Arbitration- ADR under inian law

1. Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the courts.The
dispute will be decided by one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), which renders the
"arbitration award". An arbitration award is legally binding on both sides and enforceable in the courts.[1]
Arbitration is often used for the resolution of commercial disputes,particularly in the context of international
commercial transactions.In certain countries such as the United States, arbitration is also frequently employed in
consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial
contracts and may include a waiver of the right to bring a class action claim. Mandatory consumer and employment
arbitration should be distinguished from consensualarbitration, particularly commercial arbitration.
Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or
from a contract that one party imposes on the other, in which the parties agree to hold all existing or future disputes
to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or
non-binding. Non-binding arbitration is similar to mediation in that a decision cannot be imposed on the parties.
However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on
which to compromise, the (non-binding) arbiter remains totally removed from the settlement process and will only
give a determination of liability and, if appropriate, an indication of the quantumof damages payable. By one
definition arbitration is binding and non-binding arbitration is therefore technically not arbitration.
Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to
the dispute have agreed, or legislation has decreed, will be final and binding. There are limited rights of review and
appeal of arbitration awards. Arbitration is not the same as: judicial proceedings (although in some jurisdictions,
court proceedings are sometimes referred as arbitrations[2]), alternative dispute resolution (ADR)[3], expert
determination, mediation (a form of settlement negotiation facilitated by a neutral third party.
Commercial arbitration is currently the preferred mode of dispute resolution for complex commercial disputes. The
judicial system is, and has been for some time, clogged and burdened with a massive backlog of cases. It is not
unusual for matters to be stuck in the judicial system for more than a decade pending resolution, particularly if the
matters are of high value or complicated. As a result, it is becoming standard practice for parties to include
arbitration clauses in all large transactions and agreements.
Most government entities and public sector undertakings include arbitration clauses in their standard formcontracts
and are regularly parties to arbitrations. Certain statutes in states also mandate arbitration as a dispute resolution
method for contracts with government entities.
There have been a number of recent moves to improve the arbitration landscape in India. Significantly, amendments
to the Arbitration Act have sought to improve speed and efficiency of arbitration by, among other things:
 Imposing time limits.
 Encouraging institutional arbitration. Reducing the scope for court intervention both at the pre-
arbitration and post-arbitration stage.
 Discouraging filing frivolous applications challenging arbitral awards.
 Discouraging delays by introducing a more realistic cost regime.
Courts have also followed the lead, with a number of recent decisions narrowing the scope of judicial interference.
The executive has also sought to bring about efficiencies in arbitration involving government entities by
encouraging ministries to comply with arbitration awards, pending any proposed challenge, in the interests of
ensuring cashflow, particularly in relation to large infrastructure disputes.

2. History
England
Arbitration in its common law form developed in England; in the Middle Ages,tribunals such as the Courts of the
Boroughs, of the Fair and of the Staple arose as the Royal Courts were not designed for trade disputes,and trade
with foreigners was otherwise unenforceable. In the mid-16th century, common law courts developed contract law
and the Admiralty court became accessible for disputes with foreign merchants, broadening the venues for trade
disputes.Courts became suspicious of arbitration; for example, in Kill v. Hollister (1746), an English court ruled that
the arbitration agreement could 'oust' courts of law and equity of jurisdiction. Merchants,however, retained
provisions to settle disputes among themselves, but tension between the arbitration proceedings and courts
eventually resulted in the Common Law Procedure Act 1854 which provided for the appointment of arbitrators and
umpires, allowed courts to 'stay proceedings'when a disputant filed a suit despite an agreement to arbitrate, and
provided a process for arbitrators to submit questions to a court. Later, the Arbitration Act 1889 was passed,
followed by other Arbitration Acts in 1950, 1975, 1979 and 1996. Arbitration Act 1979 in particular limited judicial
review for arbitration awards.
United States
Arbitration was common in the early United States,with George Washington serving as an arbiter on an occasion.
The United States had a notable difference from England, however, in that unlike England, its courts generally did
not enforce executory agreements (binding predispute agreements) to arbitrate. This meant that prior to an award, a
claimant could sue in court even if they had contractually agreed to settle disputes by arbitration. After the award,
courts reviewed the judgment, but generally deferred to the arbitration, although the practice was not consistent.
The lack of enforcement of predispose agreements led to the Federal Arbitration Act of 1925, with New York
leading with a state law enforcing predispose agreements. In 1921, the American Bar Association drafted the
Federal Arbitration Act based on the New York law, which was passed in 1925 with minor changes.In the next
decade, the American Arbitration Association promoted rules and facilitated arbitrations through appointments.
Advantages and disadvantages
Parties often seek to resolve disputes through arbitration because of a number of perceived potential advantages over
judicial proceedings.Companies often require arbitration with their customers, but prefer the advantages ofcourts in
disputes with competitors:
 In contrast to litigation, where one cannot "choose the judge" arbitration allows the parties to choose their
own tribunal. This is especially useful when the subject matter of the dispute is highly technical: arbitrators
with an appropriate degree of expertise (for example, quantity surveying expertise, in the case of a
construction dispute,or expertise in commercial property law, in the case of a real estate dispute)can be
chosen.
 Arbitration is often faster than litigation in court.
 Arbitral proceedings and an arbitral award are generally non-public, and can be made confidential.
 In arbitral proceedings the language of arbitration may be chosen,whereas in judicial proceedings the
official language of the country of the competent court will be automatically applied.
 Because of the provisions of the New York Convention 1958, arbitration awards are generally easier to
enforce in other nations than court verdicts.
 In most legal systems there are very limited avenues for appeal of an arbitral award, which is sometimes an
advantage because it limits the duration of the dispute and any associated liability.
Some of the disadvantages include:

