Place of Arbitration

Section 20 determines the place of arbitration, wherein the parties are free
to agree on the place of arbitration.

Section 20 of the Arbitration and Conciliation Act, 1996, alludes to the place
of arbitration but it does not set out the distinction between seat and venue.
In general, the ‘seas is a place where the court has supervisory and
governing powers over the arbitral proceedings. However, the venue is a
place where the proceedings of arbitration, such as the hearing of witnesses,
experts, or the parties, or the inspection of goods and properties are
concluded.

Seat: The term ‘seat’ connotes the situs of arbitration or the centre of
gravity of the arbitration proceedings. The selection of a certain location as a
seat will mean the courts of that jurisdiction will have supervisory jurisdiction
over the arbitral process and the procedural taw or curial law, of that
jurisdiction.

In Mankastu Impex Private Ltd versus Airvisual Ltd. [2020 (5) SCC 399), the
Supreme Court held as follows: “The seat of arbitration is a vital aspect of
any arbitration proceeding. The significance of the seat of arbitration is that
it determines the applicable law when deciding the arbitration proceedings
and arbitration procedure as well as judicial review over the arbitration
award”,

In Enercon (India) Ltd versus Enercon GMBH ((2014) 5 SCC 1], the Supreme
Court held that the location of the seat will determine the Courts that will
have exclusive jurisdiction to oversee the arbitration proceedings. It was
further held that the seat normally carries with it the choice of that Country’s
arbitration/curial law. It is well settled that seat and venue of arbitration
cannot be used interchangeably.

Accordingly, the Supreme Court made the distinction between the seat and
venue of arbitration clear by stating that the seat of arbitration is crucial to
be decided carefully as it determines the applicable law when the arbitration
proceedings and arbitration procedure for deciding the dispute between the
parties.

Scope of Section 19: The provision of Section 19 lays down the procedure
to be followed by the arbitral tribunal in conducting its proceedings. But
where the parties have not agreed upon the procedure, the arbitral tribunal
has the power to conduct the arbitration proceedings in the manner it
considers appropriate. This can be described as the Magna Carta of
arbitration proceedings.

Arbitration Proceedings

The determination of the date of commencement of arbitral proceedings is

for purpose of limitation. It is open to the parties by agreement to determine
the date of commencement of proceedings. In the absence of such an
agreement, Section 21 provides that such date on which a request is
received by one party from the other to make a reference of the dispute to
arbitration (Section 21).

All pleadings, all applications, all statements, all orders, etc., would have to
be in a language or languages agreed upon determined, if some agreement
or determination specifically exempts certain matters, they are not to be in
those languages. If any documentary evidence is not in any such languages,
the arbitral tribunal may order it to be accompanied by a translation into the
said language or languages (Section 22).

The claimants should submit statements of claims, points of issue, and relief
or remedy sought. The respondent shall state his defence in respect of these
particulars.

Section 23(1) of the Act provides that within the period of time agreed upon
by the parties or determined by the arbitral tribunal, the claimant shall
submit to the arbitral tribunal a statement of claim containing:

(a) The facts supporting his claim,

(b)The points at issue
(c) the relief or remedy sought, and
(d)The respondent shall submit to the arbitral tribunal his statement of
defence

Section 23(2) provides that the parties may also submit all relevant
documents or other evidence in support of their respective claim and
defence.

Section 23(2A) provides that the respondent can file a counterclaim or plead
set off against the claimant, if any, in the same arbitration and need not
initiate other arbitral proceedings.

Amendment in claims: Section 23(3) of the Act provides that unless

otherwise agreed upon by the parties, either party has the right to amend or
supplement his claim or defence during the course of arbitral proceedings
subject to the approval of the arbitral tribunal. Section 23(4) provides that
the statement of claim and defence under this Section shall be completed
within a period of six months from the date the arbitrator or all arbitrators
received notice, in writing, of their appointment.

‘Claim’-Section 23(3) should not be interpreted to include monetary claims

alone, but it also includes any right of which the parties to the arbitration are
likely to be deprived of because of the dispute or difference arising between
them in relation to the contract.

Hearing and Written Proceedings (Section 24)

It is open to the parties to agree whether any oral hearing should be held by
the arbitral tribunal or not. If there is no such agreement, it is for the tribunal
to decide:

1. Whether to hold oral hearings for the presentation of evidence or for

oral arguments, or
2. Whether the proceedings shall be conducted on the basis of
documents or other material.

An arbitral tribunal can use only such material of which both the parties are
aware and which they have an opportunity to counter.
 Default of a party
(Under Section 25)

Failure to submit
Failure to submit a claim Failure to appear
defence

The tribunal will

continue the
Failure will not be proceedings and give its
The arbitral tribunal
treated as an admission award where a party
shall determine the
of allegations made by fails to appear at an
proceeding
the claimant. oral hearing or fails to
produce a documentary
evidence.

Proceedings will
continue and and award
will be made on the
material and evidence
before the tribunal.

Section 25 of the Act would not apply in the following situations.

a) Where there is an agreement to the contrary between the parties

b) Where the party can show ‘sufficient cause for his default
c) Where no negligence or inaction or want of bona fide is imputable to a
party

Consequences of ex parte award: The arbitral tribunal before starting an

ex parte hearing must ensure that the respondent has been informed about
the place, date, and time of the hearing and has been sufficiently warned
about the arbitral tribunal’s intention to proceed ex parte if he does not
respond to the notice. It is settled law that no appeal lies against an ex porte
award. As soon as the award is made and published, the arbitrator becomes
functus officio and also no review or revision lies in such a case. Therefore,
the arbitrators should exercise their powers carefully while making an ex
parte award.
Expert Opinion (Section 26)

Subject to an agreement between the parties, the tribunal may appoint one
or more experts for a report on a specific issue, which has to be determined.
The tribunal can ask the parties to give to the expert any relevant
information or to produce or provide access to any relevant document, good,
or other property for his inspection.

The expert may have to be permitted participation in the proceedings to

enable the parties to put questions to him and to produce other witnesses to
testify on the points of issue. The expert has to make available the material
for the inspection of the other party on the basis of which he formulated the
report.

Court Assistance

Section 5 of the. Act provides that no judicial authority shall intervene,

except where so provided in this part

Seeking court assistance in taking evidence: Under Section 27(1), the

arbitral tribunal, as well as, any party with the approval of the arbitral
tribunal can apply to the court for assistance in taking evidence.

