The Arbitration and Conciliation Act, 1996
Part I - Comprehensive Educational Guide
The Arbitration and Conciliation Act, 1996
Part I - Arbitration (Sections 2 to 43)
Act No. 26 of 1996 | Enacted: 16th August, 1996 | Effective: 22nd August, 1996
📖 Introduction to Part I - Arbitration
The Arbitration and Conciliation Act, 1996 was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, and enforcement of foreign arbitral awards. It is based on the UNCITRAL Model Law on International Commercial Arbitration (1985).
🎯 Key Objectives of the Act
- To provide a fair and efficient mechanism for dispute resolution
- To minimize judicial intervention in arbitration proceedings
- To ensure speedy disposal of disputes
- To recognize and enforce foreign arbitral awards
- To promote institutional arbitration
📋 Structure of Part I
| Chapter | Title | Sections | Key Focus |
|---|---|---|---|
| I | General Provisions | 2-6 | Definitions & Basic Framework |
| II | Arbitration Agreement | 7-9 | Formation & Interim Measures |
| III | Composition of Tribunal | 10-15 | Arbitrator Appointment & Challenge |
| IV | Jurisdiction | 16-17 | Tribunal's Powers |
| V | Conduct of Proceedings | 18-27 | Procedural Aspects |
| VI | Making of Award | 28-33 | Award Formation |
| VII | Recourse Against Award | 34 | Setting Aside |
| VIII | Finality & Enforcement | 35-36 | Execution of Awards |
| IX | Appeals | 37 | Appealable Orders |
| X | Miscellaneous | 38-43 | Additional Provisions |
📊 Arbitration Process Flowchart
(Section 7)
(Section 9 - Optional)
(Sections 10-11)
(Sections 12-15)
(Section 16)
(Section 17)
(Sections 18-27)
(Section 23)
(Section 24)
(Section 30)
(Section 31)
Section 34?
(Within 3 months)
(Section 35)
(Section 36 - As Decree of Court)
🧠 Mind Map - Part I Overview
ACT 1996
PART I
(Ch. I: S.2-6)
(Ch. II: S.7-9)
(Ch. III: S.10-15)
(Ch. IV: S.16-17)
(Ch. V: S.18-27)
(Ch. VI: S.28-33)
(Ch. VII: S.34)
(Ch. VIII-X)
🗺️ Roadmap - Journey Through Arbitration
PRE-ARBITRATION STAGE
Section 7: Verify valid arbitration agreement exists
Section 8: Court refers parties to arbitration
Section 9: Seek interim measures from Court
CONSTITUTION OF TRIBUNAL
Section 10: Odd number (usually 1 or 3)
Section 11: By parties or Court/Institution
Sections 12-15: Grounds and procedure
JURISDICTION DETERMINATION
Section 16: Tribunal decides own jurisdiction
Section 17: Tribunal grants interim measures
CONDUCT OF PROCEEDINGS
Section 18: Fair opportunity to both parties
Section 23: Claim and Defence statements
Sections 24-27: Oral/Written proceedings
MAKING OF AWARD
Section 29A: 12 months from pleadings
Section 31: Written, signed, reasoned award
Section 31A: Costs regime
POST-AWARD STAGE
Section 34: Setting aside within 3 months
Section 35: Award becomes final and binding
Section 36: Execute as Court decree
CHAPTER I - GENERAL PROVISIONS
Section 2 - Definitions
Fundamental📌 Simple Explanation
Section 2 is the dictionary of the Act. It defines all the important words and terms used throughout Part I. Just like how you need to know what words mean before reading a book, this section tells us what each legal term means in the context of arbitration.
🔑 Key Definitions
| Term | Definition | Practical Meaning |
|---|---|---|
| Arbitration | Any arbitration whether or not administered by permanent arbitral institution | Private dispute resolution by chosen neutral person(s) |
| Arbitration Agreement | Agreement referred to in Section 7 | Written contract to resolve disputes through arbitration |
| Arbitral Award | Includes an interim award | Final decision of arbitrator(s), like a court judgment |
| Arbitral Tribunal | Sole arbitrator or panel of arbitrators | The decision-maker(s) in arbitration |
| Court | Principal Civil Court of original jurisdiction in a district (domestic); High Court (international) | Court with authority over arbitration matters |
| International Commercial Arbitration | Arbitration involving party from another country | When at least one party is foreign national/company |
💡 Practical Example
Scenario: ABC Ltd. (Indian company) has a contract with XYZ Inc. (US company) containing a clause: "All disputes shall be resolved by arbitration in Mumbai."
Application:
- This is an "International Commercial Arbitration" because XYZ Inc. is from USA
- The "Court" with jurisdiction will be the Bombay High Court
- The clause itself is the "Arbitration Agreement"
📚 Leading Case Law
Held: The Supreme Court held that Part I applies only when the place (seat) of arbitration is in India. The "seat" determines which country's courts have supervisory jurisdiction over the arbitration.