3.  Arbitration agreements are sometimes contained in ancillary agreements, or in small print in other
agreements, and consumers and employees often do not know in advance that they have agreed to
mandatory binding pre-dispute arbitration by purchasing a product or taking a job.
 If the arbitration is mandatory and binding, the parties waive their rights to access the courts and to have a
judge or jury decide the case.
 If the arbitrator or the arbitration forum depends on the corporation for repeat bus iness,there may be an
inherent incentive to rule against the consumer or employee
 There are very limited avenues for appeal, which means that an erroneous decision cannot be easily
overturned.
 Although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their
schedules for hearing dates in long cases can lead to delays.
 In some legal systems,arbitration awards have fewer enforcement options than judgments; although in the
United States arbitration awards are enforced in the same manner as court judgments and have the same
effect.
 Arbitrators are generally unable to enforce interlocutory measures against a party, making it easier for a
party to take steps to avoid enforcement of member or a small group of members in arbitration due to
increasing legal fees, without explaining to the members the adverse consequences ofan unfavorable
ruling.
 Discovery may be more limited in arbitration or entirely nonexistent.
 The potential to generate billings by attorneys may be less than pursuing the dispute through trial.
 Unlike court judgments, arbitration awards themselves are not directly enforceable. A party seeking to
enforce an arbitration award must resort to judicial remedies, called an action to "confirm" an award
Legislative framework
Applicable legislation
The Arbitration and Conciliation Act, 1996 (Arbitration Act) applies to arbitrations in India. Part I of the
Arbitration Act deals with arbitrations seated in India and Part II deals with arbitrations seated outside
India. Certain provisions of Part I of the Arbitration Act (such as court assistance in aid of arbitration)
also apply to arbitrations seated outside of India.
There have been a series of judicial decisions and legislative amendments in recent years that apply partly
prospectively and partly retrospectively. The version of the Act that will apply in any case will depend on
the date on which:
 The arbitration was commenced.
 Court proceedings relating to the arbitration (if any) were commenced.
 The arbitration agreement was executed.
For all arbitrations commenced on or after 23 October 2015, the Arbitration Act,as amended in 2015, will
apply. The Arbitration Act was also recently amended in 2019. The amendments are silent as to whether
they would apply to arbitrations initiated prior to the 2019 amendments coming into force on 30 August
2019; however, for all arbitrations initiated after the commencement of the 2019 amendments, the
Arbitration Act,as amended in 2019, will apply.

4. The Arbitration Act is largely based on the UNCITRAL Model Law (Model Law). There are however
some significant departures which make it difficult to apply the Model Law jurisprudence directly to each
case. For example, the standard for referring parties to arbitration under the Arbitration Act is
significantly lower than that prescribed under the Model Law. The Arbitration Act prescribes time limits
for the completion of an arbitration, while the Model Law does not. Further, unlike the Model Law,the
Arbitration Act contains detailed provisions about the imposition of costs.
Mandatory legislative provisions
The Arbitration Act contains a number of mandatory provisions, including in relation to:
 Requirements for the form of the arbitration agreement.
 Mandatory reference to arbitration by courts.
 Grounds of presumed impartiality and lack of independence.
 Time limits for completing arbitration proceedings.
 Grounds for setting aside an arbitral award and challenging enforcement of an arbitral award.
A violation of these conditions can either preclude reference to arbitration, render proceedings invalid or
result in an award being set aside by courts.
Certain statutes and regulations also provide for mandatory arbitration in relation to specific subject
matters such as electricity law, stock market disputes and industrial disputes. Certain statutes also provide
mandatory, specialist dispute resolution mechanisms which have the effect of precluding a party from
arbitrating specific types of disputes. For example, disputes in relation to works contracts in certain states
must be submitted to a specialised tribunal, and parties are prevented by legislation from submitting such
disputes to private arbitration. Further, consumer disputes and disputes relating to real estate projects
between developers and buyers now fall within the purview of specific statutory dispute resolution
authorities, which preclude reference of such disputes to arbitration.
Under Indian law, the types of disputes that cannot be resolved by arbitration include:
 Criminal offences.
 Matrimonial disputes.
 Guardianship matters.
 Insolvency petitions.
 Testamentary suits.
 Trust disputes.
 Labour and industrial disputes.
 Tenancy and eviction matters.
While there is no authoritative decision on the issue, existing jurisprudence suggests that disputes
involving issues of competition law are also not arbitrable. Generally, disputes in rem (regarding a
thing/property) cannot be resolved through arbitration, while disputes in personam (regarding a specific

5. person) can be. The law also prohibits reference to arbitration where a specialist forum has been set up to
resolve specific types of disputes, such as consumer disputes.
There are two areas of uncertainty about the arbitrability of disputes:
 Disputes where allegations of fraud have been made. This area of law continues to evolve but at
present, for India-seated arbitrations, where there are “very serious allegations of fraud” which
allegedly affects the very validity of the arbitration clause or has implications on the public
domain rather than only impacting the internal affairs of the parties, the dispute is not arbitrable.
Similarly, there are some inconsistent decisions on the arbitrability of disputes involving
oppression and mismanagement claims in shareholder disputes, with some courts having taken a
view that such disputes are not arbitrable.
 Intellectual property (IP) law disputes. The prevailing view, based on the decisions of a few High
Courts, is that while disputes pertaining to IP rights are in themselves not arbitrable, commercial
arrangements relating to the use IP rights are arbitrable.
Limitation
The law of limitation that applies to a civil suit also applies to an arbitration. The period of limitation
varies from one to three years for civil/commercial disputes, depending on the nature of the dispute and
the relief sought. The limitation period is calculated from the date the cause of action arose to the date the
arbitral proceedings start (which is statutorily defined as the date of receipt by the counterparty of an
invocation of the arbitration agreement by the other party (section 21, Arbitration Act).
Arbitration institutions
Large commercial disputes continue to be referred to well-known international institutions such as the:
 International Chamber of Commerce .
 Singapore International Arbitration Centre.
 London Centre of International Arbitration.
 Hong Kong International Arbitration Centre.
Domestic arbitration institutions include the:
 Mumbai Centre for International Arbitration. This is the most popular arbitration institution based
in India for large commercial disputes. It was set up in 2016 and is led by a very competent and
internationally renowned board of arbitration practitioners from across the globe, has received
significant traction, but does not yet have a notable list of administered matters.
 Nani Palkhivala Arbitration Centre. This is another institution which has seen significant growth
in recent years. It has been formally recognised by the Madras High Court to render assistance in
arbitration matters by its Order dated 21 September 2005. The Centre has a panel of arbitrators
comprising retired judges, lawyers, chartered accountants and civil servants among others.
Some High Courts in India have also set up arbitration centres affiliated with such High Courts, such as
the Delhi International Arbitration Centre and the Arbitration & Conciliation Centre – Bengaluru
(Domestic & International), an initiative of the High Court of Karnataka.

