MODULE-1

Scheme Of Conciliation + Valid Agreement + Authentication (SB) + Legal Framework

For Conciliation (SN) + Conciliation U/ A&C & When The Conciliation Proceedings
Commence & Conclude (LQ)

The scheme of conciliation under the Arbitration and Conciliation Act 1988 provides for a
voluntary, informal process and cost- effective manner for resolving disputes b/w parties
without resorting to litigation. (Conciliation is a voluntary, confidential, and flexible
alternative dispute resolution (ADR) process that helps people in a dispute reach an
agreement).

Key Benefits:

 Avoids lengthy & costly litigation

 Preserves/ restore relationship
 More flexible approach
 Confidentiality
 Voluntary process/ parties are not obligated

No. of Conciliators can be appointed U/S. 63 read with S.64 : Number of conciliators can
be one, or more than one. In case of more than one conciliator, it is necessary that they should
act jointly, and in case of one conciliator, he should be independent & impartial and must be
guided by principal of objectivity fairness & justices. He is also bound to keep confidential
all matters relating to the conciliation from the other party

Valid agreement in conciliation: U/S.73: A valid agreement for conciliation under the
ACA,1996 is a written document that outlines the parties' intention to resolve their dispute
through conciliation. This agreement should be clear, concise, and unambiguous.

The ACA, 1996 states that the conciliator will provide conditions to the parties if he thinks
there may be a settlement. The conciliator may make changes to these terms after evaluating
them and considering input from the parties. The conciliator can draft and sign the settlement
agreement if a settlement is achieved. Otherwise, if “requested” by the parties the conciliator
can draw, assist the parties, to draft the settlement agreement. Once signed, this agreement
becomes legally binding on all involved parties. The conciliator will then certify the
agreement and provide a copy to each party.

Authentication: When the parties sign the settlement agreement, the conciliator shall
authenticate the same as having been executed in his presence, as a result of their free
volition/willingness and the conciliator shall hand over a copy of such authenticated
settlement agreement to each of the parties and retain a copy thereof in his possession for
future reference, if required. The settlement agreement arrived at b/w the parties, and duly
authenticated by the conciliator, shall not only be final and binding on the parties, but will
have the same effect as if the settlement agreement is an arbitral award on agreed terms on
the substance of the dispute rendered by a duly constituted arbitral tribunal under S. 30 of the
Act. A successful conciliation comes to an end only when the settlement agreement signed by
the parties comes into existence. It is such an agreement, which has the status and effect of
legal sanctity of an arbitral award under this Section.

EXTRA: But if a conciliator, after holding some meetings with the parties and after having
discussions with them, draws up the so-called settlement agreement by himself in secrecy and
send the same to the court in a sealed cover (being without the signatures of the parties)
cannot be given recognition of a settlement agreement. If a statue prescribes a procedure for
doing a thing, that thing has to be done according to the prescribed procedure.

Legal Framework:

1- S.61: Application and scope: Applies to disputes arising from legal relationships
(contractual or not), except where conciliation is prohibited by law.
2- S.62: Commencement of conciliation proceedings: Conciliation starts with a written
invitation and acceptance. No proceedings if the invitation is rejected or not
responded to within 30 days.
3- S. 63: Number of Conciliators: Default is one conciliator unless parties agree to two
or three.
4- S. 64: Appointment of Conciliators: Parties can agree on a conciliator or seek help
from an institution for appointment.
5- S.66: Conciliator Not Bound by Certain Enactments: The conciliator is not bound by
the CpC, 1908, or the IEA,1872.
6- S. 67: Role of the Conciliator: To assist parties impartially and independently. The
 conciliator can propose settlements at any stage.
7- S. 70: Disclosure of Information: The conciliator must share information with both
parties unless specified as confidential.
8- S. 73: Settlement Agreement: When a settlement is reached, it must be signed by both
parties and is final and binding. The conciliator may assist in drafting.
9- S.74: Status and Effect of Settlement Agreement: The settlement agreement has the
same effect as an arbitral award.
10- S.75: Confidentiality: All matters related to conciliation, including the settlement, are
confidential, unless disclosure is necessary for enforcement.
11- S. 76: Termination of Conciliation Proceedings: Proceedings can end by settlement,
declaration by the conciliator, or by written notice from the parties.
12- S. 77: Resort to Judicial or Arbitral Proceedings: Parties cannot initiate court or
arbitral proceedings during conciliation except to preserve rights.
13- S. 78: Costs: determined by the conciliator and typically shared equally unless
otherwise agreed in the settlement.
14- S. 79: Deposits: The conciliator may request deposits to cover costs, and proceedings
may be suspended if deposits are not made.
15- S.80: Role of Conciliator in Other Proceedings: The conciliator cannot act as an
arbitrator or be called as a witness in any future proceedings related to the dispute.
16- S. 81: Admissibility of Evidence in Other Proceedings: Statements, admissions, and
proposals from conciliation cannot be used as evidence in subsequent legal or arbitral
proceedings.

Proceeding commencement and its conclusion

1. Invitation to Conciliate (S. 62(1)): One party sends a written invitation to the other
party, requesting conciliation. The invitation should briefly outline the subject of the
dispute.

2. Acceptance by the Other Party (S. 62(2)): Conciliation proceedings commence

when the other party accepts in writing the invitation to conciliate.

3. Rejection of Invitation (S. 62(3)): If the other party rejects the invitation, no
conciliation proceedings will occur.

4. No Response to Invitation (S. 62(4)): If the initiating party does not receive a reply
within 30 days (or a specified time period in the invitation), they can treat the silence
 as a rejection and inform the other party that the conciliation process will not proceed.

**Thus, conciliation proceedings commence as soon as the invitation to conciliate is

accepted in writing by the other party**

Conclusion (Termination) of Conciliation Proceedings U/S. 76

1. Settlement Agreement (S. 76(a)): The conciliation process concludes when the
parties sign a settlement agreement. This indicates that they have reached an
amicable resolution of the dispute. The date of signing the agreement marks the
termination of the conciliation process.

2. Declaration by Conciliator (S. 76(b)): If, after consulting with the parties, the
conciliator believes that further efforts at conciliation are no longer justified, they
may issue a written declaration terminating the conciliation. The date of the
declaration becomes the termination date.

3. Declaration by Parties (S. 76(c)): The parties may decide to terminate the
conciliation proceedings by issuing a written declaration to the conciliator. The
conciliation concludes on the date the declaration is made.

4. Declaration by a Party (S. 76(d)): Any party involved in the conciliation can
unilaterally declare the termination of the conciliation proceedings by issuing a
written declaration to the other party and the conciliator (if one has been appointed).
The date of the declaration signifies the end of the conciliation process.

Final Binding Settlement (S. 73 and 74): Once the parties sign a settlement agreement
under S. 73, it becomes final and binding on both parties and anyone claiming under them.

-The settlement agreement has the same legal status and effect as an arbitral award rendered
by an arbitral tribunal under S.30 of the A&C Act.

FOR A QUICK OVERVIEW OF ALL CONCILIATION SECTIONS

S.S: TITLE SUMMARY

61: Application & scope Applies to conciliation of disputes arising out of legal relationships,
except where certain disputes are excluded by law

62: Commencement of Conciliation starts when a party invites the other to conciliate, and
conciliation proceedings the other party accepts in writing. No reply is treated as a rejection
after 30 days.

63: No. of conciliators One conciliator by default unless parties agree on two or three.
Multiple conciliators act jointly.

64: appointment of Parties appoint conciliators by agreement or with institutional

conciliators assistance. In cases with three conciliators, the third conciliator acts
as presiding conciliator.

65: submissions of Parties submit written statements of the dispute to the conciliator.
statements to conciliator The conciliator may request further information from both parties
during the proceedings.

66: conciliator not bound The conciliator is not bound by the CPC, 1908 or the IEA, 1872
by certain enactments

67: Role of conciliator The conciliator assists parties impartially, focusing on fairness and
justice, and may propose settlements at any stage.

68: Administrative The parties or conciliator can arrange for administrative assistance
assistance from suitable institutions.

69: Communication The conciliator may communicate with both parties together or
between conciliator and separately, and meetings may be arranged at a location decided in
parties consultation with the parties.

70: Disclosure of Information provided to the conciliator must be disclosed to the other
information party, except when confidentiality is requested.

71: Co-operation of parties Parties must cooperate with the conciliator in good faith, including
with conciliator submitting materials, providing evidence, and attending meetings.

72: Suggestions by parties Parties may submit suggestions for settlement either on their own or
for settlement when invited by the conciliator.

73: Settlement agreement If a settlement is reached, it is written and signed by the parties,
 becoming final and binding. The conciliator may assist in drafting
the settlement agreement.

74: Status and effect of A settlement agreement has the same status and effect as an arbitral
settlement agreement award on agreed terms under S. 30 of the Arbitration Act.

75: Confidentiality All matters related to the conciliation process are confidential,
including the settlement agreement, except where disclosure is
required for enforcement.

76: Termination of Proceedings terminate upon signing a settlement agreement, a

conciliation proceedings declaration from the conciliator, or a declaration from either party.

77: Resort to arbitral or Parties cannot initiate arbitration or judicial proceedings during
judicial proceedings conciliation except when necessary to preserve rights.

78: Costs The conciliator fixes the costs at the conclusion of proceedings.
Costs typically include fees and expenses of conciliator, witnesses,
experts, and other related expenses.

79: Deposits The conciliator may ask parties to deposit equal amounts to cover
costs in advance, with supplementary deposits if necessary.
Unexpended balances are returned.

80: role of conciliator in The conciliator cannot act as an arbitrator, counsel, or witness in any
other proceedings subsequent proceedings related to the dispute unless agreed by the
parties.

81: Admissibility of Parties cannot use conciliatory statements, admissions, proposals, or

evidence in other settlement indications as evidence in arbitral or judicial proceedings.
proceedings

MEDIATION V. CONCILIATION (SN) + IMP PROVISIONS (LQ) [2]

In mediation, a neutral mediator facilitates communication between the disputing parties,
helping them to reach a mutually agreeable solution. The mediator's role is primarily to guide
discussions and assist the parties in understanding each other’s positions. Importantly, the
mediator does not propose solutions or make decisions; the control over the outcome rests
entirely with the parties. Mediation is an informal, flexible, and confidential process, often
used where maintaining relationships—such as in family or business disputes is crucial. The
settlement reached in mediation is voluntary and becomes binding only if the parties agree to
it.

On the other hand, conciliation is a more structured process governed by laws like Part III
of the ACA,1996 in India. In conciliation, the conciliator plays a more active role than a
mediator, as they may propose solutions or settlement terms to help resolve the dispute.
Although the parties retain control over the final decision, the conciliator can guide the
process more directly by suggesting potential outcomes. The settlement agreement in
conciliation is more formal and, once signed, carries the same weight as an arbitral award,
making it legally binding and enforceable. Like mediation, conciliation is confidential, and
information disclosed during the process cannot be used in future legal proceedings.

Both processes share the common goals of being voluntary, cooperative, and confidential, but
they differ in terms of formality and the neutral third party's involvement. Mediation is
typically more flexible and party-centric, making it well-suited for disputes that require
ongoing relationships. Conciliation, by contrast, provides a structured, legally-backed process
that is often used in commercial disputes where a binding settlement is desired. Each method
offers advantages depending on the nature of the conflict and the parties’ needs, helping
reduce the burden on courts while promoting amicable resolutions. For the imp. provisions
for Conciliation, refer the above table

MEDIATION:

1- S. 89 of the CPC, 1908: empowers the court to refer disputes to alternative dispute
resolution methods, including mediation, arbitration, and conciliation.
 It states that when it appears to the court that there exists an element of settlement, it
may direct the parties to a suitable forum for settlement, encouraging mediation as a
viable option.
2- Order XXXIIA /(32A) of the CPC: This order specifically deals with the procedures
 for mediation and outlines the process to be followed when parties agree to mediate.
 It provides guidelines for the appointment of mediators, conduct of mediation, and
confidentiality of the proceedings.
3- The Legal Service Authority Act, 1987: this act, mediation is encouraged as a
method to resolve disputes, particularly for those who cannot afford legal
representation.
 It promotes free legal services and facilitates the mediation process through legal
services authorities
4- Who are the mediators: Rule 4 of Civil procedure Mediation Rules, 2006 prescribes:
 Retired judges of SC/HC/ District & Sessions Judge/ City Civil Court or Courts of
equivalent status.
 Legal practitioners with at least 15yrs. standing at Bar at the level of SC/ HC/District
or courts of equivalent status.
 Experts or other professional, with at least 15yrs. standing; or retired senior
bureaucrats or retired senior executives.
 Institutions which are themselves experts in mediation and have been recognized as
such by the HC provided the names of its members are approved by the HC initially
or whenever there is change in membership.
5- Cases Suitable for Referral to Mediation: All civil cases, including actions for
injunctions, damages, partition, specific performance, money, rent, family disputes,
disputes related to intellectual property rights, and dishonor cases under Section 138
of the NIA except those involving serious allegations of fraud. Suitable criminal cases
under S. 316(Criminal Breach of Trust), 85(cruelty against women within
domestic relationships), and 86 of the BNS Act, 2023, and any other cases deemed
compatible under the law may also be referred to mediation.
6- How long is a mediation? Mediation can vary in length; many cases are resolved in
just a couple of sessions, while more complex disputes may require additional
sessions for effective resolution. Ideally, follow-up sessions should occur within one
week of the previous session. The mediation process should generally be completed
within a maximum of 60 days, and postponements should not be casually agreed to
by the mediator.
All parties or their representatives empowered to settle the dispute amicably, along
with their counsel, should participate in the mediation process. It's important to note
 that mediation is an alternative to trials, and referring a case to mediation does not
automatically stay any ongoing court proceedings.

KINDS OF ARB + BENEFITS (LQ) + FAST TRACK ARB (SN) [3]

INTRO: 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. By one definition
arbitration is binding and non-binding arbitration is therefore technically not arbitration.

English judgement named Collins v. Collins, the court gave a wide definition to the concept
of Arbitration: The court essentially stated that arbitration is a process of resolving disputes
where parties agree to submit their differences to the decision of one or more persons chosen
by them, rather than relying on the courts. This definition emphasizes the voluntary nature of
arbitration and the parties' agreement to be bound by the arbitrator's decision.

Kinds Of Arbitration:

1- Domestic Arbitration: Domestic arbitration refers to the resolution of disputes

that arise within a single country, governed by the arbitration laws and regulations
of that nation. It typically involves parties who are based in the same jurisdiction
and engage in commercial transactions or contractual relationships. This type of
arbitration is often preferred due to its familiarity with local legal practices and the
ease of enforcing awards within the domestic legal framework. Domestic
arbitration provides parties with a streamlined process that can lead to quicker
resolutions compared to traditional court litigation. The proceedings are typically
less formal and can be tailored to the specific needs of the parties involved,
making it a flexible and efficient alternative for resolving disputes.

