VALUATION

OF
LAND AND BUILDING
FOR IBBI EXAMINATION

By:
CEV INTEGRAL APPRAISERS FOUNDATION
REGISTERED VALUERS ORGANISATION

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Chapter LAW OF ARBITRATION AND CONCILATION : 411
27 SALIENT FEATURES
27.1 Arbitration 411
27.2 The Arbitration And Conciliation Comes Under An 411
Alternate Disputes Resolution.
27.3 Why Arbitration? 412
27.4 Basics 412
27.5 Composition Of Arbitral Tribunal - (Section 10) 413
27.6 Appointment Of Arbitrators - (Section 11) 413
27.7 Conduct Of Arbitral Proceedings - (Section/S 18-25) 414
27.8 Making Of Arbitral Award And Termination 414
Of Proceedings - (Sections 28-33)
27.9 Form And Contents Of Arbitral Award - (Section 31) 415
27.10 Termination of Proceedings – (Section 32) 415
27.11 Arbitral Disputes 415
27.12 Non Arbitral Disputes 416
27.13 Arbitration Proceedings 416
27.14 Arbitration procedure 417
27.15 Some similar terms 418
27.16 Difference Between Arbitration And Conciliation 419
27.17 Advantages of Arbitration 520

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ARBITRATION

CHAPTER 27 :Law of Arbitration and Conciliation: Salient features

ARBITRATION

Arbitration is a process in which a dispute is submitted to an impartial outsider who makes

a decision which is usually binding on both the parties.

The arbitration and conciliation comes under an Alternate Disputes Resolution.

What is ADR

Alternative Dispute Resolution is a method for resolving disputes outside of the official
judicial mechanisms

Classified into 4 types

Negotiation

Voluntary – no involvement of 3rd party who facilitates or imposes.

Mediation

Involvement of 3rd party who facilitates the resolution process

Does not impose a resolution on the parties

Collaborative law

Each party has an attorney who facilitates the resolution process within specifically
contracted terms

27.2.1.45 Arbitration

Involvement of 3rd party who imposes a resolution

Occurs due to arbitration clause. Also known as “Scott Avery Clause”

In Maharashtra & Gujarat arbitration proceedings are held in respect of Draft Town
Planning Schemes framed and published under the provisions of respective Town
Planning Acts, where a valuer may be required to either function as an Arbitrator/Town
Planning Officer or represent his client who may be either individual owner or a Local

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ARBITRATION

Planning Authority. Further a valuer may be required to function as an Arbitrator in case

of dispute between two or more parties regarding fair market value of a property.

The knowledge of the Law of Arbitration is therefore essential for a professional valuer.

WHY ARBITRATION?

Basics

 The arbitrator enforces his own point of view on the contending parties and the
opinions of the participants are not given any predominance.

 Arbitration is a judicial process

 The award of the arbitrator is binding and rests on equity and justice, i.e., there is
no scope for compromise

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ARBITRATION

Composition of Arbitral Tribunal - (Section 10)

Under this section, the parties are free to determine the number of arbitrators provided that
such number shall not be even numbers. A sole arbitrator can be appointed. A dispute
arose in MMTC Ltd. Vs. Sterlite Ltd. (1996 (6) SCC 716), where in the arbitration clause
provided for nomination of the arbitrator by each of the parties and the arbitrators so
nominated were required to appoint an umpire. The MMTC Ltd. contended that since the
arbitration clause provided for appointment of even number of arbitrators, such clause was
not valid in view of provisions of Section 10(1). This controversy was resolved by the
Supreme Court by stating that the validity of the arbitration agreement does not depend on
the number of arbitrators. The arbitration agreement though specifying an even number of
Arbitrator cannot be a ground to render the arbitration agreement invalid in as much as the
agreement satisfied the requirement of the section 7 of the Act and as such it is a valid
agreement. By nominating an umpire a valid arbitral tribunal of three persons (Odd
Number) can be constituted satisfying the requirement of the section 10 of the Act.

Appointment of Arbitrators - (Section 11)

Arbitrator can be appointed by agreement of parties and in case of failure of either of the
parties, when request is made for appointment, the aggrieved party may approach the
Chief Justice of the concerned High Court in case of Domestic Arbitration and the Chief
Justice of India in case of International Commercial Arbitration for appointment of
arbitrator. All High Courts in India have framed a scheme for such purpose. While
appointing the arbitrator, the designated authority shall have due regard to any
qualification fixed by the agreement of the parties for the arbitrator and also to other
considerations as are likely to secure the appointment of an independent and impartial
arbitrator as held by the Hon’ble Supreme Court in the case of ICICI Ltd. Vs. East Coast
Boat Building and Engineers (1998 (9) SCC 728). The decision with respect to
appointment of arbitrator by a designated authority is normally final and binding on the
parties.

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ARBITRATION

Conduct of Arbitral Proceedings - (Section/s 18-25)

The parties to the arbitration have to be treated equally and have to be given full
opportunity, by following the principles of natural justice, to present their case (Section
18). The arbitral tribunal shall not be bound by the Code of Civil Procedure or by Indian
Evidence Act. Parties are free to agree on procedure and in case of non-agreement, the
tribunal shall conduct the proceedings in the manner it consider appropriate. Normally the
arbitration proceedings shall be deemed to have commenced on the date on which a
request for reference of the dispute to arbitration has been received by the respondent
(Section 21). The arbitrator has power under Section 22 to appoint one or more expert/s to
report on specific issue and also seek assistance of the court in taking evidence.