6. Despite these developments, most arbitrations in India are still conducted on an ad hoc basis. Recent
legislative amendments to the Arbitration Act, including in particular the amendments in 2019, have
encouraged institutional arbitration with the aim of changing this position.
Jurisdictional issues
India recognises the principle of kompetenz-kompetenz. The arbitraltribunal is empowered to decide on
its own jurisdiction (section 16,Arbitration Act).
If the arbitral tribunal rules that it does not have jurisdiction, the ruling can be challenged before a court.
However,if the arbitral tribunal rules that it does have jurisdiction, no immediate appeal or challenge is
available and the only option would be to challenge the final award passed by the arbitral tribunal on the
ground of lack of jurisdiction.
There is however a narrow exception to this rule. Under Indian law, if a court is approached to refer a
matter to arbitration and during the course of such reference the court decides any issue pertaining to the
jurisdiction of the tribunal or the validity of the arbitration agreement,the decision of the court is binding
on the tribunal. In recent times, courts have significantly narrowed the scope of their interference.
Therefore,the circumstances in which a decision of the court is binding on the arbitral tribunal continues
to be narrowed over time.
Arbitration agreements
Substantive/formal requirements
The substantive and formal requirements of an arbitration agreement are contained in section 7 of the
Arbitration Act. An arbitration agreement must be in writing, and must be contained in one of the
following:
 A document signed by the parties.
 An exchange of correspondence which provides a record of the agreement.
 An exchange of statements of claim and defence containing an undisputed acknowledgment of
the agreement.
The law also recognises an arbitration agreement entered into after a dispute has arisen between the
parties.
Separate arbitration agreement
The law does not mandate a separate arbitration agreement. An arbitration agreement can either be by
way of a separate agreement,in the form of a clause in a larger agreement or can be incorporated by way
of reference to a document containing a compatible arbitration clause or agreement. To incorporate an
arbitration clause by reference,the reference to the other document must clearly indicate an intention to
incorporate the arbitration clause into the contract; a general reference to a different document will not
have the effect of incorporating an arbitration clause.

7. Unilateral or optional clauses
In recent decisions, High Courts have adopted a more permissive approach to the enforceability of
unilateral option clauses than previously (see Punjab State Civil Supplies Corporation Limited v Mahavir
Rice Mills, MANU/PH/0402/2013; Castrol India Ltd v Apex Tooling Solutions, MANU/TN/0251/2015).
Further, in a recent decision, the Supreme Court upheld the validity of a clause giving one party the right
to refuse to categorise a matter as a “dispute”, in effect empowering that party to refuse a reference to
arbitration unilaterally (Oriental Insurance Co Ltd v NarbheramPower and Steel Pvt Ltd Civil Appeal
No. 2268 of 2018).The Supreme Court refused to interpret the clause as vesting both parties with a right
to refer disputes to arbitration and held that the party who is not vested with the right is entitled to seek
recourse before the jurisdictional court.
Third parties
A third party is not normally permitted to be joined to the arbitration proceedings, except where the third
party is a “person claiming through or under” a party to the arbitration agreement. Therefore,an
arbitration clause does not bind shareholders of a company, except where there are justifiable grounds to
pierce the corporate veil on grounds of fraud and misuse of statute,among other things.
The courts have not provided an exhaustive definition of who qualifies as a “person claiming through or
under” a party to the arbitration agreement. However,while interpreting this phrase, the courts have
permitted third parties to be joined to an arbitration where a single commercial transaction is executed
through a number of agreements involving multiple parties. If a dispute arises out of such a transaction,
all parties across the multiple agreements can be referred to arbitration under the agreement that lies at the
heart of the transaction, irrespective of whether a party was a party to the said agreement and whether the
agreement to which it is a party contains an arbitration agreement.
A third party to an arbitration agreement (whether domestic or foreign seated) can compel a party to the
arbitration agreement to arbitrate disputes under the arbitration agreement if the third party is a “person
claiming through or under” a party to the arbitration agreement (sections 8 and 45, Arbitration Act).This
would typically be where a third party is a party to an ancillary agreement which forms part of a network
of agreements entered into to implement a single commercial transaction (see Question 10).
Separability
Indian law recognises the separability of an arbitration agreement. An arbitration clause survives even if
the underlying agreement of which it is a part is held to be void. A finding by an arbitral tribunal that the
underlying agreement containing the arbitration clause is void does not render the finding of the tribunal
without jurisdiction.
Breach ofan arbitration agreement
Court proceedings in breach ofan arbitration agreement
If court proceedings are initiated in breach of an arbitration agreement, the aggrieved party can make an
application under section 8 (domestic) or section 45 (foreign) of the Arbitration Act, requesting that the
court refer the parties to arbitration and decline to entertain the proceedings. The aggrieved party however
must make his/her objection no later than filing his/her first statement on the substance of the dispute in
the court proceedings. Failure to do so would be construed as a waiver of the arbitration agreement,
especially in domestic arbitrations.

