Conduct of Arbitral Proceedings
Conduct of Arbitral Proceedings
By – Moka Karthik
Introduction
“Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more
arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private
dispute resolution procedure instead of going to court.”[i]
Alternative Dispute Resolutions (ADR) is most preferred choice of dispute resolutions especially for corporate
matters. This method of dispute resolutions has been choice of dispute resolutions for the people of India from
the time immemorial as all the disputes were to be resolved in a panchayat by village head. Arbitration
mechanism is an outside court settlement. As ADR’s are preferred by the corporates as they cannot afford
time in litigation which will render huge losses to both the parties, so in order to diminish the losses so incurred
during the pendency of the cases in traditional courts. Corporates prefer ADR as they are cost effective and
convenient mechanism to the parties as the parties are free to frame the rules and procedure to be followed
and composition and seat of arbitration that needs to be taken. Arbitration and conciliation Act 1996 Provide
for the settlement of disputes by following the arbitration than settlement of disputes in ordinary courts which
is a time consuming process.
Section 2(1)(a) Act 1996[ii] defines “arbitration means any arbitration whether or not administered by
permanent arbitral institution.”
1. To make arbitration as preferred method for disputes resolution as they offer faster disposal of matters
and they are flexible enough to meet the needs of the parties and in a way less expensive than a court
litigation.
2. To provide a legal framework for both domestic and international commercial arbitration.
3. To introduce concept of conciliation, where neutral third party assists in resolving the disputes by way of
mutually agreeable settlement.
The Act establishes a comprehensive structure for regulating arbitration and conciliation procedures,
covering elements such as the appointment of arbitrators and conciliators, the conduct of proceedings, the
establishment and enforcement of arbitral awards, and the recognition and enforcement of foreign arbitral
awards. This legislation has played a crucial role in improving India’s attractiveness as a centre for global
commercial arbitration and has helped in the effective settlement of both local and international conflicts.
1. Ad-hoc arbitration
2. Arbitration organized in permanent institution.
Ad hoc arbitration is where parties are free to choose rules to be followed in arbitration and in absence of any
chosen rules from parties they are governed by the rules framed in permanent institutions.
Arbitration and conciliation Act does not govern by Civil procedure code and Evidence Act in default and it
can only be inferred if the parties specifies any condition or rule stating that particular clause or issue has to
be governed as per the provisions of the Civil procedure code and Evidence Act.
Chapter V of the Arbitration and conciliation Act 1996 lays down the provisions for the conduct of the
arbitration. While arbitration offers a valuable dispute resolution option, it requires certain ground rules. The
key one is a written arbitration agreement signed by both parties, as mandated by Section 7 of the Act.
Interestingly, there are limited situations where arbitration might proceed without a prior agreement, but these
are exceptions.
In “P. Anand Gajapathi Raju & Ors. v. P.V.G. Raju (dead) & Ors.”[iii] Supreme court held that
“if the party, who wants the matter to be referred to arbitration applies to the Court after submission of his
statement and the party who has brought the action does not object, as is the case before us, there is no bar
on the Court referring the parties to arbitration.
arbitration agreement does not, in the context, necessarily require that the agreement must be already in
existence before the action is brought in the Court.”
“Section 18 of the Arbitration and Conciliation Act, 1996 establishes two core principles:
1. The arbitral tribunal must treat the parties with equality. This means ensuring fairness and impartiality in
the proceedings.
2. Each party must be given a full opportunity to present their case. This ensures the parties’ right to be
heard and to have their arguments duly considered.”
The essence of this section is to guarantee a fair and impartial arbitration process. The provisions of Section 18
are mandatory and the arbitral tribunal is obligated to comply with them. This is a fundamental requirement
to uphold the legitimacy and integrity of the arbitration proceedings. Which is critical in ensuring fair and just
arbitration process
In “Payyavula Vengamma vs Payyavula Kesanna And Others[iv] , arbitrator took statements from each
other parties in the absence of the other and made an award. It was held that arbitrator is guilty of
misconduct of the arbitration conduct which was sufficient ground for making the award void.”