Making of Arbitral Award and Termination of Proceedings - (Sections 28-33)

No time limit is fixed for making the award, though it is always expected under the
scheme of the Act that the tribunal will resolve the dispute in accordance with the
substantive law for the time being in force in India.

In the case of tribunal consisting of more than one arbitrator, any decision of the tribunal
shall be made by the majority of the members of the tribunal. A crisis may arise when
there is no consensus between the members of the tribunal and when the members of the
tribunal take divergent views. In such circumstances, the Arbitration will fail. The parties
may settle the matter during the arbitral proceedings either by mediation, conciliation or
by other proceedings and in such case the settlement will take the form of award.

Form and Contents of Arbitral Award - (Section 31)

(a) The award should be in writing and signed by the members of the tribunal, and unless
the parties have agreed otherwise, it must state reason.

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ARBITRATION

(b) The tribunal may at any time during the proceedings make an interim award in any
matter with respect to which it may make a final award.

(c) In case of an award for payment of money, the tribunal will award interest.

(d) The award shall state the date and place of arbitration, the cost of arbitration and the
party entitled to cost and the party who will pay the cost and the manner in which the cost
shall be paid.

Termination of Proceedings – (Section 32)

The arbitral proceedings shall be terminated by the final award or by an order of the
tribunal under Section (2), i.e. in the circumstances when (a) the claimant withdraws (b)
the parties agree on the termination of the proceedings or (c) when the tribunal finds that
the continuation of the proceedings has, for some reasons, become unnecessary and
impossible.

Arbitral Disputes

 Property

 Insurance

 Contract (including employment contracts)

 Business / partnership disputes

 Family disputes (except divorce matters)

 Construction

 Commercial recoveries

Non Arbitral Disputes

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ARBITRATION

 Matters of criminal nature

 Disputes relating to matrimonial relations

 Testamentary matters relating to the validity of a will

 Relating to trusts for public purposes of charitable or religious nature

 Insolvency matters

 Matters relating to the guardianship of a minor or lunatic.

 Any execution proceedings.

Arbitration proceedings

Place of arbitration

⚫ Parties may decide

⚫ In case of failure of any mention in the agreement – place shall be

determined by the arbitral tribunal (convenient to the parties)

Commencement of proceeding

⚫ Date on which a request for that dispute to be referred to the arbitration is

received by the respondent

Language

⚫ Parties may decide

⚫ In case of failure of any mention in the agreement –shall be determined by

the arbitral tribunal

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ARBITRATION

Arbitration procedure

Section 23 to 27 stipulates the procedure to be followed in arbitration proceedings

⚫ Claimant shall state the facts supporting his claim, the points at issue and
the relief or remedy sought,

⚫ the respondent shall state his defence in respect of these particulars

⚫ The parties may submit with their statements all documents they consider
to be relevant or may add a reference to the documents or other evidence
they will submit.

⚫ Unless otherwise agreed by the parties, either party may amend or

supplement his claim or defence during the course of the arbitral
proceedings,

 Unless the arbitral tribunal considers it inappropriate to allow the

amendment or supplement having regard to the delay in making
it.

 Default by the parties – without showing sufficient cause

⚫ the claimant fails to communicate his statement of claim in accordance

with sub-section (1) of section 23,

 the arbitral tribunal shall terminate the proceedings;

⚫ the respondent fails to communicate his statement of defence in accordance

with sub-section (1) of section 23,

 The arbitral tribunal shall continue the proceedings without treating

that failure in itself as an admission of the allegations by the
claimant.

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ARBITRATION

⚫ a party fails to appear at an oral hearing or to produce documentary

evidence,

⚫ The arbitral tribunal may continue the proceedings and make the arbitral
award on the evidence before it.

Some similar terms

Conciliation

 Conciliator brings the disputants to agreement – negotiated settlement

 Conciliator is appointed only after the dispute has arisen

Mediation

 It is a structured process
 Mediator assists the disputants to reach a negotiable settlement
 This process results in signed agreement which defines the future behaviour of the
parties

CONCILIATION

The provision of conciliation is given under Sections 61-81 under Part III of the
Arbitration and Conciliation Act. The conciliation can be initiated by the consensus of the
parties and once the machinery of conciliation is set into motion, parties are precluded
from initiating any arbitral or judicial proceedings in respect of a dispute which is subject
matter of conciliation proceedings except under Section 9 of the Act for interim protection
of the substance of the dispute.

A Conciliator, who may be appointed by the parties, is required to assist the parties, in an
independent and impartial manner, in reaching an amicable settlement of dispute. A
conciliator is required to be guided by the principal of objectivity, fairness and justice,
giving consideration to rights and obligations of the parties, usages of the trade and
circumstances surrounding the dispute, including any past business practice between the

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ARBITRATION

parties. Any settlement arrived at pursuant to conciliation has the same status and effect as
an arbitral award.

Another important feature of the conciliation is that the conciliator and the parties are
required to maintain confidentiality in all matters related to conciliation proceedings and
its fallout. If the conciliation fails then neither of the parties may rely or take benefit of (a)
views expressed or suggestions made by the other party in respect of a possible settlement
of the dispute, (b) admission made by the other party in the course of conciliation
proceedings, (c) proposal made by the conciliator, and (d) the fact that the other party had
indicated his willingness to accept a proposal for settlement made by the conciliator.

DIFFERENCE BETWEEN ARBITRATION AND CONCILIATION

Advantages of Arbitration

 Choice of decision maker with expertise

 Speed

 Lower-cost
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 Flexible

 Confidentiality

 Less formal than court

 Preservation of business relationship

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