“Discuss the conduct of Arbitral proceedings under the Arbitration and conciliation act, 1996”
Arbitration is the current flavour of the legal and corporate world. And it does come in various flavours, one has domestic arbitration, institutional arbitration, ad hoc arbitration, international arbitration, forced arbitration, sole arbitrator arbitration, three member arbitration, named arbitration and arbitration by an expert, current employee, retired judge or as per mutual understanding.
What started as an alternate to complex court proceedings dominated by complex legal language and pitfalls, became the favoured child in the tri-family of alternate dispute resolution mechanism, the other two being mediation and conciliation has now grown up to encompass various countries, legal processes, territorial jurisdictions and trans national laws and become even more complex and complicated than law of any nation could ever aspire to be. Hence, this paper tries to show how the proceedings of such arbitrations takes place, according to the Arbitration and conciliation act, 1996.
ADR- alternative dispute resolution
What is Arbitration?
Arbitration, a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the “arbitrators”, “arbiters” or “arbitral tribunal”), by whose decision (the “award”) they agree to be bound. It is a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides. Other forms of ADR include mediation (a form of settlement negotiation facilitated by a neutral third party) and non-binding resolution by experts. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts.
Arbitration can be either voluntary or mandatory and can be either binding or non-binding. Non-binding arbitration is, on the surface, similar to mediation. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable.
An arbitration clause is a commonly used clause in a contract that requires the parties to resolve their disputes through an arbitration process. Although such a clause may or may not specify that arbitration occur within a specific jurisdiction, it always binds the parties to a type of resolution outside of the courts, and is therefore considered a kind of forum selection clause.
The Terms and Wording of the Arbitration Clause
The clauses should be specific
Arbitration agreements must be in writing in virtue of most arbitration statutes. Proof of the terms of the agreement would otherwise be extremely difficult if not impossible.
Sources of law
States regulate arbitration through a variety of laws. The main body of law applicable to arbitration is normally contained either in the national Private International Law Act (as is the case in Switzerland) or in a separate law on arbitration (as is the case in England). In addition to this, a number of national procedural laws may also contain provisions relating to arbitration.
By far the most important international instrument on arbitration law is the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. Some other relevant international instruments are:
§ The Geneva Protocol of 1923
§ The Geneva Convention of 1927
§ The European Convention of 1961
§ The Washington Convention of 1965 (governing settlement of international investment disputes)
§ The UNCITRAL Model Law (providing a model for a national law of arbitration)
§ The UNCITRAL Arbitration Rules (providing a set of rules for an ad hoc arbitration)
Who decides – the arbitrator or the court?
In the United States, the loss of the right to arbitrate because of a time bar has been held to be a procedural rather than a substantive matter, and thus, under federal law, it is the arbitrator, not the court, who must decide the issue of timeliness.
In the United Kingdom, Lord Diplock in The Morviken,after drawing a distinction between jurisdiction clauses and arbitration clauses, indicated that the arbitrator must determine the proper law of the contract and apply that proper law to the interpretation of the arbitration clause. He hinted, however, that if the arbitrator, by relying on a choice of law clause, rendered the arbitration clause null and void under the law of the place where the contract was made, then the arbitrator would have to treat the choice of law clause as null and void. In other words, the arbitrator’s discretion not to apply The Hague/Visby Rules, and specifically art. 3(6), would seem to be very narrow.
In India, the Arbitration and Conciliation Act 1996, has been passed to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral award and also to define law relating to conciliation and for matters connected therewith or incidental thereto. In this Act, conciliation has been introduced for the first time in India for settlement of commercial disputes.
What is Conciliation?
The terms conciliation and mediation are interchangeable in the Indian context. Conciliation is a voluntary process whereby the conciliator, a trained and qualified neutral, facilitates negotiations between disputing parties and assists them in understanding their conflicts at issue and their interests in order to arrive at a mutually acceptable agreement. Conciliation involves discussions among the parties and the conciliator with an aim to explore sustainable and equitable resolutions by targeting the existent issues involved in the dispute and creating options for a settlement that are acceptable to all parties. Parties may submit statements to the conciliator describing the general nature of the dispute and the points at issue. Each party sends a copy of the statement to the other. The conciliator may request further details, may ask to meet the parties, or communicate with the parties orally or in writing. Parties may even submit suggestions for the settlement of the dispute to the conciliator.