In “Hari Singh Nehal Chand vs Kankinarrah Co. Ltd[v], It is the duty of the arbitrator to disclose to other party
each and every representation made by opposition party in their absence. Failure to which such award can
be set aside.”
In “Ganga Prasad Modi vs Nagarmal Modi And Anr,[vi] court set aside the award due to the misconduct of
arbitrator, that thearbitrator made private inquiries behind the backs of the parties with regard to the most
important question in dispute, and based his decision on that evidence.”
1. “ The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian
Evidence Act, 1872 (1 of 1872).
2. Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral
tribunal in conducting its proceedings.
3. Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part,
conduct the proceedings in the manner it considers appropriate.
4. The power of the arbitral tribunal under sub-section (3) includes the power to determine the
admissibility, relevance, materiality and weight of any evidence.”
In “Punjab State Industrial Development Corporation Ltd., vs. Sunil K. Kansal”[vii] it was held that “During
the recording of evidence in a case, it was determined that the tribunal is not strictly bound by the Indian
Evidence Act. Instead, the tribunal has the ability to implement a method that is just, impartial, and rational. In
cases where evidence is required, parties have the option to submit affidavits and permit cross-examination
of deponents based on these affidavits. If there is no agreed-upon procedure, the provisions of the Indian
Evidence Act are applicable to the proceedings.”
In “Amir Begum v. Badruddin Hassan[viii], If irregularities in procedure can be proved which would amount
to no proper hearing of the matter in dispute, there would be misconduct sufficient to vitiate the award
without any imputation on the honesty or partiality of the arbitrator but the onus of proving the irregularities in
the procedure is on the person alleging the same.”
In “Bijendra Nath Srivastva vs Mayank Srivastava[ix], Where the arbitrator followed the procedure as to the
valuation of the property as agreed to the parties, his award cannot be challenged later on.”
The seat of the arbitration determines the legal jurisdiction over the arbitration process, whereas the venue is
just the geographical location where the arbitration is conducted. A contract that specifies a certain “seat”
while also granting jurisdiction to a court that is located elsewhere may give rise to complications.
In “Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc”[x]The Supreme Court has now
“categorically rejected Bhatia and Venture Global in BALCO, citing the exclusion of Part I of the 1996 Act from
applying to arbitrations with foreign seats. This conclusion is mostly based on two fundamental ideas that the
court emphasised in its ruling: (i) the application of the UNCITRAL Model Law was intended to be restricted to
the territorial jurisdiction of the arbitration seat, or the territoriality principle; and (ii) since the arbitration seat
serves as the “centre of gravity” for the proceedings, choosing a foreign-seated arbitration would typically
entail the parties’ consent to the application of that foreign nation’s curial law.”
The arbitrator should fix a time and place and give notice of every meeting to enable the parties to appear
and present their case[xi]. In case of notice did not served then the award would be invalid[xii]and further
failure of arbitrator to issue notice amounts to misconduct on his part.[xiii]
In case of more than one arbitrator, then fixing of time and place of such meeting should be in concurrence of
those arbitrators. To prevent the possibility of a deadlock the arbitration agreement should appoint one of
them as convenor of meetings.[xiv]
“Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence
on the date on which a request for that dispute to be referred to arbitration is received by the respondent.”
