“The award of the Arbitrator is not absolutely immune”. Discuss the grounds when such awards can be nullified by the court and also explain the differences and similarities between Conciliation and Mediation.
We need to the meaning of an arbitrator must be explained to fully understand the grounds that should be considered by the court to be able to upset an arbitrator’s award. An arbitrator is a neutral person who is chosen to judge a disagreement. An arbitrator could be used to settle any non-criminal dispute, and many business contracts make provisions for an arbitrator in the event of a disagreement. Generally, resolving a disagreement through an arbitrator is substantially less expensive than resolving it through a court of law.
‘Arbitration Award’,is referred to as an ‘Award’ even where the entire claimant’s claims fail (and thus no money needs to be paid by either party), or the Award is of a non-monetary nature. Although arbitration awards are characteristically an award of damages against party, tribunals usually has a range of remedies that can form a part of the award:
1. the tribunal may order the payment of a sum of money (conventional damages)
2. the tribunal may make a “declaration” as to any matter to be determined in the proceedings
3. in most jurisdictions, the tribunal has the same power as to a court to:
i) order a party to do or refrain from doing something (“injunctive relief”)
ii) to order specific performance of a contract
iii) to order the rectification, setting aside or cancellation of a deed or other document.
Arbitration is particularly popular as a means of dispute resolution in the commercial sphere. One of the reasons for doing so is that, in international trade, it is often easier to enforce an arbitration award in a foreign country than it is to enforce a judgment of the court.
Conciliation is an alternative dispute resolution (ADR) process whereby the parties to a dispute (including future interest disputes) agree to utilize the services of a conciliator, who then meets with the parties separately in an attempt to resolve their differences. They do this by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bringing about a negotiated settlement.
Mediation, as used in law, is a form of alternative dispute resolution (ADR), a way of resolving disputes between two or more parties. A third party, the mediator assists the parties to negotiate their own settlement (facilitative mediation). In some cases, mediators may express a view on what might be a fair or reasonable settlement, generally where all the parties agree that the mediator may do so.
This assignment is presented in a structure as follows: Part I- examines grounds for upsetting an Arbitrator’s Award, Part II- describes issues on conciliation and mediation, Part III lays out differences and similarities between Conciliation and Mediation, Part IV– explores powers of the Court for upsetting the Award of Arbitrator(s) and finally in Part V- offers conclusion.
Part I. Grounds for upsetting an Arbitrator’s Award
According to The Arbitration Act, 2001 Court has been empowered to set aside/ upsetting arbitral award (in Bangladesh) as under:
(1) The Court may set aside any arbitral award under this act other than an award made in an international commercial arbitration on the application of a party with in sixty days from the receipt of the award.
(2) The High Court Division may set aside any arbitral award made in an international commercial arbitration held in Bangladesh on the application of a party with in sixty days from the receipt of the award.
A. Grounds for setting aside arbitral tribunal (in Bangladesh)
An arbitral award may be set aside if-
(a) the party making the application furnishes proof that-
(i ) a party to the arbitration agreement was under some incapacity;
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it;
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or the arbitral proceedings or was otherwise unable due to some reasonable causes to present his case.
(iv) the arbitral award deals with a dispute not contemplated by or not failing within the terms of the submission to arbitration, or it contains decision 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, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside;
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with the provisions of this Act, or in the absence of such agreement, was not in accordance with the provisions of this Act.
(b) the Court or High Court Divisions, as the case be, is satisfied that-
(i) the subject-matter of the dispute is not capable of settlement by the arbitration under the law for the time being in force in Bangladesh ;
(ii) the arbitral award is prima facie opposed to the law for the time being in force in Bangladesh ;
(iii) the arbitral award is in conflict with the public policy of Bangladesh ; or
(iv) the arbitral award is induced or affected by fraud or corruption.
(2) Where an application is made to set aside an award, the court or the High Court Division, as the case may be, may order that any money payable by the award shall be deposited in the court or the High Court Division, as the case may be, or otherwise secured pending the determination of the application.