8. During the pendency of these proceedings, a court does not normally injunct the initiation or continuance
of domestic arbitration proceedings, as section 8 of the Arbitration Act specifically states that arbitration
proceedings can continue pending a determination of these matters by the court.
However, the courts in India have jurisdiction to issue an anti-arbitration injunction to restrain arbitration
proceedings seated outside India. The courts have indicated that this remedy will only be granted in
extreme circumstances such as where the arbitration agreement is void, inoperative or incapable of being
performed. Recently, the courts have also pointed out that they retain the inherent jurisdiction to grant
such an injunction if in their view the foreign arbitral proceedings are oppressive, vexatious, inequitable
or constitute an abuse of process. However,the courts have emphasised that they will not readily make
such a finding, particularly where the parties have consciously chosen a foreign forum to resolve their
disputes.
Arbitration in breach of a valid jurisdiction clause
Where an arbitration is in breach of a valid jurisdiction clause, the aggrieved party can raise a
preliminary objection before the arbitral tribunal which is empowered to rule on its own jurisdiction. If
the party does not succeed in his/her challenge before the arbitral tribunal, he/she can apply to the court to
set aside the arbitral award (whether partial or final) on the basis of an arbitration in breach of a valid
jurisdiction clause.
Indian courts are courts of both law and equity and so have the power to issue an anti-suit/anti-arbitration
injunction to a party, over whom they have personal jurisdiction. The Supreme Court has confirmed that
Indian courts have the power to grant an injunction to restrain proceedings started overseas in breach of
an arbitration agreement where the proceedings are found to be oppressive and vexatious. In granting
such an injunction, the court will be guided by factors such as comity of courts, mandatory language of
the arbitration clause and so on.
Arbitrators
Number and qualifications/characteristics
The parties are free to agree on the number of arbitrators, although there must be an odd number.
However,arbitration agreements that provide for an even number of arbitrators are not automatically
invalid. In that case,the appointed arbitrators can choose a presiding arbitrator bringing the tribunal up to
an uneven number of arbitrators, either at the start of proceedings or when there is a difference of opinion
between them. If the even number of arbitrators agree and give a common award, there is no frustration of
proceedings and their common opinion will prevail. If the parties do not specify the number of arbitrators,
the arbitral tribunal will consist of a sole arbitrator.
Qualification and characteristics ofarbitrators
An arbitrator does not need to be licensed to practise in India, and the law recognises that foreign
qualified lawyers and technical professionals, among others, can serve as arbitrators. Arbitrators are
appointed as agreed by the parties and the parties are free to determine their qualifications and nationality.
However,some legislative changes have been made to the Arbitration Act in 2019 (but are not yet in
effect) which prescribe qualification requirements for accreditation of arbitrators in India. These
requirements, which are set out in Schedule VIII of the Arbitration Act, appear to, among other things,
limit the ability of foreign qualified lawyers from acting as arbitrators in India. The amendments also
prescribe requirements such as minimum experience, knowledge of Indian laws and so on, as
preconditions for persons to be appointed as arbitrators. These proposals have been severely criticised,
including by sitting judges of the Supreme Court of India.

9. Independence/impartiality
Arbitrators are required by law to disclose at the time of their appointment, and throughout the arbitral
proceedings, any circumstances that affect their impartiality and/or independence. Schedule V to the
Arbitration Act identifies the circumstances that give rise to justifiable doubts about the independence
and/or impartiality of arbitrators. Arbitrators must disclose any:
 Personaland/or professional relationship with parties or their counsel.
 Relationship with the dispute.
 Interest in the dispute.
Schedule VII to the Arbitration Act sets out a list of circumstances that render a person ineligible to be
appointed as an arbitrator. However,the parties can, subsequent to disputes having arisen between them,
waive the applicability of this schedule by an express agreement in writing.
Appointment/removal
Appointment ofarbitrators
The parties are free to agree the procedure for the appointment of arbitrators. If the parties fail to agree
on the appointment of arbitrators where the agreement provides for arbitration with three arbitrators, each
party must appoint one arbitrator and the two appointed arbitrators must jointly appoint the third
arbitrator, who will act as a presiding arbitrator.
Where the parties fail to agree on the nomination of a sole arbitrator or fail to act in accordance with the
procedure in the arbitration agreement,or the two appointed arbitrators fail to appoint a third presiding
arbitrator, either party can approach the High Court (domestic arbitration) or the Supreme Court
(international arbitration) to have the arbitrator(s) appointed by court.
The High Court or the Supreme Court, while considering an application for the appointment of
arbitrators, must confine itself to the examination of the existence of an arbitration agreement.
Recent legislative amendments to the Arbitration Act have sought to divest the power of appointment of
arbitrators from the Supreme Court (in the context of international arbitration) and the High Court (in the
context of domestic arbitration) and vest them instead with arbitral institutions accredited by the
Arbitration Council of India (an independent body comprising largely of centralgovernment appointees,
which will grade arbitral institutions, accredit arbitrators, and evolve policy and guidelines for the
establishment, operation and maintenance of uniform professional standards in arbitration). However,
these provisions have not yet come into force.
Removal ofarbitrators
Parties can challenge the appointment of an arbitrator and seek his/her removal on the following grounds:
 Existence of circumstances and facts that gives raise to doubts as to the arbitrators’ impartiality
and independence.
 Lack of the qualifications agreed between the parties.
The challenge to the appointment of an arbitrator must be made in accordance with the procedure agreed
between the parties. If no procedure has been agreed, the party who wishes to challenge an arbitrator must
submit a written statement of the reasons for the challenge to the arbitral tribunal within 15 days from the

