Arbitration & Conciliation Act, 1996 – Jurisprudence, Interpretation & General Laws Important Questions

Arbitration & Conciliation Act, 1996 – Jurisprudence, Interpretation & General Laws Important Questions

Question 1.
State the various alternate dispute resolution mechanism. [Pec 2013 (3 Marks)]
Answer:
Alternative Dispute Resolution (ADR) refers to any means of settling disputes outside the courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation, and arbitration. As burgeoning court queues, rising costs of litigation, and time delays continue to plague litigants, more states have begun experimenting with ADR programs. Some of these programs are voluntary; others are mandatory.

While the two most common forms of ADR are arbitration and mediation, negotiation is almost always attempted first to resolve a dispute. It is the pre-eminent mode of dispute resolution. Negotiation allows the parties to meet in order to settle a dispute. The main advantage of this form of dispute settlement is that it allows the parties themselves to control the process and the solution.

In India, we have a system of ‘Panchayat’ where senior people from villages would resolve disputes between people. Similarly, in Arbitration two parties in dispute appoint a third person to solve their dispute. Thus, dispute gets solved out of Court and hence it is known as Alternate Dispute Resolution (ADR).

The International Centre for Alternative Dispute Resolution (ICADR) is a unique center in this part of the world that makes provision for promoting teaching and research in the field of ADR as also for offering ADR services to parties only in India but also to parties all over the world. The ICADR is a Society registered under Societies Registration Act, 1860; it is an independent non-profit making organization. It maintains panels of independent experts in the implementation of ADR processes.

Areas in which ADR works: Almost all disputes including commercial, civil labor, and family disputes, in respect of which the parties are entitled to conclude a settlement, can be settled by an ADR procedure. ADR techniques have been proven to work in the business environment, especially in respect of disputes. Involving joint ventures, construction projects, partnership differences, intellectual property, personal injury, product liability, professional liability, real estate, securities, contract interpretation, and performance and insurance coverage.

Conciliation: If the dispute between parties is settled by means of mediation or in a friendly manner and through use of goodwill, then it is known as conciliation. It should be noted that a settlement agreement reached by the parties as a result of conciliation proceedings shall have the same status and effect as an arbitral award.

The conciliation procedure can be applied to the dispute which arises out of a legal relationship, whether contractual or not.

Question 2.
What is meant by Alternative Dispute Resolution (ADR)? Which are the areas in which ADR works? [June 2016 (5 Marks)]
Answer:
Alternative Dispute Resolution (ADR) refers to any means of settling disputes outside the courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation, and arbitration. As burgeoning court queues, rising costs of litigation, and time delays continue to plague litigants, more states have begun experimenting with ADR programs. Some of these programs are voluntary; others are mandatory.

While the two most common forms of ADR are arbitration and mediation, negotiation is almost always attempted first to resolve a dispute. It is the pre-eminent mode of dispute resolution. Negotiation allows the parties to meet in order to settle a dispute. The main advantage of this form of dispute settlement is that it allows the parties themselves to control the process and the solution.

In India, we have a system of ‘Panchayat’ where senior people from villages would resolve disputes between people. Similarly, in Arbitration two parties in dispute appoint a third person to solve their dispute. Thus, dispute gets solved out of Court and hence it is known as Alternate Dispute Resolution (ADR).

The International Centre for Alternative Dispute Resolution (ICADR) is a unique center in this part of the world that makes provision for promoting teaching and research in the field of ADR as also for offering ADR services to parties only in India but also to parties all over the world. The ICADR is a Society registered under Societies Registration Act, 1860; it is an independent non-profit making organization. It maintains panels of independent experts in the implementation of ADR processes.

Areas in which ADR works: Almost all disputes including commercial, civil labor, and family disputes, in respect of which the parties are entitled to conclude a settlement, can be settled by an ADR procedure. ADR techniques have been proven to work in the business environment, especially in respect of disputes. Involving joint ventures, construction projects, partnership differences, intellectual property, personal injury, product liability, professional liability, real estate, securities, contract interpretation, and performance and insurance coverage.

Question 3.
What is ad hoc arbitration? [Dec 2014 (5 Marks)]
Answer:
An ad hoc arbitration is one that is not administered by an institution and therefore, the parties are required to determine all aspects of the arbitration like the number of arbitrators, manner of their appointment, the procedure for conducting the arbitration, etc.

Ad hoc arbitration is a proceeding that is not administered by others and requires the parties to make their own arrangements for the selection of arbitrators and for designation of rules, applicable law, procedures, and administrative support, provided the parties approach the arbitration in a spirit of cooperation. Ad hoc proceedings can be more flexible, cheaper, and faster than an administered proceeding. The absence of administrative fees alone makes this a popular choice.