2- International Arbitration: International arbitration involves disputes between

parties from different countries and is governed by international treaties or
conventions, such as the United Nations Commission on International Trade Law
(UNCITRAL) Arbitration Rules or the rules of established arbitration institutions.
This type of arbitration is particularly useful in cross-border transactions, where
 the complexities of varying legal systems and jurisdictions can pose significant
challenges. International arbitration provides a neutral forum for dispute
resolution, allowing parties to avoid the potential biases of local courts. It is
recognized for its enforceability; arbitral awards are often more readily
enforceable in multiple jurisdictions due to international treaties like the New
York Convention. As a result, international arbitration is a favored mechanism for
multinational corporations and investors seeking to resolve disputes efficiently
while minimizing legal risks.

3- AD HOC Arbitration: Ad hoc arbitration refers to arbitration that is not

administered by any established arbitration institution, allowing the parties to
design their own procedures and rules tailored to their specific needs. This type of
arbitration offers a high degree of flexibility, enabling parties to agree on various
aspects of the process, such as the choice of arbitrators, the applicable rules, and
the timelines for proceedings. While ad hoc arbitration can be advantageous for
straightforward disputes or where the parties seek to avoid the costs associated
with institutional arbitration, it may also present challenges related to procedural
consistency and enforcement, as the absence of a governing body can lead to
uncertainty. Despite these potential drawbacks, ad hoc arbitration remains a viable
option for parties who prefer a customized approach to dispute resolution.

4- Fast Track Arbitration: Fast track arbitration is a streamlined arbitration process

designed to resolve disputes quickly and efficiently, often within a predetermined
timeframe. This type of arbitration is particularly beneficial for simpler or lower-
value disputes, where parties seek a swift resolution without the lengthy
procedures typical of traditional arbitration. Fast track arbitration typically
involves shorter time limits for submitting documents and evidence, expedited
hearings, and simplified procedural rules. As a result, it reduces both the duration
and cost of the arbitration process, making it an attractive option for parties who
prioritize a quick resolution. Many arbitration institutions offer fast track
arbitration services as a response to the growing demand for efficient dispute
resolution methods in today’s fast-paced business environment.

HYBRID ADRS (SN) [3]

A hybrid dispute resolution process combines two or more traditional dispute resolution
processes into one. The most common hybrid process is med-arb in which the same
individual or dispute resolution forum acts first as a mediator and then if necessary, as an
arbitrator. However commonly, in case of a dispute, more than one type of dispute resolution
procedure is provided for in sequence such as negotiation, then mediation, and finally for
arbitration, and each of these processes is carried out by a different person.

Development Of Hybrid ADR: Med-arb was initially used in the USA while public-sector
collective bargaining, particularly for police and fire departments. In many states, the state
legislature has called for a hybrid system to resolve such disputes peacefully and efficiently.
Sam Kagel 1st coined this alternate dispute resolution mechanism and the first hybridized the
2 methods 'mediation and arbitration' into one 'Med-Arb' for settling the San Francisco
Nurses' Strike in the 1970s (significant event in the history of labour unions and women's
rights. It was a 21-day strike by over 4,500 nurses at 17 hospitals in San Francisco. The strike
was sparked by a dispute over wages, working conditions, and health benefits)

Different Forms:

1) Arb-Med: starts with an arbitration process, where a neutral third party

(arbitrator) issues a binding decision (award) that is kept sealed. Then, the parties
move into a mediation phase, where a mediator helps them negotiate a settlement.
If a settlement is reached, the award remains sealed and the settlement agreement
governs the resolution of the dispute. However, if mediation fails, the sealed
award is revealed and becomes binding on the parties. The same person can often
serve as both mediator and arbitrator, saving time and money. This approach is
informal, quick, and cost-effective. Additionally, the mediator's dual role might
influence the parties' negotiations, as they may use the mediator's suggestions as
hints towards the potential outcome of the arbitration.
2) Overlapping Med-Arb: is a hybrid dispute resolution process that combines
mediation and arbitration. Two neutral experts, a mediator and an arbitrator, are
involved. The mediator facilitates private discussions between the parties to reach
a settlement, while the arbitrator observes the mediation process without
participating in private discussions. If a settlement is reached through mediation,
arbitration is not necessary. However, if no agreement is reached, the arbitrator
steps in to make a binding decision.
 3) Plenary Med- Arb: requires the neutral to communicate with both parties
together, preventing any concerns about bias. However, this can hinder the
mediation process as private conversations are often crucial for building trust and
finding solutions.
4) Braided Med-Arb: allows parties to mediate throughout the arbitration, offering
more flexibility but potentially creating settlement pressure.
5) Optional Withdrawal Med-Arb: gives parties the option to withdraw after
mediation, protecting voluntary participation but undermining finality. Each
variant has its own advantages and disadvantages, and the best choice depends on
the specific dispute and parties' preferences.

DIFFERENCE B/W 5:

ASPECT ARB-MED OVERLAPPING PLENARY MED- BRAIDED OPTIONAL

MED-ARB ARB MED-ARB WITHDRAWAL
MED-ARB

Order of Arbitration Both processes The neutral Allows parties to Parties can
Process comes 1st happen communicates with mediate withdraw after
followed by simultaneously, both parties together, throughout mediation,
mediation of with the arbitrator ensuring arbitration, maintaining
no settlement observing the transparency but increasing voluntary
occurs mediation limiting private flexibility but participation but
conversations potentially reducing finality in
essential for trust- creating the resolution
building settlement
pressure

Arbitrator’s The same Two separate A single neutral The arbitrator and The neutral may
Involvement person acts as experts act as party handles both mediator roles are serve in both roles,
both arbitrator arbitrator and roles, maintaining closely with parties free to
and mediator mediator impartiality across interwoven, with exit before
joint mediation arbitration,
 communications sessions reducing concerns
integrated within of forced
the arbitration settlement
process

Mediator’s The mediator The mediator Joint sessions, Engages in Facilitates

Role actively focuses on private limiting private ongoing mediation with an
facilitates a discussions during discussions but mediation during option for parties
settlement mediation emphasizing arbitration, to exit, protecting
after transparency encouraging voluntariness but
arbitration resolution but potentially
increasing lowering finality
settlement
pressure

Advantages Sequential Separate experts Prevents bias by Offers flexibility Supports voluntary
process may allow more ensuring all and continuous participation by
ease transition specialized roles communication is mediation allowing exit after
from for each stage open, though private opportunities mediation, though
arbitration to sessions are within arbitration, at the cost of
settlement minimized potentially reducing finality
speeding up
resolution

6) Arbitration-Mediation-Arbitration (AMA): AMA is a hybrid dispute resolution

method that combines elements of arbitration and mediation, similar to Med-Arb.
The process begins with arbitration, where the claimant starts by filing a notice of
arbitration, and the respondent responds. After this, a tribunal (or panel of
arbitrators) is set up but immediately pauses its proceedings to give the parties a
chance to settle their dispute through mediation. If the mediation results in a
settlement, the tribunal issues a "consent award" to make the settlement legally
binding. If the mediation doesn’t succeed, the case returns to arbitration for a final
decision.
7) Mini Trials/ executive settlement conference: is a private, out-of-court process
 often used for complex cases with high financial stakes. In a mini-trial, senior
executives from both parties- who have the authority to settle but are not involved
in the case's details- review shortened presentations of the key arguments and
evidence. These executives, along with a neutral 3 rd party, assess the strengths and
weaknesses of each side’s position. If asked, the neutral 3rd party can give a non-
binding opinion on the likely outcome of a real trial or help facilitate negotiations.
Benefits: they are non-binding, relatively quick (often just one or two days), and
allow parties to control the confidentiality of sensitive information. Even if the
mini-trial doesn’t lead to a settlement, it can help both sides prepare for
negotiations by clarifying imp. facts about the case.
8) Complete Online Dispute Resolution (C-ODR): is a modern innovation that
enables dispute resolution to take place entirely online via cloud technology. C-
ODR offers a fast, efficient, and cost-effective way to resolve disputes remotely.

Conclusion: In recent years, India has experienced significant changes in its justice system.
While traditional court litigation remains reliable, many older dispute resolution methods,
such as arbitration and mediation, have gained new attention. These alternative methods help
ease the burden on the judiciary and offer faster, more flexible solutions for resolving
disputes. Hybrid mechanisms and ADR options like AMA, mini-trials, and C-ODR are now
seen as valuable tools in India's legal system, providing efficient paths to justice.

Read permanent lok Adalat n lok Adalat for the sake of viva from the ppt.(not from
exam pov)

SUITABILITY OF EARLY NEUTRAL EVALUATION (ENE) IN INDIA (SN)

In an ENE, an independent and impartial evaluator is appointed by the parties to give

an assessment or "evaluation" of the merits of their respective cases. The evaluator can offer
a knowledgeable assessment of the quality of the evidence that can be used to resolve those
legal concerns as well as an authoritative (although tentative) perspective on the major issues
of the case.

ENE is a process where a neutral 3rd party helps parties understand their case and explore
possible solutions. This process is usually non-binding, not obligated to follow any
recommendations made by the neutral.
Additionally, ENE is a non-prejudicial process. This means that anything said during the
ENE proceedings cannot be used against a party in future legal proceedings (with a few
exceptions). This helps create a safe space for parties to discuss their case openly without fear
of the info. being used against them later.

WHEN TO USE ENE:

 Deadlock in Dispute: If both parties are stuck on a specific issue, an independent

evaluator can offer a neutral opinion, helping them break the impasse and understand
the likely court or tribunal outcome.
 Wide Difference in Positions: When parties have very different views on the case,
ENE can help bring both sides closer together by providing an objective assessment
of the case.
 Unrealistic Expectations: If one party has an overly optimistic view of their position,
an independent evaluation can help them understand that their arguments may not
succeed in court.
 Need for Confidentiality: ENE is a private process, meaning no public record is
created, which is useful when privacy is essential to the parties involved.

Select And Conduct An Early Neutral Evaluation (ENE) Process:

1) Selecting the ENE Process:

 Agreement of Parties: ENE is a voluntary process, so all parties must agree on the
process and the evaluator.

 Choice of Evaluator: The evaluator can be chosen through the courts or an

organization. Selecting someone respected and trusted as impartial and independent is
essential to ensure both parties accept the evaluation.

 Court-Based ENE: If impartiality concerns arise, parties may prefer to conduct ENE
through the courts to uphold neutrality/impartiality.

2. Entering into an ENE Agreement:

 Setting Expectations: Once an evaluator is chosen, all parties enter into an ENE
agreement, outlining how the evaluation will be conducted and what is expected of
the evaluator.
Key Elements:

 The agreement should specify if the ENE is "without prejudice" and whether the
evaluation is binding or non-binding.
 Confirm the evaluator’s impartiality duty.
 Outline the procedure, timetable for document exchange, and evaluation delivery.
 Clarify if the evaluator will provide a detailed opinion or a basic assessment.
 Define whether the evaluator can request more information or seek independent
advice.
 Set confidentiality terms to protect privileged information.
 Address evaluator fees and any party costs.

3. Procedure for ENE:

 Flexible Design: Parties have flexibility to decide the ENE process. They may leave
the procedure to the evaluator or define parts of it themselves.

 Early Agreement: If parties choose to set some procedure, they should agree early,
including it in the ENE agreement, and ensure the evaluator accepts these terms.

4. Procedural Matters to Consider:

 Case Summary: Specify if a joint or separate case summary is needed.

 Submission Limits: Set limits on the number and length of submissions.

 Pre-ENE Discussions: Decide if pre-ENE discussions on conduct or procedures are

needed.

 Hearing or Written Submissions: Choose whether the ENE will have a hearing or
rely on written evidence.

 Presentation of Evidence: Specify if parties can present evidence and examine

witnesses in hearings.

 Document Submission: Determine the required documents and if there’s a core set of
agreed documents.

 Hearing Duration: Set a maximum duration for any hearing sessions.

5. Balancing Efficiency and Thoroughness: The goal of ENE is to resolve disputes

efficiently and affordably, balancing thoroughness in information presented to the evaluator
without excessive preparation or costs. Sufficient evidence ensures the evaluator's valuation
is reliable and trusted by both parties.

Advantages of ENE:

 Clarifies Issues: ENE helps identify and clarify the main issues in the dispute.

 Speed: It is usually quicker than traditional dispute resolution methods.

 Shows Case Weaknesses: It highlights any weak points, gaps in evidence, and risks
of pursuing litigation.

 Aids Settlement: By providing a neutral view, it encourages parties to adopt a more

realistic position for negotiations.

Disadvantages of ENE:

 Entrenched Positions: The “winner” may become overly confident, making

settlement harder due to increased demands.

 Weakened Negotiation Position: The “loser” may feel discouraged, which could
reduce their chances of a satisfactory settlement.

 Potential Expense: ENE can be costly and time-consuming, especially if no

settlement is reached.

 Limits for Complex Cases: It may not be detailed enough for complex technical
issues unless narrowed down to specific points.

 Judge Exclusion: If a judge conducts the ENE, they cannot later oversee the trial
unless both parties agree, which could be used tactically to remove a judge from the
case.

MODULE 2

JUDICIAL INTERVENTION UNDER ARBITRATION

Judicial intervention in arbitration seeks a balance between court oversight and the
independence of arbitration. India's Arbitration and Conciliation Act, 1996 (the Act),
modeled after the UNCITRAL Model Law, establishes limited grounds for court
involvement, aiming to reduce case backlogs and expedite dispute resolution.

Extent of Judicial Intervention The Act identifies four stages where courts may intervene:
 1. Before Arbitral Proceedings: Under Sections 8, 11, and 14, courts may refer parties
to arbitration or appoint arbitrators if required.
2. During Proceedings: Courts can grant interim measures (Section 9) or assist in
evidence gathering (Section 27).
3. Post-Award: Courts may set aside an award under Section 34 on specific grounds
and enforce awards under Section 36.
4. Appealable Orders: Section 37 lists specific orders that parties can appeal in court.

Grounds for Setting Aside an Award (Section 34) Courts may set aside awards for reasons
including:

 Incapacity of a party.
 Invalidity of the arbitration agreement.
 Lack of proper notice.
 Decisions beyond the tribunal's jurisdiction.
 Conflict with public policy.

Public Policy and Judicial Review The "public policy" ground, refined by the 2015
amendment, restricts challenges to cases involving fraud, violation of fundamental legal
principles, or justice and morality issues. Key cases clarifying this concept include:

 Renusagar Power Co. v. General Electric Co. and ONGC Ltd. v. Saw Pipes Ltd.,
establishing fundamental legal principles as a benchmark for public policy.

Doctrine of Separability This doctrine considers the arbitration clause as independent of the
main contract, ensuring arbitration even if the contract is void. Courts have increasingly
upheld this principle, as seen in Vidya Drolia v. Durga Trading Corporation.

Key Case Laws

 Videocon Industries Ltd. v. Union of India: Limited judicial discretion in

arbitration.
 Surya Dev Rai v. Ram Chander Rai: Discretionary judicial intervention for
correction without disrupting proceedings.
 McDermott International Inc. v. Burn Standards Co. Ltd.: Courts can set aside
but not correct arbitral awards.
 Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd.: Judicial caution advised
unless the award is perverse.
 State of Jharkhand v. HSS Integrated SDN: Arbitral awards with reasonable views
should not face court interference.