The assistance of the court for taking evidence can be sought as regards to
any person, who fails to cooperate with the tribunal, be it a witness or a
party to a proceeding himself (Delta Distilleries Ltd. Versus United Spirits Ltd
((2014) 1 SCC 113)). The Court may order that the evidence be provided
directly to the arbitral tribunal. It will issue to the witnesses the same
processes as it issues in the suit before it. The processes that may be issued
include the following:

1. Summons for the examination of witnesses

2. Commissions for the examination of witnesses
3. Summons for the production of documents

Contempt proceedings: Persons failing to attend in accordance with such

process, or making any other default, or refusing to give their evidence, or
guilty of any contempt to the arbitrator or umpire during the investigation of
the reference, shall be subject to the like disadvantages, penalties and
punishments by the order of the Court on the representation of the arbitrator
or umpire as they would incur for the like offences in suits tried before the
Court.

In Harinarayan G Bajaj versus Shoredeal Financial Consultants (P) Ltd [AIR

2003 Bom 295), it was categorically held that “an order rejecting an
application for taking evidence of certain documents was held to neither an
interim nor a final award. It was passed in a course of a continuing
proceeding. It could be challenged only at the time of challenging the final
award. The court also held that every order is not an arbitral award.

Making an arbitral award and termination of proceedings: Section 28

of the Act talks about the rules that are to be followed to the substance of
the dispute. It provides that the parties shall be given full autonomy in their
choice of substantive law.

The tribunal can decide the matter according to its own good sense (ex
aequo et bono) or on the basis of an amicable settlement (amiable
compositeur) but only if expressly authorised by the parties.

In JG. Engineers (P) Ltd versus Union of India (2011) 3 SCC (Civ) 128), it was
held that where the contract, in clear and unambiguous terms, bars or
prohibits a particular claim, any award made in violation of Section 28(3) of
the 1996 Act would be patently illegal, and therefore, liable to be set aside
under Section 34(2)(b) of the 1996 Act.

Decision-making by a panel of arbitrators: Section 29(1) of the 1996 Act

provides that unless otherwise agreed upon by the parties in arbitral
proceedings with more than one arbitrator, any decision of the arbitral
tribunal shall be made by a majority of all its members. The word ‘decision’
used in Section 29(1) covers not only the award but other collateral decisions
in the content of arbitral proceedings as well, such as when the tribunal:

(i) Decides regarding its jurisdiction (under Section 16).

(ii) Decides interim measures on application by a party (under Section 17),
(iii) Decides the place of arbitration (under Section 20); and
(iv) Decides regarding the law to be applicable where under
international arbitration it happens to be the major question and
problems to be solved as per Section 28.

Domestic The award shall be made by the tribunal within a

Arbitration period of 12 months from the date of completion of
 pleadings under Section 23(4).

International The award may be made as expeditiously as possible

Commercial and an endeavour may be made to dispose of the
Arbitration matter within a period of 12 months from the date of
completion of pleadings under Section 23(4).

Whereas Section 28(2) states that “if all parties or all the members of the
arbitral tribunal authorise. Questions of procedure may be decided by the
presiding arbitrator”

Time limit for arbitral award: Section 29A(1) prescribes a strict time limit
for rendering an award in all domestic and international commercial
arbitration.

Section If the award is made within a period of six months, the arbitral
29A(2) tribunal shall be entitled to receive additional fee as the
parties may agree.

Section With the consent of the parties, the period of 12 months may
29A(3) be extended by six months (l.e., it will become 18 months).
However, if the award is not made within the aforesaid period,
the mandate of the arbitrator shall terminate, unless the court
extends the period, prior to or after the expiry of the aforesaid
period of an application by a party.

Section If the procedure is delayed beyond the specified time because

29A(4) of the arbitral tribunal, the fee of the arbitrator will be reduced
by up to 5% for each month of delay

Section The time period may be allowed for extension only for
29A(5) sufficient cause on an application by either party.

Section The court can substitute one or all arbitrators while extending
29A(6) the period, and in the event of such substitution, the arbitral
proceedings shall continue from the stage already reached
and on the basis of evidence and material already on record,
and the arbitrator appointed under the said provision shall be
deemed to have received the said evidence and material.

Fast Track Procedure (Section 29B)

Section 29B(1): The parties to an arbitration agreement may agree in
writing to have their dispute. Resolved by a fast track procedure.

Section 29B(2): The parties may, while agreeing to the fast track
procedure, agree that the arbitral tribunal shall consist of a sole arbitrator
who shall be chosen by the parties.

Section 29B(3): The dispute shall be decided on the basis of written

pleadings, documents, and submissions filed by the parties without any oral
hearings. The arbitral tribunal has the power to call for any further
information or clarifications from the parties in addition to pleadings and
documents filed by them.

Settlement of arbitral dispute: Section 30(1) permits the settlement of a

dispute with mutual agreement between the parties through mediation,
conciliation, or other procedures with the use of office by the Arbitral
tribunal.

In Hanu Ram versus Dhanna Singh [AIR 1928 Lah 915), it was held that if the
existence of the compromise is disputed, the arbitrator can go into the
question, and if he finds the compromise to be valid, he can give his award in
the terms of the same.

Section 30(2) provides that if, during arbitral proceedings, the parties settle
the dispute, the arbitral tribunal shall terminate the proceedings and, if
requested by the parties’ and not objected to by the arbitral tribunal, record
the settlement in the form of an arbitral award on agreed terms.

Section 30(4) provides that the agreed award will have the same status and
force as if it were an arbitral award

Form and contents of arbitral award: Section 31 deals with the form and
contents of an arbitral award, interest to be paid, and costs borne by the
parties as to the arbitral proceeding.

1. The award must be in writing and shall be signed by the members of

the arbitral tribunal.
2. The arbitral tribunal must state reasons for its award, except

a) When the award is passed on agreed terms, and

b) when parties have agreed that no reason is to be given
 3. The arbitral award must state the date and signing of the award, and
the place at which it was signed.
4. Each party shall get a signed copy after the arbitral tribunal has made
the award.
5. The arbitral tribunal is empowered to make an interim award.

Q. Explain the conditions when the mandate of an arbitration terminates.

Ans. Section 32(1) provides that the arbitral proceedings shall be terminated
by the final award or order of the tribunal. In Kifayotullah Haji Gulam Rasool
versus Bilkish Ismail Mehsanía (AIR 2000 Bom 424), It was held that there is
an automatic termination of proceedings when the final award is passed. In
this case, no final award was passed by the arbitrator. The parties also had
not made any joint request for the termination proceedings. There was also
no order passed by the tribunal as per Section 32(2). The court accordingly
held that the arbitration proceedings could not be said to have come to an
end.

Termination by the Tribunal

An order for termination of proceedings has to be passed by the tribunal in

the following cases.

1. When the claimant withdraws his claim, but an order will not be passed
if the respondent objects and has a legitimate interest in obtaining a
final settlement of the dispute
2. When the parties agree to the termination
3. When the continuation of proceedings has become unnecessary or
impossible

Tribunal when functus officio: The mandate and authority of the tribunal
come to an end with the termination of proceedings, except in the following
case.