Explanation: The expression “Court” in this section means the Court within the local limits of whose jurisdiction the arbitral award has been finally made and signed.
B. Upsetting of Arbitrator’s Award in abroad
In United States, as per UAA1955 or 2000,the grounds for upsetting an Arbitration Award are as follows:
i) Arbitration Award procured by” corruption, fraud or undue means
Words like “corruption “and “fraud” suggest more than mere wrongdoing.
ii) Evident partiality or corruption.This provision addresses substantive misconduct by the arbitrator.
iii) Arbitrator’s “exceeded their powers“.
iv) Prejudicial misconduct in conducting the Arbitration hearing. This category includes the failure to postpone a hearing despite sufficient cause; failure to hear “evident pertinent and material,” or other Arbitration misconduct prejudicial to the right of a party.
In Italy, the Award can be challenged under article 829 of the Italian Code of Civil procedure. After the 2006 Reform, the grounds for setting aside the Award are:
1. If there is an invalid Arbitration agreement, provided that said objection has been raised in the first submission after the arbitrator’s acceptance of the appointment;
2. If the arbitrators have not been appointed according to the provisions of the code of civil procedure provided that said objection has been raised during the arbitral proceedings.
3. If the Award has been rendered by a person who could not be appointed as an arbitrator, as provided for by article 812 of the code of civil procedure;
4. If the Award exceeds the scope of Arbitration agreement, provided that said objection has been raised during the arbitral proceeding; or if the Award decides the merits of the dispute when the merits could not be decided;
5. If the Award does not include the reasons on which the Award is based, the arbitrators’ decision (relief) and the arbitrators’ signature;
6. If the Award has been rendered after the expiration of the time-limit, provided that the party’s intention to set aside the Award on this ground has been notified to others parties and to the arbitrators before the issuing of the Award.
7. If the formalities required by the parties under express sanction of nullity has not been cured.
8. If the Award is contrary to a previous Award or judgment having the force of res judicatabetween the same parties, provided that said Award or court decision has been brought to the attention of the arbitrators during the proceeding.
09. If the principle of due process has not been observed during the Arbitration Proceedings;
10. If the Award includes the arbitral proceedings without deciding the merits of the dispute and the merits had to be decided;
11. If the Award contains contradictory provisions;
12. If the Award has not pronounced on some of the claims and counterclaims falling under the scope of the Arbitration agreement.
In Hungary, as per Arbitration Act, 1994,Hungarian court practice in connection with Arbitration, the court may consider only the grounds for annulment that the claimants have explicitly raised by reference to the appropriate provision of the Act. Hungarian Arbitration Act, 1994which closely follows the UNCITRAL Model Law 1985 .In keeping with this model, the only recourse against an arbitral Award is an application to the competent court to set aside the Award. The grounds for annulment are the same as in Article 34(2) of the UNCITRALModel law and Article V of the convention.
In Hungary, the Supreme Court’s position is that if an Award is set aside on the grounds that the composition of the tribunal or the Arbitration procedure was not in accordance with the parties agreement or the act, only the whole Award may be set aside,irrespective of whether the claimant sought only a partial annulment or whether the decisions made in the Award can be separated. For example, if an arbitrator fails to disclose a fact that may call into question his or her independence or impartiality; the entire Award must be set aside.
Part II. Issues on conciliation and mediation
Conciliation is a process in which parties to a dispute with the assistance of a neutral third party identify the disputed issues, develop options, consider alternatives and endeavor to reach an agreement. The Conciliator may have an advisory role in regard to the content of the dispute or the outcome of its resolution, but not a determinative role. The Conciliator may advise on or determine the process of Conciliation whereby resolution is attempted, and may make suggestions or give advice on terms of settlement.
Mediation is a process in which parties to a dispute with the assistance of a neutral third partyidentify the disputed issues, develop options, consider alternatives and endeavor to reach an agreement. The Mediator has no advisory or other determinative role in regard to the content of the dispute or the outcome of its resolution, but may advise on or determine the process of Mediation whereby resolution is attempted.
Part III-A: Differences between Conciliation and Mediation
|1. As per Indian law, practice of UK & Japan and the UNCITRAL model, the role of the ‘Conciliator’ is pro-active and is somewhat more than the role of a ‘Mediator’.||1. As per Indian law, practice of UK & Japan and the UNCITRAL model, the role of the ‘Mediator’ is not pro-active and is somewhat less than the role of a ‘Conciliator’.|
|2. In India, under Part III of the Arbitration and Conciliation Act, 1996 the ’Conciliator’s powers are larger than those of a ‘Mediator’ as he can suggest proposals for settlement||2. In India, ‘Mediator’s powers are limited than those of a ‘Conciliator ’ as he can not suggest proposals for settlement|
|3. In India, ‘Conciliator’ can make proposals for settlement, ‘formulate’ or ‘reformulate’ the terms of a possible settlement||3. In India, ‘Mediator’ would not do so but would merely facilitate a settlement between the parties.|
|4. In India, ‘Conciliation’ is a process in which the Conciliator plays a proactive role to bring about a settlement.||4. In India, ‘Mediation’ is “a more passive process” in which the mediator does not play a proactive role to bring about a settlement.|
|5. From the point of role of a ‘Conciliator’, he/ she is also known as a discussion leader, safety valve, communication link, an innovator, sounding board, stimulator, advisor, face saver, promoter of collective bargaining.||5. From the point of role of a ‘Mediator,’ he/ she is also known as a confidential advisor, facilitator, or an industrial diplomat.|
|6. The definition of ‘Conciliation’ formulated by the ILO (1983) is as follows: “the practice by which the services of a neutral third party are used in a dispute as a means of helping the disputing parties to reduce the extent of their differences and to arrive at an amicable settlement or agreed solution. It is a process of orderly or rational discussion under the guidance of the conciliator.”||6. According to the ACAS, (UK) ‘Mediation’ in this context involves a process in which the neutral “mediator takes a more pro-active role than a conciliator for the resolution of the dispute, which the parties are free to accept or reject.|
|7. In the USA, the person having the pro-active role is called a ‘ mediator’ rather than a ‘Conciliator’.||7. In the USA, the role of a ‘Conciliator’ is not pro-active.|
|8. In the USA, the word ‘Conciliation’ has disappeared.||8. In USA, the word ‘Mediation’ has appeared and ‘Mediation’ is used for the neutral who takes a pro-active role. For example:|
“Whereas the terms ‘Conciliation’ and ‘counseling’ have long since disappeared from the literature in reference to dispute resolution services in the USA and elsewhere, these terms have remained enshrined in Australian family laws, with ‘Mediation’ grafted on as a separate dispute resolution service in 1991.”9. From the point of procedural activities, in Conciliation the conciliator may not follow a structured process, instead administering the Conciliation process as a traditional negotiation, which may take different forms depending on the case.9. From the point of procedural activities, in Mediation, the mediator controls the process through different and specific stages: introduction, joint session, caucus, and agreement, while the parties control the outcome.10. ‘Conciliation works are suggestive & advisory.10. ‘Mediation’ works purely facilitative: the practitioner has no advisory role.
Some Observations on Conciliation and Mediation
I have thus attempted to clear some of the doubts raised as to the meaning of the words ‘Conciliation’ and ‘Mediation’. Under Indian law, in the context of sec. 30 and sec. 64(1) and sec. 73(1) of the 1996 Act, the conciliator has a greater or a pro-active role in making proposals for a settlement or formulating and reformulating the terms of a settlement. A mediator is a mere facilitator. The meaning of these words in India is the same in the UNCITRAL and Conciliation Rules and in UK and Japan. But, in USA and in regard to certain institutions abroad, the meaning is just the reverse; a ‘Conciliator’ is a mere ‘facilitator’ whereas a ‘mediator’ has a greater pro-active role. While examining the rules made in US in regard to ‘Mediation’, if we substitute the word ‘Conciliation’ wherever the word ‘Mediation’ is used and use the word ‘conciliator’ wherever the word ‘mediator’ is used, we shall be understanding the said rules as we understand them in connection with ‘Conciliation’ in India.