Question 4.
Do the Alternate Dispute Resolution (ADR) processes provide procedural flexibility of a conventional trial? Explain. [June 2017 (5 Marks)]
Answer:
Alternative Dispute Resolution (ADR) refers to any means of settling disputes outside the courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation, and arbitration. As burgeoning court queues, rising costs of litigation, and time delays continue to plague litigants, more states have begun experimenting with ADR programs. Some of these programs are voluntary; others are mandatory.

While the two most common forms of ADR are arbitration and mediation, negotiation is almost always attempted first to resolve a dispute. It is the pre-eminent mode of dispute resolution. Negotiation allows the parties to meet in order to settle a dispute. The main advantage of this form of dispute settlement is that it allows the parties themselves to control the process and the solution.

In India, we have a system of ‘Panchayat’ where senior people from villages would resolve disputes between people. Similarly, in Arbitration two parties in dispute appoint a third person to solve their dispute. Thus, dispute gets solved out of Court and hence it is known as Alternate Dispute Resolution (ADR).

The International Centre for Alternative Dispute Resolution (ICADR) is a unique center in this part of the world that makes provision for promoting teaching and research in the field of ADR as also for offering ADR services to parties only in India but also to parties all over the world. The ICADR is a Society registered under Societies Registration Act, 1860; it is an independent non-profit making organization. It maintains panels of independent experts in the implementation of ADR processes.

Areas in which ADR works: Almost all disputes including commercial, civil labor, and family disputes, in respect of which the parties are entitled to conclude a settlement, can be settled by an ADR procedure. ADR techniques have been proven to work in the business environment, especially in respect of disputes. Involving joint ventures, construction projects, partnership differences, intellectual property, personal injury, product liability, professional liability, real estate, securities, contract interpretation, and performance and insurance coverage.

Question 5.
Explain: International Commercial Arbitration [Dec 2009 (4 Marks)]
Answer:
As per Section 2(f), international commercial arbitration means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is:

  • An individual who is national of, or habitually resident in, any country other than India; or
  • A body corporate which is incorporated in any country other than India; or
  • A company or an association or a body of individuals whose central management and control is exercised in any country other than India; or
  • The Government of a foreign country.

Question 6.
Ram and Shyam entered into an agreement to refer a dispute relating to the genuineness of a will to an arbitral tribunal. In spite of this, Shyam commenced proceedings relating to this dispute in the district court’s competent jurisdiction. Ram filed an application for a stay of legal proceedings under the Arbitration & Conciliation Act, 1996. Will Ram succeed? Explain. [June 2011 (5 Marks)]
Answer:
Ram will not succeed. Section 2(3) of the Arbitration & Conciliation Act, 1996 provides that certain disputes relating to testamentary matters like the validity of a will cannot be referred to the arbitration.

Where some special and specific law is enacted for the purpose of determination of a matter, such matter cannot be referred to arbitration. The question of the genuineness of a will can only be decided in accordance with law dealing with probate as given in the India Succession Act.

Hence, such a dispute cannot be referred to arbitration. In this view of the matter, the arbitration agreement, the Court cannot grant the remedy of a stay of legal proceeding to Ram.

Question 7.
How has the ‘Court’ been defined under the Arbitration and Conciliation Act, 1996? [Dec. 2014 (5 Marks)]
Answer:
Court means:
1. The Principal Civil Court of original jurisdiction in a district.

It includes the High Court in the exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit. However, the term court does not include any civil court of a grade in¬ferior to such principal Civil Court, or any Court of Small Causes.

2. In the case of international commercial arbitration, the High Court in the exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit.

In other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court.

Question 8.
Define ‘legal representative’ under the Arbitration and Conciliation Act, 1996. [Dec. 2014 (3 Marks)]
Answer:
Legal Representative [Section 2( 1 )(g)]: Definition of “legal representative” given under Section 2(1 )(g) has been taken verbatim from the definition in Section 2(11) of the Code of Civil Procedure.

Following are the persons who are legal representatives:

  • A person who in law represents the estate of a deceased person.
  • A person who intermeddles with the estate of the deceased.
  • A person on whom the estate of a deceased person devolves on the death of the party acting in a representative capacity.

Following persons are generally included in the list of legal representatives:

  • Executors and administrators properly appointed.
  • A person who has taken on himself duties and responsibilities which belong to the executor or administrator though only in respect of a part of the estate.
  • Heirs-at-law whether they take succession or by survivorship.
  • Revisions when the action has been brought by or against the widow representing her husband’s estate.
  • Universal legatee.

