ALTERNATIVE DISPUTE RESOLUTION-

Unit-1
ADR-
Introduction
Indian judiciary is one of the oldest judicial system, a world-renowned fact but
nowadays it is also well-known fact that Indian judiciary is becoming inefficient to
deal with pending cases, Indian courts are clogged with long unsettled cases. The
scenario is that even after setting up more than a thousand fast track Courts that
already settled millions of cases the problem is far from being solved as pending
cases are still piling up.

To deal with such a situation Alternative Dispute Resolution (ADR) can be helpful
mechanism, it resolves conflict in a peaceful manner where the outcome is
accepted by both the parties.

ONE OF THE MOST IMPORTANT FEATURE OF ADR IS IT RESOLVES DISPUTE IN

COST EFFECTIVE MANNER, LESS TIME CONSUMING AND PRODUCES DESIRED
RESULT.

Alternative Dispute Resolution

The concept of Alternative Dispute Resolution (ADR) mechanism is capable of

providing a substitute to the conventional methods of resolving disputes. ADR
offers to resolve all type of matters including civil, commercial, industrial and
family etc., where people are not being able to start any type of negotiation and
reach the settlement. Generally, ADR uses neutral third party who helps the
parties to communicate, discuss the differences and resolve the dispute. It is a
method which enables individuals and group to maintain co-operation, social
order and provides opportunity to reduce hostility.
Importance of ADR in India

To deal with the situation of pendency of cases in courts of India, ADR plays a
significant role in India by its diverse techniques. Alternative Dispute Resolution
mechanism provides scientifically developed techniques to Indian judiciary which
helps in reducing the burden on the courts. ADR provides various modes of
settlement including, arbitration, conciliation, mediation, negotiation and lok
Adalat. Here, negotiation means self-counseling between the parties to resolve
their dispute but it doesn’t have any statutory recognition in India.

ADR is also founded on such fundamental rights, article 14 and 21 which deals
with equality before law and right to life and personal liberty respectively. ADR’s
motive is to provide social-economic and political justice and maintain integrity in
the society enshrined in the preamble. ADR also strive to achieve equal justice
and free legal aid provided under article 39-A relating to Directive Principle of
State Policy(DPSP).

Few important provisions related to ADR

Section 89 of the Civil Procedure Code, 1908 provides that opportunity to the
people, if it appears to court there exist elements of settlement outside the court
then court formulate the terms of the possible settlement and refer the same for:
Arbitration, Conciliation, Mediation or Lok Adalat.

The Acts which deals with Alternative Dispute Resolution are Arbitration and
Conciliation Act, 1996 and,

The Legal Services Authority Act, 1987

Advantages of Alternative Dispute Resolution

Less time consuming: people resolve their dispute in short period as compared to
courts

Cost effective method: it saves lot of money if one undergoes in litigation process.

It is free from technicalities of courts, here informal ways are applied in resolving
dispute.
People are free to express themselves without any fear of court of law. They can
reveal the true facts without disclosing it to any court.

Efficient way: there are always chances of restoring relationship back as parties
discuss their issues together on the same platform.

It prevents further conflict and maintains good relationship between the parties.

It preserves the best interest of the parties.

Various modes of Alternative Dispute Resolution

Arbitration

The process of Arbitration cannot exist without valid arbitration agreement prior
to the emergence of dispute. In this technique of resolution parties refer their
dispute to one or more persons called arbitrators. Decision of arbitrator is bound
on parties and their decision is called ‘Award’. The object of Arbitration is to
obtain fair settlement of dispute outside of court without necessary delay and
expense.

Any party to a contract where arbitration clause is there, can invoke arbitration
clause either himself or through their authorized agent which refer the dispute
directly to the arbitration as per the Arbitration clause. Here, arbitration clause
means a clause that mention the course of actions, language, number of
arbitrators, seat or legal place of the arbitration to be taken place in the event of
dispute arising out between the parties.

What is the procedure to be followed once the arbitration clause is invoked?

Initially, applicant initiates an arbitration by filing a statement of claim that

specifies the relevant facts and remedies. The application must include the
certified copy of arbitration agreement.

Statement of claim is a written document filed in the court or tribunal for judicial
determination and a copy also send to the defendant in which claimant described
the facts in support of his case and the relief he seeks from the defendant.
The respondent reply to the arbitration by filing an answer against the arbitration
claim of claimant that specifies the relevant facts and available defenses to the
statement of claim.

Arbitrators selection is the process in which the parties receive lists of potential
arbitrators and select the panel to hear their case.

Then there is the exchange of documents and information in preparation for the
hearing called ‘Discovery’.

The parties meet in persons to conduct the hearing in which the parties present
the arguments and evidences in support of their respective cases.

After the witnesses examined and evidences are presented, then there in
conclusion arbitrator gives an ‘Award’ which is binding on the parties.

Now the intricacies of the proceedings vary with the arbitration agreement. For
example, there could be a timeline which must be followed. This timeline would
be stipulated in the agreement.

Section 8 of Arbitration and Conciliation Act, 1996 provides if any party

disrespects the arbitral agreement and instead of moving to arbitration, moves
that suit to civil court, other party can apply the court for referring the matter to
arbitration tribunal as per the agreement but not later the submission of the first
statement. The application must include a certified copy of arbitration agreement
and if courts satisfy with it, the matter will be referred to arbitration.

Mediation

Mediation is an Alternative Dispute resolution where a third neutral party aims to

assist two or more disputants in reaching agreement. It is an easy and
uncomplicated party centered negotiation process where third party acts as a
mediator to resolve dispute amicably by using appropriate communication and
negotiation techniques. This process is totally controlled by the parties.
Mediator’s work is just to facilitate the parties to reach settlement of their
dispute. Mediator doesn’t impose his views and make no decision about what a
fair settlement should be.
THE PROCESS OF MEDIATION WORKS IN VARIOUS STAGES. THESE ARE,

Opening statement

Joint session

Separate session and,

Closing

At the commencement of mediation process, the mediator shall ensure the

parties and their counsels should be present.

Initially in the opening statement he furnishes all the information about his
appointment and declares he does not have any connection with either of parties
and has no interest in the dispute.

In the joint session, he gathers all the information, understand the fact and issues
about the dispute by inviting both the parties to present their case and put
forward their perspective without any interruption. In this session, mediator tries
to encourage and promote communication and manage interruption and
outbursts by the parties.

Next is separate session, where he tries to understand the dispute at a deeper

level, gathers specific information by taking both the parties in confidence
separately.

Mediator asks frequent questions on facts and discusses strengths and

weaknesses to the parties of their respective cases.

After hearing both the sides, mediator starts formulating issues for resolution and
creating options for settlement.

In the case of failure to reach any agreement through negotiation in mediation,

mediator uses different Reality check technique like:

Best Alternative to Negotiated Agreement (BATNA)

It is the best possible outcome both the party come up with or has in mind. Its
suitable situation as each party thinks about their most favorable scenario looks
like.

Mediator discusses the perspective of the parties about the possible outcome at
litigation. It is also helpful for the mediator to work with parties and their
advocates to come to a proper understanding of the best, worst and most
probable outcome to the dispute through litigation as that would help the parties
to acknowledge the reality and prepare realistic, logical and workable proposals.

Conciliation

Conciliation is a form of arbitration but it is less formal in nature. It is the process

of facilitating an amicable resolution between the parties, whereby the parties to
the dispute use conciliator who meets with the parties separately to settle their
dispute. Conciliator meet separately to lower the tension between parties,
improving communication, interpreting issue to bring about a negotiated
settlement There is no need of prior agreement and cannot be forced on party
who is not intending for conciliation. It is different from arbitration in that way.

Actually, it is not possible for the parties to enter into conciliation agreement
before the dispute has arisen. It is clear in Section 62 of The Arbitration and
Conciliation Act, 1996 which provides,

The party initiating conciliation shall send to the other party a written invitation to
conciliate under this part, briefly identifying the subject of the dispute.

Conciliation proceedings shall commence when the other party accepts in writing
the invitation to conciliate.

If the other rejects the invitation, there will be no conciliation proceedings.

Above provision clearly states conciliation agreement should be an extemporary

agreement entered into after the dispute has but not before. Parties are also
permitted to engage in conciliation process even while the arbitral proceedings
are on(section 30).
Lok Adalat

Lok Adalat is called ‘People’s Court’ presided over by a sitting or retired judicial
officer, social activists or members of Legal profession as the chairman. National
Legal Service Authority(NALSA) along with other Legal Services Institutions
conducts Lok Adalats on regular intervals for exercising such jurisdiction. Any
case pending in regular court or any dispute which has not been brought before
any court of law can be referred to Lok Adalat. There is no court fees and rigid
procedure followed, which makes the process fast. If any matter pending in court
of referred to the Lok Adalat and is settled subsequently, the court fee originally
paid in the court when the petition filed is also refunded back to the parties.

Parties are in direct interaction with the judge, which is not possible in regular
courts. It depends on the parties if both the parties agree on case long pending in
regular court can be transferred to Lok Adalat. The persons deciding the cases
have the role of statutory conciliators only, they can only persuade the parties to
come to a conclusion for settling the dispute outside the regular court in the Lok
Adalat. Legal Services Authorities (State or District) as the case may be on receipt
of an application from one of the parties at a pre-litigation stage may refer such
matter to the Lok Adalat for which notice would then be issued to the other party.
Lok Adalats do not have any jurisdiction to deal with cases of non-compoundable
offenses.

HISTORY- british, mughals, post independence

UTILITY- NOTES

SYNOPSIS-
INTRODUCTION TO ADR
MEANING AND DEFINITION
HISTORY
UTILITY
DISPUTES RESOLVED BY ADR
ADVANTAGES
MODES-ARBITRATION, MEDIATION , CONCILIATION,
LOKADALAT
ARBITRATION

What is Arbitration
“Arbitration is a form of Alternative Dispute Resolution (ADR)”.

The concept of arbitration means resolution of disputes between the parties at the earliest point
of time without getting into the procedural technicalities associated with the functioning of a
civil court.

The dictionary meaning of Arbitration is “hearing and determining a dispute between the parties
by a person or persons chosen by the parties”.

In an English judgement named Collins v. Collins, 1858 28 LJ Ch 184: 53 ER 916 the court gave
a wide definition to the concept of Arbitration which reads as follows:”An arbitration is a
reference to the decisions of one or more persons either with or without an umpire, a particular
matter in difference between the parties”. It was further observed by the court that proceedings
are structured for dispute resolution wherein executives of the parties to the dispute meets in
presence of a neutral advisor and on hearing both the sides and considering the facts and merits
of the dispute, an attempt is made for voluntary settlement.

Arbitration can be a voluntary one i.e., agreed between the parties or it can be ordered by the
court.

Unlike litigation, arbitration proceeding takes place out of the court and the arbitrator’s decision
is final and the courts rarely reexamine it.

There are several modes of dispute resolution outside the Judicial process. These modes are as
follows:
Negotiation

Mediation

Conciliation

Arbitration

Mini Trial

But Arbitration is considered as an important Alternative Dispute Resolution mechanism and is

been encouraged in India due to the high pendency of cases in the courts.

Some Important Terms in Arbitration

Arbitration Clause

An Arbitration clause is a section of the contract that defines the rights of the parties in the case
any dispute arises over the contractual obligation or any other matter related to such contract.

Generally, an arbitration clause contains that the parties will not sue each other in the court of
law, if any dispute arises, instead they will resolve the dispute through arbitration.

Arbitration Tribunal

According to Section 2(1)(d) of the Arbitration and Conciliation Act, an Arbitration

Tribunal means a sole arbitrator or a panel of arbitrators.

Thus from the interpretation of this definition, the parties are free to determine the number of
arbitrators.

However, if the parties fails to determine the number of arbitrators, then in that case, the
arbitration tribunal shall consist of a sole arbitrator.

Arbitration Award

An arbitration award is an award granted by the arbitrator in the proceeding before it. This award
can be a money award and it can also be a non-financial award.

Principle Characteristics of Arbitration

Arbitration is consensual: An arbitral proceeding can only take place if both the parties to the
disputes have agreed to it. Generally, parties insert an arbitration clause in the contract for future
disputes arising from non- performance of contractual obligations. An already existing dispute
can also be referred to arbitration if both the parties to the dispute agree to it (submission
agreement).

Parties choose the Arbitrators: Under the Indian Arbitration Act parties are allowed to select their
arbitrator and they can also select a sole arbitrator together who will act as an umpire. However,
the parties should always choose an arbitrator in an odd number.

Arbitration is neutral: Apart from selecting neutral persons as arbitrators, the parties can choose
other important elements of proceeding such as the law applicable, language in which the
proceedings should be conducted, the venue for arbitration proceedings. All these things ensure
that no party enjoys a home court advantage.

Decision of the Arbitral Tribunal is final and easy to enforce: The decision or award given by the
arbitral tribunal is final and binding on the parties and persons only after the expiry of the time
limit prescribed under Section 33 and 34 of the Act.

When the award becomes final it shall be enforced under the Code of Civil Procedure, 1908, in
the same manner, one enforces a decree passed by the court.

Advantages of Arbitration in India

Expertise in Technical matters: An arbitrator can easily deal with technical matters which is
scientific in nature because generally arbitrators are appointed based on their expertise and skill
in a particular field. Thus the disputes are resolved more effectively and efficiently.