1. When the proceedings under Section 33 have been imitated:

a) For correction of errors

b) For interpretation of award
c) For making an additional award
 2. When proceedings for setting aside an award under section 34(1) have
been adjourned by the court to enable the arbitral tribunal to take
action to eliminate the grounds for setting aside the award.

Incapacity of a Party [Section 34(2)(a)(i))

If a party to an arbitration is not capable of looking after his own interests,

and he is not represented by a person who can protect his interests, the
award will not be binding on him and may be set aside on his application.
Example: If a minor or a person with an unsound mind is not capable of
binding himself by a contract, then an award does not bind him. In order to
protect the interests of such a party, Section 9 of the Act enables him to
apply to the court for the appointment of a guardian for the purpose of
arbitral proceedings.

Invalidity of Agreement [Section 34(2)(a)(iii)]

If the arbitration agreement is invalid, then the award given on the basis of
such an agreement would also be invalid and can be set aside. The plea
about the invalidity of the arbitration agreement may be raised before the
arbitration tribunal itself to the content that it lacks the jurisdiction to
arbitrate. There is no jurisdiction to arbitrate, if the arbitration agreement is
either invalid or non-existent. If the plea is accepted by the tribunal, the
other party feeling aggrieved by that order may file an appeal against that
order under Section 37(2)(a) of the Act. On the other hand, if the plea is
rejected by the arbitral tribunal, the party contending about invalidating the
arbitration agreement will have to wait until the award is made by the
arbitral tribunal. Once the award is made, the party may then make an
application under Section 16(6) read with Section 34 of the Act before the
court for setting aside the arbitral award.

Notice Not Given to the Party [Section 34(2)(a)(iii)]

It permits challenge to an award on the ground that the party was:

 Not given proper notice of the appointment of an arbitrator

 Not given proper notice of the arbitral proceedings

 Unable to present its case

Award beyond the Scope of Reference [Section 34(2)(a)(iv))

The reference to a dispute under an agreement defines the limits of the
authority and jurisdiction of the arbitrator. The arbitral tribunal is bound by
the terms of the agreement and cannot adjudicate a matter beyond the
agreement itself. A decision against the terms of the contract may be said to
be outside the submission. Hence, if any matter is decided in conscious
disregard or against the terms of the contract, it may be said that to be a
matter beyond the scope of submission

Illegality in the Composition of the Tribunal or in Arbitral Procedure

[Section 34(2)(a)(v)]

An application under Section 34 for setting aside an award can be made on

the following grounds.

 The composition of the tribunal was not in accordance with the

agreement
 The procedure agreed to by parties was not followed in the conduct of
proceedings.
 In the absence of agreements as to procedure, the procedure
prescribed by the Act was not followed.

Non-speaking award: Section 31(3) provides that an arbitral award shall

state the reasons upon which It is based, unless the parties have agreed that
no reasons are to be given or the award is on agreed terms.

In Food Corporation of India versus Great Eastern Shipping Co Ltd ((1988) 3

SCR 366], it was held that no objection could be taken to an award merely on
the ground that no reasons were stated when the arbitration clause did not
contain any requirement to that effect.

In MK Shah Engineers and Contractors versus State of MP ((1999) 2 SCC

594), it was stated that an arbitrator award is not vitiated merely because
the arbitrator has not given an item-wise award and has chosen to give a
lump sum award. A lump sum award is not a bad award. An award need not
formally express the decision of the arbitrator on each matter of difference,
nor it is necessary for the award to be a speaking one. It will be presumed
that the award disposes of finally all matters in difference.

Dispute Not Arbitrable [Section 34(2)(b)(1)]

All matters in a dispute not being of criminal nature may be referred to

arbitration. For example, matters of public right cannot be decided by the
arbitrator. A judgement in probate proceedings is not merely inter parties but
a judgement in rem. Proceedings for winding up of a company under the
Companies Act cannot be referred to arbitration.

The Supreme Court in Uttar Pradesh Rajkiya Nirman Nigam Ltd versus indure
(P) Ltd [AIR (1996) 2 SCC 6671, held that the arbitrability of a claim depends
on the construction of a clause in the contract, and on this point the finding
of the arbitrator is not conclusive, and that ultimately it is the court that
decides the controversy.

Section 16 of the 1996 Act empowers the arbitrator to decide such

questions. The decision of the arbitrator in this respect is appealable. So,
ultimately, the matter goes for the decision of the court.

Public Policy [Section 34(2)(b)(il)]

It provides that an application for setting aside an arbitral award can be

made if the arbitral award is in conflict with public policy. The award is said to
be in conflict with public policy it

a) was induced or affected by fraud or corruption or in violation of Section

75 (Confidentiality) or Section 81 (Admissibility of Evidence Conciliation
Proceedings in Other Proceedings)
b) Is in contravention with the fundamental policy of indian law.
c) Is in conflict with the most basic notions of morality and justice.

Patent illegality [Section 34(2A)]

Section 34(2A) provides that an award in an arbitration exclusively between

Indian parties can be set aside if it is vitiated by patent illegality appearing
on the face of the award However, it has been clarified that an award shall
not be set aside merely on the ground of erroneous application of law or by
re-appreciation of evidence.

Finality of Awards [Section 35]

Section 35 of the Act provides that an arbitral award shall be final and
binding on the parties and persons claiming under them respectively. To give
finality to the award, the Section provides:

1. The time aspect

 2. The legal proceedings aspect, specifying when the award becomes
final

Where the time provided for preferring an appeal to set aside the arbitral
award as per Section 34 has expired, the award shall become final at the
date at which the time for preferring an application to the court expires.

Where the application for setting aside the award is rejected after
consideration by the court, the award shall become final at the date when
the court rejects the application for setting aside the award.

Enforcement of Arbitral Award [Section 36(1)]

Section 36(1) says that an award is a decree in itself and is directly

enforceable as such. By virtue of Section 34(1), recourse to the court against
an arbitral award cannot be made beyond the prescribed period. It shall be
enforced in accordance with the provision of the Civil Procedure Code in the
same manner as if it were a decree of the court.

In Bhal Hospital Trust versus Parvinder Singh (AIR 2002 Del 311], it was held
that an award does not have the effect of res judicata in respect of persons
who were not parties to the arbitration.

No automatic stay of award: An award would not be stayed automatically

by merely filing an application for setting aside the award under Section 34.
Therefore, there has to be a specific order from the court staying the
execution of the award on an application made for the said purpose by one
of the parties.

The 2021 Amendment Act provides for automatic stay on the enforcement of
an arbitral award where It is prima facie made out that:

1. the arbitration agreement or contract is the basis of the award.

2. The making of the award was induced or affected by fraud or
corruption.

Retrospective effect: The amendment to Section 36(3) will have a

retrospective effect and apply to all cases arising out of or in relation to
proceedings, irrespective of whether the arbitral or court proceedings began
prior to or after the commencement of the 2015 amendment

Appeals [Section 37]

Section 37 of the 1996 Act provides the scope of appeal from the order of the
court or tribunal.