Following is the list of those who do not come within the meaning of legal representative, so far as the Act is concerned:

  • An assignee from a deceased zamindar or to whom the holding reverts to the death of a tenant.
  • A trespasser or a person who claims adversely the estate of the deceased.
  • A new trustee appointed or elected on the death of the deceased trustee.

Question 9.
What is an ‘arbitral award’ under the Arbitration & Conciliation Act, 1996? Explain. [June 2015 (5 Marks)]
Or
Explain the form and contents of an arbitral award. [Dec. 2013 (4 Marks)].
Or
What is meant by ‘Arbitral Award’? State the ingredients of an arbitral award j under the Arbitration and Conciliation Act, 1996. [Dec. 2018 (8 Marks)]
Answer:
Arbitral Award [Section 2(1 )(c)]: Arbitral award includes an interim award. The definition does not give much detail of the ingredients of an arbitral award. However, taking into account other provisions of the Act, the following features are noticed:

Following are the essentials of arbitral award:

  • Writing: An arbitral award shall be made in writing.
  • Signing: An arbitral award shall be signed by the members of the arbitral tribunal. In arbitral proceedings with more than one arbitrator, the signatures of the majority members shall be sufficient so long as the reason for any omitted signature is stated.
  • Reasons: The arbitral award shall state the reasons upon which it is based, unless:
    (a) The parties have agreed that no reasons are to be given, or
    (b) The award is an arbitral award on agreed terms u/s 30.
  • Date & place of award: The arbitral award shall state its date and the place of arbitration and the award shall be deemed to have been made at that place.
  • Delivery of copy: After the arbitral award is made, a signed copy shall be delivered to each party.
  • Interim arbitral award: At any time during the arbitral proceedings, the arbitral tribunal may make an interim arbitral award on any matter with respect to which it may make a final arbitral award.
  • Interest: If an arbitral award is for the payment of money, the arbitral tribunal may include interest in its award at such a rate as it deems reasonable. A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of 2% higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.
  • Interest: If an arbitral award is for the payment of money, the arbitral tribunal may include interest in its award at such a rate as it deems reasonable. A sum directed to be paid by an arbitral award may carry interest up to 18% p.a. from the date of the award to the date of payment.
  • Costs of arbitration: Unless otherwise agreed by the parties the costs of arbitration shall be fixed by the arbitral tribunal.

Question 10.
What is meant by ‘arbitration agreement’ under the Arbitration & Conciliation Act, 1996? Should the arbitration agreement be in writing and whether the jurisdiction of civil court is barred? [Dec. 2015, Dec. 2019 (5 Marks)]
Answer:
As per Section 7, arbitration agreement means an agreement by the parties submits to arbitration all or certain disputes which have arisen or which may arise between them in respect of defined legal relationship whether contractual or not.

An arbitration agreement must be in writing.

Jurisdiction of Civil Court is not barred due to arbitration agreement. However, Section 8(1) provides that if a party approaches Court despite the arbitration agreement, the other party can raise an objection to the Court along with a certified copy of the arbitration agreement. If Court is satisfied that the dispute is subject to arbitration it must refuse to admit the case and refer it back for arbitration.

Further, as per Section 8(3), an application has been made as above and that the issue is pending before the Judicial Authority, arbitration may be commenced or continued and arbitral award is made.

Question 11.
Explain in brief the ‘International Commercial Arbitration under the Arbitration & Conciliation Act, 1996. [Dec 2018 (4 Marks)]
Answer:
As per Section 2(f), international commercial arbitration means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is:

  • An individual who is national of, or habitually resident in, any country other than India; or
  • A body corporate which is incorporated in any country other than India; or
  • A company or an association or a body of individuals whose central management and control is exercised in any country other than India; or
  • The Government of a foreign country.

Question 12.
Explain the basic features of the Arbitral Award under the Arbitration & Conciliation Act, 1996. [June 2019 (4 Marks)]
Answer:
Arbitral Award [Section 2(1 )(c)]: Arbitral award includes an interim award. The definition does not give much detail of the ingredients of an arbitral award. However, taking into account other provisions of the Act, the following features are noticed:

Following are the essentials of arbitral award:

  • Writing: An arbitral award shall be made in writing.
  • Signing: An arbitral award shall be signed by the members of the arbitral tribunal. In arbitral proceedings with more than one arbitrator, the signatures of the majority members shall be sufficient so long as the reason for any omitted signature is stated.
  • Reasons: The arbitral award shall state the reasons upon which it is based, unless:
    (a) The parties have agreed that no reasons are to be given, or
    (b) The award is an arbitral award on agreed terms u/s 30.
  • Date & place of award: The arbitral award shall state its date and the place of arbitration and the award shall be deemed to have been made at that place.
  • Delivery of copy: After the arbitral award is made, a signed copy shall be delivered to each party.
  • Interim arbitral award: At any time during the arbitral proceedings, the arbitral tribunal may make an interim arbitral award on any matter with respect to which it may make a final arbitral award.
  • Interest: If an arbitral award is for the payment of money, the arbitral tribunal may include interest in its award at such a rate as it deems reasonable. A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of 2% higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.
  • Interest: If an arbitral award is for the payment of money, the arbitral tribunal may include interest in its award at such a rate as it deems reasonable. A sum directed to be paid by an arbitral award may carry interest up to 18% p.a. from the date of the award to the date of payment.
  • Costs of arbitration: Unless otherwise agreed by the parties the costs of arbitration shall be fixed by the arbitral tribunal.

Question 13
Explain the provisions for obtaining interim relief from Court, when there exists arbitration agreement among parties. [June 2019 (4 Marks)]
Answer:
1. Section 9 of the Arbitration and Conciliation Act, 1996 deals with interim measures, etc. by the Court.

2. Section 9(1) states that a party may apply to a court:

  1. for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
  2. For an interim measure of protection in respect of any of the following matters, namely:
    a. the preservation, interim custody, or sale of any goods which are the subject matter of the arbitration agreement;
    b. securing the amount in dispute in the arbitration;
    c. the detention, preservation, or inspection of any property or thing which is the subject matter of the dispute in arbitration;
    d. interim injunction or the appointment of a receiver;
    e. such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.
  3. Section 9(2) states that where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection under sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine.

3. Section 9(3) states that once the arbitral tribunal has been constituted, the Court shall not entertain an application unless the Court finds that circumstances exist which may not render the remedy.

Question 14.
Discuss the provisions regarding the appointment of arbitrators under the Arbitration and Conciliation Act, 1996. [June 2017 (7 Marks)]
Answer:
A person who is appointed to determine differences and disputes between two or more parties by their mutual consent is called an arbitrator. The parties may appoint whomsoever they please to arbitrate on their dispute. However, his appointment is not complete till he has accepted the reference.

Number of Arbitrators [Section 10]: The parties are free to determine the number of arbitrators provided that such number shall not be an even number. Thus, the Arbitral Tribunal can consist of 1, 3, 5, 7, or any number of persons provided that a number of arbitrators must be an odd number.

If the parties fail to make the determination, the arbitral tribunal shall consist of a sole arbitrator (i.e. only one).

Appointment of Arbitrators [Section 11]:

  1. A person of any nationality may be an arbitrator unless otherwise agreed by the parties.
  2. The parties are free to agree on a procedure for appointing the arbitrator or arbitrator.
  3. If they are unable to agree in arbitration with three arbitrators each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
  4. If a party fails to appoint an arbitrator within 30 days or if two appointed arbitrators fail to agree on the third arbitrator within 30 days, the party can request the Supreme Court or as the case may be, the High Court or the person or institution designated by that Court for the appointment of the arbitrator.
  5. The Supreme Court or High Court can authorize any person or institution to appoint an arbitrator e.g. India Council for Arbitration or Indian Society of Arbitrators etc.
  6. The decision on the appointment of arbitrators by the Supreme Court or High Court or the person or institution designated by that Court is final.
  7. The Supreme Court or High Court or the person or institution designated by that Court would have due regard to qualifications of arbitrators agreed between the parties, and considerations likely to secure an independent and impartial arbitrator.

Question 15.
Discuss in brief the provisions for challenging the arbitrator under the Arbitration & Conciliation Act, 1996. [Dec 2018 (8 Marks)]
Answer:
Grounds for Challenge for appointment of Arbitrator [Section 12]: The person intended to be appointed as an arbitrator must be independent and impartial.

When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances:
(a) Such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the sub¬ject-matter in dispute, whether financial, business, professional or another kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and
(b) Which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of 12 months.

Further, an arbitrator, from the time of his appointment and throughout the arbitral proceedings shall, without delay, disclose to the parties in writing any circumstances likely to affect independence or impartiality.

An appointment of an arbitrator may be challenged only if:

  • Circumstances exist that give rise to justifiable doubts as to his independence or impartiality.
  • He does not possess the qualification agreed to by the parties.