The conciliator does not decide for the parties, but strives to support them in generating options in order to find a solution that is compatible to both parties. The process is risk free and not binding on the parties till they arrive at and sign the agreement. When elements of settlement exist, he may draw up the terms of settlement and send it to the parties for their acceptance. If both the parties sign the settlement document, it shall be final and binding on both. Once a solution is reached between the disputing parties before a conciliator, the agreement had the effect of an arbitration award and is legally tenable in any court in the country.
|The Arbitration and Conciliation Act, 1996 is the prime legislation relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith or incidental thereto. It repealed the three statutory provisions for arbitration:- (i) the Arbitration Act, 1940; (ii) the Arbitration (Protocol and Convention) Act, 1937; and (iii) the Foreign Awards (Recognition and Enforcement) Act, 1961.|
ADVANTAGES OF CONCILIATION
- Conciliation offers a more flexible alternative to arbitration as well as litigation, for resolution of disputes in the widest range of contractual relationships, as it is an entirely voluntary process.
- In conciliation proceedings, the parties are free to withdraw from conciliation, without prejudice to their legal position, at any stage of the proceedings.
- The matter is settled at the threshold of the dispute, avoiding protracted litigation efforts at the courts. As conciliation can be scheduled at an early stage in the dispute, a settlement can be reached much more quickly than in litigation.
- Parties are directly engaged in negotiating a settlement.
- The conciliator, as a neutral third party, can view the dispute objectively and can assist the parties in exploring alternatives which they might not have considered on their own.
- Parties generally save money by cutting back on unproductive costs such as traveling to court, legal costs of retaining counsels and litigation and staff time.
- Conciliators may be carefully chosen by the parties for their knowledge and experience.
- Conciliation enhances the likelihood of the parties continuing their amicable business relationship during and after the proceedings.
- Creative solutions to special needs of the parties can become a part of the settlement.
India has in place a modern, an efficient Arbitration Act. There have been some decisions which
are not in tune with the letter or spirit of the Act. Hopefully, these would be addressed by the
judiciary in the near future and continuing popularity of arbitrations would be served by a truly
efficient ADR mechanism.
Christian Buhring-Uhle and Gabriele Lars Kirchhof. Arbitration and Mediation in International Business, 2nd Edition (2006)
Dionne, Georges (1992). Foundations of Insurance Economics: Readings in Economics and Finance. Springer. ISBN 0792392043.
Gary Born. International Commercial Arbitration (2009 Kluwer)
Shell, R.G. (2006). Bargaining for advantage. New York, NY: Penguin Books.
Sullivan, arthur; Steven M. Sheffrin (2003). [http://www.pearsonschool.com/index.cfm? locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4 Economics: Principles in action]. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 324. ISBN 0-13-063085-3.
Second Edition, 1989, Butterworths
Lynch, J. “ADR and Beyond: A Systems Approach to Conflict Management”, Negotiation Journal, Volume 17, Number 3, July 2001, Volume, p. 213.
Sustac, Zeno, Ignat, Claudiu. “Alternative ways of solving conflicts (ADR)”, Publisher: University, p. 242.
 Sullivan, arthur; Steven M. Sheffrin (2003). [http://www.pearsonschool.com/index.cfm? locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4 Economics: Principles in action]. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 324. ISBN 0-13-063085-3.
 Louis Dreyfus Corp. v. Cook Ind.505 F. Supp. 4 at p. 6, 1981 AMC 1550 at pp. 1553-1554 (S.D.N.Y. 1980)
 International Airports Authority of India v. K.D. Bali & Anr; (1988) 2 SCC 360.
 Section 19 of Act and Section 1 of the Evidence Act.
 Section 191 and 193 of the Indian Penal Code.
 F Nariman, ‘India and International Arbitration’, (2010) 41 The Geo. Wash. Int’l L. Rev. 367 at 376.
 Geneva, 26 September 1927 (‘Geneva Convention’).