Part III-B: Similarities between Conciliation and Mediation
A. Basic similarities between Conciliation and Mediation are narrated below:
01. Both are ADR methods.
02. Mediator and Conciliator both are neutral and impartial persons.
03. In both cases, a neutral third party seeks to help two or possibly more, opposing sides find a suitable resolution to a conflict.
04. Mediation and Conciliation provide important benefits to parties and may be seen as complementary to the judicial process.
05. Disputing parties use Conciliation or Mediation method because both are expeditious, private and generally much less expensive than a trial.
06. Conciliation and Mediation both look to maintain an existing business relationship and to rekindle a lost balance of power between two parties. These concepts are sometimes used as synonyms.
07. Conciliation sometimes serves as an umbrella-term that covers all Mediation and facilitative and advisory dispute resolution process, neither process determines an outcome, and both share many similarities. For example, both processes involve a neutral third-party who has no enforcing powers.
08. Both Mediation and Conciliation serve to identify the disputed issues and to generate options that help disputants reach a mutually- satisfactory resolution. They both offer relatively flexible processes; and any settlement reached should have the agreement of all parties. This contrasts with litigation, which normally settles the disputes in favour of the party with the strongest legal argument. In- between the two operates collaborative law, which uses a facilitative process where each party has counsel.
In the recent Decision Paper by the lord Chancellor’s Department on Alternative Dispute Resolution Where while defining ‘Mediation’ and ‘Conciliation’, it is stated that ‘Mediation’ is a away of settling disputes by a third party who helps both sides to come to an agreement, which each considers acceptable. Mediation can be ‘evaluative’ or ‘facilitative’. ‘Conciliation,’ it is said, is a procedure like Mediation but the third party, the Conciliator, takes a more interventionist role in bringing the two parties together and in suggesting possible solutions to help achieve a settlement. But it is also stated that the term ‘Conciliation’ is gradually falling into disuse and a process which is pro-active is also being regarded as a form of Mediation.This has already happened in USA.
Part IV: Powers of the court for upsetting the Award of Arbitrator(s)
Legal provisions and Court-decisions regarding upsetting the Award of Arbitrator(s)
01. State courts can upset an Award if the Award is “in conflict with public policy”.
If the arbitrator’s Awards are “in conflict with public policy “of India the Award is to be set aside.
In this connection two notable cases: (1)”SAW PIPES”-Oil &Natural Gas corporation Ltd. v. Saw Pipes and (2) The Venture Global Engineering v. Satyam Computer Services Ltd. may be cited. In SAW PIPES case, the supreme court of India held that the public policy provision of section 34 could be used to set aside an Award “if the Award is contrary to the substantive provisions of law”.
In Venture Global Engineering v. Satyam Computer Services Ltd the Supreme Court of India held that section 34, which allows Awards to be set aside if they contravene “public policy”, does apply to international Awards.
02. Court can upset an Arbitration Award due to bias
In Alim v. KBR, 2011 WL 61868, we see one instance where a prior relationship leads to dismissal of an Arbitration Award. The arbitrator, Scott Rosuck did not disclose that he had presided over a prior Arbitration three years prior with KBR, with the same KBR attorney and with the same KBR representative. Mr. Rosuck was required to disclose prior relationships, but did not mention the prior Arbitration. He did say at the beginning of the Arbitration that he had “come across” the lawyer and representative before. But, the Dallas court of appeals found that to be insufficient disclosure to put the employee on notice.
Mr. Rosuck said he relied on memory to check prior conflicts. It appears he had overlooked the prior Arbitration with the same employer, the same employer’s representative and the same employer’s attorney. Obviously, he needs a better system for checking potential issues. The court found this oversight to be “inexcusable.”