Challenge Procedure [Section 13]:

  • The parties are free to agree on a procedure for challenging an arbitrator.
  • If parties are agreed upon a procedure and if the challenge fails, then the arbitral tribunal shall continue the arbitral proceeding and make an arbitral award.
  • Where an arbitral award is made, the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with Section 34.
  • Sometimes parties may fail to agree upon the challenge procedure. Also, the party is entitled to challenge an arbitrator, within 15 days after becoming aware of the constitution of the arbitral tribunal.

Question 16.
Write a short note on the Appointment of an expert by an arbitral tribunal under the Arbitration & Conciliation Act, 1996 [Dec. 2010 (4 Marks)]
Answer:
Appointment of expert [Section 26]:

  1. The arbitral tribunal may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal.
  2. The arbitral tribunal may require a party to give relevant information or to produce, or to provide access to, any relevant documents, goods, or other property for inspection of an expert.
  3. If any party requests, the expert may participate in oral hearings.
  4. On request of any party, the expert shall make available all documents, goods, or other property in his possession.

Question 17.
Making of the additional award by the arbitral tribunal. Comment. [Dec. 2012 (4 Marks)]
Answer:
Additional Award: A party may also request the arbitral tribunal to make an additional award regarding any claim presented in the proceeding but the same is omitted from the arbitral award.

If the arbitral tribunal considers the above request and if it thinks fit, it may give an additional award within 60 days from the receipt of the request.

Question 18.
Explain the provisions for obtaining interim relief from Court, when there exists arbitration agreement among parties. [June 2019 (4 Marks)]
Answer:
Interim measures by Court [Section 9]: A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a Court:
1. For the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or

2. For an interim measure of protection in respect of any of the following matters, namely:
(a) the preservation, interim custody, or sale of any goods which are the subject matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the Court to be just and convenient,
and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

Question 19.
Discuss the provision relating to correction and interpretation of an award under the Arbitration and Conciliation Act, 1996.
Answer:
Correction and interpretation of award & additional award [Section 33]: After issuing the arbitral award, if any party feels that there is a mistake in the award or they require the interpretation on any matter, they may within 30 days from the receipt of arbitral award:

  • Apply to the arbitral tribunal to correct any computation error, any clerical or typographical error, or any other errors of similar nature by giving notice to another party.
  • Apply to the arbitral tribunal to give an interpretation of a specific point or part of the award.
    If the arbitral tribunal thinks to fit it shall correct the award or give the interpretation within 30 days from the receipt of the request.

The arbitral tribunal may correct any above type of error within 30 days from the date of the arbitral award.

Question 20.
Write a short note on Setting aside an arbitral award [June 2010 (4 Marks)]
Or
Under the circumstances, an arbitral award may be set aside by the Court under the provisions of the Arbitration and Conciliation Act, Explain any four. [Dec 2019 (4 Marks)]
Answer:
Application for setting aside arbitral award [Section 34]: When the party making the application furnishes proof to the Court regarding the following circumstances, Court may set aside the award:

  • A party was under some incapacity.
  • An arbitration agreement is not valid under the law to which the parties have subjected it.
  • The party making the application was not given proper notice.
  • The award is not in accordance with the term of submission.
  • The arbitral tribunal was not properly constituted.
  • The arbitral procedure was not in accordance with the agreement of the parties.
  • The subject matter of the dispute is not capable of settlement by arbitration.
  • The arbitral award is in conflict with the public policy of India.

An arbitral award arising out of arbitrations other than international commercial arbitrations may also be set aside by the Court if the Court finds that the award is vitiated by patent illegality appearing on the face of the award. However, an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.

The time limit for making application: An application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made u/s 33, from the date on which that request had been disposed of by the arbitral tribunal.

If the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months it may entertain the application within a further period of 30 days, but not thereafter.

On receipt of a for setting aside an arbitral award, the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

Notice to another party: An application shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

Time limit to dispose of application: An application under this section shall be disposed of expeditiously, and in any event, within a period of 1 year from the date on which the notice is served upon the other party.

