence before it.

Yes, unless otherwise agreed by the parties the Arbitrator may appoint one or more experts to report to him on specific issues to be determined by the Arbitrator and require a party to give the expert any relevant information or to produce or to provide access to, any relevant document, goods or other property for his inspection.

Unless otherwise agreed by the parties, if a party so requests or if the Arbitrator considers it necessary, the expert shall after delivery of his written or oral report, participate in an oral hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue.

Unless otherwise agreed by the parties the expert shall on the request of a party make available to that party for examination all documents, goods or other property in the possession of the expert with which  he was provided in order to prepare his report.

The Arbitrator being a private Tribunal cannot or does not have the authority or power to issue summons to witnesses or to require anyone to produce documents. The Law however as provided in Section 27 of the Act of 1996 gives the Arbitral Tribunal, or a party with a approval of the Arbitral Tribunal the power to apply to the court for assistance in taking evidence. The application has to be made giving the particulars as mentioned in Section 27 of the Act of 1996 and the manner in which the Courts assistance is required mainly for calling witness or expert witnesses or a statement of the subject matter of the testimony required or the description of any document to be produced or property to be inspected.

The Court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the Arbitrator.

The Court may issue the same processes to the witnesses as it may issue in suits tried before it.

Persons failing to attend in accordance with such process, or making any other default or refusing to give their evidence or guilty of any contempt to the Arbitrator during the conduct of Arbitration proceedings, shall be subject to the like disadvantages, penalties and punishments by the order of the court on the representation of the Arbitrator as they would incur for the like offences in suits tried before the court. The expression processes include summonses and commissions for the examination of witnesses and summonses to produce the documents.

What is the Law applicable in case of Arbitrations within India and in case on International Commercial Arbitration ? 

In an Arbitration other than an International Commercial Arbitration, the Arbitral Tribunal (Arbitrator/Arbitrators) shall decide the disputes in accordance with the substantive Law for the time being in force in India; 

the dispute is to be decided in accordance with the Law as agreed by the parties to be applicable to the dispute.

Such agreed Law or legal system as agreed to be applicable shall be construed unless otherwise expressed, as directly referring to the substantive Law of that country and not to its conflict of Laws rules;

Failing any agreement as to the Law applicable by the parties, the Arbitrator shall apply the rules of Law it considers to be appropriate, given all the circumstances surrounding the disputes. 

In all cases the Arbitrator shall decide in accordance with the terms of the contract and shall take in to account the usages of the trade applicable to the transaction.

Unless otherwise agreed by the parties any decision of the Arbitrators shall be made by a majority of all its members.

If authorized by the parties or all the members of the panel of Arbitrators, questions of procedure may be decided by the presiding Arbitrator. (Sec.29)

Can the Arbitrator encourage settlement of the disputes or may use mediation, conciliation or other procedures during the proceedings of Arbitration ?

Yes, he can do so and it is not incompatible with an Arbitration agreement. If the matter is settled and if requested by the parties and not objected to by the Arbitral Tribunal, record the settlement in the form of an award on agreed terms. An award on agreed terms shall be made in accordance with Section 31 and shall state that it is an award. An award on agreed terms shall have the same status and effects as any other award on the substance of the dispute (Section 30).

 

An award has to be in writing and the same has to be signed by the Arbitrator or Arbitrators. However if there are more than one Arbitrator, the signatures of the majority of all the members of the Tribunal shall be sufficient so long as the reason for any omitted signature is stated (Section 31).

The former Law on the point did not require the Arbitrators to give any reasons for their award unless of course the Arbitration agreement itself required reasons to be given by the Arbitrator.

With the coming into force of the 1996 Act an Arbitrator has to give the reasons in the award for his decision unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under Section 30.

The award shall state its date and the place of Arbitration as determined in accordance with Section 20 of the 1996 Act and the award shall be deemed to have been made at that place. [Section 31(3) and(4)].

Does the Arbitrator have power to make an Interim award with respect to any matter which the Arbitrator may make a final award ?

