Alternate Dispute Resolution

External Notes

Answer in 2-3 Sentences

Q.1 When does the procedure of arbitration end?

Ans: Arbitration proceedings generally end with the issuance of a final, signed award by the
arbitral tribunal, or when the tribunal issues an order for termination due to withdrawal of the
claim, mutual agreement, or if continuation becomes unnecessary or impossible.

Q.2 What are good offices?

Ans: In Alternative Dispute Resolution (ADR), "good offices" refers to a neutral third party
(like a country or organization) facilitating communication and bringing disputing parties
together to negotiate a settlement, without actively participating in the negotiation itself.

Q.3 What is the full form of UNCITRAL?

Ans: UNCITRAL stands for United Nations Commission on International Trade Law. It's a
subsidiary body of the United Nations General Assembly (UNGA).

Q.4 Who is Mediator?

Ans: A mediator is a neutral third party who helps people in conflict resolve their dispute
through a process called mediation. Mediation is a form of alternative dispute resolution
(ADR).

Q.5 When registration of award is compulsory?

Ans: Section 17 of the Registration Act, 1908, lays down what documents would require
compulsory registration. According to Section 17, any award affecting any immovable property
would have to compulsorily be registered. Further, if such an arbitral award requiring
compulsory registration is not registered, then the arbitral award could not be received as
evidence in respect of an immovable property.

Q.6 What is Fast Track Procedure in Arbitration?

Ans: Fast Track Arbitration is the process whereby the arbitration procedure is mandated to be
wrapped up within six months. The provisions placed in the act dealt only with written
pleadings and did not make any accommodations for oral proceedings.
Q.7 What is consent award?
Ans: Consent Award Definition: A consent award is a settlement agreement reached by the
parties during the arbitration process, which is then recorded and endorsed by the arbitral
tribunal as its award.

Q.8 Why Lok Adalats are Constituted?

Ans: Lok Adalats are established to provide an alternative to litigation and to help resolve
disputes outside of the court system. They are also known as People's Courts.

Q.9 What is foreign award?

Ans: Section 44 Arbitration and Conciliation Act,1996 defines "foreign award" as an arbitral
award on differences between persons arising out of legal relationships, whether contractual or
not, considered as commercial under the law in force in India.

Q.10 Who is presiding arbitrator?

Ans: In an Arbitration each party shall appoint one arbitrator. The two arbitrators thus
appointed shall choose the third arbitrator who will act as the presiding arbitrator.

Q.11 Write any two qualifications of an Arbitrator?

Ans: The Indian legislation does not specify the qualifications required to become an arbitrator.
Under the Arbitration and Conciliation Act, the person can only be appointed as an arbitrator
if he is not a minor and is of sound mind. The arbitrators in India are appointed by the arbitral
institutions and associations, which includes a panel of experts who appoint arbitrators on their
understanding.

Q.12 What is Negotiation?

Ans: Negotiation is a process of discussion and communication between two or more parties
with the aim of reaching an agreement or resolving a dispute.

Q.13 What is the language of the arbitral proceedings?

Ans: In Alternative Dispute Resolution (ADR), specifically arbitration, the language of the
proceedings is determined by the parties themselves. If they agree, the language is determined
by their agreement; otherwise, the arbitral tribunal decides.
Q.14 What is the role of Conciliator?
Ans: The primary role of a conciliator, as stated in Section 67, is to assist the parties in reaching
a mutually acceptable resolution to their dispute.
Assisting Parties in Reaching an Amicable Settlement, Guided by Principles of Objectivity,
Fairness, and Justice, Conducting the Conciliation Proceedings Appropriately.

Q.15 What is the Alternative Dispute Resolution?

Ans: Alternative dispute resolution (ADR) is a way to resolve conflicts without going to
court. ADR can help parties reach an agreement and avoid the costs and delays of litigation.

Q.16 What is Settlement Agreement?

Ans: A settlement agreement is a legally binding document that resolves a dispute between two
or more parties. It's a form of Alternative Dispute Resolution (ADR) that can be used in
mediation or conciliation.

Q.17 What do you mean by Arbitral Tribunal?

Ans: In Alternative Dispute Resolution (ADR), an "arbitral tribunal" refers to a panel of one
or more arbitrators appointed to resolve a dispute through arbitration, similar to a court but in
a private setting.

Q.18 What is Mediation?

Ans: Mediation is a type of alternative dispute resolution (ADR) that helps people in conflict
negotiate a resolution. It's a voluntary process where a neutral third party, the mediator, helps
the parties reach an agreement.

Q.19 Express the term Arbitration Agreement?

Ans: In the context of Alternative Dispute Resolution (ADR), an arbitration agreement is a
contract where parties agree to resolve disputes through arbitration instead of litigation, opting
for a neutral third party's decision instead of a court.

Q.20 What is Interim Award?

Ans: Under the Arbitration and Conciliation Act, 1996, an "interim award" is a binding
decision made by the arbitral tribunal on a specific issue before the final award, granted under
Section 31(6) and enforceable like a court order.
Q.21 Define Lien on Award?
Ans: In Alternative Dispute Resolution (ADR), a "lien on award" refers to the right of the
arbitral tribunal to retain the arbitral award until outstanding costs, including arbitrator fees and
expenses, are paid, as outlined in Section 39 of the Arbitration and Conciliation Act, 1996.

Q.22 What is non-speaking award?

Ans: Under the Arbitration and Conciliation Act, a "non-speaking award" refers to an arbitral
award that does not contain any reasoning or explanation for the arbitrator's decision, leaving
the court unable to assess the arbitrator's mental process.

Q.23 What should be the nationality of an arbitration?

Ans: Section 11(1) of ADR states that, a person of any nationality may be an arbitrator, unless
otherwise agreed by the parties.

Q.24 How many numbers of conciliators can be appointed by the parties?

Ans: Section 64 (c) in conciliation proceedings with three conciliators, each party may appoint
one conciliator and the parties may agree on the name of the third conciliator who shall act as
the presiding conciliator.

Q.25 What is the date of commencement of an Arbitral Proceedings?

Ans: Section 21 of ADR states that, in the absence of a specific agreement between parties,
arbitral proceedings in Alternative Dispute Resolution (ADR) commence on the date the
respondent receives a request to refer the dispute to arbitration.

Q.26 Whether Res-Judicata is applicable to award of Lok-Adalat?

Ans: Yes, the principle of res judicata generally applies to awards of Lok Adalat’s, meaning
that a matter decided by a Lok Adalat cannot be re-litigated in a court of law.
Under the said Act, the award (decision) made by the Lok Adalat’s is deemed to be a decree
of a civil court and is final and binding on all parties and no appeal against such an award lies
before any court of law.

Q.27 Lok Adalat is also called as?

Ans: Lok Adalat is also commonly known as "People's Court" and is an alternative dispute
resolution mechanism in India, focusing on amicable and speedy resolution of disputes.
Q.28 How is Conciliator appointed?
Ans: A conciliator can be appointed through various methods, including direct appointment by
the parties, selection via a neutral organization, or appointment by a court or arbitration
institution, often from a panel of qualified individuals.

Q.29 What should be the number of Arbitrators in Tribunal?

Ans: Section 10 of ADR states that parties are free to determine the number of arbitrators, the
number of arbitrator shall not be even number, therefore the number of arbitrators in a tribunal
is generally either one or three, with three being the most common for complex cases, but can
be determined by the parties involved.

Q.30 Can a Couple appoint Arbitrator in wife’s application for divorce?

Ans: Yes, a couple can mutually agree to appoint an arbitrator to resolve disputes arising from
a wife's divorce application, as arbitration is a recognized form of Alternative Dispute
Resolution (ADR) in India, offering a faster and potentially less adversarial process than
traditional court proceedings.

Q.31 What is the status of arbitration clauses in a void agreement?

Ans: In ADR, an arbitration clause in a contract, even if the contract itself is declared void, is
generally considered a separate agreement, meaning the arbitration clause remains
enforceable.

Q.32 How many arbitrators can be appointed according to the arbitration and
conciliation Act, 1996?
Ans: The Arbitration and Conciliation Act, 1996, allows for an arbitral tribunal to consist of
either one or three arbitrators, depending on the agreement of the parties.

Q.33 Name two statutes dealing with ADR?

Ans: Two key statutes in India that deal with Alternative Dispute Resolution (ADR) are the
Arbitration and Conciliation Act, 1996 and Section 89 of the Code of Civil Procedure, 1908.

Q.34 Which are the two international conventions dealt by Arbitration and Conciliation
Act 1996?
Ans: The Arbitration and Conciliation Act, 1996, deals with the enforcement of foreign arbitral
awards under the New York Convention (1958) and the Geneva Convention (1927).
Q.35 Is the Arbitrator required to be Indian under Arbitration and Conciliation Act,
1996?
Ans: Section 11(1) of Arbitration and Conciliation Act states that a person of any nationality
may be an arbitrator, unless otherwise agreed by the parties.

Q.36 What is the legal effect of an award made by a Lok Adalat?

Ans: An award made by a Lok Adalat, under the Legal Services Authorities Act, 1987, is
deemed a decree of a civil court, is final and binding on all parties, and no appeal lies against
it.

Q.37 What is the Statement of claim and defence in Arbitration?

Ans: As per Section 23 of the Arbitration and Conciliation Act 1996, Statement of claim and
Defence means, the Statement of Claim is the initial document filed by the claimant outlining
their case, including facts, issues, and the relief sought, while the Statement of Defence is the
respondent's response, addressing the claim and presenting their defences.

Q.38 Within how many days an additional award can be given by an arbitrator?
Ans: According to Section 33(5) of the Act states that, if the arbitral tribunal considers the
request made under sub-section (4) to be justified, it shall make the additional arbitral
award within sixty days from the receipt of such request.

Q.39 Is the Limitation Act applicable to Arbitration Proceedings?

Ans: Yes, the Limitation Act, 1963, applies to arbitration proceedings as it applies to
proceedings in court, as stated in Section 43 of the Arbitration and Conciliation Act, 1996.

Q.40 What is the institutional Arbitration?

Ans: An institutional arbitration is one that is administered by an institution agreed upon by
the parties and conducted in accordance with that institution's arbitration rules.

Q.41 Is the Validity of an arbitration agreement depend upon number of arbitrations?

Ans: The validity of an arbitration agreement does not depend on the number of arbitrators
specified therein, as the Act does not suggest the requirement of the number of arbitrators for
an arbitration agreement.
Q.42 Who appoints presiding arbitrator?
Ans: The presiding arbitrator can be appointed by the parties in agreement, or by the Supreme
Court or High Court.
• The parties can appoint the presiding arbitrator by mutual consent, as per the arbitration
clause in the agreement.
• Each party can appoint one arbitrator, and the two arbitrators can choose the third
arbitrator.
• The presiding arbitrator can be appointed through mutual agreement between the
parties' nominees.

Q.43 Whether the signatures of both parties are necessary for an arbitration agreement?
Ans: The signatures of the parties play a crucial role in forming a valid arbitration agreement.
There are two scenarios:
Mutual Signatures: The agreement can be a document signed by both parties, outlining all terms
and conditions.
Unilateral Signature: Alternatively, one party can sign the document containing the terms and
the other party can express acceptance. In this case, the agreement becomes valid upon the
acceptance.

Q.44 What is the status of an arbitral award in judicial process?

Ans: Though a judgment is public in origin, the arbitral award is a private pronouncement
made under the arbitration agreement between the parties; it has the same binding force as a
court decree and is thus enforceable under the Arbitration and Conciliation Act, 1996.

Q.45 What is Arbitrable Dispute?

Ans: Arbitrability indicates whether a dispute is “arbitrable”, i.e. capable of being settled by
arbitration.
Arbitration is a private dispute resolution mechanism where two or more parties agree to
resolve their current or future disputes before an Arbitral Tribunal in an alternative to
adjudication by courts and other public fora established by law.

Q.46 What is nationality of an Arbitrator?

Ans: As per Section 11(1) of the Arbitration and Conciliation Act, A person of any nationality
can become an Arbitrator otherwise agreed by the parties.
Q.47 What is place of an arbitration?
Ans: The "place of arbitration" or "seat of arbitration" is the legally significant location that
determines the procedural framework and governing law of the arbitration, and is usually
agreed upon by the parties in their arbitration agreement.

Q.48 What is the de-jure and de-facto impossibility to act for an arbitration?
Ans: If an arbitrator becomes bankrupt or convicted for a criminal offence, then he becomes
de jure unable to adjudicate the case. De Facto refers to factual inability. It relates to a factual
happening during the process of arbitration.

Q.49 State the expenses included in cost of arbitration?

Ans: As per Section 31(A) of Arbitration and Conciliation Act 1996, expenses encompass fees
and expenses of arbitrators, courts, and witnesses, legal fees, administrative fees of the arbitral
institution, and any other expenses incurred related to the proceedings and award.
SHORT NOTES

Q.1 Conciliation Procedure?

Ans: Alternative Dispute Resolution (ADR) refers to methods of resolving disputes outside the
traditional court system. In India, ADR is encouraged to reduce the burden on courts and
provide quicker, cost-effective solutions. The main types of ADR include arbitration,
mediation, conciliation, negotiation, and Lok Adalats (people’s courts).
The Arbitration and Conciliation Act, 1996 governs arbitration and conciliation in India,
aligning with international standards. Mediation and Lok Adalats are also widely used,
especially for family, business, and commercial disputes. Courts in India actively promote ADR
through initiatives like court-annexed mediation.
Conciliation is a way to resolve disputes without going to court. It is a voluntary and
confidential process where both parties agree to find a solution with the help of a neutral third
person called a conciliator.
The conciliator does not make a decision like a judge but helps both sides talk, understand each
other, and reach an agreement. The process is flexible, meaning the parties can discuss their
issues freely. It is confidential, so whatever is discussed cannot be used against either party
later. The goal is to find a fair solution that both sides accept.
In India, conciliation is legally recognized under the Arbitration and Conciliation Act, 1996.
This law lays down rules for how conciliation should take place. It is widely used in
commercial, family, and business disputes because it is faster, less expensive, and more
cooperative than litigation.
Conciliation helps avoid long court battles while ensuring both parties reach a fair and peaceful
settlement.
Conciliation is a voluntary process where parties try to resolve their dispute with the help of a
neutral third party, called a conciliator. It is similar to negotiation, but with an expert guiding
the discussion.
The conciliator helps each party identify their goals, understand the other side’s perspective,
and find common ground. The final settlement is reached only if both parties agree, making it
a mutually acceptable and fair solution. This process is widely used because it is faster, cost-
effective, and helps maintain relationships compared to litigation.
Process of Conciliation
Part 3 of the Arbitration and Conciliation Act 1996 discusses the process of conciliation, which
is an alternative method of resolving disputes outside of court. Conciliation is governed by the
provisions outlined in the Arbitration and Conciliation Act, 1996.
Step 1: Commencement of Conciliation Proceedings
Section 62 of the Act addresses the initiation of conciliation proceedings. To begin the process,
one party must send a written invitation to the other party. The conciliation proceedings can
only proceed if the other party accepts the invitation. If no response is received within 30 days
of sending the invitation, it will be deemed non-acceptance.
Step 2: Appointment of Conciliators
Once the parties have agreed to engage in conciliation proceedings, appointing a conciliator is
next. Section 64 covers the appointment of conciliators. If the parties agree, they can appoint a
single conciliator. If the parties opt for two conciliators, each party will appoint one. In the case
of three conciliators, each party will appoint one conciliator, and the parties together can agree
upon a third conciliator who will act as the presiding conciliator.
Step 3: Submission of Written Statements to the Conciliator
The conciliator may request both parties to provide written statements detailing the relevant
facts pertaining to the case. Both parties must submit their written statements to the conciliator.
Additionally, the parties are required to exchange their written statements with each other.
Step 4: Conduct of the Conciliation Proceedings
Sections 67(3) and 69(1) describe the conduct of conciliation proceedings. The conciliator has
the discretion to communicate with the parties through written or oral means. They can choose
to meet with the parties collectively or separately. The conduct of the proceedings will be
tailored to suit the case’s specific circumstances.
Step 5: Administrative Assistance
Section 68 of the Act addresses the option of seeking administrative assistance. The parties or
the conciliator may seek assistance from an institution or individual if necessary. However, the
consent of the parties is required to engage in such administrative assistance.
Principle of Process of Conciliation
Independence and Impartiality (Section 67(1))
The conciliator must maintain independence and impartiality throughout the conciliation
process. They should assist the parties unbiasedly and fairly while striving to reach an amicable
settlement.
Fairness and Justice (Section 67(2))
The conciliator should adhere to principles of objectivity, fairness, and justice. This involves
considering the rights and obligations of the parties, relevant trade practices, and the
circumstances surrounding the dispute, including any prior business dealings between the
parties.
Confidentiality (Sections 75, 70, proviso)
All matters relating to the conciliation proceedings are to be treated as confidential by the
conciliator and the parties involved. If a party provides information with the condition of
confidentiality, the conciliator must not disclose that information to the other party without
consent.
Disclosure of Information (Section 70)
When the conciliator receives information regarding any facts related to the dispute from one
party, they should disclose the substance of that information to the other party. This allows the
other party to provide an appropriate explanation.
Cooperation of Parties with Conciliator (Section 71)
The parties are expected to cooperate in good faith with the conciliator. This includes
submitting written materials, providing evidence, and attending meetings as requested by the
conciliator.
Rules of Procedure (Section 66)
The conciliator is not bound by the procedural rules outlined in the Code of Civil Procedure,
1908, or the Indian Evidence Act, 1872. However, while not strictly bound by technical
procedural rules, the conciliator should still uphold the principles of natural justice.
Place of Meeting (Section 69(2))
The parties can agree upon the location for meetings with the conciliator. In the absence of
such an agreement, the conciliator will determine the meeting place after consulting with the
parties, considering the circumstances of the conciliation proceedings.
Communication between Conciliator and Parties (Section 69(1))
The conciliator may invite the parties to meet, communicate with them orally or in writing, and
may choose to engage with the parties collectively or separately as necessary.
Termination of Conciliation Proceedings – Section 76
Section 76 of the Arbitration and Conciliation Act provides four ways in which conciliation
proceedings can be terminated:
Termination by Signing of Settlement Agreement (Section 76(a))
Conciliation proceedings end when the parties involved sign a settlement agreement. The date
of termination is considered to be the date on which the settlement agreement is signed.
Termination by Conciliator’s Declaration (Section 76(b))
The conciliation proceedings can be terminated if the conciliator declares in writing that further
efforts at conciliation are no longer justified. The date of termination is the date of the
conciliator’s declaration.
Termination by Written Declaration of Parties (Section 76(c))
The parties have the authority to terminate the conciliation proceedings by providing a written
declaration to the conciliator stating that they wish to end the proceedings. The date of
termination is the date of the declaration.
Termination by Party’s Written Declaration to Other Party and Conciliator (Section
76(d))
A party can unilaterally terminate the conciliation proceedings by sending a written declaration
to both the other party and the conciliator, expressing their intention to terminate the
proceedings. The date of termination is the date of the declaration.
Case Law
Haresh Dayaram Thakur v. State of Maharashtra and Ors.
In the case of Haresh Dayaram Thakur v. State of Maharashtra and Ors. (AIR 2000 SC 2281),
the Supreme Court examined the provisions of Sections 73 and 74 of the Arbitration and
Conciliation Act 1996. In paragraph 19 of the judgment, the court made the following
observations:
According to the statutory provisions mentioned above, it is evident that a conciliator’s role is
to assist the parties in settling their disputes amicably. The conciliator is granted broad powers
to determine the procedure to be followed without being bound by procedural laws such as the
Code of Civil Procedure or the Indian Evidence Act 1872.
When the parties are able to reach a mutual agreement, and the conciliator believes that there
is a potential settlement acceptable to the parties, the conciliator should follow the procedure
outlined in Section 73. This involves formulating the settlement terms and presenting it to the
parties for their observations. The final step for the conciliator is to draft the settlement based
on the parties’ observations.
The settlement becomes legally binding only when the parties themselves draw up the
settlement agreement or request the conciliator to prepare it and affix their signatures. As per
Sub-section (3) of Section 73, once the parties sign the settlement agreement is considered final
and binding on them and any individuals claiming under them.
Conclusion
Conciliation is a valuable alternative dispute resolution process guided by the Arbitration and
Conciliation Act. It involves a neutral conciliator assisting parties to settle. The process begins
with a written invitation, followed by the appointment of a conciliator. Written statements are
exchanged, and the conciliator conducts proceedings based on fairness and justice.
Confidentiality is maintained throughout.
The goal is to reach a settlement agreement, which becomes final and binding when the parties
sign. Conciliation allows parties to resolve disputes amicably, avoiding litigation while
preserving relationships.

Q.2 Need of Alternative Dispute Resolution?

Ans: Alternative Dispute Resolution (ADR) refers to methods of resolving disputes outside the
traditional court system. In India, ADR is encouraged to reduce the burden on courts and
provide quicker, cost-effective solutions. The main types of ADR include arbitration,
mediation, conciliation, negotiation, and Lok Adalats (people’s courts).
The Arbitration and Conciliation Act, 1996 governs arbitration and conciliation in India,
aligning with international standards. Mediation and Lok Adalats are also widely used,
especially for family, business, and commercial disputes. Courts in India actively promote ADR
through initiatives like court-annexed mediation.
ADR includes different methods such as negotiation, mediation, arbitration, and conciliation,
among others. These methods are usually faster and less expensive than going through a full
court trial. ADR is often used in cases like workplace disputes, divorces, and personal injury
claims. One of the biggest benefits of ADR is that it encourages cooperation instead of conflict.
Unlike traditional court cases, where one side wins and the other loses, ADR allows both parties
to communicate and find a middle ground that works for everyone. It also gives people the
opportunity to come up with creative and flexible solutions that a court might not be able to
offer.
Another advantage of ADR is that it helps reduce the number of cases in courts, making the
legal system more efficient. By working together rather than fighting against each other, ADR
allows for more satisfying and long-lasting agreements.
Important Provisions Related To ADR
Section 89 of the Civil Procedure Code, 1908 renders that relief to the people, if it occurs to
court there exist facets of settlement outside the court then court propose the terms of the
feasible settlement and pertain the same for: Arbitration, Conciliation, Mediation or Lok
Adalat. The Acts which deals with Alternative Dispute Resolution are
• Arbitration and Conciliation Act, 1996 and,
• The Legal Services Authority Act, 1987.
Need for ADR
The 222nd Report of the Law Commission of India highlights the importance of access to
justice for all citizens, as guaranteed by the Constitution, particularly under Article 39A. This
article ensures that justice is available to everyone, regardless of their financial or social status.
However, in reality, many people in India struggle to access the courts due to barriers like
poverty, illiteracy, and social or political disadvantages.
Many individuals in India live in poverty and, when their rights are violated, they often lack
the financial resources to engage in long legal battles. They cannot afford lawyers, and they do
not fully understand the legal system or court procedures. As a result, they see the judicial
system as a challenge rather than a means to seek justice.
To address these issues, the Indian government introduced Section 89 of the Code of Civil
Procedure, 1908. This provision encourages alternative dispute resolution (ADR) methods such
as arbitration, mediation, and conciliation, making justice more accessible and less expensive.
Additionally, the government replaced the outdated Arbitration Act of 1940 with the Arbitration
and Conciliation Act of 1996. This change was made in alignment with the recommendations
of the United Nations Commission on International Trade Law (UNCITRAL) to ensure a more
efficient and simplified dispute resolution process.
These reforms aim to provide a quicker, cost-effective, and accessible way for people,
especially the underprivileged, to resolve their legal issues without the burden of lengthy and
expensive court proceedings.
The policy of dispersing justice in India has come under tremendous concern for various
rationales mainly because of the massive pendency of lawsuits in courts. In India, the volume
of cases catalogued in the courts has indicated an incredible improvement in recent years
deriving in pendency and uncertainties emphasizing the requirement for alternative dispute
resolution techniques. It is in this context that a Resolution was approved by the Chief Ministers
and the Chief Justices of States in a meeting held in New Delhi on 4th December 1993 under
the chairmanship of the then Prime Minister and governed by the Chief Justice of India.
To address the issue of pending cases in Indian courts, Alternative Dispute Resolution (ADR)
plays a significant role by offering various methods for resolving disputes efficiently. ADR
introduces modern and scientifically structured procedures that help reduce the burden on the
judiciary. It provides multiple settlement options, including arbitration, conciliation, mediation,
negotiation, and Lok Adalat.
Negotiation refers to a process where parties resolve their disputes through mutual discussion
without external intervention. However, it does not have any statutory recognition in India.
Other ADR methods, such as arbitration and mediation, are legally recognized and play a
crucial role in delivering justice outside traditional court proceedings.
ADR is rooted in fundamental rights guaranteed under the Indian Constitution, particularly
Article 14, which ensures equality before the law, and Article 21, which protects the right to
life and personal liberty. The primary objective of ADR is to promote social, economic, and
political justice while fostering integrity within society, as envisioned in the Preamble of the
Constitution. Additionally, ADR seeks to achieve the goal of equal justice and free legal aid as
mandated under Article 39A, which is part of the Directive Principles of State Policy (DPSP).
By providing accessible and cost-effective dispute resolution mechanisms, ADR ensures that
justice is not only efficient but also inclusive, benefiting individuals who may struggle with the
complexities and expenses of traditional litigation.
Advantage of Alternate Dispute Resolution
• It is less costly
• It is less time consuming.
• It is open from technicalities as in the case of supervising cases in law Courts
• The parties are independent to examine their dissimilarity of belief without any
suspicion of divulgence of this fact before any law Courts.
• The last but not the least is the point that parties are amassing the sentiment that there
is no loss or gaining a victory emotion among the parties by at the same time they are
keeping the sentiment that their objection is retaliated and the connection between the
parties is replenished.
Types of ADR Mechanisms
ADR mechanisms are quite prevalent in India. There are diverse types of ADR mechanisms.
Each method has its character and has to be applied differently. The choice of the method would
largely depend on the nature of the dispute, the cooperation willingness of the parties involved,
and the desired outcome.
1. Arbitration:
Arbitration pertains to listening to both stories by an impartial third party called an arbitrator
who will come to conclusion which may or may not bind the parties.
2. Mediation:
During mediation, a third party/company called a mediator assists parties to decide their
disagreement. Mediation is private and does not bind parties. They can go to judiciary if
mediation flunks.
3. Negotiation:
Negotiation takes place when parties settle their conflict through back-and-forth and without
an impersonal third party.
5. Lok Adalat:
Lok Adalats, or "People's Courts," are India-specific. The said method is used for extrajudicial
peaceful and amicable redress of disputes. Lok Adalats handles cases relating to family law,
labor, and other minor civil causes.
Conclusion
The need for Alternative Dispute Resolution (ADR) in India is essential to tackle the
overwhelming backlog of cases in courts. By offering faster, cost-effective, and accessible
methods like arbitration, mediation, and Lok Adalat, ADR ensures justice for all, especially for
those who cannot afford lengthy litigation. Rooted in constitutional principles, ADR upholds
equality, liberty, and the right to fair justice. Its role in promoting social harmony and reducing
judicial delays makes it a crucial part of India’s legal system, ensuring that justice is not only
served but also accessible to all.