Appeal against interim measures and setting aside (Section 37(1)]:

An appeal lies under this sub- section against an order of the court granting
or refusing to grant any measure under Section 9 and also against setting
aside or refusing to set aside an award.

Appeals against order of the court (Section 37(1)): The following

orders of the court under the Arbitration Act are appealable. An order under:

1. Section 9 granting or refusing to grant interim measures of protection

2. Section 34 setting aside or refusing to set aside an award

Arbitration Council of India

The Arbitration and Conciliation Act, 1996, was amended in 2015 by the
Arbitration and Conciliation Act. 2015. This was done to make the arbitration
process more user-friendly, cost-effective, and ensure speedy disposal and
neutrality of arbitrators. To give a boost to institutional arbitration and
eliminate many practical difficulties in the applicability of the Arbitration and
Conciliation Act as amended in 2015, the government of India again
amended the Act in 2019. In the 2019 amendment, certain provisions were
included in the Act and it was enforced on 30 August 2019. The 2019
Amendment Act aims at encouraging and streamlining institutional
arbitration by establishing an independent body and promoting ADR in India.
Part 1A of this Act contains detailed domestic and international arbitration
guidelines and proposes setting up the Arbitration Council of India to oversee
conciliation proceedings in the country.

The Arbitration Council of India is a body set up with perpetual succession, a

common seal, and with the same ability to acquire, hold, and dispose of both
movable and Immovable property as specified in the Arbitration and
Conciliation Act, 1996. The Council can enter into contracts in its own name.
It can also sue and be sued. The head office of the Council is in Delhi, if
required, the Council can also set up offices at other places in India with the
approval of the Central government.

Establishment of the Arbitration Council of India

As per Section 43B of the Arbitration and Conciliation Act, 1996, the Central
government has the power to establish the Arbitration Council of India for
performing the duties and functions as prescribed under the Arbitration and
Conciliation Act. The amendment of the Arbitration and Conciliation Act,
1996, in 2019 mandates the establishment of the Arbitration Council of India
(ACI) as a corporate body. Clause 10 of the 2019 Amendment Act proposes to
insert new sections to the Arbitration and Conciliation Act. Le., Sections 42A
to 43M for the creation of the ACI.

Functions of the Arbitration Council of India

According to the Act, the main functions of the Arbitration Council of India
are as follows.

1. Framing policies for grading arbitral institutions and accrediting

arbitrators
2. Framing policies for the establishment, operation, and maintenance of
uniform professional standards for all alternate dispute redress matters
3. Maintaining a depository of arbitral awards (judgements) made in India
and abroad

Composition of the Arbitration Council of India

As per Section 43C of the Arbitration and Conciliation Act, 1996, the
Arbitration Council of India shall be composed of the following members.

1. The chairperson of the Council shall be a person who has been a judge
of the Supreme Court, or Chief Justice/judge of any High Court, or any
other eminent person having knowledge and experience in the working
and administration of arbitration. The Central government appoints the
chairperson after consultation with the Chief Justice of India.
2. An esteemed practitioner of arbitration having excellent knowledge
and experience in bath domestic and international institutional
arbitration shall be nominated by the Central government as a member
of the Council.
3. An esteemed academician having experience in arbitration and
alternative dispute resolution laws in research and teaching shall be
appointed as a member by the Central government after consultation
with the chairperson
 4. A person who has been secretary to the Government of India in the
legal affairs department, Ministry of Law and Justice, or his
representative not below the rank of joint secretary shall be appointed
as a member or ex officio member of the Council.
5. Government secretary in the expenditure department. Ministry of
Finance, or his representatives not below the rank of joint member can
be appointed as a member or ex officio member of the Council
6. One representative of a recognised body of commerce and industry
can be selected as a part-time member on a rotational basis by the
Central governmerit.
7. The chairperson of the Arbitration Council of India and other members,
except the ex officio members, shall hold office for a term of three
years, commencing on the date from which they hold the office.
8. The chairperson shall not hold office after he has attained the age of
70 years, and a member other than an ex officio member shall not hold
office after he has reached the age of 67 years.

Chief Executive Officer of the Arbitration Council of India

1 The Council will have a Chief Executive Officer (CEO), who will be in charge
of the day-to-day operations of the Council

2. His educational qualification, appointment, and other terms and conditions

of employment shall

Be as defined by the Central government. The CEO of the Arbitration Council

of india will be responsible for carrying out activities and 3

Obligations as provided in the regulations.

1. The Council shall have a Secretariat, consisting of a number of

officers and staff as determined by the Central government.
 2. The qualifications, appointment, and other terms and conditions of
service of the staff of the Arbitration Council of india shall be
specified by the Central government.

Duties and Functions of the Arbitration Council of India

As per Section 430D of the Arbitration and Conciliation Act, 1996, the
Arbitration Council of india must take all necessary steps to promote and
encourage arbitration, mediation, conciliation, or other forms of alternative
dispute resolution, as well as, make policy arguidelines for the
establishment. Operation, and maintenance of uniform professional
standards in all aspects of arbitration. The Council may follow the following
criteria to carry out the duties and functions as imposed by this Act.

1 Establish policies controlling arbitral institution grading

2. Recognise professional institutes that provide a mandate to the arbitrator

1. Hold arbitration training, workshops, and courses in collaboration

with law firms, law universities, and arbitral institutes

2. Make recommendations to the Central government

3. Give recommendations about staff, training, and infrastructure of

the Arbitral Council of India

4. Perform such additional functions as the Central government may

determine
Resignation of the Members of the Arbitration Council of India

As given under Section 43F of the Arbitration and Conciliation Act, 1996, the
chairperson, or full-time, or part-time member of the Arbitration Council of
India may resign from office by giving a written notice to the Central
government provided that until the Central government permits him to do
so, the chairperson or the full-time member shall continue to hold office until
the expiration of three months from the date of receipt of such notice or until
a person appointed in his place enters the office. Whichever happens first.

Removal of a Member of the Arbitration Council of India

As per Section 43G(1) of the Arbitration and Conciliation Act, 1996, the
Central government has the power to remove any member from office, if he:

1 is an undischarged insolvent

2. has engaged in any paid employment during his term of office (except
part-time member).

3. has been convicted of an offence that is considered a serious offence in

the opinion of the Central government

1. Has acquired such financial or other interest likely to affect his

functions maliciously as a member.

2. Has abused his position in office to the extent that he cannot

continue being in office for public interest.
 3. Has become physically or mentally incapable of carrying out the
responsibilities as a member According to Section 43G(2) of the
Arbitration and Conciliation Act, no member shall be removed from
the office on the grounds given under clauses (d) and € of sub-
section (1) as mentioned above, until the Supreme Court conducts
an inquiry on behalf of the Central government on the matter and
reports the member to be guilty on that particular ground.

Recommendations of Srikrishna Committee

The Central government set up a high-powered committee chaired by Justice

Bellur Narayanaswamy Srikrishna. The committee gave various
recommendations to the existing Act. Many recommendations as suggested
by the committee were incorporated in the 2019 Amendment Act. But many
recommendations that were beneficial for boosting arbitration were not
incorporated in the Act. Instead, some amendments that were antithetical to
the idea of propagation of arbitration were incorporated in the Amendment
Act. Some of the recommendations made by the comittee that were not
incorporated in the Amendment Act are as follows.

1. It was suggested that model rules of procedure in domestic arbitration

be inserted by making an amendment to Section 9 of the Act. These
model rules just like other soft laws in the realm of arbitration would
help in guiding the parties to arbitration. However, this
recommendation was not inserted in the 2019 Amendment Act.

2. Section (2)(1)©, which lays down the definition of the term ‘arbitral
award, was suggested to also include ‘emergency awards interestingly,
this important amendment was recommended by both Justice MB Shah
and the Srikrishna Committee. But it, too, was overlooked.

3. In order to encourage india to become an arbitration hub in the world,

it is important to involve legal professionals, both arbitrators and
advocates. The idea was to invite foreign participation in malor Indian
 cities like Mumbai, Delhi, and Kolkata, That is why the committee
recommended

Enforcement of Certain Foreign Awards

International commercial arbitration has three elements which are as follows

There must be an arbitration agreement.

2. The arbitration is international as opposed to domestic in character

4. It relates to commercial matters

Section 2(1)(f) of the Arbitration and Concillation Act, 1996, as amended on

23 October 2015, wherein “international commercial arbitration means an
arbitration relating to a commercial dispute where at least one of the parties
is-

(1)An individual who is a national of, or habitually resident in, any

country other than india or

(1)A body corporate which is incorporated in any country other than India,
or

(i) A company or an association or a body of individuals whose

central management and control is exercised in any country
other than India; or

(iv) the Government of a foreign country”.

For an arbitration to be considered as international commercial arbitration
within the meaning of the aforementioned definition it is necessary that:

1. A dispute must arise out of a legal relationship, which is commercial,

irrespective of the fact whether such a relationship is contractual or
not, and

2. At least one of the parties to the dispute is a foreign national or

company registered in a foreign country or company management and
control of which is exercised from a foreign country or government of a
foreign country.

In a recent judgement in the matter of Amway (India) versus Ravindranath

Roo Sindhia ((2021) 8 SCC 465), the Supreme Court once again delved into
the interpretation of clauses of Section 2(1)(f) of the Act, wherein the Court
examined the nature of arbitration having regard to the nationality of the
proprietors and their business enterprise having operations in India. The
facts of the present case are succinct as such, the Respondents in the year
1998 were appointed as distributor for the Petitioner herein for undertaking
the sale, distribution, and marketing of its products in india. The Respondents
were registered as Amway Business Owner/Amway Direct Seller, in the name
of the sole proprietorship “Sindhia Enterprises: Disputes arose between the
parties and the Respondents herein preferred a petition under Section 11(6)
before the Delhi High Court seeking the appointment of an arbitrator in
terms of the Act. The Appellant herein (Respondent before the Delhi High
Court) defended the petition and the main plea taken by then was that the
said petition was not maintainable as the disputes relate to international
commercial arbitration, being covered under Section 2(1)(f)(i) of the Act, in
as much as, the Respondents herein (Petitioners before the Delhi High
Court), are husband and wife, who are both nationals of and habitual
residents in the United States of America. This plea was turned down by the
Delhi High Court holding that since the central management and control of
this association or body of individuals is exercised only in India under Section
2(1)(f)(ill), the dispute is not a dispute which is an international commercial
arbitration, and therefore, the Delhi High Court exercised its jurisdiction
under Section 11(6) of the Act to appoint an arbitrator. Thereafter, the
Appellant herein (Respondent before the Delhi High Court) preferred a
Special Leave Petition (SLP) before the Supreme Court. The Supreme Court
having placed reliance on Land T judgement (supra) as well as the
judgement in the matter of Ashok Transport Agency versus Awadhesh Kumar
[(1998) 5 SCC 567), wherein it was held that a sole proprietary concern is
equated with the proprietor of the business, reversed the judgement of the
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Delhi High Court and held that: "The argument that there is no international
flavour to the transaction between the parties has no legs to stand on.
Indeed, an analysis of Section 2(1)(f) would show that whatever the
transaction between the parties, if it happens to be entered into between
persons, at least one of whom is either a foreign national, or habitually
resident in any country other than India: or by a body corporate which is
incorporated in any country other than india, or by the Government of a
foreign country, the arbitration becomes an international commercial
arbitration notwithstanding the fact that the individual, body corporate, or
government of a foreign country referred to in Section 2(1) (1) carries on
business in india through a business office in india"
New York Convention, 1958

The Convention on the Recognition and Enforcement of Foreign Arbitral

Awards, also known as the New York Arbitration Convention' or the 'New York
Convention, is one of the key instruments in international arbitration. The
New York Convention applies to the recognition and enforcement of foreign
arbitral awards and referral by a court to arbitration.

Foreign Award

According to Section 44 of the 1996 Act, the expression foreign award means
an arbitral award on differences between persons arising out of legal
relationship, whether contractual or not considered as commercial law under
the law in force in india, So, India has confined the scope of foreign awards to
commercial contracts.

In Gas Authority of india Ltd versus Spie Copog SA (AIR 1994 Del 75), the
Delhi High Court held that for being a foreign award it could have a foreign
element or flavour involving international trade or commerce, it has also held
that Section 9 of the Act has application only in respect of domestic awards
and it has no application to the arbitration agreement.

Power of Judicial Authority to Refer Parties to Arbitration

Section 45 of the Act gives power to judicial authority to refer parties to

arbitration at the request of one of the parties or any person claiming
through such a party. The court may refer the parties to arbitration according
to the agreement entered into between them. The court may refuse
reference only if it finds that the agreement is null and void, inoperative, or
incapable of being performed.
When Foreign Award Is Binding

Section 46 of the Act of 1996 states that any foreign award, which would be
enforceable under Chapter I of Part il of this Act, shall be treated as binding
for all purposes on persons as between on whom it was made, and may
accordingly be relied on by any of those persons by way of defence, set off,
or otherwise in any legal proceedings in India, and any reference in this
Chapter to enforcing a foreign award shall be construed as including a
reference to relying on an award.

Evidence (Section 47)

Section 47 of the Act lays down the method of producing evidence and proof
for the enforcement of the foreign award.

It states that

(1)The party applying for the enforcement of a foreign award shall, at the
time of the application, produce before the court-

(a) The original award or a copy thereof, duly authenticated in the

manner required by the law of the country in which it was made:

32

Arbitration and Conciliation Act, 1996

(b)The original agreement for arbitration a duly certified copy

thereof, and
©, such evidence as may be necessary to prove that the award is a foreign
award.

(2)If the award or agreement to be produced under sub-section (1) is in a

foreign language, the party seeking to enforce the award shall produce
a translation into English certified as correct by a diplomatic or
consular agent of the country to which that party belongs or certified
as correct in such other manner as may be sufficient according to the
law in force in india

Conditions for the Enforcement or Refusal of Foreign Awards (Section 48)

Section 48 of the Act lays down the conditions required for the enforcement
of foreign awards, as well as, the ground for refusal to enforce foreign
awards, it states that-

(1)Enforcement of a foreign award may be refused, at the request of the

party against whom it is Invoked, only if that party furnishes to the
court proof that-

(a) The parties to the agreement referred to in Section 44 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 subjected it or, failing any indication thereon, under the law
of the country where the award was made; or

(b)The party against whom the award is invoked was not given
proper notice of the 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 falling within
the terms of the submission to arbitration, or it contains decisions on matters
beyond the scope of the submission to arbitration: Provided that, if the
decisions on matters submitted to arbitration can be separated from those
not so submitted, that part of the award which contains decisions on matters
submitted to arbitration may be enforced; or

(c) The composition of the arbitral authority or the arbitral procedure

was not in accordance 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 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-

(a) The subject matter of the difference is not capable of settlement

by arbitration under the law of india, or

(b)The enforcement of the award would be contrary to the public

policy of India.

(3)If an application for the setting aside or suspension of the award has
been made to a competent
Authority referred to in clause € of sub-section (1) the Court may, if it
considers it proper, adjourn the decision on the enforcement of the award
and may also, on the application of the party claiming enforcement of the
award, order the other party to give suitable security.

Enforcement of Foreign Award as Decree (Section 49)

Section 49 of the Act is borrowed from Section 6(1) of the Foreign Awards
(Recognition and Enforcement) Act, 1961. Section 49 provides that where the
court is satisfied that the foreign award is enforceable under Chapter I of Part
II, the award shall be deemed to be a decree of the court.

Arbitration and Conciliation Act, 1996

Appealable Orders (Section 50)

Section 50 of the Act provides for the provision relating to appeal with
respect to foreign award.

(1)An appeal shall lie from the order refusing to-

(a) Refer the parties to arbitration under Section 45;

(b)Enforce a foreign award under Section 48 to the court authorised

by law to hear appeals from such order. ১

(2)No second appeal shall lie from an order passed in appeal under this
Section, but nothing in this Section shall affect or take away any right
to appeal to the Supreme Court.
Geneva Convention, 1927

Foreign Awards (Section 53)

Section 53 of the Act defines ‘foreign award” in the context of the Geneva
Convention, which means an arbitral award on differences relating to matters
considered as commercial under the law in force in

India made after the 28th day of July, 1924-

(a) In pursuance of an agreement for arbitration to which the

Protocol set forth in the Second Schedule applies, and

(b)Between persons of whom one is subject to the

jurisdiction of someone of such Powers as the

Central Government, being satisfied that reciprocal provisions have been

made, may, by notification

In the Official Gazette, declare to be parties to the Convention set forth in the
Third Schedule, and

Of whom the other is subject to the jurisdiction of some other of the Powers
aforesaid, and

© in one of such territories as the Central Government, being satisfied that

reciprocal provisions have been made, may, by like notification, declare to be
territories to which the said Convention applies.
This Section further provides that for the purposes of this Chapter an award
shall not be deemed to be final if any proceedings for the purpose of
contesting the validity of the award are pending in the country in which
those were made.

Power of Judicial Authority to Refer Parties to Arbitration (Section 54)

Section 54 of the Act makes it mandatory for any judicial authority when
seized of a dispute regarding a contract made between the parties to whom
Section 53 applies to refer the parties to arbitration on an application by
either party.

It lays down that, ”Notwithstanding anything contained in Part I or in the

Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, on being
seized of a dispute regarding a contract made between persons to whom
Section 53 applies and including an arbitration agreement, whether referring
to present or future differences, which is valid under that Section and
capable of being carried into effect, shall refer the parties on the application
of either of them or any person claiming through or under him to the
decision of the arbitrators and such reference shall not prejudice the
competence of the judicial authority in case the agreement or the arbitration
cannot proceed or becomes inoperative.”

When a Foreign Award is Binding (Section 55)

Section 65 of the Act provides that any foreign award, which would be
enforceable under Part II. Chapter II of the Act, shall be treated as binding for
all purposes on the persons as between whom it was made, and may
accordingly be relied on by any of those persons by way of defence, set off or
otherwise in any legal proceeding in india.

34
Arbitration and Conciliation Act, 1996

Evidence (Section 56)

Section 56 of the Act lays down the method of producing evidence and proof
for the enforcement of the foreign award.

It states that:

(1)The party applying for the enforcement of a foreign award shall, at the
time of the application, produce before the court-

(a) The original award or a copy thereof, duly authenticated in the

manner required by the law of the country in which it was made:

(b)The original agreement for arbitration or a duly certified copy

thereof, and

© such evidence as may be necessary to prove that the award is a foreign

award.

(2)If the award or agreement to be produced under sub-section (1) is in a

foreign language, the party seeking to enforce the award shall produce
a translation into English certified as correct by a diplomatic or
consular agent of the country to which that party belongs or certified
as correct in

Such other manner as may be sufficient according to the law in force in india.
Conditions for the Enforcement of Foreign Award (Section 57)

Section 57 of the Act lays down the conditions that are required to be
satisfied for the enforcement of foreign awards, Section 57(1) provides for
five conditions. These are-

(a) The award has been made in pursuance of a submission to arbitration

which is valid under the law applicable thereto:

(b)The subject matter of the award is capable of settlement by arbitration

under the law of India:

© the award has been made by the arbitral tribunal provided for in the
submission to arbitration or constituted in the manner agreed upon by the
parties and in conformity with the law governing the arbitration procedure,

(c) The award has become final in the country in which it has been made,
in the sense that it will not be considered as such if it is open to
oppositeion or appeal or if it is proved that any proceedings for the
purpose of contesting the validity of the award are pending

€ the enforcement of the award is not contrary to public policy or the law of
India.

Grounds for Refusal to Enforce Foreign Awards

Section 57(2) provides for the following grounds or conditions for refusal to
enforce foreign awards.

These are-
 (a) The award has been annulled in the country in which it was made:

(b)The party against whom it is sought to use the award was not given
notice of the arbitration proceedings in sufficient time to enable him to
present his case; or that, being under a legal Incapacity, he was not
properly represented,

© the award does not deal with differences contemplated by or falling within
the terms of the submission to arbitration or that it contains decisions on
matters beyond the scope of submission

To arbitration,

Enforcement of Foreign Award as Decree (Section 58)

Section 58 of the Act is borrowed from Section 6 of the Arbitration (Protocol

and Convention) Act, 1961. Section 58 provides that where the court is
satisfied that the foreign award is enforceable under Chapter il of Part II, the
award shall be deemed to be a decree of the court.

Appealable Order (Section 59)

Section 59 of the Act provides for the provision relating to appeal with
respect to foreign award.

(1)An appeal shall lie from the order refusing to-

(a) Refer the parties to arbitration under Section 45:

 (b)Enforce a foreign award under Section 48 to the court authorised
by law to hear appeals from such order.

(2)No second appeal shall lie from an order passed in appeal under this
Section. But nothing in this Section shall affect or take away any right
to appeal to the Supreme Court.

Conciliation

Part III of the Act deals with conciliation. Conciliation means settling of
disputes without litigation. Conciliation is a process by which a discussion
between parties is kept going through the participation of a conciliator. The
main difference between ‘arbitration’ and ‘conciliation is that in arbitration
proceedings, the award is the decision of the Arbitral Tribunal, while in case
of conciliation, the decision is that which the parties have arrived at with the
assistance of a conciliator

However, concillation can be a powerful tool for dispute resolution.

Conciliation proceedings are designed to be non-adversarial. It involves the
parties endeavouring an amicable solution in the presence of one or more
conciliators. The role of a conciliator is to facilitate dispute resolution in a
non-adversarial setting.

Conciliation Proceedings Are Directory and Not Mandatory

The pre-condition of mutual discussion is only a directory requirement and

not a mandatory one. Section 77 of the Arbitration and Conciliation Act,
1996, states that despite conciliation proceedings going on, the existence of
the same will not prevent any of the parties to exercise their rights in
accordance with the law.

In case of Saraswati Construction Co versus Cooperative Group Housing

Society (1995 (57) DLT 343: 1994 RLR 458), it was held that conciliation was
a prior requirement for invoking arbitration. Even if not complied with, the
same cannot prevent reference to arbitration because the procedure/pre-
condition has to be only taken as a directory and not a mandatory
requirement.

Application and Scope (Section 61)

This part shall apply to the conciliation of disputes arising out of a legal
relationship, whether contractual or not, and to all proceedings. This part
shall not apply where by virtue of any law for the time being in force, certain
disputes may not be submitted to conciliation.

Section 61 points out that the process of conciliation extends, in the first
place, to disputes, whether contractual or not. But disputes must arise out of
legal relationship. It means that a dispute must be such as to give one party
the right to sue and other party the liability to be sued. The process of
conciliation extends, in the second place, to all proceedings relating to it. But
Part III of the Act does not apply to such disputes as cannot be submitted to
conciliation by virtue of any law for the time being in force. It is to be noted
that there is no need for conciliation of future disputes. Either party to a
dispute can initiate the conciliation proceedings by sending a written
invitation to conciliate to the other party by briefly identifying the subject of
the dispute. The conciliation commences when the other party accepts the
invitation in writing.

Number of Conciliators (Section 63)

Section 63 fixes the number of conciliators. There shall be one conciliator.

But the parties may by their agreement provide for two or three conciliators.
Where the number of conciliators is more than one. They should, as a
general rule, act jointly. Thus, unlike in arbitration, there can be an even
number of conciliators.

Appointment of Conciliators (Section 64)

If there is one conciliator in a conciliation proceeding, the parties may agree
on the name of a sole conciliator. If there are two conciliators in a conciliation
proceeding, each party may appoint one concillator and the parties may
agree on the name of the third conciliator, who shall act as the

Presiding conciliator.

Sub-section (2) of Section 64 provides for the assistance of a suitable

institution or person in the appointment of conciliators. Either a party may
request such institution or person to recommend the names of suitable
individuals to act as conciliators, or the parties may agree that the
appointment of one or more conciliators be made directly by such institution
or person.

Principles of Procedure

Independence and Impartiality [Section 67(1)]

The conciliator should be independent and impartial. He should assist the

parties in an independent. And impartial manner while attempting to reach
an amicable settlement of their dispute.

Fairness and Justice (Section 67(2)]

The conciliator should be guided by the principles of objectivity, fairness, and

justice. He should take into consideration, among other things, the rights and
obligations of the parties, the usages of the trade concerned, and the
circumstances surrounding the diepute, including any previous business
practices between the parties.

Confidentiality (Section 75 and 70-proviso)

The conciliator and the parties are duty-bound to keep confidential all
matters relating to the conciliation proceedings. Similarly, when a party gives
information to the conciliator on the condition that it be kept confidential, the
conciliator should not disclose that information to the other party (Section
70, proviso),

Disclosure of Information (Section 70)

When the concillator receives a piece of information about any fact relating
to the dispute from a party,

He should disclose the substance of that information to the other party. The
purpose of this provision

Is to enable the other party to present an explanation that he might consider

appropriate.

Cooperation of Parties with Conciliator (Section 71)

The parties should in good faith cooperate with the concillator. They should
submit the written

Materials, provide evidence, and attend meetings when the conciliator

requests them for this purpose.

Rules of procedure (Section 66)

The conciliator is not bound by the rules contained in the Code of Civil
Procedure, 1908, or the Indian Evidence Act, 1872. Though the conciliator is
not bound by the technical rutes of procedure, he should not ignore the
principles of natural justice.
Arbitration and Conciliation Act, 1996

Place of Meeting [Section 69(2)]

The parties have the freedom to fix by their agreement the place where
meetings with the conciliator are to be held. Where there is no such
agreement, the place of the meeting will be fixed by the conciliator after
consultation with the parties in doing so, the circumstances of the
conciliation proceedings will have to be considered,

Communication between Conciliator and Parties [Section 69(1))

The conciliator may invite the parties to meet him or may communicate with
them orally or in writing He may do so with the parties together or with each
of them separately.

Procedure of Conciliation

Commencement of Conciliation Proceedings (Section 62)

The conciliation proceedings are initiated by one party sending a written

invitation to the other party to conciliate. The invitation should identify the
subject of the dispute. Conciliation proceedings are commenced when the
other party accepts the invitation to conciliate in writing, if the other party
rejects the invitation, there will be no conciliation proceeding, if the party
inviting conciliation does not receive a reply within 30 days from the date he
sends the invitation, he may elect to treat this as rejection of the invitation to
conciliate. if he so elects, he should inform the other party in writing.

Submission of Statements to Conciliator (Section 65)

The conciliator may request each party to submit to him a brief written
statement. The statement should describe the general nature of the dispute
and the points at issue. Each party should send a copy of such statement to
the other party. The concillator may require each party to submit to him a
written statement of his position and the facts and grounds in its support. It
may be supplemented by appropriate documents and evidence. The party
should send a copy of such statements, documents,

And evidence to the other party.

Conduct of Conciliation Proceedings [Section 69(1) and 67(3)]

The conciliator may invite the parties to meet him. He may communicate
with the parties orally or in

Writing. He may meet or communicate with the parties together or

separately [Section 69(1)), in the

Conduct of conciliation proceedings, the concillator has some freedom. He

may conduct them in such

A manner as he may consider appropriate. But he should take into account

the circumstances of the

Case, the express wishes of the parties, a party’s request to be heard orally,
and the need for speedy Settlement of the dispute (Section 67(3)

Administrative Assistance (Section 68)

Section 68 facilitates administrative assistance for the conduct of conciliation

proceedings. The parties and the conciliator may seek administrative
assistance from a suitable institution or person with the consent of the
parties concerned.

Settlement

Settlement of Dispute (Section 67(4), 72 and 73)

The role of the conciliator is to assist the parties to reach an amicable

settlement of a dispute. He may at any stage of the conciliation proceedings
make proposals for the settlement of the dispute Such proposals need not be
in writing or accompanied by a statement of reasons [Section 67(4)). Each

38

Arbitration and Conciliation Act, 1996

Party may, on his own initiative or at the invitation of the conciliator, submit
to the conciliator the suggestions for the settlement of the dispute (Section
72).

When it appears to the conciliator that there exists elements of a settlement

likely to be accepted by the parties, he shall formulate the terms of a
possible settlement and submit them to the parties for their observations.
After receiving the observations of the parties, the conciliator may
reformulate the terms of the possible settlement in light of such observations
[Section 73(1)]. If the parties reach an agreement on the settlement of a
dispute, a written settlement agreement will be drawn up and signed by the
parties.

If the parties request, the conciliator draws up or assists the parties in

drawing up the settlement agreements [Section 73(2)). When the parties
have signed the settlement agreement, it becomes final and binding on the
parties and persons claiming under them [Section 73(3)]. The conciliator
shall authenticate the settlement agreement and furnish its copy to each of
the parties [Section 73(4)),

Status and Effect of the Settlement Agreement (Section 74)

Section 74 provides that the settlement agreement shall have the same
status and effect as an arbitral award on agreed terms under Section 30. This
means that it shall be treated as a decree of the court and shall be
enforceable.

Restrictions on the Role of a Conciliator (Section 80)

Section 80 places two restrictions on the role of a concillator in the conduct

of conciliation proceedings.

Clause (a) of Section 80 prohibits the conciliator to act as an arbitrator, or as

a representative, or

Counsel of a party in any arbitral or judicial proceeding in respect of a

dispute which is the subject of the conciliation proceedings.

Clause (b) of Section 80 prohibits the parties to produce the conciliator as a

witness in any arbitral or Judicial proceedings.

The Supreme court In Mysore Cements Ltd versus Svedala Barmac Ltd
((2003) 10 SCC 376] held that the primary role of a conciliator is to assist the
parties in an independent and impartial manner and enable them to reach an
amicable settlement of disputes, unlike an arbitrator who has an adjudicatory
function. In achieving this role, the Act provides for the following duties of
the concillator.
 (a) To be guided by the principles of objectivity, fairness and justice, giving
consideration to the rights and obligations of the parties, the usage of
the trade concerned, and circumstances surrounding the disputes,
including any previous business practices between the parties

(b)To make proposals for a settlement of the dispute at any stage of

proceedings

© To conduct the proceedings in a manner it considers appropriate and take

into account the circumstances of the case, and wishes of the parties,
including any request by a party to hear oral statements, and the need for a
speedy settlement of the disputes

Termination of Conciliation Proceedings (Section 76)

Section 76 lays down four ways to terminate conciliation proceedings. These

are as follows.

The conciliation proceedings terminate with the signing of the settlement

agreement by the parties. Here, the date of termination of conciliation
proceedings is the date of the settlement agreement [Section 76(a)].

The conciliation proceedings stand terminated when the conciliator declares

in writing that further efforts at conciliation are no longer justified. Here, the
date of termination of conciliation proceedings is the date of the declaration
(Section 76(b))

The conciliation proceedings are terminated by a written declaration of the

parties addressed to the concillator to the effect that the conciliation
proceedings are terminated. Here, the date of termination of conciliation
proceedings is the date of the declaration (Section 76©).
The conciliation proceedings are terminated when a party declares in writing
to the other party and the conciliator that the conciliation proceedings are
terminated. Here, the date of termination of conciliation proceedings is the
date of the declaration (Section 76(d))

Resorting to Arbitral or Judicial Proceedings (Section 77)

As a general rule, the parties cannot initiate arbitral or judicial proceedings

during the conciliation proceedings in respect of a dispute, which is the
subject matter of the conciliation proceedings. But in exceptional cases, a
party may initiate arbitral or judicial proceedings if in his opinion such
proceedings are necessary for preserving his rights

Costs (Section 78)

Costs mean reasonable costs relating to the following

The fee and expenses of the conciliator and witnesses requested by the
conciliator with the consent of the parties

Any expert advice requested by the conciliator with the consent of the
parties

Any assistance provided under Section 64(2)(b) and Section 68

Any other expenses incurred in connection with the conciliation proceedings

and the settlement agreement [Section 78(2))
It is the conciliator who fixes the costs of the conciliation proceedings upon
their termination and gives written notice of it to the parties (Section 78(1)).
The costs are borne by the parties in equal shares [Section 78(3)].

Deposits (Section 79)

The conciliator may estimate the costs likely to be incurred and direct each
party to deposit it in advance in an equal amount. During the conciliation
proceedings, the conciliator may demand supplementary deposits from each
party. If the required deposits are not paid in full by both parties within 30
days, the conciliator may either suspend the proceedings or terminate the
proceedings by making a written declaration to the parties. The termination
of proceedings becomes effective from the date of declaration. Upon
termination of the proceedings, the conciliator shall render to the parties.
Accounts of deposits received and return the unexpected balance to them.

If there Is No Prescribed Time Limit for Conciliation Proceedings in Agreement

This issue was resolved by the Delhi High Court in the case of Ravindra
Kumar Verma versus BPTP Ltd

(2014) SCC OnLine Del 6602: [(2015) 147 DRJ 175), wherein no timeframe
was mentioned with respect

To the completion of mutual discussion/conciliation proceedings. The court

held that the parties must

Resort to mutual discussions within a time-bound reasonable period. In case,

mutual discussions of

Conciliation proceedings do not successfully conclude within the time-bound

reasonable period of say
Three months, thereafter arbitration proceedings for the determination of the
rights can be continued.

“I note that I am fixing a period in this case because contractually no period

has been prescribed for

Mutual discussion/conciliation procedure.” With the observation of the Court,

this can be inferred that

The concillation procedure requires a timeframe within the legislative ambit

and in the agreement as well.