Prof. Practice

1. Arbitration
- Kruti Desai

2. Alternative Dispute Resolution
• Alternative Dispute Resolution (ADR) which includes various methods of settling a dispute
without getting into the intricacies of the court.
• It is a method where parties try to resolve their disputes privately in front of a third-person
expert.

3. Types of ADR Mechanisms
•Arbitration
•A neutral third party
listens to each side's
arguments and makes
a decision. Businesses
often use arbitration
to resolve commercial
disputes.
•Mediation
•A neutral third
party helps the
parties involved
reach an
agreement. Media
tion is one of the
most common
forms of ADR.
•Conciliation
A conciliator meets
with each party
separately to
understand their
complaints and goals.
•Negotiation
The parties involved
directly discuss the
dispute and work
towards an
agreement. Negotia
tion is the simplest
form of ADR.

4. Arbitration Definitions
• It is defined under Section 2 (1)(a) of the Act. “It is an alternative to litigation in courts and is
advantageous as it provides flexibility and confidentiality.”
• According to Black Law Dictionary: “It isa method of resolving disputes which includes two
parties and third party whose decision is binding on both parties. “
• The Hon’ble Supreme Court in the case of P. Anand Gajapati Raju v. P.V.G Raju (2000) gave certain
requirements necessary for referring parties to arbitration:
• An arbitration agreement must be there.
• A party must bring an action in court against others.
• The subject matter must be the same as in arbitration.
• One party demands arbitration in court.

5. Objectives of Arbitration
• The primary objectives of arbitration are to provide a fair and efficient method for resolving
disputes, offering parties an alternative to costly and lengthy court proceedings, while ensuring
impartiality and confidentiality.
• Fair and Efficient Dispute Resolution
• Parties' Autonomy
• Impartiality and Independence
• Confidentiality
• Minimizing Court Intervention
• Flexibility

6. The Arbitration and conciliation Act, 1996
• The act is divided into four parts:
• Part I (Sections 2-43) – Applies to the place of arbitration in India. The award granted is treated as
a domestic award.
• Part II (Sections 44-60) – Enforcement of foreign awards.
• Part III (Sections 61-81) – Conciliation
• Part IV (Sections 82-86) – Supplementary provisions

7. Process of arbitration in India
Arbitration clause: A contract or agreement that was entered by the parties must contain an
arbitration clause in order to resolve the disputes through arbitration. An arbitration clause can be a
separate agreement or an agreement in an agreement. That means the arbitration clause may be in
the form of a separate agreement or in a contract. An arbitration clause says that when a dispute
arises between the parties, it must be resolved through the process of arbitration. The parties shall
also mention the seat and venue of the proceedings in the arbitration clause itself.
Arbitral tribunals (Composition of tribunals) : It is the creation of an agreement which conforms
with the law. Section 10 of the Act enables the parties to determine freely the number of arbitrators
to settle their dispute. The only restriction is that the number of such arbitrators must not be even.
If the parties are not able to decide then there will be only 1 arbitrator. But if there are even
number of arbitrators then the agreement cannot be held valid merely on this ground. ( Narayan
Prasad Lohia v. Nikunj Kumar Lohia, 2002)
Appointment of arbitrator: After the respondent receives the notice from the applicant about
commencement of arbitration, both the parties will appoint an arbitrator in a manner that is
described in the arbitration clause. This provision is given under section 11 of the 1996 Act.

8. Who can be an Arbitrator?
In arbitration, an arbitrator is the presiding officer.
• A person who is of sound mind can be appointed as an arbitrator. The nationality of an arbitrator is
not specifically restricted. Hence, the arbitrator may be of any nationality. This is as per Section 11 of
the Arbitration and Conciliation Act, 1996 (“The Act”). Furthermore, the parties are free to choose
the arbitrator and determine the arbitrator’s qualifications.
• A person to become an arbitrator must qualify the following conditions:
• He can be a judge.
• He can be an advocate; or
• He can be a chartered accountant; or
• He can be a maritime expert.
• He can be an executive; or
• He can be an engineer; or
• He can be a businessman

9. Powers and Duties of Arbitrators
According to ACT 1996, arbitrator is granted comprehensive set of powers to oversee arbitration
proceedings which includes:
• Power to rule on jurisdiction and validity of arbitration agreement
• Administer an oath to parties and witness involved in the arbitration
• Pass interim measures
• Decide on the admissibility and influence of the evidence presented
• Power to proceed ex-party
• Settle the dispute based on merits keeping in mind the governing law, and determine the rules of
procedure and terms of the conduct
• Power to appoint experts
• Support settlement even through other methods such as conciliation are available
• Determine and apportion the costs of arbitration between two parties
• Discover a reasoned and just award and a duty to interpret or correct the award

10. Arbitral award
Arbitral award: After hearing the parties and examining all the issues a final award will be given by
the arbitrator. This award shall be made in writing and shall be signed by all the members of the
Tribunal. This award shall be final and binding on both the parties. However, the parties can appeal
against the arbitral award before the court.
Recourse against arbitral awards
Under Section 34 of the Act, a party if not satisfied can make an application to set aside the award
granted by an arbitral tribunal. The time limit to make such an application is not more than 3
months from the date the arbitral award was made. The grounds are:
• Incapacity of parties.
• Non-existence of the agreement of arbitration.
• Did not follow the due process.
• Error on the part of the arbitral tribunal to exercise its jurisdiction.
• Improper composition of the arbitral tribunal.
• The subject matter is not capable of being referred to arbitration.
• It is against public policy.
• Fraud or corruption.

11. Difference between the 1940 and 1996
Arbitration Act
1940 Act 1996 Act
Scope and Coverage Primarily focused on domestic arbitration. Covers both domestic and international commercial arbitration
Judicial Intervention Allowed for extensive court intervention in
arbitration proceedings, including
modifying or remitting awards.
Significantly reduces judicial intervention, aiming for a more
independent and final arbitration process.
Enforcement of Awards Did not provide for the enforcement of
foreign arbitral awards.
Facilitates the enforcement of foreign arbitral awards, aligning
with international practice.
Appointment of
Arbitrators
Provided for court appointment of
arbitrators
Emphasizes party autonomy in appointing arbitrators, with
court intervention limited to specific circumstances.
Time Limits Lacked strict time limits for arbitration
proceedings.
Includes provisions for time limits, encouraging efficient
arbitration.
Basis for Challenging
Award
Allowed for broader grounds to challenge
arbitral awards.
Narrowed the grounds for challenging awards, aiming for
greater finality.
Principles and
Objectives
Provided a structured process for dispute
resolution via arbitrations
Was enacted to narrow the basis of challenges of the awards,
decrease judicial supervision, ensure finality of awards, and
expedite the arbitration process.

12. Conclusion
Arbitration deals with alternate dispute resolution methods which are effective, cost-friendly, and
time-saving. Due to the pendency of cases and rigid procedural laws of the courts and to prevent
litigation, people nowadays generally prefer settling a dispute outside the courts with the help of
ADRs like arbitration, conciliation, mediation etc.
In conclusion, arbitration offers a more formal process where a third party, the arbitrator, makes a
binding decision based on evidence presented by both sides. This method is often used when
parties prefer a structured process and need a final resolution.