Significance: This landmark judgment clarified the territorial application of Part I and established that Indian courts cannot interfere with foreign-seated arbitrations under Part I.
Section 3 - Receipt of Written Communications
Procedural📌 Simple Explanation
This section tells us when a letter or notice is considered "delivered" in arbitration. It's like the postal rules for arbitration - when you send a notice to someone, the law says it's delivered when it reaches their office, home, or last known address.
🔑 Key Points
- Personal Delivery: Communication received when delivered to the person directly
- Place of Business: Delivered at office/business premises
- Habitual Residence: Delivered at permanent home address
- Last Known Address: If none of above found, sent by registered post to last known address
- Date of Receipt: Communication deemed received on the day it is delivered
💡 Practical Example
Scenario: Party A wants to start arbitration against Party B. Party A sends notice to Party B's office in Delhi on March 1st. The notice reaches the office on March 3rd.
Application: The communication is deemed to have been received on March 3rd (the day of delivery), not March 1st (the day of sending). This date becomes important for calculating time limits.
📚 Leading Case Law
Significance: Parties cannot escape arbitration by refusing to accept communications.
Section 4 - Waiver of Right to Object
Important📌 Simple Explanation
This is the "speak now or forever hold your peace" rule of arbitration. If you know something is wrong in the arbitration proceedings but you stay silent and continue participating, you lose your right to complain about it later. It's like watching someone break a rule in a game but not saying anything until you lose - you can't complain then!
🔑 Key Points
- Knowledge Requirement: Party must know about the non-compliance
- Continuing Participation: Party proceeds with arbitration despite knowing
- Timely Objection Required: Must object without undue delay
- Deemed Waiver: Silence = acceptance of the irregularity
- Applies to: Derogable provisions and arbitration agreement requirements
💡 Practical Example
Scenario: In an arbitration, the agreement says hearings should be in English. However, the Tribunal conducts hearings in Hindi. Party X knows this but participates in all hearings without objection. After losing, Party X challenges the award saying wrong language was used.
Application: Party X has waived the right to object because they knew about the deviation, continued to participate, and didn't raise any objection at the time. The challenge will likely fail under Section 4.
📚 Leading Case Law
Significance: Reinforces that procedural objections must be raised promptly, not saved as a backup challenge strategy.
Section 5 - Extent of Judicial Intervention
Fundamental📌 Simple Explanation
This is one of the most important sections! It tells courts: "Stay out of arbitration unless this Act specifically allows you to step in." Think of it as a "Do Not Disturb" sign that arbitration puts up for courts. The whole purpose of arbitration is to avoid court battles, so courts should only interfere when absolutely necessary and when the Act permits.
🔑 Key Points
- Minimum Intervention Principle: Courts should intervene minimally
- Overriding Effect: Applies despite any other law
- Limited Scope: Only intervene where Act permits
- Party Autonomy: Respects parties' choice to arbitrate
📋 When Courts CAN Intervene (Limited Exceptions)
| Section | Purpose of Intervention |
|---|---|
| Section 8 | Refer parties to arbitration |
| Section 9 | Grant interim measures |
| Section 11 | Appoint arbitrators |
| Section 27 | Assist in taking evidence |
| Section 34 | Set aside arbitral award |
| Section 36 | Enforce arbitral award |
| Section 37 | Hear appeals |
💡 Practical Example
Scenario: During ongoing arbitration, one party files a civil suit in court on the same matter, arguing that the arbitrator is taking too long.
Application: The court should dismiss the suit under Section 5. The Act provides specific remedies (like Section 29A for time extension) - the party cannot bypass the arbitration process by going to court directly.
📚 Leading Case Law
Significance: This case is cited frequently to prevent unnecessary court interference in arbitration proceedings.
Section 6 - Administrative Assistance
Facilitative📌 Simple Explanation
Arbitration needs someone to handle logistics - arranging meeting rooms, managing documents, sending notices, etc. This section allows parties or the tribunal to hire an institution or person to handle these administrative tasks. Think of it like hiring an event manager for your arbitration!
🔑 Key Points
- Purpose: Facilitate smooth conduct of proceedings
- Who Can Arrange: Parties or Tribunal (with party consent)
- Assistance By: Institution or individual person
- Examples: Venue booking, document management, scheduling
💡 Practical Example
Scenario: Two companies are in a complex arbitration with multiple hearings, hundreds of documents, and witnesses from different cities.
Application: They can engage an arbitral institution like Mumbai Centre for International Arbitration (MCIA) or Delhi International Arbitration Centre (DIAC) to provide administrative support - venue, transcription services, document management, and communication handling.
📚 Leading Case Law
Significance: Encourages use of institutional support while maintaining integrity of arbitration process.
CHAPTER II - ARBITRATION AGREEMENT
Section 7 - Arbitration Agreement
Fundamental📌 Simple Explanation
This section is the foundation of all arbitration. It defines what an arbitration agreement is and what makes it valid. An arbitration agreement is simply a promise between parties that if any dispute arises, they will resolve it through arbitration instead of going to court. This agreement MUST be in writing - verbal agreements don't count!