Q.3 New York Convention?

Ans: The New York convention also known as the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards was first adopted by the United Nations diplomatic
conference on 10 June 1958 and was enforced on 7 June 1959. It is often considered as one of
the most important treaties in the field of international trade law and has a great significance.
It is often described as a foundation stone in the field of international arbitration. It requires
courts of the contracting states to give effect to an agreement to arbitrate when seized of an
action in a matter covered by an arbitration agreement and also to recognize and enforce awards
made in other states, subject to specific limited exceptions. At present, the convention is signed
by 156 state parties.
It was adopted mainly for promoting healthy business relations between the countries and to
promote harmony and coordination among the states. Further it reduces the burden of the states
to decide which laws to be enforced or the procedures of which countries to be followed during
the process of the arbitration. Further it also establishes a minimum level of control which the
contracting states can exert over arbitral awards and arbitral agreements. The two main actions
which were taken by the New York convention are as follows:
Recognition and Enforcement of Foreign Arbitral Award
The first action is to recognize the awards made in the foreign territory and is defined under
the Article 1 of the convention. It is the obligation of the states to recognize such awards and
enforce them according to the Article 3 of the convention. The state who wants to seek the
foreign arbitral award needs to submit the following documents before the court and it lies
upon the interpretation of the court to decide that it falls under the scope of the convention or
not. A state which needs to seek the enforcement needs to submit the following documents.
• The Arbitral Award
• The Arbitral Document according to the article 4 of the convention
The State against whom the convention is enforced can object to the enforcement by submitting
the proof of even one grounds of refusal of the enforcement which are mentioned in the Article
5 of the constitution.
Referral to the Court by the method of Arbitration
Article II, paragraph 3, provides that a court of a Contracting State, when seized of a matter in
respect of which the parties have made an arbitration agreement, must, at the request of one of
the parties, refer them to arbitration.
Features of the New York Convention
• It creates a uniform international framework which enables various countries to establish
strong trade and commercial relations and solve disputes with the help of arbitration. It achieves
this by firstly requiring the signatory states to enforce the awards rendered in the signatory state
and secondly by limiting the grounds on which the states may refuse recognition and
enforcement.
• The states who are a party to this convention are required to bind to the foreign awards and
enforce them according to the rules and procedures established by the New York Convention.
• The procedure is free from any complex procedures and charges. The states just need to
submit to a competent court in the contracting state where the enforcement is sought.
• The main provisions of the convention are as follows.
Aim of the New York Convention
• The Convention's principal aim is that foreign and non-domestic arbitral awards should
not be discriminated against by courts asked to enforce them.
• It obliges Contracting States to ensure foreign awards are recognised and generally
capable of enforcement in their jurisdiction in the same way as domestic awards.
• To require courts of Contracting States to uphold valid arbitration agreements and stay
court proceedings in respect of matters which the parties have agreed should be resolved
by arbitration.
• By signing up to the Convention, a state agrees that its courts will respect and enforce
parties' agreements to arbitrate, and to recognise and enforce any resulting arbitral
award in its jurisdiction subject to only very limited grounds for refusal.
Articles of New York Convention
This is the New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (1958). It sets out the framework for recognizing and enforcing arbitration agreements
and awards across different countries.
Key Points:
1. Scope (Article I) – Applies to arbitral awards made in foreign countries and those not
considered domestic in the enforcing country.
2. Arbitration Agreements (Article II) – Requires courts to recognize and enforce
arbitration agreements.
3. Enforcement of Awards (Article III) – Awards must be recognized as binding and
enforced under local rules, without extra fees or obstacles.
4. Application Process (Article IV) – The party seeking enforcement must provide the
original or certified copies of the award and agreement.
5. Grounds for Refusal (Article V) – Courts may refuse enforcement only for specific
reasons, such as incapacity, lack of proper notice, jurisdictional issues, procedural
irregularities, non-binding awards, or public policy concerns.
6. Suspension & Security (Article VI) – Enforcement can be postponed if an annulment
request is pending. Courts may require security.
7. Other Treaties & Laws (Article VII) – The Convention does not override other
treaties or laws allowing for broader enforcement.
8. Ratification & Accession (Articles VIII–XII) – Open to UN member states and
others, requiring ratification or accession.
9. Denunciation (Article XIII) – A country can withdraw by notifying the UN, effective
after one year.
10. Federal States (Article XI) – Federal states must ensure compliance at both national
and local levels.
It is the most important treaty governing international arbitration, ensuring that arbitral awards
are widely recognized and enforced across borders.
Conclusion
The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(1958) is a cornerstone of international arbitration and global trade law, ensuring that
arbitration agreements and foreign arbitral awards are uniformly recognized and enforced
across 156 contracting states. By reducing legal uncertainty, promoting efficiency, and limiting
grounds for refusal, the Convention facilitates smooth international business relations and
strengthens trust in arbitration as a preferred dispute resolution mechanism.
Its two primary functions—recognition and enforcement of arbitral awards and referral of
disputes to arbitration—help streamline cross-border dispute resolution and minimize judicial
interference. The limited exceptions to enforcement ensure a balance between respecting
arbitral autonomy and protecting fundamental legal principles, such as public policy and due
process.
By establishing a uniform and predictable legal framework, the New York Convention has
played a pivotal role in shaping modern international arbitration, fostering harmonization in
global commerce, and encouraging foreign investment. Its widespread adoption underscores
its vital importance in ensuring that arbitral awards are as effective as domestic court
judgments, making it one of the most significant treaties in international trade law.

Q.4 Arbitral Tribunal?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Tribunal
An Arbitral Tribunal is a neutral body appointed to resolve disputes through arbitration,
offering an alternative to traditional court litigation. It is composed of one or more arbitrators
chosen by the parties involved or appointed by a designated authority if the parties fail to agree.
The tribunal functions similarly to a court but operates in a more flexible, private, and efficient
manner. It has the authority to hear arguments, evaluate evidence, and issue a binding decision
known as an arbitral award, which is enforceable under the Arbitration and Conciliation Act,
1996. Unlike courts, arbitral tribunals allow parties to select arbitrators with expertise relevant
to their dispute, ensuring a more specialized and informed resolution. The tribunal's procedures
are less formal than traditional litigation, making arbitration a preferred choice in commercial,
contractual, and international disputes. The primary objective of an arbitral tribunal is to
provide a fair, impartial, and legally sound resolution while maintaining confidentiality and
efficiency in dispute settlement.
According to section 2(1) (d), an ‘Arbitral Tribunal’ means a sole arbitrator or a panel of
arbitrators. The Amendment Act enables the Supreme Court (on account of international
commercial arbitration) and the High Court (in cases other than international commercial
arbitration) to assign arbitral establishments with the end goal of arrangement of arbitrators.
Such arbitral establishments will be evaluated by the Arbitration Council of India. Where a
reviewed arbitral establishment isn’t accessible, the Chief Justice of the concerned High Court
may keep up a board of arbitrators for releasing the capacities and obligations of the arbitral
organization.
The arbitrator may be of any nationality and parties are at liberty to agree on the procedure for
appointing the arbitrator or arbitrators for their cause. But Section 11(9) of the Arbitration Act,
1996 provides that in case of arbitrator which involves international commercial transaction,
an arbitrator or arbitrators shall be appointed of different nationality, other than the nationality
of parties. Thus in case of an international commercial dispute between India or Bangladesh,
an Indian or Bangladesh must not be appointed as an arbitrator.
Where the number of arbitrators agreed upon is three and no procedure has been is laid down,
each party shall appoint one arbitrator and the two arbitrators shall appoint a ‘third arbitrator’
as Presiding Arbitrator.
Under the 1996 Act parties are free to appoint the arbitrators on its own. But according to The
Arbitration And Conciliation (Amendment) Act, 2019 the parties are allowed to appoint the
arbitrator from the receipt date within 30 days, so on the arbitrators also given a period of 30
days to appoint a third arbitrator for completing arbitration. If the parties fail to appoint the
arbitrator, the Chief Justice of High Court shall have the power to appoint the arbitrator or
Presiding arbitrator within the territory of parties to settle the dispute. Therefore in case of
international commercial arbitration, the Chief Justice of India shall have the power to appoint
such person. However the arbitral institution will determine the fees of the arbitral tribunal and
the manner of its payment which is specified in the fourth schedule of the Act.
COMPOSITION
Prior to this amendment Act, no doubt parties were free to appoint the arbitrators, provided that
such number shall not be an even number. But as per the Arbitration and Conciliation
(Amendment) Act, 2019 it shall be consist of a chairperson who is either judge of Supreme
Court; or a judge of a High Court; or a Chief Justice of High Court; or an eminent person with
expert knowledge in conduct of arbitration proceeding. Therefore other members consist of an
eminent arbitration practitioner, an academician with experience in arbitration, and government
appointees. The ex-officio Members of the Council will remember the Secretary to the
Government of India for the Department of Legal Affairs, Ministry of Law and Justice and
Secretary to the Government of India in the Department of Expenditure, Ministry of Finance
or their individual agents not underneath the position of Joint Secretary. One representative of
a recognised body of commerce and industry will be a part time member.
JURISDICTION OF ARBITRAL TRIBUNAL
The term ‘jurisdiction’ signifies ‘the power to decide. If there is any irregularity or illegality in
the procedure or in the pleading it would not be covered by term jurisdiction. Section 16
empowers the arbitral tribunal to decide the vires of its own jurisdiction that is the scope of
arbitration on the basis of arbitration agreement and the reference made to it. Therefore the
court has no jurisdiction to adjudicate upon the question of arbitral tribunal’s jurisdiction.
However if the parties desirous to challenge the jurisdiction of arbitral tribunal shall raise the
objection before the statement of defence submit.
The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with
reference to the existence or validity of the arbitration agreement for this purpose:-
(a) A clause which forms a part of contract shall be treated as an agreement independent of the
opposite terms of the contract; and
(b) A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure
by law itself the invalidity of the arbitration clause. [Section 16 (1)]
Thus, the Act confers competence on the arbitral tribunal to decide on its own jurisdiction and
to consider objections with respect to the existence or validity of the arbitration agreement.
Similarly, a plea may be made that the arbitral tribunal is exceeding the scope of its authority
during the arbitral proceedings. [Section16 (3)].
ARBITRAL TRIBUNAL AWARDS
An arbitral award is a final decision or judgement of the arbitral tribunal on all matters referred
to it. It is as binding in its nature as the judgement of a court. It is required to be in writing and
to be signed by all the members of tribunal or by the majority with reasons for any omitted
signatures. An award should state the date and place of the arbitration, and signed copy must
be delivered to each party.
Under the Arbitration and Conciliation (Amendment) Act, an Arbitral Tribunal must issue its
final award within 12 months from the date it starts working on the case (enters the reference).
If both parties agree, this 12-month period can be extended by up to 6 more months, making it
a total of 18 months. However, if the tribunal fails to give its decision within this time, its
authority (mandate) automatically ends. The only exception is if a court grants further extension
beyond 18 months.
This rule ensures that arbitration remains fast and efficient, preventing unnecessary delays in
dispute resolution.
This Act does not impose any specific limitation on the remedies available through arbitration.
Thus the limitations are same as those applicable in Indian court proceeding. However the
tribunal can order specific performance and award damages, declarations, costs and interest.
Although under Indian law, exemplary or punitive damages for breach of contract are not
available but courts can issue interim measures pending constitution of the tribunal. Thereafter,
this power continues through the proceedings until the declaration of the award, only if the
courts recognised that the interim measures ordered would not be effective by the tribunal.
Though courts and tribunals both can issue interim measures, but court has wider powers to
grant interim protection. It includes injunctions, appointment of a receiver, order for
preservation, custody, sale and protection of goods, to secure the amount in arbitration dispute
and any other interim measure that may be justified. Thus the Arbitration and Conciliation
(Amendment) Act has cleared that the Indian courts will have the power to provide interim
measures of protection in relation to arbitrations seated outside India.
Conclusion
An arbitrator(s) or arbitral tribunal performs the function of a judge, in other words an arbitrator
adjudicates/judges the dispute between the parties. The terms arbitrator(s) or arbitral tribunal
are interchangeable and refers to an equivalent person or group of persons. Thus there might
be one (sole) arbitrator or quite one arbitrator. Both would be mentioned as arbitral tribunal
A unique feature of arbitration unlike court based adjudication is that the parties get to pick
their arbitrators or delegate to an establishment (like ICC, FICCI, ICADR, etc.) the facility to
appoint on their behalf. This is often considered to be a key advantage because the parties can
choose the one that will adjudicate their dispute as compared a court based system where they
need no control over the judge.
In India, appointment and termination (removal) of arbitral tribunal is regulated by the
Arbitration and Conciliation Act 1996. The law prescribes various provisions for various
possibilities which may arise in appointing or removal of arbitrators. The various authorities
which have the facility for appointment and removal are the District Court (Court), High court
and Supreme Court of India.
The Arbitral Tribunal is crucial in the arbitration method which offers a fair and unbiased
resolution of disputes outdoor of conventional court litigation. Events concerned in
arbitration must apprehend the appointment, composition, jurisdiction, and functions of the
Tribunal. By following established strategies and guidelines, Arbitral Tribunals contribute to
the green and powerful resolution of disputes. Hence, the growth of arbitration proceedings in
India helps to solve the unwanted condition of court burden.

Q.5 Termination of Arbitral Proceedings?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Proceedings
Arbitral proceedings refer to the step-by-step process followed by an Arbitral Tribunal to
resolve a dispute between parties through arbitration. These proceedings are designed to be
faster, more flexible, and less formal than court trials. The process begins when the parties
agree to resolve their dispute through arbitration, either as per a prior agreement (arbitration
clause in a contract) or by mutual consent after a dispute arises.
The arbitration process officially starts when a party sends a notice of arbitration to the other
party. The parties then appoint an arbitrator or a panel of arbitrators. Once the Arbitral Tribunal
is formed, it conducts hearings where both parties present their arguments, evidence, and
witnesses. The tribunal ensures that the proceedings are conducted fairly and impartially. It has
the power to make procedural decisions, such as setting deadlines, deciding on the admission
of evidence, and granting interim relief if necessary. After hearing both sides, the tribunal
delivers a final decision, known as an arbitral award, which is legally binding and enforceable
like a court judgment.
Making of arbitral award and termination of proceedings is completely addressed with in
CHAPTER VI of the Arbitration and Conciliation Act, 1996. From sections 28 to 33 it’s all
about “making of arbitral award and termination of proceedings”.
Arbitrator
The role of an arbitrator is to resolve disputes that the parties have in agreement to submit
to arbitration. The decisions of the arbitrator require a document subject to certain formalities,
and referred to as the arbitral award. The content and form of an arbitral award, and also the
discretion enjoyed by arbitrators in creating an award can essentially vary according to the
procedural law applicable to the arbitral procedure, the powers presented by the parties upon
the arbitrator under the applicable arbitration agreement, and also the specific sort of arbitration
used.
Termination of Arbitral Proceedings
Termination of arbitral proceedings refers to the formal conclusion of an arbitration case. It
marks the point at which the tribunal or sole arbitrator closes the case and ends their authority
over the dispute. An arbitral decision can lead to termination. The dispute is brought to a close
by an award. However, there are occasions when arbitration concludes without a verdict, such
as when the parties come to an agreement or abandon the process.
Section 32 of the Arbitrational and Conciliation Act, 1996 is totally coherent with Article 32 of
UNCITRAL Model Law. According to Section 32(1) of the Act termination of Arbitral
proceedings takes place once the final award declared by the arbitral tribunal. The other three
grounds of termination of arbitral proceedings are given under Sub-section 2 of Section 32.
To terminate the arbitration proceedings arbitral tribunal shall issue an order:
• The parties themselves agree to terminate the proceedings.
• If the arbitral tribunal finds that the continuation of the proceedings is either
unnecessary or impossible for any other reason.
• the plaintiff withdraws their claim. It can also be terminated if the respondent objects
to the arbitral award. Looking at which the arbitral tribunal come to a conclusion that it
has a legitimate interest in obtaining a final settlement.
The mandate of the arbitral tribunal will terminate with the termination of the procedure itself.
Sub-section (3) of this section lays down that the above provisions are subject to Section 34(4)
and section 33.
Arbitral proceedings can be concluded in two main ways:
1. Termination by Final Award
Arbitration is commonly concluded when the arbitrator issues a conclusive decision. The
verdict is the ultimate one and must be followed by both parties. The final ruling indicates the
official conclusion of the arbitration. It may include:
• Monetary compensation.
• Specific performance of a contract.
• Dismissal of claims.
• Allocation of costs and fees.
2. Termination Without an Award
Arbitral proceedings can conclude without final verdict for several reasons:
A. Mutual Settlement: Prior to issuing an award, parties can settle their dispute. If they come
to a consensus, then they can either ask the arbitrator to agree or close it.
B. Withdrawal of Claim: If the claimant withdraws the claim, the arbitration could be
terminated. But if the other party objects and has a legitimate counterclaim, the process may
go forward.
C. Failure to Proceed: Arbitration may be terminated if:
• A party refuses to participate in the proceedings.
• There is excessive delay in taking necessary steps.
• The arbitrator determines that continuation is impossible.
D. Death or Insolvency: If a party dies or if an insolvency occurs, arbitration can be ended
without legal representation.
E. Lack of Jurisdiction: The arbitrator or tribunal may halt the proceedings if they determine
that they lack jurisdiction over the dispute.
F. Expiration of Time Limit: The resolution of disputes is typically subject to time constraints
in arbitration agreements. Unless mutually agreed upon, the proceedings may be prolonged if
the arbitrator fails to award an award within the allotted time.
Legal Provisions Governing Termination of Arbitration
The termination of arbitration proceedings is recognized by most national and international
arbitration laws. Key legal provisions include:
1. UNCITRAL Model Law on International Commercial Arbitration
Many countries have adopted the UNCITRAL Model Law, which declares that arbitration will
end when:
• The final award is made.
• The Tribunal mandates termination based on withdrawal, settlement, or failure to
proceed.
2. Arbitration and Conciliation Act, 1996
According to Section 32 of the Indian Arbitration Act, arbitration terminates at:
• When the final award is issued.
• If the tribunal determines that the process is not required or feasible.
Consequences of Termination of Arbitration
When arbitration is halted, there are several outcomes:
• 1. Loss of Tribunal's Authority: Unless parties apply for clarification or correction of
the award, the arbitrator or tribunal has no further jurisdiction on the matter.
• 2. Enforcement of the Award: In case of a final award, the winning party can resort to
national court proceedings under arbitration laws for enforcement.
• 3. Costs and Fees: Decisions regarding cost allocation and arbitration expenses are
frequently included in termination orders.
• 4. Right to Challenge or Appeal: Arbitration results in a judgment that can be appealed
in court by the losing party on specific grounds, including fraud or procedural
irregularities.
Case Law
Sai Babu v. M/S Clariya Steels Private Limited
In the case of Sai Babu v. M/S Clariya Steels Private Limited in 2019 the Supreme Court held
that once the sole arbitrator terminates the arbitration proceedings under Section 32(2)(c) of
Arbitration and Conciliation Act, 1996 (“Arbitration Act”), the same cannot be subsequently
recalled. In order to reach a conclusion in the case of Sai Babu v. M/S Clariya Steels Private
Limited the Apex Court chalked out a difference between the termination of Arbitral
proceedings under Section 32 and Section 25 of the Arbitration and Conciliation Act.
Conclusion
The termination of arbitral proceedings represents an important milestone in arbitration. It
signals the formal end of the dispute resolution process, whether by award or otherwise.
Arbitration, in general, does end by making a final award, but there are other factors, such as
settlement, withdrawal, and jurisdictional issues that also lead to termination. By understanding
how termination works, the parties can make sure that they properly follow the appropriate
procedures and know their rights after arbitration comes to an end.
The Supreme Court has sometimes come up with suggested amendments and necessary
interpretations. It’s interesting to note that the termination of arbitral proceedings is different
under Section 32 and Section 25. The conclusiveness of award marks the termination of
proceedings under Arbitration and Conciliation Act under Section 32 along with three other
grounds. Not several radical judgments are passed with regard to the above subject however
Sai Babu v. M/S Clariya Steels Private Limited holds good law.

Q.6 Distinguish between arbitration and conciliation?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
Arbitration is a legal process used to resolve disputes outside of traditional courts, where an
independent and neutral third party, known as an arbitrator or Arbitral Tribunal, makes a
binding decision. It is a form of Alternative Dispute Resolution (ADR) that offers a faster, more
cost-effective, and confidential way to settle conflicts, especially in commercial and contractual
matters. Arbitration is commonly used in business disputes, construction contracts,
international trade, and other areas where parties want to avoid lengthy and expensive court
litigation.
The arbitration process typically begins when two or more parties agree to arbitrate either
through an arbitration clause in a contract or by mutual consent after a dispute arises. Once
arbitration is initiated, the parties select one or more arbitrators, who act as private judges to
hear both sides, review evidence, and make a final decision, known as an arbitral award. This
award is legally binding and enforceable, similar to a court judgment. Unlike court trials,
arbitration allows parties to choose their arbitrator(s), making it possible to appoint experts in
specific fields, ensuring that complex matters are decided with specialized knowledge.
One of the key advantages of arbitration is confidentiality—unlike court cases, arbitration
proceedings and awards are not made public. Additionally, arbitration is more flexible than
litigation, as parties can decide on procedural rules, timelines, and even the location of the
proceedings. Arbitration can be either domestic or international, depending on whether the
dispute involves parties from the same country or different jurisdictions. In India, arbitration is
governed by the Arbitration and Conciliation Act, 1996, which is based on the UNCITRAL
Model Law to align with international standards.
Therefore, arbitration provides an efficient and impartial way to settle disputes while reducing
the burden on courts. It ensures a fair and final resolution while allowing parties greater control
over the process, making it a preferred dispute resolution mechanism for businesses and
individuals alike.
Conciliation
Conciliation is a form of Alternative Dispute Resolution (ADR) where a neutral third party,
known as the conciliator, helps disputing parties reach a mutually acceptable settlement. Unlike
arbitration, where the arbitrator gives a binding decision, conciliation is a voluntary and non-
binding process in which the conciliator assists the parties in negotiating and finding common
ground. This method is particularly useful in civil, commercial, labour, and family disputes,
where preserving relationships and maintaining a cooperative approach is important.
The conciliation process begins when parties agree to resolve their dispute through conciliation
instead of litigation. The conciliator plays an active role in guiding discussions, clarifying
misunderstandings, and suggesting possible solutions. However, unlike a judge or arbitrator,
the conciliator does not impose a decision; instead, they facilitate communication and
encourage both sides to come to a mutual agreement. Once an agreement is reached, it is
recorded in writing and signed by both parties, becoming legally binding.
One of the biggest advantages of conciliation is its informal, flexible, and confidential nature.
It allows parties to openly discuss their concerns without the rigid procedures of a courtroom
or arbitration. The process is less adversarial, meaning it promotes a win-win situation rather
than declaring a winner and a loser. In India, conciliation is governed by the Arbitration and
Conciliation Act, 1996, which outlines the rules and procedures for conducting conciliation
proceedings.
Conciliation is particularly effective in disputes where both parties want to maintain a good
relationship, such as business partnerships, employer-employee conflicts, and family matters.
Since it encourages cooperation and understanding, it is often preferred over more
confrontational dispute resolution methods. By providing a cost-effective, quicker, and
amicable solution, conciliation serves as an efficient way to resolve conflicts while avoiding
the complexities and expenses of litigation.
Difference between Arbitration and Conciliation
Aspects Arbitration Conciliation
Definition A method of dispute A method of dispute
resolution where a neutral resolution where a neutral
third party makes a legally third party facilitates
binding decision after negotiations between the
considering the arguments of parties to help them reach a
both parties. mutually acceptable solution.
Role of the Third Party The arbitrator acts as a The conciliator acts as a
decision-maker and renders a mediator and facilitates talks
final and binding decision. between the parties but does
not make a final decision.
Legal Binding The decision reached by the The agreement reached
arbitrator is legally binding through conciliation is not
and enforceable by law. legally binding unless the
parties voluntarily decide to
formalize it into a contract.
Process Control The parties have limited The parties have more
control over the arbitration control over the conciliation
process as the arbitrator process as they actively
determines the rules and participate in negotiations
procedures. and decide the outcome.
Adversarial Nature Arbitration is typically an Conciliation is more
adversarial process where the collaborative, focusing on
parties present their case to finding common ground and
the arbitrator. resolving disputes amicably.
Arbitration can be relatively Conciliation can be quicker
quicker than litigation but as it fosters direct
Speed
may take several months or communication between the
years. parties to resolve efficiently.
Applicability Applicable in commercial Applicable in family
disputes, construction disputes, community
contracts, labour disputes, conflicts, and interpersonal
and international matters. conflicts.
Role of Legal Parties in arbitration can Parties in conciliation may or
Representation have legal representation to may not have legal
present their case. representation.

