• Arbitration is QUASI JUDICIAL METHOD of settling disputes of a
CIVIL NATURE . The decision ( award )of the is in the nature of
judgment . E.g. The Indian village Panchayats and Panchas offer
the services of arbitration .
• Definition of arbitration : Under the Indian Arbitration Act (IAA)
of 1940 it has been defined as
• “ Settlement of disputes and differences related to Civil Matters
( e.g. Money or Property or Breach of contract ) between one
party and another in a Quasi Judicial manner, by the decision of
one or more persons called Arbitrators appointed by the
contended parties, without having recourse to a court of law .
• ARBITRATION AGREEMENT OR SUBMISSION TO ARBITRATION : SEC
2(a) of IAA ,1940
• “ A written agreement to submit present or future differences to
arbitration, whether an arbitrator is named there in or not “.
• ESSENTIALS OF A VALID ARBITRATION AGREEMENT :
• 1) There must be an written agreement .
• 2) The agreement must indicate an intension of the parties have the
disputes and differences referred and decided by arbitrator .
• 3) The agreement must be in respect of present or future disputes .
• 4) It is not necessary that an arbitrator should be named in the
arbitration agreement .
• REVOCATION OF ARBITRATION : A dispute once submited to
arbitration cannot be withdrawn and the arbitration agreement
cannot be revoked except under the following circumstances :
• a) When both the parties to the dispute agree between
themselves to withdraw the disputes , or
• b) When the party who wants to revoke the submission of a
dispute to arbitration takes the permission of the court to such
• WHO CAN REFFER DISPUTES OF ARBITRATION :
• 1) Reference by a minor or lunatic .
• 2) Reference by the karta .
• 3) Reference by an agent .
• 4) Reference by a trustee .
• 5)Reference by an official assignee .
• 6) Reference by a partner .
• 7) Reference by executor or administration .
• 8) Reference by an insolvent .
• 9) Reference by an attorney or counsel .
• WHAT MAY BE REFFERED TO ARBITRATION :
• a) Any matters affecting the private rights of the parties, which
can be subject matter of a Civil suit may be referred to arbitration
.E.g. right too hold the office of a pujari in a temple .
• b) All matters of a Civil nature i.e. disputes about property or
money disputes arising out of Breach of contract or Question law .
• c) Matters relating to personal rights between the parties .
• d) Disputes regarding compliment and dignity .
• e) A time_barred claim .
• f) The question whether judgement has been properly obtained or
it is erroneous or void .
• g) Disputes between an insolvent and his creditors can be referred
to arbitration by the official Assignee or Receiver, through the
insolvency proceedings cannot so referred .
• h) Cases which involve both questions of fact and of law.
• WHAT CANNOT BE REFERRED TO ARBITRATION :
• a) Matters of criminal nature are the concern of the community and
must be decided by a court of law .
• b) Disputes relating to matrimonial relations like a suit for divorce
or restitution of conjugal rights .
• c) Lunacy proceedings in the nature of inquisition are a subject
matter only for a court of law .
• d) Testamentary matters relating to the validity of a will or the
issue of a probate of will can be decided only by the probate court
and not by an arbitrator .
• e) Question relating to trusts for public purposes of charitable or
religious nature .
• f) Insolvency matters, i.e. adjudging a person as an insolvent .
• g) Matters relating to the guardianship of a minor or lunatic.
• h) Any execution proceedings .
• MODES OF ARBITRATION : There are three different modes of
submitting a dispute to arbitration :
• A) Arbitration without the intervention of the court .
• B) Arbitration with the intervention of the court when there is no
suit pending .
• C) Arbitration with the intervention of the court where a suit is
• A) ARBITRATION WITHOUT THE INTERVENTION OF THE COURT :
• a) The appointment of arbitrators who may be appointed as an
• b) Appointment of an arbitrator by the parties . The parties may
appoint an arbitrator in the following ways :
• 1) An arbitrator may be named in the arbitration agreement, or
• 2) He may not be named at all .
• 3) It may be agreed that the arbitrator shall be appointed by a third
party who shall be named in the agreement .
• c) Appointment of arbitrator by third party .
• d) Power of a party to appoint a new or sole arbitrator .
• e) Appointment of an arbitrator by court : under sec (8), the court
has the power to appoint an arbitrator or umpire in the following
• * Where the arbitrator or arbitrators have to appointed by the
consent of the parties, but the parties do not after differences have
arisen concur in the appointment .
• * If the appointed arbitrator or umpire neglects or refuses to act or
is incapable of acting or dies and the arbitration agreement does
not show that the vacancy should not be supplied and the parties
do not fill up the vacancy .
• * Where the parties or arbitrators are required to
appoint an umpire and do not appoint him .
• f) Appointment of three are more arbitrators .
• g) Remuneration of arbitrators or umpire .
• h) Removal of an arbitrator or umpire of the court
• i) Effect of death of a part .
POWERS OF AN ARBITRATOR : The power of an
arbitrator shall be regulated by the terms and
conditions of the agreements to refer disputes to
arbitration. Therefore, subject to the provisions of
the agreement arbitrators will have the power to do
any one of the following things :
1) To administer oath to the parties and witness
2) To refer matters of law or the award for the
opinion of the court .
3) To make the award conditional or alternative .
• 4) To correct any clerical mistake or error arising from any
accidental slip or omission in the award .
• 5) To put necessary interrogatories to any party to the dispute .
• 6) To determine by and to whom the costs of reference and the
award shall be paid .
• 7) To award interest .
• 8) To make an interim award unless the agreement prohibits it .
• 9) To grant installments and fix the number, amount, mode and
time of their payment .
• 10) To order for the specific performance of the contract .
• 11) To order for the dissolution of partnership .
• 12) To determine questions of legal representative of the deceased
party to arbitration agreement .
• DUTIES OF ARBITRATOR : An arbitrator is required to perform the
following duties :
• a) To act judicially .
• b) To observe the first principals of the justice .
• c) To act impartially .
• d) To decide all matters referred .
• e) To discharge functions personally .
• f) Not to exceed his authority .
• g) To disclose his personal interest .
• h) Should not make use of personal knowledge unless authorized to
do so .
• i) Not to misconduct .
• j) To rehear the evidence .
• k) To sign the award .
• B) ARBITRATION WITH INTERVENSION OF COURT WHERE NO SUIT
IS PENDING : Sec ( 20 ) of the arbitration act lays down the
following procedure for having the reference made through court .
• 1) “ Where there is an arbitration agreement and no suit of
pending, and where a difference has arisen to which the agreement
• 2) On such application being made, the court shall issue notice
there of to all the parties to the agreement other than the
applicants, requiring them to show cause within the time specified
in the notice why the agreement should not be filled .
• 3) Where no sufficient cause is shown, the court should order the
agreement to be filled and shall make an order of reference to the
arbitrator appointed by the parties.
• 4) Thereafter, the arbitration shall proceed in the same manner as
an “arbitration with out the intervention of the court .”
• C) ARBITRATION WITH INTERVENTION OF THE COURT WHERE A
SUIT IS PENDING :
• Arbitration of any suit which is pending in a civil court . The parties
to a suit may be mutual consent apply in writing at any time
before judgment to the court for an order of reference, where upon
the court shall appoint an arbitrator in such manner as may be
agreed upon between the parties .