🔑 Essential Requirements
- Agreement to Arbitrate: Clear intention to resolve disputes through arbitration
- Disputes Covered: Can cover existing OR future disputes
- Defined Legal Relationship: Must relate to a specific relationship (contractual or non-contractual)
- Must Be in Writing: Mandatory requirement
📋 What Qualifies as "In Writing"?
| Form | Example | Valid? |
|---|---|---|
| Signed Document | Contract with arbitration clause signed by both parties | ✅ Yes |
| Exchange of Letters | Offer letter with arbitration clause + Acceptance letter | ✅ Yes |
| Emails/Electronic | Email exchange agreeing to arbitration | ✅ Yes |
| Claim & Defence | One party alleges agreement, other doesn't deny | ✅ Yes |
| Reference to Document | Contract referring to another document with arbitration clause | ✅ Yes |
| Verbal Agreement | Oral discussion agreeing to arbitrate | ❌ No |
💡 Practical Examples
Example 1 - Arbitration Clause:
Example 2 - Separate Agreement:
After a dispute arises, parties sign a separate document agreeing to refer their existing dispute to arbitration - this is also valid.
Example 3 - Reference by Incorporation:
Purchase Order says: "This order is subject to our General Terms and Conditions." The General Terms contain an arbitration clause. If the PO is signed, the arbitration clause becomes part of the contract.
📚 Leading Case Law
Held: The Supreme Court laid down a comprehensive test for determining validity of arbitration agreements and arbitrability of disputes. It held that courts should adopt a prima facie approach and not conduct a mini-trial while examining arbitration agreements under Section 8 or 11.
Significance: Landmark judgment clarifying the approach to examining arbitration agreements and expanding scope of arbitrable disputes.
Section 8 - Power to Refer Parties to Arbitration
Mandatory📌 Simple Explanation
What happens if someone ignores the arbitration agreement and files a court case instead? This section says the court MUST send them back to arbitration! It's like a bouncer at a club - if you have a valid arbitration agreement, the court will redirect you: "Sorry, you can't sue here, go to arbitration!"
🔑 Key Requirements
- Valid Arbitration Agreement: Must exist between parties
- Application Required: Party must apply for reference
- Timing: Application must be made before submitting first statement on substance
- Court's Duty: MUST refer unless agreement is prima facie invalid
- Mandatory Nature: Word used is "shall" - court has no discretion
📋 Procedure for Reference
| Step | Action | Time Limit |
|---|---|---|
| 1 | Party A files suit despite arbitration agreement | - |
| 2 | Party B files application under Section 8 | Before first statement on merits |
| 3 | Attach original/certified copy of agreement | With application |
| 4 | Court examines prima facie validity | - |
| 5 | If valid, court refers parties to arbitration | Mandatory |
💡 Practical Example
Scenario: Supplier and Buyer have a contract with an arbitration clause. Buyer defaults on payment. Supplier files a money recovery suit in civil court instead of invoking arbitration.
What Buyer Should Do:
- Immediately file application under Section 8 before filing written statement
- Attach the contract with arbitration clause
- Request court to refer matter to arbitration
Result: Court will stay the suit and direct parties to arbitrate. The suit cannot continue.
📚 Leading Case Law
Significance: Reinforces minimal judicial intervention and respects tribunal's jurisdiction under Section 16.
Section 9 - Interim Measures by Court
Critical📌 Simple Explanation
Sometimes you can't wait for the final arbitration result. What if the other party is selling off assets to become judgment-proof? What if evidence is being destroyed? Section 9 allows you to ask the court for emergency protection measures - before, during, or after arbitration (but before enforcement). It's like calling the police before the crime is completed!
🔑 When Can You Apply?
- Before Arbitration: When urgency exists and tribunal not yet formed
- During Arbitration: When tribunal's remedy won't be effective
- After Award: Before enforcement under Section 36
📋 Types of Interim Measures Available
| Type | Purpose | Example |
|---|---|---|
| Preservation of Goods | Protect subject matter | Prevent sale of disputed machinery |
| Securing Amount | Ensure money available for award | Attachment of bank accounts |
| Detention of Property | Preserve evidence/property | Sealing disputed warehouse |
| Interim Injunction | Stop harmful action | Prevent construction on disputed land |
| Appointment of Receiver | Neutral management | Receiver to manage disputed business |
| Guardian Appointment | Protect minor's interest | Guardian for minor party |
⚠️ Important Restrictions (Post 2015 Amendment)
- If order passed before arbitration, proceedings must commence within 90 days
- Once tribunal is constituted, court won't entertain application unless Section 17 remedy is not efficacious
💡 Practical Example
Scenario: Party A and Party B are in a construction dispute. Party A learns that Party B is planning to transfer its only valuable property (worth ₹50 crores) to a third party. Arbitration hasn't started yet.
Action: Party A can immediately file Section 9 application seeking:
- Injunction restraining Party B from transferring the property
- Attachment of the property as security for the claim
Post-Order Obligation: Party A must commence arbitration within 90 days of the court order.