Conclusion Judicial intervention, although minimal, provides necessary checks. The

judiciary's role is administrative, ensuring arbitration remains efficient while upholding
justice. Recent amendments continue to shape arbitration towards becoming a viable, swift
dispute resolution method aligned with international standards.
 MODULE 3

An Arbitration Agreement is an agreement between the parties to submit all or certain

disputes which have arisen or which may arise between them, to arbitration, in respect of a
defined legal relationship, whether contractual or not.

The following factors are essential to such an agreement:

I. Validity:

An arbitration agreement, including an arbitration clause in an agreement, is a contract. It

must be legally valid under the Indian Contract Act, 1872. A contract, to be legally valid
under said act, must have the following:

a. Parties must be legally competent to enter into contract.

b. Consent of parties must not be influenced by fraud.

c. The object of the contract must be lawful.

d. The contract must be capable of being carried into effect. Therefore, it should not be
uncertain.

II. Writing & Intent: An arbitration agreement is only valid if it is in writing. Both parties
should be completely intent on referring the matter to arbitration.

III. Dispute: The arbitration agreement can be in respect of present or future dispute. Such
dispute must arise out of the defined legal relationship. A dispute not arising from the legal
relationship is beyond the scope of arbitration. The legal relationship can be contractual or
non-contractual, arising out of a breach of statutory obligation.

Recommended Arbitration Clause by the Indian council of Arbitration

"Any Dispute or differences whatsoever arising between the parties out of or relating to the

construction, meaning and operation or effect of this contract or the breach thereof shall be

settled by arbitration in accordance with the Rules of Arbitration of the Indian Council of

Arbitration and the Award made in pursuance thereof shall be binding on the parties.“

STANDARD ICC ARBITRATION CLAUSE

All disputes arising out of or in connection with the present contract shall be finally settled

under the Rules of Arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with the said Rules.

 Parties are free to adapt the clause to their particular circumstances. For instance, they
may wish to stipulate the number of arbitrators given that the ICC Arbitration Rules
contain a presumption in favor of a sole arbitrator. Also, it may be desirable for them to
stipulate the place and language of the arbitration and the law applicable to the merits.
The ICC Arbitration Rules do not limit the parties’ free choice of the place and language
of the arbitration or the law governing the contract.
 When adapting the clause, care must be taken to avoid any risk of ambiguity. Unclear
wording in the clause will cause uncertainty and delay and can hinder or even
compromise the dispute resolution process.
 Parties should also take account of any factors that may affect the enforceability of the
clause under applicable law. These include any mandatory requirements that may exist at
the place of arbitration and the expected place or places of enforcement.

An example of a basic arbitration clause is: “Dispute Resolution: Any claim, dispute or
difference relating to or arising out of this Agreement shall be referred to the arbitration, of
a sole arbitrator. The arbitration shall be subject to the Arbitration and Conciliation Act,
1996 as may be amended from time to time. The XYZ Arbitration Centre, will appoint the
Sole Arbitrator and will conduct the Arbitration in accordance with its rules for conduct of
Arbitration proceedings then in force and applicable to the proceeding. The seat and venue
of arbitration shall be New Delhi. The proceedings shall be undertaken in English. The
arbitration award shall be final and binding on the parties.”

Arbitration Centre can be replaced with any reputed arbitral institution such as the Nani
Palkhivala Arbitration Centre, International Centre for Dispute Resolution, Delhi
International Arbitration Centre, Singapore International Arbitration Center, London Court of
International Arbitration, ICC International Court of Arbitration etc.

Number of Arbitrators: Considerable thought must be given to the number of arbitrators

constituting the arbitral tribunal. As a rule of thumb, it is advisable to opt for a sole arbitrator
as opposed to a panel of arbitrators, particularly in low value contracts. Arbitral fees can be
prohibitive. Coordinating mutually convenient dates and time of three/five arbitrators can
itself become challenging. Unless there is a thought through compelling strategy behind
opting for a panel of arbitrators, a sole arbitrator should be the norm. It is advisable to review
the fee schedules provided in the Arbitration & Conciliation Act, 1996 (Fourth Schedule) and
also the fees schedules in case of institutional arbitrations and make a comparative fee
analysis, prior to drafting the clause.

Institutional Arbitration: Institutional arbitration as opposed to ad-hoc arbitration. A typical

arbitration clause would typically state that an arbitrator would be jointly appointed by the
parties. But when parties are in dispute, the chances of mutually agreeing on an arbitrator are
miniscule. In such event, parties have no option but to approach the court for the appointment
of an arbitrator under s.11 of the Arbitration & Conciliation Act, 1996 (‘ACA’). It is
therefore advisable to leave the appointment to a neutral and reputed arbitration institution.
There are also other advantages of opting for institutional arbitration including use of their
pre-established rules of procedure. One can also look to the institution for their sample
clauses to draw up the arbitration clause, if the parties have decided on the institution.

Fast Track Procedure: Under S.29B of the ACA, it is possible for parties to provide for a
fast track procedure in writing ‘at any stage’. In low value contracts it is advisable to opt for
the S.29B procedure at the stage of drafting the arbitration clause. The fast track procedure
inter-alia envisages a decision on ‘the dispute on the basis of written pleadings, documents
and submissions filed by the parties without any oral hearing’ and requires that an award be
made within six months from the date on which the arbitral tribunal enters reference. In this
procedure the parties and the arbitrator are free to agree on a fees.

Importance of Seat: It is imperative to designate the arbitral ‘seat’. ‘Seat’ is the determinant
element for the supervisory jurisdiction of courts. It is settled law that ‘seat’ and ‘venue’ can
be different. It is entirely possible that parties may choose a ‘venue’ for the convenience of
conducting arbitration and a completely different ‘seat’ for the supervisory oversight of the
courts on matters such as injunctions, appointment of arbitrators, objections to the arbitral
award etc.

In-depth research on courts and the manner in which they have dealt with these important
aspects, particularly in cross border disputes, must be undertaken, before deciding on a seat.
Keep in mind that the law of contract, law of the arbitration agreement and procedural law
governing the arbitration are all important aspects in relation to arbitration and can become
contentious as well as extremely relevant, for the determination of the seat, when such seat is
not explicitly stated. It is not unknown to see protracted court battles for determination of
seat. The issues become more complex if international jurisdictions are involved. Therefore,
particularly, in cases of international commercial arbitration, give careful thought to each of
these laws and keep them of the same country to the extent possible.

Jurisdiction: Matters can become further complicated if the arbitration agreement provides
for a jurisdiction of courts different from the ‘seat’ of arbitration. In the case of Indus Mobile
Distribution v. Datawind Innovations, the Supreme Court ruled that exclusive jurisdiction
is granted by seat. It is important to avoid providing lawyers any room for interpretation and
to maintain consistency between "seat" and jurisdiction in the dispute resolution provision.

Binding Nature of the Award: The arbitration clause must mention that the arbitral award
will be final and binding. Under Indian Law a non-binding award is no award in the eyes of
law. Arbitration is a consensual process. If the language of the arbitration clause conveys a
cloud on the mandatory nature of either submission to arbitration or that the parties did not
intend for the arbitral award to be final and binding, the submission and/or award, as the case
may be, can be brought into question. The language must convey the intent to arbitrate and to
be bound by the decision of the arbitral tribunal in unequivocal terms.

Avoid expressions like ‘may’ or ‘can’, which connote a mere desire. Instead opt for a
mandatory form of language using the expressions ‘shall’ or ‘will’. While drafting an
arbitration clause, use language that is unambiguous, necessary and devoid of needless
verbosity. Shakespeare once said “brevity is the soul of wit”. It is apt for any legal drafting,
but apropos for an arbitration clause.

Oriental Insurance Company Limited v. M/s Narbheram Power and Steel Pvt. Ltd held that
an arbitration clause is required to be strictly construed. Any expression in the clause must
unequivocally express the intent of arbitration. In this case, the Respondent had suffered
damages on account of cyclone in Odisha in 2013. Accordingly, the respondent intimated the
Appellant Insurance Company of the damages suffered by it and requested the appellant to
settle the claim. However, the claim was not settled and consequently the respondent invoked
the arbitration agreement and requested the appellant to concur with the name of the
arbitrator whom it had nominated. The appellant on the other hand objected to arbitration
proceedings and declined to refer the disputes to arbitration in view of Clause 13 of the policy
which stated that once the claim was repudiated and the insurer had disputed or not accepted
the liability under or in respect of the policy, no difference or dispute could have been
referred to arbitration.
With reference to the instant case, the Court opined that Clause 13 categorically postulated
that if the insurer has disputed or not accepted the liability, no difference or dispute shall be
referred to arbitration. Thus, such a situation squarely fell within the concept of denial of
disputes and non-acceptance of liability.

Cheran Properties Limited v. Kasturi and Sons Limited and Ors.: whether a non-
signatory to an arbitration agreement is bound by the same or not, the Apex Court has held
that in certain situations, an arbitration agreement between two or more parties may operate
to bind other parties as well.

“persons claiming under them” is a legislative recognition of the doctrine that besides the
parties, an arbitral award binds every person whose capacity or position is derived from and
is the same as a party to the proceedings. The group of companies doctrine has been applied
to pierce the corporate veil to locate the “true” party in interest, and more significantly, to
target the creditworthy member of a group of companies.

In Enercon Indian Ltd. and Ors. v. Enercon Gmbh the dispute arose of the nonsupplies

under the International property License Agreement (IPLA). It stated that the

venue would be London and the governing Law would be the Indian Arbitration and

Conciliation Act, 1996. The question arose whether London Court could have concurrent

jurisdiction where the venue was in London. The Hon’ble Supreme Court of India

distinguishing between the seat and venue of the arbitration held that “the express

mention in the judgment that London was the venue of the arbitration does not lead to the

conclusion that it was the seat of arbitration. Once the seat has been decided, Indian

Courts will have supervisory jurisdiction and the English Court will not have jurisdiction.

It is thus, not necessary for the seat and venue to be the same. The hearing even if it is

taking place at a different place, the chosen seat of arbitration will remain unaffected.

[Other Imp. Cases]

1. In K.K. Modi Vs. K.N. Modi and others (1998) 3 SCC 573 Hon’ble Supreme Court
observed that the authorities seem to agree that while there are no conclusive tests, by
and large, one can follow a set of guidelines in deciding whether the agreement is to refer
 an issue to an expert or whether the parties have agreed to resolve disputes through
arbitration.

2. In the case of Rukmanibai Gupta v. Collector, Jabalpur (1980) 4 SCC 556 the Supreme
Court held that as per the arbitration agreement the dispute will refer to the arbitration
and the decision of the arbitrator would be final and binding.
3. In the case of State of U.P. v. Tipper Chand (1980) 2 SCC 341 a clause in the contract
which provided that the decision of the Superintending Engineer shall be final,
conclusive and binding on all parties to the contract upon all questions relating to the
meaning of the specifications, designs, drawings and instructions was construed as not
being an arbitration clause. The Supreme Court said that there was no mention in this
clause of any dispute, much less of a reference thereof. The purpose of the clause was
clearly to vest the Superintending Engineer with supervision of the execution of the work
and administrative control over it from time to time.
4. In the case of State of W.B. v. Haripada Santra AIR 1990 Cal 83; the agreement
provided that in the event of a dispute, the decision of the Superintending Engineer of the
Circle shall be final. The Court relied upon the fact that the reference was to dispute
between the parties on which a decision was required to be given by the Superintending
Engineer. Obviously, such a decision could be arrived at by the Superintending Engineer
only when the dispute was referred to him by either party for decision. He was also
required to act judicially and decide the disputes after hearing both parties and after
considering the material before him. It was, therefore, an arbitration agreement.

5. In the case of J & K State Forest Corpn. v. Abdul Karim Wani (1989) 2 SCC 701 (para
24) Supreme Court considered the agreement as an agreement of reference to arbitration.
It has emphasised that:
a. (1) the agreement was in writing;
b. (2) it was a contract at the present time to refer the dispute arising out of the
present contract and
c. (3) there was a valid agreement to refer the dispute to arbitration of the
Managing Director, Jammu and Kashmir State Forest Corporation. The Court
observed that endeavour should always be made to find out the intention of the
parties, and that intention has to be found out by reading the terms broadly and
clearly without being circumscribed.
Q. WAIVER OF RIGHT TO OBJECT UNDER THE A&C (SN)

The concept of waiver in the Arbitration & Conciliation Act, 1996 (A&C Act) allows a party
to forgo objections when it proceeds with arbitration despite knowing that a requirement
under the arbitration agreement has not been met. Section 4 of the A&C Act summarise this
by barring parties from raising objections if they knowingly continue arbitration without
addressing procedural non-compliance promptly. This provision is rooted in the principle of
estoppel and is designed to safeguard the efficiency and finality of arbitration proceedings. (A
party forfeits the right to object if they are aware of any non-compliance with (a) a provision
that can be altered by agreement or (b) any requirement in the arbitration agreement, yet
proceed with the arbitration without raising the objection promptly or within a specified time
limit.)

Model Law: Section 4 of the A&C Act closely follows Article 4 of the UNCITRAL Model
Law on International Commercial Arbitration, emphasizing India's commitment to
internationally recognized arbitration standards. The travaux préparatoires (preparatory
works) of the Model Law reveal that the waiver provision was created to protect arbitration
from disruptions due to procedural objections. Initially formulated as “Article I quarter,” the
waiver rule required parties to raise objections “without delay” if they became aware of non-
compliance, thereby avoiding unnecessary arbitration delays.

The UNCITRAL Working Group ultimately refined this by adopting language to ensure the
waiver principle applied only to non-mandatory procedural requirements and extended its
impact to post-award stages, including recognition and enforcement. Indian courts routinely
refer to these discussions when interpreting Section 4, thereby aligning Indian law with
global practices and standards.

Preconditions Governing the Application of Section 4 of the A&C Act: Section 4 of the
A&C Act’s waiver provision applies under specific conditions:

1. Non-mandatory Provision: The procedural requirement not met should be a non-

mandatory provision of either the A&C Act or the arbitration agreement.
2. Knowledge of Non-compliance: The party must have known about the non-
compliance.
3. Timely Objection: The party must raise an objection “without undue delay”;
otherwise, proceeding without objection is deemed a waiver.
 4. Continuation of Arbitration: A party waives the right to object by continuing with
the arbitration despite knowing about the procedural defect.

These conditions emphasize that only non-mandatory procedural provisions are subject to
waiver under Section 4, which ensures that fundamental rights and mandatory procedural
requirements cannot be waived.

The Indian judiciary has elaborated on waiver under Section 4 through various cases. In
Adani Enterprises Ltd. v. Antikeros Shipping Corporation, the Bombay High Court
addressed the issue of waiver in relation to Section 11 of the A&C Act. The petitioner argued
that the respondent had waived its right to object, as it had presented arguments before the
arbitrator. Citing Narayan Prasad Lohia v. Nikunj Kumar Lohia, the petitioner contended
that certain provisions, like Section 10, could be waived. However, the court held that Section
11, which relates to the court’s power to appoint arbitrators, is non-derogable and therefore
cannot be waived by a party’s conduct. This decision distinguishes between procedural
provisions that allow for waiver (like Section 10) and substantive provisions involving court
powers (like Section 11), where waiver cannot apply.

