Indian legal system is known for its delays and disparities. It is a known fact that our courts are over-burdened with the pending cases and it is almost impossible to provide quick and efficient relief to the aggrieved parties. The A & C act covers an ADR to address this issue especially when it comes to commercial disputes
The alternative Dispute Resolution (ADR) mechanism is used all over the world which is more effective, faster and less expensive. Under ADR mechanism, there are basically four methods :-— (a) Negotiation (b) Mediation (c) Conciliation (d) Arbitration While the first two methods are not recognised by law, the methods of conciliation and arbitration are quasi-judicial methods to resolve a dispute with minimum court intervention. The same is now recognised by the Arbitration and Conciliation Act, 1996 (Act 26 of 1996). The courts have always assisted in proper conduct of the arbitration proceedings and enforcement of arbitration awards.
Quick decision of any commercial dispute is necessary for smooth functioning of business and industry. In todays world of shrinking boundaries, free trade and international commerce have become global necessities. lncreasing competitiveness often leads to conflicts between entrepreneurs, resulting in commercial disputes. Arbitration is chosen as a means of effective consensual and speedy dispute resolution. The growing strength and role of India and the Indian industry in the Asian and global economy has seen the country&apos;s emergence as a force to be contended with. Increasing foreign direct investment and other forms of collaboration by foreign companies have witnessed disputes between Indian and foreign parties. This has raised the need for an act that will address commercial disputes quickly and efficiently
If a party approaches court despite the arbitration agreement, the other party can raise objection. However, such objection must be raised before submitting his first statement on the substance of dispute. Such objection must be accompanied by the original arbitration agreement or its certified copy. On such application the judicial authority shall refer the parties to arbitration. Since the word used is “shall”, it is mandatory for judicial authority to refer the matter to arbitration. [section 8]. However, once first statement to court is already made by the opposite party, the matter has to continue in the court. Once an application is made by other party for referring the matter to arbitration, the arbitrator can continue with arbitration and even make an arbitral award.
ne of the major defects of earlier arbitration law was that the party could access court almost at every stage of arbitration - right from appointment of arbitrator to implementation of final award. Thus, the defending party could approach court at various stages and stall the proceedings. Now, approach to court has been drastically curtailed. In some cases, if an objection is raised by the party, the decision on that objection can be given by Arbitral Tribunal itself. After the decision, the arbitration proceedings are continued and the aggrieved party can approach Court only after Arbitral Award is made. Appeal to court is now only on restricted grounds. Of course, Tribunal cannot be given unlimited and uncontrolled powers and supervision of Courts cannot be totally eliminated. ARBITRATION ACT HAS OVER-RIDING EFFECT - Section 5 of Act clarifies that notwithstanding anything contained in any other law for the time being in force, in matters governed by the Act, the judicial authority can intervene only as provided in this Act and not under any other Act..
Conciliation - Part III of the Act makes provision for conciliation proceedings. In conciliation proceedings, there is no agreement for arbitration. In fact, conciliation can be done even if there is arbitration agreement. The conciliator only brings parties together and tries to solve the dispute using his good offices. The conciliator has no authority to give any award. He only helps parties in arriving at a mutually accepted settlement. After such agreement they may draw and sign a written settlement agreement. It will be signed by the conciliator. However after the settlement agreement is signed by both the parties and the conciliator, it has the same status and effect as if it is an arbitral award. Conciliation is the amicable settlement of disputes between the parties, with the help of a conciliator.
OFFER FOR CONCILIATION - The conciliation proceedings can start when one of the parties makes a written request to other to conciliate, briefly identifying the dispute. The conciliation can start only if other party accepts in writing the invitation to conciliate. Unless there is written acceptance, conciliation cannot commence. If the other party does not reply within 30 days, the offer for conciliation can be treated as rejected. [section 62]
All matters of a civil nature or breach of contract or disputes of movable or immovable property can be referred to conciliation
Matters of criminal nature, illegal transactions, matrimonial matters like divorce suit etc. cannot be referred to conciliation.
Power of High Court to make rules.- The High court may make rules consistent with this Act as to all proceedings before the court under this Act. 83.Removal of difficulties.- (1) If any difficulty arises in giving effect to the provisions of this Act, the central Government may, by order published in the Official Gazette, make such provisions, not inconsistent with the provisions of this Act as appear to it to be necessary or expedient for removing the difficulty: Provided that no such order shall be after the expiry of a period of two years from the date of commencement of this Act. (2) Every order made under this section shall, as soon as may be after it is made, be laid before each Houses of Parliament. 84.Power to make rules.- (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act. (2) Every rule made by the Central Government under this Act shall be laid, as soon as may be, after it is made before each House of Parliament while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making may modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule. 85.Repeal and savings.- (1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed. (2) Notwithstanding such repeal,----- (a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force; (b) all rules made and notifications published, under the said enactments shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act, 86.Repeal of Ordinance 27 of 1996 and saving.- (1) The Arbitration and Conciliation (Third) Ordinance, 1996 (Ord.27 of 1996) is hereby repealed.done or any action taken in pursuance of any provision of the said Ordinance shall be deemed to have been made, done or taken under the corresponding provisions of this Act.
· On 25.07.2005, Satyam Computers filed a request for arbitration with the London Court of International Arbitration as mentioned in Shareholders Agreement. · London Court of International Arbitration passed an award directing the VGE to transfer the shares to Satyam Computers. · Satyam Computers filed a petition to recognize and enforce the award before the United States District Court, Eastern District Court of Michigan (US Court). · The VGE entered appearance to defend this proceeding before the US Court by filing a cross petition. In this cross petition, it objected to the enforcement of the Award which ordered transfer of shares which was in violation of Indian Laws and Regulations specifically the Foreign Exchange Management Act, 1999 (FEMA) and its notifications. · The VGE filed a suit before the Ist Additional Chief Judge, City Civil Court, Secunderabad on 8.4.2006 seeking declaration to set aside the award and permanent injunction on the transfer of shares under the Award. · On 15.6.2006, the District Court passed an interim order of injunction, restraining Satyam Computers from seeking or effecting the transfer of shares either under the terms of the Award or otherwise. · Challenging the said order, Satyam Computers filed an appeal before the High Court of Andhra Pradesh. The High Court admitted Satyam Computers appeal and directed interim suspension of the order of the District Court but made it clear that Satyam Computers would not affect the transfer of shares until further orders. · Challenging the said order, the VGE filed an appeal before the High Court. On 27.2.2007, the High Court dismissed the appeal holding that the award cannot be challenged even if it is against the public policy and in contravention of statutory provisions. Against the said order, the VGE preferred the above appeal byway of special leave petition.
Arbitration and conciliation agreement
Arbitration & Conciliation Act, 1996
An Act covering:
international commercial arbitration
enforcement of foreign arbitral awards
Modern concept of harmonious working partnership between
the Court and Arbitration.
Has far reaching effect on reducing court litigation
Gives more importance to Arbitration and Conciliation by
adding speed and economy to settlement of disputes.
Alternative Dispute Resolution
Mechanism used across the world - effective, faster and
4 methods of ADR:
Negotiation – unrecognized
Mediation – unrecognized
Conciliation – recognized
Arbitration - recognized
Recognized by the Arbitration and Conciliation Act, 1996
Necessity of the Act
Shrinking Boundaries, Free trade & International
Commerce have become global necessities.
Competition often leads to conflicts between
entrepreneurs resulting in commercial disputes.
Growing strength and role of India in the global economy
Increasing FDI and other forms of collaboration
-increasing disputes between Indian and foreign parties
Quick redressal to commercial disputes through private
Settlement of dispute in an expeditious, convenient,
inexpensive and private manner so that they do not
become the subject of future litigation between the
Acts addressing ADR in India
The law on arbitration in India was substantially
contained in three enactments, namely:
The Arbitration (Protocol & Convention) Act, 1937
The Arbitration Act, 1940
The Foreign Awards (Recognition and Enforcement)
The Arbitration & Conciliation Act,
An Act to consolidate and amend the law relating to
domestic arbitration, international commercial arbitration
and enforcement of foreign arbitral awards as also to
define the law relating to conciliation and for matters
connected therewith or incidental thereto.