10. date when the party learns the facts and circumstances on which the challenge is based. Unless the
challenged arbitrator withdraws from his/her office, the arbitral tribunal will decide on the challenge.
If the challenge is unsuccessful, the arbitral tribunal will continue the proceedings and pass an award.
The aggrieved party can challenge the award on the ground of challenge of the arbitrator.
The mandate of an arbitrator will also terminate and he/she will be substituted by another arbitrator if:
 He/she is unable to act as an arbitrator.
 He/she withdraws from office.
 The parties agree to terminate his/her mandate.
Procedure
Commencement ofarbitral proceedings
Unless the parties agree otherwise, an arbitral proceeding of a dispute commences on the date on which a
request for that dispute to be referred to arbitration is received by the respondent (section 21,Arbitration
Act).
Applicable rules and powers
Applicable procedural rules
Section 19 of the Arbitration Act recognises the right of the parties to agree on the procedural rules
applicable to the arbitral proceedings.
Parties can adopt procedural rules (such as the Model Law) or agree to have their arbitration administered
by an institution with its own rules in exercise of this choice. If the parties fail to decide on a procedure,
the arbitral tribunal can conduct the proceedings in the manner it considers appropriate. The arbitral
tribunal is not bound to follow the procedural rules that apply to domestic court proceedings. However,
the procedure devised by the parties or the tribunal must meet the basic tenets of an adjudicatory process
(such as the parties must be treated with equality and each party must be given a full opportunity of
presenting his/her case).
Default rules
The Arbitration Act does not prescribe detailed default rules regulating procedure. However,it does
provide some useful guidance to the parties and the arbitrators on the manner in which arbitrations should
be conducted. Parties can deviate from these default rules by specific agreement, subject to the limitation
that any procedure devised by the parties or the tribunal must meet the basic tenets of an adjudicatory
process. The Arbitration Act provides, among other things, that:
 The claimant must usually state the facts supporting his/her claim, the points at issue and the
relief or remedy sought, and the respondent must state his/her defence in respect of these
particulars, and any counterclaim or set-off he/she seeks to claim, while filing his/her statement of
claim and defence,respectively.
 Parties can submit with their statements all documents they consider to be relevant or add a
reference to the documents or other evidence they will submit.

11.  Either party can amend or supplement his/her claim or defence during the course of the arbitral
proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or
supplement having regard to the delay in making it.
 The arbitral tribunal must, as far as possible, hold oral hearings for the presentation of evidence or
for oral argument on a day-to-day basis, and not grant any adjournments unless sufficient cause is
made out, and can impose costs including exemplary costs on the party seeking adjournment
without any sufficient cause.
 The parties must be given sufficient notice in advance of any hearing and of any meeting of the
arbitral tribunal for the purposes of inspection of documents, goods or other property.
 All statements, documents or other information supplied to, or applications made to, the arbitral
tribunal by one party must be communicated to the other party, and any expert report or
evidentiary document on which the arbitral tribunal relies on in making its decision must be
communicated to the parties.
 If, without showing sufficient cause,the claimant fails to communicate his/her statement of claim,
the arbitral tribunal must terminate the proceedings.
 If, without showing sufficient cause,the respondent fails to communicate his/her statement of
defence,the arbitral tribunal must continue the proceedings without treating that failure in itself
as an admission of the allegations by the claimant and must have the discretion to treat the right
of the respondent to file such statement of defence as having been forfeited.
 If, without showing sufficient cause,a party fails to appear at an oral hearing or to produce
documentary evidence, the arbitral tribunal can continue the proceedings and make the arbitral
award on the evidence before it.
Evidence and disclosure
Under section 19(3) of the Arbitration Act, in the absence of an express agreement by the parties, the
arbitral tribunal can, subject to Part I of the Arbitration Act,conduct the proceedings in the manner it
considers appropriate. There is nothing in Part I of the Arbitration Act prohibiting or limiting the arbitral
tribunal’s power to order disclosure of documents and attendance of witnesses. Further, the courts have
recognised that the arbitral tribunal has the same powers as the courts with respect to discovery,
inspection, production of documents and summoning of witnesses.
If a direction issued by the arbitral tribunal directing production of documents by a party is not complied
with, the tribunal can draw an adverse inference from the conduct of the parties, or it can apply to the
court under section 27 of the Arbitration Act for assistance in taking evidence. The arbitrator can appoint
one or more experts to report to it on specific issues and require a party to give the expert(s) any relevant
information or to produce, or to provide access to,any relevant documents, goods or other property for
their inspection (section 26, Arbitration Act).The tribunal can also order the expert(s) to participate in the
oral hearings where the parties have been given the opportunity to cross examine the expert(s) on their
testimony.
Evidence
Scope ofdisclosure
There is no mandatory requirement for disclosure of documents in an arbitration. Under section 23 of the
Arbitration Act it is open for the parties to agree upon the required elements of the statements of claim

