ARBITRATION

SUBMITTED
To Le Droit India
By Aayushi
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Contents Page Numbers

Introduction 2
What is arbitration? 2
Illustration 2
Types 3
Benefits 4
Case-Laws 5
Conclusion 5
Bibliography 6

Case-Laws Page Numbers

Progressive Construction Limited V. Louis 4
Burger Group
Bhajahari v. Bihari 5
Harinarayan Bajaj v. Sharedeal Finance 5
Paradise Hotel v. Airport Authority of India 5
Ltd
Pandit Munsi Ram and associates v. Union 5
of India
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INTRODUCTION
Arbitration is an easier and simple platform to solve the dispute. Solving disputes through
arbitrator is an ancient custom. In the past when any dispute arose in villages, it was solved
by the help of ‘Panch’. Such ‘Panchs’ was the reputed people of the village and there were
faith and confidence over them. Their decision was binding overall. With the passage of time,
it adopted the nature of law and was being called ‘Arbitration’. Not only this it was provided
international nature by Geneva Conventions, 1972 and New York Convention, 1958.

What is Arbitration?
It means two or more than two parties submit or refer their dispute to a third person named
Arbitrator for the decision who decided the dispute judicially. In other words, it could be said
that when two parties agree to have any intention of solving their dispute by the negotiations
of other person and which requires to follow all the formalities of judicial adjudication is
called Arbitration.

Illustration
A, B, C and D constitute a partnership firm and keeps a clause in the partnership documents
that their dispute shall be solved by the Arbitrator. This is an Arbitration Agreement.
According to John B.Saunders – “Arbitration is the reference of a dispute or conflict between
two or more parties for the decision after hearing both the parties judicially to such person or
persons which is not a court of competent jurisdiction”.
In this case of Collins Versus Collins (28 L.J.CH. 196), Romil H.R. has stated while defining
the it that it is the reference of a dispute or conflict on a subject matter between the parties for
the decision to one or more person with or without the umpire”.
According to section 2 (1) (a) of the Arbitration and Conciliation Act, 1996 Arbitration
means arbitration whether or not administered by permanent arbitral institutions.
But this definition is incomplete, brief and unclear. Actually, it does not define it. The above
definition of Arbitration is appropriate and according to these definitions:
• It is followed for reference to the dispute between one or more person for the purpose
of disposition.
• Stitch person is called the arbitration to whom the dispute is referred for disposition.
• It is not a court of competent jurisdiction.
• It is also not a suit instituted in a court.
• This solves the dispute after hearing both the parties judicially.

Types
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It is of three types:

1. Personal or Domestic Arbitration

2. Statutory Arbitration, and
3. International Arbitration.
1. Personal or Domestic Arbitration
It is the most followed type of Arbitration. In this, two or more parties refer their dispute or
conflict to Arbitral Tribunal for the decision.
Arbitration and conciliation Act, 1996 does not define personal or Domestic Arbitration. The
Act defines international commercial arbitration. On the basis of this definition, personal or
Domestic Arbitration could be defined. According to it – such Arbitration which is not
international Arbitration is domestic Arbitration. Under Domestic Arbitration both the parties
are Indians. Such a person could also be a legal person like a company, corporation, etc.
2. Statutory Arbitration
Generally, the procedure of Arbitration is determined by the mutual consent of the parties.
Where such procedure is determined, the Arbitration proceedings shall be conducted in
accordance with it.
But sometimes the dispute coming within the limits of an Act are to be solved by Arbitration
through the procedure mentioned in the Act and the proceedings are to be conducted in
accordance to that procedure, like- appointment of arbitration, place of Arbitration, the period
for giving award enforcement of Award, the procedure to be followed for Arbitral
proceedings, fees for Arbitration, etc such Arbitration is called statutory Arbitration.
There is no consideration of the contents of parties in the statutory Arbitration. Parties are
bound to follow the provisions of statutory Arbitration. Generally, Co-operation Societies
Act, Company Act Electricity Supply Act, etc. Consist provision of statutory Arbitration.
3. International Arbitration
Creation of international Arbitration is the result of growing international trade. Increase in
communication methods and liberalisation of national trade policy has lead to a tremendous
increase in international trade and commerce. In such situations, it is natural to accrue dispute
and conflict during international trade & commerce.
It is the reason that Arbitration & Conciliation Act, 1996 has laid down provision for
resolving such dispute and enforcement of the foreign award. Under the Act, such Arbitration
has been denoted as International Commercial Arbitration.
Section 2(1)(f) of the Act defines international commercial arbitration as – International
Commercial Arbitration means an Arbitration relating to a dispute arising out of the legal
relationship, whether contractual or not, considered as commercial under the law in force in
India and where at least one of the parties is-
• An individual who is a national of, or habitually residents in, any country other than
India;
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• A body corporate which is incorporated in any country other than India;

• A company or an association or a body of individuals whose central management and
control is exercised in any country other than India;
• The government of a foreign country: It is to mention here that no difference has been
made between the Arbitration and International Commercial Arbitration under the Act
(Progressive Construction Limited Versus Louis Burger Group A.I.R. 2012 Andhra
Pradesh 38) [1].