"Arbitration is the reference of dispute between not less
than two parties, for determination, after hearing both
sides in a judicial manner, by a person or persons other
than a court of competent jurisdiction.”
Law Based on UNCITRAL Model Law
The present Act is based on model law drafted by
United Nations Commission on International Trade
Laws (UNCITRAL), both on domestic arbitration as
well as international commercial arbitration, to
provide uniformity and certainty to both categories of
WHAT CAN BE REFERRED TO ARBITRATION
All disputes of a civil nature or quasi-civil nature which can be
decided by a civil court can be referred to arbitration:
Relating to property
Right to hold an office
Compensation for non-fulfillment of a clause in a
Disputes in a partnership
Disputes excluded from the Arbitration Act
The law has given jurisdiction to determine certain matters to
specified tribunal only; these cannot be referred to arbitration:
Matters involving questions about validity of a will.
Relating to appointment of a guardian.
Pertaining to criminal proceedings
Relating to Charitable Trusts
Winding up of a company
Matters of divorce or restitution of conjugal rights
Disputes arising from an illegal contract
Insolvency matters, such as adjudication of a person as an insolvent.
Matters falling within the purview of the Competition Act.
Scheme of the Act
The Act is divided in to the following parts
(a) Part I - Domestic arbitration.
(b) Part II - Enforcement of foreign awards.
(c) Part III - Conciliation procedures.
(d) Part IV - Supplementary provisions.
Arbitration Agreement - an agreement by the parties to
submit to arbitration all or certain disputes which have
arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not.
Power to refer parties to arbitration when there is an
Interim Measures by Court
appointment of a guardian for a minor or person of
unsound mind for the purposes of arbitral proceedings
protection in respect of preservation, interim custody or
sale of any goods which are the subject-matter of the
securing the amount in dispute
the detention, preservation or inspection of any property
or thing which is the subject-matter of the dispute
interim injunction or the appointment of a receiver;
Any other interim measure of protection as may appear to
the Court to be just and convenient
Appointment of Arbitrator
Any person can be appointed as an arbitrator.
Generally impartial and independent persons –
C A’s, engineers, retired judges, advocates and other
professionals are preferred.
Parties are free to determine the number of arbitrators
Number shall not be an even number.
The arbitrator shall disclose in writing to the parties
anything that may give rise to justifiable doubts about his
independence or impartiality.
Appointment of Arbitrator
If they are unable to agree-
Each party will appoint one arbitrator and the two
appointed arbitrators will appoint the third arbitrator who
will act as a presiding arbitrator.
If not appointed within 30 days, the party can request
Chief Justice of High Court to appoint an arbitrator.
In case of international commercial dispute, the
application for appointment of arbitrator has to be made
to Chief Justice of India.
Termination of Arbitrator
Appointment of Arbitrator can be challenged only if
Circumstances exist that give rise to justifiable doubts as
to his independence or impartiality
He does not possess the qualifications agreed to by the
Termination of Arbitrator
The mandate of an arbitrator shall terminate if---
he becomes de jure or de facto unable to perform his functions or
for other reasons fails to act without undue delay; and
he withdraws from his office or the parties agree to the
termination of his mandate.
where he withdraws from office for any reason; or by or pursuant
to agreement of the parties.
Where the mandate of an arbitrator terminates, a
substitute arbitrator shall be appointed according to the
rules that were applicable to the appointment of the
arbitrator being replaced.
Conduct of Arbitral Proceedings
The Arbitral Tribunal is not bound by Code of Civil Procedure,
1908 or Indian Evidence Act, 1872.
The parties to arbitration are free to agree on the procedure to
be followed by the Arbitral Tribunal.
Law of limitation (1963) applicable
Flexibility in respect of procedure, place & language.
Submission of statement of claim & defense maybe amended/
supplemented at any time
Hearings & Written Proceedings – at the discretion of the
Can be oral at the request of either party
Settlements during Arbitration
The decision of Arbitral Tribunal will be by majority
The arbitral award shall be in writing and signed by the
members of the tribunal.
