Arbitration and Conciliation

Arbitration is considered an alternate dispute resolution in which conciliation and mediation are also included. Arbitration has gained a lot of importance as a less expensive and less taxing route to resolve disputes.

Even the UN has bestowed proper recognition to Model Law of international commercial Arbitration and Conciliation rules UNCITRAL (United Nations Commission on Trade and Law).The model set of rules can be tailored according to the municipal laws and trade laws in specific nations and territories.

And modeled after the UNCITRAL India enacted the Arbitration and Conciliation Act 1996 and amended in 2015. This act deals with domestic and commercial trade disputes by way of Arbitration. The amendment also laid emphasis on limiting the role of judiciary (as given in Section 5 of the Act) and greater autonomy in the arbitration proceedings and moreover to treat every arbitration order as an award or a decree as in the CPC.

Section 8 of the act gives remedies to the parties that they may approach the court only after the arbitration award has been made. But however according to Section 9 of the act in order to get interim relief on a number of matters like Presevation, interim custody or sale of goods, to appoint a guardian to an incompetent person, detention or preservation of any property or any substance subject matter to the case. The party may also approach the arbitral tribunal for the above mentioned interim reliefs that are subject matter to the case under Section 17 of the act.

Appointment of Arbitrators is given as under Section 11 of the act and has given complete control to the parties and the arbitrator can be of any nationality as agreed by the parties, if the parties wish to appoint more than one arbitrators, Illustration : if 3 arbitrators are to be appointed then each party at dispute can appoint one arbitrator and then either the appointed arbitrators can appoint the third arbitrator or the parties can come to a consensus on the third arbitrator.

The parties while appointing the arbitrators have to disclose if the arbitrator appointed by them is or has been in any sort of relationship with the party at dispute which may affect his impartiality. However, the Arbitrators can be challenged, the provisions of which are given in section 12 , if there are circumstances that gives justifiable doubts about the impartiality of the arbitrator, if the arbitrator does not fulfill the qualifications decided by the parties beforehand.

The termination of an arbitrator is given in Section 14 if he fails to act without considerable delay or fails to fulfill his duties or he becomes unable to perform his/her functions.

Arbitration can be done in one if two ways , first one being the ad-hoc route in which the parties commence the arbitration by themselves and they are the ones who determine the conduct of arbitration proceedings , the parties have to appoint the arbitrator themselves and if they can not reach to a mutual consensus they can invoke section 11.

Second one being Institutional Arbitration, here the arbitration is governed by the institution, the parties may approach any arbitration institution and commence the proceedings. The indian institution includes Indian Council of Arbitration and International Centre for Alternative Dispute Resolution.

Conciliation is provided in Part-III of the Arbitration and Conciliation Act 1996 (amended 2015) and provisions are given from Section 61 to Section 81. Conciliation is a process by which discussion between the parties is kept going through the participation of a conciliator. The distinction between arbitration and conciliation is that in arbitration proceedings the award that is given by the arbitrator is the decision but in conciliation the decision is the consensus reached by the parties themselves with the aid of the conciliator. The prescribed number of conciliators is given section 63 of the act, one conciliator may be appointed but the parties may even appoint two or even three conciliators, for the sole conciliator the parties must come to a mutual consensus, for two conciliators each party may appoint one and for three conciliators one party may appoint each and they may come at a mutual agreement for the third.The conciliators must be impartial and independent (given in section 67) and they must not disclose any information about the conciliation and maintain confidentiality (given in section 70)

The conciliation begins after the other party accepts the invitation that the first party sends, if the invitation is rejected or there is no reply for 30 days then there must be no conciliation. A conciliator makes recommendations and suggestions and aids the discussion of the parties and helps them to come to fair and just consensus that booth parties are satisfied and the dispute resolves.Unlike an arbitrator , a conciliator cannot give out awards that can later be challenges in court proceedings.A conciliator is barred from:

Acting as an arbitrator in respect of the same dispute in which he was a conciliator.
Acting as a Representative of either of the parties in any arbitral or judicial proceeding in respect of the same dispute.
Acting as a witness in any arbitral or judicial proceeding in respect of the same dispute in which he was a conciliator.