03. An Award can be challenged for upsetting by third party whose interest is impacted by arbitral Award
The cassation court held that a non-party to an Arbitration proceeding may request an arbitral Award be set aside if the party’s rights are affected by the Award. Such affirmation was based on a procedural rule that any person may seek protection of their rights in the state courts. The court held that as long as there is no other way of intervening in Arbitration proceeding, an appeal to set aside the Award is the only way for party to protect its rights. The Russian constitutional court held that one person’s recourse of judicial protection does not breach the constitutional right of the other person to judicial protection. Interference by a third party does not preclude the other party from protecting its rights in the same case. Furthermore, if an Award is annulled, it can always be litigated to protect the infringed rights.
o4. An international Arbitration Award can be set aside which based on deficient pleadings
If it isn’t pleaded, you can’t consider it. That in a nutshell appears to be the holding established recently by the Singapore High Court in Kaminski Hotels SA v PT Prima International Development .That case saw the setting aside of three related international Arbitration Awards on the basis that the tribunal had gone beyond the scope of matters submitted to it by making a decision based on an issue not formally pleaded.
Before the Singapore High Court, Kempinski Hotels sought to set aside the Awards on five grounds and failed on all but a pleading point which forms the focus of this note.
The learned Judge’s reasoning can be summarized as follows. Art 34(2)(a)(iii) of the Model Law provides that an Arbitration Award can be set aside when the matters decided by the tribunal were beyond the scope of the submission to Arbitration. To determine whether matters in an Award were within or outside the scope of submission to Arbitration, a reference to pleadings would usually have to be made. An arbitrator is bound to decide the case in accordance with the parties’ pleadings, and the arbitrator is not entitled to go beyond the pleadings and decide on points which the parties have not given evidence or submissions.
05. Supreme Court Can Strike Down Arbitrator’s Decision Allowing Class Action Arbitration
In an important decision for domestic and international Arbitrations, the United States Supreme Court issued a ruling on April 27, 2010, striking down an Arbitration panel’s decision that allowed an Arbitration to proceed as a class action where the contract was silent on the issue. Stolt-Nielsen, S.A. v. AnimalFeeds International Corp. The Court emphasized that Arbitration is a product of the parties’ agreement, and it held that the Arbitration panel’s decision ordering class Arbitration where the contract was silent was “fundamentally at war with the foundational FAAprinciple that Arbitration is a matter of consent.”
Part V: Conclusion
From the above discussion ,we may say, the decision of the arbitrator can be upset on grounds of fraud ,corruption, undue means, misconduct by the arbitrator, or refusal to hear pertinent and material evidence, or failure to post phone a hearing despite sufficient cause. An Award can be upset by the state courts if the Award is – ‘in conflict with public policy” or “contrary to substantive provision of law”. Even, an Award can be challenged for up setting by third party whose interests is impacted by arbitral Awards.
We may also say, there are some differences and similarities between Conciliation and Mediation. As per Indian Arbitration and Conciliation Act, 1996, UNCITRAL and existing Conciliation Rules in U K and Japan, the ‘ Conciliator’ has a greater pro-active role and ‘mediator’ is a mere ‘ facilitator’ . But in U S A and in regard to certain institutions abroad, the meaning is just the reverse, a ‘ conciliator’ is a mere ‘facilitator’ whereas as a ‘mediator’ has a greater pro-active role. We observe here one noticeable matter is that both are ‘peaceful’ dispute resolution tools that are complementary existing court system. Both methods look to maintain an existing business relationship and to rekindle a lost balance of power between two parties.
These concepts are sometimes used as synonyms. The aim of both methods is to resolve business disputes quickly for the interest of the business communities of the world. It is more interesting matter that both processes involve a neutral third-party who has no enforcing powers.