States the reasons for the award unless the parties have agreed
that no reason for the award is to be given.
The award should be dated and place where it is made should
Copy of award given to each party.
Tribunal can make interim award also.
Arbitral Award - Appeal
An arbitral award may be set aside by the Court only if;
The party furnishes proof of some incapacity
the arbitration agreement is not valid under the law to which the
parties have subjected it
the party was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise unable to
present his case; or
the arbitral award deals with a dispute not contemplated by or not
falling within the terms of the submission to arbitration, or it
contains decisions on matter beyond the scope of the submission
the composition of the arbitral tribunal or the arbitral procedure
was not in accordance with the agreement of the parties
the arbitral award is in conflict with the public policy of India.
Cost of Arbitration
Fees and expenses of arbitrators and witnesses, legal fees
and expenses, administration fees of the institution
supervising the arbitration and other expenses.
Tribunal can decide the cost and share of each party.
If parties refuse to pay the costs, the Arbitral Tribunal
may refuse to deliver its award; thus any party can
The Court will ask for deposit from the parties and on
such deposit, the award will be delivered by the Tribunal.
Then Court will decide the costs of arbitration and shall
pay the same to Arbitrators. Balance, if any, will be
refunded to the party.
Intervention by Court
The earlier arbitration law was that the party could access
court almost at any stage of arbitration.
Now, approach to court has been drastically curtailed.
If an objection is raised by the party, the decision on that
objection can be given by Arbitral Tribunal itself & the
arbitration proceedings are continued
The aggrieved party can approach Court only after
Arbitral Award is made.
Appeal to court is now only on restricted grounds.
Tribunal cannot be given unlimited and uncontrolled
powers and supervision of Courts cannot be totally
ARBITRATION ACT HAS OVER-RIDING EFFECT
The act makes provision for conciliation proceedings. In
There is no agreement for arbitration.
Conciliation can be done even if there is arbitration agreement.
The conciliator only brings parties together and tries to solve the
dispute using his good offices.
The conciliator has no authority to give any award.
Helps parties in arriving at a mutually accepted settlement.
In such agreement they may draw and sign a written
settlement agreement. Duly signed by the conciliator
However after the settlement agreement is signed by
both the parties and the conciliator, it has the same
status and effect as if it is an arbitral award.
Conciliation is the amicable settlement of disputes
between the parties, with the help of a conciliator.
Offer for Conciliation
The conciliation proceedings can start when one of the
parties makes a written request to other to conciliate,
briefly identifying the dispute.
The conciliation can start only if other party accepts in
writing the invitation to conciliate.
Unless there is written acceptance, conciliation cannot
commence. If the other party does not reply within 30
days, the offer for conciliation can be treated as rejected
What Can Be Referred To Conciliation
Matters of a –
Breach of contract
Disputes of movable or immovable property
What Cannot Be Referred To Conciliation
Matters of –
Matrimonial matters like divorce suit etc.
The High Court has the power to make rules under this
Removal of difficulties by central Government through
provisions made under the Act
Rules made by Central Government subject to approval by
The present Act overrules the previous Acts
Supreme Court Judgment, Civil appeal under ‘Arbitration
And Conciliation Act’ for setting aside of Foreign Award
1) London Court of
2) United States District
5) High Court of Andhra
3) Cross Petition
Addl. Chief Judge, Civil
It means an arbitration relating to disputes arising
out of legal relationships, whether contractual or not,
considered as commercial under the law in force in
India and where at least one of the parties is---
(i) an individual who is a national of, or habitually
resident in, any country other than India; or
(ii) a body corporate which is incorporated in any
country 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
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Regular Guest Lectures by eminent Company Secretaries.
World class infrastructure.
Group Discussion sessions for Professional students.
Live Trade Exposure.
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Company Secretaries with industry experience.
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District Bar Association
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Annual General Meeting Vardhman Textiles Limited.
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We have associated CA’s , Lawyers , CS.
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The success of the students is inspiring and so is the faith of students in StudEase
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exposure sessions, visit to corporates and lectures by guest faculty with industry
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