12. and defence. There is no mandatory requirement to submit documents at this stage,and it is open to the
parties to either submit all documents that they consider to be relevant along with their statements of
claim and defence,or to add a reference to the documents or other evidence that they will later submit.
Validity of parties’ agreement as to rules ofdisclosure
Under section 19 of the Arbitration Act,parties can agree upon or the tribunal can decide a procedure to
be followed in conducting the arbitration proceedings. This includes the right to agree on a procedure of
discovery, inspection and production of documents. The tribunal or a party (with the permission of the
tribunal) can also seek the assistance of the court for the examination of witnesses and the production of
documents.
Confidentiality
As a result of the legislative changes introduced in 2019 to the Arbitration Act,the arbitrator, the arbitral
institution and the parties to the arbitration agreement are under a legal obligation to maintain
confidentiality of all arbitral proceedings. The award is exempt from the obligation of confidentiality
where its disclosure is necessary for its implementation and enforcement.
Courts and arbitration
The local courts have the power to intervene to assist arbitration proceedings seated in its jurisdiction.
The assistance can be in one of the following ways:
 Reference of disputes to arbitration (section 8, Arbitration Act).
 Granting interim measures in aid of arbitration (section 9, Arbitration Act).
 Appointing arbitrators (section 11, Arbitration Act).
 Deciding any controversy regarding an arbitrator’s mandate (section 14,Arbitration Act).
 Enforcing interim orders of the arbitral tribunal (section 17, Arbitration Act).
 Assistance in taking evidence including for summoning witnesses and producing documents
(section 27 Arbitration Act).
 Penalising and punishing parties for non-compliance with orders of the arbitral tribunal (section
27, Arbitration Act).
 Extending an arbitral tribunal’s mandate or penalising the tribunal or the parties for a delay in
pursuing arbitration proceedings (section 29(A), Arbitration Act).
 Hearing challenges to an arbitral award in a setting-aside application (section 34, Arbitration
Act).
 Hearing appeals from certain decisions of the arbitral tribunal (section 37, Arbitration Act) such
as when a plea of lack of jurisdiction is accepted (section 16) or an interim measure sought of the
arbitral tribunal is denied (section 17, Arbitration Act).
 Payment of costs to the tribunal before the rendering of an award (section 39, Arbitration Act).
 Extension of time periods fixed by the parties for the initiation of arbitration (section 43(3),
Arbitration Act).

13. Risk ofcourt intervention
In the context of India-seated arbitration, section 5 of the Arbitration Act limits judicial intervention to the
purposes mentioned in the Arbitration Act. Significantly, this includes reference of dispute to arbitration
(section 8, Arbitration Act) and appointment of arbitrator(s) (section 11, Arbitration Act).
Section 23 of the Arbitration Act prescribes a period of six months from the date on which all arbitrators
receive notice of their appointment for the filing of the statement of claim and statement of defence.
An arbitration proceeding must be completed within 12 months (and an additional six months if mutually
agreed by the parties) from the date on which the statement of claim and the statement of defence are filed
in an arbitration.
The 2019 amendments remove this restriction for international commercial arbitrations and provide that
the tribunals “must endeavour” to complete international arbitration matters within 12 months. In
domestic arbitrations, if necessary,the court can grant an extension to the time limit, with or without
penalties to the parties/arbitrators. This has increased the scope of court interference,particularly in the
context of complex disputes, which cannot always be concluded within these prescribed time limits.
The courts can also set aside arbitral awards (section 34, Arbitration Act).In these proceedings, the courts
can evaluate the:
 Capacity of the parties.
 Validity of the arbitration agreement.
 Appointment and jurisdiction of the tribunal.
 Procedure for conduct of proceedings.
 Arbitrability of disputes.
 Conflict with the public policy of India.
Delaying proceedings
In the past years,there have been significant delays at each stage where a court has intervened in the
context of an arbitration. This was attributable both to the willingness of the courts to engage in the merits
of arbitration, and to the severe backlog of cases that burden the judicial system. However, some progress
has been made in relation to the former.
Previously, courts engaged in lengthy enquiries into the validity and effect of the arbitration agreement
before referring parties to arbitration and/or before appointing an arbitrator, thereby severely delaying
matters. However,with recent amendments to the Arbitration Act, the scope of interference has been
substantially reduced. A court is now required to confine itself to only examining the existence of the
arbitration agreement,leaving all other matters to be determined by the arbitrator.
Similarly, in proceedings initiated to set aside arbitration awards,courts previously engaged in a re-
assessment of the merits of the arbitration, or an arbitrator’s erroneous application of law, or appreciation
of evidence. These proceedings were extremely lengthy and often much longer than the underlying
arbitration itself.

14. Recent amendments to the Arbitration Act have narrowed the scope of enquiry, including by specifically
clarifying that a court cannot undertake a re-assessment of the merits of the case,or involve itself with re-
assessing evidence, in setting aside proceedings.
The Arbitration Act also recommends that setting aside proceedings be completed within one year. In
practice, while the courts have embraced to some extent the limitation on their scope of enquiry, they
have generally not been able to complete proceedings within the prescribed time limit.
While some legislative and judicial developments have sought to limit the extent of court intervention, in
practice, it is possible for parties to file multiple applications and delay proceedings, both before and after
the closure of arbitration proceedings. Even if these applications are ultimately dismissed on merit, the
process of filing applications, serving the other side, hearing applications and seeking an order on these
applications, is used by the parties to buy time in a judicial system which is significantly over-burdened.
In this context there is a vast difference among the various jurisdictions within India, both in terms of
expertise and practice in relation to arbitration. To remedy this, recent amendments to the Arbitration Act
require all matters arising out of international commercial arbitration proceedings to be filed before the
concerned High Court. Even the High Courts are known to adopt differing approaches; for example, the
courts in New Delhi and Mumbai, which regularly handle complex commercial disputes, have a
reputation of being less interventionist and more arbitration-friendly than the other courts in the country.
Insolvency
Pendency of an insolvency proceeding of one party to the arbitration will, in itself, not have any effect on
the arbitration itself. However,under the Insolvency and Bankruptcy Code 2016, when a proceeding for
insolvency is admitted, a moratorium is imposed on the party subject to the insolvency proceeding for a
period of 180 to 270 days. During this period of moratorium, there is a statutory stay on all suits and
proceedings, including arbitral proceedings, against the party subject to the insolvency proceeding. As a
general principle, the moratorium would be applicable only to proceedings against the party subject to the
insolvency proceeding, and no moratorium would be applicable to proceedings by such party. However,
where counterclaims are made against an insolvent company, they can continue to the extent they are
intrinsically intertwined with the claims made by the insolvent company.
The period of moratorium can end either in a resolution of the party’s insolvency as mutually agreed on
by its creditors or in a final order of insolvency against the party. In the former, the moratorium is lifted
and the arbitral proceedings continue.
If the insolvency proceedings culminate in an order of insolvency or winding up passed against a party,
then he/she will not be entitled to continue the arbitral proceedings himself/herself. Once an order of
insolvency is passed,if the insolvent party is the claimant in an arbitration proceeding, the liquidator of
the insolvent party can choose to continue the arbitral proceedings for the benefit of the creditors of the
insolvent party. If the insolvent party is the defendant, the arbitral proceedings cannot continue in respect
of an insolvent party, and the claimant is left with the recourse of presenting his/her claim to the
liquidator to consider.
Remedies
Interim remedies
The arbitral tribunal is empowered to grant interim reliefs during the arbitral proceedings until the making
of an award. A party can apply to the arbitral tribunal for the appointment of a guardian for a minor
person or a person of unsound mind for the purposes of arbitral proceedings or for an interim measure of
protection in respect of any of the following matters:

15.  The preservation, interim custody or sale of goods which are the subject matter of the
proceedings.
 Securing the amount in dispute in the arbitration.
 The detention, preservation or inspection of any property which is the subject matter of the
dispute in arbitration.
 Interim injunction.
 The appointment of receivers.
Ex parte
If a party fails to appear before the arbitral tribunal despite having notice of the constitution of the
arbitral tribunal, the arbitral tribunal can grant ex parte interim relief.
Security
The arbitral tribunal can grant orders to provide security for any amount, goods or property in dispute in
the arbitration.
The arbitral tribunal has the power to grant:
 Declarations.
 Injunctions.
 Payment of money.
 Specific performance.
Damages can only be compensatory in nature and punitive damages are not permitted. Where an arbitral
award is for the payment of money, the arbitral tribunal can also include interest, at such rate as it deems
reasonable, on 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 date on which the award is made. An arbitral tribunal can
also make a suitable award on costs.
Appeals
Rights ofappeal/challenge
Awards rendered by arbitral tribunals are considered to be final and binding in terms of the decision on
merits, and no appeal is allowed from an arbitral tribunal to the courts.
The Arbitration Act allows for challenges to the award (section 34, Arbitration Act).This right is
available to all parties to the arbitration where the arbitration is seated in India.
Grounds and procedure
There are very limited grounds available for challenging an arbitral award. The award can be challenged
only if:
A party was under some form of incapacity.

16.  The arbitration agreement was not valid under the law to which the parties had subjected it.
 The party was not given proper notice of the appointment of an arbitrator or the arbitral
proceedings.
 The award dealt with a dispute or contained a decision that was beyond the scope of the
arbitration agreement.
 The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the
arbitration agreement or, failing such agreement,was not in accordance with the provisions of the
Arbitration Act.
 The subject matter of dispute was not capable of settlement by arbitration.
 The arbitral award was in conflict with the public policy of India, which means that:
 the making of the award was induced or affected by fraud or corruption in violation of principles
of confidentiality applicable to conciliation proceedings;
 the award was in contravention of the fundamental policy of Indian law; or
 the award was in conflict with the most basic notions of justice.
Further, an award can be challenged in a domestic arbitration (that is, between two Indian parties seated
in India) if the award is vitiated by patent illegality appearing on the face of the award.
The law expressly prohibits courts from looking into the merits of the dispute while examining a
challenge to an arbitral award and provides that an arbitral award cannot be set aside merely on the
ground of an erroneous application of law or evidence. The recent amendments also clarify that a
challenge on grounds of incapacity, insufficient notice, exceeding the mandate for arbitration, or improper
constitution of the arbitral tribunal can only be made on the basis of the material already available on the
record of the arbitral tribunal, in an attempt to curtail the scope of the challenge and time required to
consider such challenge.
Waiving rights of appeal
Indian law does not authorise the parties to waive their rights of challenge to an award by an agreement.
Section 28 of the Indian Contract Act,1872 provides that any agreement by which a party is restrained
from enforcing its rights through legal proceedings is void.
A challenge to an arbitral award (whether relating to an international commercial arbitration or a domestic
arbitration) rendered in India can be made within three months from the date of receipt of the award by
the challenging party. If a party can show sufficient cause that prevented it from making the challenge
within the limitation period, a further 30 days can be granted, but no longer.
Costs
Fees ofcounsel. No legal fees are fixed by law or prescribed for counsel. Lawyers usually charge hourly
fees,and sometimes on the basis of the number of sittings attended along with hours of chamber work.
Lawyers are both ethically and statutorily barred from charging fees contingent on the outcome of any
litigation or arbitration. There is no express bar on third party funding of arbitration, but the legal
permissibility remains unclear as it has not yet been tested before the courts.