This interpretation highlights the Indian judiciary’s approach to upholding the integrity of
arbitration by allowing waiver only for procedural, non-mandatory provisions. By following
the UNCITRAL Model Law’s standards, Indian courts prevent parties from leveraging
procedural non-compliance at later stages, thereby reinforcing the finality of arbitration
awards.

Q. TERMINATION OF PROCEEDINGS UNDER A&C,1996 (SN)

Arbitration proceedings under the Arbitration and Conciliation Act, 1996 can conclude
through two primary means: by the issuance of a final arbitral award per Section 32(1) or
through a termination order issued by the arbitral tribunal under Section 32(2).

The tribunal may issue an order for termination in specific situations, including:

1. Withdrawal by Claimant: The claimant may withdraw their claim unless the
respondent objects and has a legitimate interest in obtaining a final resolution of the
dispute (as illustrated in Dharam Singh v. State of Punjab, 2017).
 2. Mutual Agreement: The parties may mutually agree to terminate the proceedings,
exemplified in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services,
Inc., 2002.
3. Unnecessary or Impossible Continuation: The tribunal can find that the
continuation of the proceedings is unnecessary or impossible. For instance, in S.B.P.
& Co. v. Patel Engineering Ltd., 2005, the Supreme Court held that the tribunal may
terminate proceedings if further deliberation serves no purpose.

Section 32(3) and Other Grounds for Termination: According to Section 32(3), the
mandate of the arbitral tribunal terminates with the conclusion of the proceedings. This
provision emphasizes that the tribunal's authority and duties cease upon termination, which
serves to protect the integrity of the arbitration process and ensure that the tribunal does not
exceed its jurisdiction or interfere in matters post-termination.

While Section 32 outlines essential conditions for termination, it is not exhaustive. Other
grounds for termination include:

 Default of the Claimant (Section 25(a)): If the claimant fails to communicate their
statement of claim, as seen in Indian Oil Corporation Ltd. v. Amritsar Gas Service,
2009. This provision safeguards against delays and ensures that the arbitration process
moves forward.
 Settlement (Section 30(2)): If the parties reach a settlement, such as in Sahara India
(Firm) v. Commissioner of Income Tax, 2008. This allows for flexibility in the
resolution of disputes, promoting amicable settlements.
 Non-Payment of Deposits (Section 38(2)): If the parties fail to pay the
required deposit, illustrated in Booz Allen & Hamilton Inc. v. SBI Home
Finance Ltd., 2011. This ensures that the arbitration process is financially
supported and discourages parties from delaying proceedings.

Q. JURISDICTIONAL CHALLENGE UNDER A&C (SN)

Arbitration is a widely adopted alternative dispute resolution mechanism that empowers

parties to resolve disputes efficiently without resorting to judicial intervention. The
Arbitration and Conciliation Act, 1996, provides the legal framework governing
arbitration in India, emphasizing party autonomy and the tribunal's jurisdiction. Section
16 of the Act plays a crucial role in defining the arbitral tribunal's authority to rule on its
own jurisdiction, reflecting the doctrine of Kompetenz-Kompetenz.

Section 16 and Its Subsections

Section 16(1): This provision grants arbitral tribunals the power to determine their own
jurisdiction, including any objections concerning the existence or validity of the
arbitration agreement. The language "may rule" indicates that this power is discretionary,
allowing the tribunal to act at its own discretion or at a party's request. It also establishes
that an arbitration clause is an independent agreement; its validity is not affected by the
invalidity of the main contract.

Section 16(2): This subsection stipulates that any objections to the tribunal's jurisdiction
must be raised at the earliest opportunity, specifically before or alongside the submission
of a defense statement. Importantly, it asserts that a party's participation in appointing an
arbitrator does not prevent them from challenging the tribunal's jurisdiction, as affirmed
in UP Rajkija Nirman Nigam Ltd. v. Indure (P) Ltd. (1996).

Section 16(3): This provision allows parties to raise objections if they believe the tribunal
has exceeded its authority.

Section 16(4): This subsection empowers the tribunal to condone delays in raising
jurisdictional objections if deemed justified. The case of S.N. Malhotra & Sons v. Airport
Authority of India (2008) illustrates this principle, indicating that if the tribunal finds the
delay justified, it may accept the objection.

Section 16(5): Mandates the tribunal to decide on the jurisdictional objections raised
under Sections 16(2) or 16(3). If the tribunal rejects these challenges, it can continue the
arbitration proceedings and issue a final award. The Orissa High Court's ruling in Odisha
State Road Transport v. Arss Bus Terminal Pvt. Ltd. (2021) emphasizes that jurisdictional
challenges must be resolved prior to issuing an award.

Section 16(6): This provision provides an aggrieved party the right to challenge the
arbitral award under Section 34 after the award is made, but it prohibits immediate
appeals based on the rejection of jurisdictional pleas since such decisions are treated as
interim orders.
 Challenges to Jurisdiction: Under Section 16, parties can effectively challenge the
jurisdiction of an arbitral tribunal, reinforcing the principle that jurisdiction is rooted in
the agreement between the parties. While a party may raise objections regarding the
tribunal’s jurisdiction, the Act requires these objections to be presented promptly,
ensuring the arbitration process remains efficient. A crucial aspect of the challenge is that
even if a party has participated in the appointment of an arbitrator, it does not lose the
right to contest the tribunal's jurisdiction. Furthermore, if a tribunal determines that it
possesses jurisdiction, the aggrieved party must wait until the final award is issued to
contest the jurisdiction in a challenge under Section 34.

MODULE 4: ARBITRATION TRIBUNAL

Definition: Arbitral Tribunal: According to Section 2(1)(d), Arbitral tribunal” means a sole
arbitrator or a panel of arbitrators.

Composition Section 10 - Number Of Arbitrators: There is no restrictions on number,

qualification or characteristics of arbitrators. However, the tribunal must comprise an uneven
number of arbitrators. If the parties want more than one arbitrator, they will have to expressly
provide so in the agreement otherwise reference is to be a sole arbitrator appointed with the
consent of the parties.

Appointment Of Arbitrators

1. Parties are free to agree upon any procedure to appoint the arbitrator. [Section 11(2)]
2. Where the procedure for appointment of an arbitrator has been agreed upon by the
parties, the court’s role is to only implement that procedure.
3. The parties have agreed upon an arbitrator or have already named an arbitrator in the
arbitration agreement - he is to be appointed.
4. If the panel is to consist of 3 arbitrators, the parties shall appoint one arbitrator each
and the two appointed arbitrators shall appoint the third arbitrator, who shall act as a
presiding arbitrator in the proceedings. [Section 11(3)]
5. When the agreement does not name any arbitrator and parties fail to agree upon the
procedure or name of arbitrator, then only the court gets the power of appointment.

It shall be in the following cases –

In case of Sole arbitrator - [Section 11(5)]: When the parties fail to agree upon the
arbitrator within 30 days of request to do so.

In case of Panel of arbitrators:

 When a party fails to appoint an arbitrator within 30 days of receipt of request to do

so by the other party [Section 11(4)(a)]
 When the two appointed arbitrators fail to appoint the third arbitrator within 30 days
from their appointment [Section 11(4)(b)]

Failure to follow the procedure - (No time limit of 30 days)

 Where the parties have agreed upon a procedure to appoint the arbitrator and both or
either party fails to act according to the procedure.
 When the two appointed arbitrators fail to follow the procedure to appoint the third
arbitrator

Failure of institution - (no time limit of 30 days) : Where the person or institution
designated by the parties for appointment of arbitrator fails to act.

Case Summary

The case of Ace Pipeline Contracts Private Limited vs. Bharat Petroleum Corporation
Limited involves a dispute over the appointment of an arbitrator under a contract dated June
10, 2002, for pipeline installation as part of Bharat Petroleum Corporation Limited's (BPCL)
Mumbai-Manmad Pipeline Extension Project. The core issue pertains to the interpretation
and application of Clause 91 of the contract, which designated the Director (Marketing) of
BPCL or an appointed officer as the sole arbitrator for any disputes arising under the contract.

Ace Pipeline requested the appointment of an independent arbitrator (a retired Supreme Court
Judge) due to concerns over impartiality. BPCL responded by appointing an internal officer
(Executive Director of Quality Control Cell) as the arbitrator. Ace Pipeline contended that
BPCL forfeited its right to appoint an arbitrator due to delays and the fact that the
appointment was made after Ace Pipeline filed a petition. The Supreme Court ultimately
ruled that BPCL did not lose its right to appoint an arbitrator, as the appointment was made
before Ace Pipeline’s request under Section 11(6) of the Arbitration and Conciliation Act,
1996.

The Court upheld the High Court's dismissal of Ace Pipeline's application, affirming that an
arbitrator appointed by BPCL should proceed, and any concerns about bias could be
addressed in an application to set aside an award under Section 34 of the Act if any partiality
or impropriety is observed.

Relevant Sections: The case prominently involves the Arbitration and Conciliation Act,
1996, specifically:

1. Section 11(5) – Pertains to appointment of an arbitrator in cases with no specified

appointment procedure, allowing either party to request an appointment from the
Chief Justice if there is a failure to appoint.
2. Section 11(6) – Allows a party to request the Chief Justice to take necessary measures
for arbitrator appointment when the procedure agreed by the parties fails.
3. Section 34 – Provides grounds for setting aside an arbitral award if a party believes
the arbitrator acted with bias, partiality, or improper conduct.

This judgment clarifies the interpretation of Section 11(6), emphasizing that the right to
appoint does not lapse if the appointment is made before the court application for
intervention.

CHALLENGING MANDATE OF ARBITRATOR [Section (12 and 13)]

The mandate of an arbitrator refers to the authority and responsibility granted to the
arbitrator to hear and decide a dispute within the arbitration process. This mandate begins
when the arbitrator is appointed and accepted by the parties or the appointing authority and
generally includes duties like conducting proceedings impartially, resolving the dispute based
on evidence and applicable law, and issuing a binding award. The mandate can end when the
arbitrator completes the arbitration by delivering the final award or if they are removed due to
reasons such as incapacity, bias, or failure to perform their duties within the specified time.

The Arbitration & Conciliation Act does not contemplate removal of arbitrator by the court
but either by the parties themselves or the Arbitration Tribunal. When a person has been
approached for appointment as an arbitrator, he has to disclose in writing any circumstances
which may show:-

 Any relationship with or interest in any of the parties.

 Any relation to subject matter of the dispute like financial, business professional or
any kind.
 Any grounds which may cast any justifiable doubts as to his independence or
impartiality.
 Any grounds which are likely to affect his ability to devote sufficient time to
arbitration and ability to complete the work within 12 months.
 If he lacks qualifications required by the parties.

The duty to disclose any such interest continues after his appointment and throughout the
arbitral proceedings. [r.w. Section 12(2)]

However, a party can challenge his own arbitrator only for reasons of which the party became
aware after the appointment has been made. If any circumstances arise subsequently, the
parties have to be informed in writing. [r.w. Section 12(4)]

Explanation 1 - The applicable grounds have been stated in 5 th schedule.

Explanation 2 - The disclosure has to be made in the form specified in 6 th schedule.

If the categories specified in 7th schedule are applicable, he becomes ineligible for
appointment and no contract opposing the same can be entered into between the parties
before the dispute. However, after the dispute arises the parties may waive the application of
the schedule by a written agreement.

While the Fifth Schedule [r.w. Section 12(1)(a)] lists the various instances giving rise to
“justifiable doubts as to the independence and impartiality” of an arbitrator, the Seventh
Schedule [r.w. Section 12(5)] of the Arbitration and Conciliation Act relates to instances
which directly result in the “ineligibility” of a person from being appointed as an arbitrator
unless the parties had expressly waived the applicability of the provision in writing after the
agreement was entered into. The arbitrators would have to make disclosures of their
independence and impartiality as per the entries in the 5th Schedule, which would otherwise
be unknown to the parties. Based on such disclosures, eligibility would be determined under
the Seventh Schedule read with Section 12(5) of the Act.

For Example – The Fifth Schedule governs the appointment of former workers of a
corporation that is a party to a dispute as arbitrators. In this scenario, the arbitrator must
reveal the prior affiliation before to appointment; otherwise, his mandate may be contested.
However, the 7th Schedule shall govern the selection of a current employee of a corporation
that is a party to the dispute as an arbitrator, and he is legally unqualified to serve as an
arbitrator under the arbitration clause. However, the parties may voluntarily waive this
criterion in writing after the dispute has arisen.

The distinction is done considering former employees are seen as neither related to a party as
employees, consultants or advisors, nor do they have any other past or present business
relationship with the party, as required under Entry 1 of the Seventh Schedule.

Procedure for challenging an Arbitrator: Section 13 of the Arbitration and Conciliation

Act, 1996 outlines the procedure for challenging an arbitrator:

1. Parties can mutually decide on a procedure for challenging an arbitrator.

2. If no procedure is agreed upon, a party may challenge an arbitrator within 15 days of
learning of the tribunal's constitution or any grounds for challenge under Section
12(3), by submitting a written statement to the tribunal.
3. If the arbitrator does not voluntarily withdraw, and the other party does not agree to
the challenge, the tribunal itself will decide on the challenge.
4. If the challenge fails, the tribunal continues proceedings and may issue an award.
5. A party may then apply to set aside the award under Section 34.
6. If the award is set aside, the court will decide if the challenged arbitrator is entitled to
any fees.
 The appropriate court for the purpose of exercising this power is the court in whose
jurisdiction the contract was executed or the work was performed.
 An application for termination would lie before the Principal Civil Court of Original
Jurisdiction and not before the Supreme Court, even if the arbitrator was appointed
under Section 11.

TERMINATION OF MANDATE OF ARBITRATOR

Section 14(1) of the Act provides that the mandate of an arbitrator shall terminate and he
shall be substituted by another arbitrator, if:-

 He becomes de jure or de facto unable to perform his functions or for other reasons
fails to act without undue delay; and In this case only, the parties may apply to the
court for terminating the mandate. Not on the remaining grounds.
 He withdraws from his office or the parties agree to the termination of his mandate.

Section 15 of the provides additional circumstances under which the mandate of an arbitrator
shall terminate. These include:-

 Where the arbitrator withdraws from office for any reason; or

 By or pursuant to agreement of the parties.

It is further provided that where the mandate of an arbitrator terminates, a substitute arbitrator
shall be appointed. The same rules shall be followed in appointing a substitute arbitrator
which was applicable to the appointment of the arbitrator being replaced. Where an arbitrator
is replaced, any hearing previously held may be repeated at the discretion of the arbitral
tribunal, unless otherwise agreed by the parties. However, it is provided that an order or
ruling of the arbitral tribunal made prior to the replacement of an arbitrator shall not be
invalid solely because there has been a change in the composition of the arbitral tribunal,
unless otherwise agreed by the parties.

Where can the mandate be challenged? : The appropriate court for challenging mandate of
arbitrator is the court in whose jurisdiction the contract was executed or work was performed.
Sec 2(e) defines court which is referred to u/s 14.