The arbitral process is cost effective and less time consuming than the traditional way of dispute
resolution in the court of law.

There is the convenience of the parties as they are able to decide on the language, venue and time
of the proceedings.

Privacy and confidentiality of the parties are maintained as there is no unnecessary publicity of
the dispute.

Arbitral proceeding is more flexible than the court proceeding as under the arbitral proceeding
one does not have to follow the strict and rigid rules and regulation as that of the court. This is
due to the reason that parties set the rules and regulations of the proceedings.

History of Arbitration in India

The codified practise of arbitration in India dates back to the nineteenth century when the
government enacted the Indian Arbitration Act, 1899. The Act, however, was confined to the
three princely states i.e. Bombay, Madras and Calcutta. Later, however, arbitration found
mention in the Code of Civil Procedure, 1902 under Section 89. But due to lack of robust
procedural modalities, it merited an independent statute. In turn, the Arbitration Act, 1940
(hereinafter 1940 Act) came into force which applied to the whole of India. The 1940 Act,
although an improvement to the prior Act, proved inefficient, cumbersome and lacking in the
various domains. The Act also faced criticism from the apex court; Justice D.A. Desai stated in
Guru Nanak Foundation v Rattan Singh – “Interminable, time-consuming, complex and
expensive Court procedures impelled jurists to search for an alternative Forum, less formal,
more effective and speedy for resolution of disputes, avoiding procedural claptrap and this led
them to Arbitration Act, 1940. However, the way in which the proceedings under the Act are
conducted and without exception challenged in Courts has made Lawyers laugh and legal
philosophers weep.”

TYPES- VOLUNTARY
DOMESTIC PARTIES APPOINT THIRD PARTY

FOREIGN OR INTERNATIONAL COMMERCIAL

ARBITRATION

COMPULSORY BY GOV. OR COURT

SYNOPSIS-

INTRODUCTION TO ARBITRATION

MEANING AND DEFINITION

HISTORY

TYPES

ADVANTAGES

PRINCIPLE CHARACTERISTICS

ARBITRATION AGREEMENT
Arbitration agreements
An arbitration agreement is the raison d’être of an arbitration proceeding. It
is only through an arbitration agreement that parties can submit their issues
to be adjudicated by the arbitral tribunal. An arbitration agreement not only
engenders an arbitral tribunal but also gives shape to it. Therefore, it is
crucial to understand the position of the arbitration agreement under the
statute.

In the 1940 Act, the Arbitration Agreement was defined under Section 2(a)
as-

“A written agreement to submit present or future differences to arbitration,

whether an arbitrator is named therein or not.”

The vague definition was replaced in the 1996 Act by Section 7 which stated
–

“7. Arbitration agreement. —

(1) In this Part, “arbitration agreement” means an agreement by the parties

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

(2) An arbitration agreement may be in the form of an arbitration clause in a

contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in—

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of

telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence
of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration

clause constitutes an arbitration agreement if the contract is in writing and
the reference is such as to make that arbitration clause part of the contract.”

In short, an arbitration agreement is formed when two parties enter into a

contract and agree in writing that any disputes arising between them out of
that contract will have to be resolved without going to the courts and with
the assistance of a neutral person: a third party appointed by both of the
parties, known as the Arbitrator, who would act as a judge and whose
decision will be binding upon the parties.

Also, the 1996 Act ascribes an inviolable position to the arbitration

agreement. Section 8 clearly states that after taking cognizance of a valid
arbitration agreement between the parties the court shall abstain from
dwelling into the merits of the dispute and refer the parties to arbitration.

An arbitration agreement once made, cannot be deterred when a dispute

arises. In Ravi Prakash Goel v. Chandra Prakash Goel, the Supreme Court
held that where there is an arbitration agreement present and applicable,
the parties cannot take recourse to the civil court without first undergoing
arbitration. It is mandatory for the courts under Section 8 of the 1997 Act,
to refer the parties to arbitration when there is an applicable arbitration
agreement.

Forms of Arbitration Agreement

A fundamental requirement under Section 7 of the 1997 Act is that an
arbitration agreement shall be in writing. Besides that, Section 7 grants
liberty to the parties to form an arbitration agreement in multiple ways as
enumerated below:

 A standalone separate Arbitration Agreement

A separate arbitration agreement can be formed in addition and reference to
the operative agreement between the parties.

 An Arbitration Clause
An arbitration clause can be formed in the operative agreement as to the
section of the agreement that deals with the rights and options of the parties
in the event of a legal dispute arising out of the contract. An arbitration
clause is construed as an arbitration agreement.

 Incorporation by reference
An arbitration clause contained in a separate contract can also be
incorporated in a contract being drafted. As per Section 7(5), any reference
to a document containing an arbitration clause shall also be construed as an
arbitration agreement provided that the referred contract is in writing and
the reference is made with the intention to make that arbitration clause the
part of the contract.

In M/s Elite Engineering and Construction (HYD.) Private Ltd. v. M/s

Techtrans Construction India Private Ltd., the Supreme Court held that a
general reference to the incorporation of a separate arbitration clause will
not be tenable in law. The reference shall be clear and must indicate the
intention of the parties to incorporate.

 By communication
According to Section 7(b) of the 1996 Act, an arbitration agreement can also
be inferred from the exchange of letters, telex, telegrams, or other means of
telecommunication, which provide a record of the agreement between the
parties. In short, an agreement can be construed from the correspondence
of the parties where there is a clear and unequivocal intention to refer the
disputes to arbitration.

Recently, in Galaxy Infra and Engineering Pvt. Ltd v. Pravin Electricals Pvt.
Ltd the Delhi High Court held that the draft agreement exchanged by email
between the parties can be construed as a valid arbitration agreement.

In Pravinchandra Murarji Savla v. Meghji Murji Shah, it was held that it is the
substance of the agreement and not the form which is of importance.

Also, as per Section Section 7(c) of the 1996 Act and S.N. Prasad v. Monnet
Finance Ltd., where a statement of claims or allegations is made and is met
with ‘non-denial’ by the other party, the presence of an arbitration
agreement can be construed. Therefore in the

Even though the 1996 Act has left the field open with a plethora of ways to
form an arbitration agreement, it is always recommended as a standard
practice to choose to have an arbitration clause in a contract itself.

Drafting an Effective Arbitration Agreement

Supreme Court, in the cases Jagdish Chander v. Ramesh Chander and K. K.
Modi v. K. N. Modi directly tackled the question of what constitutes a valid
arbitration agreement. The Hon’ble Court arrived at a list of principles that
should be incorporated in an arbitration agreement. The principles are as
follows:

1. The arbitration agreement must be in writing.

2. The parties shall agree to refer any dispute (present or future)
arising out of a contract to a private tribunal.
3. The private tribunal should be empowered to adjudicate upon the
disputes in an impartial manner, giving due opportunity to the
parties to put forth their case before it.
4. The parties must agree to be bound by the decision of the arbitral
tribunal.
5. The intention of the parties to refer the dispute to a private tribunal
must be unequivocally reflected.
6. There must be ‘consensus ad idem’ between the parties i.e. they
should agree to the same thing in the same sense.
7. The words shall contemplate an obligation and determination on the
part of the parties to invoke arbitration and not merely a possibility.
For example, use of the words such as “parties can if they so desire,
refer their dispute to arbitration” or “ in the event of any dispute,
the parties may also agree to refer the same to arbitration” shall not
be construed as submission to arbitration.
8. The agreement clauses shall not in any way specifically exclude any
of the aforementioned essentials. For example, a clause permitting
the tribunal to decide a claim without hearing the other side.
Although it is always preferable to draft clear and unambiguous clauses, an
arbitration agreement not mentioning the words “arbitration”, “arbitration
tribunal” and/or “the arbitrator” may still be considered a valid arbitration
agreement if the basic attributes of a valid arbitration agreement (as
aforementioned) are present therein.

It is to be noted that the aforementioned list is not comprehensive. To draft

effective arbitration agreements, contemplating some additional mechanisms
can help the parties overcome complications that may arise in the arbitral
process. The following are such mechanism:

 Number of arbitrators
Deciding the composition of the arbitrator tribunal is crucial. At times, the
subject matter of the contract may be so intricate and convoluted that it
would require the expertise of multiple arbitrators. Furthermore, in some
cases, both the parties may want to exercise the right of appointing a
nominee arbitrator.

The 1940 Act allowed the parties to appoint any number of arbitrators.
Oftentimes in tribunals where even-numbered arbitrators were appointed,
the award faced inordinate delay due to conflicting opinions between the
arbitrators. Therefore, the 1996 Act, under Section 10, brought a welcomed
change allowing the parties to appoint as many arbitrators as they wished,
as long as the number of arbitrators is odd

Since appointing multiple arbitrators adds to the cost burden of the parties
and causes difficulties in scheduling dates, the general practice is to appoint
either a sole arbitrator or three arbitrators.

 Procedure for appointment

Under the 1996 Act, Section 11, empowers the parties to formulate and
agree upon an appointment procedure by themselves. If the parties fail to
agree upon a procedure, in an arbitration with a sole arbitrator, the court
shall make the appointment and in an arbitration with three arbitrators, each
party must appoint one arbitrator and then the two appointed arbitrators
choose a presiding arbitrator.

Since the 1940 Act, a standard drafting practice being followed in India was
to give unilateral powers to one party to appoint the sole arbitrator.
However, since the 246th Report of the Law Commission of India and the
subsequent amendments of 2015 and 2019, more and more cases cropped
up where the unilateral appointment was struck down by the courts to
uphold the principle of party autonomy. The dispute finally came to rest in
Perkins Eastman Architects DPC & Anr v. HSCC (India) Ltd, where the
Supreme Court held that unilateral appointment of the sole arbitrator would
no longer be valid. Therefore, while drafting the arbitration clause one must
eschew giving appointment rights to a single party.

 Language of the proceedings

Many a time, the parties (domestic or international) may suffer
communication difficulties during the dispute resolution process due to
different language proficiencies. In such situations, the translation fee may
skyrocket and bring further distress to the parties. Therefore, choosing the
language of the arbitration proceedings beforehand is always a wise
decision.
  Ad hoc or institutional arbitration

In an arbitration agreement, the parties must select either ad hoc or

institutional arbitration. In ad hoc arbitration, the proceedings are carried
out as per the procedure and modalities agreed to by the parties. In
institutional arbitration, a specialised institution is appointed to administer
the proceedings and appoint the arbitrator. Some of the arbitration institutes
in India are Delhi International Arbitration Centre (DIAC), Nani Palkhivala
International Arbitration Centre,, and Mumbai Centre for International
Arbitration (MCIA). The ad hoc system grants more autonomy and is cost-
effective. On the other hand, the institutional arbitration model offers pre-
established fine-tuned procedure, administrative assistance and qualified
empanelled arbitrators.

In India, ad hoc arbitration is more prevalent as compared to institutional

arbitration. Through the Arbitration and Conciliation Amendment Act, 2019,
through the Arbitration and Conciliation Amendment Act, 2019, the
government has tried to push the arbitral institutions to develop into cost-
effective centres for domestic and international arbitration.

 Seat and Venue

The words ‘‘seat’’ and ‘‘venue’’ are not defined under the 1996 Act and were
interchangeably used before the judgement of Bharat Aluminium Company
v. Kaiser Aluminium Technical Services Inc. (Balco). In Balco, tIn Balco, the
Supreme Court held that the ‘‘seat’’ is the centre of gravity of arbitration and
decides the jurisdiction of the court along with the jurisdiction of the place
where the cause of action arises. So, if arbitration is seated in London, Part
1 of the 1996 Act will not be applicable and the courts in London will have
jurisdiction over the arbitration.

Diluting the Balco judgement, the Arbitration and Conciliation Amendment

Act, 2015 added a proviso under Section 2. The proviso was added to the
effect that unless agreed to the contrary, Section 9, 27 and 37(1)(a) and
37(3) shall also apply to international commercial arbitrations even if the
place of arbitration was outside India.

After the Balco judgement, issues started arising as to the interpretation of

the terms “venue” or “place” in an arbitration. The Hon’ble Supreme Court in
the judgement of UOI Vs. Hardy Exploration and Production (India)
Inc. distinguished between ‘distinguished between ‘venue’’ and ‘‘seat’,’, and
held that the ‘‘venue’’ of the arbitration signifies only the place where the
arbitration proceedings are held. Therefore, in arbitrations with a foreign
venue but the seat in India, Part 1 of the 1996 Act would be applicable.

Thereafter, in the case of BGS-SGS SOMA-JV Vs. NHPC Ltd., the three-judge
bench of the Hon’ble Supreme Court, while deciding a matter of domestic
arbitration held that where an arbitration agreement designates a venue but
does not make any mention of the seat or the rules governing the tribunal,
the place of the venue will be construed as the seat of the arbitration.
Therefore, in absence of seat and governing law, the jurisdiction of the
arbitration shall exclusively be vested in the venue.

Based on the catena of judgements by the Supreme Court taking different

positions, it can be concluded that the seat and venue debate is around the
curial law of the arbitration. Curial law is the law governing the arbitration
proceedings and the rights of the party to the arbitration. Therefore, the
seat of arbitration gains a much greater significance and must be specified in
the arbitration agreement. It should be borne in mind that the courts in the
designated seat will have the exclusive jurisdiction over the matters arising
out of the arbitration and the arbitration itself will be governed by the laws
of the seat.

Whether an arbitration agreement needs to be signed

In Svapn Const. v. IDPL Employees Co-op. Group Housing Society Ltd., it
was held that the agreement need not be signed by the parties if it is
established by another written

contemporaneous document, which is binding between the parties. However,

in 2018, the Supreme Court held in M/s Caravel Shipping Services Pvt Ltd v
M/s Premier Sea Food Exim Pvt Ltd that an unsigned arbitration agreement
is valid as the only prerequisite for a valid arbitration agreement under the
1996 Act is that it must be in writing.

Whether an arbitration agreement needs to be stamped

Arbitration Agreement is chargeable under Section 5 of the Indian Stamp
Act, 1899. With respect to the 1940 Act, the Calcutta High Court held in
Bengal Hire Purchase Corpn v. Harendra Singh that an unstamped
arbitration agreement cannot be given effect unless the full stamp duty is
duly paid. The courts would first impound the unstamped agreement and
send it to the relevant authorities for the payment of stamp duty and penalty
(if any). Only after ensuring that the lacuna is cured, the arbitration
agreement can be executed. The Supreme Court held the same position with
respect to the 1996 Act in Garware Walls Ropes Ltd. v. Coastal Marine
Constructions & Engineering Ltd.

When the Arbitration Agreement is Vague

the Calcutta High Court held in State Trading Corporation of India Ltd. v.
Owners & Parties Interested in the Vessel M.V. Baltik Confidence, that an
application referring to an ambiguous and ambiguous agreement will not be
maintained. However, in the judgement of Zhejiang Bonly Elevator Guide
Rail Manufacture Co. Ltd. v. M/S Jade Elevator Components, the Supreme
Court while dealing with a vague arbitration clause, scrutinized the clause
examining the intention of the parties instead of doing away with the
agreement itself. Therefore vague and unclear arbitration agreements can
hold validity as long as the intention to refer the parties to arbitration is
clear. and upheld the validity of the arbitration agreement.

REFERENCE TO A.
Section 7 defines an Arbitration Agreement wherein parties agree to submit all/any of disputes
whether contractual or not in a written format for purposes of evidence, in same or separate
Agreement intended to apply to main contract. Section 8 states reference to Arbitration by a
Judicial Authority before which matter is brought that is originally covered under Arbitration.
Either Party to the Arbitration Agreement or claiming under him, upto submission of
1st statement on substance of dispute proves existence of a valid Arbitration
Agreement. Judicial Authority on being satisfied of such presence of Agreement on same
subject is bound to send the other party for Arbitration. Arbitration may be initiated, continue
and Award passed even while such application is pending before Judicial Authority.

It is to be noted that the language of Section 8 is mandatory after fulfilling conditions

prescribed. It diverges from Model Law, Geneva Convention and New York Convention as
Judicial Authority instead of Courts is used and that merit-based analysis of legality is not
provided to any Judicial Body. Words “Prima Facie” indicate that not to delve into a detailed
examination of Arbitration Agreement or Clause, rather observe its sufficiency to refer to
Arbitration. As clearly mentioned, reference of disputes whether contractual or not can be
made, i.e. not limited solely to commercial ones but be extended to certain civil disputes as
well. Arbitration Agreement, in essence, being a contract has to impliedly comply with capacity
and validity preconditions of the Indian Contract Act. Locus Standi requirement has been a bit
relaxed and that a non-signatory can also be a party in Arbitration Proceedings, provided proves
himself to be a necessary and proper party.

Case Laws on Section 7

In M.R. Engineers and Contractors Pvt. Ltd. v. Som Datt Builders Ltd, a general reference in a
sub-contract between contractor and a sub-contractor to an Arbitration Clause incorporated by
reference in a main contract between contractor and PWD was not allowed since reference to
Arbitration shall always be in precisely unequivocal terms, unless it is some sort of Standard
Form of Contract whose terms are generally understood by members of Trade or any
Regulatory Institution and hence a general reference shall also suffice.

Inox Wind Limited v. Thermocables Limited further added a wide scope to earlier mentioned
standard clause exception, when it held that even if 1 party which need not be a Trade or
Regulatory Institution, using Standard Form of Contract, forming part of a single contract shall
suffice for a general reference to Arbitration. It diluted prudent classification that members of
Trade or Regulatory Body are aware of standard terms which might not be the case for any
other ordinary individual. Hence binding any person who might not be aware of standard terms
by general reference to any Organization’s Standard Reference altogether has a different
impact.

Subsequent Cases upholding the MR Engineers Case but reflecting subtle differences wherein
an unsigned Bill of Lading mandating Arbitration under its Standard Printed Terms was made
binding on parties. Contrasting viewpoints highlighted when a Draft Agreement mentioning
Arbitration are attached at time of inviting bids and thereafter focus is on Acceptance /Approval
Letter issuance to make it a binding contract , in order to make Arbitration compulsory.

In GIRIRAJ v COAL INDIA, Reference to Arbitration as per previous terms and conditions
regarding any dispute for coal allocation via single e window was considered binding as and
when Petitioner entered into contract to lift coal after depositing earnest money. Relying on
MR Engineers, Inox Cables and Habas Sanai Case, it fairly distinguished 1 from 2 contract case.

Reference reflects sort of Judicial/Quasi-Judicial Authorityconferred on The Arbitrator, in

distinction to administrative or expert determination. 2015 Amendment included E- mode in
addition to letters, Documents, Statement of Claim or Defence for proof of existence of
Agreement intended for the same thing in the same sense. Oral Agreements have no bearing
and that even if a precise clause is mentioned in the main Agreement itself, its validity and
enforcement is independent of the contract per se. Stamping as per state where seat of
Arbitration is located prescribed for Arbitrator Appointment. No particular format or exact
categories of dispute can be enumerated at the time of entering into a contract, yet parties
underlying motive should be to actually go for Arbitration and not mere possibility of opting
Arbitration as recourse to settlement. Vague words not indicating any specific dispute or
Authority to be addressed cannot be called as Arbitration Clause. Finality of the decision taken
by any Authority mentioned tantamount to reference. Any Ill Reasoned or unjustifiable denial
of Reference is Appealable in Court as per statute conferring jurisdiction to hear Appeals.

Upon careful examination of provisions above, it is germane on part of The Legislators to draw
fine limitations on all vital aspects so as to limit undue judicial intervention and enhance use of
Arbitration wherever possible. However, Courts till recently pronounced several conflicting
judgments visibly not in tune with Legal Provisions and Precedents. An illustration of same is:

Exceptions

A. AYYASAMY v A. PARAMASIVAM creating exceptions for forgery and fabrication adversely

impacting the very soul of main contract so as to render Arbitration inoperable along with main
contract. A Test of cutting through internal contract and being unconnected to public morality
was laid down to objectively determine whether fraud be resolved by Arbitration.

In a recent Ameet Lalchand judgment, Delhi High Court, relying

on Ayyasmay and Sukanya Holding case proclaimed that mere fraudulent allegations without
advancing substantial evidence, not be a sole criterion to reject Arbitration initiation
Application since Business Efficiency is of paramount significance and not to be compromised.

Another exception is not to divide subject if different parties are involved and dispute partly not
covered under Arbitration, in order to avoid invocation against 3rd party, altogether not refer
to Arbitration.

Apart from this, principles of Estoppel, Waiver and Acquiescence are applicable to a party
seeking reference of a matter to arbitration, in order to avoid probable abuse of process.

But the question is that Courts are to interpret and not create or supplement lacunas present in
legal provisions? It cannot be ignored that each judge uses a different
interpretation/construction rule, as per his perception of situation but in any case it is not
meant to produce conflicting, contradictory verdicts from status quo, which itself is based on
objective understanding. Had the Legislature desired to provide certain exceptions or increase
domain of Judicial intervention, could have explicitly done so in 2 rounds of Amendments made
in year 2015 and 2019. Arbitrability has been separately provided for in the Act itself, so there
don’t seem any plausible reasons to entwine 2 clearly distinct provisions to produce an
erroneous decision. Such disarrayed decisions create nothing but ambiguity in actual position,
thereby discouraging use of Arbitration as an effective alternate mechanism. SCOPE OF R TO A
Landmark cases on arbitration
R.V. Solutions Pvt. Ltd. v. Ajay Kumar Dixit & Ors. In this case, The Delhi High Court held
that a non-signatory or third party can only be subjected to arbitration in exceptional cases
without its consent. The arbitrator is required to form a direct relationship with the
signatory party of the agreement, or between the parties in the agreement or the equality
of the subject or the overall transaction.

Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engineering Ltd, the court states
that The High Court should stop the instrument which has not imposed stamp duty and
hand it over to the authority which will then decide to implement the payment of stamp
duty and penalty (if any) at the earliest, and preferably a period of 45 days. . Within the
date on which the instrument of authority is received. As soon as the stamp duty is paid on
the instrument, either party can bring the instrument to the notice of the High Court which
will then proceed to hear and dispose of the Section 11 application expeditiously.

UNIT-2
ARBITRAL AWARD-
The arbitral award or arbitration award refers to an arbitration hearing decision
made by an arbitration tribunal. An arbitral award is equal to a court judgment.
An arbitral award may be non-monetary in nature where the claims of the entire
claimant fail and there is no need for any party to pay any money[20].

An arbitration award may be given for payment of a sum of money, judgment of

any matter to be decided in the arbitration proceedings, injunctive relief,
substantive fulfilment of a contract and rectification, setting aside or cancelling
an act or other document.

The arbitral award shall be defined[21] as any arbitral tribunal’s judgment on

the nature of the dispute referred to it and shall include a temporary,
interlocutory or partial arbitral award. The arbitral tribunal may grant an interim
arbitral award on any matter for which it will make a final arbitral award at any
time during the arbitral proceedings. The interim award may be applied in the
same way as a final award of arbitration[22]. Unless otherwise decided by the
parties, a party may ask the arbitral tribunal to make an additional arbitral
award in respect of the claims raised in the arbitral proceedings but omitted
from the arbitral award within 30 days of receipt of the arbitral award[23].
An arbitral award can be categorised into:

1. Domestic Award: Domestic award are those awards which are the
outcomes of domestic arbitration. It is confined to the territory of
India, the parties should have a nexus or birth of Indian origin, the
territory essentially comes into play for domestic arbitration purposes.
The award given by an arbitral tribunal in India or an award, even if it
is given by a foreign state for a dispute in which both parties are of
Indian origin and the nationality is also regulated by Indian law, also
falls within the scope of domestic arbitration.[24]
Domestic awards are governed by Part I of the Arbitration and Conciliation Act,
1996. A domestic award is an award granted pursuant to Section 2 to 43 of the
Act.[25]

2. Foreign Award: Foreign Award is the outcome of Foreign Arbitration. If

the parties choose a foreign arbitration institution or agree to an ad
hoc arbitration overseas, the award granted after such proceedings
shall be referred to as foreign award.[26]
Part II of the Arbitration and Conciliation Act of 1996 deals with International
Arbitration or Foreign Arbitration.[27] Section 44 of the Act defines with Foreign
Award.[28]

In, Serajuddin v. Michael Golodetz[29] The Calcutta High Court established the
necessary conditions for an arbitration to be referred to as ‘ foreign arbitration ‘
or the essential elements of a foreign arbitration where the award could also be
referred to as a foreign arbitration award. The important points laid were as
follow:

1. “Arbitration should have been held in a foreign country.”

2. ”By a foreign arbitrator.”
3. “Arbitration by applying foreign laws.”
4. “One of the parties consists of foreign nationals.”

Essential Elements of Arbitral Award

 Should be in written form.
 Signed by the Arbitrator.
 Shall contain the reason for the passing of Award.
 Date and place at which the arbitration took place.
Enforcement of Arbitral Award
The regulation and execution of decrees in India is regulated by the Civil
Procedure Code, 1908 (“CPC”), while the arbitral award procedure in India is
governed mainly by the Arbitration & Conciliation Act, 1996 (“Act”) and the
CPC.

For the same way as an Indian court decree, domestic and international awards
are enforced. However, there is a difference depending on the seat of
arbitration. Seated arbitral award (“domestic award”) would be governed by
Part I of the Act, enforcement of foreign — seated awards (“international
award”) would be governed by Part II of the Act.[30]

 Enforcement of Domestic Arbitral Award : Until filing for compliance and

execution, an award recipient would have to wait 90 days after
receiving the award. The award may be questioned during the
transitional period in compliance with Section 34 of the Act. When the
above time expires, if a court considers the award enforceable at the
execution point, the authenticity of the arbitral award cannot be
questioned any further. Before the recent Law on Arbitration and
Conciliation (Amendment),2015 (Amendment Act), a petition to set
aside an award could equate to a stay in the award execution
proceedings. Nevertheless, a party opposing a award would have to
transfer a separate application to demand a stay on an award
execution by virtue of the Amendment Act.
  Enforcement of Foreign Arbitral Award : India is a signatory to Geneva
Convention on the Execution of Foreign Arbitral Awards, 1927
(“Geneva Convention”) and Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 1958 (“New York
Convention”).
If a party receives a binding award from a state signing the New York
Convention or the Geneva Convention and the award is made in a territory
recognized by India as a convention country, the award would then be
enforceable in India. In India, implementing a foreign award is a two-stage
procedure begun by filing a request for execution. Initially, a judge will decide if
the award met with the law’s criteria.

Once an award has been considered enforceable, it can be applied as a court

order.

At this point, however, parties should be aware of the various obstacles that
may occur, such as frivolous complaints from the opposing party, and provisions
such as bringing the award’s original / authenticated copy and the underlying
agreement before the court.
Conditions for enforcement of Arbitral Awards
(domestic and foreign)
A party may use the following grounds to contest an award. If the other party
shows this, such an award would be made unenforceable.

1. According to the statute, the parties to the settlement were under any
disability.
2. The agreement in question did not comply with the law to which the
parties are subject or with the law of the country in which the award
was made.
 3. The party did not receive a proper notice of appointment from the
arbitrator or the arbitral proceedings or was otherwise unable to bring
his case before the arbitral tribunal.
4. The reward deals with a distinction that does not fall within the terms
of the agreement.
5. Award contains decisions on matters beyond the scope of being
referred arbitration.
6. The arbitral proceedings did not comply with the agreement.
7. The composition of the arbitral body or the arbitral proceedings does
not comply with the law of the country in which the arbitration took
place.
8. The award (precisely a foreign award) was not made binding on the
parties or was set aside or revoked by the competent authority of the
state in which the award was made or by the statute of which it was
made.
9. Under Indian law, the subject matter of the dispute cannot be resolved
by arbitration. Enforcing the award would be contradictory to India’s
public policy.

Limitation Period for Enforcement of Arbitral Award

In the case of domestic arbitral awards, the 1963 limitation law applies to
arbitrations because, according to section 21, the arbitral proceedings in respect
of a specific dispute start on the date on which the respondent receives a
petition to refer the dispute to arbitration.[31] Arbitral awards are deemed to be
a decree.[32] The Arbitration Act does not place any restriction on the
execution of a foreign award, and the usual limitation period (12 years) is likely
to apply.[33]

Different high courts have given different definitions of the limitation period
within which a party can impose an award in the case of foreign awards. The
Bombay High Court observed a foreign award in ‘Noy Vallesina v Jindal Drugs
Limited’ not to be a judgment, rendering it non-binding on parties unless it was
reported as enforceable by a competent court.[34] In the ‘Compania Naviera ‘
Sodnoc ‘ v. Bharat Refineries Ltd.,’ on the other hand, the Madras High Court
referred to international awards as considered decrees.[35]

In M/s. Fuerst Day Lawson Ltd v. Jindal Exports Ltd, the Supreme Court ruled
that there could be different stages in a single proceeding. A court can agree on
the enforceability of the award in the first proceeding. Once the enforceability
has been determined, more successful steps can be taken to implement the
same.[36]

In the case that a foreign award is implemented, the party cannot appeal
against any court decision denying the award’s objections. If the court holds the
award to be non-enforceable, an appeal can be made. Therefore, a ruling that
upholds the award cannot be appealed twice. Nevertheless, according to Article
136[37] of the Indian Constitution, the party can look forward to a direct appeal
to the Supreme Court of India. These forms of appeals are pursued only in the
case that the court thinks there is a matter of fundamental importance or public
interest.[38]

The party seeking enforcement of a decree of a court of reciprocating country to

file a execution proceedings in India. International rulings from a reciprocating
territory’s superior courts can be specifically applied by filing an execution
petition under section 44A of the Civil Procedure Code. After which section 51
must come into play and order XXI of CPC.[39]

In the event that a non-reciprocating nation gives the foreign judgment, a fresh
case will have to be brought before a court of competent jurisdiction in India,
where the foreign judgment will be considered as proof. The time limit for filing
a lawsuit to enforce these international judgments is three years from the date
of delivery of the judgment.[40]

Challenges in Execution of Foreign Arbitral Award

in India
Obtaining an award in your favour from an international arbitral tribunal is a bit
of a half-won fight as it still needs to be enforceable in India. There have been
various cases in which the party failed to enforce it in competent Indian courts,
despite receiving a favourable award in an international arbitral tribunal.
Therefore, in order to obtain an arbitral award, there is no way out but to enter
into litigation from which all parties at first refrained. It takes time for an order
already issued by an international arbitral tribunal to become effective.
Nonetheless, this path cannot be avoided as it offers more of a formal
procedure and guarantees that proper diligence is applied on behalf of the
courts to implement the award.

Local government pressure, especially local parties with more political power,
may attempt to cancel the award or the full impact of the award, which could
frustrate the award given by the international arbitration seat.
Part II of the 1996 Indian Arbitration & Conciliation Act (“the Act”) deals with
the enforcement of foreign awards, while Chapter I (Sections 44-52) deals
explicitly with the awards relating to the Convention. According to Section
44(b), a “international award” must be given in one of those territories as the
Government of India may, upon being satisfied with the existence of reciprocal
provisions, by notification in its Official Gazette, declare it to be the territory in
which the Convention is applicable. There is, however, a reason why it is
necessary to remove this provision to obtain gazetted notice in order to bring
India’s arbitration system into accordance with convention norms. Gazetting
provisions create unnecessary confusion about the compliance of international
awards given in countries that are contracting states to the Convention but
have not yet been informed in the Gazette.

Uttarakhand Purv Sainik Kalyan Nigam Ltd. Vs. Northern Coal Field Ltd.1

Relying on the doctrine of'kompetenz � kompetenz'enshrined in Section 16 of the Arbitration &

Conciliation Act, 1996 ( Arbitration Act ) and the legislative intent to restrict judicial intervention at pre-
reference stage, the Supreme Court held that the issue of limitation would be decided by an arbitrator.

It also reaffirmed that the legislative intent of the Arbitration Act is party autonomy and minimal judicial
interference in the arbitration process. It observed that the regime of the Arbitration Act outlines that
once an arbitrator has been appointed, all objections and issues are to be decided by the arbitrator.

The Supreme Court observed that the issue of limitation is a jurisdictional issue which should be decided
by the arbitrator in terms of Section 16 of the Arbitration Act and not before the High Court at the pre-
reference stage under Section 11 of the Arbitration Act. The Supreme Court observed that once the
arbitration agreement is not in dispute, all issue including jurisdictional issues are to be decided by the
arbitrator.

Hindustan Construction Company Limited & Anr. Vs. Union of India & Ors.2

A three (3) member bench of the Hon'ble Supreme Court comprising of Hon'ble Mr. Justice R.F.
Nariman, Hon'ble Mr. Justice Surya Kant and Hon'ble Mr. Justice V. Ramasubramanium (Bench) has
struck down Section 873'of the Arbitration & Conciliation Act, 1996 (Arbitration Act) as being "manifestly
arbitrary" in terms of Article 14 of the Constitution of India.

SYNOPSIS
INTRO
MEANING AND DEFINITION
ESSENTIALS
FORM AND CONTENTS OF AWARD
MAKING AND TERMINATION
CORRECTION AND INTERPRETATION
OF AWARD, ADDITIONAL AWARD
GROUNDS TO SET ASIDE
IMPARTIALITY OF THR ARBITRATOR
BAR OF LIMITATIONS
CONSENT OF PARTIES
ENFORCEMENT

What does “ Appealable Order ”SEC-50

means?
If a single document contains both an order granting a motion for summary judgment and a
judgment, it is an appealable order. An order granting or denying a request for an injunction, or
granting or denying a request to dissolve an injunction.
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In furtherance of this avowed objective, Section 34(3) of the Arbitration Act, 1996 provides that
an application for setting aside an arbitral award must be made within 3 months from the receipt
of the arbitral award. The proviso of the said Section 34(3) confers a limited discretion on the
Court to allow such application within a further period of 30 days if the applicant has been
prevented from filing such application within 3 month period due to “sufficient cause”.

An appeal can be filed under Section 37 of the Arbitration Act, 1996 in case the court sets aside
or refuses to set aside the arbitral award under Section 34. Unlike, the time period of 3 months
plus 30 days provided under Section 34, no time period has been prescribed under the Arbitration
Act, 1996 for filing an appeal under Section 37. Since Limitation Act, 1963 is applicable to
arbitrations and court proceedings by virtue of Section 43 of the Arbitration Act, 1996, appeals
under Section 37 have to be filed within 90 days or 30 days according to Articles 116 and 117 of
the Limitation Act, 1963, depending upon whether the appeal is from any other court to a High
Court or an intra-High Court appeal, respectively. Section 13(1-A) of the Commercial Courts
Act, 2015, further prescribes a limitation period of 60 days for appeals that are preferred under
Section 37 of the Arbitration Act[5].
Notably, the Supreme Court in Union of India v. Varindera Constructions Ltd.[6] (“Varindera
Constructions”) and N.V. International v. State of Assam7 (“N.V. International”) had held that an
appeal under Section 37 cannot be filed after 120 days from the decision of the court under
Section 34 and no condonation of delay is permissible beyond this 120 day period.
While almost all of the High Courts had followed[7] the decision in N.V. International[8], as
they were bound to under Article 141 of the Constitution of India, however, the Jabalpur Bench
of the Madhya Pradesh High Court in M.P. Poorv Kshetra Vidyut Vitran Co. Ltd. v. Swastik
Wires[9] (“Swastik Wires”) took a contrary approach.
Who can Appeal?
In general, parties who are not satisfied with the result of court or tribunal can appeal. However,
a new precedent arising out of arbitration proceedings is that, can a third party appeal to the order
of an arbitrator?
On september 11, 2018, the BOMBAY HIGH COURT passed a gradual judgement. In the case
of Prabhat Steel Traders Pvt. Ltd. v. Excel Metal Processors Pvt. Ltd.[10], the high court held
that a third party can appeal to the order u/s 37 of the Act, if they are affected by such order
directly or indirectly passed by the tribunal under section 17 of the Act.
So, according to this landmark judgement, a third party can also appeal under section 37, if
affected under section 17 of the Act.

Jurisdiction of Courts Regarding Appeal

Matters under the Same section (37 of A&C Act) can be dealt with High Courts of any state
subject to the provision of jurisdiction of such court. In accordance to the seal and venue of
Arbitral Proceeding, the court of such state having the place of arbitration holds the jurisdiction
to try such arbitral matter.

Further it can always be contested to the Apex Court as well.

Meaning of Arbitral Tribunal

"Arbitral tribunal" means a sole arbitrator or a panel of arbitrators. An arbitral tribunal is
a panel of one or more adjudicators which is convened and sits to resolve a dispute by
way of arbitration. The tribunal may consist of a sole arbitrator, or there may be two or
more arbitrators, which might include either a chairman or an umpire.
Article 16(3) of the Model Law qualifies the jurisdiction of the tribunal further by
stipulating that:
The arbitral tribunal may rule on a plea (regarding the jurisdiction of the tribunal) either
as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a
preliminary question that it has jurisdiction, any party may request, within thirty days
after having received notice of that ruling, the court specified in Article 6 to decide the
matter, which decision shall be subject to no appeal; while such arequest is pending,
the arbitral tribunal may continue the arbitral proceedings and make an award.
It has been suggested that Article 16(3) promotes the negative effect by supporting
tribunals to determine their own jurisdiction as a preliminary question with the provision
for expedited, unappealable judicial review of the tribunal’s ruling.
The above view of Article 16(3) has received support by some jurisdictions which have
adopted the Model Law and their respective courts have interpreted the negative effect
into this Article.59 In conclusion, Article 16(3) may be interpreted as a compromise
between the more extreme positions concerning when judicial review is authorized
during the arbitral process.

Ram Kripal Singh v. NTPC

The High Court of Delhi held that independence and impartiality of the arbitrator is a
continuing requirement. Further, Section 12(5) applies regardless of whether the
arbitration proceedings commenced before or after the 2015 amendment.
Union of India v. Reliance Industries
The Delhi High Court held that an issue as to the bias of an arbitrator can be raised
only before the tribunal under Section 13 of the Act. Further, u/s 14, the Court can
decide on the mandate of the arbitrator only if it is challenged on any grounds under
the 7th Schedule of the Act

OTHER TOPICS-
CHANGING DIMENSIONS OF ADP
CONDUCT OF ARBITRAL PROCEEDINGS
UNIT-3
Conciliation
Conciliation means settling disputes without litigation. It is an informal process in which
conciliator i.e. third party tries to bring the disputants to agreement. He overcomes the
disputable issues by lowering the tension, improvement in communication, interpreting
issues, providing technical assistance, exploring potential solutions and bringing the
negotiated settlement before the parties. Conciliator adopts his own method to resolve the
dispute and the steps taken by him are not strict and legal. There is no need of agreement
like arbitration agreement. The acceptance of settlement is needed by both of the parties.

Part III of the Arbitration and Conciliation Act, 1996 deals with conciliation. it is a voluntary
proceeding where parties in dispute agree to resolve their dispute through conciliation. It is
a flexible process which allows the parties to decide the time and place for conciliation,
structure, content and terms of negotiations. In Conciliation, the conciliators are trained and
qualified neutral person who help the conflicting parties to make them understand the
issues in dispute and their interest to reach mutually accepted agreements. The conciliation
process includes the discussion between the parties which is made with the participation of
the conciliator. It covers many disputes like industrial disputes, marriage disputes, family
disputes etc. This allows the parties to control the output of their dispute. The result is also
likely to be satisfactory.

Conciliator
Conciliator is the third party who is involved in settling the dispute of the parties. Generally,
there is one conciliator for the settlement but there can be more than one conciliator, if the
parties have requested for the same. If there is more than one conciliator then they will act
jointly in the matter. Section 64 deals with the appointment of conciliator which states that
if there is more than one conciliator then the third conciliator will act as the Presiding
Conciliator.

Kinds of Conciliation

1. Voluntary Conciliation- In this method parties can voluntarily participate in the

process of conciliation for resolving their dispute.
2. Compulsory Conciliation- If parties do not want to take the opportunity of
voluntary conciliation then they can go for compulsory conciliation. In this
method, if the parties do not want to meet the other party to resolve the dispute
then the process is said to be compulsory. This method is commonly used in
labour cases.

Procedure of Conciliation
The objective of the conciliation proceedings is to reach upon mutual terms, speedy and
cost-effective settlement of the dispute. Section 62 discuss the initiative of conciliation will
start when one party will send Written Invitation to conciliate upon the matter to the other
party. There will be the commencement of procedure if the other party accepts the
invitation in writing to conciliate. If the other party rejects the invitation or the party who is
willing for the conciliation does not get a reply from the other party within Thirty days then
it will be treated as a Rejection of the Invitation.

Section 65 explains the submission of the statements of both the parties to the conciliators.
Each party should submit a brief written statement regarding dispute as requested by the
conciliator. The statement should describe the general nature of the dispute and the points
of issue. Each party should send a copy of their statement to the other party. The conciliator
can also ask for the submission of written statements which includes issues of the parties,
grounds of settlement etc. These statements must be supplemented by evidence,
documents or visual representation. The copy of the same statement must be sent to the
other party. Conciliator can also request for additional documents whenever he needs them.
According to Section 67(3) and 69(1), the conciliator can set up meetings for the parties or
he can meet parties together or separately. The place of meeting can be decided by parties
or conciliators. He can also communicate with the parties orally or in written form. He must
also consider the party’s expressed wishes like quick settlement of the case which also
depends upon the circumstances of the case.
Advantages and disadvantages of Conciliation

Advantages
1. The conciliation procedure is of private nature. The documents, evidences or any
other information which are used during the process are Confidential.
2. One of the most important advantages is that they are Informal process and
contains Simple procedures which can be easily followed by the general people.
3. The process depends upon the circumstances of the case. In these processes the
need of the parties comes first like quick settlement of their cases so there is no
chance for delay.
4. The selection of the conciliators depends upon the parties. The parties can choose
conciliator on the basis of their availability, experience in particular field, previous
track records of the cases, knowledge in subject area.
5. The conciliation is cheap as compared to litigation. They are cost effective and
most opted process for resolving disputes. It purely depends upon the nature of
the dispute but is widely acceptable.

Disadvantages
1. Conciliator is not a legally qualified person for resolving disputes. His decision is
not binding upon the parties.
2. As the procedure of conciliation is informal and simple there is high possibility of
delivering injustice.
3. Miscommunication of information: The role of the conciliator to settle up the case
by giving information of one party to another and vice versa. The process of
sending and receiving information sometimes leads to mixed and incorrect
information. So, by these processes one can easily interpret the information
given.

Mediation
Meaning
Mediation is one of the alternative dispute resolutions which are voluntary and informal
process for resolution of disputes. Mediation is a process which is under the control of the
parties. The mediator acts as a middle person who helps to come on a negotiated common
point of their dispute. They are trained professionals or sometimes attorneys who assist the
parties in dispute to meet at a common place where they can discuss their issues and can
try to negotiate to reach at a common output. A mediator uses special kind of conversation
and communication to resolve the parties dispute.
The parties can appoint the mediators themselves with mutual consent or the court may
appoint the arbitrators in pending litigation. In Mediation, the parties are the decision
makers. Mediators don’t decide what is right or wrong or what is fair or unfair. Mediator
can’t impose his opinion upon the parties but he can suggest and help the parties to reach a
mutual accepted agreement. Mediators may hold joint meetings or can meet with the
disputed parties together or separately and can suggest some possible solutions, provide
options to compromise, or provide advice and guidance but they cannot impose their
opinion or try to solve the dispute forcefully. In mediation, both parties are responsible for
reaching the outcome. The role of the parties in mediation is not to convince the mediator
but to come up with a common solution which is acceptable by both the parties.

Mediation is an informal method of settling disputes, while it consists of basic rules or

procedures. The decision of the mediation is non-binding upon the parties. If the disputed
parties have agreed for the process of mediation then it is not binding upon them to agree
upon the proposed opinion of the Mediator. The mediator can suggest, give opinions and
can tell what to do or what not but he can’t force the parties to attend the mediation if they
are not interested to continue.

Mediation can be divided into two categories which is commonly followed in India:

1. Court referred mediation

The court may refer the pending case to a mediator for mediation if they think there is
possibility for the settlement of the case. The act of referring cases is given in Section 89 of
the civil procedure code, 1908. These kinds of mediation are used in matters like divorce
cases or cases which deals under Negotiable Instrument Act, 1881.

2. Private mediation
In this kind of mediation, the professional and trained person works as Mediator. The
general public, government authorities, personnel from corporate sector or anyone from
court can approach them for settling their dispute through mediation.

Mediation in India
Mediation is one of the ancient methods of resolving disputes between the parties.Various
forms of Mediation among businessmen gained recognition during Pre-British rule in India.
The Mahajans were respected, impartial and wise businessmen who resolved disputes
between merchants through mediation. The informal process practiced in India’s western
province of Gujarat was a combination of Mediation and Arbitration, now known as Med-Arb
in the Western world. Despite of getting widespread acceptance in the business world,
arbitration had no legal sanction.

The East India Company gained control from England and divided Indian rulers and
converted their commercial purpose in political aggression. By 1753, Britishers established
their colonies and British-style courts came into existence in India. By 1775, Britishers
ignored the local indigenous processes for settling disputes and set up courts based on
British laws of that period. However, there was an underground dispute going on between
British values which gives clear decision on cases and Indian values which promote the
parties to work with their differences and end it with some kind of settlement. British courts
slowly became recognized for their integrity and by gaining people’s confidence. Even after
the Independence of India in 1947, the Indian judiciary has been declared as Nation’s Pride.
Commerce, trade and industry began to expand rapidly in the 21st century the British
system quickly dispensed justice while maintaining respect and honour. In Independence,
mediation has also played an important role in awareness of fundamental and
individual rights, Government’s participation in the growth of trade, commerce and industry
of the nation, establishment of Parliament and State Assemblies, Government Corporation,
Financial Participation in institutions, fast growing international commerce and public sector
business.

The explosion in litigation resulted from the increase of civil litigation, Business
opportunities beyond local borders, increase in population, creation of new acts, new rights
and measures and increase dependence on sole Judicial Forum of Courts.. Due to lack of
facilities there was a challenge to handle the overload of cases efficiently and effectively by
the judicial forum. The concept of Arbitration got legislative recognition for the first time in
India through Industrial Disputes Act, 1947. Almost all democratic countries of the world
have faced similar problems regarding access to justice. The United States faced the most
major changes in their law reform in 30 years and the same was being followed in Australia.
United Kingdom has also adopted alternative dispute resolution as part of its legal system.
European Union also favoured the arbitration for the settling of commercial disputes
between member states.

Differences between Arbitration and

Mediation
Arbitration Mediation

Arbitration is like a court procedure

Mediation refers to a process of
because the parties submit evidence
settling disputes by independent
similar to a trial where the third
Meaning and impartial third party who assists
party hear the entire situation and
the parties to reach a common
give his decision which is binding
outcome.
upon the parties.

It is a formal procedure like court

Procedure It is an informal procedure.
proceedings.

The third party is termed as

Third party Third party is termed as arbitrator.
mediator.

One arbitrator is known as sole

Number of
arbitrator and there can be more One mediator.
third party
than one arbitrator.
Nature of They are binding upon both the
They are non binding in nature.
award parties.

The outcome of the arbitration

Control
depends upon the evidence, The outcome of the mediation
over
documents etc the decision depends depends upon the parties.
outcome
upon the arbitrators.

During arbitration, both parties are Arbitrators do not issue orders, find
given the opportunity to present fault, or make determinations.
their case to the arbitrator. The Instead, help the parties with
Decision
arbitrator does not pass any communication, obtain relevant
decision, but only disposes with the information and develop
approval of the parties. alternatives.

Difference between Mediation and Conciliation

Conciliation Mediation

Conciliation is an alternative dispute Mediation refers to a process of

resolution method in which an settling disputes by independent
Meaning expert is appointed to resolve a and impartial third party who
dispute by convincing the parties to assists the parties to reach a
agree upon an agreement. common outcome.

Arbitration and Conciliation Act,

Regulation By The Civil Procedure Code, 1908.
1996.

Number of
One or more conciliator. One mediator.
Third party

In mediation confidentiality
depends upon thrust, and it is
In Conciliation Confidentiality is
Confidentiality advised for all parties to sign a
determined by the law.
Confidentiality Clause for extra
measure.

In mediation, the mediator

Nature of third In conciliation the conciliator plays a
should be impartial and objective
party more active role.
to the parties’ dispute.
 In Conciliation, the conciliator also
In Mediation, the mediator does
Third party plays the role of evaluation and
not give any judgement.
intervention for settling the dispute.

Difference between Arbitration and

Conciliation
Arbitration Conciliation

Arbitration is like a court procedure Conciliation is an alternative

because the parties submit evidence dispute resolution method in
similar to a trial where the third which an expert is appointed to
Meaning
party hear the entire situation and resolve a dispute by convincing
give his decision which is binding the parties to agree upon an
upon the parties. agreement.

That decision made by the arbitrator

Enforceability However, a conciliator has no
is binding in the same way as a
of decision right to enforce his decisions.
court decision.

Arbitration is a formal process and

follows similar procedures as court It is an informal process and
Nature of
proceedings where witnesses can be usually involves a discussion on
process
called and evidence can be table.
presented in respective cases.

Prior
Prior agreement is required. No need of prior agreement.
agreement

Available for existing and future Available for only existing

Availability
dispute. dispute.

Conciliation does not always

Arbitral award is final and binding ensure that a mutually agreed
Outcome
upon parties. result will arise between the
parties.
Proceedings of Conciliation under the Act
 Section 62 of the Act provides that in order to initiate the conciliation proceedings
one party to the dispute has to invite the other party in writing for conciliation.
However, there will be no proceedings if the other to whom notice/invitation is
sent, reject it or does not reply.
 The general rule states that there must be one conciliator but in the case of more
than one conciliator they have to function together with each other as per Section
63 of the Act.
 The appointment of the conciliator like an arbitrator will be done by the parties
themselves under Section 64 of the Act.
 A party according to Section 65 of the Act is under an obligation to submit in
writing the nature of the dispute and all the necessary information related to it to
the conciliator.
 The proceeding can be terminated following any of the procedures given
under Section 78 of the Act.

Role of conciliator
It is mentioned under Section 67 of the Act:

 He must be independent and impartial.

 He must assist the parties to come to a settlement.
 He is not bound by the procedure given under the Code of Civil Procedure, 1908.
 He must adhere to the principles of fairness and justice.

NOTES..
UNIT-4 AND 5

What is international arbitration

International arbitration is a dispute resolution mechanism, similar to domestic court litigation,
except it is carried out by private adjudicators called ‘arbitrators,’ and it extends beyond a
country’s borders. It is a consensual, neutral, binding, and enforceable means of dispute
resolution that is more efficient and faster than regular court proceedings. It facilitates the
coming together of parties from different legal, linguistic, and cultural backgrounds and
resolving their disputes.

Availing international arbitration can be optional, but it could also be made compulsory by
inserting a ‘mandatory arbitration clause.’ Usually, parties enter into ‘arbitration agreements’
beforehand. Article II(1) of the New York Convention defines such an agreement as “an
agreement in writing under which the parties undertake to submit to arbitration all or any
differences which have arisen or which may arise between them in respect of a defined legal
relationship, whether contractual or not.”

Thus, international arbitration, “provides businesses engaged in international transactions with a

neutral form of dispute resolution.”

Essential requirements of an international arbitration clause

International arbitration clause to be in writing

It is mandatory for the arbitration agreement to be in writing if it is to be enforced, in most

jurisdictions. This is also prescribed in Article 7 of the UNCITRAL Model Law.

International arbitration to be mandatory

The intention of the parties regarding taking the dispute for arbitration must be clear from the
agreement clause. It may provide for mandatory arbitration in case of any dispute or contain
permissive language, i.e. that any dispute may be referred to arbitration. In some cases, there
may be a clause for unilateral choice of arbitration, i.e. either party may unilaterally choose
between arbitration or court proceedings in case a dispute arises. However, these clauses are not
enforceable in all jurisdictions.

In recent years, mandatory arbitration clauses have become a problem. Corporations usually
insert mandatory arbitration clauses in agreements with consumers and employees. The problem
that arises here is that these clauses take away the jurisdiction of domestic courts in case any
dispute arises. Thus, the employees and consumers have no recourse left to the country’s judicial
system; rather, they have to go for arbitration, which practically puts them in a disadvantaged
position. That is why the relevance of such clauses has been disputed across the world recently.

Choice of the arbitral seat

The choice of arbitral seat is related to the country whose courts shall have the supervisory
jurisdiction over the arbitration proceedings. These courts of the arbitral seat have the authority
to pass rulings on preliminary injunctions and any challenges related to the arbitral award.
However, the arbitral seat is not the same as the venue of the arbitration, i.e., it need not
correspond with the place where the hearings physically take place. Because of these reasons, it
is important to choose a seat in a place that has modern and arbitration-friendly laws and where
the courts are cognizant of international arbitration principles to ease the entire process.

A pertinent case to mention here is that of the BALCO judgment. In Bharat Aluminium Company
v. Kaiser Aluminium Technical Services Inc.(2012), it was held that part I of the Arbitration and
Conciliation Act, 1986 would not apply to the foreign seated international commercial
arbitrations. Section 2(2) of the Act outlines the territorial limitations of the Act, i.e., it applies
only to arbitration seated in India. Thus, different countries have different laws regarding the
arbitrations carried out on their soil or outside. The choice of the arbitral seat has serious
consequences, including the applicability of domestic laws and the enforceability of the award.

4. Scope of the clause

It is important to clarify the scope of the arbitration clause so as to definitely outline the disputes
arising out of, or in connection with the agreement that can be made the subject of arbitration,
regardless of the types of claims asserted, like contract breach, business tort claim, etc. The
parties may choose to keep certain claims like infringement of intellectual property rights, etc.
out of the arbitration clause. In such cases, the claims left out may be preferred to any court of
competent jurisdiction. Also, the matters that can be referred to arbitration may also differ
according to the arbitral seat. Some jurisdictions prescribe that certain matters should be
mandatorily resolved by courts of competent jurisdiction, and not referred to arbitration.

5. Applicable laws

The arbitration clause must also specify the substantive law to be applicable to the rights and
obligations arising under the contract if they are not dealt with under any other relevant provision
within the contract. The applicable law need not have any relation to the arbitral seat.

6. Arbitral rules

In case the parties wish to get their dispute resolved by a specific international arbitral institution,
like the International Chamber of Commerce, the arbitration clause must specify that particular
arbitral institution and the institutional rules as well.

7. Language of the proceedings

The international arbitration clause must also specify the working language of the arbitral
proceedings.

8. Optional clauses

The following details, though optional, may be included in the international arbitration clause:

1. The number of arbitrators, or their specific qualifications;

 2. The method of constituting a tribunal;
3. Rules regarding the confidentiality of the proceedings;
4. Allocation of the costs of arbitration;
5. Mandatory pre-arbitration negotiations or mediation;
6. Waiver of the right to challenge the arbitral award, adhering to the limits permitted
under the law of the arbitral seat;
7. Powers of the tribunal to call for specific performance of the contract; or
8. Other specifics related to the dispute or arbitration.

Stages of international arbitration proceedings

International arbitration, especially commercial arbitration, consists of the following stages:

Request for arbitration

The proceedings begin with an initial pleading known as the Request for Arbitration or Notice of
Arbitration. The pleading is a document (typically very short consisting of 15 to 25 pages) that
contains the procedural information like the parties’ names, their contact details, address, and
counsel. Besides this, it also includes a brief summary of the facts of the case and its background,
along with the relief sought by the parties.

Answer to the request for arbitration

In response to the request for arbitration by the claimant, the respondent files an answer to this
request, as per the institutional or procedural rules of the arbitration. The answer again is a brief
and a procedural document. Here, the respondent presents his case and puts forward counter-
claims. The respondent’s appointed arbitrator is also nominated in the answer itself.

Constitution of the arbitration tribunal

After the submission of the initial pleadings, the arbitration tribunal is to be constituted. If the
tribunal consists of three members, then the two members nominated by the parties are examined
for independence and impartiality. The arbitral institution then confirms their appointment and
the third member, or any other member, is designated as the president of the tribunal by the
institutional procedural rules or the rules mutually decided by the parties. Any challenges or
issues arising from the appointment shall be disposed of, and finally, the tribunal shall be
constituted formally. Article 11 of the UNCITRAL Model Law talks about the appointment of
arbitrators. It gives liberty to the parties to decide among themselves the procedure of appointing
the arbitrators.
The hearing

After the tribunal has been established formally, the next stage is that of the procedural hearing.
It is the first opportunity for the parties to interact directly with the tribunal constituted. If it is
not physically possible for all the pirates and arbitrators to be present in one place, then it might
happen via telephone or video-conferencing. It is at this first hearing itself that the timetable is
set for the remaining proceedings.

Detailed pleadings and production of documents

After the first hearing, the detailed hearing takes place. There is an exchange of further detailed
written pleadings, witness statements, legal arguments, and authorities. Basically, it is the stage
where either party presents its case with full strength and all the supporting evidence. There may
be a second round of pleadings if requested by the parties and granted by the tribunal.

After the first exchange of pleadings comes to an end, it is followed by the presentation of
documents. Documents are usually presented only when requested and it is proved that the
presentation of documents is relevant and material to the dispute.

Article 23 of the UNCITRAL Model law deals with the statements of claim and defence. The
parties are free to present all the documents to support their claims. The Article also permits the
parties to amend their claims unless the arbitral tribunal considers it inappropriate to allow such
an amendment owing to the delay in making it.

Witness statements and expert reports

If the tribunal feels that it is necessary, keeping in mind the nature of the dispute and the
circumstances of the case, it can allow the presentation of expert witness evidence, after
consulting all the parties involved. It can also happen that the pleadings and document
presentation may be allowed after the expert evidence is submitted to focus on the factual issues
at the core of the dispute.

Appointment of experts by the arbitral tribunal is covered under Article 26 of the UNCITRAL
Model Law. It also adds that if the parties so request, the expert can be called into the
proceedings after giving the evidence for questions and examination.

The formal hearing

After the detailed pleadings and all the evidence is presented, the tribunal then proceeds toward a
more formal hearing of the matter. Usually, they are shorter in duration and do not last for more
than ten working days. The formal hearing begins with both sides presenting their opening oral
arguments, followed by a direct examination of the witness statements and cross-examinations.

The post-hearing brief

After the conclusion of the formal hearing, the parties may be asked to submit post-hearing briefs
in place of oral closing arguments. In the post-hearing briefs, the parties reiterate their claims and
defenses along with all the supporting evidence.

The award

After the proceedings come to an end, the tribunal shall issue a written award. The award is
signed, dated, and distributed to the parties.

Article 31 of the UNCITRAL Model Law states that the award should be in writing and must
include the reasons upon which it is based.

Appeal

The international arbitration awards have only limited grounds for challenge. However, the
award can be set aside in the domestic courts of the arbitral seat. The challenge shall be governed
by the domestic laws of the country that is the seat of arbitration. Usually, the law is consistent
with the provisions of the New York Convention, if that country is a signatory to it.

Most countries have a restricted approach to appealing against arbitral awards. That is why many
countries do not permit a de novo review of the evidence. Usually, the awards can be set aside on
issues like grave procedural deficiencies, irregularities in the tribunal constitution, lack of
jurisdiction, not following due process, or when the award goes against public policy.

Article 34 of the UNCITRAL Model Law lists the various grounds for setting aside the arbitral
award. It includes grounds like procedural deficiencies, issues with jurisdiction or the
appointment of arbitrators, etc.

Recognising and enforcing the arbitral award

Either party can bring a suit for judicial recognition and enforcement of the arbitral award in any
country if the other party refuses to comply with the award. Recognition and enforcement are
mostly governed by international arbitration conventions like the New York Convention, in
countries that are signatories to it.
As per Article 35 of the UNCITRAL Model Law, the arbitral award shall be recognised as
binding and enforceable, irrespective of the country in which it was made, except on certain
grounds mentioned in Article 36.

Advantages of international arbitration

There are the following advantages of opting for international arbitration:

1. It provides a neutral platform for the parties to come together and present their
arguments in front of the arbitrators outside of the formal court setting.
2. The arbitral awards are more easily enforceable than the court-awarded judgments.
3. The procedures are easy and flexible.
4. Arbitrators appointed usually have expertise in the matter they are going to arbitrate.
5. Privacy and confidentiality of the parties are ensured.
6. The outcome is binding on all the parties, and appeal is allowed only in limited cases.
7. It is often less expensive than civil litigation.
8. Parties get enough opportunities to directly participate in the proceedings.

Introduction
The Legal Services Authorities Act, 1987, was enacted by the Central Government of India
pursuant to Article 39-A of the Constitution of India and the recommendations of its committees.
The Legal Services Authority Act, of 1987 came into effect on 9th November 1995, following
the Amendment Act of 1994, which introduced several amendments to the main Act. According
to this Act, the economically weak, the backward, and the disabled are eligible to receive legal
aid. In 1971, Justice P.N.Bhagawati introduced the legal aid scheme, which was overseen by the
Legal Aid Committee. On 5th December 1995, the National Legal Services Authority was
established by Justice R.N. Mishra, which was an important contribution to the implementation
of the Act.

There are different levels of legal aid, including provisions for legal assistance to illiterate, poor,
and physically challenged individuals who are unable to access the courts due to their ignorance
of the law or financial limitations. Anyone who qualifies for legal aid under Section 12 of the
Act, may obtain legal assistance under the Act. The National Legal Service Day (NLSD) was
declared on November 9, 2009, the day the law came into force. As stated under the Act, the
legal aid is to be provided by the State, District, and Taluk Legal Service
Authorities/Commissions formed throughout the country in order to bring about a re-dedication
to ensure equality of opportunity and fairness to all individuals. Through its various forms of
legal assistance, the NLSD promotes equal opportunity and justice for all citizens.

The Act envisions that no one will be denied access to justice because of disability or economic
reasons, and aims to educate the public about the law, offer free legal aid, and establish Lok
Adalats. As a result of the creation of Lok Adalats, the process of dispensing justice has been
revolutionized in the country. There remains a large number of pending cases in the courts of the
country. A number of measures have already been taken by the government to reduce the number
of pending cases. In addition to providing a supplementary forum for conciliatory settlements,
the plan achieved success in providing an additional forum for litigants.

Analysis of the Legal Services Authority Act, 1987

Types of services under Legal Services Authority Act

The Act provides many types of legal services to the general public:

Free legal awareness

This Act is primarily intended for the public to make them aware of laws and schemes issued by
public authorities. The Legal Service Authority teaches some portions of the rules of law to the
individuals. Legal camps and legal aid centres are organized by authorities so that the general
public can seek advice from the legal aid centres located near their homes or places of work. The
legal guides and centres can help address the grievances of ordinary people as well.

Free legal aid counsel

A person who wants to defend or file a case in a court of law but does not have the means to hire
an advocate can seek the assistance of a free legal aid attorney. The Act states that free legal aid
counsel is available, and the Council is responsible for assisting needy individuals to obtain
justice. By adopting and establishing this philosophy, the Indian Courts should be freed from the
burden of adjudicating the cases.

A Lok Adalat was held for the first time in Gujarat on 14th March 1982 and succeeded in
resolving many disputes pertaining to labour disputes, family disputes, and bank recoveries. Lok
Adalats are the primary method by which the legal services authorities decide disputes. Our
Indian courts have a huge backlog of cases, and it takes an extremely long time to resolve
disputes under judicial supervision.

Lok Adalat was, thus, seen as an Alternative Dispute Redressal (ADR) mechanism that was
reliable, efficient, and friendly in resolving disputes. Lok Adalats can be constituted by the legal
services authorities at such spans and locations to exercise the authority of their jurisdiction in
such areas as they think fit. There is a mix of lawyers and non-lawyers on the Lok Adalat bench
in order for it to possess a superior understanding of the dispute and convince both parties to
reach a mutually agreeable compromise.

Objectives of Legal Services Authority Act

Under Article 39A of the Constitution of India, free legal aid and equal justice are provided to all
citizens by appropriate legislation, schemes or other means to ensure that no citizen is denied
access to justice on the basis of economic disadvantage or in any other way. The Legal Services
Authorities Act, 1987 was enacted as a consequence of this constitutional provision with the
primary objective of providing free and competent legal services to the weaker sections of
society in the country.

Structural Organization under Legal Services Authority Act

As a result of the Legal Services Act, a National Legal Services Authority (NALSA) was
established as the apex body for regulating the legal aid provisions. State Legal Services
Authority (SALSA) handles the implementation of NALSA’s powers at the state level, which
delegates further to a number of organizations. NALSA is considered to be an alliance between
the State, Social Action Groups, individuals, and non-profit organizations that have their
presence from the grassroots level to the state level.

NALSA

In response to Section 4 of the Act, NALSA has been established to provide free legal aid to all
citizens of the country. The body has been established by the government. It is headed by the
Chief Justice of India, patron-in-chief. The executive chairman of the organisation is a retired or
serving judge of the Supreme Court of India. The nominees are selected by the president after
consultation with the Chief Justice of India. An advisory committee referred to as the Supreme
Court Legal Services Committee is formed by the central authority. A significant objective of
the NALSA is to ensure that justice is equally distributed among citizens, regardless of economic
or other factors. The main responsibilities of NALSA are the following:

Through legal aid camps, the organization promotes legal aid in slums, rural and labour colonies,
as well as disadvantaged areas. It plays an important role in providing education about the rights
and needs of the people who live in such areas. Lok Adalats are also formed by the authority to
settle disputes between these people.