Alternative dispute resolution has expanded over the last several years and has become an vitally important component of the dispute resolution process. Hello Counsel’s Legal Team is providing alternative dispute resolution services in India and abroad. We assist clients with resolution of disputes in all areas of general and special practices in a broad range of industrial sectors- International Finance, International Investments, Intellectual Property, Information Technology, Telecommunications, Construction and Infrastructure, Real Estate, Banking and Finance, Aviation, Insurance and Reinsurance, Oil and Gas, Power, Mining, Entertainment and Media, etc.

We have significant experience in both international and domestic arbitration and other forms of Alternative Dispute Resolution (ADR) such as conciliation and mediation. We advise clients on strategies, potential disputes and mediations and are actively engaged in Alternative Dispute Resolution [ADR] processes such as Arbitration, Conciliation & Mediation. Our Legal Team has acted as counsels and arbitrators in high stake arbitrations providing best advice and support in resolving disputes. We have a dedicated team of lawyers with specific expertise to meet our client’s requirements and handle arbitration matters involving complex financial issues both in India and abroad. Services provided by Hello Counsel include the following amongst various others:

Conducting domestic arbitration under the Arbitration and Conciliation Act. 1996 and ICA rules.
Conducting international arbitration under UNCITRAL and ICC Rules
Rendering mediation services to clients.
Enforcing and challenging enforcement of Arbitral Awards
Representing clients before High Courts and Supreme Court in arbitration petitions
Advising clients on the appropriate venue of arbitration and choice of procedural and substantive law.
Appointment of arbitrator through High Court of Delhi and Supreme Court of India
Representing clients before arbitral tribunals with regard to disputes arising out of agreements containing arbitration clause.
Applying to stay proceedings brought in breach of arbitration clauses.
Draft arbitration agreements and clauses.
Advising clients and handling arbitration cases related to Commercial Contracts, Collaboration Disputes, Contractual Disputes, Construction Agreements, Service Agreements, Joint Venture Agreements, Supply Contracts, Marketing Agreements, Sale Agreements, etc.
Advising clients on conciliation and mediation matters.
Advising clients on alternative dispute resolution laws and procedures
Representing our Clients in Lok Adalats conducted by legal services authorities.

Vital Features Of Domestic & International Arbitration

Arbitration Agreement
Reference Of Parties To Arbitration
Injunction & Stay By Court & Arbitrator
Appointment Of Arbitrator Or Composition of Arbitral Tribunal
Challenge To Appointment Of Arbitrator
Seat/ Place Of Arbitration
Arbitration Award
Setting Aside Arbitral Award
Appeals
Jurisdiction
Limitation
International Commercial Arbitration
New York Convention Award
Geneva Convention Award
Conciliation & Conciliators
Settlement Agreement by Conciliators
Arbitral Or Judicial Proceedings During Conciliation Proceedings.

Legal Provisions Governing The Arbitration & Conciliation Issues

Important Legal Sections of the act Governing Arbitration and Conciliation are as follows:

Arbitration and Conciliation Act, 1996

PART I: ARBITRATION

CHAPTER I : General provisions

Section-2. Definitions.

CHAPTER II : Arbitration agreement

Section-7.Arbitration agreement.
Section-8.Power to refer parties to arbitration where there is an arbitration agreement.
Section-9.Interim measures etc. by Court.

CHAPTER III: Composition of arbitral tribunal

Section-10. Number of arbitrators.
Section-11. Appointment of arbitrators.
Section-12. Grounds for challenge.
Section-13. Challenge procedure.
Section-14. Failure or impossibility to act.
Section-15. Termination of mandate and substitution of arbitrator.

CHAPTER IV: Jurisdiction of Arbitral Tribunals

Section-16.Competence of arbitral tribunal to rule on its jurisdiction.
Section-17.Interim measures ordered by arbitral tribunal.

CHAPTER V: Conduct of arbitral proceedings

Section-18. Equal treatment of parties.
Section-19. Determination of rules of procedure.
Section-20. Place of arbitration.
Section-21. Commencement of arbitral proceedings.
Section-23. Statements of claim and defence.
Section-24. Hearings and written proceedings
Section-25. Default of a party.
Section-26. Expert appointed by arbitral tribunal.
Section-27. Court assistance in taking evidence.