JURISDICTION OF ARBITRAL TRIBUNAL

The Act provides that the arbitral tribunal may rule on its own jurisdiction, including any
objections with respect to the existence or validity of the arbitration agreement. The
arbitration agreement shall be deemed to be independent of the contract containing the
arbitration clause, and invalidity of the contract shall not render the arbitration agreement
void. Hence, the arbitrators shall have jurisdiction even if the contract in which the arbitration
agreement is contained is vitiated by fraud and/or any other legal infirmity. Further, any
objection as to jurisdiction of the arbitrators should be raised by as party at the first instance,
i.e., either prior to or along with the filing of the statement of defence. If the plea of
jurisdiction is rejected, the arbitrators can proceed with the arbitration and make the arbitral
award. Any party aggrieved by such an award may apply for having it set aside under Section
34 of the Act. Hence, the scheme is that, in the first instance, the objections are to be taken
up by the arbitral tribunal and in the event of an adverse order; it is open to the aggrieved
party to challenge the award.

Thus, Section 16 (Competence of arbitral tribunal to rule on its jurisdiction) empowers

Arbitral Tribunal to decide: -

1. The question as to its jurisdiction

2. The objection as to existence or validity of arbitration agreement

For this purpose, an arbitration clause in a contract shall be treated as an arbitration

agreement independent of the contract. If the Arbitral Tribunal holds the contract null and
void it will not result in the automatic invalidity of arbitration clause.

The objection must be filed before or along with the statement of claim. The question of
jurisdiction has to be treated as a preliminary issue.

The objection can be regarding the fact that the AT has no jurisdiction at all or that it is
entertaining some matter beyond its jurisdiction.

REMEDIES

 When an award has been made after the rejection of the objections, the aggrieved
party may make an application under Section 34 to set aside the award on the ground
that objection was wrongly challenged.
 The decision of the Arbitral Tribunal on its jurisdiction is not an award. It is an order
which may culminate in closure of the proceedings and in that event an appeal lies
under Section 37 of the act. If it does not terminate the proceedings, the order can be
challenged when award itself is challenged.

CAN ARBITRATOR PROCEED WITH THE ARBITRATION DESPITE

OBJECTIONS TO ITS JURISDICTION??
Yes, an arbitrator can proceed with arbitration despite objections to its jurisdiction under the
Arbitration and Conciliation Act, 1996, as per Section 16 of the Act, which empowers the
arbitrator to rule on its own jurisdiction. This section provides that:

1. An arbitral tribunal can rule on objections regarding the validity or existence of the
arbitration agreement.
2. The decision of the arbitrator regarding jurisdiction is provisional and subject to final
review by the courts, meaning it is not binding if subsequently overturned by a
judicial review under Section 34.

The arbitrator’s decision to proceed is provisional, allowing the arbitration to continue while
preserving the right of the objecting party to seek judicial intervention after the award, should
they believe there was a lack of jurisdiction.

Case Laws

1. Renusagar Power Co. Ltd. v. General Electric Co. – Affirmed that an arbitrator
could decide on jurisdiction provisionally.
2. Food Corporation of India v. Indian Council of Arbitration (AIR 2003 SC 3011)
– Addressed the arbitral tribunal's duty to adhere strictly to contract terms.
3. Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. (2011) – Discussed non-
arbitrable matters where the arbitrator lacks jurisdiction.
4. MSP Infrastructure Ltd. v. M.P. Road Development Corporation Ltd. – Stated
that objections to jurisdiction must be raised no later than the statement of defense,
and that delay tactics should not hinder arbitration.

Relevant Sections from the Arbitration and Conciliation Act, 1996

 Section 16 – Allows the arbitral tribunal to rule on its own jurisdiction and maintain
proceedings unless a court decides otherwise.
 Section 34 – Provides grounds for setting aside an arbitral award, including if the
tribunal exceeded its jurisdiction.

In sum, objections to an arbitrator's jurisdiction do not automatically halt proceedings. The

arbitrator must address these objections initially and can proceed, though the final decision
rests with the court on review.
INTERVENTION BY HIGH COURT OR SUPREME COURT

Conditions in case of intervention: -

1. In case of International Commercial Arbitration - SC has the power. In case of

Domestic Arbitration - HC within whose limits the cause of action arises has the
power.
2. Where more than one request has been made to the Court, the first request is to be the
sole basis of decision. [r.w. Section 11(11)]
3. While exercising the power under this provision the appropriate court needs to take
into consideration the qualifications required under the agreement and other
considerations for assuring the appointment of an independent and impartial
arbitrator. [r.w. Section 11(8) & Section 12]
4. In case of ICA, the SC or his designated authority may appoint the arbitrator of
nationality other than the nationality of parties where parties belong to different
nationalities. [r.w. Section 11(9)]
5. The proceedings before the court are of summary nature. Wider examination of matter
is not warranted.
6. Order u/s 11 involves self-adjudication on jurisdiction since it determines the rights of
the parties with finality. The court determining appointment under Sec 11(6) of the
Act has to look at following points:
 Whether the party making the motion has approached the right high court or
not i.e. territorial jurisdiction
 Whether there is valid arbitration agreement as given u/s 7.
 Whether the person requesting appointment is party to dispute or not.
 Whether the claim is within limitation period (3 years) or time barred.

But the court cannot go into the arbitrability of the matter.

In SBP & Co. v. Patel Engineering Ltd. And Another [2005 8 SCC 618]

A seven-judge bench of the Supreme Court of India held that the Chief Justice of a High
Court or the Chief Justice of India (now the Supreme Court) exercises judicial power—not
administrative power—when making appointments under Section 11(6) of the Arbitration
and Conciliation Act, 1996. This judicial role allows the Chief Justice or a designated judge
to address preliminary issues such as their own jurisdiction to entertain the request, the
existence of a valid arbitration agreement, whether a "live" claim exists, the qualifications of
the proposed arbitrators, and the conditions necessary to exercise this authority.

The Court ruled that an appeal against such an order by a Chief Justice of a High Court or
designated judge can be brought only under Article 136 of the Constitution to the Supreme
Court, whereas no appeal is permissible against orders passed by the Chief Justice of India or
a designated judge of the Supreme Court under Section 11(6). Furthermore, once an Arbitral
Tribunal is constituted independently by the parties without invoking Section 11(6), that
tribunal possesses the jurisdiction to address all matters related to its jurisdiction as provided
under Section 16 of the Act.

INTERIM RELIEF UNDER ARBITRATION TRIBUNAL

In Indian arbitration, interim relief is critical to ensure that the arbitration process remains
effective by preserving the subject matter of the dispute. Interim reliefs are granted under
Sections 9 and 17 of the Arbitration and Conciliation Act, 1996 ("the Act"). Section 9
provides courts with the authority to issue interim measures, while Section 17 empowers
arbitral tribunals with similar authority once constituted.

Section 9 – Interim Relief from Courts: Under Section 9(1) of the Act, a party may apply
to the court for interim measures either before or during arbitration proceedings or even after
an award is rendered (but before enforcement under Section 36: enforcement of arbitral
awards). The types of relief available include:

1. Securing the amount in dispute – Section 9(1)(ii)(b) authorizes courts to take

measures to secure the amount in dispute, often through attachment orders.
2. Preserving the subject matter of the dispute – Section 9(1)(ii)(c) provides for the
preservation, custody, or detention of the property in dispute.
3. Preventive orders – Courts may prevent parties from alienating or dissipating assets,
ensuring the final award can be effectively enforced.

Following the 2015 Amendment to the Act, Section 9(3) introduced a limitation: once an
arbitral tribunal is constituted, courts are restricted from granting interim relief unless
remedies under Section 17 are deemed ineffective. This amendment aligns Section 9 with the
UNCITRAL Model Law, promoting tribunal-based interim reliefs rather than court
intervention.

Section 17 – Interim Relief by Arbitral Tribunal: Section 17 enables the arbitral tribunal
to grant interim measures similar to those under Section 9. This includes measures to:

 Preserve evidence relevant to the arbitration.

 Prevent the alienation of disputed assets.

The 2015 Amendment enhanced the tribunal's powers under Section 17, allowing its orders
to be enforceable as if they were orders of the court. This amendment equates the tribunal’s
authority to the court’s, reducing reliance on judicial intervention.

Key Cases and Judicial Precedents

1. ArcelorMittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd.

o The Supreme Court clarified that once a court has entertained a Section 9
application, it may continue considering the application even if the arbitral
tribunal is later constituted.
o The court emphasized that only in circumstances where tribunal-based relief is
inadequate should the court grant interim relief after the tribunal's constitution.
2. Essar House (P) Ltd. v. Arcellor Mittal Nippon Steel (India) Ltd.
o The Supreme Court highlighted that courts should not be bound by procedural
technicalities under the Code of Civil Procedure (CPC) when exercising
powers under Section 9.
o The decision clarified that courts could grant interim relief under Section 9
without strictly adhering to the requirements of Order 38 Rule 5 of the CPC,
provided a prima facie case, balance of convenience, and irreparable harm are
established.
3. Sanghi Industries Ltd. v. Ravin Cables Ltd.
o This case presented a more stringent view, requiring satisfaction of Order 38
Rule 5 conditions for securing the subject matter of dispute.
o The Court stated that attachment orders under Section 9 should follow similar
principles as those in Order 38 Rule 5 CPC, such as a defendant’s likelihood
of obstructing or delaying the arbitration outcome.
 4. Ajay Singh v. Kal Airways (P) Ltd.
o The Delhi High Court emphasized that while courts may consider principles
under Orders 38 and 39 of CPC, they retain discretion under Section 9 and are
not strictly bound by these CPC provisions.
5. N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
o This Supreme Court decision raised questions about stamping requirements,
affecting the enforceability of Section 9 applications. However, the subsequent
Stamping Judgment clarified that stamping requirements do not preclude
interim relief under Section 9.

Conclusion: Sections 9 and 17 of the Arbitration Act provide a comprehensive framework

for interim reliefs, empowering both courts and arbitral tribunals. The amendments and case
law highlight a shift toward greater tribunal authority under Section 17, with courts retaining
a supporting role only when necessary. This framework ensures that interim reliefs preserve
the arbitration's integrity, aligning with global arbitration standards.

PROCEDURE/PROCEEDINGS OF ARBITRAL TRIBUNAL

Under the Arbitration and Conciliation Act, 1996 in India, the procedure and proceedings
of an Arbitral Tribunal are designed to ensure a fair, efficient, and effective dispute
resolution process. Here is an outline of the key stages and relevant sections governing the
proceedings of an Arbitral Tribunal:

1. Commencement of Proceedings

 Section 21: Arbitration proceedings officially commence on the date the respondent
receives a request for arbitration from the claimant. This date is crucial, as it impacts
matters like limitation periods.

2. Constitution of the Arbitral Tribunal

 Sections 10-15: Parties can determine the number and qualifications of arbitrators,
failing which the Act prescribes the default provisions. Under Section 11, if parties
cannot agree, a party may approach the court for the appointment of an arbitrator.
  Section 16: The Tribunal has the power to rule on its own jurisdiction, known as the
“kompetenz-kompetenz” principle. Objections to jurisdiction must be raised at the
earliest stage.

3. Conduct of Arbitral Proceedings

 Section 18: Ensures equal treatment of parties, giving each party a full opportunity to
present their case.
 Section 19: The Tribunal is not bound by the Code of Civil Procedure (CPC) or the
Indian Evidence Act, allowing flexibility in determining its own procedure.
 Section 20: Parties may agree on the place of arbitration. If they cannot agree, the
Tribunal determines the place based on the circumstances of the case.

4. Procedural and Substantive Law

 Section 28: The Tribunal applies the substantive law agreed upon by the parties,
failing which it applies Indian law if the arbitration is seated in India.

5. Interim Reliefs

 Section 17: The Tribunal may grant interim relief similar to court-ordered measures
under Section 9. This includes preserving assets, evidence, or preventing actions that
would render the award ineffective.

6. Statements of Claim and Defense

 Section 23: Specifies that the claimant must submit a statement of claim, and the
respondent must submit a statement of defense. Parties may amend or supplement
their claims unless the Tribunal considers the amendment inappropriate.

7. Hearings and Written Proceedings

 Section 24: The Tribunal may decide whether to hold oral hearings or rely on written
submissions unless parties request a hearing. The Tribunal must give sufficient notice
for all hearings and meetings.
8. Experts and Evidence

 Section 26: The Tribunal may appoint experts to report on specific issues and require
parties to provide relevant information. Experts may also be examined in hearings if
requested by a party.

9. Default of a Party

 Section 25: If a party defaults (e.g., fails to submit the statement of claim or defense),
the Tribunal may proceed with the arbitration and make a ruling based on the
evidence available.

10. Conclusion of Hearings

 Section 27: The Tribunal may seek the court's assistance in taking evidence. Once
hearings are completed, the Tribunal must notify the parties that proceedings are
closed.

11. Award and Termination of Proceedings

 Section 29: The Tribunal’s award must be made by a majority unless otherwise
agreed by the parties.
 Section 31: The award must be in writing, signed by the arbitrators, and must state the
reasons for the award unless the parties agree otherwise. The award must be delivered
to each party, and it includes interest provisions.
 Section 32: Proceedings are terminated upon issuing the final award or by an order of
the Tribunal if continuation becomes unnecessary or impossible.

12. Correction and Interpretation of Award

 Section 33: Parties may request corrections or interpretations of the award within 30
days, and the Tribunal may also correct any clerical errors on its own.

13. Costs of Arbitration

 Section 31A: The Tribunal may decide on the costs of arbitration, which include fees,
expenses, and other relevant costs.
This structured procedure under the Act ensures that arbitration proceedings remain fair,
streamlined, and adaptable to the needs of the parties involved.

MODULE-5

(valid & enforcement + Public policy + grounds for challenging (SB) (LQ)) [4] And

arb award? + forms & content + set aside? + essentials of award + procedure to execute u/
A&C?

Introduction: The ACA, 1996 regulates arbitration in India and deals with the arbitration
procedure. Arbitration is the process of solving disputes outside the walls of the judicial
system. According to this Act, an arbitral award determines the issues in controversy made by
the arbitral tribunal. Thus, it has adopted the UNCITRAL, Model Law on International
Commercial Arbitration to enforce the arbitral awards internationally and domestically.
Considering the workload on the judiciary, (ADR) considered as best alternative to resolve
any dispute amicably. Arb is one of the mechanisms of dispute settlement like mediation and
negotiation. It is considered as one of the best ways to solve disputes other than the
traditional method of courts as it resembles to court proceedings. In arbitration, both parties
argue from their side and an arbitrator acting as a judge passes a judgement which is referred
to as an arbitral award. It is enforceable like a decree of the court and both parties have to
comply to it.

What’s a arbitral award? An arbitral award could be monetary such as the amount of
money one party has to pay to another or non-monetary such as restraining one party from
doing something. It can be final, interim or consent based. As per S.2(1)(C) of the act
arbitral award includes an interim award. S.31(6) defines an Interim award as an
award passed by an arbitral tribunal at any time during the arbitral proceedings. Sec
30 talks about the award by consent. If during the proceeding, the parties want to settle the
dispute, the arbitral tribunal shall terminate the dispute and record the settlement in the form
of an arbitral award with the consent of both parties.

Essentials of an Arbitral Award: S.31 of ACA, 1996, outlines the essentials of an arbitral
award:

 Written Form: The award must be in writing and signed by the members of the
 arbitral tribunal.
 Reasoning: It should state the reasons upon which the award is based.
 Date and Place: The award must specify the date and place of arbitration.
 Delivery: A signed copy of the award must be delivered to each party.
Different forms of arbitral award:

1- Domestic Award: is an arbitration decision made within India, and it applies even if
the involved are from different countries, parties as long as the arbitration takes place
within Indian territory. According to S. 2(7) of the ACA, any arbitration conducted
under Part I of the Act is considered a domestic award.
2- Foreign Award: refers to arbitration decisions made outside of India. Governed by
Part II of the Act, foreign awards arise from disputes related to commercial
relationships and must adhere to specific conditions outlined in Section 44. These
conditions include being based on a written arbitration agreement and made in
countries recognized by the Indian government as having reciprocal arbitration
agreements.
**[the classification of an arbitral award as domestic or foreign depends on the
location of the arbitration rather than the nationality of the parties involved]**

Procedure for Issuing Arbitral Award

 Commencement: As per S. 21, the arbitration process begins when the respondent
receives notice of the dispute.
 Constitution of Tribunal: Parties appoint an arbitrator of their choice; if no
agreement is reached, Sections 10-15 provide the procedure for appointment.
 Submissions: Parties submit pleadings—the claimant submits a statement of claims
and the respondent submits a statement of defense—within the agreed timeframe,
typically within 6 months of the arbitrator's appointment.
 Proceedings: The tribunal decides whether to hold oral proceedings or to conduct
them based on documents and other materials.
Grounds for Setting Aside an Arbitral Award: An arbitral award is generally
unchallengeable, but there are exceptions under S.34(2):

1. Incapacity of Parties: If one party is incompetent (e.g., a minor or of unsound mind)

and not properly represented.
 2. Invalid Agreement: If the arbitration agreement is void under applicable law.
3. Lack of Notification: If a party was not notified about the appointment of the
arbitrator or the proceedings, hindering their ability to present their case (e.g., Dulal
Poddar vs. Executive Engineer).
4. Scope of Arbitration Clause: If the award addresses issues not included in the
arbitration agreement (e.g., Rajinder Krishan Khanna & Ors vs. Union of India).
5. Improper Composition: If the composition of the tribunal or its procedure deviates
from what was agreed upon (e.g., Krishna Lal v. Union of India).
Additional Grounds for Challenge

 Subject Matter: If the matter is not capable of being settled by arbitration as per law.
 Public Policy: If the award is against Indian public policy, including cases of fraud or
corruption (e.g., Steel Authority of India Ltd. v. Primetals Technologies).
Explanation for the Public Policy: Public Policy in Arbitration: The ACA 1996, does not
provide a strict definition of public policy. However, it includes the following aspects that
may render an award contrary to public policy:

 Fundamental Policy of Indian Law: An award that violates the essential principles of
law, such as statutory provisions, is considered against public policy. For example, if
an award mandates an action that is illegal under Indian law, it would be set aside.
 Interests of India: Any award that harms the interests of the nation or its citizens can
be challenged. This includes awards that contravene national security or public order.
 Natural Justice: Awards that are made in violation of the principles of natural justice
—such as denying a party the right to be heard—can be set aside as they contravene
the fundamental notion of fairness in legal proceedings.
 Morality and Justice: An award that shocks the conscience of the court or is
considered immoral or unjust can be deemed against public policy. Courts have the
discretion to evaluate whether the award aligns with societal norms and ethical
standards.
Limitation for Application to Set Aside Award

 An application to set aside an arbitral award must be made within three months from
when the party received the award. If a request for correction under Section 33 is
made, the limitation period starts from the disposal date of that request.
 If the court is satisfied with sufficient cause for delay, a further 30-day extension may
 be granted.
 The limitation period begins only after a valid delivery of the signed copy of the
award, as clarified in Union of India v. Tecco Trichy Engineers & Contractors and
further reiterated in State of Maharashtra v. M/S. Ark Builders Pvt. Ltd..

Summary of Case Law: ONGC vs Saw Pipes Ltd.

Introduction: This case involved a dispute between the Oil and Natural Gas Commission
(ONGC) and Saw Pipes Ltd. regarding an arbitral award related to the delayed supply of
equipment for offshore oil exploration. The case was presided over by Justices M.B. Shah
and Arun Kumar, with the judgment authored by Justice Shah. ONGC challenged the arbitral
award, which had directed it to refund amounts withheld as liquidated damages.

Facts: ONGC had contracted Saw Pipes for the supply of equipment to be sourced from
European manufacturers. The contract specified timely delivery as crucial. However, a strike
in European steel mills caused delays. Although ONGC granted an extension, it invoked a
liquidated damages clause to withhold $304,970.20 and ₹15,75,557, covering customs duty,
sales tax, and freight. Saw Pipes disputed these deductions, and the matter was referred to
arbitration. The tribunal found ONGC’s deduction wrongful, citing ONGC's failure to show
evidence of actual financial loss, which led ONGC to challenge the award as being contrary
to public policy and not in line with contract terms and trade practices. Although the Bombay
High Court dismissed the challenge, the Supreme Court ultimately set aside the award in
favor of ONGC.

Issues Raised

1. Whether ONGC had the right to claim liquidated damages.

2. Whether "patent illegality" could be a ground for challenging the arbitral award under
Section 34 of the Arbitration and Conciliation Act, 1996.

Judgment: The Supreme Court first analyzed its authority to set aside awards under Section
34 of the Act, which allows interference on specific grounds. Addressing the question of
damages, the Court held that when contract terms are clear and parties have agreed on a pre-
estimated amount for liquidated damages, there is no need for the buyer (in this case, ONGC)
to prove actual losses.

The Court further noted that if liquidated damages appear to be a penalty, reasonable
compensation may be awarded only if damages can be proven. However, if experts draft the
contract, courts should be cautious about interpreting liquidated damages as penalties,
especially if assessing actual damages is complex. Referring to Maula Bux v. Union of India,
the Court emphasized that the burden of proof lies with the party contesting the
reasonableness of the stipulated amount.

The Court reaffirmed that no compensation should be awarded if there is no loss from the
breach. It clarified that in cases of liquidated damages, stipulated sums are considered
reasonable compensation, whereas penalties require proof of damage.

Critical Appraisal: The judgment was criticized for two main reasons:

1. Overlooking Force Majeure: The Court failed to account for the European labor
strike, an unforeseen and uncontrollable factor for Saw Pipes.
2. Judicial Overreach and Precedent Violation: The Court departed from the
Renusagar Power Plant Ltd. v. General Electric Co. ruling, a binding three-judge
decision that defined “public policy” narrowly. The Court’s broader interpretation
expanded judicial review of arbitral awards, undermining the principle of minimal
interference in arbitration. This departure from precedent, criticized by prominent
lawyer Fali S. Nariman, was seen as regressive for arbitration law in India,
threatening the finality and efficiency intended by the Arbitration and Conciliation
Act of 1996.

Conclusion: The Court clarified that labeling a clause as "penalty" or "liquidated damages" is
not definitive. The nature of such clauses is assessed based on the contract's context. English
law parallels this view, where liquidated damages permit recovery of a pre-set amount
without needing to prove actual damage. The purpose of such clauses is to avoid complex
damage assessments and to provide the promisee with assurance of fulfillment. Courts may
intervene if forfeiture is unconscionable or excessively punitive. However, if liquidated
damages are genuinely pre-estimated, courts typically enforce them as reasonable
compensation.

MODULE 6: CONCILIATION

Meaning of Conciliationn: Conciliation is an alternative dispute resolution (ADR)

mechanism provided under Part III of the Arbitration and Conciliation Act, 1996. It
involves an independent and neutral conciliator who assists disputing parties in reaching a
mutually agreeable settlement without adjudicating the matter. Unlike arbitration, where the
arbitrator makes a binding decision, conciliation is non-binding and focuses on encouraging
an amicable settlement between the parties. Conciliation is particularly useful when parties
seek a less formal, flexible, and cost-effective process.

Need for Conciliation: Conciliation serves as an essential tool for resolving disputes
amicably by encouraging direct interaction between the parties and fostering an
understanding of each other’s perspectives. It offers confidentiality, flexibility, and control
over the outcome, which can preserve relationships. This process is particularly advantageous
in situations where preserving business or personal relationships is important and where a
legally binding decision may not be necessary or desirable.

Key Aspects of Conciliation under the Act

1. Application and Scope (Section 61)

 Section 61(1) provides that Part III of the Act applies to conciliation for disputes
arising from legal relationships, whether contractual or otherwise. It includes all
conciliation proceedings unless parties agree otherwise.
 Section 61(2) specifies that conciliation cannot be used where certain disputes, by
law, are not permitted to be submitted to conciliation (such as criminal matters or
certain statutory issues).

2. Commencement of Conciliation Proceedings (Section 62)

 Section 62(1) states that conciliation begins when one party sends a written invitation
to the other to initiate conciliation.
 Section 62(2) clarifies that proceedings commence once the other party accepts this
invitation in writing.
 If the invitation is declined or no response is received within 30 days (or as specified),
the initiating party may treat it as a rejection, as per Section 62(3) and 62(4).

3. Appointment of Conciliators (Sections 63 and 64)

 Section 63 establishes the number of conciliators, generally one unless the parties
agree on two or three, who should act jointly if more than one.
 Section 64 details the process of appointing conciliators:
o Section 64(1)(a): For a single conciliator, both parties agree on the
appointment.
o Section 64(1)(b) and (c): For two or three conciliators, each party appoints
one, and a third (if applicable) is mutually agreed upon as the presiding
conciliator.
  Section 64(2) allows parties to enlist a suitable institution or person for
recommending conciliators, ensuring impartiality, and, where appropriate, choosing a
conciliator of a different nationality.

4. Submission of Statements to the Conciliator (Section 65)

 Section 65(1) permits the conciliator to request each party to submit a brief written
statement describing the dispute's general nature and issues, with a copy sent to the
other party.
 Section 65(2) allows for additional written statements, evidence, or documents.
 The conciliator may also request additional information at any stage of the
proceedings under Section 65(3).

5. Interaction between the Conciliator and the Parties (Sections 66-70)

 Section 66: The conciliator is not bound by procedural formalities under the Code of
Civil Procedure or the Evidence Act, giving them flexibility to conduct proceedings
informally.
 Section 67 outlines the role of the conciliator, which is to assist parties impartially in
reaching an amicable settlement. The conciliator is guided by objectivity, fairness,
and justice, considering party rights, trade practices, and circumstances of the dispute.
 Section 69: The conciliator can meet with parties together or separately and
communicate orally or in writing. The conciliator decides the meeting place if not
otherwise agreed upon by the parties.
 Section 70 ensures transparency in information sharing, as any factual information
received from one party must be disclosed to the other, except where confidentiality is
specifically requested.

6. Role of the Conciliator in Settlement Proposals and Agreements (Sections 71-74)

 Section 71 mandates that parties must cooperate with the conciliator in good faith,
providing documents, evidence, and attending meetings as requested.
 Section 72: Either party may propose settlement terms directly to the conciliator or at
the conciliator’s invitation.
  Section 73: The conciliator formulates and submits potential settlement terms,
inviting feedback, and may reformulate terms based on party observations. If the
parties agree, they may sign a written settlement agreement, which is final and
binding once authenticated by the conciliator.
 Section 74 gives the settlement agreement the same status and effect as an arbitral
award, enforceable under Section 30.

7. Confidentiality (Section 75): The Act mandates confidentiality for all matters related to
the conciliation proceedings, extending to the settlement agreement unless disclosure is
essential for enforcement.

8. Termination of Conciliation Proceedings (Section 76): The conciliation ends as

specified in Section 76:

o By signing the settlement agreement.

o By the conciliator declaring that further efforts are futile.
o By a declaration from the parties that the proceedings are terminated.
o By one party informing the other and the conciliator that they wish to
terminate proceedings.

9. Resort to Judicial or Arbitral Proceedings (Section 77): Parties are restricted from
initiating arbitral or judicial proceedings on the same dispute during conciliation. Exceptions
are allowed if legal action is necessary to preserve rights (e.g., urgent court orders for asset
protection).

10. Costs of Conciliation (Section 78)

 Section 78(1) states that the conciliator will determine the costs upon termination of
proceedings, with Section 78(2) defining “costs” to include conciliator fees, witness
expenses, expert fees, and administrative assistance costs.
 Section 78(3) clarifies that costs are shared equally unless otherwise agreed in the
settlement.

11. Deposits (Section 79): The conciliator may require equal deposits from each party as an
advance for anticipated costs. If deposits are not paid within 30 days, the conciliator may
suspend or terminate the proceedings. Any unspent deposits are refunded after the
proceedings conclude.

12. Role of the Conciliator in Other Proceedings (Section 80): Section 80 restricts the
conciliator from acting as an arbitrator, counsel, or witness in any subsequent arbitral or
judicial proceedings concerning the same dispute, unless both parties agree otherwise.

13. Admissibility of Evidence in Other Proceedings (Section 81): Section 81 ensures that
statements, admissions, and proposals made during conciliation cannot be used as evidence in
subsequent judicial or arbitral proceedings, thus preserving the confidentiality and integrity of
the conciliation process.

Q) 'CONCILIATION TAKES ITS CENTRAL STAGE WITH AN UNDERSTANDING

OF BOTH THE PARTIES, WHILE ARB INTERPLAYS B/W THE PARTIES'
ACTIONS.’

The statement "Conciliation takes its central stage with an understanding of both the parties,
while arbitration interplays between the parties' actions" emphasizes the fundamental
differences in approach, interaction, and outcome between conciliation and arbitration
under the Arbitration and Conciliation Act, 1996.

Key Differences and Explanation

1. Conciliation: An Amicable Process Focused on Understanding

o Conciliation is a non-binding, voluntary process where the conciliator’s role
is primarily to assist the parties in reaching a mutually agreeable solution.
Here, understanding and collaboration between parties are paramount. The
conciliator facilitates dialogue and encourages compromise, creating a space
for parties to understand each other's concerns and interests.
o Section 67 of the Act describes the conciliator's role, emphasizing that they
must act impartially to help parties reach an amicable settlement. The
conciliator guides the process based on principles of fairness, justice, and
objectivity, considering factors like the parties’ rights, trade usages, and any
previous business practices.
 o Judicial Precedent: In Haresh Dayaram Thakur v. State of Maharashtra
(2000), the Supreme Court held that conciliation is a process based on mutual
understanding and cooperation, as it focuses on developing a settlement
through the active involvement of both parties, distinguishing it from
arbitration, which follows a more formal, judgment-based approach.

2. Arbitration: Adversarial, Binding, and Action-Oriented

o Arbitration, unlike conciliation, is a binding adjudicative process where the
arbitrator evaluates the facts, evidence, and arguments presented by each party
and then makes a decision that is binding on both. This process emphasizes
actions and evidence over mutual understanding, as the arbitrator’s role is to
interpret the legal rights and obligations of each party based on the facts of the
case.
o Section 16 grants the arbitral tribunal authority to decide on its jurisdiction
and the validity of the arbitration agreement, reinforcing that the arbitrator’s
role is rooted in analyzing actions and claims of each party to reach a
binding award.
o Judicial Precedent: In SBP & Co. v. Patel Engineering Ltd. (2005), the
Supreme Court clarified the judicial nature of arbitration under Section 11(6),
where the court or arbitrator must assess the actions and rights of parties based
on the existing contract or dispute. The Court emphasized that arbitration does
not rely on consensus but on determining entitlements based on the legal and
factual aspects of the case.