📚 Leading Case Law
Significance: Balances party's right to interim relief with principle of minimal judicial intervention.
CHAPTER III - COMPOSITION OF ARBITRAL TRIBUNAL
Section 10 - Number of Arbitrators
Basic📌 Simple Explanation
How many referees do you need for your arbitration match? This section says parties can choose, but the number must be ODD (1, 3, 5, etc.) - never even. Why? Because with an even number, there might be a tie! If parties don't specify, the default is ONE arbitrator (sole arbitrator).
🔑 Key Points
- Party Autonomy: Parties free to choose the number
- Odd Number Only: Must not be even (to avoid deadlock)
- Default Rule: If not specified = Sole Arbitrator
- Common Choices: 1 arbitrator (simpler disputes) or 3 arbitrators (complex disputes)
📋 Comparison: Sole vs. Panel
| Aspect | Sole Arbitrator | Panel of 3 |
|---|---|---|
| Cost | Lower | Higher |
| Speed | Generally faster | May take longer |
| Expertise | Limited to one person | Diverse expertise |
| Risk of Bias | Higher perceived risk | Lower (checks & balances) |
| Suitable For | Simpler, lower value disputes | Complex, high value disputes |
💡 Practical Example
Clause Example: "The dispute shall be resolved by a tribunal of three arbitrators, with each party appointing one arbitrator and the two appointed arbitrators selecting the presiding arbitrator."
Invalid Clause: "The dispute shall be resolved by two arbitrators" - This violates Section 10 as the number is even.
📚 Leading Case Law
Significance: Reinforces the statutory mandate against even-numbered tribunals to prevent deadlocks.
Section 11 - Appointment of Arbitrators
Critical📌 Simple Explanation
This section explains how to pick your arbitrator(s). Parties have freedom to decide the appointment procedure. If they can't agree or the procedure fails, they can approach the Supreme Court (for international commercial arbitration) or High Court (for domestic arbitration) to appoint arbitrators.
🔑 Appointment Methods
| Scenario | Procedure | Time Limit |
|---|---|---|
| Sole Arbitrator - Mutual Agreement | Parties agree on one name | 30 days from request |
| Three Arbitrators | Each party appoints one; those two appoint third | 30 days for each stage |
| Failure to Appoint | Court/designated institution appoints | 60 days (endeavor) |
📋 Court with Jurisdiction
- International Commercial Arbitration: Supreme Court of India
- Domestic Arbitration: High Court having jurisdiction over the principal civil court
⚠️ Important Post-2015 Changes
- Court must only examine existence of arbitration agreement (Section 11(6A))
- Court can designate institutions to make appointments
- Decision on appointment is final - no appeal including Letters Patent Appeal
- High Court may frame rules for arbitrator fees (Fourth Schedule rates)
💡 Practical Example
Scenario: ABC Ltd. (Delhi) and XYZ Ltd. (Mumbai) have a contract with arbitration clause saying "disputes to be settled by sole arbitrator mutually appointed." A dispute arises, and ABC suggests Mr. Sharma as arbitrator, but XYZ doesn't respond for 45 days.
Action: ABC can file application under Section 11(5) before the High Court having jurisdiction (likely Delhi or Mumbai based on where civil court jurisdiction lies) requesting court to appoint arbitrator since 30 days have passed without agreement.
📚 Leading Case Law
Significance: Major decision affecting government contracts where PSUs had unilateral appointment rights.
Section 12 - Grounds for Challenge
Important📌 Simple Explanation
Can you challenge your arbitrator? Yes! This section says an arbitrator must be independent and impartial - like a fair judge. Before accepting appointment, they must disclose anything that might make them biased. If there are reasons to doubt their fairness, you can challenge them. The Fifth Schedule lists examples of such relationships.
🔑 Key Requirements
- Mandatory Disclosure: Arbitrator must disclose any circumstances affecting independence/impartiality
- Ongoing Duty: Disclosure duty continues throughout proceedings
- Challenge Grounds: Justifiable doubts about independence/impartiality, OR lack of agreed qualifications
- Seventh Schedule: Lists relationships that make a person INELIGIBLE to be arbitrator
📋 Examples of Disqualifying Relationships (Fifth & Seventh Schedules)
| Category | Examples |
|---|---|
| With Parties | Employee, consultant, shareholder, family relationship |
| With Counsel | Same law firm, close family member of counsel |
| With Dispute | Previous involvement, given legal advice on the dispute |
| Financial Interest | Shares in party company, financial stake in outcome |
💡 Practical Example
Scenario: In an arbitration between Company A and Company B, it's discovered that the arbitrator's son works as a senior manager in Company A.
Application:
- This falls under "close family relationship" in the Seventh Schedule
- The arbitrator should have disclosed this before accepting
- Company B can challenge the arbitrator under Section 12(3)
- If the arbitrator knew and didn't disclose, this is a serious breach
📚 Leading Case Law
Significance: Clarifies the distinction between challengeable (Fifth Schedule) and ineligible (Seventh Schedule) situations.