CHAPTER VI: Making of arbitral award and termination of proceedings

Section-28. Rules applicable to substance of dispute.
Section-29. Decision making by panel of arbitrators.
Section-30. Settlement.
Section-32. Termination of proceedings.
Section-33. Correction and interpretation of award; additional award.

CHAPTER VII: Recourse against arbitral award

Section-34. Application for setting aside arbitral award.

CHAPTER VIII: Finality and enforcement of arbitral awards

Section-35. Finality of arbitral awards.
Section-36. Enforcement.

CHAPTER IX: Appeals

Section-37. Appealable Orders

CHAPTER X: Miscellaneous

Section-40. Arbitration agreement not to be discharged by death of party thereto.
Section-41. Provisions in case of insolvency.
Section-42. Jurisdiction.
Section-43. Limitations.

PART II: ENFORCEMENT OF CERTAIN FOREIGN AWARDS

CHAPTER I : New York Convention Awards

Section-44. Definition.
Section-45. Power of judicial authority to refer parties to arbitration.
Section-46. When foreign award binding.
Section-47. Evidence.
Section-48. Conditions for enforcement of foreign awards.
Section-49. Enforcement of foreign awards.
Section-50. Appealable orders.
Section-51. Saving.
Section-52. Chapter II not to apply.

CHAPTER II: Geneva Convention Awards

Section-54. Power of judicial authority to refer parties to arbitration.
Section-55. Foreign awards when binding.
Section-56. Evidence.
Section-Section-57. Conditions for enforcement of foreign awards.
Section-58. Enforcement of foreign awards.
Section-59. Appealable orders.
Section-60. Saving.

PART III: CONCILIATION

Section-61. Application and scope.
Section-62. Commencement of conciliation proceedings.
Section-63. Number of conciliators.
Section-64. Appointment of conciliators.
Section-65. Submission of statements to conciliator.
Section-66. Conciliator not bound by certain enactments.
Section-67. Role of conciliator.
Section-69. Communication between conciliator and parties
Section-70. Disclosure of information.
Section-71. Co-operation of parties with conciliator.
Section-72. Suggestions by parties for settlement of dispute.
Section-73. Settlement agreement.
Section-74. Status and effect of settlement agreement.
Section-75. Confidentiality.
Section-76. Termination of conciliation proceedings
Section-77. Resort to arbitral or judicial proceedings.
Section-80. Role of conciliator in other proceedings
Section-81. Admissibility of evidence in other proceedings.

PART IV: SUPPLEMENTARY PROVISIONS

Section-82. Power of High Court to make rules.
Section-83. Removal of difficulties.
Section-84. Power to make rules
Section-85. Repeal and savings.

FIRST SCHEDULE

CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS:

ARTICLE-I
ARTICLE II
ARTICLE III
ARTICLE IV
ARTICLE V
ARTICLE VI
ARTICLE VII
ARTICLE VIII
ARTICLE IX
ARTICLE X
ARTICLE XI
ARTICLE XII
ARTICLE XIII
ARTICLE XIV A
ARTICLE XV
ARTICLE XVI

SECOND SCHEDULE

PROTOCOL ON ARBITRATION CLAUSES

THIRD SCHEDULE

CONVENTION ON THE EXECUTION OF FOREIGN ARBITRAL AWARDS
[See section 53]

Judgments: Arbitration & Conciliation, 1996

Important Judgements that provide insight into the working of Arbitration and Conciliation under Arbitration and Conciliation act 1999 (amended 2015) are given below:

Bharat Aluminium Co. Versus Kaiser Aluminium Technical Service, Inc., Civil Appeal No.7019 OF 2005, Judgment Dated: 06.09.2012, Bench: S.H.Kapadia, CJI, D.K.Jain, Surinder Singh Nijjar, Ranjana Prakash Desai & Jagdish Singh Khehar, JJ, Supreme Court OF India [Five Judge Constitutional Bench PDF Judgment] [Residual PDF Judgment of the Constitution Bench Judgment]- Arbitration And Conciliation Act, 1996- Extent & Scope Of The Part-I-International Commercial Arbitration- The Issue which fell for consideration of the Constitutional bench arose out the following arbitration Clause, as contained in an Agreement: “Article 17.1 – Any dispute or claim arising out of or relating to this Agreement shall be in the first instance, endeavour to be settled amicably by negotiation between the parties hereto and failing which the same will be settled by arbitration pursuant to the English Arbitration Law and subsequent amendments thereto. Article 17.2 – The arbitration proceedings shall be carried out by two Arbitrators one appointed by BALCO and one by KATSI chosen freely and without any bias. The court of Arbitration shall be held wholly in London, England and shall use English language in the proceeding. The findings and award of the Court of Arbitration shall be final and binding upon the parties. Article 22 – Governing Law – This agreement will be governed by the prevailing law of India and in case of Arbitration, the English law shall apply.”- Consequently, the arbitration in this case took place in England- Indian courts- District Court, as also the concerned High Court, i.e. the High Court of Judicature at Chattisgarh, Bilaspur declined to entertain the Application seeking setting aside of the award- Held, “198. In view of the above discussion, we are of the considered opinion that the Arbitration Act, 1996 has accepted the territoriality principle which has been adopted in the UNCITRAL Model Law. Section 2(2) makes a declaration that Part I of the Arbitration Act, 1996 shall apply to all arbitrations which take place within India. We are of the considered opinion that Part I of the Arbitration Act, 1996 would have no application to International Commercial Arbitration held outside India. Therefore, such awards would only be subject to the jurisdiction of the Indian courts when the same are sought to be enforced in India in accordance with the provisions contained in Part II of the Arbitration Act, 1996. In our opinion, the provisions contained in Arbitration Act, 1996 make it crystal clear that there can be no overlapping or intermingling of the provisions contained in Part I with the provisions contained in Part II of the Arbitration Act, 1996.”- Further held, “199….the provision contained in Section 2(2) of the Arbitration Act, 1996 is not in conflict with any of the provisions either in Part I or in Part II of the Arbitration Act, 1996. In a foreign seated international commercial arbitration, no application for interim relief would be maintainable under Section 9 or any other provision, as applicability of Part I of the Arbitration Act, 1996 is limited to all arbitrations which take place in India. Similarly, no suit for interim injunction simplicitor would be maintainable in India, on the basis of an international commercial arbitration with a seat outside India.”- Further held, Part I of the Arbitration Act, 1996 is applicable only to all the arbitrations which take place within the territory of India.- Overruled the three-Judge Bench decisions of this Court in Bhatia International Versus Bulk Trading S.A. and another, (2002) 4 SCC 1052, as also in Venture Global Engineering Vs. Satyam Computer Services Ltd. & Anr., 2008 (4) SCC 190.- Exercising its the power under Article 142 of the Constitution of India, the Constitution Bench however, held that the law declared by it would only operate prospectively. In other words, all agreements executed prior to 06.09.2012 were to be governed by the decision in Bhatia International.- The three Judge Bench held, “the court cannot adopt an approach for interpreting a statute. The terms of the contract will have to be understood in the way the parties wanted and intended them to be. In that context, particularly in agreements of arbitration, where party autonomy is the grundnorm, how the parties worked out the agreement, is one of the indicators to decipher the intention, apart from the plain or grammatical meaning of the expressions and the use of the expressions at the proper places in the agreement. Contextually, it may be noted that in the present case, the respondent had invoked the provisions of English law for the purpose of the initiation of the unsettled disputes. It has hence, while interpreting an agreement, to be kept in mind that the parties, intended to avoid impracticable and inconvenient processes and procedures in working out the agreement.
BPTP Ltd. Vs. CPI India Limited– Arb.A. No.8/2015 & OMP No.79 of 2015, Bench-S Murlidhar, J, Delhi High Court, Judgment Dated-03.07.2015- Arbitration and Conciliation Act, 1996- Sections-9, 17 & 37- Scheme, Extent & Scope- Appeal Against Arbitral Award- The scheme of Section 37 of the Act is that an order denying or granting relief under Section-17 of the Act could be challenged by way of an appeal- While Section-17 itself may not result in an order enforceable by a Court, once that order is tested and is affirmed in an appeal under Section-37 of the Act, the order of the appellate Court should prevail. Such interpretation would ensure that the exercise of getting the Arbitral Tribunal (AT) to pass interim orders under Section 17 is not rendered futile. The statutory remedy under Section 17 cannot be allowed to be frustrated if the alternate dispute resolution mechanism of arbitration has to be effective and efficacious. Judgments On Appointment Of Arbitrators [S-11].