Benefits
It has several benefits out of which followings are the main:
Simple and express procedure: The procedure of this is very simple and expressive. It
does not contain the complex procedure of courts. The provisions of the code of civil
procedure and evidence Act does not apply to Arbitral proceedings. There is also no
requirement of appointment of an advocate or legal experts. In all, it follows the principle
of natural justice.
Not being Expensive and Delaying: Its proceedings are neither expensive nor delaying.
The disposal of the suit by court takes a lot of time owing to the overload of work and it
also expensive. Whereas there is only one dispute before an Arbitrator, he solves it earlier
and with fewer expenses. Generally, it has to give an award within four months and the
umpire has to within two months in an Arbitration.
Appointment of Arbitration by Parties: In this, parties appoint the Arbitrator. The
arbitrator is the faithful person of the parties. Hence whatever they decided, it is easily
acceptable to both the parties, and there is also no apprehension of partiality. Whereas
judges in court are government servant appointed by the Government, whose decision
could be against the will of the parties.
Services of Experts: Since it are appointed by the parties, so they may appoint the expert
of the subject matter to dispute as an Arbitrator. This increase the possibilities of a better
justice. Whereas, it is not necessary that a judge in Court be an expert of a subject matter.
An expert can only present in court as a witness which is not sufficient.
Individual Examination: One benefit of this is also that the Arbitrate can itself examine a
disputed place or subject matter which helps in arriving out a correct conclusion. Whereas
this work is not being done by the judge itself but being done by the commissioner this
does not prove to be so useful.
Revocation of Authority: During Arbitral proceedings, if it appears that an Arbitrator is
guilty of corrupt behaviour or misconduct, the parties can revoke its authority. Whereas
the authority of a judge cannot be revoked in this manner.
Confidentiality: Arbitral proceedings are always confidential. The arbitrator also can not
publish such proceedings whereas the proceedings of the court are held in open court
which makes them no more confidential.
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Case Laws dealing with Arbitral Award under Arbitration and

Conciliation Act, 1996:
• Calcutta High Court described an arbitral award as a result of the consensual
justice of the parties. Within the case of Bhajahari v. Bihari arbitral award was
outlined as the final determination of the claim or issue, by an arbitrator of the
parties of their own choice [2].

• In Harinarayan Bajaj v. Sharedeal Finance [3] it was held that as per definition
under Section 2 an arbitral award includes an interim award. However, an interim
award to be an award had to determine a claim with finality. Once the claim is
determined, the Tribunal couldn’t adjudicate more thereon claim and become
functus officio. Moreover, the procedural orders passed throughout the arbitral
proceeding is essentially excluded from the concept of award.
• In Paradise Hotel v. Airport Authority of India Ltd [4] the enforcement of an
award is complete only when it has been implemented under CPC within the same
manner as if wee a decree of court.
• In Pandit Munsi Ram and associates v. Union of India [5] it was interpreted that
since an arbitral award is taken into account a decree as under Section 35 of the
1996 Act, the court held that an arbitral award is an order which determines the
rights of parties involved by finally determining the actual claim or issue within
the course of arbitral proceedings.

Conclusion
The termination of proceedings procedure and making an arbitral award laid down is
pretty straightforward and simple. The Supreme Court has sometimes come up with
suggested amendments and necessary interpretations. It’s interesting to note that the
termination of arbitral proceedings is different under Section 32 and Section 25. The
conclusiveness of award marks the termination of proceedings under Arbitration and
Conciliation Act under Section 32 along with three other grounds. Not several radical
judgments are passed with regard to the above subject however Sai Babu v. M/S Clariya
Steels Private Limited holds good law.
1

1F Elkouri, EA Elkouri, K May - 1960 - ojp.gov

J Paulsson - 2013 - books.google.com
HS Farber - Journal of conflict resolution, 1980 - journals.sagepub.com
M Rubino-Sammartano - 2014 - books.google.com
S Mentschikoff - Columbia Law Review, 1961 – JSTOR
U. Ill. L. Rev., 2010 – HeinOnline
InD. lJ, 1987 – HeinOnline
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Bibliography
Primary Sources
• Section 2(1)(f)
• section 2 (1) (a) of the Arbitration and Conciliation Act, 1996
Secondary Sources
• Google Scholar
• Book of Law of Arbitration by Avtar Singh
• Book of Commercial Arbitration by Chirag Balyan
• Arbitration Step by Step by Dr. P.C. Markanda