Conclusion
Both arbitration and conciliation serve as effective Alternative Dispute Resolution (ADR)
mechanisms that help resolve disputes outside traditional courts. While arbitration involves a
binding decision made by an arbitrator or tribunal, conciliation focuses on mutual negotiation
with the assistance of a conciliator, leading to a voluntary agreement. Arbitration is more
structured and commonly used in commercial and contractual disputes, whereas conciliation is
more flexible and promotes amicable settlements, making it ideal for resolving conflicts while
maintaining relationships. Both methods offer significant advantages such as confidentiality,
time efficiency, and cost savings, reducing the burden on courts and providing faster justice.
Choosing between arbitration and conciliation depends on the nature of the dispute and the
willingness of the parties to either accept a binding decision or work toward a mutually
agreeable resolution.
Q.7 Forms and Content of Arbitral Award?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Award
According to Section 2(1)(c) of the 1996 Act an arbitral award includes an interim award. As a
preventive measure and at the request of the party an arbitrator can issue an interim order or
award regarding the dispute. Interim orders are orders that are valid only during the arbitration
process, mandating the party to refrain from doing some actions that may fall counter to or
harm the other party's interest. Such an order is passed in the form of an interim injunction.
Unlike a usual interim measure, an interim award under the 1996 Act forms a part of the final
award, that is binding on the parties involved. An interim award is granted after a thorough
hearing, encompassing the accepted interim measures.
However, once the arbitration proceedings have been completed, the arbitral tribunal grants an
arbitral/arbitration award, as the final award. An arbitral award can be monetary or non-
monetary. It can be monetary which is made for payment of a sum of money from one party to
the other and it can be non-monetary when no money needs to be paid, but it includes decisions
like stopping a certain business practice or increasing unemployment perks and incentives.
An arbitral award is the final decision given by the Arbitral Tribunal to resolve a dispute. It is
similar to a court judgment but is given by an arbitrator instead of a judge. The award is issued
after all parties have had a fair chance to present their case, provide evidence, and make
arguments.
For an award to be held valid, it must fulfil two conditions. Firstly it should be certain, meaning
that it should be clear, definite, and unambiguous in terms of the decision made with regard to
the rights of the parties. Secondly, it must contain a decision. An award without a valid decision
or unclear decision on every issue raised before the arbitral tribunal shall be considered invalid.
In addition to fulfilling these conditions, an award must bear the signature of an arbitrator. It
must also contain specific reasons for the decision made in an award regarding the particular
case. The award should not leave any room for confusion and must clearly outline the duties
and liabilities imposed on the parties. An award must deal with every aspect of the issue that is
a matter of concern between the parties, giving a clear and final decision on every such aspect
of the issue.
The form and content of an arbitral award are regulated by Section 31 of the Arbitration and
Conciliation Act, 1996. This section ensures that the award is made in writing, signed by the
arbitrators, and includes reasons for the decision (unless the parties agree otherwise). It also
mentions details such as the date and place of arbitration. The award is final and binding,
meaning that both parties must follow its terms, just like a court ruling. This process ensures
fairness, transparency, and enforceability in arbitration.
The following are the fundamental parts of a legitimate Award, as determined by a cursory
perusal of this Section:
• The Award shall be made in writing.
• Award must be signed by all the members of the panel.
• Award should be describe the reasons for its existence.
• The date of award should be stated.
• The award shall identify the location.
• An interim award can also be given under Section 17.
• After the Award is made each party should receive a signed copy.
• The Award may be made without stating any grounds if the parties agree, Giving reason
for the award is not required in the case of a settlement.
• Award as may be justified. Any such correction, interpretation of award and additional
award shall form as a part of the final award.
• An Award becomes final either upon expiry of the period provided under the statute to
challenge the Award or if challenged, after the final decisions on such challenges.
Forms and Content of an Award
Section 31 of the Arbitration and Conciliation Act, 1996, lays down the essential requirements
for the form and content of arbitral awards. It ensures that awards are comprehensive,
enforceable, and conform to procedural fairness. This section mandates written awards,
inclusion of reasons, and proper documentation to instil confidence in the arbitration process.
By setting clear guidelines, Section 31 provides a robust framework for arbitrators and parties,
promoting clarity, transparency, and adherence to international standards.
Section 31 of the Arbitration and Conciliation Act, 1996, establishes the foundational rules for
the form and content of arbitral awards. This section ensures that awards are precise,
enforceable, and reflective of due process. Below is a detailed analysis of the legal framework
provided under this provision:
1. Requirement for a Written Award
Section 31 mandates that every arbitral award must be in writing. This requirement ensures a
tangible and verifiable record of the tribunal’s decision, which is essential for enforcement,
judicial review, and archival purposes.
2. Statement of Reasons
The section requires arbitral tribunals to provide reasons for their decisions unless:
• The parties agree that reasons are not necessary, or
• The award is based on a settlement under Section 30 (settlement award).
3. Key Details in the Award
Section 31 specifies that an arbitral award must include the following details:
• Date of the Award: The date is crucial for calculating statutory time limits, such as
challenges under Section 34 or enforcement under Section 36.
• Place of Arbitration: The place (or seat) of arbitration determines the legal framework
applicable to the arbitration and the supervisory jurisdiction of the courts.
4. Signing of the Award
The arbitral award must be signed by all members of the arbitral tribunal. However, if an
arbitrator cannot or refuses to sign, the award remains valid provided the majority of arbitrators
sign and the reason for the absence of a signature is recorded. This provision balances
procedural fairness with practicality, ensuring that awards are not invalidated due to the refusal
of a minority member.
5. Communication to Parties
The tribunal is required to deliver a signed copy of the award to each party. This delivery
ensures that parties are formally notified of the decision and can take subsequent steps such as
enforcement or challenge within prescribed time limits.
6. Costs of Arbitration
Section 31(8) empowers the tribunal to:
• Decide the allocation of arbitration costs among the parties.
• Specify the amount of costs, including tribunal fees, expenses, and legal representation
costs. The tribunal’s discretion in cost allocation incentivizes fair conduct by parties
and discourages frivolous claims or delays.
7. Interest on the Award
Section 31(7) provides for interest on the awarded amount:
• The tribunal may award interest at a rate it deems reasonable unless otherwise agreed
by the parties.
• If no specific rate is awarded, the awarded amount accrues interest at 2% higher than
the prevailing current rate as defined under Section 2(b) of the Interest Act, 1978. This
provision ensures compensation for delayed payments post-award, encouraging prompt
compliance.
8. Compliance with International Standards
The requirements outlined in Section 31 align with global arbitration practices, particularly
those under the UNCITRAL Model Law. This alignment facilitates the enforceability of Indian
awards under international frameworks such as the New York Convention.
Importance of Section 31 of the Act
1. Transparency and Accountability
By requiring reasons for the award, Section 31 promotes transparency and holds the
tribunal accountable for its decision-making process.
2. Ensuring Enforceability
Compliance with the formal requirements under Section 31 enhances the enforceability
of awards, both domestically and internationally, under the New York Convention.
3. Clarity for Parties
Detailed awards provide clarity to the parties about the tribunal’s findings, ensuring
there is no ambiguity regarding the decision or the reasoning.
4. Judicial Review
Section 31 plays a crucial role during challenges to arbitral awards under Section 34.
Courts rely on the reasoning and formal compliance of the award to determine its
validity.
5. Cost Allocation
By explicitly addressing the costs of arbitration, Section 31 provides certainty and
prevents further disputes over financial responsibilities.
Significance in International Arbitration
1. Global Standards
Section 31 aligns with international norms for the form and content of arbitral awards,
ensuring that Indian awards meet global enforceability standards.
2. Cross-Border Enforceability
Awards adhering to Section 31 are more likely to be recognized and enforced under the
New York Convention, bolstering India’s credibility in international arbitration.
3. Cultural Nuances
In international disputes, detailed reasoning helps bridge cultural and legal differences,
ensuring all parties understand the basis of the decision.
4. Compliance with Multi-Tiered Procedures
Section 31 ensures awards are well-documented and compliant with multi-tiered
dispute resolution clauses, which are common in international contracts.
Interplay with Other Provisions
1. Section 30: Settlement
If parties reach a settlement, the award must reflect the agreed terms. Section 31 ensures
such awards retain their enforceable nature.
2. Section 34: Setting Aside Arbitral Awards
Courts scrutinize awards under Section 34 for procedural compliance with Section 31,
emphasizing its importance in ensuring the validity of awards.
3. Section 36: Enforcement of Awards
Section 31’s adherence to formal requirements is critical for the smooth enforcement of
awards under Section 36.
4. Section 29A: Time Limit for Award
The requirement for detailed reasoning under Section 31 must align with the time
constraints imposed by Section 29A, creating a balance between quality and efficiency.
Enforcement and Implementation of Awards under Section 31
Section 31 also plays a critical role in the enforcement and implementation of arbitral awards.
By specifying the mandatory components of an award, it helps ensure that awards are clear and
complete, making them easier to enforce in courts. Once an award is issued in compliance with
Section 31, it holds legal force and can be enforced in the same manner as a court judgment
under Section 36 of the Arbitration and Conciliation Act, 1996. This contributes to the
credibility of the arbitration process, as parties are more likely to comply with an award that
meets the standards outlined in Section 31.
Courts in India and internationally often scrutinize the form and content of the award as per
Section 31 before granting enforcement. If the award does not adhere to the guidelines, it may
be challenged, delayed, or not recognized. Therefore, Section 31 ensures that arbitral awards
are enforceable, fostering a predictable and efficient dispute resolution mechanism.
Judicial Scrutiny and Challenges to Awards under Section 31
While Section 31 provides clear guidelines for the form and content of an arbitral award,
judicial scrutiny remains an essential aspect of the post-arbitration process. Section 31 is
designed to make arbitral awards enforceable, but it also allows for limited judicial intervention
under Section 34 if any party believes that the award does not meet the legal standards or
procedural fairness.
Judicial challenges may arise if the award lacks clarity, does not follow the procedure
prescribed by law, or if the tribunal exceeded its jurisdiction. Courts can also review whether
the award is in accordance with public policy, ensuring that it adheres to principles of justice,
fairness, and legality. As such, while Section 31 aims to ensure that arbitral awards are both
structured and substantive, it balances the award’s form with a degree of judicial oversight to
protect parties’ rights and interests.
Conclusion
Section 31 of the Arbitration and Conciliation Act, 1996, establishes the framework for drafting
arbitral awards that are transparent, reasoned, and enforceable. Its adherence ensures that
arbitration remains a credible and efficient dispute resolution mechanism, both domestically
and internationally. By bridging procedural formalities with practical requirements, Section 31
plays a pivotal role in maintaining the integrity of the arbitral process.

Q.8 Interim measures by the court?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
In some cases, it is seen that one of the parties deliberately prolong the time for the arbitration
proceedings to prejudice the rights of the other party or for some other reason beneficial to
them or to delay the pronouncement of the arbitral award against them and thereby delay the
enforcement of the award. Such tactics by one party may render meaningless the final arbitral
award for the aggrieved party unless the arbitral tribunal and/or the court safeguards the rights
of the aggrieved party before, during and after the arbitral proceedings till the award is
enforced.
Therefore, it is imperative that some interim measures or interim relief be granted by the arbitral
tribunal or the court in order to protect the rights of the aggrieved party. In some particular
instances, the interim relief may involve directives to some third parties also. Interim relief is
like an urgent remedy granted in exceptional circumstances.
Generally, interim relief is granted when:
a. prima facie there is a case;
b. the balance of convenience lies with the aggrieved party who is seeking the relief; and
c. irreparable damage or injury may be caused if the interim relief is not granted.
There are certain provisions in the Arbitration and Conciliation Act, 1996 (Amended 2015 and
2019), which safeguard the interest of one party over the other. Section 9 and Section 17 of the
Arbitration and Conciliation Act enable any party to any arbitration agreement to file an
application for interim relief from the court or arbitral tribunal respectively.
Interim relief under Section 9 of the Act
Section 9 of the Act mentions that a party may put up an application for interim relief to the
court before the commencement of arbitration proceedings, during arbitration proceedings or
at any point of time before the enforcement of the arbitral award. However, generally, courts
do not allow a petition for interim relief after the arbitral tribunal has been constituted unless
the aggrieved party proves beyond doubt that the interim relief that has been provided by the
arbitral tribunal under Section 17 of the Act shall be futile.
Nevertheless, the power to grant interim relief to the aggrieved party before the arbitral tribunal
is constituted and after the arbitral award is passed lies with the courts only. Further, Section 9
also states that in case the court passes an order for interim relief before the commencement of
arbitral proceedings, then the arbitral proceedings shall have to be commenced within 90 days
from the date of the interim relief order or within such further time that the court may grant.
Interim relief that can be sought under Section 9
Section 9 of the Act describes the type of interim relief that may be sought by a party.
Application for interim relief may include the following:
1. Appointment of guardian for a minor or person of unsound mind;
2. Preservation, interim custody or sale of goods (if the goods are of perishable nature) for any
goods related to the arbitration agreement;
3. Securing the amount of claims;
4. Allowing the detention, preservation or inspection of any property or thing, authorizing any
person to enter upon any land or building, authorizing any samples to be taken or observations
to be made or experiments to be tried in order to expedite the process and obtain accurate &
complete information or evidence;
5. Allowing interim injunction or appointment of receiver;
6. Any other reliefs which the court considers proper taking into account the facts and
circumstances of the case.
Any party to the arbitration agreement may file an application to the concerned court under
Section 9 before or during the course of the arbitration. However, after the pronouncement of
the arbitral award only the successful party, who is entitled to seek enforcement of the arbitral
award, may file an application for interim relief under Section 9. The unsuccessful party of an
arbitral proceeding would not be entitled to file an application for interim relief under Section
9 because there is no award which is to be enforced in its favour.
Furthermore, in case the arbitral award has been set aside, the unsuccessful party, i.e. the party
whose claims were rejected vide the award, cannot apply to a court for interim relief under
Section 9.
Jurisdiction of court for the application of Section 9
Under the Arbitration and Conciliation Act, the court where the arbitration is seated has the
exclusive authority over arbitration proceedings. This means that if a party wants to apply for
interim relief under Section 9 (such as freezing assets or preserving evidence before the final
award), they must file the application in the relevant district court or High Court based on the
arbitration’s location.
For international commercial arbitration (where at least one party is non-Indian), the Section 9
application must be filed only in the High Court. After the 2015 amendment, even if the
arbitration takes place outside India, a party can still seek interim relief in Indian courts unless
they have explicitly or implicitly agreed to exclude this option.
If a Section 9 application is already pending in court and the Arbitral Tribunal is formed during
this time, the court can still decide on the application. There is no rule stating that the case must
be transferred to the tribunal once it is constituted. This ensures that parties do not lose their
right to seek urgent relief just because the tribunal has been set up.
Enforceability of and appeal against interim relief granted under Section 9
The interim relief granted by a court has to be enforced like any other order of the court. Any
wilful non-compliance or disobedience of the interim relief order may be treated as contempt
of court and dealt with according to the existing laws of the land. However, an appeal against
an interim order may be made to the suitable court as per Section 37(1)(b) of the Act.
Enforcing an interim relief granted by an arbitral tribunal seated outside India
As Section 17 falls under Part I of the Act, parties can apply for interim relief under Section 17
only if the seat of arbitration is in India. Any interim relief order passed by an arbitral tribunal
seated outside India cannot be directly enforced in India as there are no relevant provisions in
the Act which permit the enforceability of interim orders granted by tribunals seated outside
India. In order to enforce an interim relief order granted by an arbitral tribunal outside India,
the party shall have to file an application under Section 9 of the Act provided the parties to the
arbitration agreement have explicitly excluded the applicability of Section 9 from the contract.
Interim relief under Section 17 of the Act
Section 17 of the Act gives the arbitral tribunal the power to pass an order for interim measures
if a party applies to the tribunal for such interim relief. A party may apply for interim relief
under Section 17 of the Act only after the arbitral tribunal has been constituted till the arbitral
award is passed. During this time, generally, the courts do not allow an application for interim
relief under Section 9. The arbitral tribunal cannot pass an interim relief order containing
directives to some third party. The jurisdiction of the arbitral tribunal is limited to the parties
of the arbitration agreement only.
The interim relief that can be sought under Section 17 of the Act is the same as that can be
sought under Section 9. Application for interim relief may include the following:
1. Appointment of guardian for a minor or person of unsound mind;
2. Preservation, interim custody or sale of goods (if the goods are of perishable nature) for any
goods related to the arbitration agreement;
3. Securing the amount of claims;
4. Allowing the detention, preservation or inspection of any property or thing, authorizing any
person to enter upon any land or building, authorizing any samples to be taken or observations
to be made or experiments to be tried in order to expedite the process and obtain accurate &
complete information or evidence;
5. Allowing interim injunction or appointment of receiver;
6. Any other reliefs which the court considers proper taking into account the facts and
circumstances of the case.
Any party to the arbitration agreement may file an application to the arbitral tribunal under
Section 17 during the course of the arbitration, i.e. after the arbitral tribunal has been constituted
and up to the time the arbitral award has been made.
Enforceability of and appeal against interim relief granted under Section 17
The interim relief orders passed by the arbitral tribunal shall have the same force and shall be
deemed to be an order of the court for all purposes similar to the powers of the court under
Section 9. The order shall also be enforceable as if it were an order of the court. Further, the
non-compliance of an interim relief order by the arbitral tribunal shall be treated as a contempt
of court and can be dealt with appropriately as per the prevailing laws of the land. However,
an appeal from an order granting or refusing to grant an interim relief under Section 17 may be
made as per Section 37(2) of the Act.
Interplay Between Sections 9, 36, and 37 of the Arbitration Act
Section 36 of the Arbitration and Conciliation Act, 1996, deals with enforcing an arbitration
award. This means once an arbitration decision is final and ready to be enforced, parties
generally can't ask for any temporary orders under Section 9. It lets parties seek these temporary
orders from the court before the award is enforced.
If parties are not happy with how a court handled these temporary orders under Section 9,
Section 37(1)(a) allows them to challenge that decision. This section gives the right to appeal
if the court either refuses to give the temporary relief asked for or if the relief granted isn't what
the parties think is appropriate. This way, parties have a chance to address any issues with the
temporary orders before they affect the final outcome of the arbitration or its enforcement.
Case Law
Hero Wind Energy Private Limited v. Inox Renewables Limited (2020)
The Delhi High Court in Hero Wind Energy Private Limited v. Inox Renewables Limited
(2020) deliberated on the applicability of Section 9 to non-signatories of arbitration
agreements, establishing that relief under this section can be complex and dependent on the
specifics of the arbitration agreement and the nature of the parties involved.
Mitsumi Incorporated (2020)
In Mitsumi Incorporated (2020), the Delhi High Court ruled that once an arbitral tribunal is
constituted in a foreign-seated arbitration, Section 9 applications are not maintainable if the
tribunal can provide an effective remedy.
Conclusion
Section 9 of the Arbitration Act is pivotal for securing interim relief before, during, and after
arbitration proceedings but before the enforcement of the arbitral award. At the heart of
arbitration law is the necessity for an arbitration agreement.
Thus, it is clear that the right of the aggrieved party is protected at every stage, i.e. even before
the commencement of arbitration, during the arbitration proceedings and even after the passing
of the arbitral award. The interim relief orders granted by the court or the arbitral tribunal are
enforceable. The provisions of Section 9 and Section 17 are of paramount importance and are
an indispensable component of the arbitration mechanism.