Amongst other things, it is primarily concerned with providing legal services through clinics in
law colleges, universities, etc.

Arbitration, mediation, and conciliation are all methods that are used by these organizations to
settle disputes.
The organisation provides grant aid to institutions that provide social services at the grassroots
level to marginalised communities from various parts of the country.

Research activities are also conducted to improve legal services for the poor.

Ensures that citizens commit to the fundamental duties they have been entrusted with.

As part of the proper implementation of the schemes and programmes, they tend to evaluate the
effectiveness of the actions taken for the legal aid problems at specific intervals so that the
correct functions are being performed.

Through the policy and scheme they laid down, the body ensures that the legal services could be
made available to the general public. Through these schemes, the body is able to provide the
most economical and effective legal services

Financial matters are handled by this body, and the funds allocated by it are allocated to
respective district and state legal services authorities.

In NALSA v. Union of India (2014) the National Legal Services Authority of India (NALSA)
filed this case to recognize those who are outside the binary gender distinction, including
individuals who identify as “third gender”. There was a question that the Court had to address
regarding the recognition of people who do not fit into the male/female binary as “third gender”
individuals. During the discussion, the panel deliberated whether ignoring non-binary gender
identities constitutes an infringement of Indian Constitutional rights. For developing its
judgment, the panel referred to an “Expert Committee on Transgender Issues” established under
the Ministry of Social Justice and Empowerment.

There is no doubt that this was a landmark decision because the Supreme Court of India
recognised the identity of ‘third gender’ and transgender persons for the first time. In its
judgment, the Court recognized that third-gender individuals had fundamental rights under the
Constitution and the International Covenant. As a result, the government of the state was directed
to develop mechanisms for the realization of the rights of “third gender”/transgender individuals.

According to the Court, the concept of ‘dignity’ under Article 21 of the Constitution includes all
forms of self-expression, which permits a person to live a dignified life. The rights to dignity
under Article 21 include the right to gender identity.

The Apex Court stated that Article 14 and Article 19(1)(a) were framed in gender-neutral terms,
and thus, the right to equality and freedom of expression would extend to transgender persons
also. Transgender persons all over society are subject to “extreme discrimination” which is a
violation of their right to equality, which is illustrated by the fact that they are treated as second-
class citizens. Furthermore, under the freedom of expression, it was indicated by the Court that
the right to express one’s gender was included by dressing, speaking, acting, or acting in a
manner consistent with their gender identity.
Thus, Articles 14, 15, 16, 19(1)(a) and 21 of the Constitution confer fundamental rights on
transgender individuals. The Court also relied on the Yogyakarta Principles and core
international human rights treaties while recognizing the human rights of transgender people. To
reduce the stigma against transgender communities, public awareness programs were held to be
necessary by the Court.

State Legal Services Authority

Each state has a legal service authority, which provides free legal advice to those who cannot
afford it. This is covered under Section 6 of the Act. They provide preventative and strategic
legal assistance programs. Lok Adalat sessions are also conducted by the authorities to assist
clients. Among their main duties is to implement the policies and schemes as directed by
NALSA. The respective High Court’s chief justices serve as patrons-in-chief. These bodies are
supervised by an executive chairman who is a retired or serving judge. A high court legal service
committee is usually formed by the state authority. This body is headed by a sitting High Court
judge, who is the chairman and is administered by the Chief Justice of the respective High Court.

DLSA- The main functions of the District Legal Service Authority (DLSA) or the activities
engaged by DLSA are as follows:

 Provides free and competent legal aid in the nature of counselling and legal
advice, as well as free legal services in the conduct of cases before Courts and
Tribunals.
 Organises regular Lok Adalats every month for pending cases of all types, as
well as special Lok Adalats for special categories of cases. Lok Adalats limit
costs, delays and ensure speedy justice, overcoming legal technicalities.
 Undertake responsibilities of pre-litigation dispute resolution through conciliation
mechanism by establishing Permanent Lok Adalats in each district where matters
relating to Public Utility Services are taken up for settlement.
 Spreads Legal Awareness among the public, targeting particularly the
beneficiaries of social legislations and the public at large on various issues of
legal importance.
 Special endeavour is made for rendering free legal aid to under trial prisoners
whose cases are pending in courts.
 Organises Legal Literacy Classes in colleges, jails and Legal Awareness programmes for
women and children in need of care and protection.

Legal Aid under Legal Services Authority Act, 1987

In 1971, Justice P.N. Bhagwati formed the Legal Aid Committee to introduce the Legal Aid
scheme. In his opinion, the legal aid system is aimed at making the missionary of administration
of justice easily available to the people able to enforce their legal rights. The poor and the
illiterate will be able to approach the courts and as a result, they will get justice faster from the
courts.

Poor and illiterate people should have access to legal aid. An individual does not have to be a
litigant in order to obtain legal aid. According to Article 39A of the Indian Constitution, it is the
duty of the State to ensure that the legal system operates on the basis of equality and that in
particular, it must ensure the provision of free legal aid to ensure that citizens of every economic
category have access to justice. Furthermore, Articles 14 and 22(1) make it mandatory for the
State to ensure equality under the law and a legal system that promotes justice from an equal
opportunity standpoint. It is the aim of legal aid to ensure that the law is enforced in its letter and
spirit, and equally just treatment is provided to the weakest, poorest, and most downtrodden
sections of society.

The concept of legal aid can be traced back to the year 1851 when in France, enactments were
passed to provide legal assistance to those in need. As far back as 1944, England and Wales had
also supported the provision of legal advice to the poor and needy as part of its organized efforts
to provide legal services to the poor. The Rushcliffe Committee was appointed by the Lord
Chancellor, Viscount Simon, to look into the current facilities available to provide legal advice to
the poor and to recommend any measures that appear relevant to ensuring that the needs of these
individuals are met. As per the Act, the Supreme Court Legal Services Committee, the High
Court Legal Services Committee, the State Legal Services Authority, the District Legal Services
Authority, and the Taluk Legal Services Committee have been entrusted with the responsibility
of organizing all Lok-Adalats in India.

Eligibility criteria for free legal aid

There was even an item on the committee’s (headed by Justice PN Bhagwati) agenda on the
eligibility criteria for the people to qualify for free legal aid, which has been also mentioned in
the Code of Criminal Procedure, 1973 under Section 304 to provide free and competent legal
assistance to a marginalised member of the society at the expense of the state. As established
in Hussainara Khatoon v. State of Bihar (1979), legal aid will be provided at the expense and
cost of the state to marginalised groups within society, and the state is required to make such
assistance available to the accused.

In a similar vein, the Supreme Court has also ruled in Suk Das v. Union Territory of Arunachal
Pradesh (1986) that an accused who cannot afford legal aid may have his or her conviction set
aside on socio-economic grounds.

The following are the people eligible for free legal aid under Section 12 of the Act:

a member of a Scheduled Caste or Scheduled Tribe;

a victim of trafficking in human beings or beggars as referred to in Article 23 of the Constitution;

a woman or a child;

a person with a disability as defined in Section 2(i) of the Persons with Disabilities (Equal
Opportunities, Protection of Rights and Full Participation) Act, 1995;

a person under circumstances of undeserved want such as being a victim of a mass disaster,
ethnic violence, caste atrocity, flood, drought, earthquake or industrial disaster; or

an industrial workman; or

in custody, including custody in a protective home within the meaning of Section 2(g) of
the Immoral Traffic (Prevention) Act, 1956 or in a juvenile home within the meaning of Section
2(j) of the Juvenile Justice Act, 1986 or in a psychiatric hospital or psychiatric nursing home
within the meaning of Section 2(g) of the Mental Health Act, 1987; or

in receipt of annual income less than rupees nine thousand or such other higher amount as may
be prescribed by the State Government, if the case is before a court other than the Supreme
Court, and less than rupees twelve thousand or such other higher amount as may be prescribed
by the Central Government, if the case is before the Supreme Court.

Lok Adalat under Legal Services Authority Act, 1987

Section 19 of the Act provides for the establishment of Lok Adalats. Legal service authorities at
all levels, including the central, state, and district levels, shall hold Lok Adalats. Lok Adalats
serve as an alternate dispute resolution system. Their purpose is to settle cases that are pending
or that have not been heard in the courts. It consists of judicial officers or an authorized person
under the jurisdiction of the state, central government, or local government. Following the
conciliation of disputes between the parties and the agreement of the parties, the award is handed
down by conciliators in accordance with Section 21 of the Act. The award has the same legal
effect as a court decision.

Scope of Lok Adalat

Unlike the Supreme Court, Lok Adalat is extremely broad to incorporate most of the cases
pending before it as well as new cases that will be filed in the near future to be settled. The Lok
Adalat does not have jurisdiction over cases relating to offences that cannot be compounded
under any law. The Lok Sabha does not refer such matters to committees without giving the
other party a reasonable opportunity to be heard. The Lok Adalat proceeds to resolve any case
referred to it and tries to negotiate a mutually acceptable outcome between the parties involved
with the case. Whenever a Lok Adalat decides a case before it, it adopts the most extreme efforts
for a trade-off or settlement. The following points elaborate on the scope of Lok Adalats:
If no settlement or compromise is reached by the parties after the Lok Adalat passes, no order is
given.

A reference will be sent automatically to the Court that drew up the reference for disposition.
Those involved in the dispute are urged to seek redressal in courts.

If the terms proposed by the bench do not satisfy the parties, the Lok Adalat cannot be forced to
compromise or reach a settlement. Orders from Lok Adalats are definitive and restrict the
parties.

An order passed by a judge is a satisfactory means of stopping the proceedings that demand
justice.

Lok Adalats have enough powers under the Act to make justice without compromising the
quality of their awards. The Lok Adalat’s final order is considered judicial since it is given the
status of a decree.

A Civil Court recognizes it as a form of evidence and is given the power to summon, discover,
and get an affirmation.

In the case of P.T. Thomas v. Thomas Job (2005), the Apex Court specifically explained what
Lok Adalat is. According to the Court, Lok Adalat is an ancient form of adjudicating system that
once predominated in India, and its validity has not been questioned even today. According to
Gandhian principles, the term Lok Adalat means “People’s Court”. It is an essential component
of alternative dispute resolution. If the dispute is resolved at Lok Adala, there is no court fee, and
if it is already paid, the fee will be refunded.

According to the case of B.P. Moideen Sevamandir and others v. AM Kutty Hassan (2008), the
parties can communicate directly through their attorneys, which is far more convenient than
speaking in a regular courtroom. Because Lok Adalats are dynamic, they are able to balance the
interests of both parties and pass orders that both sides find acceptable.

Functions of Lok Adalat

The following are the functions of Lok Adalat:

Lok Adalat members should be impartial and fair to the parties.

Lok Adalat is responsible for handling pending cases in court. In the case of a Lok Adalat
settlement, the court fee paid to the court on the petition will be reimbursed

When filing a dispute with Lok Adalat, you do not have to pay a court fee.

Types of Lok Adalat

Lok Adalats can take the following forms:

National level Lok Adalat

The Lok Adalat held at the national level is held regularly throughout the country at the Supreme
Court level and taluk level, where thousands of cases are disposed of. Every month a different
topic is discussed in this Adalat.

Permanent Lok Adalat

The body is governed by Section 22B of the Act. There is a mandatory pre-litigation mechanism
in Permanent Lok Adalat that settles disputes concerning public utilities such as transport,
telegraph, postal service, etc. As a result of the case Abdul Hasan and National Legal Services
Authority v. Delhi Vidyut Board and other (1999), the courts directed that permanent Lok
Adalats be established.

Permanent Lok Adalats are charged with resolving public utility disputes quickly. Therefore, if
parties neglect to show up at the settlement or compromise, then it has a further advantage of
choosing the dispute based on merit. In this way, the possibility of postponement in the
resolution of questions is eliminated. Rather than following the formal procedure for resolving
disputes, it is bound to follow the principle of natural justice in order to save time.

Thus, the establishment of the Permanent Lok Adalat is fundamental to settling disputes with
public utility administrations in a quick and amicable manner. The awards of the Permanent Lok
Adalat made under this Act are conclusive and binding. In no case will it be included as a
defence in an original suit, application, or execution proceeding. Such actions are considered
announcements by a civil court. In case the Permanent Lok Adalat makes an award, that award
will be communicated to a civil court having nearby jurisdiction, which will then execute the
order as if it were a decree made by the particular court.

Permanent Lok Adalats and Lok Adalats are indistinguishable in their essential features. There
have, however, been some differences. The fundamental difference is that a common Lok Adalat
must convene periodically and not consistently whereas a Permanent Lok Adalat is a setup that
functions like any other court or tribunal.

Despite the Legal Services Authorities Act, 1987, which set up the Lok Adalats, the permanent
Lok Adalats were not established right away. Through the Amendment Act of 2002, the
foundation of the Permanent Lok Adalat was enabled.

Mobile Lok Adalat

Mobile Lok Adalat is a method of settling disputes that travels from place to place. Over 15.14
lakh Lok Adalats have been held in the country as of 30th September 2015, and over 8.25 crore
cases have been settled.

Mega Lok Adalat

The Mega Lok Adalat is an ad hoc body that is constituted at the state level on a single day in all
courts.

Daily Lok Adalat

On a daily basis, these Lok Adalats are held.

Continuous Lok Adalat

It is held continuously for a specific number of days.

Jurisdiction of Lok Adalats

Lok Adalats fall under the jurisdiction of the courts which organize them, thus, they cover any
cases heard by that Court under its jurisdiction. This jurisdiction does not apply to cases
regarding offences which are not compoundable by law and the Lok Adalats cannot resolve these
cases. The respective courts may accept cases presented to them by parties concurring that the
dispute should be referred to the Lok Adalat. The Courts may accept such cases in situations
where one party makes an application to the court for the referral of the case to the Lok Adalat
and the court might consider that there is a possibility of compromise through the Act.

Limitations of Legal Services Authority Act

The Government should not only establish the four-tiered Legal Services Authority but also
establish an independent body to oversee the workings of these tiers and actively work to
promote coordination between the Taluka, District, State, and National Legal Services Authority.
When establishing the independent monitoring body, the government should recruit young legal
professionals who hold no other judicial posts, so that they will exclusively serve the interests of
the independent monitoring body. An institutional network of legal services is constituted by the
Legal Services Authority at the Central, State, District, and Taluk levels have some limitations in
relation to the manner in which they are constituted, the composition, etc.

Major limitations under Legal Services Authority Act

Section 3

The National Legal Services Authority is established under Section 3 of the Act. The
organization chart of the body reveals, however, that the members are all already overcharged
with the assigned duties of their primary work; therefore, a light modification of Section 3 is
needed. As the government builds up the National Legal Services Authority, it should emphasize
the importance of recruiting young legal professionals who do not hold other legal positions so
they can devote as much time to the purpose of the Act as possible.

Section 3-A
As set forth in Section 3-A of the Act, there is a requirement that the chairman of the Supreme
Court Legal Services Committee shall be a judge of the Supreme Court. Now, in this case, the
respective judge is already overburdened with his entrusted duties of day-to-day litigation. As a
result, there is the possibility that the office may not be able to achieve the expected results in
providing legal services in the future if such an overburdened person is again given the functions
of the Supreme Court Legal Services Committee. Therefore, if Section 3-A of the Act is to be
implemented properly, then it will be essential to amend this section.

Section 6

A State Legal Services Authority is established by Section 6 of the Act. Although the
organization of the body appears to be fairly straightforward at first glance, a closer look at it
reveals that each of the members is to a certain extent occupied with duties outside the body, and
therefore, a minor alteration of Section 6 is required. It is important for the government to
emphasize when establishing the State Legal Services Authority that it will be recruiting young
qualified legal professionals who have the zeal to work in the field with utmost devotion to
achieve the core objective stated in the Act.

As a consequence of Supreme Court Bar Association v. Union of India and Others (1988), it has
been held that the normal rule should be that the Chairman of the State Legal Services Authority
should be a sitting judge and retired judges were only to be appointed under exceptional
circumstances.

LEGAL LITERACY CAMP- Citizens aware of their legal rights can

access benefits of government programs and lead dignified lives as
promised in Constitution of India. To bring awareness among rural
population, Legal Literacy Camp model was introduced. It is a
collaborative model created by Non-Governmental Organization,
District Legal Services Authorities (DLSA), and law colleges. The
camps aim to help people realise the potential of legal
empowerment.

Majority of Indian population, almost 70 percent reside in the

villages, most of them lack awareness about their legal rights and
entitlements as grievance redressal mechanism as a result delivery
of government services remains largely ineffective. Villagers are not
able to access the benefits of their legally mandated government
programs. Hence, it is extremely important to address the
information gap and generate awareness among the villagers about
their rights and entitlements and grievance redressal mechanisms in
an attempt to bridge this information gap and generate awareness
among the villagers.

Sehgal foundation joins hands with District Legal Services Authority

(DLSA) to work together on access to rights and entitlements.
Together they organize Legal Literacy camps in different parts of
rural India. Such camps ate organized with the aim to empower rural
communities with information on their legal rights. This
collaboration is further strengthened through the participation of
faculty members and students of law colleges. Improved awareness
through camps could lead to improved access of villagers to various
government programs like regular availability of water, cycle under
labour, old age pension, etc.

On the whole, impacts of such camps could result in collective

articulation of demands by the villagers leading to accountability
and transparency of public institutions. Legal literacy camp acts as
a catalyst to make this a reality. It not only generates awareness
but also helps the villagers to engage constructively with the
government and access their basic rights and entitlements.

LEGAL LITERACY NECESSITY

Legal literacy goals and objectives:

1. Fighting Injustice and Women — The main reason is that Legal

education helps in changing the attitude of public and make them
connect to the social problems; it makes people more aware about their
rights and duties and help them to become ideal citizens.

Many enactments have been made for society’s greater good, such as

 Dowry Prohibition Act,

 Child Marriage Restraint Act,

 Sati Prohibition Act, etc.

2. Empowerment — Free legal assistance to Women who are not able to

enforce the rights given to them by law. They can be achieved by holding
frequent legal advice camps at different places.

3. Understanding the scope of Human rights — Establishments of Legal

Advice centers. Educating the rural masses the matters of their rights and
responsibilities in a welfare society. Help of legal academicians, professors,
advocates and other such professionals who can aid in the better
understanding of laws and its working should be resorted. People must be
informed about their political, civil, social, economic and cultural rights.

4. Increase in knowledge about law — Implementation of social

mechanisms such as Legal seminars, camps, workshops etc, must be
undertaken to make the people aware of the present legal structure.

Likewise, various steps have been initiated by the State Legal Services
Authority for creating legal Awareness in their states:

 Legal literacy camps/seminars

 Mass awareness through Print Media

 Creating awareness through EDUSAT

 Awareness programmes for women

 Training and Strengthening of legal aid department

SETTLEMENT AGREEMENT- Settlement Agreement under Section 73
Part III of the arbitration and conciliation act, 1996 deals with the provisions related to the
process of conciliation, this process is very different from arbitration. Here conciliator tries to
settle the dispute between the parties by assisting them and helping them to reach to the
conclusion or solution of the matter. Under this process one party reaches out to other or send the
invitation to settle the dispute through the process of conciliation. If the other party accepts the
invitation of the party, then both the parties proceeds to choose the conciliator which is generally
one but in some cases there might be more than once conciliator.
The settlement process takes place under section 73 of The Arbitration and Conciliation Act,
1996 when the conciliator sees the possibility of settlement of dispute. Generally decision of the
conciliation proceedings are not binding on the parties but if the parties resort to settlement of
award under this section then the settlement agreement becomes binding on the parties. Parties
have the option of either drawing up the terms settlement agreement by themselves or take the
assistance of conciliator and at last the agreement is signed by both the parties and authenticated
by the conciliator. As per section 74 of The Arbitration and Conciliation Act, 1996 settlement
agreement drawn under section 73 is kept in par with arbitral award in the arbitration
proceedings under section 30 of The Arbitration and Conciliation Act, 1996 and it is binding
like arbitral award.
In case of Haresh Darayam Thakur Vs. State of Maharashtra The Supreme Court addressed the
issue of importance of signature of both parties on the settlement agreement. Court said that
settlement agreement under section 73 of The Arbitration and Conciliation Act, 1996 can be
given legal sanctity of arbitral award under section 74 of The Arbitration and Conciliation Act,
1996 only when both the parties sign the settlement agreement. Settlement agreement can be
drawn by conciliator only when he sees that there is some possibility of mutual settlement of
dispute between the parties. Similarly, in the case of Anuradha SA Investment LLC & Anr. Vs.
Parsvnath Developers Limitid & Ors. Enforcement of settlement agreement was challenged on
the basis of the agreement being not stamped properly by the parties and the conciliator. Court
said that the fact that the settlement agreement is not duly stamped does not make the whole
agreement invalid. Keeping settlement agreement in par with arbitral award does not mean that
parties have to obtain a decree to enforce the settlement agreement or initiate the fresh
proceedings, settlement agreement under section 73 is only given the status of an arbitral award
given under section 30 so that it can be enforced and can be binding on the parties like the
arbitral award. In case of agreement which is not properly stamped, the only thing parties need to
do is to get the settlement agreement stamped properly.
It is clear from words given in section 73 and section 74 of The Arbitration and Conciliation
Act,1996 and the case laws given above that settlement agreement drawn in the conciliation
proceedings under section 73 are given the same status of an arbitral award made in the
arbitration proceedings under section 30 of The Arbitration and Conciliation Act,1996.

ENFORCEMENT OF ARBITRAL AWARD-

The enforcement of international arbitration awards in India, where there is going to be
a remittance of foreign exchange from a resident to a non-resident, would invariably
have FEMA implications. If the award is not in conformity with the FEMA regulations,
the question that arises is whether the court, where enforcement action is filed, can
decline enforcement on the ground that the award's enforcement would be contrary to
the country's public policy.
Section 48 of the Arbitration and Conciliation Act, 1196
Conditions for the enforcement of foreign award:-
1. Incapacity: the parties to the agreement were, under the law applicable to them, under some incapacity. It
could be the claimant’s incapacity or incapacity of both the parties. In the absence of choice of law provision,
the validity of the arbitral clause must be decided according to the law of the seat of the arbitral tribunal.
2. Invalidity of Agreement: the agreement is not valid under the law to which the parties have subjected it or
failing any indication thereon, under the law of the country where the award was made.
3. Inability to present his case:- He/she was not given proper notice of the arbitral proceedings or any valid
reason
4. Award exceeds reference: the award must not deal with questions not referred or contain decisions on
matters beyond the scope of the agreement. The award is not enforceable if it decides disputes as to the
arbitrator’s jurisdiction which by the which by the foreign law they have no power to decide.
5. Legality of composition of arbitral tribunal and procedure : enforcement of any award may be refused is
a) The composition of the arbitral tribunal was not in accordance with either the agreement or the law of the
country where the arbitration took place.
b) The arbitral procedure was not in accordance with the agreement or the law of the country where the
arbitration took place.
c) Award not yet binding, set aside or suspended.
6. Other grounds:- sub section (2) of Section 48 empowers the court to refuse enforcement on two grounds
a) The subject matter of difference is not capable of settlement by arbitration under law in India.
b) Contrary to public policy.

the parties to the agreement, were, under the law applicable to them, under some
incapacity or the said agreement is not valid under the law to which the parties have
(a)
subjected it or, failing any indication thereon, under the law of the country where the
award was made; or
the party against whom the award is invoked was not given proper notice of the
(b) appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to
present his case; or
the award deals with a difference not contemplated by or not failing within the terms of
(c) the submission to arbitration, or it contains decisions on matters beyond the scope of
the submission to arbitration:
Provided that, if the decisions on matter submitted to arbitration can be separated from
those not so submitted, that pail of the award which contains decisions on matters
submitted to arbitration may be enforced; or
the composition of the arbitral authority or the arbitral procedure was not in accordance
(d) with the agreement of the parties, or, failing such agreement, was not in accordance
with the law of the country where the arbitration took place; or
the award has not yet become binding on the parties, or has been set aside or suspended
(e) by a competent authority of the country in which. or under the law of which, that award
was made.
(2) Enforcement of an arbitral award may also be refused if the Court finds that –
 the subject-matter of the difference is not capable of settlement by arbitration under the
(a)
law of India; or
(b) the enforcement of the award would be contrary to the public policy of India.

Once the court is satisfied that the above do not apply the court shall to execute the proceedings.

Procedure for enforcement of a Domestic award

A person against whom a domestic award is made has to immediately approach a civil court for challenging the
same by making an application under section 34 of the act otherwise the person in whose favour the award has
been made can execute the same as a decree

New York Convention

Section 48 of the Arbitration and Conciliation Act, 1996, contains the

requirements for enforcing a New York Convention award. These are:

1. Unless the parties to the arbitration agreement were physically or mentally

disabled, a foreign award is enforceable.

2. Unless the arbitration agreement is found to be unenforceable under the

body of law governing its recognition and enforcement, a foreign award

shall be enforceable.

3. Unless the party against whom the award has been rendered can

demonstrate that they were not properly informed of the appointment of

the arbitrators or the conduct of the arbitration processes, a foreign award

will be enforceable. They must be able to demonstrate that the arbitral

panel did not provide them with a fair opportunity to submit their case.

4. A foreign award is enforceable unless it resolves a matter/issue unrelated

to the one brought before the tribunal. The tribunal must have concluded a

matter that was brought before it for consideration.

5. A foreign award would not be voidable unless the way the arbitral tribunal

was established or the way the arbitration was handled violated the terms

of the parties’ agreement or the rules of the law that was adopted to

govern the arbitration.

Geneva Convention

Section 57 of the Arbitration and Conciliation Act, 1996, contains the

requirements for enforcing a judgement. A foreign judgement will only

be enforceable if:

1. When compared to the law controlling its enforcement and recognition, the

arbitration agreement under which the dispute is brought to arbitration has

been deemed to be legal.

2. The dispute’s subject matter qualifies for arbitration under Indian law, and

as a result of that award, the dispute’s subject matter qualifies as such.

3. The tribunal was established, and the procedures were handled in a way

that was consistent with the terms of the parties’ agreement or with the

law that was selected to regulate the arbitration.

4. The award has reached finality, which means it can no longer be contested

as to its legitimacy.

5. The award’s enforcement won’t conflict with Indian public policy.

NOTES-…………..