Conciliation Sections Highlighting Party Understanding

 Section 62 establishes that conciliation begins only when both parties agree to it,
ensuring that the process is initiated with mutual consent.
 Section 65 allows the conciliator to request statements from each party, providing a
basis to understand the nature of the dispute and the viewpoints of both sides.
 Section 73 describes the settlement process, where the conciliator suggests potential
terms for settlement after understanding the concerns and objectives of both parties.
Arbitration Sections Emphasizing Party Actions

 Section 18 mandates equal treatment of parties, ensuring each party has an

opportunity to present their case based on evidence and arguments.
 Section 24 allows for hearings, where each party's actions and statements are
analyzed by the arbitrator, who makes decisions on procedural matters and
evidentiary claims.
 Section 31 requires the arbitrator to issue a reasoned award based on the parties'
actions, submissions, and evidence presented during the proceedings, underscoring
that arbitration relies heavily on each party’s conduct and argumentation.

Conclusion: In summary, conciliation is centered around mutual understanding and

negotiation facilitated by a neutral conciliator, aiming to reach an agreement without
imposing a decision. Arbitration, however, focuses on the analysis of each party's actions,
claims, and defenses, leading to a binding award. The process and outcome differ
significantly due to the conciliator's and arbitrator’s distinct roles, as demonstrated by
Sections 67, 62, and 73 for conciliation and Sections 16, 18, and 31 for arbitration under the
Arbitration and Conciliation Act, 1996, along with supporting judicial interpretations.

MODULE 8

Q. Aims & Obj. Of The New York Convention, 1958 + Arb Awards Recognized &
Enforceable u/ Convention

The New York Convention of 1958, formally known as the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, is a landmark international treaty that
facilitates the recognition and enforcement of foreign arbitral awards across borders. Signed
by over 170 countries, including major economic and trading powers, the Convention has
become a key legal instrument in the global arbitration framework, providing companies,
individuals, and investors with a reliable mechanism for resolving disputes internationally.

Aims and Objectives: The Convention's overarching objective is to support international

arbitration by creating a streamlined process for enforcing foreign arbitral awards and
recognizing arbitration agreements across jurisdictions. Its primary aims include:
 1. Recognition and Enforcement of Foreign Arbitral Awards: The Convention
mandates contracting states to recognize and enforce arbitral awards from other
member states, as specified in Article III. This provision ensures that an award
rendered in one country will be upheld in another, minimizing the hurdles for cross-
border dispute resolution.
2. Standardization of Arbitration Agreement Formalities: Article II of the
Convention sets a consistent standard for recognizing arbitration agreements,
requiring that agreements be in writing to ensure uniformity and reduce procedural
discrepancies in enforcing these agreements.
3. Minimizing Grounds for Refusal of Enforcement: The Convention aims to create a
"pro-enforcement bias" by limiting the grounds on which an enforcing court may
refuse to recognize an award, as outlined in Articles IV and V. This provision is
essential in promoting trust in arbitration by preventing unnecessary challenges and
delays in enforcement.
4. Promotion of International Trade and Investment: By streamlining arbitration
procedures and enforcement mechanisms, the Convention helps reduce uncertainties,
encouraging businesses and investors to engage in international trade and investment
with confidence.
5. Referral to Arbitration: Article II(3) requires that if a valid arbitration agreement
exists, courts in contracting states must refer disputes to arbitration rather than
allowing them to proceed in court. This provision strengthens arbitration as the
preferred mechanism for resolving international commercial disputes.

Key Provisions and Relevant Case Law

The New York Convention’s provisions establish the framework for enforcing foreign
arbitral awards with specific procedures and limited grounds for refusal. Significant articles
and case interpretations include:

1. Scope of Application – Article I: The Convention applies to arbitral awards made in

a contracting state and recognized in another contracting state. It also allows countries
to make a reciprocity reservation under Article I(3), restricting the application to
awards made in other member states, which approximately two-thirds of contracting
states have exercised.
2. General Obligation to Enforce – Article III: Article III requires that each
contracting state recognize foreign awards as binding and enforce them in accordance
with its procedural laws. This provision emphasizes that the conditions imposed on
foreign awards cannot be more stringent than those for domestic awards, promoting
equal treatment across jurisdictions.
3. Requirements for Enforcement – Article IV: To enforce an award, the applicant
must submit the original award and arbitration agreement or certified copies. This
establishes the prima facie validity of the award. Courts may only deny enforcement
based on specific grounds in the Convention, as seen in Parsons & Whittemore
Overseas Co. Inc. v. Société Générale de l'Industrie du Papier (RAKTA) (1974),
where the U.S. Second Circuit held that the public policy exception could only be
invoked if enforcement violated the “forum state’s most basic notions of morality and
justice.”
4. Grounds for Refusal of Enforcement – Article V: Article V outlines exhaustive
grounds for refusal, designed to promote a "pro-enforcement bias." Key grounds
include:
o Invalidity of the Arbitration Agreement: Enforcement may be denied if the
agreement is invalid under the applicable law.
o Due Process Concerns: Awards can be refused if parties were not properly
notified or had insufficient opportunity to present their case.
o Public Policy: Enforcement can be refused if it contravenes the enforcing
state’s public policy, a narrowly interpreted exception to prevent abuse. In
Parsons & Whittemore, the public policy exception was defined narrowly to
uphold awards unless they would severely violate the enforcing jurisdiction's
values.
5. Suspension and Setting Aside of Awards – Article V(1)(e) and Article VI: Article
V(1)(e) permits a court to refuse enforcement if the award has been set aside in the
country where it was made. Courts may also adjourn enforcement if an annulment is
pending, ensuring deference to the primary jurisdiction's procedural standards. This is
illustrated in TermoRio S.A. E.S.P. v. Electranta S.P. (2007), where the U.S. D.C.
Circuit declined to enforce an award annulled in Colombia, respecting the decision of
the primary jurisdiction.
 6. Referral to Arbitration – Article II(3): Article II(3) mandates that courts must refer
parties to arbitration if a valid arbitration agreement exists. This principle aligns with
U.S. Supreme Court decisions such as Moses H. Cone Memorial Hospital v. Mercury
Construction Corp. (1983), which emphasized a strong preference for arbitration in
line with the Convention’s objectives.

The New York Convention of 1958 has thus been fundamental in making arbitration a
reliable, efficient means of dispute resolution on an international scale, upholding arbitral
autonomy, creating a uniform enforcement process, and making commercial relationships
across borders more predictable and dependable. Through limited grounds for refusal and a
supportive enforcement framework, the Convention continues to strengthen arbitration as the
preferred method for resolving international disputes.

Q. Foreign Award Arb + How Is It Governed In India + ICA? (SB) Exp. 'Considered
To Be Commercial' W/ SC Judgments. (LQ) [6]

Enforcement of Foreign Arbitral Awards in India

In India, the enforcement of foreign arbitral awards is governed by the Arbitration and
Conciliation Act, 1996 (the Act), particularly under Part II, which addresses the recognition
and enforcement of international awards. This framework reflects India's obligations as a
signatory to the New York Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, 1958. To ensure consistency with international arbitration practices, the
Act’s provisions align with the Convention's goal of facilitating cross-border enforcement.

Key Provisions for Enforcement

1. Definition and Applicability: Section 2(1)(f) of the Act defines "international

commercial arbitration" to include disputes where at least one party is a foreign
national or entity. This definition sets the jurisdictional foundation for treating certain
foreign awards as enforceable under Indian law.
2. Grounds for Refusal of Enforcement: Section 48 outlines specific conditions under
which enforcement may be refused, such as:
o The arbitration agreement is invalid under the law applicable to the agreement.
o The arbitration procedure was not in accordance with the agreement.
 o The award has been set aside or suspended by a competent authority in the
country where it was made.
o Enforcement of the award is contrary to public policy in India. Notably, the
Supreme Court has held in Renusagar Power Co. Ltd. v. General Electric
Co. (1994) that "public policy" should be interpreted narrowly, limiting it to
cases where enforcement would contravene India’s fundamental policy,
interests of justice, or morality judicial Oversight**: Indian courts have
gradually developed a pro-arbitration approach, emphasizing minimal
interference in international awards. For instance, in Bhatia International v.
Bulk Trading S.A. (2002), the Supreme Court extended Part I of the Act to
foreign awards unless expressly excluded, promoting enforcement in line with
India's obligations under the New York Convention. This stance was
reaffirmed in Venture Global Engineering v. Satyam Computer Services
Ltd. (2008), where the court underscored the limited scope of interference
permitted in foreign arbitral awards.

Q. INTERNATIONAL COMMERCIAL ARBITRATION

International commercial arbitration is a method for resolving disputes arising out of

commercial transactions between parties from different jurisdictions. Unlike domestic
arbitration, this involves an international component, allowing parties from various countries
to settle disputes outside of national court systems, fostering efficiency, neutrality, and
flexibility.

Key Features

 Arbitration Agreement: Central to international arbitration, parties must agree to

resolve disputes through arbitration rather than litigation. This agreement typically
outlines key aspects such as the selection of arbitrators and procedural rules.
 Binding Decisions: Arbitral awards are binding on the parties, with limited grounds
for appeal, making it an efficient and final dispute resolution mechanism.
 Confidentiality and Flexibility: Arbitration is typically private, shielding sensitive
information from public disclosure, and allows parties to customize various aspects of
the process, including procedural rules and timelines.
India’s Arbitration and Conciliation Act incorporates principles of international arbitration as
laid down by the UNCITRAL Model Law, which encourages countries to create arbitration-
friendly legal frameworks that support neutrality and enforceability of awards. This provides
parties with confidence that arbitral awards will be treated fairly under Indian law.

Q. “Considered to Be Commercial” in International Arbitration: Supreme Court

Judgments

In determining whether a matter qualifies as "commercial" under international commercial

arbitration, the Supreme Court of India has clarified the scope and nature of "commercial"
activities through several landmark judgments.

1. Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO)

(2012): This pivotal case redefined the scope of commercial transactions in
international arbitration by holding that even transactions involving public sector
undertakings (PSUs) could be considered "commercial" if they exhibit a trade or
commercial character. The judgment reinforced that a State entity’s participation does
not alter the fundamental nature of an agreement when the subject is inherently
commercial .
2. Indian Oil Corporation Ltd. v. Amritsar Gas Service (2009): The Supreme Court
here emphasized that contracts related to trade or business, irrespective of the parties'
public or private status, fall within the scope of "commercial." The decision
established that agreements with a direct impact on trade or commercial interests meet
the commercial criterion for arbitration.
3. Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc. (2013):
This judgment further clarified that determining whether a matter is "commercial"
should focus on the substance rather than the form of an agreement. Even if a contract
involves public policy elements or governmental entities, the nature of the transaction
prevails if the core of the contract pertains to commercial dealings.

These cases collectively illustrate term "commercial" in international arbitration is interpreted

broadly to include any transaction of a trade or business nature, whether it involves private
entities or government undertakings. This jurisprudence highlights India's adherence to
international standards, ensuring that commercial disputes with an international element are
suitably addressed under arbitration law, fostering greater reliability and predictability for
foreign investors and trade partners.

MODULE 9

DEVELOPMENT OF E-LOK ADALAT

1. Introduction to E-Lok Adalat

 E-Lok Adalat is an innovative adaptation of the Lok Adalat mechanism within the
Alternative Dispute Resolution System (ADRS) in India, utilizing digital platforms
to conduct Lok Adalat sessions online. E-Lok Adalat offers a way to resolve cases
quickly, cost-effectively, and with minimal formality, making ADR accessible to a
wider public, particularly in remote areas where physical access to courts may be
challenging.
 This online model was primarily developed in response to the COVID-19 pandemic,
which caused disruptions to physical court and ADR proceedings, and accelerated the
need for digital solutions in the judiciary.

2. Legislative Foundation for Lok Adalats and E-Lok Adalats

 The Legal Services Authorities Act, 1987 underpins the Lok Adalat system in India,
granting it statutory recognition as a means of dispute resolution. Section 19 of the
Act provides for the organization of Lok Adalats, which aim to settle disputes
amicably, often with the assistance of retired judges, lawyers, and trained mediators.
 E-Lok Adalats derive their legitimacy from this legislation but extend the process into
the digital domain, backed by judicial and executive support for e-governance and
digital justice initiatives.

3. Development of E-Lok Adalat

 The idea of E-Lok Adalat emerged due to the limitations posed by the pandemic, but
it has been advocated as part of India’s Digital India mission and the judiciary's goal
of Digital Justice Delivery.
 2020 marked a significant milestone when Chhattisgarh organized India’s first E-
Lok Adalat, resolving thousands of cases online in a single day. Following this
 success, other states, including Maharashtra, Gujarat, and Karnataka, adopted similar
initiatives, making E-Lok Adalats a permanent feature of ADR in India.
 By integrating video conferencing, digital document submission, and e-signatures, E-
Lok Adalat facilitates end-to-end digital dispute resolution.

4. Features and Advantages of E-Lok Adalat

 Remote Access: Parties can participate from anywhere, reducing logistical

constraints.
 Cost-Effectiveness: Eliminates travel and related costs, benefiting low-income and
rural litigants.
 Speed and Efficiency: E-Lok Adalat can dispose of cases faster due to minimized
procedural delays.
 Confidentiality and Informality: Maintains the informal structure of Lok Adalats,
encouraging open negotiation.
 Court and Case Backlog Reduction: Addresses the issue of pending cases by
resolving suitable cases through ADR.

6. Role of the National Legal Services Authority (NALSA)

 NALSA has been instrumental in promoting E-Lok Adalats across India, issuing
guidelines for their conduct and ensuring the availability of necessary digital
infrastructure. By coordinating with State Legal Services Authorities (SLSAs),
NALSA has facilitated large-scale E-Lok Adalats nationwide, contributing
significantly to their development and success.

7. Future of E-Lok Adalat and Digital ADR

 The E-Lok Adalat model demonstrates the judiciary's commitment to Digital Justice
Delivery and is expected to continue evolving with advancements in technology.
Future developments could include the use of Artificial Intelligence for case
management and automated scheduling, enhancing the efficiency and reach of E-Lok
Adalats.
Conclusion: E-Lok Adalat exemplifies the fusion of ADR with technology, providing an
accessible, efficient, and user-friendly platform for dispute resolution. It is an innovative
addition to India's ADR framework, empowered by judicial endorsements and statutory
support from the Legal Services Authorities Act, 1987. Through this mechanism, the
judiciary has expanded access to justice and taken significant steps towards resolving India’s
case backlog in a manner that is both modern and rooted in the principles of Lok Adalats.

ESTABLISHMENT, PROCEDURE, LIMITATION OF LOK ADALAT

Lok Adalat, meaning "People's Court," is a part of India’s Alternative Dispute Resolution
(ADR) mechanisms designed to provide an informal, conciliatory, and speedy resolution to
legal disputes. Lok Adalats are constituted under the Legal Services Authorities Act, 1987
and serve as a platform where cases can be resolved without the lengthy processes and costs
associated with conventional court proceedings.

1. Establishment of Lok Adalat: Lok Adalats are established under Section 19 of the Legal
Services Authorities Act, 1987. They operate as informal courts, often organized by the
National Legal Services Authority (NALSA) and State Legal Services Authorities
(SLSAs), which regularly organize Lok Adalat sessions to hear disputes that are suitable for
settlement.

 Section 19 provides statutory recognition for the formation of Lok Adalats,

empowering state and district legal services authorities to organize these forums for
conciliation and settlement.
 They may be convened periodically, in court premises or other public places, with
special sessions like Mega Lok Adalat for large-scale settlement of cases.

In State of Punjab and Haryana v. Jalour Singh & Ors. (2008), the Supreme Court upheld
the powers of Lok Adalats under the Legal Services Authorities Act, emphasizing the
importance of amicable and expeditious settlement.
2. Procedure of Lok Adalat: Lok Adalats adopt a flexible and informal procedure, focusing
on conciliation and negotiation rather than strict legal principles or technical rules.

 Conciliatory Approach: The procedure is less formal than in traditional courts, with
no adherence to strict evidentiary and procedural laws.
 Participation and Consent: Participation in Lok Adalat is voluntary, and settlement
is possible only if both parties consent.
 Compromise and Settlement: Lok Adalat encourages both parties to arrive at a
mutually acceptable settlement. Often, a neutral third party, such as a retired judge or
an advocate, presides over the session, guiding the parties towards a resolution.

Key Sections Governing Procedure:

 Section 20(3): Grants Lok Adalat the power to settle matters through compromise and
negotiation.
 Section 20(4): If a compromise cannot be reached, the case is returned to the referring
court for traditional adjudication.
 Section 21: States that an award by a Lok Adalat is deemed a civil court decree,
making it enforceable and binding on the parties.

In K.N. Govindan Kutty Menon v. C.D. Shaji (2011), the Supreme Court ruled that an award
by a Lok Adalat is final and enforceable as a decree of a civil court, binding the parties to the
terms agreed upon during the settlement.

3. Limitation of Lok Adalat: Despite its advantages, Lok Adalat has certain limitations,
mainly due to its reliance on compromise and lack of coercive power.

 Nature of Disputes: Lok Adalat can only handle cases that are capable of settlement,
such as civil disputes, compoundable criminal cases, family disputes, and cases
related to public utility services. Serious criminal offenses, non-compoundable cases,
and matters requiring extensive legal analysis are outside its scope.
 Requirement of Consent: Since Lok Adalat relies on voluntary participation and
consent, it cannot enforce a settlement if either party does not agree. This restricts its
effectiveness when one party is unwilling to compromise.
  Inability to Adjudicate: Lok Adalat does not have the authority to make a binding
decision in the absence of a settlement. If a compromise cannot be reached, the
dispute is referred back to the traditional court system, leading to delays and
additional costs.

Relevant Sections Governing Limitations:

 Section 20(5): Specifies that if a compromise is not possible, the case must be
returned to the referring court, which highlights the non-binding nature of Lok Adalat
in cases where no mutual agreement is achieved.
 Section 22: Confirms that Lok Adalat does not have jurisdiction to adjudicate
disputes and can only facilitate settlements.

In Bhargavi Constructions & Anr. v. Kothakapu Muthyam Reddy & Ors. (2017), the
Supreme Court clarified that Lok Adalat can settle only matters where a compromise is
possible, and if nocompromise is reached, it must refer the case back to the referring court.

4. Legal Status of Lok Adalat Award

 Section 21 grants a Lok Adalat award the same status as a civil court decree, making
it final, binding, and enforceable. This award is conclusive and no appeal can be filed
against it, except in cases where fraud or coercion can be proved.
 Awards rendered by Lok Adalat are unique as they do not require judicial scrutiny or
confirmation by a higher court, thus making Lok Adalat an efficient ADR mechanism
for settlement-driven cases.

Conclusion: Lok Adalat plays a vital role in India’s ADR framework, offering a quick, cost-
effective, and accessible alternative to traditional litigation for certain types of disputes.
However, its dependency on mutual consent and lack of jurisdiction over non-compoundable
criminal cases limit its applicability. Still, Lok Adalats remain crucial in reducing the burden
on courts by providing a platform for amicable settlements, backed by both legislative
support and judicial precedent.

'ALL CATEGORIES OF CASES CAN BE SETTLED THROUGH LOK ADALATS

EXCEPT CRIMINAL CASES WHICH ARE NOT COMPOUNDABLE' - COMMENT
IN LIGHT OF LSA ACT, 1987.
The statement "All categories of cases can be settled through Lok Adalats except criminal
cases which are not compoundable" captures the essence of Lok Adalats under the Legal
Services Authorities Act, 1987. Lok Adalats are designed to provide a platform for amicable
and expeditious settlement of disputes, but their jurisdiction is indeed limited by the nature of
the case, especially when it comes to criminal matters.

Lok Adalats under the Legal Services Authorities Act, 1987: The Legal Services
Authorities Act, 1987 (LSA Act) established Lok Adalats as an alternative dispute resolution
(ADR) forum to handle cases that can be resolved through compromise. Section 19 of the
Act provides for the establishment of Lok Adalats, which have the authority to resolve
various types of disputes, including civil, matrimonial, land, labor, and some criminal
matters. However, Section 20 of the LSA Act specifically limits the types of criminal cases
that can be heard in Lok Adalats, thereby excluding non-compoundable criminal offenses.

Types of Cases Settled by Lok Adalats: According to the LSA Act and the scope of Lok
Adalats:

1. Civil Matters: All civil cases are eligible for Lok Adalat proceedings, including
property disputes, family and matrimonial issues, and contractual disagreements.
2. Compoundable Criminal Cases: Lok Adalats can settle criminal cases that are
compoundable under Section 320 of the Criminal Procedure Code (CrPC), 1973.
Compoundable offenses are those where the complainant can withdraw the charges
against the accused, such as minor assault or trespass.
3. Other Matters: Cases related to motor vehicle accidents, public utility disputes, and
debt recovery can also be settled.

However, non-compoundable criminal cases (e.g., grievous assault, homicide, offenses

against the state) are outside the jurisdiction of Lok Adalats as these offenses are considered
too severe to be resolved through compromise.

Section 20 of the LSA Act, 1987 – Limitation on Lok Adalat’s Jurisdiction outlines that:

 Voluntary Participation: Parties must agree to resolve their dispute in Lok Adalat
voluntarily. Lok Adalat has no authority to impose jurisdiction on parties unwilling to
participate.
  Compromise-Based Settlement: Lok Adalats are limited to cases where a
compromise is possible. For non-compoundable criminal cases, compromise is
generally not permitted by law, as these offenses are considered crimes against
society or the state, requiring a judicial approach.
 Referral to Courts: If a compromise cannot be reached in Lok Adalat, Section 20(5)
mandates that the case be returned to the referring court for adjudication. This
underscores that Lok Adalats do not have adjudicatory powers over non-
compoundable criminal offenses and cannot force a settlement.

CASES

1. State of Punjab and Haryana v. Jalour Singh & Ors. (2008)

2. Bhargavi Constructions & Anr. v. Kothakapu Muthyam Reddy & Ors. (2017)
3. K.N. Govindan Kutty Menon v. C.D. Shaji (2011)

Why Non-Compoundable Criminal Cases are Excluded: Non-compoundable offenses are

treated as crimes against society, affecting public order, morality, and welfare. Allowing such
cases to be settled in Lok Adalats, where compromise is encouraged, would contradict the
public interest as these offenses often require deterrent punishment rather than settlement.
Judicial proceedings in regular courts ensure due process, accountability, and appropriate
penalties.

Conclusion: Lok Adalats, established under the LSA Act, 1987, are effective for expeditious
and amicable settlements in civil matters and compoundable criminal cases where
compromise aligns with public policy and individual rights. However, non-compoundable
criminal offenses, due to their gravity and societal impact, are outside the scope of Lok
Adalats, as they demand a more formal judicial process. This restriction maintains the
integrity of the criminal justice system and ensures that justice is not compromised for the
sake of settlement. The structure of Lok Adalats, as confirmed by legislative provisions and
judicial interpretations, upholds this balance by empowering them to resolve only those
disputes that can be appropriately managed through compromise.
DRAFT A PARTNERSHIP DEED WITH AN ARBITRATION CLAUSE

PARTNERSHIP DEED

This Partnership Deed is made on this ___ day of _, 20, between:

1. [Partner 1's Full Name], aged __ years, residing at [Full Address], hereinafter
referred to as "Partner 1," and
2. [Partner 2's Full Name], aged __ years, residing at [Full Address], hereinafter
referred to as "Partner 2."

(Hereinafter collectively referred to as "the Partners" and individually as "a Partner").

The Partners hereby agree to form a partnership under the terms and conditions set forth
below:

1. Name and Business of the Partnership

The name of the partnership shall be [Partnership Name], and the business shall be
[Describe the Nature of Business]. The principal place of business shall be located at
[Business Address].

2. Commencement and Duration

This partnership shall commence on [Date of Commencement] and continue until

terminated as provided herein.

3. Capital Contribution

Each Partner shall contribute the following amounts as initial capital:

 Partner 1: $__________
 Partner 2: $__________

Any further capital contributions required shall be agreed upon by all Partners.

4. Profit and Loss Sharing

Profits and losses of the partnership shall be shared in the following ratio:

 Partner 1: __%
 Partner 2: __%

The Partners shall also bear any partnership losses in the same ratio as the profit-sharing.
 5. Management and Duties of Partners

Each Partner shall actively participate in the day-to-day management of the business, and all
decisions shall be made jointly. Specific duties may be assigned to individual Partners as
agreed upon in writing.

6. Bank Accounts and Financials

Partnership bank accounts shall be opened and operated jointly by the Partners. All funds
received in the partnership's name shall be deposited into the partnership's bank account(s),
and withdrawals shall require the signatures of both Partners.

7. Books of Accounts

Proper books of accounts shall be maintained at the partnership’s principal place of business
and shall be accessible to both Partners. An annual audit of the books shall be conducted.

8. Admission of New Partners

New partners may be admitted only upon the unanimous consent of the existing Partners and
under terms agreed upon at the time.

9. Retirement and Death of a Partner

In the event of the retirement or death of any Partner, the remaining Partner(s) may either
continue the partnership with the legal representatives of the deceased Partner or dissolve the
partnership and settle accounts as per the agreed terms.

10. Dissolution

The partnership may be dissolved:

 By mutual consent of the Partners.

 If a Partner gives ___ months’ written notice.
 In accordance with applicable law if circumstances render the business illegal or
impossible to continue.

11. Arbitration Clause

Dispute Resolution:

 All disputes, controversies, or claims arising out of or in connection with this

Partnership Deed, including any question regarding its existence, validity, or
termination, shall be resolved by arbitration.
  Arbitration Procedure: The arbitration shall be conducted in accordance with the
[Arbitration Rules, e.g., Arbitration and Conciliation Act, 1996, if in India] by a sole
arbitrator appointed by mutual agreement of the Partners. If the Partners fail to agree
on an arbitrator within __ days of a dispute, either Partner may request the appropriate
legal authority to appoint the arbitrator.
 Venue and Language: The arbitration proceedings shall take place in
[City/Location], and the language of arbitration shall be English.
 Final and Binding: The decision or award of the arbitrator shall be final and binding
upon the Partners, and judgment on such award may be entered in any court having
jurisdiction.
 Costs: The costs of arbitration shall be borne equally by the Partners unless otherwise
decided by the arbitrator.

12. Governing Law

This deed shall be governed by and construed in accordance with the laws of
[State/Country].

13. Amendments to the Partnership Deed

Any amendment to this Partnership Deed shall be valid only if made in writing and signed by
both Partners.

14. Miscellaneous

 Entire Agreement: This deed represents the entire agreement between the Partners.
 Severability: If any provision of this deed is found invalid or unenforceable, the
remaining provisions shall continue in full force and effect.

IN WITNESS WHEREOF, the Partners have executed this Partnership Deed on the date
first above written.

Partner 1

(Signature)

Partner 2
DRAFT AN APP. FOR INTERIM RELIEF U/ S.9 OF A&C.

IN THE HON’BLE [NAME OF THE COURT]

Application under Section 9 of the Arbitration and Conciliation Act, 1996

(Case No. __ of 20__)

In the Matter of:

1. [Name of Applicant],
Aged __ years,
S/o or D/o __,
Residing at [Address],
Applicant

Versus

2. [Name of Respondent],
Aged __ years,
S/o or D/o __,
Residing at [Address],
Respondent

MOST RESPECTFULLY SHOWETH:

1. The Applicant’s Background

The Applicant is engaged in the business of [describe business or service provided],
and is a party to a valid and subsisting contract dated __ (hereinafter referred to as
“the Contract”) executed with the Respondent for [briefly state the purpose of the
contract].
2. The Arbitration Agreement
The Applicant and the Respondent have an arbitration agreement dated __, contained
in Clause __ of the Contract, which provides for arbitration in the event of any
disputes arising between the parties. The parties have agreed to resolve disputes
through arbitration as per the provisions of the Arbitration and Conciliation Act, 1996.
3. Disputes and Differences
Disputes and differences have arisen between the Applicant and the Respondent
regarding [brief description of the dispute, e.g., non-payment of dues, breach of
contract terms]. The Applicant has issued a notice for arbitration dated __, and is
taking steps to initiate the arbitration proceedings.
4. Need for Interim Relief
The Respondent is taking actions that are likely to cause irreparable harm and loss to
the Applicant, jeopardizing the rights of the Applicant under the Contract.
Specifically, [describe the actions of the Respondent that necessitate interim
relief, e.g., Respondent disposing of secured assets, transferring funds, etc.]. If
these actions are not immediately restrained, the Applicant will suffer significant
financial loss and hardship, which cannot be adequately compensated by damages.
 5. Prima Facie Case and Balance of Convenience
The Applicant has a strong prima facie case based on the contractual rights and the
merits of the dispute. Furthermore, the balance of convenience is in favor of granting
the interim relief sought by the Applicant to prevent irreparable harm that may be
caused by the Respondent's actions.
6. Grounds for Relief
The Applicant submits that:
o (a) The actions of the Respondent are likely to render the arbitral award
ineffectual if interim measures are not granted.
o (b) There exists a real and immediate threat to the Applicant's rights under the
Contract due to the Respondent’s actions.
o (c) The Applicant has no alternative remedy except to approach this Hon'ble
Court under Section 9 of the Act for urgent interim relief.

PRAYER

In view of the above, the Applicant humbly prays that this Hon’ble Court be pleased to:

1. Grant an interim injunction restraining the Respondent from [describe the specific
actions sought to be restrained, e.g., disposing of assets, transferring funds] until
the conclusion of the arbitration proceedings.
2. Direct the Respondent to [describe any specific performance or preservation of
assets, such as maintaining status quo or preserving property].
3. Pass any other order(s) that this Hon’ble Court deems fit and proper in the
circumstances of the case.

Place: [City]
Date: [Date]

For the Applicant,

[Applicant’s Advocate's Name and Signature]

[Law Firm Name, if applicable]
[Contact Information]