Question 21.
Anil moves an application for setting aside the arbitral award on the ground that he was not given proper notice of the arbitral proceedings and thereby not being able to present his case. He furnishes sufficient proof and pleads before the court that he received the arbitral award just 15 days back. Decide with reasons:
(i) Whether Anil will succeed in his prayer and
(ii) Whether the law of limitation will not be a bar in his case. [Dec 2010 (5 Marks)]
Or
Arun prefers an appeal for setting aside the arbitral award on the ground that he was not given proper notice of arbitral proceedings and thereby not being able to present his case. He also furnishes sufficient proof and pleads before the court that he received the arbitral award just 15 days back.
Decide with reasons:
(i) Whether Arun will succeed in his prayer; and
(ii) Whether the law of limitation will not be a bar?
[Dec. 2013(5 Marks)]
Or
Ramendra prefers an appeal for setting aside the arbitral award on the ground that he was not given proper notice of arbitral proceedings and thereby not being able to present his case. He also furnishes sufficient proof and pleads before the Court that he received the arbitral award just 10 days back. Advise with reasons:
(i) Whether Ramendra will succeed in his prayer; and
(ii) Whether the law of limitation will not be a bar? [June 2014 (5 Marks)]
Answer:
Section 34 of the Arbitration & Conciliation Act, 1996 provides various grounds on which an arbitral award may be set aside. If the party making the application was not given proper notice of the application of an arbitrator or of the arbitral proceedings then it valid ground for setting arbitral award and hence Madhav will succeed.

An application for setting aside an award should be made within 3 months from the date of receipt of an arbitral award by the party making the application. Anil has made applications within time. Hence, the law of limitation will not be a bar in his case.

Question 22.
Enumerate the grounds on which an arbitral award may be challenged before Court. [June 2012 (6 Marks), Dec 2013 (5 Marks)]
Answer:
Application for setting aside arbitral award [Section 34]: When the party making the application furnishes proof to the Court regarding the following circumstances, Court may set aside the award:

  • A party was under some incapacity.
  • An arbitration agreement is not valid under the law to which the parties have subjected it.
  • The party making the application was not given proper notice.
  • The award is not in accordance with the term of submission.
  • The arbitral tribunal was not properly constituted.
  • The arbitral procedure was not in accordance with the agreement of the parties.
  • The subject matter of the dispute is not capable of settlement by arbitration.
  • An arbitral award is in conflict with the public policy of India.

An arbitral award arising out of arbitrations other than international commercial arbitrations may also be set aside by the Court if the Court finds that the award is vitiated by patent illegality appearing on the face of the award. However, an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.

The time limit for making application: An application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made u/s 33, from the date on which that request had been disposed of by the arbitral tribunal.

If the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months it may entertain the application within a further period of 30 days, but not thereafter.

On receipt of a for setting aside an arbitral award, the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

Notice to other parties: An application shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

Time limit to dispose of application: An application under this section shall be disposed of expeditiously, and in any event, within a period of 1 year from the date on which the notice is served upon the other party.

Question 23.
What are the grounds for setting aside an arbitral award under the Arbitration & Conciliation Act, 1996? [June 2016 (5 Marks)]
Answer:
Application for setting aside arbitral award [Section 34]: When the party making the application furnishes proof to the Court regarding the following circumstances, Court may set aside the award:

  • A party was under some incapacity.
  • An arbitration agreement is not valid under the law to which the parties have subjected it.
  • The party making the application was not given proper notice.
  • The award is not in accordance with the term of submission.
  • The arbitral tribunal was not properly constituted.
  • The arbitral procedure was not in accordance with the agreement of the parties.
  • The subject matter of the dispute is not capable of settlement by arbitration.
  • The arbitral award is in conflict with the public policy of India.

An arbitral award arising out of arbitrations other than international commercial arbitrations may also be set aside by the Court if the Court finds that the award is vitiated by patent illegality appearing on the face of the award. However, an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.

The time limit for making application: An application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made u/s 33, from the date on which that request had been disposed of by the arbitral tribunal.

If the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months it may entertain the application within a further period of 30 days, but not thereafter.

On receipt of a for setting aside an arbitral award, the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

Notice to another party: An application shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

Time limit to dispose of application: An application under this section shall be disposed of expeditiously, and in any event, within a period of 1 year from the date on which the notice is served upon the other party.

Question 24.
Discuss in detail, the grounds for setting aside arbitral awards with special reference to public policy doctrine under the Arbitration & Conciliation Act, 1996. [June 2018 (8 Marks)]
Answer:
Application for setting aside arbitral award [Section 34]: When the party making the application furnishes proof to the Court regarding the following circumstances, Court may set aside the award:

  • A party was under some incapacity.
  • An arbitration agreement is not valid under the law to which the parties have subjected it.
  • The party making the application was not given proper notice.
  • The award is not in accordance with the term of submission.
  • The arbitral tribunal was not properly constituted.
  • The arbitral procedure was not in accordance with the agreement of the parties.
  • The subject matter of the dispute is not capable of settlement by arbitration.
  • The arbitral award is in conflict with the public policy of India.

An arbitral award arising out of arbitrations other than international commercial arbitrations may also be set aside by the Court if the Court finds that the award is vitiated by patent illegality appearing on the face of the award. However, an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.