Section 13 - Challenge Procedure
Procedural📌 Simple Explanation
So you want to challenge an arbitrator - how do you actually do it? This section provides the procedure. You must send a written statement explaining your reasons to the tribunal within 15 days of knowing about the issue. If the challenge fails, the arbitration continues, but you can still raise this issue when challenging the final award.
🔑 Challenge Procedure
| Step | Action | Timeline |
|---|---|---|
| 1 | Party becomes aware of grounds for challenge | - |
| 2 | Send written statement of reasons to tribunal | Within 15 days |
| 3 | If arbitrator withdraws or other party agrees - Challenge succeeds | - |
| 4 | If not - Tribunal decides on challenge | - |
| 5 | If unsuccessful - Tribunal continues and makes award | - |
| 6 | Challenge can be raised in Section 34 application | Within 3 months of award |
💡 Practical Example
Scenario: On January 10th, Party A discovers that the arbitrator has financial dealings with Party B. Party A must act quickly.
Timeline:
- January 10: Discovery of conflict
- By January 25: File written challenge (15 days)
- If tribunal rejects challenge, continue arbitration
- After award - can challenge under Section 34
📚 Leading Case Law
Significance: Parties must be vigilant and raise challenges promptly.
Section 14 - Failure or Impossibility to Act
Procedural📌 Simple Explanation
What if your arbitrator becomes seriously ill, dies, or simply stops doing their job? This section provides that the arbitrator's appointment ends (mandate terminates) if they become unable to act or fail to act without good reason. A substitute arbitrator is then appointed.
🔑 When Mandate Terminates
- De Jure Inability: Legal impossibility (e.g., becomes ineligible under law)
- De Facto Inability: Practical impossibility (e.g., serious illness, death)
- Failure to Act: Unexplained delays or inaction
- Withdrawal: Arbitrator voluntarily withdraws
- Party Agreement: Both parties agree to terminate mandate
💡 Practical Example
Scenario 1: The arbitrator suffers a stroke and is hospitalized indefinitely - de facto inability
Scenario 2: The arbitrator doesn't schedule any hearings for 6 months without explanation - failure to act
Scenario 3: It's discovered the arbitrator was convicted of fraud after appointment - de jure inability
Action: In any case, parties can apply to Court under Section 14(2) if there's controversy about termination of mandate.
📚 Leading Case Law
Significance: Provides guidance on when Section 14 can be invoked for arbitrator's failure to act.
Section 15 - Termination of Mandate and Substitution
Procedural📌 Simple Explanation
When an arbitrator leaves (for any reason), what happens next? This section says a replacement must be appointed using the same procedure that was used for the original appointment. The good news is that previous hearings and orders don't automatically become invalid - the new arbitrator picks up where the old one left off.
🔑 Key Points
- Reasons for Termination: Withdrawal, party agreement, Section 13/14 situations
- Substitution Method: Same rules as original appointment apply
- Previous Hearings: May be repeated at new tribunal's discretion (unless parties agree otherwise)
- Previous Orders: Remain valid despite change in composition
💡 Practical Example
Scenario: In a 3-arbitrator panel, one party-appointed arbitrator resigns after 5 hearings have been conducted.
Process:
- The party who appointed the resigning arbitrator appoints a substitute
- The new arbitrator reviews records of previous hearings
- The reconstituted tribunal decides whether to repeat any hearings
- Previous interim orders remain valid
- Arbitration continues from the stage already reached
📚 Leading Case Law
Significance: Prevents parties from using arbitrator changes as a delay tactic.
CHAPTER IV - JURISDICTION OF ARBITRAL TRIBUNALS
Section 16 - Competence of Arbitral Tribunal to Rule on Its Jurisdiction
Fundamental📌 Simple Explanation
This is the famous "Kompetenz-Kompetenz" principle! It means the arbitral tribunal has the power to decide whether it has the power to hear the case. If someone says "this tribunal has no jurisdiction," the tribunal itself can decide whether that's true. Also, even if the main contract is void, the arbitration clause can survive separately.
🔑 Key Principles
- Self-Judging Power: Tribunal can rule on its own jurisdiction
- Separability Doctrine: Arbitration clause is independent of main contract
- Contract Void ≠ Clause Void: If main contract is void, arbitration clause can still be valid
- Timing of Objection: Jurisdiction objection must be raised with statement of defence
- Scope Objection: Must be raised when the matter is raised
💡 Practical Example
Scenario: Party A claims the entire contract was induced by fraud and is void. Party B invokes arbitration clause in that contract.
Application:
- Even if the contract is found void due to fraud, the arbitration clause survives
- The tribunal can examine whether the contract was fraudulent
- The arbitration clause is treated as a separate agreement
- This is the "Separability Doctrine" in action
📚 Leading Case Law
Significance: Strengthens tribunal autonomy and reduces judicial interference at preliminary stages.
