![distribution agreement; commercial representation or agency; factoring; leasing; construction
of works; consulting; engineering; licensing; investment; financing; banking; insurance;
exploitation agreement or concession; joint venture and other forms of industrial or business
cooperation; carriage of goods or passengers by air, sea, rail or road.
ARBITRALITY
Not every type of disputes can be submitted to arbitration. The international conventions and
domestic statues require that certain matter of types of disputes cannot be subject matter of
arbitration. This subject matters or disputes are considered as no arbitrable subjects and the
principle is known as ‘arbitrability’. The decision relating to what is not arbitrable in
particular jurisdiction lies with the state and its domestic court. Arbitrability in essence, is a
matter of national public policy. As public policy can differ from one country to another, the
arbitrability of a particular dispute may vary considerably from jurisdiction to jurisdiction.
Some traditionally non-arbitrable subjects
• Criminal disputes/Fraud
• Disputes between the patent or trademark applicant and the granting office.
• Anti-trust or anti-competition claims
• Matrimonial dispute
• Insolvency disputes
• Consumer Disputes
•
What is an Arbitration Agreement?
Arbitration primarily being a contractual process requires the free consent of the parties to
arbitrate. The arbitration agreement is the foundation stone on which the entire arbitration
process consolidates. Therefore requirement of a valid arbitration agreement is a mandatory
requirement in all national and international law governing arbitration.
Functions of an arbitration agreement
1. It shows that the parties have consented to resolve the disputes by arbitration
2. Once parties have express their consent to arbitrate they cannot unilaterally withdraw
from arbitration
3. Agreement establishes the jurisdiction of the tribunal.
4. Agreement to arbitrate is an universally enforceable agreement [ Art II (3) of NYC
and Art 8 UML]
Valid Legal Requirements for Arbitration Agreement
1. Agreement in writing
2. Dispute arises in respect to defined legal relationship, whether contractual or
not
3. Deals with existing or future disputes
4. Subject matter is capable of settlement by arbitration
An arbitration agreement in writing consists of four aspects
(1) In a contract containing an arbitration clause signed by the parties,
(2) In a contract contained in exchange of letters, telegrams telex, telegrams or
other means of telecommunication.
(3) 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.](https://image.slidesharecdn.com/arbitrationnotes-151208162503-lva1-app6892/85/Arbitration-notes-5-320.jpg)
![Appointment
• Parties have power to select the arbitrator, its qualification and procedure. [Sec 10 and
11 of A&C Act 1996]
• Power of Court to appointment arbitrator [Sec 11 (5) & (6) A&C Act 1996]
• Nature of the power exercised by Chief Justice or his representative during
appointment of an arbitrator - Judicial
Power of Chief Justice
• Where either the party or parties had failed to
• nominate their arbitrator
• two nominated arbitrators had failed to agree on the presiding
arbitrator
Duty of Independence and Impartiality of an
Arbitrator
Duty to disclose any bias
When a person is approached in connection with his
possible appointment as an arbitrator, he shall disclose in
writing any circumstances likely to give rise to
justifiable doubts as to his independence or impartiality.
Grounds for challenge
Circumstances exist that give rise to justifiable doubts as
to his independence or impartiality
He does not possess the qualifications agreed to by the
parties
What Is Bias
• A predisposition to decide for or against one party, without proper regard to the true
merits of the dispute is bias.
• Reasonable apprehension of bias in the mind of a reasonable man can be a ground for
removal of the arbitrator.
• There must be reasonable apprehension of that predisposition. The reasonable
apprehension must be based on cogent materials.
Disqualification
1. The relationship of the arbitrator to one of the parties was unknown to the other party
2. The arbitrator has performed as a lawyer, legal officer or legal consultant for any
party in the past.
3. The arbitrator has been an adjudicator in any matter before him in the capacity of a
judge
4. Fraudulent collusion
5. Arbitrator was indebted to one of the parties
6. Arbitrator has rendered some legal service to any of the parties free of charge in the
past
The mandate of an arbitrator shall be terminated if:-](https://image.slidesharecdn.com/arbitrationnotes-151208162503-lva1-app6892/85/Arbitration-notes-8-320.jpg)
![deals with place of arbitration, commencement of arbitral proceedings and language
respectively. Thereafter, Section 23, 24 and 25 deal with statements of claim and defence,
hearings and written proceedings and procedure to be followed in case of default of a party.
Chapter VI - Making of arbitral award and termination of proceedings.
Relevant sections which require consideration are Section 28 and 31.
Complex system of applicable laws in ICA
Law governing the existence and proceedings of an arbitration
Law governing the substantive issues in dispute
Law governing recognition and enforcement of an arbitration agreement or an award
Law governing the arbitration agreement and the performance of that agreement
ARBITRAL AWRAD
Meaning
• An instrument embodying a decision of an arbitrator or arbitrators as regards matters
referred to him.
• Settlement agreement under the conciliation process is not an award
Statutory Definition
“ Arbitral awards includes an interim award”
VALID AWARD
To be valid an award must comprise a decision by the tribunal on the matters referred with
which it deals. An award must also be final, in the sense of being a complete decision without
leaving matters to be dealt with subsequently or by a third party, and it must be certain.
Kinds of award
• Domestic award (Arbitral award made under Part-I)
[Bhatia International vs. Bulk Trading (AIR 2002 SC 1432)
Part-I extends to arbitration taking place outside the territory of India]
• Foreign Award
Classification of awards
1. Final award
2. Interim award
3. Consent award
4. Additional Award
FORMS AND CONTENT OF AWARD
1. Written form and signed
2. Date and place
3. Reasons
Exception
The parties have agreed that no reasons are to be given, or
The award is an arbitral award on a-reed terms under section 30.
1. Delivery of award
2. Stamp duty](https://image.slidesharecdn.com/arbitrationnotes-151208162503-lva1-app6892/85/Arbitration-notes-10-320.jpg)
![3. Awarding interest and period
4. Costs
Fees and expenses of arbitrators and witnesses
Legal fees
Administration fees
Expenses incurred in connection with arbitral proceedings
Question of presumption in favour of an award
5. A Court shouldapproach anawardwith a desire to support it,if that is reasonably possible, rather than to destroy it by calling it
illegal;
6. Unless the reference to arbitration specifically so requires, the arbitrator is not bound to deal with each claim or matter
separately, but can deliver a consolidatedaward. The legal positionis clear that unless so specificallyrequired, an award neednot
formally express the decision of the arbitrator on each matter of difference;
7. unless the contrary appears the Court will presume that the award disposes of finally all the mattes in difference; and
8. where an award is made ‘de praemissis’ (that is, of and concerning all matters in dispute referred to the arbitrator), the
presumptionis that the arbitrator intended todispose of finallyall the matters in difference; andhis awardwill be heldfinal, if by
any intendment it can be made so.
GROUNDS FOR SETTING ASIDE AN AWARD
An arbitral award may be set aside by the court only if
Incapacity
Invalid arbitration agreement
With out proper notice
Exceeding the scope of submission to arbitration
Composition of the arbitral tribunal
Arbitrability
Public Policy
Fundamental policy of Indian Law
Interest of India
Justice and morality
Patently illegal [ ONGC vs. SAW Pipes Ltd. ( AIR 2003 SC 3041)]
Procedure for setting aside
An application for setting aside an award be made before a competent court having
jurisdiction to hear such an application
Made before three months elapsed from the date on which the party making that
application had received the arbitral award
The phrase 'Public Policy of India' is not defined under the Act. Hence, the said term is
required to be given meaning in context and also considering the purpose of the section and
scheme of the Act. It has been repeatedly stated by various authorities that the expression
'public policy' does not admit of precise definition and may vary from generation to
generation and from time to time. Hence, the concept 'public policy' is considered to be
vague, susceptible to narrow or wider meaning depending upon the context in which it is
used.](https://image.slidesharecdn.com/arbitrationnotes-151208162503-lva1-app6892/85/Arbitration-notes-11-320.jpg)
Arbitration notes
- 1. OBLIGATION OF LAW, LEGAL PROCESS & LEGAL PROFESSION Goals of a dispute resolution system– a) Least possible expense b) Shortest possible time c) Minimum Stress d) Equal Access What is ADR The term is often used to describe a wide variety of dispute resolution mechanisms that are short of, or alternative to, full-scale court processes. Why ADR With court congestion and excessive litigiousness drawing increasing criticism, it is clear that lawyers in the future will have to be trained to find fresh approaches to explore non-litigation routes to resolve disputes. Advantages of ADR Private process of dispute settlement Expeditious Informal Inexpensive Lack of technicality Involve community participation Decision making process is controlled by the parties Leads to amicable results Relationship is secured Finality of result Confidentiality DISPUTE RESOLUTION 1.Emphasis was put on (A) Case Management (B) Developing Dispute Processing Techniques (C) Fostering Multi-door Dispute resolution Center 2 Issues to be addressed – Design the DR methods for cost and time effective dispute settlement – Bring peoples trust – Introducing teaching and research materials – Training future lawyers How to determine a dispute resolution process? Two step approach
- 2. Step 1 – Considering the client goals. Whether the D.R. can attain those goals. Step 2 – Whether client is amenable to settlement Evaluation of the impediments to settlement Subsequent consideration – Public interest in the dispute A comparative analysis of various dispute resolution processes Evaluation of the impediments to settlement and likelihood of overcoming those impediments. Impediments to settlement poor communication – Effectively poor communication Emotional stress – Opportunity to express their views Different views on fact – Disagreement of parties on matters Different views on law – Disagreement on the legal implications Important principle – Fundamentally associated to a ideology Constituent pressure – Pressure formits group or constituency Multiple parties - Different parties with diverse interest Jackpot Syndrome - Discretionary awards What is Arbitration • A private method of dispute resolution • A consensual dispute resolution process • To resolve their commercial or trade related disputes at venue selected by the parties. • Without recourse to court of law • By reference to a neutral third party for its determination chosen by the parties themselves • With a binding end result which is internationally enforceable • Avail interim reliefs if required and Confidentiality in the process. Contrast with litigation • A Private form of dispute settlement • Arbitration offers a quicker, cheaper, and more streamlined procedure than litigation. • Parties choose arbitration as the method of dispute resolution • Agreement to arbitrate • Limited right of appeal • The "internationalist" quality of the arbitral tribunal that makes arbitration attractive -- with party-nominated arbitrators often chosen from the parties' respective countries, and the chairperson from yet a third country
- 3. Contrast Arb itratio n Mediation/Conciliation 1. Private Adjudication 2. Totally binding 3. Adjudicatory 4. Has power to grant interim-measures 5. Awards and agreements are enforceable internationally 1. Facilitative 2. Non-binding unless agreement is reached between parties 3. Facilitative/Evaluative 4. No 5. No History of Arbitrations • Popular process of dispute resolution between commercial and trader groups from ancient time. • Primary reason- Limiting the intervention of court and external sanctions • Initially no legal frame work • Peer-group pressure among the trader groups and communities as the main force which resulted in obligating the parties to abide by the decision of the arbitrations tribunals. Types of Arbitration Institutional Arbitration: Clause- “All disputes arising in connection with the present contract shall be finally settled under the rules of ICC” Advantages • Degree of permanency • Modern rules of arbitration • High quality technical support facility • Better scrutiny of awards Disadvantages • Cost is higher (Cost is determined on the ad-volerem of the amount involved in the claim) • Time problems with the respondent (As there is a fixed period on the respondent to submit his response to the issues raised by the party initiating arbitration). • Lack of greater flexibility • Process is extremely technical and involves higher time for its resolution. Ad-Hoc Arbitration- Clause- “ All dispute or differences arising out of or in connection with this agreement shall be referred to and determined by arbitration”. Advantages – Parties agree there own rules – Greater flexibility offered – Usually less costly and less technical in comparison to institutional arbitration
- 4. – The Adoption of UNCITRAL RULES OF ARBITRATION provides modern rules. Disadvantages – Depends on co-operation and effectiveness of parties. – Grater chance of existence of factual errors in the award. Party Autonomy in Arbitration (1) What set of rules will apply to the arbitration (2) What procedural law will apply to the arbitration (3) What substantive law will apply to the dispute being arbitrated Both the proceedings and, to a certain extent, the results, are determined by these three fundamental decisions. Objective of A & C Act 1996 (a) To comprehensively cover international commercial arbitration and conciliation as also domestic arbitration and conciliation; (b) To minimize the supervisory role of courts in the arbitral process; (c) To provide that every final arbitral award is enforced in the same manner as if it was a decree of court (d) To ensure that Indian law is harmonized with the international legal framework DAY 2 What is an Domestic & International Arbitration? The Arbitration and Conciliation Act, 1996 (i) An individual who is a national of, or habitually resident in, any country other than India; or (ii) A body corporate which is in corporate in any on n try other than India; or (iii) A company or an association or a body of individuals whose central management and control is exercised in any country other than India; or (iv). The Government of a foreign country What is a Commercial subject? Commercial- Matters arising from all relationship of a commercial nature whether contractual or of non-contractual nature UNCITRAL Model Law states that The term “commercial” should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services;
- 5. distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road. ARBITRALITY Not every type of disputes can be submitted to arbitration. The international conventions and domestic statues require that certain matter of types of disputes cannot be subject matter of arbitration. This subject matters or disputes are considered as no arbitrable subjects and the principle is known as ‘arbitrability’. The decision relating to what is not arbitrable in particular jurisdiction lies with the state and its domestic court. Arbitrability in essence, is a matter of national public policy. As public policy can differ from one country to another, the arbitrability of a particular dispute may vary considerably from jurisdiction to jurisdiction. Some traditionally non-arbitrable subjects • Criminal disputes/Fraud • Disputes between the patent or trademark applicant and the granting office. • Anti-trust or anti-competition claims • Matrimonial dispute • Insolvency disputes • Consumer Disputes • What is an Arbitration Agreement? Arbitration primarily being a contractual process requires the free consent of the parties to arbitrate. The arbitration agreement is the foundation stone on which the entire arbitration process consolidates. Therefore requirement of a valid arbitration agreement is a mandatory requirement in all national and international law governing arbitration. Functions of an arbitration agreement 1. It shows that the parties have consented to resolve the disputes by arbitration 2. Once parties have express their consent to arbitrate they cannot unilaterally withdraw from arbitration 3. Agreement establishes the jurisdiction of the tribunal. 4. Agreement to arbitrate is an universally enforceable agreement [ Art II (3) of NYC and Art 8 UML] Valid Legal Requirements for Arbitration Agreement 1. Agreement in writing 2. Dispute arises in respect to defined legal relationship, whether contractual or not 3. Deals with existing or future disputes 4. Subject matter is capable of settlement by arbitration An arbitration agreement in writing consists of four aspects (1) In a contract containing an arbitration clause signed by the parties, (2) In a contract contained in exchange of letters, telegrams telex, telegrams or other means of telecommunication. (3) 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.
- 6. (4) Incorporation by reference to another contract PROBLEMS: • A contract containing an arbitration clause is formed on the basis of a text proposed by one party, which is not explicitly accepted in writing by the other party, but that latter party refers in writing to the contract in subsequent correspondence, invoice or letter of credit by mentioning, for example, its date or contract number. Q. Whether there is a binding arbitration agreement ? • A bill of lading contains an arbitration clause that is not signed by the shipper or the subsequent holder. Q. Whether there is a binding arbitration agreement ? • Arbitration is private process with public consequence. • An introduction to UNCITRAL Model law on International Commercial Arbitration • Pillars of UNCITRAL Model law on International Commercial Arbitration Party autonomy in arbitration Equal treatment of parties in arbitration Minimal Court Intervention Waiver of rights Sec-8 Power to refer parties to arbitration where there is an arbitration agreement. (1) A judicial authority before which an action is brought in a matter, which is the subject of an arbitration agreement, shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitrat award made. Nature of court intervention to enforce foreign arbitration agreement? “a challenge to the arbitration agreement under Section 45 on the ground that it is “null and void, inoperative or incapable of being performed” is to be determined on a prima facie basis.” Interim Measures In arbitration, due to the lapse of time between commencement of arbitral proceedings and issuance of the final award, interim measures often constitute a key tool to prevent irreparable and non-compensatory harm to one party.
- 7. Nature of Interim Measures An interim measure is any temporary measure, whether in the form of an award or in another form, by which, at any time prior to the issuance of the award by which the dispute is finally decided. Difference with Section 9 application • Maintainable even before the commencement of proceedings • Sec 17 would operate only during the existence of the arbitral tribunal and it being functional CONDITIONS FOR GRANTING INTERIM MEASURES Gujarat Bottling Co. Ltd. vs. Coca Cola Company and Others, 1995(5) SCC 545 The object of the interlocutory injunction is to protect the plaintiff against a. injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial.(Irreparable injury) b. The need for such protection has, however, to be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against another and determine where the “balance of convenience‟ lies." Type of interim measures 1. Maintain or restore the status quo pending determination of the dispute 2. Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself 3. Provide a means of preserving assets out of which a subsequent award may be satisfied 4. Preserve evidence that may be relevant and material to the resolution of the dispute. Recourse An appeal shall lie under Section 37 from an order 1. Court • Granting or refusing to grant any measure under section 9 2. Arbitral Tribunal • Granting or refusing to grant an interim measure under section 17 Composition of arbitral tribunal Section 10 gives freedom to the parties to a. determine the number of arbitrators b. but imposes a restriction that it shall not be an even number. Section 11 is ’Appointment of arbitrators’ • A person of any nationality may be an arbitrator • Parties can agree on a procedure for appointing • Parties can appointment of an arbitrator • Each party could appoint one arbitrator, and the two arbitrators so appointed, could appoint the third arbitrator, who would act as the presiding arbitrator.
- 8. Appointment • Parties have power to select the arbitrator, its qualification and procedure. [Sec 10 and 11 of A&C Act 1996] • Power of Court to appointment arbitrator [Sec 11 (5) & (6) A&C Act 1996] • Nature of the power exercised by Chief Justice or his representative during appointment of an arbitrator - Judicial Power of Chief Justice • Where either the party or parties had failed to • nominate their arbitrator • two nominated arbitrators had failed to agree on the presiding arbitrator Duty of Independence and Impartiality of an Arbitrator Duty to disclose any bias When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. Grounds for challenge Circumstances exist that give rise to justifiable doubts as to his independence or impartiality He does not possess the qualifications agreed to by the parties What Is Bias • A predisposition to decide for or against one party, without proper regard to the true merits of the dispute is bias. • Reasonable apprehension of bias in the mind of a reasonable man can be a ground for removal of the arbitrator. • There must be reasonable apprehension of that predisposition. The reasonable apprehension must be based on cogent materials. Disqualification 1. The relationship of the arbitrator to one of the parties was unknown to the other party 2. The arbitrator has performed as a lawyer, legal officer or legal consultant for any party in the past. 3. The arbitrator has been an adjudicator in any matter before him in the capacity of a judge 4. Fraudulent collusion 5. Arbitrator was indebted to one of the parties 6. Arbitrator has rendered some legal service to any of the parties free of charge in the past The mandate of an arbitrator shall be terminated if:-
- 9. Becomes de jure or de facto unable to perform his functions Fails to act without undue delay He withdraws from his office By agreement parties decide to the termination of his mandate Arbitration & Conciliation Act Sec 16- Competence of arbitral tribunal to rule on its jurisdictional- The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose, - (a) An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract (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 Domestic Arbitration Section 31 & 33 of the Arbitration Act, 1940 No power of arbitrators to decide its jurisdiction. International Commercial Arbitration Ordinarily as a rule, an arbitrator has no authority to clothe himself with power to decide the question of his own jurisdiction unless parties, expressly conferred such a power on him. Autonomy The autonomy of the arbitration agreement is understood by arbitral tribunals and courts to mean, above all, separability of the arbitral clause from the main agreement. To speak of autonomy is to consider the arbitration clause as separate from the main contract. Manner of challenging jurisdiction A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence A plea that the arbitral tribunal is exceeding the scope of its authority shall be raise as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. What is the procedure that the arbitrators need to follow Chapter V of Part-I - Conduct of arbitral proceedings. Section 18 mandates that parties to the arbitral proceedings shall be treated with equality and each party shall be given full opportunity to present his case. Section 19 specifically provides that arbitral tribunal is not bound by the Code of Civil Procedure 1908 or the Indian Evidence Act 1872 and parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. Failing any agreement between the parties subject to other provisions of Part-I, the arbitral tribunal is to conduct the proceedings in the manner it considers appropriate. This power includes the power to determine the admissibility, relevance, the materiality and weight of any evidence. Sections 20, 21 and 22
- 10. deals with place of arbitration, commencement of arbitral proceedings and language respectively. Thereafter, Section 23, 24 and 25 deal with statements of claim and defence, hearings and written proceedings and procedure to be followed in case of default of a party. Chapter VI - Making of arbitral award and termination of proceedings. Relevant sections which require consideration are Section 28 and 31. Complex system of applicable laws in ICA Law governing the existence and proceedings of an arbitration Law governing the substantive issues in dispute Law governing recognition and enforcement of an arbitration agreement or an award Law governing the arbitration agreement and the performance of that agreement ARBITRAL AWRAD Meaning • An instrument embodying a decision of an arbitrator or arbitrators as regards matters referred to him. • Settlement agreement under the conciliation process is not an award Statutory Definition “ Arbitral awards includes an interim award” VALID AWARD To be valid an award must comprise a decision by the tribunal on the matters referred with which it deals. An award must also be final, in the sense of being a complete decision without leaving matters to be dealt with subsequently or by a third party, and it must be certain. Kinds of award • Domestic award (Arbitral award made under Part-I) [Bhatia International vs. Bulk Trading (AIR 2002 SC 1432) Part-I extends to arbitration taking place outside the territory of India] • Foreign Award Classification of awards 1. Final award 2. Interim award 3. Consent award 4. Additional Award FORMS AND CONTENT OF AWARD 1. Written form and signed 2. Date and place 3. Reasons Exception The parties have agreed that no reasons are to be given, or The award is an arbitral award on a-reed terms under section 30. 1. Delivery of award 2. Stamp duty
- 11. 3. Awarding interest and period 4. Costs Fees and expenses of arbitrators and witnesses Legal fees Administration fees Expenses incurred in connection with arbitral proceedings Question of presumption in favour of an award 5. A Court shouldapproach anawardwith a desire to support it,if that is reasonably possible, rather than to destroy it by calling it illegal; 6. Unless the reference to arbitration specifically so requires, the arbitrator is not bound to deal with each claim or matter separately, but can deliver a consolidatedaward. The legal positionis clear that unless so specificallyrequired, an award neednot formally express the decision of the arbitrator on each matter of difference; 7. unless the contrary appears the Court will presume that the award disposes of finally all the mattes in difference; and 8. where an award is made ‘de praemissis’ (that is, of and concerning all matters in dispute referred to the arbitrator), the presumptionis that the arbitrator intended todispose of finallyall the matters in difference; andhis awardwill be heldfinal, if by any intendment it can be made so. GROUNDS FOR SETTING ASIDE AN AWARD An arbitral award may be set aside by the court only if Incapacity Invalid arbitration agreement With out proper notice Exceeding the scope of submission to arbitration Composition of the arbitral tribunal Arbitrability Public Policy Fundamental policy of Indian Law Interest of India Justice and morality Patently illegal [ ONGC vs. SAW Pipes Ltd. ( AIR 2003 SC 3041)] Procedure for setting aside An application for setting aside an award be made before a competent court having jurisdiction to hear such an application Made before three months elapsed from the date on which the party making that application had received the arbitral award The phrase 'Public Policy of India' is not defined under the Act. Hence, the said term is required to be given meaning in context and also considering the purpose of the section and scheme of the Act. It has been repeatedly stated by various authorities that the expression 'public policy' does not admit of precise definition and may vary from generation to generation and from time to time. Hence, the concept 'public policy' is considered to be vague, susceptible to narrow or wider meaning depending upon the context in which it is used.
- 12. PATENTLY ILLEGAL ORDER The award which is, on the face of its, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term 'public policy' in Renusagar's case, it is required to be held that the award could be set aside if it is patently illegal. Result would be - award could be set aside if it is contrary to: fundamental policy of Indian law; or the interest of India; or justice or morality; or in addition, if it is patently illegal. The nature of illegality- Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void. FINALITY Arbitral award shall be final and binding on the parties and persons, claiming under them respectively. Enforcement Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused the award shall be enforced under the Code of Civil Procedure 1908 (5 of 1908) in the same manner as if it were a decree of the court. FOREIGN AWARD 1. It means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not. 2. Considered as commercial under the law in force in India. 3. Award must have been made in pursuance of an arbitration agreement in writing. 4. The award must be made in one of the reciprocating territories declared by the Central govt. by notification in Official Gazette. New York Convention Award Geneva convention Award Grounds for refusing enforcement of a foreign award under NYC (1) Enforcement of a foreign award may be refused, at the request of the party (a) The parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or (b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
- 13. (c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) The award has not yet become binding on the parties, or has beenset aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. (2) Enforcement of an arbitral award may also be refused if the court findsthat- (a) The subject-matter of the difference is not capable of settlement by arbitration under the law of India; or (b) The enforcement of the award would be contrary to the public policy of India. NEGOTIATION Negotiation is an interactive communicative process that potentially takes place whenever you want something from some one else or they want something from you; Negotiation is achieving what you want by convincing the person from whom you want that. Elements Of Negotiation • Interests : Your interests and other interests in Negotiation. Interest is different from position. Interests may be classified into three categories: (i) Absolutely essential – Must be achieved. (ii) Important – It is important. May be obtained in different forms : there has to be flexibility; Need not break the deal for not getting the way you want; (iii) Desirable –This is generally built as a buffer; May be given up to get important or absolutely essential things. (iv) Options – There are many ways of satisfying interests. Options are possible solutions to the problem. What options will satisfy your interests. (v) Standards & People (vi) Alternatives – If no agreement is reached in Negotiation, what alternatives you have? If the options coming out in the Negotiation are not acceptable, what is the alternative to the problem? (vii) Legitimacy – When you put forth your option, what supports that? The proposals and counter proposals are to be properly supported. You will be on a firm footing. (viii) Communications – Negotiation takes place through communications. Verbal or Non- verbal – “body language”, Skill of listening. Even if Negotiations fail, communication lines could be kept alive. (ix) Relationship – Separate problems from the relationship. No emotions. Separate people from problem. Easier to negotiate when relationship is good. Communications lines should be kept alive. Positional Negotiation endangers ongoing relationship. (x) Commitment – Ensure that the agreement is legally enforceable. What is mediation? It is negotiation carried out with the assistance of a third party. The mediator, in contrast to the arbitrator o Main characteristics
- 14. Negotiation in presence of a third neutral Facilitative and not adjudicatory NOR BINDING Mediation saved me precious time and energy Mediation process was confidential, the procedure was simple and the atmosphere was informal Mediation restored my broken relationships and focused on improving the future, not on dissecting the past Mediation showed me the strength and weaknesses of my case which helped me find realistic solution Settlement of disputes outside the Court (seC 89 cpc) (1)Where it appears to the court that there exist elements of a settlement which may be acceptable to the partie a) arbitration; b) conciliation; c) judicial settlement including settlement through Lok Adalat; d) mediation MEDIATION • Mediation is an informal process where a party selected neutral assists disputing parties in their negotiation. • Mediation is a process in which a third party facilitates and coordinates the negotiation of disputing parties. • Mediation is trying to get two people to do that which they least want to do – talk to each other. • Mediation process is a flexible one. There is a structure to the mediation process, it is not rigid but rather fluid in nature. • Mediation has been used since thousands of years as a primary means of conflict resolution. • The Indian history reflects this. • In China and Japan Mediation and Conciliation is used as primary means of dispute resolution. CONCILIATION It means the process by which a conciliator who is appointed by parties or by the Court, as the case may be, conciliates the disputes between the parties to the suit by the application of the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) in so far as they relate to conciliation, and in particular, in exercise of his powers under sections 67 and 73 of that Act, by making proposals for a settlement of the dispute and by formulating or reformulating the terms of a possible settlement; and has a greater role than a mediator.
- 15. Distinction Conciliation 1. Governed by A&C Act 1996 2. Evaluative 3. Role of conciliator is more active 4. Conciliator has power to propose settlement 5. Settlement agreement when signed by the parties and conciliator becomes an award in agreed terms Mediation 1. No Statutory recognition 2. Facilitative 3. Role mediator is passive 4. Mediator cannot propose settlement 5. The decision of a mediator is not an award. STAGES IN MEDIATION • Convening Process – preliminary arrangements. • Mediators introduction and laying down of ground rules to be followed in the Mediation process. • Statements by Negotiators – problem – venting of emotions. • Re-statement of the problem by the Mediator briefly • Collection of additional information, if necessary • Setting the Agenda for Mediation – similar to issues – how to arrange? • Facilitation of Negotiation - process • Mediator generating alternatives – process • Private meetings, if necessary – process • Persuasion meetings, if necessary – process • Persuasion to reach a settlement – process • Agreement – Realistic – Implementable • Summing up the settlement for clarity also process of implementation • Reduce the settlement to writing REMEMBER WHILE MEDIATING • Neutrality • Confidentiality • Separate people from the problem • Motivating Negotiators • Counseling • Provide scope of venting of emotions • Ethics – a) To bring out an amicable settlement? b) To bring out fair and amicable settlement? Who is a conciliator Conciliator is the neutral third party who assists the disputing parties in mutually reaching an agreed settlement Appointment of conciliator • In conciliation proceedings with one conciliator, the parties may agree on the name of a sole conciliator; • In conciliation proceedings with two conciliators, each party may appoint one conciliator;
- 16. • In conciliation proceedings with three conciliators, each party may appoint one conciliator and the parties may agree on the name of the third conciliator who shall act as the presiding conciliator. • Parties may enlist the assistance of a suitable institution or person in connection with the appointment of conciliators • What to do if there is exploitation in the process of reading a settlement? • Different shades of Negotiators. • Keep reminding the negotiators about the ground rules. • Mediator as face saver. • Resist the temptation to suggest via media – But the margin of difference is not much – may think of suggesting via media – Give reasons for exercising this. • Problem/issue and interests underlying the problem/issue. There is difference between issue and interest. CONCILIATION PROCEEDINGS • Commencement of conciliation Written invitation by one party Written acceptance by other party • Appointment of conciliator • Submission of statements by parties • Exchange of statements and communication between conciliator and the parties • Suggestion for settlement Who can appointment a mediator Parties are free to agree on the name of the mediator or mediators for mediating between them. Who can be appointed as mediators Any persons other than a person who has been adjudged as insolvent or persons against whom criminal charges involving moral turpitude are framed by a criminal court persons who have been convicted by a criminal court for any offence involving moral turpitude person against whom disciplinary proceedings have been initiated by the appropriate disciplinary authority any person who is interested or connected with the subject-matter of dispute any legal practitioner who has or is appearing for any of the parties in the dispute Role of mediator The mediator shall attempt to facilitate voluntary resolution of the dispute by the parties, and communicate the view of each party to the other, assist them in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise and generating options in an attempt to solve the dispute, emphasizing that it is the responsibility of the parties to take decision which effect them; he shall not impose any terms of settlement on the parties. Confidentiality of mediation When a mediator receives factual information concerning the dispute from any party, it shall be confidential and the mediator shall not be compelled to divulge information regarding those documents.
- 17. Who can be appointed as conciliators Any persons other than a person who has been adjudged as insolvent or persons against whom criminal charges involving moral turpitude are framed by a criminal court persons who have been convicted by a criminal court for any offence involving moral turpitude person against whom disciplinary proceedings have been initiated by the appropriate disciplinary authority any person who is interested or connected with the subject-matter of dispute any legal practitioner who has or is appearing for any of the parties in the dispute ROLE OF CONCILIATOR Independence and impartiality Maintaining confidentiality of all communications between the parties and the conciliator Give consideration to the rights and obligations of the parties, usages of the trade concerned and the circumstances surrounding the dispute Conduct of proceedings in an objective and fair manner Proposal of settlement Formulation of the settlement agreement as agreed by the parties to conciliation Authentication of the settlement agreement EHICS TO BE FOLLOWED BY MEDIATOR Follow and observe these Rules strictly and with due diligence; Not carry on any activity or conduct which could reasonably be considered as conduct unbecoming of a mediator; Uphold the integrity and fairness of the mediation process; Ensure that the parties involved in the mediation and fairly informed and have an adequate understanding of the procedural aspects of the process; Satisfy himself/herself that he/she is qualified to undertake and complete the assignment in a professional manner; Disclose any interest or relationship likely to affect impartiality or which might seek an appearance of partiality or bias; Avoid, while communicating with the parties, any impropriety or appearance of impropriety; Be faithful to the relationship of trust and confidentiality imposed in the office of mediator; Conduct all proceedings related to the resolutions of a dispute, in accordance with the applicable law; Recognize that mediation is based on principles of self-determination by the parties and that mediation process relies upon the ability of parties to reach a voluntary, undisclosed agreement; Maintain the reasonable expectations of the parties as to confidentiality; Refrain from promises or guarantees of results SETTLEMENT AGREEMENT 1. When it appears to the conciliator that there exist elements of a settlement, which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit them to the parties for their observations. 2. After receiving the observations of the parties, the conciliator may reformulate the terms of a possible settlement in the light of such observations. 3. If the parties reach agreement on a settlement of the dispute, they may draw up and sign a written settlement agreement. 4. When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively.
- 18. FINALITY The settlement agreement shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30. Termination of conciliation proceedings 1. By the signing of the settlement agreement by the parties 2. By a written declaration of the conciliator 3. By a written declaration of the parties addressed to the conciliator )