The time limit for making application: An application for setting aside may not be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made u/s 33, from the date on which that request had been disposed of by the arbitral tribunal.

If the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months it may entertain the application within a further period of 30 days, but not thereafter.

On receipt of a for setting aside an arbitral award, the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

Notice to other parties: An application shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.

Time limit to dispose of application: An application under this section shall be disposed of expeditiously, and in any event, within a period of 1 year from the date on which the notice is served upon the other party.

Question 25.
Discuss briefly the grounds for opposing the ‘foreign award’ made under the Arbitration and Conciliation Act, 1996. [Dec 2018 (4 Marks)]
Answer:
Section 48 of the Arbitration & Conciliation Act, 1996 enumerates the conditions for enforcement of foreign awards and provides that the party, against whom the award is invoked, may use one or more of the following grounds for the purpose of opposing enforcement of a foreign award:
1. Incapacity of the parties/invalid agreement: 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 subjected it or, failing any indication thereon, under the law of the country where the award was made.

2. No proper notice was given to the party: 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.

3. Arbitral award contains decisions on matters beyond the scope of arbitra¬tion: 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. However, 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.

4. Composition of the arbitral authority was not proper: 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.

5. Award was set aside by a competent authority: 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.

6. Subject-matter is not capable of settlement by arbitration: The subject matter of the difference is not capable of settlement by arbitration under the law of India.

7. Contrary to the public policy of India: The enforcement of the award would be contrary to the public policy of India.

Question 26.
Distinguish between: Arbitration & Conciliation [Dec. 2012 (4 Marks)]
Answer:
Following are the main points of difference between arbitration & conciliation:

Points Arbitration Conciliation
Meaning Arbitration is an agreement by the parties to submit to arbitration all or certain dispute which have arisen or which may arise between them in respect of defined legal relationship whether contractual or not. If the dispute between parties is settled by means of mediation or in a friendly manner and through the use of goodwill, then it is known as conciliation.
Decision In arbitration, the decision is known as arbitral award and is signed by the arbitral tribunal members. While under conciliation, it is known as settlement and is signed by the parties concerned.
Number In arbitration, parties cannot appoint even a number of arbitrators. In conciliation, the number of conciliators can be even.
Appointment Arbitrators can be appointed even before the dispute arises. A conciliator is appointed only after the dispute has arisen.
Evidence & examination of witnesses An arbitrator has the right to seek evidence or call witnesses. A conciliator does not have such rights.

Question 27.
Distinguish between ‘arbitration’ and ‘conciliation’ under the Arbitration & Conciliation Act, 1996. [Dec 2014 (5 Marks)]
Answer:
Following are the main points of difference between arbitration & conciliation:

Points Arbitration Conciliation
Meaning Arbitration is an agreement by the parties to submit to arbitration all or certain dispute which have arisen or which may arise between them in respect of defined legal relationship whether contractual or not. If the dispute between parties is settled by means of mediation or in a friendly manner and through the use of goodwill, then it is known as conciliation.
Decision In arbitration, the decision is known as arbitral award and is signed by the arbitral tribunal members. While under conciliation, it is known as settlement and is signed by the parties concerned.
Number In arbitration, parties cannot appoint even a number of arbitrators. In conciliation, the number of conciliators can be even.
Appointment Arbitrators can be appointed even before the dispute arises. A conciliator is appointed only after the dispute has arisen.
Evidence & examination of witnesses An arbitrator has the right to seek evidence or call witnesses. A conciliator does not have such rights.

Question 28.
Explain briefly the terms ‘conciliation’ and ‘mediation’. [Dec 2016 (3 Marks)]
Answer:
Conciliation is the amicable settlement of the dispute between the parties, with the help of a conciliator. In conciliation, there is a ‘win-win’ situation, as both parties agree to discuss among themselves and arrive at a mutually agreed compromise.

Mediation is a structured process in which the mediator assists the disputants to reach a negotiated settlement of their differences. Mediation is usually a voluntary process that results in a signed agreement that defines the future behavior of the parties. The mediator uses a variety of skills and techniques to help the parties reach the settlement, but is not empowered to render a decision.

These processes can be successful only if the personality of the conciliator/ mediator is such that he is able to induce the parties to come to a settlement. The Act gives formal recognition to conciliation in India. Conciliation forces earlier and greater hold of the case. It can succeed only if the parties are willing to re-adjust. According to current thinking conciliation is not an alternative to arbitration or litigation but rather complements arbitration or litigation.