Section 17 - Interim Measures Ordered by Arbitral Tribunal
Critical📌 Simple Explanation
After the 2015 Amendment, the arbitral tribunal has the same power as courts to grant interim protection! No need to run to court - you can ask your arbitrator for injunctions, attachments, or preservation orders. The tribunal's orders are now enforceable like court orders.
🔑 Powers of Tribunal (Same as Court)
- Appointment of guardian for minor/person of unsound mind
- Preservation, custody or sale of disputed goods
- Securing disputed amount
- Detention, preservation or inspection of property
- Interim injunction
- Appointment of receiver
- Any other measure deemed just and convenient
📋 Section 9 vs Section 17 Comparison
| Aspect | Section 9 (Court) | Section 17 (Tribunal) |
|---|---|---|
| Authority | Court | Arbitral Tribunal |
| When Available | Before, during, after arbitration | During arbitration only |
| Enforcement | Directly as court order | Deemed court order (post-2015) |
| Preference | Secondary (after tribunal constituted) | Primary (once constituted) |
⚠️ Key Change by 2015 Amendment
Section 17 orders are now deemed to be orders of the Court and enforceable under CPC like court orders. This was a game-changer as earlier tribunal orders had no enforcement mechanism!
💡 Practical Example
Scenario: During arbitration, Party A learns that Party B is disposing of its assets. The tribunal is already constituted.
Action:
- Party A files application under Section 17 before the tribunal
- Tribunal grants injunction restraining asset disposal
- If Party B disobeys, Section 17(2) kicks in
- Party A can enforce the order like a court decree
📚 Leading Case Law
Significance: Landmark decision recognizing Emergency Arbitrator awards as enforceable, expanding the scope of Section 17.
CHAPTER V - CONDUCT OF ARBITRAL PROCEEDINGS
Section 18 - Equal Treatment of Parties
Fundamental📌 Simple Explanation
This is the golden rule of arbitration - FAIRNESS. Both parties must be treated equally, and each must get a full opportunity to present their case. It's like the principle of natural justice - hear both sides before deciding. If this is violated, the entire award can be set aside!
🔑 Dual Requirements
- Equality: Both parties treated on equal footing
- Full Opportunity: Each party given proper chance to present case
📋 What Equal Treatment Means
| Aspect | Equal Treatment Requirement |
|---|---|
| Notice | Same notice period to both parties |
| Hearings | Equal time to present arguments |
| Documents | Access to all documents given to other party |
| Witnesses | Equal opportunity to call and cross-examine |
| Communication | No ex-parte communication with tribunal |
📚 Leading Case Law
Section 19 - Determination of Rules of Procedure
Procedural📌 Simple Explanation
Arbitration is NOT bound by rigid court procedures. The tribunal doesn't have to follow the Civil Procedure Code or Evidence Act! Parties are free to agree on their own procedures, and if they don't, the tribunal can conduct proceedings as it thinks appropriate. This flexibility is a key advantage of arbitration.
🔑 Key Freedoms
- Not Bound by CPC: Tribunal need not follow court procedures
- Not Bound by Evidence Act: Flexible evidence rules
- Party Agreement: Parties can agree on procedure
- Tribunal Discretion: If no agreement, tribunal decides
- Evidence Control: Tribunal determines admissibility, relevance, weight
📚 Leading Case Law
Section 20 - Place of Arbitration
Important📌 Simple Explanation
Where should arbitration happen? The "seat" or "place" of arbitration is crucial - it determines which country's laws will govern the arbitration. Parties can choose the place. If they don't, the tribunal decides based on convenience. Note: Actual hearings can happen anywhere, but the legal "seat" is what matters for jurisdiction.
🔑 Important Distinction
- Seat/Place: Juridical seat - determines governing law and court jurisdiction
- Venue: Physical location of hearings - can be different from seat
📚 Leading Case Law
Section 21 - Commencement of Arbitral Proceedings
Procedural📌 Simple Explanation
When does arbitration officially start? On the date the respondent receives the request to arbitrate. This date is important for calculating limitation periods and time limits.
📚 Case Law
Section 22 - Language
Procedural📌 Simple Explanation
Parties can choose the language of arbitration. If they don't, the tribunal decides. Documents may need translation into the chosen language.
Section 23 - Statements of Claim and Defence
Procedural📌 Simple Explanation
Like pleadings in court - claimant files statement of claim, respondent files defence. The respondent can also file counterclaims. After 2019 amendment, pleadings must be completed within 6 months of arbitrator receiving notice of appointment.
📚 Case Law
Section 24 - Hearings and Written Proceedings
Procedural📌 Simple Explanation
Tribunal can decide whether to have oral hearings or decide on documents only. However, if a party requests oral hearing, it must be granted. Hearings should be day-to-day, and adjournments should only be for sufficient cause.
Section 25 - Default of a Party
Procedural📌 Simple Explanation
What if a party doesn't participate? If claimant doesn't file claim - proceedings terminate. If respondent doesn't file defence - proceedings continue (but it's not treated as admission). If a party doesn't appear at hearing - tribunal can proceed and decide on available evidence.
📚 Case Law
Section 26 - Expert Appointed by Arbitral Tribunal
Procedural📌 Simple Explanation
Tribunal can appoint experts to help understand technical issues. Parties can question the expert. Note: Section 26 was omitted in some amendments but the provision for tribunal-appointed experts remains in practice.
Section 27 - Court Assistance in Taking Evidence
Important📌 Simple Explanation
Sometimes witnesses won't cooperate with arbitration. The tribunal (or party with tribunal approval) can ask the court for help - issuing summons, compelling witness attendance, etc. The court can treat uncooperative witnesses as in contempt.
📚 Case Law
CHAPTER VI - MAKING OF ARBITRAL AWARD
Section 28 - Rules Applicable to Substance of Dispute
Important📌 Simple Explanation
What law should the tribunal apply to decide the dispute? For domestic arbitration - Indian law applies mandatorily. For international commercial arbitration - parties can choose any country's law. The tribunal must always consider contract terms and trade usages.
🔑 Applicable Law Rules
| Type | Applicable Law |
|---|---|
| Domestic Arbitration | Indian substantive law (mandatory) |
| International Commercial | Law chosen by parties; if not chosen, tribunal decides |
📚 Case Law
Section 29 - Decision Making by Panel of Arbitrators
Procedural📌 Simple Explanation
In a panel of 3 arbitrators, how is decision made? By majority vote. Procedural matters can be decided by presiding arbitrator alone if authorized.
Section 29A - Time Limit for Arbitral Award
Critical📌 Simple Explanation
One of the most important post-2015 provisions! Domestic arbitration award must be made within 12 months from completion of pleadings. Parties can extend by 6 more months. Beyond that, court permission needed. If tribunal causes delay, fees can be reduced!
🔑 Timeline
| Period | Duration | Authority |
|---|---|---|
| Initial Period | 12 months from pleadings | Automatic |
| First Extension | 6 months | Party consent |
| Further Extension | As needed | Court approval |
| Penalty for Delay | Up to 5% fee reduction/month | Court imposed |
📚 Case Law
Section 29B - Fast Track Procedure
Special📌 Simple Explanation
Want quicker arbitration? Opt for Fast Track! Decision based on documents only (no oral hearings unless necessary), sole arbitrator, and award within 6 months. Great for simpler disputes or where parties want speed.
🔑 Fast Track Features
- Written consent of parties required
- Usually sole arbitrator
- Documents-based decision (no oral hearing usually)
- Award within 6 months
- Technical formalities dispensed with
Section 30 - Settlement
Facilitative📌 Simple Explanation
Tribunal can encourage parties to settle. If parties agree to settle during arbitration, the settlement can be recorded as an "Award on Agreed Terms" - this has the same force as a regular arbitral award. It's enforceable as a decree!
📚 Case Law
Section 31 - Form and Contents of Arbitral Award
Important📌 Simple Explanation
What should the award look like? It must be in writing, signed by arbitrators, give reasons (unless parties agreed no reasons needed), state the date and place, and be delivered to parties. The tribunal can grant interest on the awarded amount.
🔑 Essential Elements of Award
- In Writing: Mandatory
- Signed: By arbitrators (majority sufficient)
- Reasons: Required (unless waived by parties)
- Date & Place: Must be stated
- Interest: Can be awarded at reasonable rate
- Post-Award Interest: 2% above current rate (automatic)
📚 Case Law
Section 31A - Regime for Costs
Important📌 Simple Explanation
Post-2015 Amendment brought a structured costs regime. General rule: loser pays. But tribunal has discretion based on party conduct, partial success, frivolous counterclaims, and refusal of reasonable settlement offers. Costs include arbitrator fees, legal fees, institutional fees, etc.
🔑 Costs Determination Factors
- Conduct of parties
- Partial success in claims
- Frivolous counterclaims causing delay
- Reasonable settlement offers refused
Section 32 - Termination of Proceedings
Procedural📌 Simple Explanation
When do arbitration proceedings end? By final award, OR by tribunal order when claimant withdraws, parties agree to terminate, or continuation becomes unnecessary/impossible. Tribunal's mandate ends with termination.
Section 33 - Correction and Interpretation of Award
Post-Award📌 Simple Explanation
Made a calculation error? Need clarification on award? Within 30 days of receiving award, parties can request tribunal to correct errors or interpret specific points. Tribunal can also make additional award for claims presented but omitted from the award.
🔑 Post-Award Remedies
| Remedy | Time to Request | Time to Decide |
|---|---|---|
| Correction of errors | 30 days | 30 days |
| Interpretation | 30 days | 30 days |
| Additional award | 30 days | 60 days |
📚 Case Law
CHAPTER VII - RECOURSE AGAINST ARBITRAL AWARD
Section 34 - Application for Setting Aside Arbitral Award
Critical📌 Simple Explanation
Don't like the award? Section 34 is your ONLY remedy! You can apply to court to set aside the award, but only on specific grounds. Courts cannot review the merits - they can only check if proper procedure was followed and if the award violates public policy. Time limit: 3 months (extendable by 30 days for sufficient cause).