Yes, the Arbitrator may at any time during the Arbitration proceedings make an interim award on any matter with respect to which it may make a final award- Section 31(6).  

The Law on this point has been clarified by the Section 31(7). The Law says that unless otherwise agreed by the parties where in and so far an award where an award is foe payment of money the Arbitrator may include in the sun for which the award  is made interests, at such rate as it deems reasonable, for the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the day on which the award is made.

Section 31(7)(a) gives the Arbitrator the full power to award interest right from the date of accrual  of the cause of action until the date of the award at such reasonable rate as the Arbitrator thinks fit and proper.

The other salutary provision in sub-section B is that the some directed to be paid by an award shall, unless the award otherwise directs, carry interests at the rate of a eighteen per centum per annum from the date of the award to the date of payment. This provision applies whether there is any provision in the award or not for future interest from the date of the award to the date of payment. 
 

Unless otherwise agreed by the parties, the cost of Arbitration shall be fixed by the arbitrator. The Arbitrator shall specify the party entitled to cost, the party who shall pay the cost the amount of cost or method of determining that amount and the manner in which the cost shall be paid. Cost means reasonable costs relating to the fees and expenses of the Arbitrators and witnesses, legal fees and expenses, any administration fees of the institution supervising the Arbitration and any other expenses incurred in connection with the proceedings and the award-Section 31(8).

 

By the final award or when the claimant withdraws his claim, or when the parties agree on the termination of the proceedings or when the Arbitrator finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.(Section 32).

Yes, within 30days from the receipt of the award a party with notice to the other party may request the Arbitrator to correct any computation errors any clerical or hypographical errors or any other errors of a similar nature occurring in the award.

If so agreed by the parties, a party with notice to the other party, may request the Arbitrator to give an interpretation of a specific point or part of the award.

If the Arbitrator considers a request made by any party to be justified, it shall make the correction or give the interpretation within 30 days from the receipt of the request and the interpretation shall form part of the award. The Arbitrator may correct any error as specified in Section 33 on his own motive, within 30 days from the date of the award.

Unless otherwise agreed by the parties, a party with notice to the other party, may request within 30 days from the receipt of the award, to make an additional award as to claims presented in the arbitration proceedings but omitted from the award.

If the Arbitrator considers the request made for additional award to be justified, it shall make the additional award within 60 days from the receipt of such request.

The Arbitrator may extent if necessary, the period of time within which he shall make a correction give an interpretation or make an additional award. The correction and/or the interpretation and/or the additional award shall form part of the award (Section 33).
 

Yes, but the grounds are extremely limited. The party making the application if it furnishes prove that a party was under some incapacity, or that the arbitration agreement is not valid under the Law or that the party making the application was not given proper notice of the appointment of the Arbitrator or of the Arbitration proceedings or was otherwise enable to present his case. The award may be set aside.

The other grounds for setting aside the awards are that the award deals with a dispute not contemplated while or not falling within the terms of the submission to Arbitration, or it content decisions on matters beyond the scope of the submission to Arbitration.

Provided always that if the decisions on matters submitted to Arbitration can be separated from those not so submitted, only that part of the award which content decisions on matters not submitted to Arbitration may be set aside.

If the composition of the Arbitration Tribunal or the procedure follow was not in accordance with the agreement of the parties.

Apart from the above grounds for setting aside the awards, the award can be set aside if the subject matter of the dispute is not capable of settlement by Arbitration under the Law for the time being inforce or if the award is in conflict with the public policy on India. If the award was procure by fraud or corruption or was in violation of Section 75 or Section 81 the award will be treated as in conflict with the public policy in India-Section 34(1)and (2).

 

An application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application, had received the Arbitral award or if a request have been made for correction, interpretation or for additional award, than from the date on which that request had been disposed of by the Arbitrator.

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the set period of three months, it may entertain the application within a further period of 30 days but not there after Section 34(3). This shows that the outer limit even for the Court to entertain an application for setting aside an award is 60 days even after extension of time.

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