Q.9 Appointment of Conciliator?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Conciliation
Conciliation is a voluntary and confidential method of alternative dispute resolution (ADR) in
which a neutral third party, known as a conciliator, assists disputing parties in resolving their
differences and reaching a mutually acceptable settlement.
In conciliation, the conciliator acts as a facilitator, helping the parties communicate effectively,
understand each other’s perspectives, and find common ground for resolving their dispute. The
conciliator is a neutral and impartial intermediary who does not impose decisions but guides
the parties towards a resolution through dialogue and negotiation.
Conciliation is particularly effective in resolving commercial, family, labour, and community
disputes, as it fosters cooperation and preserves relationships. The process is less formal than
litigation and arbitration, making it a quicker, more cost-effective, and flexible method of
dispute resolution.
A conciliator is a neutral third party appointed or chosen to facilitate the conciliation process
in dispute resolution. The conciliator’s role is to assist the disputing parties in reaching a
mutually agreeable settlement through open communication, negotiation, and consensus-
building.
A conciliator is typically someone with expertise and experience in dispute resolution,
negotiation, and conflict management.
Roles and Responsibilities of a Conciliator
Assisting Parties in Reaching an Amicable Settlement
The primary role of a conciliator, as stated in Section 67, is to assist the parties in reaching a
mutually acceptable resolution to their dispute.
This involves facilitating communication, encouraging dialogue, and exploring possible
solutions. The conciliator acts as a neutral and impartial third party, promoting a cooperative
environment where parties can freely express their concerns and interests.
Guided by Principles of Objectivity, Fairness, and Justice
A conciliator must uphold objectivity, fairness, and justice principles throughout the
conciliation proceedings. This means treating both parties equally without favouring one over
the other.
Conducting the Conciliation Proceedings Appropriately
Section 67 grants conciliators the flexibility to conduct the conciliation proceedings in a
manner they deem appropriate. This enables them to tailor their approach to the case’s specific
needs.
They may take into account the circumstances of the dispute, the expressed wishes of the
parties, and the need for a speedy resolution. Furthermore, if a party requests the conciliator to
hear oral statements, the conciliator should consider such requests.
Making Proposals for Settlement
At any stage of the conciliation process, a conciliator is empowered to make settlement
proposals to the parties. These proposals, which need not be in writing and are not required to
be accompanied by a statement of reasons, can serve as potential solutions for the parties to
consider. The aim is to guide the parties towards a settlement that effectively accommodates
their interests and resolves their dispute.
The role of Conciliators is important in facilitating communication, promoting understanding,
and guiding the parties towards a mutually agreeable settlement. They must be neutral, and
impartial, and possess the necessary skills to conduct the conciliation process effectively. Their
primary objective is to assist the parties in reaching a voluntary resolution through dialogue
and negotiation.
Appointment of Conciliator
Under the provisions of the Arbitration and Conciliation Act, the number and qualifications of
conciliators are outlined in Sections 63 and 64:
Number of Conciliators (Section 63)
• By default, there shall be one conciliator in a conciliation proceeding.
• However, the parties involved in the dispute can agree on the appointment of two or
three conciliators if they wish.
• When multiple conciliators are appointed, they are generally expected to act jointly in
conducting the conciliation proceedings.
According to the provisions of the Arbitration and Conciliation Act, the appointment of a
conciliator in conciliation proceedings follows the following guidelines:
Appointment by Agreement
• In conciliation proceedings with one conciliator, the parties have the freedom to agree
on the name of a sole conciliator.
• In conciliation proceedings with two conciliators, each party has the right to appoint
one conciliator.
• In conciliation proceedings with three conciliators, each party has the right to appoint
one conciliator, and the parties may collectively agree on the name of the third
conciliator, who will act as the presiding conciliator.
Enlisting Assistance of an Institution or Person
Parties also have the option to seek the assistance of a suitable institution or person in
connection with the appointment of conciliators. This can be done through the following
means:
• A party may request such an institution or person to recommend the names of suitable
individuals to act as a conciliator.
• The parties may agree that the appointment of one or more conciliators be made directly
by such an institution or person.
In making recommendations or appointments, the institution or person involved must consider
factors that ensure the appointment of an independent and impartial conciliator. Additionally,
when appointing a sole or third conciliator, they should consider the desirability of appointing
a conciliator of a nationality different from that of the parties.
These provisions ensure that the appointment of a conciliator is conducted in a manner that
upholds the principles of neutrality, independence, and impartiality, thereby promoting a fair
and effective conciliation process.
Conclusion
Appointing conciliators in conciliation is a crucial aspect of alternative dispute resolution. The
Arbitration and Conciliation Act provides guidelines in Sections 63 and 64 regarding the
number and qualifications of conciliators.
Parties have the flexibility to agree on the appointment of one, two, or three conciliators, with
the expectation that they will act jointly in most cases. The Act also allows parties to seek the
assistance of a suitable institution or person in the appointment process.
Q.10 Appointment of an Arbitrator/by Parties/ by Court?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
Arbitration is a structured and legally binding dispute resolution process in which a neutral
third party, known as an arbitrator, hears arguments and evidence from the disputing parties
and renders a decision. Arbitration serves as an alternative to litigation, offering a private,
efficient, and often quicker resolution.
Arbitration is commonly used in commercial, contractual, labour, construction, and
international disputes due to its confidential nature, expert decision-making, and finality. Many
business contracts include arbitration clauses to ensure disputes are resolved outside traditional
court systems.
The World Intellectual Property Organization (WIPO) defines arbitration as
"Arbitration is a process in which parties by an agreement submit the dispute to one or more
arbitrators, who then make a decision binding to the parties on the dispute. Arbitration is a
method of resolving disputes by way of private dispute resolution, instead of going to a court".
Section 2(1)(a) states that arbitration means any arbitration administered or not administered
by a permanent arbitral institution.
Parties choose an arbitration method to resolve their disputes, as it provides more flexibility
and efficiency as compared to the litigation method. The process of arbitration begins with
drafting an arbitration agreement between the parties. This arbitration agreement is referred to
when any dispute arises between the parties. All the important terms and conditions are
mentioned in this agreement. There can be cases wherein an agreement is not present and the
parties decide to resolve a dispute by choosing the method of arbitration after the dispute has
arisen. In such cases Section 11 of the Act lays down the provisions that are to be followed
when it comes to appointing an arbitrator.
Provisions under Section 11 of the Arbitration and Conciliation Act
Section 11(1)
The arbitrator can be of any nationality unless something specific is agreed by the parties. There
is no restriction on the arbitrator's nationality if both the parties to the dispute agree to the same.
The key point to keep in mind here is that an arbitrator is appointed only after there has been a
mutual agreement between the parties to the dispute. This sub-section also mentions that the
nationality of the arbitrator may also be priorly mentioned in the agreement, For example, in
case of disputes between two companies that work in different countries, they can have a clause
in the agreement that states that they shall appoint an arbitrator from a specific nationality in
case of dispute. There is no strict rule that the arbitrator has to be a citizen of India if the
arbitration is taking place in India.
Section 11(2)
The parties can freely decide the process for arbitrator or arbitrator's appointment, subject to
sub-section (6) of the Section. The parties themselves decide the procedure for arbitration and
appointment of the arbitration. The parties are free to follow whichever method they want
which is comfortable for both the parties and also ensures the resolution of the dispute.
The parties are free to decide the place of arbitration, the language in which the arbitration is
to be carried out, how they want to appoint the arbitrator, what procedure they want to follow
when the arbitration proceedings take place, etc. These details are also often added to the
agreement itself. If some specific venue or process is mentioned in the agreement then that is
to be followed.
Section 11(3)
In case of failure to reach an agreement on the procedure of appointment, sub-section (3)
prescribes the following procedure for the appointment of three arbitrators:
1. Each party appoints an arbitrator.
2. The two arbitrators then jointly appoint the third arbitrator, who acts as the presiding
arbitrator.
The main aim of this sub-section is to ensure that there is a balanced approach when it comes
to appointing arbitrators. When the agreement between the parties states that three arbitrators
shall be appointed then in that case each party shall appoint one arbitrator from their side, and
the third arbitrator will be appointed as the presiding arbitrator by the other 2 appointed
arbitrators.
Section 11(3A)
The power to designate an arbitral tribunal from time to time is vested in the Supreme Court
and the High Court. These arbitral tribunals will be graded by council under the Section 43-I.
Provided that if a graded arbitral tribunal is not present in the jurisdictions of any High Court,
then the concerned High Court's Chief Justice can maintain an arbitrator's panel that discharges
all the duties and functions of the arbitral institution.
When any reference is made to the arbitrators, it will be deemed that it is made to the arbitral
tribunal. The arbitrators that are appointed under this Section are entitled to the fees which are
prescribed in the Fourth Schedule. A review on a periodic basis is also conducted of the arbitral
tribunal by the Chief Justice of the concerned High Court.
Section 11(4)
If the procedure of appointment in the sub-section (3) is applied
1. Each party must appoint an arbitrator within thirty days of receiving the request from the
other party to do so.
2. The two arbitrators must reach an agreement on appointing the third arbitrator within thirty
days from the date of their appointment. Such appointment of an arbitrator will be made when
the party makes an application for the same. In case of an international commercial matter, the
Supreme Court will make the appointment of arbitrators, while in case of matters, other than
international commercial matter, the High Courts will appoint.
When the parties fail to appoint the arbitrators the Supreme Court and High Court help the
parties by appointing an arbitrator. The timelines are provided in order to make the process
quick in order to resolve the dispute faster than the traditional courts. Both the parties are given
the right to select an arbitrator in order to maintain partiality. The Supreme Court and High
Court shall help the parties who have opted for arbitration when they are having problems with
the appointment of the arbitrator.
Section 11(5)
This sub-section states when in an arbitration with a sole arbitrator and the parties to the dispute
cannot reach an agreement on the procedure of appointment, then in that case if the arbitrator
is not appointed within thirty days from the day on which one party had requested the other
party to agree, then such appointment shall be made by the High Court if the arbitration is a
non international commercial arbitration, while in case of international commercial arbitration
the appointment of arbitrator will be done by the institution designated by the Supreme Court.
Section 11(6)
This sub-section states that where an agreement on the appointment procedure has been made
by the parties, if
1. A party fails to act as prescribed by the procedure, or
2. The parties or the appointed arbitrators fail to reach an agreement as prescribed by the
procedure, or
3. The person or institution entrusted with any function by the procedure fails to perform it,
then such appointment of an arbitrator will be made when the party makes an application for
the same. In case of an international commercial matter, the Supreme Court will make the
appointment of arbitrators, while in case of matters, other than international commercial
matters, the High Courts will appoint in order to take measures that are necessary, unless there
is some other means for securing appointment as per the agreement.
Section 11(8)
The Supreme Court, High Court, or the institution or person designated by the court before an
arbitrator is appointed, must give in writing a disclosure from the prospective arbitrator in terms
of Section 12(1) and make the decision taking in the following considerations
1. Qualifications required for an arbitrator as per the agreement of the parties,
2. Contents of disclosure and other considerations for appointing an independent and impartial
arbitrator
Section 11(9)
In case of appointment for arbitrator is to be made in international commercial matters, and
there is a need to appoint a sole arbitrator or a third arbitrator, the arbitral institution designated
by the Supreme Court or a High Court may appoint an arbitrator of a nationality other than the
nationalities of the parties.
This sub-section governs that in case of the international commercial arbitration, the party can
approach the Supreme Court for the arbitrator appointment. In the case of international
commercial arbitration, the person or the institution which is designated by the court or the
Supreme Court may appoint a third arbitrator or a sole arbitrator. The arbitrator that is to be
appointed must be of any other nationality than the parties' nationality.
Section 11(11)
If there has been more than one request or application made to Chief Justices of different High
Courts or designates during the application made under the sub-section (4), (5), (6), the High
Court receiving the first request will be competent.
Section 11(12)
When the matters referred under sub-sections (4), (5), (6), and (8). in relation to international
commercial arbitration or other arbitration, the arbitral institution is referred, is the arbitral
institution which was designated under sub-section 3A.
Section 11(13)
An application or request for the appointment of arbitrators shall be disposed of expeditiously
by the arbitral institution. It shall be disposed of within thirty days from the date of service of
notice on the opposite party.
Section 11(14)
The arbitral institution shall determine the fee and manner of its payment to the arbitral tribunal
after considering the rates prescribed in the Fourth Schedule of the Act. However, the
explanation of this subsection provides that in the case of international arbitration in non-
commercial matters, the parties may agree to determine fees as per the rules prescribed by an
arbitral tribunal.
Number of Arbitrator
The parties have the freedom to decide the number of arbitrators that they want to appoint in
the arbitration process as per Section 10 of the Act, provided that the number of arbitrators in
the arbitration procedure should not be an even number. For example, there can be three
arbitrators appointed, where one party each appoints an arbitrator and then the two arbitrators
appoint the third one who is known as the presiding arbitrator. The number of arbitrators cannot
be two or four. When the parties are not able to appoint an odd number of arbitrators then the
arbitral tribunal in that case will be constituted with a sole arbitrator. The court will appoint an
arbitrator if the parties fail to appoint the same or in case of an agreement of three arbitrators,
the two arbitrators cannot appoint the third arbitrator.
Case Law
M/S Comed Chemicals Ltd. vs. CN Ramchand (2008)
In the case of M/S Comed Chemicals Ltd. vs. CN Ramchand (2008) a petition was filed by the
petitioner under Section 11. The petitioner has prayed to the Chief Justice of India to appoint a
presiding arbitrator or a sole arbitrator. The preferred arbitrator was mentioned and the same
was conveyed by sending a notice by the petitioner in 2005. The appointment of an arbitrator
was rejected by the respondent. The respondent stated that as it is an international commercial
matter it should be referred to the Chief Justice and not the High Court. The Supreme Court
appointed a sole arbitrator as it was a case of International Commercial Arbitration.
Brahmani River Pellets Limited vs. Kamachi Industries Limited (2019)
In the case of Brahmani River Pellets Limited vs. Kamachi Industries Limited (2019), the
Supreme Court held that only the courts that satisfy the jurisdiction as per the contract will
have the jurisdiction in relation to that matter. The parties to the dispute had already decided
the venue for arbitration, which was Bhubaneswar. This proves that the parties intended to
exclude other courts from having jurisdiction. The High Court of Madras had no jurisdiction
under the Section 11(6) of the Act in relation to the appointment of the application for an
arbitrator.

Q.11 Settlement Agreement?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Settlement Agreement
Conciliation is a voluntary and confidential method of alternative dispute resolution (ADR) in
which a neutral third party, known as a conciliator, assists disputing parties in resolving their
differences and reaching a mutually acceptable settlement.
In conciliation, the conciliator acts as a facilitator, helping the parties communicate effectively,
understand each other’s perspectives, and find common ground for resolving their dispute. The
conciliator is a neutral and impartial intermediary who does not impose decisions but guides
the parties towards a resolution through dialogue and negotiation.
Part III of the arbitration and conciliation act, 1996 deals with the provisions related to the
process of conciliation, this process is very different from arbitration. Here conciliator tries to
settle the dispute between the parties by assisting them and helping them to reach to the
conclusion or solution of the matter. Under this process one party reaches out to other or send
the invitation to settle the dispute through the process of conciliation. If the other party accepts
the invitation of the party, then both the parties proceeds to choose the conciliator which is
generally one but in some cases there might be more than once conciliator.
The settlement process takes place under section 73 of The Arbitration and Conciliation Act,
1996 when the conciliator sees the possibility of settlement of dispute. Generally decision of
the conciliation proceedings are not binding on the parties but if the parties resort to settlement
of award under this section then the settlement agreement becomes binding on the parties.
Parties have the option of either drawing up the terms settlement agreement by themselves or
take the assistance of conciliator and at last the agreement is signed by both the parties and
authenticated by the conciliator. As per section 74 of The Arbitration and Conciliation Act,
1996 settlement agreement drawn under section 73 is kept in par with arbitral award in the
arbitration proceedings under section 30 of The Arbitration and Conciliation Act, 1996 and it
is binding like arbitral award.
Provisions of Section 73
1. Recording the Settlement Agreement
• Subsection 1 of Section 73 states that any settlement agreement reached during
conciliation proceedings should be recorded in writing. The agreement must be signed
by the parties involved in the conciliation process. If the conciliator has facilitated the
process, they may also sign the settlement, but only as a witness, not as a party to the
agreement.
• The agreement must reflect the terms mutually agreed upon by the parties. The
conciliator’s role here is to ensure that the terms are clear and accurately represent what
has been agreed upon during the conciliation discussions.
2. Binding Nature of the Settlement Agreement
• Subsection 2 of Section 73 stipulates that once the settlement agreement is signed by
the parties, it becomes legally binding. The agreement is treated as a contract under
the Indian Contract Act, 1872.
• This means that if either party fails to honour the terms of the agreement, the other party
has the right to seek enforcement through the courts. The settlement is as enforceable
as any other contract, with the same legal standing and consequences in case of breach.
3. Confidentiality of the Agreement
• Section 73 ensures that the settlement remains confidential unless both parties mutually
agree to waive this confidentiality. The conciliator’s responsibility includes ensuring
that the details of the conciliation proceedings are not disclosed unless required by law
or agreed upon by the parties.
• This confidentiality helps protect the integrity of the conciliation process and ensures
that the discussions that led to the settlement remain private. In practice, this encourages
open and honest communication between the parties, without fear that the information
will be used against them later in litigation.
4. Voluntary Nature of the Settlement
• The settlement agreement under Section 73 is based on the voluntary participation of
the parties. The agreement is only binding if both parties freely consent to the terms.
• The conciliator cannot impose any terms, nor can the settlement be enforced unless it
is signed voluntarily by both parties. This is a key principle of the conciliation process,
where the focus is on mutual resolution rather than imposing a solution on the parties.
5. Finality and Completion
• Once the settlement agreement is signed by the parties, and the terms are agreed upon,
the conciliation proceedings are considered complete. The conciliator may not be
involved in the enforcement of the agreement, and the parties themselves will be
responsible for ensuring that the settlement is executed as agreed.
• The parties are also free to modify or terminate the agreement at any time, provided
both agree to the changes. However, in the absence of such modifications, the
agreement is final and binding.
6. Judicial Enforcement
• If a party refuses to comply with the settlement agreement or if a dispute arises about
its implementation, Section 73 provides that the court can intervene to enforce the
agreement. This ensures that the settlement has the full backing of the law and that any
party failing to honour the terms of the settlement can be legally compelled to comply.
• The court, however, cannot interfere with the substance of the settlement, as long as it
conforms to the law and public policy.
7. Possibility of Conversion into a Court Decree
• One important aspect of Section 73 is that the settlement agreement can be converted
into a court decree. If the parties wish, they can approach the court to convert the
settlement agreement into a decree of the court. This adds an additional layer of legal
enforceability and makes the settlement easier to enforce.
• The court’s role in this context is primarily to recognize the agreement and issue the
decree, ensuring that it has the same legal effect as any court judgment.
8. Role of the Conciliator
• The conciliator is primarily tasked with facilitating the resolution of the dispute by
helping the parties reach a mutually agreeable settlement. However, the conciliator is
not a judge and cannot impose any terms or force a settlement on the parties.
• The conciliator may assist in drafting the settlement agreement and ensuring that the
terms are clearly expressed and accurately reflect the parties’ intentions. The
conciliator’s role ends once the agreement is reached, and they are not involved in its
enforcement.
Significance of Section 73
1. Efficient Dispute Resolution:
• Section 73 contributes significantly to efficiency in dispute resolution. Once the
parties reach a settlement, they avoid the need for protracted litigation or
arbitration. This not only saves time but also reduces the financial costs
associated with resolving disputes.
• It also encourages a cooperative rather than adversarial approach, which can
preserve or even improve the relationships between the parties.
2. Promotes Flexibility:
• The settlement agreement allows for flexible solutions that are tailor-made for
the parties involved. Unlike court judgments, which are rigid and standardized,
conciliation allows for creative and mutually acceptable resolutions that suit the
unique circumstances of each dispute.
3. Alternative to Litigation:
• Section 73 significantly reduces the burden on the judicial system by
encouraging parties to resolve their disputes through conciliation rather than
litigation. This leads to faster resolution of disputes, which is vital for reducing
the backlog of cases in Indian courts.
4. Finality and Clarity:
• Once signed, the settlement agreement offers clarity and finality to the parties
involved. Both parties are legally bound by the terms of the settlement,
providing them with security and certainty. The enforceability of the agreement
ensures that there are no ambiguities about the resolution.
5. Enforcement Mechanism:
• Since a settlement agreement under Section 73 is enforceable in the same way
as a regular contract, it provides a strong legal foundation for enforcement. This
reduces the likelihood of one party failing to honour the terms, as they are aware
that the agreement is legally binding and enforceable.

Case Law
Haresh Darayam Thakur Vs. State of Maharashtra
In case of Haresh Darayam Thakur Vs. State of Maharashtra The Supreme Court addressed the
issue of importance of signature of both parties on the settlement agreement. Court said that
settlement agreement under section 73 of The Arbitration and Conciliation Act, 1996 can be
given legal sanctity of arbitral award under section 74 of The Arbitration and Conciliation Act,
1996 only when both the parties sign the settlement agreement. Settlement agreement can be
drawn by conciliator only when he sees that there is some possibility of mutual settlement of
dispute between the parties.
Q.12 Role of court in arbitration and conciliation proceedings?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Role of Courts in Arbitration and Conciliation Proceedings
Arbitration and conciliation are two widely recognized methods of Alternative Dispute
Resolution (ADR) that provide an efficient, cost-effective, and private means of settling
disputes outside traditional court litigation. Both mechanisms promote the resolution of
conflicts in a less adversarial manner, preserving business relationships and reducing the
burden on judicial systems.
Arbitration is a quasi-judicial process in which a neutral third party, known as an arbitrator,
hears the arguments and evidence presented by the disputing parties and renders a legally
binding decision (arbitral award). Arbitration is commonly used in commercial, contractual,
and international disputes, offering flexibility, confidentiality, and enforceability of awards
under various legal frameworks such as the New York Convention and UNCITRAL Model
Law.
Conciliation, on the other hand, is a voluntary and non-binding dispute resolution process
where a conciliator facilitates communication between the parties, helps identify issues, and
suggests possible solutions. Unlike arbitration, the conciliator does not impose a decision;
instead, the disputing parties must mutually agree upon a settlement. Conciliation is often used
in family, labour, and business disputes where maintaining long-term relationships is crucial.
Both arbitration and conciliation serve as effective alternatives to litigation, reducing legal
costs and delays while ensuring fair and amicable dispute resolution.
Role of Courts
Although arbitration and conciliation are meant to function outside the judicial system, courts
still play a significant role in supporting and regulating these ADR processes. Courts act as
facilitators, enforcers, and supervisors, ensuring that arbitration and conciliation proceedings
are conducted fairly and in accordance with legal principles.
A court proceeding, in other words, is also called the process of Litigation. So, court proceeding
or Litigation refers to proceedings initiated between two opposing parties to enforce or defend
a legal right.
Litigation is the most common and familiar process to resolve any dispute, and this process
involves two aspects: Civil litigation (involves dispute arising between parties) and Criminal
litigation. Whereas, the process of arbitration involves two parties who are in dispute regarding
some issue, but are willing to work it out, with the help of a third party.
Roles of the court in arbitration and conciliation proceedings are as follows:
Power of the Parties to Refer to Arbitration
The parties, under arbitration, have many powers. As the arbitration clause can be formulated
by the parties themselves, they are allowed to add certain provisions that they deem fit. One
such power is the power of the parties to refer to Arbitration. This can be discussed under two
heads:
• When there is an arbitration clause
Section 8 of the Arbitration and Conciliation Act, 1996 clearly states that when a case is filed
in the civil court and the right of action of said case emerge from a contract in which the parties
had voluntarily and freely agreed to settle the dispute by arbitration, then, if the essentials of
section 8 are fulfilled, it is the obligatory duty of the court to refer the parties to arbitration.
• When there is no arbitration clause
When there is no express arbitration agreement between the parties as regards to reference of
disputes for arbitration, the court does not have the power to refer the parties to arbitration
unless and until a written consent is provided by the parties by way of joint application or a
joint memo or a joint affidavit. So, a written joint memo is necessary for the reference of dispute
to arbitration.
Interim Measures by the Court
Section 9 of Arbitration and Conciliation Act, 1996 states that a party may before or during the
arbitral proceedings or at any time after making of the arbitral award but before it is enforced
in accordance with Section 36, may apply to the court for interim measure of protection.
Appointment of Arbitrator
The Parties can mutually determine the procedure for appointment of the arbitrator prior to the
commencement of the arbitration proceedings. Nonetheless, if for some reason, the parties
failed to appoint an arbitrator for conducting arbitration proceedings then the court has the
power to appoint the arbitrator in such cases.
Setting aside the Arbitral Award
Setting aside the arbitral award in simple terms is called challenging the arbitral award. Sec.
34 of the Arbitration and conciliation Act, 1996 lays down the grounds for setting aside the
arbitral award, which are as follow:
1. The party was under some form of incapacity;
2. The arbitration agreement is not valid under the law in force, for which the agreement has
been subjected to;
3. The party was not given proper notice of appointment of arbitrator or the arbitral
proceedings;
4. The award falls beyond the scope of submission to arbitration;
5. The due procedure was not followed, while appointment of arbitrator or the tribunal;
6. The award is in violation of public policy of India;
7. The subject matter of dispute is not capable of being settled by the arbitration.
If an arbitral award falls within the limits of above-mentioned grounds, the party can file a
petition u/s 34 to challenge such award, before the competent court.
Enforcement of the Award
Section 36 of Arbitration and Conciliation Act, 1996 deals with the enforcement of the award.
It states that:
Once an award is made, the concerned party has to wait 90 days, before he can file for execution
of such award, before the competent court/forum.
After the 2015 amendment, sec. 34 application does not put an automatic stay on the
enforcement of execution of award. Rather, the party wanting to set aside the award under sec.
34 shall file a separate application before the court, asking for stay on execution proceedings.
Sec. 35 of the act states that an award is final and binding. Hence, it becomes enforceable unless
it is challenged under sec. 34 application. Moreover, if only a part of an award is challenged
under sec. 34 application, then the unchallenged part becomes enforceable under sec. 36 of the
act.
Appealable Orders
Section 37 of Arbitration and Conciliation Act, 1996 deals with provision relating to appealable
orders. Section 37 deals with processes involved in PART I and Domestic arbitration.
Appealable orders relevant to procedures of PART II and foreign arbitration are dealt in Section
50 of the Act.
Provisions under section 37(1) which deals with appealable order of the Court, are briefly
mentioned hereon:
1. Refusing the parties to refer them to arbitration under section 8.
2. Granting or refusing to grant any measures under section 9.
3. Setting aside or refusing to set aside an arbitral award under section 34.
Conclusion
Arbitration and conciliation are essential components of the modern dispute resolution
framework, offering parties speed, cost-effectiveness, confidentiality, and flexibility. While
ADR mechanisms operate independently of the traditional court system, courts play a
supportive and supervisory role in ensuring fairness, enforcing decisions, and upholding the
rule of law. By striking a balance between judicial intervention and party autonomy, courts
contribute to the efficiency and credibility of arbitration and conciliation proceedings.