The parties have the freedom to determine the method by which they formally commence the arbitration
process, as outlined in Section 21[xv] of the Act. If the parties cannot reach an agreement, the arbitration
process for a specific subject commences on the day the respondent receives a request to send the dispute
to arbitration. In order to determine the date of receipt, it is necessary to analyse the terms outlined in section
3. As per Section 3, a written communication is considered to be received when it is physically handed over to
the intended recipient at their personal location, business premises, regular residence, or mailing address,
unless there is a different agreement between the parties. If none of these locations can be found after
conducting a search, a written communication is considered received if it is sent via registered mail to the
recipient’s most recent known place of business, usual place of residence, or mailing address. Alternatively, it
can be sent using any other method that ensures a record of the delivery attempt, if none of these locations
can be located after a reasonable investigation. Furthermore, the day on which the communication is sent is
the day it is deemed to have been received. On applying the limitation act of 1963 in Arbitration Act, the
Arbitration and Conciliation Act of 1996. Section 43 provides that the Limitation Act of 1963 is considered
applicable to arbitrations ‘as it applies to proceedings in court’. Therefore, the date most significant to start a
limit with respect to the arbitral proceedings is the date when the arbitral proceedings start. And the limitation
starts or becomes significant on the commencement date of the arbitral proceedings in an agreement to
which it is provided that ‘ no dispute or claim shall be arbitrated after the expiration of a certain period from
the occurrence of the dispute or claim’. The physical location of arbitration. The request for arbitration shall
specify that the parties have requested that their dispute be determined in arbitration. The request shall
clearly set a date on which the arbitration proceeding has commenced, regardless of whether it is by a
“statement of claim,” “application,” “notice,” “request,” or other designation.
Date of commencement of arbitral proceedings may not necessarily be date of receipt of request for
reference of dispute to arbitration. The parties are free to agree as to the date of commencement of
proceedings. If arbitration is by an institution, the parties may agree that the date of commencement of
arbitral proceedings will be as per the rules of arbitration framed by that institution.[xvi]
In “ M.H. Tejani v. Kulsum Bai[xvii] it was held that the reference to arbitration is completed when either party
appoints his arbitrator and it is not necessary to follow it up with a formal reference to arbitration.”
In “Balika Devi v. Kedar Nath Puri.[xviii]” case Allahabad High Court observed that “ if a particular point of
law had been referred to the arbitrators by the parties the position might have been different. For that
purpose, it was open to the court to consider whether the award was vitiated by an error of law apparent on
the face of it.”
In “Oil and Natural Gas Corpn. Ltd v. Antek Geophysical P. Ltd.[xix] The period of limitation runs from date on
which the cause for demanding arbitration accrued, i.e., from the date when the claimant first acquired either
a right of action or a right to require that an arbitration takes place upon the dispute concerned. A counter
claim filed after five years after filing of claim was held to be time barred and it should be filed within three
years from that filing of claim.”
Even though the parties are free to determine the language that should be used to conduct arbitration, in
case they cannot reach an agreement, the Tribunal will decide what the appropriate language is for hearings.
Any written statement, or decision of the arbitral tribunal including awards and any other submission or
communication shall be made in the language determined by the agreement of the parties or decision of the
arbitral tribunal unless the latter had decided otherwise. The arbitral tribunal may also demand that any
written evidence be translated into a language agreed between the parties or determined by the tribunal.
It is important to emphasise that the arbitral tribunal is required to exercise its power in line with section 18 of
the Act[xx], which ensures impartiality and a fair trial, when determining the suitable language under section
20(2) and the need for any translations under section 20(4). The arbitral tribunal has duty of ensuring that all
parties comprehend and adhere to the processes. The terminology used in international business arbitrations
needs to be chosen very carefully.
VI. STATEMENT AND CLAIM
Section 23[xxi] says that both parties can make arguments to the arbitral panel. Statement of claim: This is
what the claimant’s document should include. It should list
The respondent will file the statement of defence as soon as he gets the statement of claim. It should include
the explanation for each of the claims in the statement of claim and
any other information or statement that refutes the claim.
In addition, each side has to include all the papers they think are important with their statement. The parties
can include a list of papers or other proof they will present with their statement. The pleadings can be
changed or added to at any point during the arbitration process, unless both sides agree otherwise and the
arbitral tribunal thinks it’s not suitable to let the change or addition happen because of the time it took to
make it. Section 23 of the Act gives both sides a lot of choices when it comes to making pleadings. The parties
may agree on when to file their papers. If there isn’t an agreement, the arbitral panel can decide when the
papers need to be filed. The parties are free to agree on what needs to be written in the papers. Each side can
come up with their own way to do things. For example, they can follow the rules in Orders 7 and 8 of the Code
of Civil Procedure, 1908, or they can follow the rules for how to do things set by any arbitral organisation. As
soon as the arbitral panel is set up, the parties usually trade and file their briefs with the tribunal. The claimant
lists the facts and other important information that he is relying on. The responder, on the other hand,
disagrees with the facts and the claims made in the claim statement, as well as the relief that the claimant is
seeking. What is written in a pleading can be different from one case to the next, Depending on the specific
details and conditions of each individual case.
In “N. Jayalaxmi v. R. Veeraswamy.”[xxii] Court held that extension of time by the arbitrator to enable a party
to file pleadings, particularly where the default was not motivated, was held to be not a ground for setting
aside the award.
In “ Subraj and Co v. Housing Board”[xxiii] court stated that all amendments should be allowed if they fall
within the purview of arbitral agreement and such amendments cannot cause grave injustice to other side.
Allowing such amendments doesn’t fall under misconduct of they arise within the ambit of arbitral agreement
and within the scope of arbitration clause.
In “Jayashree Patnaik v. Co-operative Bank.”[xxiv] Court held that an arbitrator acting under Odisha Co-
operative Societies Act, can permit corrections to be made, pleadings to be amended and permitting legal
representatives to be impleaded and this practice is normal under the Act.
What the intent of providing evidence is in an arbitration case is to help the arbitral tribunal decide on the
disputed facts or experts’ opinions. Usually, both sides send in written comments from the witnesses whose
testimony they plan to use. While under oath in an arbitration proceeding, if a party or witness gives evidence
that he knows to be false or does not think to be true, he can be charged with fraud. At an arbitration hearing,
either (a) the party can show relevant documents; (b) witnesses of fact can give oral or written evidence; (c)
expert witnesses can give oral or written views; or (d) the dispute itself can be examined at. When it comes to
examining witnesses, arbitral courts usually follow the rules set out in sections 135 to 166 of the Indian Evidence
Act, 1872. A witness must first be examined-in-chief, which means that the person who calls the witness must
question him or her. This is what Section 137 of the Indian Evidence Act, 1872 says. Second, the witness will be
cross-examined, which means that the opposing side will question the witness. Third, the person who called
the witness will examine him again, which means that someone other than the person who called him will
question him again. According to Section 138 of the Indian Evidence Act, 1872, witnesses must be first
examined-in-chief, then cross-examined (if the opposing party wants to), and finally re-examined (if the
party calling him wants to). The arbitral tribunal looks at the subject of the dispute in certain types of
contracts (for example, building contracts) after both sides present their proof. When the tribunal inspects the
site or thing that is in question, they have to make sure that all the parties or their representatives are there.
In “Chinoy Chablani and Co. v. Y Anjiah”[xxv] court held that the “defendant was given an opportunity to file
his statement within three days and accordingly he filed , the arbitrator without going through the statement
filed by him and without giving him opportunity to the defendant to be heard or fixing further date for hearing
gave his award . the arbitrator was guilty of judicial misconduct.”
In Prem Nath v. Om Prakash[xxvi] court held that “Although an arbitrator is allowed considerable latitude in
the procedure adopted by him at the hearing it is essential that he should afford the parties a reasonable
opportunity of being heard and of presenting their case. If he makes an award without complying with this
essential requirement he does so at the peril of his award being declared invalid and inoperative in the eye of
law.”
In cases when a party fails to show up on the scheduled date and time for the hearing, even though the
arbitrator noted in the records that the hearing will proceed ex parte without further notice, the ex parte award
will be made. If a party is repeatedly summoned to come before the arbitrator but chooses to remain absent
and permit the procedures to proceed ex parte, that party cannot thereafter claim that he was denied the
chance to be heard. The court will vacate the ex-parte award if the party demonstrates sufficient cause for
not appearing before the arbitrator. Unless the parties agree otherwise, the arbitral tribunal may proceed with
the proceedings and make the arbitral award based on the evidence presented if either party fails to appear
at an oral hearing or provide documentary evidence after the pleadings have been filed, without sufficient
cause, as stated in clause (c) of section 25[xxvii].
In “India Oil Corpn Ltd v. ATV Projects India Ltd”[xxviii] court held that arbitrator cannot on application of
default claimant restore the proceedings which he had earlier closed for default without providing sufficient
cause and recording of such finding of sufficient cause is mandatory under section 25(a).