Question 29.
State the provisions relating to the appointment of conciliator under the Arbitration & Conciliation Act, 1996. State the role of the conciliator to settle the dispute. [Dec 2017 (5 Marks)]
Or
“Conciliation is an informal process in which the conciliator (the third party) tries to bring the disputants to an agreement.” [Dec 2011 (4 Marks)]
Answer:
The number of conciliators [Section 63]: There shall be 1 conciliator unless the parties agree that there shall be 2 or 3 conciliators.

Appointment of Conciliator [Section 64]: In conciliation proceedings with one conciliator, the parties may agree on the name of a sole conciliator. In conciliation with two conciliators, each party may appoint one conciliator. In conciliation proceeding with 3 conciliators, each party may appoint one conciliator and the parties may agree on the name of the third conciliator who shall all as a presiding conciliator.

The parties can also take the help of a suitable institution or person in connection with the appointment of conciliators.

A party may request such an institution or person to recommend the names of suitable individuals to out as conciliators or

The parties may agree that the appointment of one or more conciliators is made directly by such an institution or person.

Role of Conciliator [Section 67]:

  1. The conciliator shall assist the parties in an independent and impartial manner to reach an amicable settlement of their dispute.
  2. The conciliator shall be guided by principles of objectivity, fairness, and justice. He shall take into consideration the right and obligations of the parties the usage of the trade concerned and the circumstances surrounding the dispute.
  3. The conciliator may conduct the conciliation proceeding in such a manner as he considers appropriate but after taking into consideration the request of the parties if any.
  4. The conciliator may, at any stage of the conciliation make proposals for a settlement of the dispute. Such a proposal need not be in writing.

Question 30.
What is Conciliation? Bring out some differences between Arbitration and Conciliation. [June 2018 (3 Marks)]
Answer:
Conciliation is the amicable settlement of the dispute between the parties, with the help of a conciliator. In conciliation, there is a ‘win-win’ situation, as both parties agree to discuss among themselves and arrive at a mutually agreed compromise.

For the distinction between ‘arbitration’ and ‘conciliation’

Points Arbitration Conciliation
Meaning Arbitration is an agreement by the parties to submit to arbitration all or certain dispute which have arisen or which may arise between them in respect of defined legal relationship whether contractual or not. If the dispute between parties is settled by means of mediation or in a friendly manner and through the use of goodwill, then it is known as conciliation.
Decision In arbitration, the decision is known as arbitral award and is signed by the arbitral tribunal members. While under conciliation, it is known as settlement and is signed by the parties concerned.
Number In arbitration, parties cannot appoint even a number of arbitrators. In conciliation, the number of conciliators can be even.
Appointment Arbitrators can be appointed even before the dispute arises. A conciliator is appointed only after the dispute has arisen.
Evidence & examination of witnesses An arbitrator has the right to seek evidence or call witnesses. A conciliator does not have such rights.

Question 31.
Distinguish between Arbitration and Conciliation under the Arbitration & Conciliation Act, 1996. [June 2019 (4 Marks)]
Answer:
Alternative Dispute Resolution (ADR) refers to any means of settling disputes outside the courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation, and arbitration. As burgeoning court queues, rising costs of litigation, and time delays continue to plague litigants, more states have begun experimenting with ADR programs. Some of these programs are voluntary; others are mandatory.

While the two most common forms of ADR are arbitration and mediation, negotiation is almost always attempted first to resolve a dispute. It is the pre-eminent mode of dispute resolution. Negotiation allows the parties to meet in order to settle a dispute. The main advantage of this form of dispute settlement is that it allows the parties themselves to control the process and the solution.

In India, we have a system of ‘Panchayat’ where senior people from villages would resolve disputes between people. Similarly, in Arbitration two parties in dispute appoint a third person to solve their dispute. Thus, dispute gets solved out of Court and hence it is known as Alternate Dispute Resolution (ADR).

The International Centre for Alternative Dispute Resolution (ICADR) is a unique center in this part of the world that makes provision for promoting teaching and research in the field of ADR as also for offering ADR services to parties only in India but also to parties all over the world. The ICADR is a Society registered under Societies Registration Act, 1860; it is an independent non-profit making organization. It maintains panels of independent experts in the implementation of ADR processes.

Areas in which ADR works: Almost all disputes including commercial, civil labor, and family disputes, in respect of which the parties are entitled to conclude a settlement, can be settled by an ADR procedure. ADR techniques have been proven to work in the business environment, especially in respect of disputes. Involving joint ventures, construction projects, partnership differences, intellectual property, personal injury, product liability, professional liability, real estate, securities, contract interpretation, and performance and insurance coverage.

Jurisprudence, Interpretation & General Laws Questions and Answers

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