17. Fees ofarbitrators. At present,the law does not prescribe a fee structure for arbitrators. Therefore,
traditionally used structures such as hourly rates and lump sum rates based on the size and/or complexity
of the matter are acceptable.
The fees of the arbitrator cannot be fixed by reference to the result of the dispute.
For domestic arbitrations, the law provides a model fee structure in Schedule IV to the Arbitration Act,
based on the sum in dispute. At present, this is merely a guideline and not mandatory, but certain
amendments to the Arbitration Act which have been proposed, but have not yet come into force, intend to
make this schedule mandatory. The fees proposed in Schedule IV are not applicable to international
commercial arbitrations, or arbitrations agreed by parties to be conducted through arbitral institutions.
Most arbitral institutions prescribe a fee structure of their own.
Fees ofinstitutions. If arbitrations are conducted through arbitral institutions, the institutions prescribe an
institutional fee for administration and use of the institution supervising the arbitration.
In ad hoc arbitrations conducted outside arbitral institutions, a small fee is usually also payable for the use
of secretarialassistance and transport of arbitrators.
Cost allocation
The arbitral tribunal is empowered to determine the costs to be paid by one party to the other, the amount
of these costs and when they are to be paid.
Cost calculation
The Arbitration Act specifies what constitutes “costs”, which includes:
 Legal fees and expenses of arbitrators, the court and witnesses.
 Administrative fees of the institution supervising the arbitration.
 Other expenses incurred in relation to the arbitration.
Parties are usually invited by the arbitral tribunal to make submissions on costs after the final hearing, but
before the award is rendered.
Factors considered
In determining the costs, the tribunal is expected to have regard to:
 The conduct of the parties.
 The success of the claims of the parties.
 Any reasonable offers of settlement and refusals of these made by the parties.
Enforcement ofan award
Domestic awards
An arbitral award is enforceable after the time for making an application to set aside such an award has
expired (three months). The party intending to enforce the award can file an execution petition before the
civil court. The award is enforced in the same manner as a decree of the court under the Indian Code of
Civil Procedure,which provides the framework for the execution of arbitral awards.

18. If a party wishes to seek a stay on the enforcement of the award, it must make a separate application to
the court for that purpose. Recent amendments to the Arbitration Act require the court to ensure that the
party applying for a stay on the enforcement of an award has provided sufficient security to satisfy the
award,as a precondition to granting a stay.
An arbitral award rendered in India which is unstamped or is insufficiently stamped is inadmissible. This
deficiency can be fixed by payment of deficit stamp duty and penalty. An arbitral award must also be
registered if it concerns immovable property.
Foreign awards
India is a party to both the New York Convention and the Geneva Convention on the Execution of
Foreign Arbitral Awards 1927 (Geneva Convention). However,an award is only enforceable if it was
made in the territory of another state that is identified by the Government of India in the Official Gazette
as being bound by either convention. Most of the popular arbitration destinations such as the UK,US,
Singapore, Hong Kong and Switzerland, are gazetted convention countries, and so the awards made in
these countries are enforceable under the Arbitration Act. Certain countries such as the UAE are not
convention countries.
Further, in India, the conventions only apply to disputes arising out of legal relationships which are
considered commercial under Indian law. In recent times, this has been interpreted as meaning that the
conventions (and the Arbitration Act) do not apply to Investment Treaty Arbitrations.
An award rendered in a commercial arbitration in a gazetted convention country is enforceable in India,
provided:
The procedural requirements to enforce an award are satisfied (section 47,Arbitration Act).
 The award does not fall under any of the categories where enforcement can be refused (section
48, Arbitration Act).
The grounds for refusing enforcement of a foreign arbitral award are largely the same as the grounds set
out in the New York Convention. Indian courts have further held that the grounds for refusing
enforcement of a foreign award are narrower than the grounds available to challenge an award rendered in
India. The public policy ground for refusing enforcement of a foreign award has been held to be
significantly narrower than the public policy ground that would vitiate an award rendered in India.
Further, unlike a domestic award,enforcement for a foreign arbitral award cannot be refused on grounds
that it is patently illegal.
Once the court is satisfied that the foreign award is enforceable, it would be deemed to be a decree of the
court under section 49 of the Arbitration Act. The process for enforcement of a foreign award is similar to
that of a domestic award.
There is some uncertainty about the applicable limitation period for actions to enforce international
arbitration awards rendered outside India.
Some courts have held that since a foreign award will need to be recognised in India before it is deemed
to be a decree of an Indian court, the first step of the proceeding to enforce a foreign award cannot be
considered “execution”. Therefore,the limitation period to file enforcement proceedings in India is the
same as that of filing a new suit (that is, three years from the date of the award).

19. Other courts in India have held that recognition and enforcement are part of the same process and so the
limitation period is the same as that which applies to execution proceedings (that is, 12 years from the
date of the award).
The Supreme Court has not yet provided an authoritative ruling on the issue but has confirmed that
recognition and enforcement are part of the same process and cannot be split into two proceedings. This
view would appear to support the argument that the limitation period to enforce a foreign arbitral award is
12 years. However,this currently remains untested.
Length ofenforcement proceedings
Enforcement takes about six months to one year in courts which deal with complex commercial matters
on a regular basis. However, the process can be significantly longer if the courts are saddled with high
volumes of work and/or if they do not regularly deal with commercial disputes. Also, parties can adopt
dilatory tactics, and consequently prevent the enforcement for severalyears. If the courts use their powers
to exercise control over such parties and conduct, the impact of these dilatory tactics can be mitigated.
There is no procedure to expedite the enforcement of an award. However,if a party wishes to challenge
an arbitral award,and seeks to stay enforcement pending such a challenge, the law requires the party to
provide security in respect of the full value of the arbitral award as a precondition to granting stay. If the
security provided is in the form of a deposit of the arbitral award amount in court, an application can be
made by the successfulparty to withdraw such sums pending a challenge to the award, against providing
sufficient security.
Reform
A number of amendments have recently been passed by the Parliament of India. A significant portion of
these amendments have already come into force and have been discussed above. However, some
amendments which have been enacted have not yet come into force,including those relating to:
 Expediting the appointment of arbitrators through designated arbitral institutions.
 Creating an independent body, the Arbitration Council of India, which will:
 grade arbitral institutions;
 accredit arbitrators;
 evolve policy and guidelines for the establishment, operation and maintenance of uniform
professional standards in arbitration;
 maintain an electronic depository of all arbitral awards.