Q.13 Working Process of Lok Adalat?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Lok Adalat
Lok Adalat (People’s Court) is an alternative dispute resolution mechanism in India, organized
under the Legal Services Authorities Act, 1987. It aims to provide speedy and cost-effective
justice by settling disputes through conciliation and compromise. Lok Adalats have the
authority to settle civil cases, matrimonial disputes, land disputes, and compoundable criminal
cases. The decisions made by Lok Adalats are binding and hold the same legal status as a court
decree, but without the possibility of appeal, ensuring finality. They play a crucial role in
reducing the burden on regular courts while promoting amicable settlements.
Types of Lok Adalat
In India, various types of Lok Adalats have been established to cater to specific categories of
cases, ensuring accessible and efficient justice for all.
1. Permanent Lok Adalats
Permanent Lok Adalats are created under the Legal Services Authorities Act of 1987 to resolve
specific types of disputes. These lok adalats have authority over public utility services such as
transportation, postal services and telegraph services.
They have the same powers as a Civil Court and are presided over by a sitting or retired judicial
officer. Permanent Lok Adalats ensure that issues are resolved quickly and conveniently for all
parties concerned.
2. National Lok Adalat
National Lok Adalat is a unique initiative by the Indian government aiming to reduce the
burden of pending cases across the country. It is conducted on specific days as specified by the
National Legal Services Authority (NALSA). The National Lok Adalat aims to encourage
compromise and settlement offering an opportunity to resolve a vast number of cases
expeditiously. By making justice accessible to all this initiative promotes the principle of
“justice at the doorstep”.
3. State Lok Adalat
State Lok Adalats operate at the state level and focus on resolving disputes that are pending
before various courts within the jurisdiction of the respective state. These adalats are organized
by the State Legal Services Authorities (SLSA) and serve as an alternative forum for litigants
to seek resolution.
4. Mega Lok Adalat
Mega Lok Adalat is an extended version of the National Lok Adalat. It mainly aim to address
a large number of cases pending in various courts and tribunals within a specific jurisdiction.
The Mega Lok Adalat brings together multiple Lok Adalats, including Permanent Lok Adalats,
to handle a substantial volume of cases on a single day.
5. Mobile Lok Adalat
The Mobile Lok Adalat is a very progressive concept that takes the Lok Adalat system to the
doorstep of the interested litigants. It involves the establishment of temporary Lok Adalat. It
centres in the different locations to cater to the needs of people who may face challenges in
accessing regular courts. The Mobile Lok Adalat plays very important role to reach out the
remote areas for ensuring easy access to justice for all irrespective of their geographical
location.
6. Special Lok Adalats
Special Lok Adalats are organized to deal with specific categories of cases tailoring the
approach to meet their unique requirements. These adalats address matters such as motor
vehicle accident claims, land acquisition disputes and family matters etc. By focusing on
specific types of cases Special Lok Adalats streamline the resolution process ensuring
specialized attention and timely justice.
Lok Adalat under Legal Services Authority Act, 1987
Section 19 of the Act provides for the establishment of Lok Adalats. Legal service authorities
at all levels, including the central, state, and district levels, shall hold Lok Adalats. Lok Adalats
serve as an alternate dispute resolution system. Their purpose is to settle cases that are pending
or that have not been heard in the courts. It consists of judicial officers or an authorized person
under the jurisdiction of the state, central government, or local government. Following the
conciliation of disputes between the parties and the agreement of the parties, the award is
handed down by conciliators in accordance with Section 21 of the Act. The award has the same
legal effect as a court decision.
Scope of Lok Adalat
Unlike the Supreme Court, Lok Adalat is extremely broad to incorporate most of the cases
pending before it as well as new cases that will be filed in the near future to be settled. The Lok
Adalat does not have jurisdiction over cases relating to offences that cannot be compounded
under any law. The Lok Sabha does not refer such matters to committees without giving the
other party a reasonable opportunity to be heard. The Lok Adalat proceeds to resolve any case
referred to it and tries to negotiate a mutually acceptable outcome between the parties involved
with the case. Whenever a Lok Adalat decides a case before it, it adopts the most extreme
efforts for a trade-off or settlement. The following points elaborate on the scope of Lok Adalats:
• If no settlement or compromise is reached by the parties after the Lok Adalat passes, no order
is given.
• A reference will be sent automatically to the Court that drew up the reference for disposition.
Those involved in the dispute are urged to seek redressal in courts.
• If the terms proposed by the bench do not satisfy the parties, the Lok Adalat cannot be forced
to compromise or reach a settlement. Orders from Lok Adalats are definitive and restrict the
parties.
• An order passed by a judge is a satisfactory means of stopping the proceedings that demand
justice.
• Lok Adalats have enough powers under the Act to make justice without compromising the
quality of their awards. The Lok Adalat's final order is considered judicial since it is given the
status of a decree.
• A Civil Court recognizes it as a form of evidence and is given the power to summon, discover,
and get an affirmation.
Functions of Lok Adalat
The following are the functions of Lok Adalat:
• Lok Adalat members should be impartial and fair to the parties.
• Lok Adalat is responsible for handling pending cases in court. In the case of a Lok Adalat
settlement, the court fee paid to the court on the petition will be reimbursed
• When filing a dispute with Lok Adalat, you do not have to pay a court fee.
Powers of Lok Adalat
o The Lok Adalat shall have the same powers as are vested in a Civil Court under
the Code of Civil Procedure (1908).
o Further, a Lok Adalat shall have the requisite powers to specify its own
procedure for the determination of any dispute coming before it.
o All proceedings before a Lok Adalat shall be deemed to be judicial proceedings
within the meaning of the Bharatiya Nyaya Sanhita 2023 and every Lok Adalat
shall be deemed to be a Civil Court for the purpose of the Bharatiya Nagarik
Suraksha Sanhita 2023.
o An award of a Lok Adalat shall be deemed to be a decree of a Civil Court or an
order of any other court.
o Every award made by a Lok Adalat shall be final and binding on all the parties
to the dispute. No appeal shall lie to any court against the award of the Lok
Adalat.
Procedure of Lok Adalat
Step 1: Suitability of the Case
The first step is to determine whether the case is suitable for resolution through the Lok Adalat.
Lok Adalats primarily handle civil cases, including disputes related to property, family matters,
labour disputes, and motor accident claims. Criminal cases, matters involving serious offenses,
and cases where the law does not allow for a compromise cannot be referred to Lok Adalats.
Step 2: Consent of Parties
it is essential that all the parties involved in the dispute must agree to refer the case to the Lok
Adalat. No matter shall be referred to Lok Adalat without free consent of both the parties.
Consent can be given either at the stage of pre-litigation that is before filing a case in court or
even during the court proceedings before the regular court.
Step 3: Application for Referral
To get the case referred to the Lok Adalat, its needed to file an application in the appropriate
court. The application should be in proper format. Formats of application for lok adalats are
available with the court clerk.
Step 4: Evaluation by the Court
After the application is filed, the court considers its merits and decides if the case should be
sent to the Lok Adalat. The court may before considering the matter may examine the criteria
such as the nature of the dispute, the willingness of the parties, and the stage of the proceedings.
If the court finds the case is appropriate for the Lok Adalat, it will issue an order referring the
case to the Lok Adalat.
Step 5: Lok Adalat Proceedings
After referring the case to the Lok Adalat, the court may provide notice to both parties
concerned, advising them of the date, time, and location of the Lok Adalat proceedings. Both
parties are obligated to attend the Lok Adalat hearings on the appointed date. The Lok Adalat
functions in a casual and participative manner, allowing parties to present their points,
negotiate, and reach an agreement. The Lok Adalat bench, comprising judicial officers and
other members, facilitates the resolution process and ensures fairness.
Step 6: Conciliation and Mediation
The Lok Adalat panel, comprising a judicial officer and other experts, facilitates conciliation
and mediation between the parties. They encourage open communication and guide the parties
towards a mutually agreeable settlement.
Step 7: Settlement and Award
If an agreement is reached between the parties during the Lok Adalat proceedings, it is recorded
as a settlement. The settlement agreement has the same legal validity and enforceability as a
court decree. If the parties fail to reach a settlement and act as per the settlement deed, then the
case will be referred back to the regular court for further regular proceedings as per the law.
Step 8: Implementation of Settlement
Once a settlement is reached in the Lok Adalat, it is binding on the parties. The settlement is
implemented by the regular court as per the terms agreed upon.
Step 9: Enforceability
The settlement reached in Lok Adalat is final and binding. It has the same legal standing as a
decree passed by a civil court, making it enforceable through execution proceedings.
Step 10: Non-Settlement Cases
If a case does not reach a settlement in Lok Adalat, it is referred back to the appropriate court
for further proceedings. The proceedings and discussions held during the Lok Adalat are not
admissible as evidence in the subsequent court proceedings.
Advantages of Lok Adalat
o There is no court fee and if court fee is already paid the amount will be refunded if the
dispute is settled at Lok Adalat.
o There is procedural flexibility and speedy trial of the disputes. There is no strict
application of procedural laws while assessing the claim by Lok Adalat.
o The parties to the dispute can directly interact with the judge through their counsel
which is not possible in regular courts of law.
o The award by the Lok Adalat is binding on the parties and it has the status of a decree
of a civil court and it is non-appealable, which does not cause the delay in the settlement
of disputes finally.
Conclusion
The procedure of Lok Adalat in India provides a valuable avenue for individuals to resolve
their legal disputes swiftly and amicably. By emphasizing conciliation and compromise, Lok
Adalats offer a more accessible and cost-effective alternative to the formal court system. The
unique features and benefits of Lok Adalats have led to their widespread adoption and success
in resolving a diverse range of cases.
Lok Adalats have become an integral part of the Indian legal system, providing opportunities
for the poor and discouraged to access justice. The organization has overcome all obstacles to
lawful aid, although there are specific areas for improvement that could make it more effective.
Although they are overcoming any barriers to access to justice, they should also provide
genuine admittance to equity for aggrieved parties. There is more activity than was expected,
which could make Lok Adalats a better mechanism to deal with cases that are on the rise.

Q.14 Foreign Award?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
Arbitration serves as an alternate dispute resolution mechanism for two parties in a contractual
relationship who want to solve disputes without going to court due to cost and time factors. In
such cases, they can add an arbitration clause in the contract, which proves to be very helpful
in times of dispute.
To understand foreign arbitral awards, one should be able to distinguish between international
commercial arbitration and foreign arbitration.
Arbitration, in India, is governed by the Arbitration and Conciliation Act, 1996 where Section
2(1)(f) defines international commercial arbitration. In other words, it can be understood as an
arbitration between two parties, where at least one of the parties is a foreign national, company,
or government entity, thereby qualifying as international commercial arbitration.
Arbitration involves the concept of "seat", which determines the jurisdiction whose laws apply
to the arbitration proceedings. For example, if arbitration occurs between a foreign company
and an Indian company with that in India, then it constitutes international commercial
arbitration. Conversely, if the seat is outside India, i.e., governed by foreign laws of arbitration,
then it will be a foreign arbitration.
Foreign Arbitral Award
Foreign arbitral awards, being closely associated with arbitration, can be defined as awards
issued in foreign jurisdictions. Typically, these awards stem from the proceedings held in
foreign arbitral tribunals and need to be recognized as "foreign signs". They are governed by
various international treaties, conventions, and respective national laws to ensure uniformity
and predictability in their recognition and enforcement on a global scale.
Foreign arbitral awards specifically refer to those arbitral awards that are issued in a country
other than where the enforcement takes place. These awards are internationally recognizable
and are subject to specific legal structures and frameworks for enforcement. They fall under
the purview of various laws, specific legislations, and international conventions to facilitate
their recognition and application across borders. With regard to India, the Arbitration and
Conciliation Act, 1996 defines "foreign award" under Section 44 of Arbitration and
Conciliation Act.
Foreign arbitral awards play a crucial role in international arbitration, expediting the dispute
resolution process between parties from different nations while adhering to legal conventions
and frameworks.
The term "foreign arbitral awards" specifically refers to the award issued through foreign
arbitration, which is distinct from domestic arbitration. In the case of Serajuddin and Co. v.
Michael Golodetz and Others, (1959) the Calcutta High Court elucidated necessary
restrictions and conditions aligning with the term "foreign arbitration". The court laid down
certain essentials for what constitutes a foreign arbitration. According to this decision,
arbitration will be considered to be foreign arbitration, if:
Enforcement of Arbitral Award
The enforcement of arbitral awards involves two primary aspects: domestic awards, governed
by Section 36 of Part I of the Arbitration and Conciliation Act, 1996, and foreign arbitral
awards, which are recognized and enforced through two avenues: the New York Convention,
outlined in Chapter I of Part II of the Arbitration and Conciliation Act, 1996, and the Geneva
Convention, specified in Chapter II of Part II of the Arbitration and Conciliation Act, 1996.
When the arbitral award from one country is recognized and enforced in another, this
involvement is considered as the enforcement of foreign arbitral awards.
Enforcement of foreign arbitral awards under the New York Convention
Chapter I of Part II of the Arbitration and Conciliation Act, 1996 deals with the enforcement of
New York Convention Awards. From Sections 44 to 52, this chapter essentially outlines the
conditions under which a foreign award is recognized and enforced in accordance with the New
York Convention.
Definition of a foreign award
The foreign award is an arbitration settling disputes between those parties arising out of the
legal relationship, whether contractual or not, to be considered as commercial under law.
Thereby, the definitions outline two essential conditions for the Enforcement of Foreign
Arbitral Awards under New York Convention: Firstly, the country
According to the Supreme Court of India, the term "commercial" encompasses various
activities structured towards international trade. This interpretation was elucidated in R.M.
Investments & Trading.Co. Pvt. Ltd. v. Boeing Co (1994) wherein the Court stated that the
Arbitration Act was enacted to facilitate international trade through a speedy redressal of
disputes, therefore, the meaning of terms like "commercial" occurring in the Act should be
given a "liberal construction".
Evidence
Section 47 lists the evidence to be presented before the court by the party seeking the
enforcement of a foreign arbitral award. Such evidence must be produced at the time of
application and must include:
1. Original award or its duly authenticated copy;
2. Original arbitration agreement or its duly certified copy;
3. Any evidence of relevance that can show that the award in question is foreign; and
4. A certified copy of the award and/or agreement translated into English if the award or
agreement is in a foreign language.
Enforcement of foreign arbitral awards under the Geneva Convention
Chapter II of Part II of the Arbitration and Conciliation Act deals with the avenue of
enforcement of the Geneva Convention Awards. This Chapter comprises Sections 53 to 60,
which incorporate the principles of enforcement as laid down in the Geneva Convention.
It involves the recognition and enforcement of arbitral awards made in accordance with an
arbitration agreement governed by the Geneva Convention. The conditions for recognition of
such an award are:
• Validity under applicable law,
• Potential for arbitration settlement,
• Finality in the country of origin, and
• Abidance with public policy
Foreign arbitral awards under the Geneva Convention
According to Section 53, of Geneva Protocol the three essential requirements for the
enforcement of a foreign arbitral award are:
1. The award is based on an arbitration agreement that falls under the Geneva Protocol on
Arbitration Clauses, 1923;
2. The award involves parties who come under the jurisdiction of territories designated as
"reciprocating" by the Central Government and where the Geneva Convention on the
Execution of Foreign Arbitral Awards is applicable; and
3. The award in question is issued in a reciprocating territory recognized by the Central
Government.
Conditions for enforcement
Section 57 enlists the conditions necessary for the enforcement of foreign arbitral awards under
the Geneva Convention. They are as follows:
1. The award must have been issued based on an arbitration agreement valid under the relevant
laws;
2. The subject matter of the award must be one that can be resolved through arbitration under
Indian law;
3. The award must be issued by the arbitral tribunal specified in the arbitral agreement or agreed
upon by both parties;
4. The award must be final in the country where it was issued, meaning there are no appeals or
challenges to such award pending; and
5. The enforcement of the award must not be against "public policy" under Indian laws.
Timeline for enforcement of foreign arbitral awards in India
The timeline for the enforcement of foreign arbitral awards in India is categorised as under:
• Upon receiving the award, the party must wait for 3 months for the application and execution
to take place. During this time, the award may be challenged under Section 34 of the Arbitration
and Conciliation Act, 1996. After the elapse of this period, if the court agrees to enforce the
award, no further challenges or refusals can be made during the execution stage.
• Within 3 years, the application for the enforcement and the recognition of the foreign arbitral
awards must be filed, as clarified by the Supreme Court regarding Article 137 of the Schedule
to the Limitation Act, 1963. Although the Arbitration Act does not establish or specify any time
limit for the enforcement of foreign arbitral awards, the Supreme Court's guideline of the 3-
year period must be adhered to.
Conclusion
The enforcement of foreign arbitral awards plays a pivotal role in resolving international
disputes and promoting cross-border business transactions. India through the recognition and
enforcement of foreign arbitral awards demonstrates its dedication to upholding its
commitment towards the international Conventions and legal frameworks, ensuring that parties
from different nations can effectively seek timely resolution of their disputes. The Arbitration
and Conciliation Act, 1996, along with the avenues provided by the New York Convention and
the Geneva Convention, set forth a legal structure for the recognition and enforcement of
foreign arbitral awards in India. It is of vital importance for individuals and businesses involved
in international arbitration to follow and work as per the procedural setup, limitations, and
adapt to the recent development in this area.

Q.15 Place of Arbitration?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
Arbitration serves as an alternate dispute resolution mechanism for two parties in a contractual
relationship who want to solve disputes without going to court due to cost and time factors. In
such cases, they can add an arbitration clause in the contract, which proves to be very helpful
in times of dispute.
To understand foreign arbitral awards, one should be able to distinguish between international
commercial arbitration and foreign arbitration.
Arbitration, in India, is governed by the Arbitration and Conciliation Act, 1996 where Section
2(1)(f) defines international commercial arbitration. In other words, it can be understood as an
arbitration between two parties, where at least one of the parties is a foreign national, company,
or government entity, thereby qualifying as international commercial arbitration.
Arbitration involves the concept of "seat", which determines the jurisdiction whose laws apply
to the arbitration proceedings. For example, if arbitration occurs between a foreign company
and an Indian company with that in India, then it constitutes international commercial
arbitration. Conversely, if the seat is outside India, i.e., governed by foreign laws of arbitration,
then it will be a foreign arbitration.
Types of Arbitration
Ad Hoc Arbitration
Ad hoc arbitration is the type of arbitration where the parties mutually agree to resolve their
disputes by arbitration proceedings conducted by mutually appointed arbitrators but not by an
institution. This is one of the most common forms of arbitration in India where the parties
themselves agree to and arrange for arbitration.
Institutional Arbitration
Institutional Arbitration is the form of arbitration where an institute, which has been set up for
the purpose of settling disputes by arbitration or other ADR methods, is employed to conduct
arbitration. Such institutes may be national or international in character and they usually lay
down their own rules of arbitration. But such rules cannot override the provisions of the
Arbitration and Conciliation Act, 1996.
Domestic Arbitration
When the arbitration takes place in one jurisdiction and both the parties come under that
jurisdiction, then such an arbitration is called domestic arbitration. In other words, both the
parties must be nationals of the same jurisdiction.
International Arbitration
International arbitration is the type of arbitration where at least one of the parties at dispute is
a foreign national or in the case of a body corporate, has been incorporated in a foreign country.
In other words, at least one of the parties must be a foreign national or habitually resident in a
foreign country.
Stages of Arbitration in India
The stages of an arbitral process as per the provisions of the Arbitration and Conciliation Act,
1996 are described as follows:
Arbitration agreement (Section 7, Arbitration and Conciliation Act, 1996)
The arbitration agreement is the first step towards arbitration.
Number of arbitrators (Section 10, Arbitration and Conciliation Act, 1996)
Section 10 of the Arbitration and Conciliation Act, 1996 lays down the number of arbitrators
that will be adjudging the arbitral proceedings. According to this Section-
• The parties are empowered to themselves determine the number of arbitrators they want
provided that such number of arbitrators are odd in number.
• In cases where the parties are unable to come to a decision as to what shall be the number of
arbitrators, the arbitral tribunal will be graced by a sole arbitrator.
Commencement of arbitral proceedings (Section 21, Arbitration and Conciliation Act,
1996)
Section 21 of the Arbitration and Conciliation Act, 1996 lays down the provision as to when
shall an arbitral proceeding begin. According to this Section, in the event of no agreement to
the contrary, the arbitration proceedings shall be deemed to commence from the date the
respondents have received a request i.e., notice of referring the dispute to arbitration from the
other party i.e., the petitioners / claimants.
Appointment of arbitrators (Section 11, Arbitration and Conciliation Act, 1996)
Section 11 of the Arbitration and Conciliation Act, 1996 deals with the provision of
appointment of arbitrators. Just like the parties can mutually decide upon the number of
arbitrators vide Section 10 of the Act, similarly they can also mutually decide upon the
procedure of appointment of arbitrators and can appoint any person(s) of any nationality as
arbitrator(s) based on mutual agreements. Also, in case of disputes regarding appointment of
arbitrators, the parties can approach the Supreme Court or High Court (as the case may be
depending on arbitration agreement) to appoint arbitrator(s) for them.
Statements of claim and defence (Section 23, Arbitration and Conciliation Act, 1996)
Section 23 of the Arbitration and Conciliation Act, 1996 envisages the provision of statements
of claim and defence made by both the parties before the arbitral tribunal. According to the
section, subject to the mutual agreements between the parties or as per the order of the arbitral
tribunal, the claimant shall submit his claims in details corroborated with facts, issues and relief
or remedy sought. In response, the respondent is to submit defence i.e., counter-statements
within the stipulated time. According to the recently added sub-section (4) of Section 23, the
statements of claim and defence of both the parties should be finished within a maximum period
of six months from the date of appointment of arbitrator(s).
Hearing and written proceedings (Section 24, Arbitration and Conciliation Act, 1996)
Section 24 of the Arbitration and Conciliation Act, 1996 deals with the provisions of hearing
and written proceedings before an arbitral tribunal. According to the Section, subject to an
agreement to the contrary between the parties, it is upto the arbitral tribunal to decide whether
the arbitral proceedings will be held orally or on the basis of documents and other materials.
Arbitral award
The judgement or order of the arbitral tribunal is called the arbitral award.
Important Concepts related to Arbitration
Arbitration Agreement and its essentials
Arbitration agreement is a written agreement between the parties whereby both the parties
resolve to submit themselves to arbitration in the event of a dispute. It has been defined in
Section 2(1)(b) of the Arbitration and Conciliation Act, 1996. According to this provision,
"Arbitration Agreement" means an agreement referred to in Section 7. And according to
Section 7(1), "arbitration agreement" means an agreement by the parties to submit to arbitration
all or certain disputes which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not.
Conditions to be fulfilled to enforce an arbitration clause
In the event there is a contract between the parties and that contract refers to another document
which contains the arbitration clause, then for such arbitration clause to be construed as an
arbitration agreement, certain essential conditions need to be fulfilled, which are as follows:
• The contract must be in writing.
• The reference to the arbitration clause in the separate document is made in a manner so as to
signify that the arbitration clause is a part of the contract.
• The reference to the arbitration clause must be in clear and unambiguous terms.
• The arbitration clause should be well framed, clearly portraying the intention of the parties to
resort to arbitration, so that in cases of disputes under the contract, such clause can be made
applicable.
• The arbitration clause should not be repugnant to any other terms of the contract.
Seat of arbitration
The place of arbitration is referred to as the seat of arbitration. Usually, both parties agree to a
seat of arbitration within the terms of the arbitration clause or arbitration agreement itself. The
importance of the seat of arbitration is paramount because it is the seat of arbitration that
governs the arbitration rules and procedures to be followed in resolving the dispute in case the
parties have not predetermined any procedure. In other words, the seat of arbitration determines
the situs of arbitration. But in case the parties fail to agree on the place of arbitration as per
Section 20(1) of the Arbitration and Conciliation Act, 2015, then the arbitral tribunal can fix
the seat of arbitration for the parties depending on the circumstances of the case and as per the
convenience of the parties vide Section 20(2) of the Act.
Venue of arbitration
Sometimes confusion arises when the words 'venue', 'seat', 'place' of arbitration get used
interchangeably in the arbitration agreement or arbitration clause. Although the seat of
arbitration and the place of arbitration mean the same thing, the venue of arbitration usually
means the convenient geographical place where the arbitration proceedings are being
conducted. So, the seat of arbitration refers to the place whose rules and procedures are to be
applied to the arbitration proceedings and it also determines which courts will have supervisory
jurisdiction over the arbitration proceedings. Thus, the venue of arbitration may not be the same
as the seat of arbitration. When the seat of arbitration has been fixed, i.e., the governing rules
and procedures have been fixed, the proceedings can go on at any geographical place or venue,
even across countries. Hence, it can be said that the term 'venue of arbitration' carries less
weightage than the term 'seat of arbitration'.
Arbitrability of subject matter
All matters cannot be resolved outside the court by arbitration since arbitration is a private
forum of resolution. This brings us to the crucial word 'arbitrability' which determines if a
subject matter can be submitted to the process of arbitration or not. The legislature and judicial
authority decide which matters cannot be subjected to arbitration.
Arbitral Award
In simple words, the judgement or order of the arbitral tribunal (consisting of the appointed or
chosen arbitrators) is called the arbitral award. Section 2(1)(c) of the Arbitration and
Conciliation Act, 1996 defines arbitral award. According to this provision, "arbitral award
includes an interim award." It is clear from this definition that the statutory definition is not
exhaustive in nature and basically includes any order of the arbitral tribunal.
The arbitral award must be duly written, signed by the arbitrator(s) and dated with proper
mention of the place of arbitration.
Foreign Arbitral Award
Foreign arbitral award or foreign award is the award granted by an arbitration tribunal
recognised by the New York Convention (1958) (as defined in Section 44 of the Act) and under
the Geneva Protocol and Geneva Convention (as defined in Section 53 of the Act). In a way,
because of a lot of dissatisfaction, the New York Convention (1958) replaced the Geneva
Protocol (1923) and Geneva Convention (1927).
Case Law
Bharat Aluminium Company Ltd v. Kaiser Aluminium Technical Service Inc (BALCO
case) (2012)
In the case of Bharat Aluminium Company Ltd v. Kaiser Aluminium Technical Service Inc
(BALCO case) (2012), the Hon'ble Supreme Court held that if the disputing parties have agreed
to a seat of arbitration in a different country, then it necessarily implies that the parties have
accepted the law of that country governing the rules and procedures of arbitration. However,
after the enactment of the Arbitration and Conciliation (Amendment) Act, 2015, Part I of the
Act, such as Section 9 (interim relief), Section 27 (court assistance for evidence), Section
37(1)(a) (appealable orders) of the Act will apply even to an international commercial
arbitration where the seat of arbitration is outside India subject to an agreement to the contrary
vide Proviso to Section 2(2) of the Act.
Conclusion
The Act deals with alternate dispute resolution methods which are effective, cost-friendly, and
time-saving. Due to the pendency of cases and rigid procedural laws of the courts and to prevent
litigation, people nowadays generally prefer settling a dispute outside the courts with the help
of ADRs like arbitration, conciliation, mediation etc. The Act provides the procedure to be
followed in arbitration proceedings, arbitral tribunal, the conduct of the tribunal along with the
arbitral awards to be made in a dispute. The decision is binding on the parties and given in the
form of an arbitral award in an arbitration agreement. It also prescribes the procedure of appeal
to courts in case of discrepancies.