Comed Chemicals Ltd. Versus C.N. Ramchand, Arbitration Petition No. 17/2007, Judgment Dated: 06/11/2008, Bench: C.K. Thakker, J., Supreme Court Of India, Citation: 2009(1) R.A.J. 310: 2009 AIR(SC) 494: 2008(15) SCR 567: 2009(1) SCC 91: 2008(11) JT 547: 2008(13) SCALE 717: 2008(9) SLT 17: 2008(4) ArbLR 207- Arbitration and Conciliation Act, 1996- Sections 11(9), 2(1)(f), (1)(b) & 10- International commercial arbitration- What is; appointment of arbitrator by court, when permissible; existence of arbitration clause, scope- Applicant-company doing business in chemicals in the field of bio-technology- To expand the business it entered into a MOU with respondent for development of products in the field of bio-industries and manufacturing and marketing such products- Respondent appointed as Director (Technical) and allotted 40% equity shares in the subsidiary Company- Over and above that, he was to be paid salary and other benefits in lieu of services rendered by him- MOU providing that respondent will work full time with the company at least for next eight years from the date of signing of agreement- Allegation of company that respondent did not take interest in work and failed to attend Board Meetings and ultimately resigned before completion of work assigned to him in violation of agreement and also instigated other subordinate staff workers to leave the organization- In view of large investment by company, it refused to accept the resignation of respondent- Clause 12 of agreement provides that if there be any dispute pertaining to meaning of this MoU or of any nature, will be solved and decided by appointing an independent Arbitrator acceptable to all the parties and if not solved by him can be referred to court of law and for which the jurisdiction will be Vadodara- Failure of parties to agree on a name of arbitrator- Whether arbitration clause is existing and application for appointment of arbitrator by applicant-company before court is maintainable- Held, on facts, yes- If respondent is engaged by applicant Company to perform functions which are inextricably linked with functions which could be undertaken by a businessman or by a Company and such activities form an integral part of his activities, there is element of `commerce’- In that case, the provisions of Act would clearly apply- In the instant case, it is a case of International commercial arbitration and covered by clause of MOU between parties- Plea that there is no International Commercial Arbitration, unsustainable- Any dispute between the applicant- Company and the respondent would, therefore, be covered by Clause 12 of the Agreement which provides for arbitration- Hence, the contention that respondent was merely an employee and there was no element of business, trade or commerce has no substance and must be rejected- Since there is a dispute between parties, it has to be decided by arbitrator- As relevant clause provide for a sole arbitrator, hence, only one arbitrator to be appointed.- HELD: I find no substance in the preliminary objection raised by the learned counsel for the respondent that there is no arbitration clause in the Agreement. Clause 12 of the agreement which provides for arbitration reads thus;- If there be any dispute pertaining to meaning of this MoU or of any nature, will be solved and decided by appointing an independent Arbitrator acceptable to all the parties and if not solved by him can be referred to court of law and for which the jurisdiction will be Vadodara.- Bare reading of the above clause leaves no room for doubt that it is an `arbitration clause’ and expressly declares that any dispute pertaining to MoU would be solved and decided by an arbitrator.- I am also unable to uphold the argument of the learned counsel that there is no International Commercial Arbitration. The learned counsel for the respondent submitted that there is no `commercial’ element in the agreement and what was agreed between the parties was to provide `technical know-how’ and `expertise’ to the applicant-Company for which the respondent was to be paid `fees’.- It has not been disputed by the applicant-Company that if the contract is merely of an employment and the relationship between the parties is of master and servant, the matter cannot be referred to Arbitral Tribunal. But if the respondent is engaged by the applicant Company to perform functions which are inextricably linked with functions which could be undertaken by a businessman or by a Company and such activities form an integral part of his activities, there is element of `commerce’. In that case, the provisions of the Act would clearly apply.- In the instant case, the respondent has been appointed as Director (Technical) and has been allotted 40% equity shares in the subsidiary Company (Comed Bio-Tech Ltd.). Over and above that, he was to be paid salary and other benefits in lieu of services rendered by him. Para 3 of the Agreement required the respondent to undertake certain responsibilities.- Thus, from settled legal position as also from the functions to be performed by the respondent, I hold that the respondent was working in dual or double capacity, i.e. (i) as an employee, and (ii) as a Director. In the later capacity, however, he was the Chief Executive Officer of the subsidiary Company and had to look after all operational matters. The functions to be performed by him were supervisory and related to policy making decisions in the affairs of the Company, as observed by this Court in Ram Pershad. Any dispute between the applicant-Company and the respondent would, therefore, be covered by Clause 12 of the Agreement which provides for arbitration. Hence, the contention of the learned counsel for the respondent that the respondent was merely an employee and there was no element of business, trade or commerce has no substance and must be rejected.- For the foregoing reasons, in my opinion, the application filed by the Company must be allowed by holding that the case is covered by clause (f) of sub-section (1) of Section 2 of the Act. It is a case of International Commercial Arbitration and is covered by Clause 12 of MoU. Since there is a dispute between the parties, it has to be decided by an arbitrator. The clause extracted hereinabove provides for an arbitrator i.e. sole arbitrator and hence only one arbitrator should be appointed. I, therefore, appoint Mr. Madhukar Fanse, retired Judge, City Civil Court, Ahmedabad as the sole arbitrator to decide the dispute between the parties.
Emkay Global Financial Services Ltd. Vs. Girdhar Sondhi– Supreme Court Of India Judgment- (2018) 9 SCC 49 [Full PDF Judgment].