In “Senko Engineering Ltd v. State of Bihar”[xxix] In this case petitioner had applied to Chief Justice for
appointment of independent arbitrator, but the Chief Justice did not receive the request , authority appointed
arbitrator. The petitioner did not produce any paper before the authority as his application is pending before
chief justice. There was no negligence, inaction or lack of bona fides on his part. There was sufficient cause.
The tribunal could restore proceedings by recalling its order for termination.
Sometimes, determining on any issue in an arbitration case involves deciding on questions that are scientific
or technical, like those in engineering, accounting, and so on. The arbitral tribunal can engage a technical
expert to help them decide on these kinds of problems. An expert engaged in this way is supposed to give the
arbitral tribunal fair advice on things that are within his area of knowledge. Section 26(1) of the Act talks about
how to choose one or more experts to help the arbitral tribunal make decisions about specific issues. Section
26 says that the arbitral tribunal can tell a party to give relevant information to an expert the tribunal has
chosen or to show the expert any relevant papers, goods, or other properties for inspection. The arbitral court
could also tell a party to let the expert see these things. The expert must write up a report and give it to the
arbitral tribunal. In it, he or she must explain their thoughts on the specific technical problem. In order to make
its decision, the arbitral panel will use the expert’s report as a technical guide. It’s important to remember that
the expert has to be fair. The parties may challenge the expert if they don’t think they are independent. After
the expert turns in his report, both sides will have a chance to ask questions of the expert. Expert witnesses are
people who are engaged by both sides to give evidence in court. The arbitral tribunal has the power to decide
if the expert proof can be used in the case. Section 26(3)[xxx] says that if a party asks, the expert must let that
party look at any papers, goods, or other property that he had access to in order to write his report.
In “Naranbhai Amthalal Panchal v. Ramchandra Somnath”[xxxi] court stated that merely because of
certain clarifications were sought from the lawyers to make the award legal, the award cannot be said to be
not of the arbitrators but the work of legal brain. As there is nothing wrong or improper in seeking advice of his
solicitors on interpretations of clause after the parties had completed their arguments and in adopting advice
after he made up his mind when merely confirmed his own opinion.
If a witness refuses to appear before an arbitral tribunal, the tribunal cannot compel them to give evidence,
Furthermore, it lacks the authority to demand the production of documents held by a third party, even if those
papers could be essential to the issues at question. Section 27(1)[xxxii] makes it clear that the Court can be
asked by an arbitral tribunal or a party with their agreement to help gather evidence. The arbitral tribunal or a
party may petition the court to have evidence sent directly to it, and the court may, within its authority and in
compliance with the rules of evidence, grant this request. The Court may treat witnesses in the same way it
treats them in cases brought before it under the Code of Civil Procedure, 1908 while issuing an order.
The defendant may be summoned to appear and answer the claim in accordance with the procedures
outlined in Section 27 of the Code of Civil Procedure, 1908 (C.P.C.). This process can be carried out in
accordance with the established protocols. For specific guidelines on how to issue and serve summonses, see
Order 5 of the C.P.C. The issuance of summonses to witnesses to offer evidence or to produce documents or
other tangible things is further provided for in Section 31 of the C.P.C. If the individual to whom a summons has
been issued fails to appear as ordered, the punishment for default is laid out in Section 32 of the C.P.C. The
Court has the authority to (a) issue an arrest warrant for the individual to whom a summons has been issued;
(b) seize and sell his property in order to force his attendance, as stated in Section 32 of the C.P.C.
In “Harinarayan G. Bajaj v. Sharedeal Financial Consultants P. Ltd”[xxxiii] court held that “an order under
section 27 rejecting an application which was filed for an order seeking court assistance for taking evidence of
certain documents was held to be not an award either interim or final. It was an order passed in the course of
continuing proceedings. It could be challenged only at the time of challenging the final award. The court held
that every order passed by an arbitral tribunal is not an award.”
Conclusion:
International Alternative Dispute Resolution (ADR) represents a vital mechanism in the global landscape for
resolving disputes, particularly within the corporate sector. Its appeal lies in its flexibility, cost-effectiveness,
and efficiency, which are essential in a business environment where time and resources are of the essence.
The legal frameworks, such as the Arbitration and Conciliation Act of 1996 in India, provide a robust structure
that facilitates both domestic and international arbitration, ensuring fair treatment, equal opportunity for
parties to present their cases, and a tailored approach that meets the specific needs of the parties involved.
The process, including key aspects such as the appointment of arbitrators, determination of procedure, place
of arbitration, and the handling of evidence, is designed to maintain the integrity and fairness of the
proceedings. ADR, particularly arbitration, is recognized for its ability to adapt to complex commercial
disputes, offering a reliable alternative to the often slow and costly litigation processes. The legal precedents
and structured guidelines ensure that arbitration remains a legitimate and respected method of dispute
resolution, promoting the resolution of conflicts in a manner that is both just and efficient on a global scale.
Despite the various issues highlighted in the aforementioned case laws, Alternative Dispute Resolution (ADR)
remains an efficient and cost-effective mechanism for resolving disputes. With a few amendments to the
existing legal framework, its efficiency and adaptability can be further enhanced.
Bibliography:
1. Law of Arbitration and Conciliation, 6th Edition, Volume 1, Lexis Nexis By Justice R S Bachawat
2. Law of Arbitration and Conciliation, 6th Edition, Wadhawa Nagpur, By P C Markanda
3. Commentary on Law of Arbitration and Conciliation Act, 7th Edition, Universal Law Publishers, By Justice S
B Malik
4. Law of Arbitration and Conciliation,5th Edition, Snow White, By Justice Dr B P Saraf
[i]“ https://www.wipo.int/amc/en/arbitration/what-is-
arb.html#:~:text=Arbitration%20is%20a%20procedure%20in,instead%20of%20going%20to%20court.”
[iii] “P. Anand Gajapathi Raju & Ors. v. P.V.G. Raju (dead) & Ors AIR 2000 SC 1886”
[iv] “Payyavula Vengamma vs Payyavula Kesanna and Others, AIR 1953 SUPREME COURT 21”
[v] “Hari Singh Nehal Chand vs Kankinarrah Co. Ltd., (1920) 34 Cal LJ 39”
[vii] “Punjab State Industrial Development Corporation Ltd., vs. Sunil K. Kansal 2013 (1) Arb LR 327 (P&H) (DB)”
[viii] “Amir Begum vs Badruddin Hassan, ILR 36 ALL 336: AI 1914 PC 105”
[ix] “Bijendra Nath Srivastva vs Mayank Srivastava and ORS 1994. SUP.02.SCR.529”
[x] “Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc CIVIL APPEAL NO.6284 OF 2004.”
[xi] “Purushottam Das Narain Das vs Louis Dreyfus and Co., AIR 1920 Cal 386 at p 387.”
[xii] “U.Pyinnya v. U.Ottama, AIR 1935 Rang 376 at p 385(FB).”
[xiii]“Louis Dreyfus and Co. v. Rajagopala Aiyar and Sons, AIR 1923 Mad 222 at p 223.”
[xvi] “Penukonda Rathakrisnamurthy v. Balasubramania and Co, AIR 1949 Mad 599.”
[xviii] “Balika Devi v. Kedar Nath Puri, AIR 1956 All 377 at p 382.”
[xix] “Oil and Natural Gas Corpn. Ltd v. Antek Geophysical P. Ltd., (2004) 3 RAJ 581 (Del).”
[xxiii] “Subraj and Co v. Housing Board, HP, AIR 1982 NOC 115 HP :1981 HP 387.”
[xxviii] “Indian Oil Corpn. Ltd v. ATV projects India Ltd, (2004) 3 RAJ 6 (Del).”
[xxix] “Senko Engineering Ltd v. State of Bihar, AIR 2004 Par 33.”
[xxxiii] “Harinarayan G. Bajaj v. Sharedeal Financial Consultants P. Ltd, AIR 2003 Bom 296 at pp 302-303.”
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