Q.17 Arbitral Proceedings?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Proceedings
Arbitral proceedings refer to the step-by-step process followed by an Arbitral Tribunal to
resolve a dispute between parties through arbitration. These proceedings are designed to be
faster, more flexible, and less formal than court trials. The process begins when the parties
agree to resolve their dispute through arbitration, either as per a prior agreement (arbitration
clause in a contract) or by mutual consent after a dispute arises.
The arbitration process officially starts when a party sends a notice of arbitration to the other
party. The parties then appoint an arbitrator or a panel of arbitrators. Once the Arbitral Tribunal
is formed, it conducts hearings where both parties present their arguments, evidence, and
witnesses. The tribunal ensures that the proceedings are conducted fairly and impartially. It has
the power to make procedural decisions, such as setting deadlines, deciding on the admission
of evidence, and granting interim relief if necessary. After hearing both sides, the tribunal
delivers a final decision, known as an arbitral award, which is legally binding and enforceable
like a court judgment.
Arbitrator
The role of an arbitrator is to resolve disputes that the parties have in agreement to submit
to arbitration. The decisions of the arbitrator require a document subject to certain formalities,
and referred to as the arbitral award. The content and form of an arbitral award, and also the
discretion enjoyed by arbitrators in creating an award can essentially vary according to the
procedural law applicable to the arbitral procedure, the powers presented by the parties upon
the arbitrator under the applicable arbitration agreement, and also the specific sort of arbitration
used.
Stages of Arbitral Proceedings
Arbitration clause or arbitration agreement
During the drafting of any contract pertaining to either insurance, partnership, any civil matter,
or any other matter. The parties shall add an arbitration clause in the contract, the clause should
state that in the future, if any disputes arise among the parties then, in that case, they can resolve
it through the arbitration process. During the drafting of an arbitration clause in the contract,
the person who is drafting needs to be very careful to make the clause in a detailed manner and
ensure every possibility in which the disputes can be raised out of contract or due to the relation
of the contract. In the event that the parties do not have an arbitration clause in the contract, the
parties at that point can make an arbitration agreement, but it should be with their mutual
consent, in order to solve the disputes arising out of the previous contract.
Notice of arbitration
Section 21 of the Act states about when arbitration can commence. The dispute among the party
begins on that particular date on which a request for the dispute as referred to arbitration is
received by the respondent. From the date the respondent has received the legal notice to the
date of completion of the fixed period given in the notice, the parties must give a reply to the
notice.
Appointment of arbitrators
Section 10(1) of the Act states that the parties are free to agree on any number of arbitrators,
however, the number of arbitrators should not be in the even number. Further, Section 10(2)
enunciates that in case parties fail to decide arbitrators in accordance with Section 10(1), then
under that circumstance the arbitral tribunal shall consist of a sole arbitrator.
Parties mutually decide on the matter of the appointment of arbitrators. The parties to the
arbitration agreement or clause must mention the name of the concerned arbitrator who will
resolve the dispute. In case the parties fail to decide mutually on the appointment of the
arbitrator then under those circumstances, Section 11 of the Act, states that the parties must
move to the court and request for the appointment of an arbitrator.
Statement of claim
Section 23 of the Act, states that within the time period that is fixed by the parties, the claimant
must state supporting facts about his claim, the point of issue and relief.
The parties need to submit their statement of claim which should be accompanied by all the
documents that must be supported by the relevant facts and the issues of the arbitration. It is
pertinent to note that the claim can be changed if the parties agree to it, then they can alter or
change the claim during the arbitral proceeding or unless the arbitral tribunal considers the
claim to be inappropriate.
Hearing of parties
Steps that are involved during the process of hearing of the parties:
Preliminary hearing and exchange of information stage
After the arbitrator is appointed and is confirmed, the preliminary hearing of the arbitration
proceeding begins in which the parties call their arbitrator so that the schedule can be fixed.
During the preliminary meeting, primarily the issues of the dispute are addressed, and then the
exchange of information is done among the parties and the next hearing date is scheduled. On
the next date which was scheduled, the arbitrator will issue a written document commonly
known as a 'scheduling order.'
Stage of hearing
At this stage, the case is presented to the arbitrators by the parties. This process cans take place
in person, or can be over the telephone, or by submitting the written documents or arbitration
agreements and applicable rules that govern the case. Parties need to submit written arguments
after hearings, as directed by the arbitrator.
Arbitral award
An arbitral award is considered as a final order which is given by the arbitrator. The award can
either be in terms of monetary relief by one party or by other parties. Also an award can be a
non-financial one such as adding the incentives of employment or stopping the business
practices.
Essentials of the award
Essentials of the award given in an arbitral proceeding -
The award must be in written form and duly signed either by the majority or by all..
The date and place of the award should be mentioned.
• The reason for the decision must be mentioned in the award, except when parties have agreed
that there is no need to give that reason or when there is a mutual settlement during the
proceeding which is recorded as an award.
• The arbitral award should be certain and the final award must not be vague, unce and
ambiguous.
• There is no such need for the registration of an award, award is like a final judicial decree and
must be enforced in the same way.
Types of arbitral awards
Interim award
This is a temporary award given by the tribunal during which the proceeding is going on. An
Interim award can be made by such a tribunal which has the authority to grant a final award.
Interim orders are generally given for the money payment or for property's disposition between
the parties and an order to make an interim payment is on account of the costs of the arbitration.
Final award
The final award is the order given by the arbitrator after the completion of the entire arbitration
proceeding. The arbitrator must state the reason for the decisions made in the award. After the
final award is made it must be signed by all the arbitrators and the parties.
Challenge in court
For challenging the award the party in whose favour the award is given by the arbitrator needs
to wait for a period of 90 days and during this period, other parties have the right to challenge
awards i.e. aggrieved party.
In accordance with Section 34 of the Act, it states that the court can set aside the arbitral award
if:
The party was under some type of incapacity.
The contract of arbitration wasn't valid under the law to which the parties had been subjected.
• The party making an application for invoking the arbitration has not given proper opportunity
to the other party for the appointment of the arbitrator.
The award deals with disputes that do not fall under the submission of the arbitration or contain
any other matter which is beyond the scope of arbitration.
Seat and venue
In arbitration, a seat is the legal construct and it depends on the jurisdiction where the final
arbitral award will be made. However, the seat has a great impact on the entire legal procedure
of the arbitration. Every jurisdiction applies its own set of rules and regulations for the process
of arbitration and that is why it is necessary for the parties to decide the seat of the arbitration
with proper diligence. The selection of the seat for the arbitral proceedings not only determines
the law governing the arbitral proceedings but also the rights pertaining to the enforcement of
the arbitral awards.
The venue of arbitration is the place where parties meet, in the case the arbitration is an
institutional arbitration, it is generally conducted at that place where the institution is located
or at any other place that the institution deems fit. If the arbitration is ad hoc arbitration, the
place of arbitration is decided by the parties and hence changes accordingly. The venue does
not determine the seat of arbitration, it merely determines the geographical location where
arbitration proceedings will be conducted, which is chosen on the basis of convenience.
Cost
The cost of the entire arbitration proceeding must be borne by both parties to the arbitration. It
is well settled and completely against the law that only one party bears the cost of proceeding
solely, thus, the plaintiff, as well as the respondent, will have to pay the entire fees, or as decided
by both parties mutually.
Limitation to commencement of arbitration
Section 43(2) of the act, states that on the date on which the cause of arbitration occurred, the
period of limitation begins to run for the claimant to invoke the arbitration clause. The needless
communication or reminders cannot postpone this accrual of the cause of action nor stop the
limitation period from beginning, even if there is no mention of the limitation period in the
arbitration clause.
Case Law
Associate Builders Vs Delhi Development Authority
Facts
In the present case, the appellant was awarded with the construction work by the Delhi
Development Authority (DDA, defendant), and the construction work was given on the
contract to the appellant. The appellant has to build 168 Middle Income Group and 56 Lower
Income Group House as per, the contract which specified the tender amount of Rs. 87,66,678/-
was given to the appellant to complete the construction work. As per the contract, the
construction work has to be completed within 9 months but was completed in 34 months. The
contractor i.e. appellant has completed the work of only 166 Middle Income Group and 36
Lower Income Group House. The total value of work which was done by the contractor was
Rs. 62,84,845/-.
It was contended by the appellant that the delay in completion of the construction was because
of the defendant's fault; around 15 claims were made by the appellant regarding the default
made by the defendant. As a result, the Delhi High Court appointed a sole arbitrator to initiate
an arbitral proceeding on this matter. After going through all the 15 claims, the arbitrator
concluded that there are 4 claims that are most relevant. Considering these 4 claims, it was
stated that the delay was indeed because of the defendant's fault. It was further stated by the
arbitrator that the respondent failed to fulfil the obligation as a result delay was caused and
further the appellant has suffered a huge monetary loss.
The appellant then appealed to the Apex Court by the Special Leave Petition under Article 136
of the Indian Constitution against the order of the divisional bench.
Issues
The primary issue of this case was whether the divisional bench had surpassed its jurisdiction
in setting aside the award given by the arbitral tribunal.
Judgment
The court of law in this case allowed the appeal and further set aside the impugned award. It
was held by the Supreme Court that under Section 34 the court must not set aside the award
given by the arbitral tribunal if they don't agree with the interpretation of the agreement which
is given by the arbitral tribunal. In order to set aside the award the court must show that the
decision given by the tribunal was based on the irregular or no evidence.
Conclusion
The first and foremost important step in the arbitral process is the arbitration clause which must
be framed very diligently while making the arbitration clause or arbitration agreement.
Arbitration supports the party's autonomy. During the framing of the arbitration clauses, parties
have to decide the appointment of the arbitrator, the number of arbitrators, rules applicable in
the arbitration. After the final arbitration award, it is enforced by the law applicable in such
jurisdiction of the arbitration.

Q.18 Conciliation?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Conciliation
Conciliation is a voluntary and confidential method of alternative dispute resolution (ADR) in
which a neutral third party, known as a conciliator, assists disputing parties in resolving their
differences and reaching a mutually acceptable settlement.
In conciliation, the conciliator acts as a facilitator, helping the parties communicate effectively,
understand each other’s perspectives, and find common ground for resolving their dispute. The
conciliator is a neutral and impartial intermediary who does not impose decisions but guides
the parties towards a resolution through dialogue and negotiation.
Conciliation is particularly effective in resolving commercial, family, labour, and community
disputes, as it fosters cooperation and preserves relationships. The process is less formal than
litigation and arbitration, making it a quicker, more cost-effective, and flexible method of
dispute resolution.
A conciliator is a neutral third party appointed or chosen to facilitate the conciliation process
in dispute resolution. The conciliator’s role is to assist the disputing parties in reaching a
mutually agreeable settlement through open communication, negotiation, and consensus-
building.
A conciliator is typically someone with expertise and experience in dispute resolution,
negotiation, and conflict management.
Legal Provisions Dealing with Conciliation
Section 61 of the Arbitration and Conciliation Act of 1996 provides for the Application and
Scope of Conciliation which points out that the process of conciliation extends, in the first
place, to disputes, whether contractual or not and they must arise out of the legal relationship.
In a dispute, one party has the right to sue and to the other party the liability to be sued. But
Part III of the Act does not apply to such disputes.
Section 63 of the act fixes the number of conciliators. Ideally, one conciliator is required but
the parties may by their agreement provide for two or three conciliators.
Appointment of a Conciliator under the Arbitration and Conciliation Act, 1996
Section 64 of the Arbitration and Conciliation Act, 1996 explains how conciliators are
appointed in a conciliation process.
1. If there is only one conciliator – Both parties must agree on a single person to act as
the conciliator.
2. If there are two conciliators – Each party can appoint one conciliator.
3. If there are three conciliators –
o Each party appoints one conciliator.
o Both parties must then agree on the third conciliator, who will act as the
presiding conciliator.
4. Seeking Assistance in Appointment – If needed, the parties can ask a trusted
institution or an individual to help with the appointment process. This can be done in
two ways:
o A party may request recommendations for suitable conciliators.
o Both parties may agree that an institution or individual directly appoints one or
more conciliators.
Key Points to Remember:
• When both parties agree to conciliation, they must also agree on how many conciliators
will be involved.
• If they don’t specify otherwise, there will be only one conciliator by default.
• If parties fail to agree on a conciliator, the process can proceed with two or three
conciliators.
• The third conciliator (if there are three) will lead the process.
• The appointed conciliator(s) must be neutral and independent.
This system ensures fairness and allows parties to settle disputes efficiently without going to
court.
Role of conciliator as per Arbitration and Conciliation Act, 1996
Section 67 of the act describes the role of the conciliator as-
(1) The conciliator shall assist the parties in an independent and impartial manner in their
attempt to reach an amicable settlement of their dispute.
(2) The conciliator shall be guided by principles of objectivity, fairness and justice, giving
consideration to, among other things, the rights and obligations of the parties, the usages of the
trade concerned and the circumstances surrounding the dispute, including any previous
business practices between the parties.
(3) The conciliator may conduct the conciliation proceedings in such a manner as he considers
appropriate, taking into account the circumstances of the case, the wishes the parties may
express, including any request by a party that the conciliator hear oral statements, and the need
for a speedy settlement of the dispute.
(4) The conciliator may, at any stage of the conciliation proceedings, make proposals for a
settlement of the dispute. Such proposals need not be writing and need not be accompanied by
a statement of the reasons therefore.
A conciliator is also expected to review relevant documents and information to help reach
conclusions. Meet with witnesses and other persons related to the parties to obtain statements
and additional information about the dispute in question and practice confidentiality regarding
the personal information of the parties and of the dispute. A brief written statement of all the
issues faced by the parties is to be submitted to the conciliator before the process of
conciliation.
A positive dialogue and an atmosphere of comfort is to be created by the conciliator in order to
promote harmonious and cooperative problem-solving between the parties.
Restrictions on Role of Conciliator – Section 80
Section 80 places two restrictions on the role of the conciliator in the conduct of conciliation
proceedings:
1. Clause (a) prohibits the conciliator to act as an arbitrator or as a representative or
counsel of a party in any arbitral or judicial proceeding in respect of a dispute which is
subject of the conciliation proceedings.
2. Clause (b) of prohibits the parties to produce the conciliator as a witness in any arbitral
or judicial proceedings.
Commencement of conciliator proceedings
Either of the parties to the dispute can commence the conciliation process. The conciliation
proceedings are said to have been initiated when one party invites the other party for the
resolution of their dispute through conciliation. The process commences when the other party
accepts the invitation.
If they reject it, then no conciliation proceedings will be conducted for that dispute. The
invitation should identify the subject of the dispute. If no reply is received by the inviting party
within 30 days then it may be treated as rejection to conciliate.
Commencement of conciliation proceedings under section 62 of the act states that-
(1) The party initiating conciliation shall send to the other party a written invitation to conciliate
under this Part, briefly identifying the subject of the dispute.
(2) Conciliation proceedings shall commence when the other party accepts in writing the
invitation to conciliate.
(3) If the other party rejects the invitation, there will be no conciliation proceedings.
(4) If the party initiating conciliation does not receive a reply within thirty days from the date
on which he sends the invitation, or within such other period of time as specified in the
invitation, he may elect to treat this as a rejection of the invitation to conciliate and if he so
elects, he shall inform in writing the other party accordingly.
The conciliation proceedings shall be terminated as given under section 76-
(a) by the signing of the settlement agreement by the parties on the date of the agreement; or
(b) by a written declaration of the conciliator, after consultation with the parties, to the effect
that further efforts at conciliation are no longer justified, on the date of the declaration; or
(c) by a written declaration of the parties addressed to the conciliator to the effect that the
conciliation proceedings are terminated, on the date of the declaration; or
(d) by a written declaration of a party to the other party and the conciliator, if appointed, to the
effect that the conciliation proceedings are terminated, on the date of the declaration.
The conciliation proceedings shall stand terminated on the date as and when the parties reach
an amicable settlement on the disputes which had been referred to the conciliator, and a duly
authenticated copy (by the conciliator) of the settlement agreement is handed over to the
parties. There is no provision in the Act for review of the settlement agreement, nor there does
any provision under which any of the parties to the settlement agreement can retrace its steps
and wriggle out of the written commitments in the form of a settlement agreement.
Principle of Confidentiality
In a conciliation proceeding, two parties resolve the matter and confidentiality is something
which is guaranteed by the statute itself which makes it one of the highlighting features of
alternative dispute resolution. In conciliation, both the parties and the conciliator are obligatory
to keep the facts and all the material relating to the proceedings very confidential.
Details and opinions/views of other parties is not to be discussed by the parties in respect of
the possible settlement of their dispute. They should also refrain from making admission of
other parties and other conciliators in the course of the proceedings. Matters regarding the
dispute is required not to speak about any information or not to bring out any e subject matter
regarding the dispute to other party or conciliators during the cancellation process. During the
proceedings, a conciliator can never play the role of a witness.
Case Law
Mysore Cements Ltd. V. Svedala Barmac Ltd. AIR 2003 SC 3493
It was said that Section 73 of the Act speaks of Settlement Agreement. Sub-section (1) says
that when it appears to the Conciliator that there exist elements of a settlement which may be
acceptable to the parties, he shall formulate the terms of a possible settlement and submit them
to the parties for their observation. After receiving the observations of the parties, the
Conciliator may reformulate the terms of a possible settlement.
In the present case, we do not find there any such formulation and reformulation by the
Conciliator, under Subsection (2), if the parties reach a settlement agreement of the dispute on
the possible terms of settlement formulated, they may draw up and sign a written settlement
agreement. Under Sub-section (4), the Conciliator shall authenticate the Settlement Agreement
and furnish a copy thereof to each of the parties. From the undisputed facts and looking at the
records, it is clear that all the requirements of Section 73 are not complied with.
Conclusion
The process of conciliation as an alternate dispute redressal mechanism is beneficial to the
parties as it is expeditious and cost-effective which makes it simple compared to lengthy
litigation. However, the success of conciliation depends on the attitude of the parties, the skill
of the conciliator and the appropriate environment, backed by infrastructure facilities for
servicing the conciliation procedure. On ultimate analytical observation, reciprocity is the
hallmark of the conciliation process.
Mutual understanding is required for a healthy business and solving the dispute through
settlement is the eventual quality or eventual base as it leads to success in conciliation. In
contrast to arbitration, conciliation is nonbonding and confidential. The court plays no formal
role in sponsoring conciliation. Conciliation is becoming increasingly popular, as an alternative
to other formal and informal modes of dispute resolution as it offers a more flexible alternative,
for a wide variety of disputes and obviates the parties from seeking recourse to the court system.

Q.20 Alternative means of settlement of disputes?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Alternative Dispute Resolution
The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing a
substitute to the conventional methods of resolving disputes. ADR offers to resolve all type of
matters including civil, commercial, industrial and family etc., where people are not being able
to start any type of negotiation and reach the settlement. Generally, ADR uses neutral third
party who helps the parties to communicate, discuss the differences and resolve the dispute. It
is a method which enables individuals and group to maintain co-operation, social order and
provides opportunity to reduce hostility.
Importance of ADR in India
To deal with the situation of pendency of cases in courts of India, ADR plays a significant role
in India by its diverse techniques. Alternative Dispute Resolution mechanism provides
scientifically developed techniques to Indian judiciary which helps in reducing the burden on
the courts. ADR provides various modes of settlement including, arbitration, conciliation,
mediation, negotiation and lok Adalat. Here, negotiation means self-counselling between the
parties to resolve their dispute but it doesn't have any statutory recognition in India.
ADR is also founded on such fundamental rights, article 14 and 21 which deals with equality
before law and right to life and personal liberty respectively. ADR's motive is to provide social-
economic and political justice and maintain integrity in the society enshrined in the preamble.
ADR also strive to achieve equal justice and free legal aid provided under article 39-A relating
to Directive Principle of State Policy (DPSP).
Few important provisions related to ADR
• Section 89 of the Civil Procedure Code, 1908 provides that opportunity to the people, if it
appears to court there exist elements of settlement outside the court then court formulate the
terms of the possible settlement and refer the same for: Arbitration, Conciliation, Mediation or
Lok Adalat
• The Acts which deals with Alternative Dispute Resolution are Arbitration and Conciliation
Act, 1996 and,
• The Legal Services Authority Act, 1987
Advantages of Alternative Dispute Resolution
• Less time consuming: people resolve their dispute in short period as compared to courts
• Cost effective method: it saves lot of money if one undergoes in litigation process.
• It is free from technicalities of courts, here informal ways are applied in resolving dispute.
• People are free to express themselves without any fear of court of law. They can reveal the
true facts without disclosing it to any court.
• Efficient way: there are always chances of restoring relationship back as parties discuss their
issues together on the same platform.
• It prevents further conflict and maintains good relationship between the parties.
• It preserves the best interest of the parties.
Various modes of Alternative Dispute Resolution
Arbitration
The process of Arbitration cannot exist without valid arbitration agreement prior to the
emergence of dispute. In this technique of resolution parties refer their dispute to one or more
persons called arbitrators. Decision of arbitrator is bound on parties and their decision is called
'Award'. The object of Arbitration is to obtain fair settlement of dispute outside of court without
necessary delay and expense.
Any party to a contract where arbitration clause is there, can invoke arbitration clause either
himself or through their authorized agent which refer the dispute directly to the arbitration as
per the Arbitration clause. Here, arbitration clause means a clause that mention the course of
actions, language, number of arbitrators, seat or legal place of the arbitration to be taken place
in the event of dispute arising out between the parties.
Mediation
Mediation is an Alternative Dispute resolution where a third neutral party aims to assist two or
more disputants in reaching agreement. It is an easy and uncomplicated party centered
negotiation process where third party acts as a mediator to resolve dispute amicably by using
appropriate communication and negotiation techniques. This process is totally controlled by
the parties. Mediator's work is just to facilitate the parties to reach settlement of their dispute.
Mediator doesn't impose his views and make no decision about what a fair settlement should
be.
Conciliation
Conciliation is a form of arbitration but it is less formal in nature. It is the process of facilitating
an amicable resolution between the parties, whereby the parties to the dispute use conciliator
who meets with the parties separately to settle their dispute. Conciliator meet separately to
lower the tension between parties, improving communication, interpreting issue to bring about
a negotiated settlement There is no need of prior agreement and cannot be forced on party who
is not intending for conciliation. It is different from arbitration in that way.
Lok Adalat
Lok Adalat is called 'People's Court' presided over by a sitting or retired judicial officer, social
activists or members of Legal profession as the chairman. National Legal Service Authority
(NALSA) along with other Legal Services Institutions conducts Lok Adalats on regular
intervals for exercising such jurisdiction. Any case pending in regular court or any dispute
which has not been brought before any court of law can be referred to Lok Adalat. There is no
court fees and rigid procedure followed, which makes the process fast. If any matter pending
in court of referred to the Lok Adalat and is settled subsequently, the court fee originally paid
in the court when the petition filed is also refunded back to the parties.
Parties are in direct interaction with the judge, which is not possible in regular courts. It depends
on the parties if both the parties agree on case long pending in regular court can be transferred
to Lok Adalat. The persons deciding the cases have the role of statutory conciliators only, they
can only persuade the parties to come to a conclusion for settling the dispute outside the regular
court in the Lok Adalat. Legal Services Authorities (State or District) as the case may be on
receipt of an application from one of the parties at a pre-litigation stage may refer such matter
to the Lok Adalat for which notice would then be issued to the other party. Lok Adalats do not
have any jurisdiction to deal with cases of non-compoundable offenses.
Conclusion
Alternative Dispute Resolution (ADR) plays a crucial role in providing an effective, efficient,
and amicable method of resolving disputes outside the traditional court system. Governed by
the Arbitration and Conciliation Act, 1996, ADR offers various mechanisms such as arbitration,
mediation, conciliation, negotiation, and Lok Adalats, each tailored to different types of
disputes. These methods help in reducing the burden on courts, saving time and costs, and
ensuring confidentiality and flexibility. ADR is also supported by legal provisions such as
Section 89 of the Civil Procedure Code, 1908, and the Legal Services Authorities Act, 1987,
which promote out-of-court settlements. The Indian judiciary has actively encouraged ADR by
setting up mediation centers and delivering arbitration-friendly judgments. By preserving
relationships, preventing further conflicts, and ensuring fair resolutions, ADR aligns with
constitutional principles such as equality before the law (Article 14) and access to justice
(Article 39-A). With India striving to become a global hub for arbitration, the increasing
adoption of ADR across commercial, civil, and family disputes highlights its significance in
the legal landscape.

Q.21 Importance of Lok Adalat?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
6. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
7. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
8. Conciliation – Similar to mediation but with a more active role for the conciliator.
9. Negotiation – Direct discussions between parties to reach a settlement.
10. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Lok Adalat
Lok Adalat (People’s Court) is an alternative dispute resolution mechanism in India, organized
under the Legal Services Authorities Act, 1987. It aims to provide speedy and cost-effective
justice by settling disputes through conciliation and compromise. Lok Adalats have the
authority to settle civil cases, matrimonial disputes, land disputes, and compoundable criminal
cases. The decisions made by Lok Adalats are binding and hold the same legal status as a court
decree, but without the possibility of appeal, ensuring finality. They play a crucial role in
reducing the burden on regular courts while promoting amicable settlements.
Types of Lok Adalat
In India, various types of Lok Adalats have been established to cater to specific categories of
cases, ensuring accessible and efficient justice for all.
1. Permanent Lok Adalats
Permanent Lok Adalats are created under the Legal Services Authorities Act of 1987 to resolve
specific types of disputes. These lok adalats have authority over public utility services such as
transportation, postal services and telegraph services.
They have the same powers as a Civil Court and are presided over by a sitting or retired judicial
officer. Permanent Lok Adalats ensure that issues are resolved quickly and conveniently for all
parties concerned.
2. National Lok Adalat
National Lok Adalat is a unique initiative by the Indian government aiming to reduce the
burden of pending cases across the country. It is conducted on specific days as specified by the
National Legal Services Authority (NALSA). The National Lok Adalat aims to encourage
compromise and settlement offering an opportunity to resolve a vast number of cases
expeditiously. By making justice accessible to all this initiative promotes the principle of
“justice at the doorstep”.
3. State Lok Adalat
State Lok Adalats operate at the state level and focus on resolving disputes that are pending
before various courts within the jurisdiction of the respective state. These adalats are organized
by the State Legal Services Authorities (SLSA) and serve as an alternative forum for litigants
to seek resolution.
4. Mega Lok Adalat
Mega Lok Adalat is an extended version of the National Lok Adalat. It mainly aim to address
a large number of cases pending in various courts and tribunals within a specific jurisdiction.
The Mega Lok Adalat brings together multiple Lok Adalats, including Permanent Lok Adalats,
to handle a substantial volume of cases on a single day.
5. Mobile Lok Adalat
The Mobile Lok Adalat is a very progressive concept that takes the Lok Adalat system to the
doorstep of the interested litigants. It involves the establishment of temporary Lok Adalat. It
centres in the different locations to cater to the needs of people who may face challenges in
accessing regular courts. The Mobile Lok Adalat plays very important role to reach out the
remote areas for ensuring easy access to justice for all irrespective of their geographical
location.
6. Special Lok Adalats
Special Lok Adalats are organized to deal with specific categories of cases tailoring the
approach to meet their unique requirements. These adalats address matters such as motor
vehicle accident claims, land acquisition disputes and family matters etc. By focusing on
specific types of cases Special Lok Adalats streamline the resolution process ensuring
specialized attention and timely justice.
Lok Adalat under Legal Services Authority Act, 1987
Section 19 of the Act provides for the establishment of Lok Adalats. Legal service authorities
at all levels, including the central, state, and district levels, shall hold Lok Adalats. Lok Adalats
serve as an alternate dispute resolution system. Their purpose is to settle cases that are pending
or that have not been heard in the courts. It consists of judicial officers or an authorized person
under the jurisdiction of the state, central government, or local government. Following the
conciliation of disputes between the parties and the agreement of the parties, the award is
handed down by conciliators in accordance with Section 21 of the Act. The award has the same
legal effect as a court decision.
Scope of Lok Adalat
Unlike the Supreme Court, Lok Adalat is extremely broad to incorporate most of the cases
pending before it as well as new cases that will be filed in the near future to be settled. The Lok
Adalat does not have jurisdiction over cases relating to offences that cannot be compounded
under any law. The Lok Sabha does not refer such matters to committees without giving the
other party a reasonable opportunity to be heard. The Lok Adalat proceeds to resolve any case
referred to it and tries to negotiate a mutually acceptable outcome between the parties involved
with the case. Whenever a Lok Adalat decides a case before it, it adopts the most extreme
efforts for a trade-off or settlement. The following points elaborate on the scope of Lok Adalats:
• If no settlement or compromise is reached by the parties after the Lok Adalat passes, no order
is given.
• A reference will be sent automatically to the Court that drew up the reference for disposition.
Those involved in the dispute are urged to seek redressal in courts.
• If the terms proposed by the bench do not satisfy the parties, the Lok Adalat cannot be forced
to compromise or reach a settlement. Orders from Lok Adalats are definitive and restrict the
parties.
• An order passed by a judge is a satisfactory means of stopping the proceedings that demand
justice.
• Lok Adalats have enough powers under the Act to make justice without compromising the
quality of their awards. The Lok Adalat's final order is considered judicial since it is given the
status of a decree.
• A Civil Court recognizes it as a form of evidence and is given the power to summon, discover,
and get an affirmation.
Functions of Lok Adalat
The following are the functions of Lok Adalat:
• Lok Adalat members should be impartial and fair to the parties.
• Lok Adalat is responsible for handling pending cases in court. In the case of a Lok Adalat
settlement, the court fee paid to the court on the petition will be reimbursed
• When filing a dispute with Lok Adalat, you do not have to pay a court fee.
Jurisdiction of Lok Adalats
Lok Adalats fall under the jurisdiction of the courts which organize them, thus, they cover any
cases heard by that Court under its jurisdiction. This jurisdiction does not apply to cases
regarding offences which are not compoundable by law and the Lok Adalats cannot resolve
these cases. The respective courts may accept cases presented to them by parties concurring
that the dispute should be referred to the Lok Adalat. The Courts may accept such cases in
situations where one party makes an application to the court for the referral of the case to the
Lok Adalat and the court might consider that there is a possibility of compromise through the
Act.
Powers of Lok Adalat
o The Lok Adalat shall have the same powers as are vested in a Civil Court under
the Code of Civil Procedure (1908).
o Further, a Lok Adalat shall have the requisite powers to specify its own
procedure for the determination of any dispute coming before it.
o All proceedings before a Lok Adalat shall be deemed to be judicial proceedings
within the meaning of the Bharatiya Nyaya Sanhita 2023 and every Lok Adalat
shall be deemed to be a Civil Court for the purpose of the Bharatiya Nagarik
Suraksha Sanhita 2023.
o An award of a Lok Adalat shall be deemed to be a decree of a Civil Court or an
order of any other court.
o Every award made by a Lok Adalat shall be final and binding on all the parties
to the dispute. No appeal shall lie to any court against the award of the Lok
Adalat.
Advantages of Lok Adalat
o There is no court fee and if court fee is already paid the amount will be refunded if the
dispute is settled at Lok Adalat.
o There is procedural flexibility and speedy trial of the disputes. There is no strict
application of procedural laws while assessing the claim by Lok Adalat.
o The parties to the dispute can directly interact with the judge through their counsel
which is not possible in regular courts of law.
o The award by the Lok Adalat is binding on the parties and it has the status of a decree
of a civil court and it is non-appealable, which does not cause the delay in the settlement
of disputes finally.
Importance of Lok Adalats
Lok Adalats hold paramount importance in the Indian legal system due to their role in
expediting justice and easing the burden on conventional courts. They provide a swift and cost-
effective resolution mechanism, emphasising reconciliation and compromise.
By encouraging community participation, Lok Adalats contributes to a more accessible and
citizen-centric legal process. The diverse types of Lok Adalats, such as Permanent, National,
Mega, Mobile, Daily and Continuous, address a wide spectrum of disputes, ensuring flexibility
and relevance.
This alternative dispute resolution model underscores the democratic principle of people’s
participation in justice delivery, making it a vital component of India’s legal landscape.
Conclusion
Lok Adalats have become an integral part of the Indian legal system, providing opportunities
for the poor and discouraged to access justice. The organization has overcome all obstacles to
lawful aid, although there are specific areas for improvement that could make it more effective.
Although they are overcoming any barriers to access to justice, they should also provide
genuine admittance to equity for aggrieved parties. There is more activity than was expected,
which could make Lok Adalats a better mechanism to deal with cases that are on the rise.

Q.22 Role of Conciliator?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
6. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
7. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
8. Conciliation – Similar to mediation but with a more active role for the conciliator.
9. Negotiation – Direct discussions between parties to reach a settlement.
10. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Conciliation
Conciliation is a voluntary and confidential method of alternative dispute resolution (ADR) in
which a neutral third party, known as a conciliator, assists disputing parties in resolving their
differences and reaching a mutually acceptable settlement.
In conciliation, the conciliator acts as a facilitator, helping the parties communicate effectively,
understand each other’s perspectives, and find common ground for resolving their dispute. The
conciliator is a neutral and impartial intermediary who does not impose decisions but guides
the parties towards a resolution through dialogue and negotiation.
Conciliation is particularly effective in resolving commercial, family, labour, and community
disputes, as it fosters cooperation and preserves relationships. The process is less formal than
litigation and arbitration, making it a quicker, more cost-effective, and flexible method of
dispute resolution.
A conciliator is a neutral third party appointed or chosen to facilitate the conciliation process
in dispute resolution. The conciliator’s role is to assist the disputing parties in reaching a
mutually agreeable settlement through open communication, negotiation, and consensus-
building.
A conciliator is typically someone with expertise and experience in dispute resolution,
negotiation, and conflict management.
Legal Provisions Dealing with Conciliation
Section 61 of the Arbitration and Conciliation Act of 1996 provides for the Application and
Scope of Conciliation which points out that the process of conciliation extends, in the first
place, to disputes, whether contractual or not and they must arise out of the legal relationship.
In a dispute, one party has the right to sue and to the other party the liability to be sued. But
Part III of the Act does not apply to such disputes.
Section 63 of the act fixes the number of conciliators. Ideally, one conciliator is required but
the parties may by their agreement provide for two or three conciliators.
Appointment of a Conciliator under the Arbitration and Conciliation Act, 1996
Section 64 of the Arbitration and Conciliation Act, 1996 explains how conciliators are
appointed in a conciliation process.
5. If there is only one conciliator – Both parties must agree on a single person to act as
the conciliator.
6. If there are two conciliators – Each party can appoint one conciliator.
7. If there are three conciliators –
o Each party appoints one conciliator.
o Both parties must then agree on the third conciliator, who will act as the
presiding conciliator.
8. Seeking Assistance in Appointment – If needed, the parties can ask a trusted
institution or an individual to help with the appointment process. This can be done in
two ways:
o A party may request recommendations for suitable conciliators.
o Both parties may agree that an institution or individual directly appoints one or
more conciliators.
Key Points to Remember:
• When both parties agree to conciliation, they must also agree on how many conciliators
will be involved.
• If they don’t specify otherwise, there will be only one conciliator by default.
• If parties fail to agree on a conciliator, the process can proceed with two or three
conciliators.
• The third conciliator (if there are three) will lead the process.
• The appointed conciliator(s) must be neutral and independent.
This system ensures fairness and allows parties to settle disputes efficiently without going to
court.
Role of conciliator as per Arbitration and Conciliation Act, 1996
Section 67 of the act describes the role of the conciliator as-
(1) The conciliator shall assist the parties in an independent and impartial manner in their
attempt to reach an amicable settlement of their dispute.
(2) The conciliator shall be guided by principles of objectivity, fairness and justice, giving
consideration to, among other things, the rights and obligations of the parties, the usages of the
trade concerned and the circumstances surrounding the dispute, including any previous
business practices between the parties.
(3) The conciliator may conduct the conciliation proceedings in such a manner as he considers
appropriate, taking into account the circumstances of the case, the wishes the parties may
express, including any request by a party that the conciliator hear oral statements, and the need
for a speedy settlement of the dispute.
(4) The conciliator may, at any stage of the conciliation proceedings, make proposals for a
settlement of the dispute. Such proposals need not be writing and need not be accompanied by
a statement of the reasons therefore.
A conciliator is also expected to review relevant documents and information to help reach
conclusions. Meet with witnesses and other persons related to the parties to obtain statements
and additional information about the dispute in question and practice confidentiality regarding
the personal information of the parties and of the dispute. A brief written statement of all the
issues faced by the parties is to be submitted to the conciliator before the process of
conciliation.
A positive dialogue and an atmosphere of comfort is to be created by the conciliator in order to
promote harmonious and cooperative problem-solving between the parties.
Restrictions on Role of Conciliator – Section 80
Section 80 places two restrictions on the role of the conciliator in the conduct of conciliation
proceedings:
3. Clause (a) prohibits the conciliator to act as an arbitrator or as a representative or
counsel of a party in any arbitral or judicial proceeding in respect of a dispute which is
subject of the conciliation proceedings.
4. Clause (b) of prohibits the parties to produce the conciliator as a witness in any arbitral
or judicial proceedings.
Commencement of conciliator proceedings
Either of the parties to the dispute can commence the conciliation process. The conciliation
proceedings are said to have been initiated when one party invites the other party for the
resolution of their dispute through conciliation. The process commences when the other party
accepts the invitation.
If they reject it, then no conciliation proceedings will be conducted for that dispute. The
invitation should identify the subject of the dispute. If no reply is received by the inviting party
within 30 days then it may be treated as rejection to conciliate.
Commencement of conciliation proceedings under section 62 of the act states that-
(1) The party initiating conciliation shall send to the other party a written invitation to conciliate
under this Part, briefly identifying the subject of the dispute.
(2) Conciliation proceedings shall commence when the other party accepts in writing the
invitation to conciliate.
(3) If the other party rejects the invitation, there will be no conciliation proceedings.
(4) If the party initiating conciliation does not receive a reply within thirty days from the date
on which he sends the invitation, or within such other period of time as specified in the
invitation, he may elect to treat this as a rejection of the invitation to conciliate and if he so
elects, he shall inform in writing the other party accordingly.
The conciliation proceedings shall be terminated as given under section 76-
(a) by the signing of the settlement agreement by the parties on the date of the agreement; or
(b) by a written declaration of the conciliator, after consultation with the parties, to the effect
that further efforts at conciliation are no longer justified, on the date of the declaration; or
(c) by a written declaration of the parties addressed to the conciliator to the effect that the
conciliation proceedings are terminated, on the date of the declaration; or
(d) by a written declaration of a party to the other party and the conciliator, if appointed, to the
effect that the conciliation proceedings are terminated, on the date of the declaration.
The conciliation proceedings shall stand terminated on the date as and when the parties reach
an amicable settlement on the disputes which had been referred to the conciliator, and a duly
authenticated copy (by the conciliator) of the settlement agreement is handed over to the
parties. There is no provision in the Act for review of the settlement agreement, nor there does
any provision under which any of the parties to the settlement agreement can retrace its steps
and wriggle out of the written commitments in the form of a settlement agreement.
Principle of Confidentiality
In a conciliation proceeding, two parties resolve the matter and confidentiality is something
which is guaranteed by the statute itself which makes it one of the highlighting features of
alternative dispute resolution. In conciliation, both the parties and the conciliator are obligatory
to keep the facts and all the material relating to the proceedings very confidential.
Details and opinions/views of other parties is not to be discussed by the parties in respect of
the possible settlement of their dispute. They should also refrain from making admission of
other parties and other conciliators in the course of the proceedings. Matters regarding the
dispute is required not to speak about any information or not to bring out any e subject matter
regarding the dispute to other party or conciliators during the cancellation process. During the
proceedings, a conciliator can never play the role of a witness.
Case Law
Mysore Cements Ltd. V. Svedala Barmac Ltd. AIR 2003 SC 3493
It was said that Section 73 of the Act speaks of Settlement Agreement. Sub-section (1) says
that when it appears to the Conciliator that there exist elements of a settlement which may be
acceptable to the parties, he shall formulate the terms of a possible settlement and submit them
to the parties for their observation. After receiving the observations of the parties, the
Conciliator may reformulate the terms of a possible settlement.
In the present case, we do not find there any such formulation and reformulation by the
Conciliator, under Subsection (2), if the parties reach a settlement agreement of the dispute on
the possible terms of settlement formulated, they may draw up and sign a written settlement
agreement. Under Sub-section (4), the Conciliator shall authenticate the Settlement Agreement
and furnish a copy thereof to each of the parties. From the undisputed facts and looking at the
records, it is clear that all the requirements of Section 73 are not complied with.
Conclusion
The process of conciliation as an alternate dispute redressal mechanism is beneficial to the
parties as it is expeditious and cost-effective which makes it simple compared to lengthy
litigation. However, the success of conciliation depends on the attitude of the parties, the skill
of the conciliator and the appropriate environment, backed by infrastructure facilities for
servicing the conciliation procedure. On ultimate analytical observation, reciprocity is the
hallmark of the conciliation process.
Mutual understanding is required for a healthy business and solving the dispute through
settlement is the eventual quality or eventual base as it leads to success in conciliation. In
contrast to arbitration, conciliation is nonbonding and confidential. The court plays no formal
role in sponsoring conciliation. Conciliation is becoming increasingly popular, as an alternative
to other formal and informal modes of dispute resolution as it offers a more flexible alternative,
for a wide variety of disputes and obviates the parties from seeking recourse to the court system.
BRIEF

Q.1 When does foreign award becomes binding on parties to the arbitration?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
Arbitration serves as an alternate dispute resolution mechanism for two parties in a contractual
relationship who want to solve disputes without going to court due to cost and time factors. In
such cases, they can add an arbitration clause in the contract, which proves to be very helpful
in times of dispute.
To understand foreign arbitral awards, one should be able to distinguish between international
commercial arbitration and foreign arbitration.
Arbitration, in India, is governed by the Arbitration and Conciliation Act, 1996 where Section
2(1)(f) defines international commercial arbitration. In other words, it can be understood as an
arbitration between two parties, where at least one of the parties is a foreign national, company,
or government entity, thereby qualifying as international commercial arbitration.
Arbitration involves the concept of "seat", which determines the jurisdiction whose laws apply
to the arbitration proceedings. For example, if arbitration occurs between a foreign company
and an Indian company with that in India, then it constitutes international commercial
arbitration. Conversely, if the seat is outside India, i.e., governed by foreign laws of arbitration,
then it will be a foreign arbitration.
Foreign Arbitral Award
Foreign arbitral awards, being closely associated with arbitration, can be defined as awards
issued in foreign jurisdictions. Typically, these awards stem from the proceedings held in
foreign arbitral tribunals and need to be recognized as "foreign signs". They are governed by
various international treaties, conventions, and respective national laws to ensure uniformity
and predictability in their recognition and enforcement on a global scale.
Foreign arbitral awards specifically refer to those arbitral awards that are issued in a country
other than where the enforcement takes place. These awards are internationally recognizable
and are subject to specific legal structures and frameworks for enforcement. They fall under
the purview of various laws, specific legislations, and international conventions to facilitate
their recognition and application across borders. With regard to India, the Arbitration and
Conciliation Act, 1996 defines "foreign award" under Section 44 of Arbitration and
Conciliation Act.
Foreign arbitral awards play a crucial role in international arbitration, expediting the dispute
resolution process between parties from different nations while adhering to legal conventions
and frameworks.
The term "foreign arbitral awards" specifically refers to the award issued through foreign
arbitration, which is distinct from domestic arbitration. In the case of Serajuddin and Co. v.
Michael Golodetz and Others, (1959) the Calcutta High Court elucidated necessary
restrictions and conditions aligning with the term "foreign arbitration". The court laid down
certain essentials for what constitutes a foreign arbitration. According to this decision,
arbitration will be considered to be foreign arbitration, if:
Enforcement of Arbitral Award
The enforcement of arbitral awards involves two primary aspects: domestic awards, governed
by Section 36 of Part I of the Arbitration and Conciliation Act, 1996, and foreign arbitral
awards, which are recognized and enforced through two avenues: the New York Convention,
outlined in Chapter I of Part II of the Arbitration and Conciliation Act, 1996, and the Geneva
Convention, specified in Chapter II of Part II of the Arbitration and Conciliation Act, 1996.
When the arbitral award from one country is recognized and enforced in another, this
involvement is considered as the enforcement of foreign arbitral awards.
Enforcement of foreign arbitral awards under the New York Convention
Chapter I of Part II of the Arbitration and Conciliation Act, 1996 deals with the enforcement of
New York Convention Awards. From Sections 44 to 52, this chapter essentially outlines the
conditions under which a foreign award is recognized and enforced in accordance with the New
York Convention.
Definition of a foreign award
The foreign award is an arbitration settling disputes between those parties arising out of the
legal relationship, whether contractual or not, to be considered as commercial under law.
Thereby, the definitions outline two essential conditions for the Enforcement of Foreign
Arbitral Awards under New York Convention: Firstly, the country
According to the Supreme Court of India, the term "commercial" encompasses various
activities structured towards international trade. This interpretation was elucidated in R.M.
Investments & Trading.Co. Pvt. Ltd. v. Boeing Co (1994) wherein the Court stated that the
Arbitration Act was enacted to facilitate international trade through a speedy redressal of
disputes, therefore, the meaning of terms like "commercial" occurring in the Act should be
given a "liberal construction".
Foreign Awards Become Binding
Arbitration has long been a preferred mechanism for resolving international disputes, offering
a more efficient and private alternative to traditional litigation. In the context of foreign awards,
India has adopted a legal framework that ensures the enforcement of such awards while
respecting international conventions. Section 46 of the Arbitration and Conciliation Act, 1996
plays a pivotal role in this regard, providing the criteria under which foreign awards become
binding in India.
Section 46 deals with the enforcement of foreign arbitral awards in India. It defines the
circumstances under which a foreign award becomes binding and enforceable. A foreign award,
in the context of Section 46, refers to an arbitral award that has been made outside India by an
arbitral tribunal. To be enforceable in India, a foreign award must meet the conditions laid
down in the Arbitration and Conciliation Act, 1996, specifically aligning with international
treaties like the New York Convention of 1958.
LEGAL FRAMEWORK OF SECTION 46:
1. Definition of a Foreign Award
A foreign award, as per Section 46, refers to an arbitral award made outside India. These
awards are typically rendered in jurisdictions that are signatories to the New York
Convention or the Geneva Convention. The award must have been made in an international
arbitration procedure, meaning the parties to the arbitration are from different countries.
2. Binding Nature of Foreign Awards
Under Section 46, foreign awards are considered binding and enforceable in India once they
have been recognized by the court. Upon recognition, a foreign award is treated as an Indian
court decree, granting it the same legal effect and enforceability as a domestic decree. This
ensures that international commercial arbitration decisions are given equal weight to domestic
arbitration awards, allowing foreign investors and companies to have their awards recognized
in India.
3. Enforcing a Foreign Award
For a foreign award to become binding in India, it must go through the process of enforcement
in an Indian court. The party seeking enforcement of a foreign award must file an application
with a competent court in India, typically in the jurisdiction where the assets are located or
where the other party resides.
4. Grounds for Refusing Enforcement
While Section 46 mandates the binding nature of foreign awards, Section 48 lays down specific
grounds on which an Indian court may refuse to enforce such awards. These grounds include:
• Incapacity of the Parties: If one of the parties was under incapacity or lacked the legal
capacity to enter into an arbitration agreement.
• Improper Notice: If a party was not provided adequate notice of the arbitration
proceedings.
• Contravention of Public Policy: If the award violates Indian public policy or
principles of natural justice.
• Non-Arbitrability of Dispute: If the subject matter of the dispute is not arbitrable
under Indian law (e.g., criminal matters, family disputes).
These grounds are framed to ensure that foreign awards are consistent with India’s legal norms
and public policy.
5. Court’s Role in Enforcement
The Indian court plays a significant role in determining whether a foreign award should be
enforced. The court conducts a limited review of the award, focusing on procedural fairness
and adherence to Indian public policy. The scope of the review is not to evaluate the merits of
the dispute but to assess the procedural legitimacy and enforceability of the award under the
law.
Once the court is satisfied with the foreign award’s compliance with the necessary
requirements, it issues an order recognizing the award, which then allows it to be enforced as
if it were a decree of an Indian court.
6. International Treaties and Conventions
Section 46 aligns with India’s obligations under international treaties, notably the New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) and
the Geneva Convention (1927). As a signatory to these conventions, India has committed to
enforcing foreign awards that meet the specified criteria. This ensures that India adheres to its
global obligations and provides international arbitration users with a predictable legal
environment.
7. Limitations and Exceptions
Section 46 does not allow for an automatic or unconditional enforcement of a foreign award.
If the award meets any of the criteria set forth under Section 48 (grounds for refusal), the
enforcement application may be dismissed. Additionally, there may be delays in enforcement
due to court backlogs or legal challenges raised by the losing party.
Evidence
Section 47 lists the evidence to be presented before the court by the party seeking the
enforcement of a foreign arbitral award. Such evidence must be produced at the time of
application and must include:
1. Original award or its duly authenticated copy;
2. Original arbitration agreement or its duly certified copy;
3. Any evidence of relevance that can show that the award in question is foreign; and
4. A certified copy of the award and/or agreement translated into English if the award or
agreement is in a foreign language.
Enforcement of foreign arbitral awards under the Geneva Convention
Chapter II of Part II of the Arbitration and Conciliation Act deals with the avenue of
enforcement of the Geneva Convention Awards. This Chapter comprises Sections 53 to 60,
which incorporate the principles of enforcement as laid down in the Geneva Convention.
It involves the recognition and enforcement of arbitral awards made in accordance with an
arbitration agreement governed by the Geneva Convention. The conditions for recognition of
such an award are:
• Validity under applicable law,
• Potential for arbitration settlement,
• Finality in the country of origin, and
• Abidance with public policy
Foreign arbitral awards under the Geneva Convention
According to Section 53, of Geneva Protocol the three essential requirements for the
enforcement of a foreign arbitral award are:
1. The award is based on an arbitration agreement that falls under the Geneva Protocol on
Arbitration Clauses, 1923;
2. The award involves parties who come under the jurisdiction of territories designated as
"reciprocating" by the Central Government and where the Geneva Convention on the
Execution of Foreign Arbitral Awards is applicable; and
3. The award in question is issued in a reciprocating territory recognized by the Central
Government.
Conditions for enforcement
Section 57 enlists the conditions necessary for the enforcement of foreign arbitral awards under
the Geneva Convention. They are as follows:
1. The award must have been issued based on an arbitration agreement valid under the relevant
laws;
2. The subject matter of the award must be one that can be resolved through arbitration under
Indian law;
3. The award must be issued by the arbitral tribunal specified in the arbitral agreement or agreed
upon by both parties;
4. The award must be final in the country where it was issued, meaning there are no appeals or
challenges to such award pending; and
5. The enforcement of the award must not be against "public policy" under Indian laws.
Timeline for enforcement of foreign arbitral awards in India
The timeline for the enforcement of foreign arbitral awards in India is categorised as under:
• Upon receiving the award, the party must wait for 3 months for the application and execution
to take place. During this time, the award may be challenged under Section 34 of the Arbitration
and Conciliation Act, 1996. After the elapse of this period, if the court agrees to enforce the
award, no further challenges or refusals can be made during the execution stage.
• Within 3 years, the application for the enforcement and the recognition of the foreign arbitral
awards must be filed, as clarified by the Supreme Court regarding Article 137 of the Schedule
to the Limitation Act, 1963. Although the Arbitration Act does not establish or specify any time
limit for the enforcement of foreign arbitral awards, the Supreme Court's guideline of the 3-
year period must be adhered to.
Conclusion
The enforcement of foreign arbitral awards plays a pivotal role in resolving international
disputes and promoting cross-border business transactions. India through the recognition and
enforcement of foreign arbitral awards demonstrates its dedication to upholding its
commitment towards the international Conventions and legal frameworks, ensuring that parties
from different nations can effectively seek timely resolution of their disputes. The Arbitration
and Conciliation Act, 1996, along with the avenues provided by the New York Convention and
the Geneva Convention, set forth a legal structure for the recognition and enforcement of
foreign arbitral awards in India. It is of vital importance for individuals and businesses involved
in international arbitration to follow and work as per the procedural setup, limitations, and
adapt to the recent development in this area.

Q.2 State the importance of Lok Adalat in Judicial System?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
11. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
12. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
13. Conciliation – Similar to mediation but with a more active role for the conciliator.
14. Negotiation – Direct discussions between parties to reach a settlement.
15. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Lok Adalat
Lok Adalat (People’s Court) is an alternative dispute resolution mechanism in India, organized
under the Legal Services Authorities Act, 1987. It aims to provide speedy and cost-effective
justice by settling disputes through conciliation and compromise. Lok Adalats have the
authority to settle civil cases, matrimonial disputes, land disputes, and compoundable criminal
cases. The decisions made by Lok Adalats are binding and hold the same legal status as a court
decree, but without the possibility of appeal, ensuring finality. They play a crucial role in
reducing the burden on regular courts while promoting amicable settlements.
Types of Lok Adalat
In India, various types of Lok Adalats have been established to cater to specific categories of
cases, ensuring accessible and efficient justice for all.
1. Permanent Lok Adalats
Permanent Lok Adalats are created under the Legal Services Authorities Act of 1987 to resolve
specific types of disputes. These lok adalats have authority over public utility services such as
transportation, postal services and telegraph services.
They have the same powers as a Civil Court and are presided over by a sitting or retired judicial
officer. Permanent Lok Adalats ensure that issues are resolved quickly and conveniently for all
parties concerned.
2. National Lok Adalat
National Lok Adalat is a unique initiative by the Indian government aiming to reduce the
burden of pending cases across the country. It is conducted on specific days as specified by the
National Legal Services Authority (NALSA). The National Lok Adalat aims to encourage
compromise and settlement offering an opportunity to resolve a vast number of cases
expeditiously. By making justice accessible to all this initiative promotes the principle of
“justice at the doorstep”.
3. State Lok Adalat
State Lok Adalats operate at the state level and focus on resolving disputes that are pending
before various courts within the jurisdiction of the respective state. These adalats are organized
by the State Legal Services Authorities (SLSA) and serve as an alternative forum for litigants
to seek resolution.
4. Mega Lok Adalat
Mega Lok Adalat is an extended version of the National Lok Adalat. It mainly aim to address
a large number of cases pending in various courts and tribunals within a specific jurisdiction.
The Mega Lok Adalat brings together multiple Lok Adalats, including Permanent Lok Adalats,
to handle a substantial volume of cases on a single day.
5. Mobile Lok Adalat
The Mobile Lok Adalat is a very progressive concept that takes the Lok Adalat system to the
doorstep of the interested litigants. It involves the establishment of temporary Lok Adalat. It
centres in the different locations to cater to the needs of people who may face challenges in
accessing regular courts. The Mobile Lok Adalat plays very important role to reach out the
remote areas for ensuring easy access to justice for all irrespective of their geographical
location.
6. Special Lok Adalats
Special Lok Adalats are organized to deal with specific categories of cases tailoring the
approach to meet their unique requirements. These adalats address matters such as motor
vehicle accident claims, land acquisition disputes and family matters etc. By focusing on
specific types of cases Special Lok Adalats streamline the resolution process ensuring
specialized attention and timely justice.
Lok Adalat under Legal Services Authority Act, 1987
Section 19 of the Act provides for the establishment of Lok Adalats. Legal service authorities
at all levels, including the central, state, and district levels, shall hold Lok Adalats. Lok Adalats
serve as an alternate dispute resolution system. Their purpose is to settle cases that are pending
or that have not been heard in the courts. It consists of judicial officers or an authorized person
under the jurisdiction of the state, central government, or local government. Following the
conciliation of disputes between the parties and the agreement of the parties, the award is
handed down by conciliators in accordance with Section 21 of the Act. The award has the same
legal effect as a court decision.
Scope of Lok Adalat
Unlike the Supreme Court, Lok Adalat is extremely broad to incorporate most of the cases
pending before it as well as new cases that will be filed in the near future to be settled. The Lok
Adalat does not have jurisdiction over cases relating to offences that cannot be compounded
under any law. The Lok Sabha does not refer such matters to committees without giving the
other party a reasonable opportunity to be heard. The Lok Adalat proceeds to resolve any case
referred to it and tries to negotiate a mutually acceptable outcome between the parties involved
with the case. Whenever a Lok Adalat decides a case before it, it adopts the most extreme
efforts for a trade-off or settlement. The following points elaborate on the scope of Lok Adalats:
• If no settlement or compromise is reached by the parties after the Lok Adalat passes, no order
is given.
• A reference will be sent automatically to the Court that drew up the reference for disposition.
Those involved in the dispute are urged to seek redressal in courts.
• If the terms proposed by the bench do not satisfy the parties, the Lok Adalat cannot be forced
to compromise or reach a settlement. Orders from Lok Adalats are definitive and restrict the
parties.
• An order passed by a judge is a satisfactory means of stopping the proceedings that demand
justice.
• Lok Adalats have enough powers under the Act to make justice without compromising the
quality of their awards. The Lok Adalat's final order is considered judicial since it is given the
status of a decree.
• A Civil Court recognizes it as a form of evidence and is given the power to summon, discover,
and get an affirmation.
Functions of Lok Adalat
The following are the functions of Lok Adalat:
• Lok Adalat members should be impartial and fair to the parties.
• Lok Adalat is responsible for handling pending cases in court. In the case of a Lok Adalat
settlement, the court fee paid to the court on the petition will be reimbursed
• When filing a dispute with Lok Adalat, you do not have to pay a court fee.
Jurisdiction of Lok Adalats
Lok Adalats fall under the jurisdiction of the courts which organize them, thus, they cover any
cases heard by that Court under its jurisdiction. This jurisdiction does not apply to cases
regarding offences which are not compoundable by law and the Lok Adalats cannot resolve
these cases. The respective courts may accept cases presented to them by parties concurring
that the dispute should be referred to the Lok Adalat. The Courts may accept such cases in
situations where one party makes an application to the court for the referral of the case to the
Lok Adalat and the court might consider that there is a possibility of compromise through the
Act.
Powers of Lok Adalat
o The Lok Adalat shall have the same powers as are vested in a Civil Court under
the Code of Civil Procedure (1908).
o Further, a Lok Adalat shall have the requisite powers to specify its own
procedure for the determination of any dispute coming before it.
o All proceedings before a Lok Adalat shall be deemed to be judicial proceedings
within the meaning of the Bharatiya Nyaya Sanhita 2023 and every Lok Adalat
shall be deemed to be a Civil Court for the purpose of the Bharatiya Nagarik
Suraksha Sanhita 2023.
o An award of a Lok Adalat shall be deemed to be a decree of a Civil Court or an
order of any other court.
o Every award made by a Lok Adalat shall be final and binding on all the parties
to the dispute. No appeal shall lie to any court against the award of the Lok
Adalat.
Advantages of Lok Adalat
o There is no court fee and if court fee is already paid the amount will be refunded if the
dispute is settled at Lok Adalat.
o There is procedural flexibility and speedy trial of the disputes. There is no strict
application of procedural laws while assessing the claim by Lok Adalat.
o The parties to the dispute can directly interact with the judge through their counsel
which is not possible in regular courts of law.
o The award by the Lok Adalat is binding on the parties and it has the status of a decree
of a civil court and it is non-appealable, which does not cause the delay in the settlement
of disputes finally.
Importance of Lok Adalats
Lok Adalats hold paramount importance in the Indian legal system due to their role in
expediting justice and easing the burden on conventional courts. They provide a swift and cost-
effective resolution mechanism, emphasising reconciliation and compromise.
By encouraging community participation, Lok Adalats contributes to a more accessible and
citizen-centric legal process. The diverse types of Lok Adalats, such as Permanent, National,
Mega, Mobile, Daily and Continuous, address a wide spectrum of disputes, ensuring flexibility
and relevance.
This alternative dispute resolution model underscores the democratic principle of people’s
participation in justice delivery, making it a vital component of India’s legal landscape.
Lok Adalats serve as an essential component of India’s judicial system by addressing the
challenges of judicial backlog and providing justice to marginalised sections.
Lok Adalats play a pivotal role in promoting alternative dispute resolution mechanisms, thus
complementing traditional courts.
Lok Adalat reduces expenses through its low-cost operation, which decreases litigation
expenses beyond standard court processes. Through these sessions, one can obtain dispute
resolution much faster because cases settle within hours or days, which helps to reduce court
backlogs. Lok Adalat creates justice opportunities for everyone regardless of economic status
by supporting agreeable dispute resolutions that maintain relationships between involved
parties.
1. Cost-Effectiveness: Lok Adalat operations maintain minimal costs compared to
conventional litigation procedures and their related legal fee expenditures. People from
all economic levels can more easily access justice in this manner for their needs.
2. Faster Resolution: One of Lok Adalat's key advantages is the speed at which disputes
are resolved. While a typical court case can take years, disputes in Lok Adalat are
generally resolved in hours or days.
3. Reduced Court Backlog: The judicial system receives relief by significantly reducing
pending cases at Lok Adalats. Through Lok Adalats, courts resolve long-standing legal
matters that otherwise could delay court proceedings.
4. Accessible Justice: Through Lok Adalat, all members, including financially
disadvantaged people, have equal access to justice despite their inability to pursue cases
at regular courts. Under the established legal system, these specific sections of society
can utilize the redressal process.
5. Promoting Amicable Settlements: The nature of Lok Adalat fosters peaceful and
consensual solutions, encouraging cooperation over confrontation. This helps preserve
relationships between parties, especially in family or community disputes.
The Role of Lok Adalat in Reducing Judicial Overload
Judicial case backlog numbers in India have now escalated to dangerous levels. The judicial
system demonstrates decreasing efficiency rates because courts face millions of unresolved
cases. The establishment of Lok Adalat serves as an essential instrument to minimize the heavy
caseloads. The annual resolution of thousands of cases through Lok Adalat helps revitalize
judicial capacity because it removes routine cases from the court system. Through their
operations, Lok Adalats supports judicial reforms that advance novel forms of dispute
resolution that enhance the formal judicial system. Lok Adalats' ability to support a flexible
justice approach enhances system functionality throughout the legal framework.
Conclusion
Lok Adalats have become an integral part of the Indian legal system, providing opportunities
for the poor and discouraged to access justice. The organization has overcome all obstacles to
lawful aid, although there are specific areas for improvement that could make it more effective.
Although they are overcoming any barriers to access to justice, they should also provide
genuine admittance to equity for aggrieved parties. There is more activity than was expected,
which could make Lok Adalats a better mechanism to deal with cases that are on the rise.

Q.3 Examine the advantage and limitations of alternative dispute resolution system?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Alternative Dispute Resolution
The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing a
substitute to the conventional methods of resolving disputes. ADR offers to resolve all type of
matters including civil, commercial, industrial and family etc., where people are not being able
to start any type of negotiation and reach the settlement. Generally, ADR uses neutral third
party who helps the parties to communicate, discuss the differences and resolve the dispute. It
is a method which enables individuals and group to maintain co-operation, social order and
provides opportunity to reduce hostility.
Importance of ADR in India
To deal with the situation of pendency of cases in courts of India, ADR plays a significant role
in India by its diverse techniques. Alternative Dispute Resolution mechanism provides
scientifically developed techniques to Indian judiciary which helps in reducing the burden on
the courts. ADR provides various modes of settlement including, arbitration, conciliation,
mediation, negotiation and lok Adalat. Here, negotiation means self-counselling between the
parties to resolve their dispute but it doesn't have any statutory recognition in India.
ADR is also founded on such fundamental rights, article 14 and 21 which deals with equality
before law and right to life and personal liberty respectively. ADR's motive is to provide social-
economic and political justice and maintain integrity in the society enshrined in the preamble.
ADR also strive to achieve equal justice and free legal aid provided under article 39-A relating
to Directive Principle of State Policy (DPSP).
Few important provisions related to ADR
• Section 89 of the Civil Procedure Code, 1908 provides that opportunity to the people, if it
appears to court there exist elements of settlement outside the court then court formulate the
terms of the possible settlement and refer the same for: Arbitration, Conciliation, Mediation or
Lok Adalat
• The Acts which deals with Alternative Dispute Resolution are Arbitration and Conciliation
Act, 1996 and,
• The Legal Services Authority Act, 1987
Advantages of Alternative Dispute Resolution
• Less time consuming: people resolve their dispute in short period as compared to courts
• Cost effective method: it saves lot of money if one undergoes in litigation process.
• It is free from technicalities of courts, here informal ways are applied in resolving dispute.
• People are free to express themselves without any fear of court of law. They can reveal the
true facts without disclosing it to any court.
• Efficient way: there are always chances of restoring relationship back as parties discuss their
issues together on the same platform.
• It prevents further conflict and maintains good relationship between the parties.
• It preserves the best interest of the parties.
Various modes of Alternative Dispute Resolution
Arbitration
The process of Arbitration cannot exist without valid arbitration agreement prior to the
emergence of dispute. In this technique of resolution parties refer their dispute to one or more
persons called arbitrators. Decision of arbitrator is bound on parties and their decision is called
'Award'. The object of Arbitration is to obtain fair settlement of dispute outside of court without
necessary delay and expense.
Any party to a contract where arbitration clause is there, can invoke arbitration clause either
himself or through their authorized agent which refer the dispute directly to the arbitration as
per the Arbitration clause. Here, arbitration clause means a clause that mention the course of
actions, language, number of arbitrators, seat or legal place of the arbitration to be taken place
in the event of dispute arising out between the parties.
Mediation
Mediation is an Alternative Dispute resolution where a third neutral party aims to assist two or
more disputants in reaching agreement. It is an easy and uncomplicated party centered
negotiation process where third party acts as a mediator to resolve dispute amicably by using
appropriate communication and negotiation techniques. This process is totally controlled by
the parties. Mediator's work is just to facilitate the parties to reach settlement of their dispute.
Mediator doesn't impose his views and make no decision about what a fair settlement should
be.
Conciliation
Conciliation is a form of arbitration but it is less formal in nature. It is the process of facilitating
an amicable resolution between the parties, whereby the parties to the dispute use conciliator
who meets with the parties separately to settle their dispute. Conciliator meet separately to
lower the tension between parties, improving communication, interpreting issue to bring about
a negotiated settlement There is no need of prior agreement and cannot be forced on party who
is not intending for conciliation. It is different from arbitration in that way.
Lok Adalat
Lok Adalat is called 'People's Court' presided over by a sitting or retired judicial officer, social
activists or members of Legal profession as the chairman. National Legal Service Authority
(NALSA) along with other Legal Services Institutions conducts Lok Adalats on regular
intervals for exercising such jurisdiction. Any case pending in regular court or any dispute
which has not been brought before any court of law can be referred to Lok Adalat. There is no
court fees and rigid procedure followed, which makes the process fast. If any matter pending
in court of referred to the Lok Adalat and is settled subsequently, the court fee originally paid
in the court when the petition filed is also refunded back to the parties.
Parties are in direct interaction with the judge, which is not possible in regular courts. It depends
on the parties if both the parties agree on case long pending in regular court can be transferred
to Lok Adalat. The persons deciding the cases have the role of statutory conciliators only, they
can only persuade the parties to come to a conclusion for settling the dispute outside the regular
court in the Lok Adalat. Legal Services Authorities (State or District) as the case may be on
receipt of an application from one of the parties at a pre-litigation stage may refer such matter
to the Lok Adalat for which notice would then be issued to the other party. Lok Adalats do not
have any jurisdiction to deal with cases of non-compoundable offenses.
Limitations Of Alternative Dispute Resolution
There are undoubtedly many benefits to alternative dispute resolution. However, it is also
important to note alternative dispute resolution’s Limitations. Following are the Limitations
of alternative dispute resolution:
Surrenders Appeal: Unlike litigation, where a party may appeal a decision after it is made,
alternative dispute resolution processes limit the ability of the parties to achieve a different
outcome after the process is resolved and the decision is made. This can undercut the
accessibility of the process for some.
Increases Spending: There are more out-of-pocket costs at the beginning of the alternative
dispute resolution process that would not be the case in litigation. Parties will have to pay for
a neutral, the space for the process, and many other costs. This is why it is essential to weigh
the costs of the process with the costs at stake.
Encourages Compromise: The collaborative nature of alternative dispute resolution requires
that the parties come to the table with the intent to compromise their position in some way.
While this may be a quick result, it may not be the best possible result. A party must have a
stellar understanding of what they are entitled to when entering these processes.
Stalls Process: Because the process is non-binding, some parties will attempt to use alternative
dispute resolution as a tactic to stall the proceedings for some time. This can be to buy more
time to gather evidence or to cause the plaintiff to wait longer for their award.
There is no guaranteed resolution: The alternative resolution process does not always lead
to a resolution. This means that the parties could invest time and money in trying to resolve the
dispute out of court and still end up having to proceed with litigation and trial before a judge
and jury.
Limit on Awards: There is no equivalent of s.66 of the Arbitration Act 1996 (which provides
that an award made by the tribunal pursuant to an arbitration agreement may be enforced in the
same manner as a judgment or order of the court to the same effect) enabling ADR awards to
be enforced as if they were court judgment. However, the awards are not so easily enforceable.
Arbitrations mostly resolve disputes that involve money. They cannot issue orders compelling
one party to do something, or refrain from doing something; hence, they cannot give
injunctions.
Uneven Negotiating Command: Power imbalances in alternative dispute resolution can cause
issues with the neutrality of the process. For example, if one party is more powerful, the other
will often feel like they are working to appease them rather than meet in the middle. In
convinced situations, one side is capable to have power over the other. For that reason, a
noteworthy discrepancy of power exists.
Required Court Action: The arbitrator’s verdict can necessitate a court action if one of the
parties declines to acknowledge the arbitrator’s conclusion. This would not only generate
pandemonium but also an obligatory review by the court. Thus, ADR occasionally elevates the
question of biasness of the arbitrator’s pronouncement. Also, there is a very flawed panorama
for judicial assessment of an arbitrator’s decision.
Conclusion
Alternative Dispute Resolution (ADR) plays a crucial role in providing an effective, efficient,
and amicable method of resolving disputes outside the traditional court system. Governed by
the Arbitration and Conciliation Act, 1996, ADR offers various mechanisms such as arbitration,
mediation, conciliation, negotiation, and Lok Adalats, each tailored to different types of
disputes. These methods help in reducing the burden on courts, saving time and costs, and
ensuring confidentiality and flexibility. ADR is also supported by legal provisions such as
Section 89 of the Civil Procedure Code, 1908, and the Legal Services Authorities Act, 1987,
which promote out-of-court settlements. The Indian judiciary has actively encouraged ADR by
setting up mediation centers and delivering arbitration-friendly judgments. By preserving
relationships, preventing further conflicts, and ensuring fair resolutions, ADR aligns with
constitutional principles such as equality before the law (Article 14) and access to justice
(Article 39-A). With India striving to become a global hub for arbitration, the increasing
adoption of ADR across commercial, civil, and family disputes highlights its significance in
the legal landscape.

Q.4 Why the measures of alternative dispute resolution are not widely accepted in India?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Alternative Dispute Resolution
The concept of Alternative Dispute Resolution (ADR) mechanism is capable of providing a
substitute to the conventional methods of resolving disputes. ADR offers to resolve all type of
matters including civil, commercial, industrial and family etc., where people are not being able
to start any type of negotiation and reach the settlement. Generally, ADR uses neutral third
party who helps the parties to communicate, discuss the differences and resolve the dispute. It
is a method which enables individuals and group to maintain co-operation, social order and
provides opportunity to reduce hostility.
Importance of ADR in India
To deal with the situation of pendency of cases in courts of India, ADR plays a significant role
in India by its diverse techniques. Alternative Dispute Resolution mechanism provides
scientifically developed techniques to Indian judiciary which helps in reducing the burden on
the courts. ADR provides various modes of settlement including, arbitration, conciliation,
mediation, negotiation and lok Adalat. Here, negotiation means self-counselling between the
parties to resolve their dispute but it doesn't have any statutory recognition in India.
ADR is also founded on such fundamental rights, article 14 and 21 which deals with equality
before law and right to life and personal liberty respectively. ADR's motive is to provide social-
economic and political justice and maintain integrity in the society enshrined in the preamble.
ADR also strive to achieve equal justice and free legal aid provided under article 39-A relating
to Directive Principle of State Policy (DPSP).
Few important provisions related to ADR
• Section 89 of the Civil Procedure Code, 1908 provides that opportunity to the people, if it
appears to court there exist elements of settlement outside the court then court formulate the
terms of the possible settlement and refer the same for: Arbitration, Conciliation, Mediation or
Lok Adalat
• The Acts which deals with Alternative Dispute Resolution are Arbitration and Conciliation
Act, 1996 and,
• The Legal Services Authority Act, 1987
Advantages of Alternative Dispute Resolution
• Less time consuming: people resolve their dispute in short period as compared to courts
• