- The parties to a present dispute may make an agreement
called as the 'arbitration agreement' that instead of going to the court,
they shall refer the dispute to arbitration. The parties to the agreement
may refer to arbitration, a dispute:-
Thus, all matters of civil nature whether they relate
to present or future disputes may form the subject matter of reference.
Even disputes such as infringement of intellectual property rights shall
also be covered.
- Which has arisen or which may
arise between them,
- In respect of a defined legal
relationship, whether contractual or not.
- Although no formal document is prescribed,
an arbitration agreement/clause must be in writing. If the arbitration
agreement/clause is contained in a document, the document must be signed
by the concerned parties. Besides, the agreement may be established
by:- (i) an exchange of letters, telex, telegram or other means of telecommunications;
or (ii) an exchange of statements of claims and defence in which the
agreement is alleged by one party and is not denied by the other.
- The disputes that cannot be referred to arbitration
- Insolvency proceedings.
- Lunancy proceedings.
- Proceedings for appointment of
a guardian to a minor.
- Question of genuineness or otherwise
of a will or matter relating to issue of a probate.
- Matter of criminal nature.
- Matters concerning public charitable
- Disputes arising from and founded
on an illegal contract.
- The agreement mandatorily requires
the appointment of an arbitrator. An arbitrator is a person appointed,
with or without mutual consent of the contending parties, for the purpose
of investigation and settlement of a difference or dispute referred
to him. The arbitral tribunal may be constituted by one or more arbitrators.
The parties are free to fix the number of arbitrators by agreement.
Accordingly, the reference may be made either to a single arbitrator
or a panel of odd number (i.e. 3,5,7 etc) of arbitrators. If there is
no agreement, the reference shall be made to a sole arbitrator.
- Unless otherwise agreed by the parties,
an arbitrator may be of any nationality. In case of an international
commercial arbitration, where the parties belong to different nationalities,
the Chief Justice of India may appoint an arbitrator of a nationality
other than that of the parties.
- The parties are free to agree on a
procedure for appointing the arbitrator or arbitrators. If there is
such an agreement, the appointment has to be made in accordance with
it. The agreement may provide for the number of arbitrators, qualifications
of arbitrator, procedure of appointment, procedure of challenging the
appointment, termination of appointment, procedure to be followed by
arbitrators, place of arbitration, language, etc.
- The Duties of the Arbitral Tribunal
are:- (i) to act independently and impartially and treat the parties
equally; (ii) to give each party full opportunity to present his case.
- The parties may agree on the procedure
to be followed by the arbitral tribunal in conducting its proceedings.
In the absence of such agreement, the arbitral tribunal may conduct
the proceedings in the manner it considers appropriate and shall be
empowered to determine the admissibility, relevance, materiality and
weight of any evidence. The tribunal shall decide whether to hold oral
hearings for presentation of evidence or for oral argument, or whether
to conduct the proceedings on the basis of documents and other materials.
- An arbitral award shall be made in
writing and shall be signed by the members of the arbitral tribunal.
The award shall state its date and place of arbitration. The arbitral
award shall state the reasons upon which it is based, unless the parties
have agreed that no reasons are to be given or in case of award on a
settlement between the parties. A signed copy of the award shall be
delivered to each party.
- An arbitral award is itself enforceable
as a decree of the court, normally after three months from the date
on which it was received by the parties, provided no application for
setting aside the award is made or if it is made the same has been rejected.
The arbitral award shall be final and binding on the parties and persons
claiming under them respectively.
- The arbitral proceedings shall be terminated when:-
- The final arbitral award is made,
- The claimant withdraws his claim,
and the respondent does not object to it,
- The parties agree on the termination,
- The continuation of proceedings
has for any other reason become unnecessary or impossible.