Chapter 1 A - Introduction to Arbitration (1).pdf
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El capítulo 1a presenta la noción general de arbitraje y su aplicación en disputas comerciales, explicando su naturaleza como un proceso legalmente vinculante y privado. Se detalla cómo se puede referir una disputa al arbitraje, el proceso de nombramiento del árbitro, y los tipos y formas de arbitraje disponibles, incluyendo las obligaciones de las partes involucradas. El arbitraje busca resolver disputas de manera justa, rápida y eficiente, limitando la intervención judicial.
Chapter 1 A - Introduction to Arbitration (1).pdf
- 1. Chapter 1 A – Introduction to Arbitration 1 Chapter 1 A Introduction to Arbitration Introduction The purpose of this chapter is to introduce you to the general concept of Arbitration andto demonstrate how it can be applied to commercial disputes. Some of the concepts raisedwill be developed in later chapters. Objectives At the end of this chapter, you should appreciate: the nature of arbitration how a dispute can be referred to arbitration how an Arbitrator is appointed the basic forms and types of arbitration the duty of the parties and the arbitral tribunal M.M.T.C .Limited v Sterlite Industries (India) Ltd 1996 (6) SCC 716 :AIR1997 SC 605
- 2. Chapter 1 A – Introduction to Arbitration 2 What is arbitration? Arbitration is a legally enforceable procedure to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense. It is a private andconfidential process between the parties and the arbitrator and the parties are free toagree how their disputes are resolved; the court should not intervene except to assist inthe administration of the process. The award of the arbitrator is enforceable like a court decree (s 36 of the Arbitration and Conciliation Act 1996) and is final and binding. How can a dispute be referred to arbitration? The parties must agree to refer their dispute to arbitration. If the terms of the Arbitration and Conciliation Act 1996 are to apply then, under s 7, their agreement must be writing or recorded so that it is evidenced in writing. This can be done through an existing clause or term in a contract which refer any disputes arising in that existing contract to arbitration or a separate arbitration agreement (s 7). The arbitration clause or term is an agreement which stands alone even if the remainder of the contract fails
- 3. Chapter 1 A – Introduction to Arbitration 3 Certain disputes can be referred on an ‘ad hoc’ basis to arbitration, which means that an agreement is reached between the parties to refer their dispute to arbitration, even after the dispute has arisen. However, it is not possible to refer certain disputes or issues to arbitration as the arbitral tribunal does not have the jurisdiction or power to deal with certain matters, for example, criminal prosecutions (such as murder), family proceedings (children or divorce) or matters involving the state and policies (such as Tax). In general terms, arbitration is most appropriate for contractual disputes involving private individuals or limited companies. In In M.M.T.C. Limited v Sterlite Industries (India) Ltd (1996) an agreement specifying an even number of arbitrators cannot be a ground to render the arbitration agreement invalid under the new Act. If an agreement satisfies the requirement of Section 7 of the new Act it is a valid arbitration agreement. If each of the two parties have appointed their own arbitrators, two appointed arbitrators were required to appoint the third arbitrator to act as the presiding arbitrator, failing which the Chief Justice or any person or institution designated by him would be required to appoint the third arbitrator. At the point at which a contract has an arbitration clause the judicial authority intends to refer the dispute to arbitration (s 8).
- 4. Chapter 1 A – Introduction to Arbitration 4 How is the arbitrator appointed? Anyone who is nominated and agreed by both parties and accepts the appointmentmay be the arbitrator to whom a dispute is referred. The parties are free to agree on the number of arbitrators to form the tribunal and whether there is to be a presiding arbitrator (s 10). The arbitrator has a judicial role and may act inquisitorially as a tribunal and does not act as an expert. He will hear and read evidence properly produced to him but will not undertake investigative work to discover evidence. He will sit on the ‘judicial bench’ and not step down into the adversarial presentation of the case for either party. The arbitrator will be impartial and may not, without proper notice to both parties, use his own expertiseto determine matters. If the parties fail to agree on an individual then they might have agreed a procedure for the appointment of an arbitrator but if not then, under s 11, the default provision will apply and dealt under the following subsections If the appointment procedure in sub-section (3) applies and – 👉 a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
- 5. Chapter 1 A – Introduction to Arbitration 5 👉 the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made uponrequest of a party, by the chief justice or any person or institution designatedby him. Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made,upon request of a party, by the Chief Justice of any person or institution designated byhim. Where, under an appointment procedure agreed upon by the parties – 👉a party fails to act as required under that procedure; or 👉the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or 👉a person, including an institution, fails to perform any function entrusted him or it under that procedure, a party may request the Chief Justice or any person or institution designated by him take the necessary measure, unless the agreement on the appointment procedure provides other means for securing theappointment. A decision on a matter entrusted by sub-section (4) or sub-section (5) or sub section (6) to the Chief Justice or the person or institution designated by him is final.
