UNIT-II

Arbitral Proceedings

SUBJECT - Alternative Dispute Resolution

Semester - VII

Mr. NITIN KUMAR (Adv.)

Visiting Faculty
Faculty of Law,
University of Lucknow,
Lucknow

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 ARBITRAL PROCEEDINGS

 BASIC PRINCIPLES
 DETERMINATION OF RULES OF ARBITRAL PROCEEDING
 OBLIGATIONS OF ARBITRAL TRIBUNAL & PARTIES
 PLACE & COMMENCEMENT OF ARBITRATION
 LANGUAGE OF ARBITRATION
 ARBITRATION PROCEDURE
 POWER TO TERMINATE THE PROCEEDINGS
 MISCELLANEOUS PROVISIONS
 INTERIM MEASURES ORDERED BY ARBITRAL TRIBUNAL

BASIC PRINCIPLES
 Under the provisions of the 1996 Act, the parties have been given a choice in accordance
with which they wish the Arbitral Tribunal to proceed with the adjudication of the
controversy between the parties subject only to certain restrictions concerning public
interest.
 The will of the parties prevail without intervention of the courts except as provided under
Sections 8 and 9.
 In Domestic Arbitration, the Arbitral Tribunal shall/ has to decide the dispute in accordance
with the substantive law for the time being in force in India, but in International
Commercial Arbitration, parties have been given freedom to designate law applicable to the
substance of the dispute and the Arbitral Tribunal may apply the rules of law agreed by the
parties.
 The Arbitral Tribunal shall decide the dispute in accordance with the rule of law designated
by the parties as applicable to the substance of the dispute. Failing any designation by the
parties, the Arbitral Tribunal shall apply the rules of law it considers to be appropriate given
all the circumstances surrounding the dispute applying the proper law for the parties in such
circumstances by putting itself in the place of a reasonable man. [r.w. Section 19]
 Unless otherwise agreed by the parties, Arbitral Tribunal shall decide by a majority of all its
members. But if authorized by the parties or all the members, questions of procedure may
be decided by the presiding arbitrator.

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 DETERMINATION OF RULES OF ARBITRAL PROCEEDING
(Section 19)
 The parties are free to agree on a procedure to be followed by the Arbitral Tribunal in
conducting its proceedings and the Arbitral Tribunal in conducting its proceedings is bound
to follow that procedure. [Section 19(2)]
 There is no mandatory provision in the Act as to how to determine the admissibility,
relevance, materiality and weight of evidence. However, if there are no agreed rules by the
parties, the Arbitral Tribunal has power to determine the admissibility, relevance,
materiality and weight of any evidence and make decision in the manner it considers
appropriate. [Section 19(4)]
 The Arbitral Tribunal is neither bound by the Code of Civil Procedure 1908, nor by the
Indian Evidence Act, 1872 or procedure as followed by a Court. However, the AT is to
observe fundamental principles envisaged under the Code of Civil Procedure and the Indian
Evidence Act and should be according to the principles of Natural Justice. [Section 19(1)]
 Whether or not the agreement requires that both parties be heard by the arbitration and be
given equal opportunity to produce evidence, Rules of Natural Justice mandates that and not
following the same may render the award invalid. Thus, the Arbitral Tribunal may conduct
the proceedings in the manner it considers appropriate, but such power is subject to two
exceptions mentioned below:
(i) The Arbitral Tribunal cannot conduct the proceedings in a manner which is in
violation of the mandatory provisions of the law.
(ii) The Arbitral Tribunal cannot conduct proceedings in a manner which is in violation of
the procedure agreed by the parties, if any.
 Parties generally incorporate arbitration rules of a particular institution (e.g. FICCI,
ICADR) by reference to the same in the agreement as they usually deal with procedural
matters in detail and are periodically revised. The Arbitral Tribunal does not have any
discretion where any such rule has been provided for in the agreement itself.

OBLIGATIONS ON ARBITRAL TRIBUNAL & PARTIES

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 Section 18 lays down two obligations on the Arbitral Tribunal i.e. to treat the party with
equality and to give full opportunity to each party to present his case.
 The principles should be observed by the parties also, when laying down any rules of
procedure. An agreed procedure which violates the fundamental principle of equality and
granting of an opportunity of being heard is null and void and an award passed in violation
of this principle can be set aside.
 An agreement between the parties cannot be in conflict with a mandatory provision of the
law and if it is, it cannot be enforced by the Arbitral Tribunal. The principle enshrined in
Section 18 should be observed during the entire arbitral proceedings.
 The Arbitral Tribunal has power to correct any computation errors, any clerical or
typographical errors or any other errors of a similar nature and to give interpretation of a
specific point or part of the award.

PLACE AND COMMENCEMENT OF ARBITRATION

[Section (20 & 21)]

 The parties are free to agree on the place of arbitration and if they fail to reach an
agreement, the place of arbitration is determined by the Arbitral Tribunal, having regard to
the circumstances of the case, including the convenience of the parties. [r.w. Section 20]
 The arbitrator/tribunal may, unless otherwise agreed by the parties, may meet at any place it
considers appropriate for –
 consultation among its members,
 For hearing witnesses, experts or
 For hearing the parties, or
 For inspection of documents, goods or other property
 It is mandatory for the Arbitral Tribunal to state in the arbitral award date and the place of
arbitration as determined and the award is then deemed to have been made at that place.
 In Domestic Arbitration, parties may agree on the place of arbitration anywhere in India.
But in International Commercial Arbitration, place of arbitration has legal implications in
terms of law applicable to arbitration and also enforcement of the arbitral award.