Judgments- Subject-Wise:

The Arbitration and Conciliation (Amendment) Bill, 2018- S-11(6-A)- S-11(3 (i)- Splendid Judicial interpretation- for international commercial arbitrations, appointments of arbitrators were to be made by an institution designated by the Supreme Court and for domestic arbitrations, by an institution designated by the concerned High Court- TRF Limited Energo Engineering Projects Limited [(2017) 8 SCC 377, 401 paragraph 42,43]– Duro Felguera S.A.v. Gangavaram Port Ltd. [(2017) 9 SCC 729]- Oriental Insurance Company Ltd. v. Nardheram Power and Steel Private Limited [(2018) 6 SCC 534, 547]- United Insurance Company Ltd. v. Hyundai Engineering and Construction Company Ltd. and others [ 2018 SCC OnLine SC 1045]- NCC Ltd. v. Indian Oil Corporation Ltd. (DelHC-ARB.P 115/2018)- Vidya Drolia and others v. Durga Trading Corporation (DelHC- Civil Appeal No. 2402 of 2019)- Himangi Enterprises v. Kamaljeet Singh Ahluwalia [ (2017) 10 SCC 706]- Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engineering Ltd. (BomHC- Civil Appeal No. 3631 of 2019 paragraph 25)- Coastal Marine Constructions & Engineering Ltd. v. Garware Wall Ropes Ltd. (BomHC- MANU/MH/0416/2018)- Union of India v. Hansoli Devi and others [ (2002) 7 SCC 273, 281 paragraph 9]-

Arbitration- International Foras:

Zurich Chamber of Commerce– Bleicherweg 5, Postfach 3058, Zürich- Switzerland- Covers all fields of industry and commerce- offers institutional arbitration to resolve out-of-court disputes between enterprises and individuals in Switzerland and abroad- Related Rules- International Arbitration Rules of Zurich Chamber of Commerce (1989)- Related Forum-The Court of Arbitration.

We, at Hello Counsel, have a significant experience of representing our clients before domestic & international Arbitral Tribunals in the matters involving complex financial issues. We undertake both arbitration and other forms of Alternative Dispute Resolution (ADR).

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Arbitration & Conciliation: Domestic & International