1. Alessandra, S. Mara and Prieditis, A.Marighetto (2005); Arbitration, Mediation and Conciliation; differences and similarities from an International and Italian business perspective by (http://www.mediate. com/articles
2. Henry, J. Brown and Arthur, L. Mariot (1997); ‘ADR Principles and Practice’ by, 2nd Edition. Sweet & Maxwell, Lord)(on chapter 7, p.127)
3. Jagtenbury, R. (2001); The ‘New” Mediation: Flower of the East in Harvard Bouquet: Asia Pacific Law Review Vol. 9, No.1
4. James, L. Loftis &Alden, L (2008); Whispers of Revolution or Pockets of Resistance- by Vinson &Elkins LLP London and Washington, D.C (Printed by the Dedman School of Law at Southern Methodist University,Volume 22 Spring 2008 Number 2
5. Mia, S. Rahman (2010); The Arbitration Act, 4th Edition, Bangladesh Law Book Company, Dhaka.
6. Stephen, B. Goldberg and Frank, E.A. Sander (1999); Dispute Resolution'(Negotiation, Mediation other Processes by, 3rd Edition. Aspine Law & Business, (chapter.3 p.123)
7. Thomas J.Crane (2008); Law Blog: San Employment Lawyer & Attorney: Firm: South Texas, Bexar County Tx Wage & Discrimination Issues; Published By Law Office.http;//www.sanatonioemploymentlawblog. com /2011/01/articles/contra.)
8. http://www. State regulation of Arbitration (In U. S.A.)
9. Italian Code of Civil Procedure (Reform), 2006.
10. Indian Arbitration and Conciliation Act, 1996
11. Indian Code of Civil Procedure (amendment) Act, 1999, Part III
12. http://www.international law office.com/newsletter/detail.asxpg=b3be
16. http://www.wisegeek.com/ what is the difference- between -Conciliation -and- Mediation .htm.
17. http://www.adrnow.org.UK/ sub section2.html
20. http://www.edcostello.com/content.aspx? ID = 1 (By:Edward J. Costellow)
23. http://www.goodbyecourts.com/arbpage 4.html.
24. Setting aside an international Arbitration Award based on deficient pleadings- By Darius Chan, Wilmer Hale (kluwerArbitrationblog.com/…/setting-aside-an-international-arbitratio)
26. http://www.setting aside an Arbitral Award with a refference to recent judgments of the Italian court of cassation.
27. International Commercial Arbitration Seminar on SETTING ASIDE ARBITRAL AWARDS IN RUSSIA AND SWEDEN by Anna Fomina.
28. http://en.wikipedia.org/wiki/Arbitration Award
Course InstructorSubmitted by :Md. Jashim Uddin
ID No. 10.01.51.067Course Code :MBA- 613Session:Fall-2011Date of Submission :20.01.2012
 http://en.wikipedia.org/wiki/Arbitration Award
 (THE ARBITRATION ACT,2001,CHAPTER-VIII,SECTION.42 OF BANGLADESH
 THE ARBITRATION ACT,2001,CHAPTER-VIII,SECTION.43 OF BANGLADESH
 Uniform Arbitration Act.
 9 U.S.C. SEC 10 (a ) (2); U.A.A.SEC (12) (a) (2) ( 1955) ; U.A.A.SEC. 23 (a) (2) (2000)
 9 U.S.C. SEC 10 (a ) (4); U.A.A.SEC (12) (a) (3) ( 1955) ; U.A.A.SEC. 23 (a) (4) (2000)
 In this update the terms ‘annulment ‘and’ setting aside’ refer to the invalidation (as opposed to cassation) of an
 Article 55 of the Arbitration Act
 United Nations Commission on International Trade Law
 Decision Gfv.x3o.141/2010/24,quoted in Muranyi, page 29, note 1.
 http://www.iama.org. au/mcrules.htm
 The ACAS (Advisory, Conciliation and Arbitration Service) role in Arbitration, Conciliation and Mediation, 1989
 http://www. mediate.com/articles/sgubini A-2.cfm.
 http://www. mediate. com/articles/sgubini A-2.cfm.)
 http://en.wikipedia.org/wiki/ Mediation
 Arbitration Act, Sec.34 (2) (b) (ii)
 Tex.App. Dallas 1/10/2011
 SGHC 171 (“Kempinski”).
 set out in the First Schedule of Singapore’s International Arbitration Act.