🔑 Grounds for Setting Aside
| Category | Grounds (To be proved by Applicant) |
|---|---|
| Section 34(2)(a) | Party incapacity, invalid agreement, improper notice, award beyond scope, procedural irregularity |
| Section 34(2)(b) | Non-arbitrable subject matter, conflict with public policy |
| Section 34(2A) | Patent illegality on face of award (domestic only) |
📋 Public Policy Test (Post-2015)
Award conflicts with public policy ONLY if:
- Induced by fraud or corruption
- Violates Section 75 or 81 (confidentiality in conciliation)
- Contravenes fundamental policy of Indian law
- Conflicts with basic notions of morality or justice
⚠️ Key Limitations
- NO review on merits of dispute
- NO re-appreciation of evidence
- Erroneous application of law is NOT sufficient ground
- Must file within 3 months + 30 days (maximum)
📚 Leading Case Law
CHAPTER VIII - FINALITY AND ENFORCEMENT
Section 35 - Finality of Arbitral Awards
Important📌 Simple Explanation
Subject to this Part (including Section 34), an arbitral award is FINAL and BINDING. Once the time for challenge under Section 34 expires, the award becomes conclusive - like a court judgment. Parties cannot reopen matters decided in the award.
📚 Case Law
Section 36 - Enforcement
Critical📌 Simple Explanation
The award is useless if you can't enforce it. Section 36 says once the time for Section 34 application expires (or if filed, once disposed), the award is enforceable as a decree of court under CPC. Post-2015: Filing a Section 34 application doesn't automatically stay enforcement - you need a separate stay order.
🔑 Enforcement Rules
- Award enforceable like court decree under CPC
- Section 34 application doesn't automatic stay enforcement
- Separate stay application needed
- Court may grant stay with conditions
- Fraud/corruption in award-making → unconditional stay
📚 Case Law
CHAPTER IX - APPEALS
Section 37 - Appealable Orders
Important📌 Simple Explanation
Not every order can be appealed! Section 37 lists specific orders that CAN be appealed. This is an exhaustive list - if the order isn't listed here, no appeal lies. No second appeal from Section 37 order, but Supreme Court appeal remains available.
🔑 Appealable Orders
| From Court Orders | From Tribunal Orders |
|---|---|
| Refusing to refer to arbitration (Section 8) | Accepting jurisdiction plea (Section 16) |
| Granting/refusing interim measures (Section 9) | Granting/refusing interim measures (Section 17) |
| Setting aside/refusing to set aside award (Section 34) | - |
📚 Case Law
CHAPTER X - MISCELLANEOUS
Section 38 - Deposits
Financial📌 Simple Explanation
Arbitration costs money! Tribunal can ask parties to deposit money in advance for expected costs. Usually split equally. If one party doesn't pay, the other can pay their share. If neither pays, proceedings can be suspended or terminated. Unused deposits are returned after arbitration.
Section 39 - Lien on Arbitral Award
Financial📌 Simple Explanation
Arbitrators have a lien (legal right to hold) on the award until their fees are paid. If they refuse to deliver the award without payment, a party can apply to court - court can order delivery on depositing the fees with court, and then determine reasonable fees.
Section 40 - Death of Party
Special📌 Simple Explanation
If a party dies, does the arbitration agreement die too? No! The agreement survives and is enforceable by/against the legal representatives of the deceased. The arbitrator's mandate also continues despite a party's death.
📚 Case Law
Section 41 - Provisions in Case of Insolvency
Special📌 Simple Explanation
If a party becomes insolvent (bankrupt), the arbitration agreement survives if the receiver (Official Assignee) adopts the contract. Disputes required for insolvency proceedings can be referred to arbitration by court order.
Section 42 - Jurisdiction
Critical📌 Simple Explanation
Once you approach a court for any application under Part I, ONLY that court has jurisdiction over all subsequent applications. This prevents forum shopping - parties can't go to different courts for different applications hoping for favorable treatment.
📚 Case Law
Section 42A - Confidentiality of Information
2019 Amendment📌 Simple Explanation
Added by 2019 Amendment - Arbitrator, institution, and parties must maintain confidentiality of all arbitral proceedings. Only exception: Award disclosure necessary for implementation and enforcement. This makes arbitration more attractive for sensitive commercial disputes.
Section 42B - Protection of Action Taken in Good Faith
2019 Amendment📌 Simple Explanation
Added by 2019 Amendment - No suit or legal proceedings against arbitrator for actions done in good faith under the Act. This protects arbitrators from harassment and encourages qualified persons to accept arbitration appointments.
Section 43 - Limitations
Important📌 Simple Explanation
The Limitation Act applies to arbitration! You must file your claim within the limitation period (usually 3 years for most civil claims). Arbitration is deemed commenced on the date under Section 21. If award is set aside, the time between arbitration commencement and setting aside is excluded from limitation.