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 The arbitral proceedings commence on the date on which a request for that dispute to be
referred to arbitration is received by the respondent. [r.w. Section 21]

LANGUAGE OF ARBITRATION
(Section 22)
The Arbitral Tribunal, subject to agreement of parties, has power to determine the language or
languages to be used in the arbitral proceedings.

Generally, the language of arbitration is English, it being the international language, is agreed
in most of the arbitrations. The Arbitral Tribunal may ask for translation of documentary
evidence in the languages agreed upon by the parties or determined by the AT.

ARBITRATION PROCEDURE
[Sections (23 to 27)]
It is open for the parties to lay down by agreement, the procedure to be followed in the
arbitration proceedings. Such procedure must not be contrary to procedure laid in Section 23,
24 and 25, dealing with statement of claim and defence, hearing and written proceedings and
consequences of default by a party. If there is no agreement between the parties, the Arbitral
Tribunal can follow any procedure subject to aforementioned provisions.

Statements of Claim and Defence

Within the period of time agreed upon by the parties or determined by the tribunal, the
claimant has to state the facts in supporting his claim, the points at issue and the relief or
remedy sought. Similarly, the respondent shall also state his defence in respect of these
particulars. [Section 23(1) r.w. Section 23(4)]

Submission of documents

The parties may submit with their statements all documents they consider to be relevant or
may add a reference to the documents or other evidence which they will submit later on.
[Section 23(2)]

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 Amendments - Parties may amend or supplement these statements during the proceedings,
unless: Parties have agreed otherwise, or the Arbitral Tribunal considers it inappropriate to
allow the amendment or supplement, due to delay in making it. [Section 23(3)]

Procedural Conditions -

Freedom of the parties to lay down rules of procedure is, subject to following conditions laid
down by law:

 The Arbitral Tribunal has to maintain a balance for smooth conduct of the proceedings and
has to make the parties feel that the Arbitral Tribunal is giving them full opportunity to
present documents, witnesses and arguments.
 The parties are entitled to legal representation by the person of their choice and if
disallowed, it could be violation of the principle of giving a full opportunity of presenting
the case.
 There is no restriction upon the parties to agree for holding oral hearings for presentation of
evidence and arguments or, alternatively, for conducting the proceedings on the basis of
documents. In absence of the agreement, the AT shall decide upon the same.

Procedural Restrictions - (Mandatory Provisions)

 Submission of a statement of a claim and defence & within a period of 6 months from the
date of appointment of AT. [Section 23(4)]
 The parties shall be given sufficient advance notice of any hearing and of any meeting of
the AT for the purpose of inspection of documents, goods or other property. [Section 24(2)]
 All documents/statements/other information received from one party as well as any expert
report or evidentiary document on which Arbitral Tribunal may rely in making its decision
must be communicated to the other parties. [Section 24(3)]
 The hearings must be conducted by the Arbitral Tribunal on daily basis without
adjournments unless unavoidable based on sufficient cause. [Proviso to Section 24(1)]
 The Arbitral Tribunal, or a party with the approval of the AT, is allowed to request the
Court in taking evidence. [Section 27(1)]

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 POWER TO TERMINATE THE PROCEEDINGS

DEFAULT OF PARTIES (Section 25)

Subject to the agreement between the parties, where, without showing sufficient cause, the
claimant fails to communicate his statement of claim within the agreed period, the arbitration
proceedings shall be terminated by the arbitrator. [Section 25(1)]

Similarly, where the respondent fails to communicate his statement of defence within the
predetermined period, the arbitrator shall continue the proceedings without treating such
failure, in itself, as an admission of the claimant’s allegations. [Section 25(2)]

Further, when a party fails to appear at an oral hearing or to produce documentary evidence in
support of its averment, the arbitrator can proceed and pronounce the award on the basis of
evidence available before it.

Thus, the general principles of ex party proceedings will apply to arbitration proceedings also.

MISCELLENEOUS PROVISIONS

 Appointment of experts by Arbitral Tribunal [Section 26] Read bare act

Duty on the expert to make available to the parties on their request the various documents etc.
on which the expert has based his report.

Decision by majority where there is more than one arbitrator.

 Court assistance [Section 27]

The Arbitral Tribunal, or a party with the approval of the AT, may apply to the court for
assistance in taking evidence. [Section 27(1)]

Contents of Application - For this purpose the application must specify the names and
addresses of the parties and the arbitrators, general nature of the claim and the relief sought
and the evidence to be obtained particularly the name and address of any person to be heard

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as witness or expert witness and a statement of the subject matter of the testimony required;
the description of any document to be produced or property to be inspected. [Sec 27(2)]

The Court may execute the request by ordering that the evidence be provided directly to the
Arbitral Tribunal. Parties shall be subject to the same disadvantage, punishments and
penalties by order of the Court, as they would incur for the like offences in suits tried by the
Court when persons fail to attend, or make a default, or refuse to give evidence or guilty of
contempt of the tribunal during the conduct of the proceedings. [Section 27(1) & ()]

INTERIM MEASURES ORDERED BY ARBITRAL TRIBUNAL

[Section 17]

Section 17 of the Act empowers the Arbitral Tribunal whereas Section 9 of the Act authorizes
a Court to order interim measures. Section 9 shall come into play only when remedy under
Section 17 has been exhausted.

Section 17 provides that the tribunal may on application by a party, order for taking any
interim measure of protection as it may consider necessary in respect of subject matter of the
dispute.

Interim measures are temporary and provisional measures operative till the dispute is resolved
by an award to protect the interest of a party. They are made in the interest of justice with
regard to the following issues-

 appointment of a guardian for a minor or person of unsound mind

 preservation, interim custody or sale of any goods
 securing the amount in dispute
 detention, preservation or inspection of any property or thing
 injunction
 appointment of a receiver