- 6. Chapter 1 A – Introduction to Arbitration 6 The Chief Justice or the person or institution designated by him, in appointing arbitrator, shall have due regaled to – 👉 any qualifications required of the arbitrator by the agreement of the parties 👉 and other considerations as are likely to secure the appointment of an independent,and impartial arbitrator. In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice of India or the person or institution designated by him may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities. The Chief Justice may make such scheme as he may deem appropriate for dealing with matters entrusted by sub-section (4) or sub-section (5) or sub- section (6) to him. Where more than one request has been made under sub-section (4) or subsection (5)or sub-section (6) to the Chief Justices of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made under the relevant sub-section shall alone be competent to decide on the request. (a) and (b) (a) Where the matters referred to in sub-sections (4), (6), (7), (8) and (10) arise in an international commercial arbitration the reference to "Chief Justice" in those subsections shall be construed as a reference to the "Chief Justice of India."
- 7. Chapter 1 A – Introduction to Arbitration 7 (b) Where the matters referred to in sub-sections (4), (5), (7), (8), and (10) arise in any other arbitration, the reference to "Chief Justice" in those sub-sections shall he construed as a reference to the Chief Justice of the High Court within whose local limits the principal Civil Court referred to in clause (e) of sub- section (1) of section 2 is situate and, where the High Court itself is the Court referred to in that clause, to the Chief justice of that High Court. Presiding Arbitrator: The Presiding Arbitrator of a panel of three arbitrators sits with the other two co -arbitrators, hears the whole case and enjoys the same powers as the other co -arbitrators. It is common practice in Europe to have three arbitrators sitting as the ‘arbitral tribunal’ but in the UK a sole arbitrator is preferred to the arbitral tribunal in order to save costs. InIndia it is always recommended not for even number of arbitrators (s 10 (1)) It is preferable to have an odd number of arbitrators so that a final decision can bereached. One alternative to using presiding arbitrator is for a sole arbitrator to appoint an expert adviser or legal assessor to assist him in his deliberations. This is one of the powers available to the arbitrator, if the parties do not object, and will be covered in a later chapter.
- 8. Chapter 1 A – Introduction to Arbitration 8 Management of arbitration The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense. The parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest. The court should not intervene, except as specifically provided in Part I of the Arbitration and Conciliation Act 1996 (s 5). The arbitrator therefore has a duty to ensure that these general principles are implemented in the management of an arbitration reference and that they are tempered with the ‘law’ or rules of natural justice to allow each party a fair opportunity to present their case. (s 18) The way in which the case is managed is decided by the arbitrator in consultation with the parties and it is at his discretion how matters are taken forward. During the course of the reference, he will issue his decisions as ‘orders for directions’ to the parties which will clearly set out the conduct and timetable required during the progress of the case. It is up to the arbitrator to drive the arbitration process forward and he would be failing in his duty if he allowed delays in the conduct of the reference.
- 9. Chapter 1 A – Introduction to Arbitration 9 An arbitrator may be removed and substituted if he loses impartiality, mental or physical capacity or it is discovered that he does not possess the necessary qualifications (s 15). If a party does notobject and continues to participate in proceedings, he will be prevented from objecting later (s 4). The types of arbitration procedure applied to a particular dispute must ‘match’ its complexity, its importance to the parties and the value of the amounts in issue. This principle is called ‘proportionality’ and means that the arbitrator must take notice of the quantum in dispute before deciding which type of arbitration procedure is appropriate. The arbitrator should not use a sledgehammer to crack a nut. The arbitrator is at liberty to customize the procedure and tailor it to the issues referred to him. Similarly, the parties can apply to the arbitrator at an interlocutoryhearing to deal with any matters that cannot be agreed between them.
- 10. Chapter 1 A – Introduction to Arbitration 10 Types of arbitration The simplest type of arbitration is capable of a fair resolution on a ‘documents- only’ basis and in these situations the arbitrator will never meet with the parties. At the other end of the spectrum there are really complex cases which go througha ‘full oral hearing’ which is an arbitration procedure that is almost the parallel of a court hearing except that the strict rules of evidence. The Civil Procedure Code do notnecessarily apply, although they may provide good guidance for the procedure if the parties choose to adopt them. This extreme example would entail the ordering by the arbitrator of formal submissions from the parties with full disclosure (previously called discovery), which is a very costly exercise. An alternative would be for arbitrator to order statements of case rather than full pleadings and to limit disclosure of documents. Another permutation of an appropriate procedure might be the use of written representations from the parties combined with a short oral hearing. There are many other types of arbitration procedure which are peculiar to particular disputes.
- 11. Chapter 1 A – Introduction to Arbitration 11 Duties of the parties The parties have a duty do all things necessary for the proper and expeditious conduct of the arbitral proceedings. This includes complying without delay with determinations of the tribunal as to procedural or evidential matters and, where appropriate, taking without delay the necessary steps to obtain a decision of the court on interim measures (s 9) There is a further duty implied to the parties who mustplay their particular roles in obtaining a fair resolution of the disputes without unnecessary delay or expense. References usually commence with a preliminary meeting between the arbitrator and the parties (and their representatives). At that meeting the issues which are to be referred to the arbitrator are clarified and narrowed and the administration timetable and procedures and powers are defined. This is the point at which the duties of the parties are explained to them by the arbitrator. Preliminary meetings are not always held if the arbitrator is content that there is another appropriate procedure such as documents-only. Disclaimer "This reading material is sourced from various statutes and web contents. They are meant for academic purpose and not for sale or any commercial purpose. Users are advised not to reproduce or circulate for any commercial purpose"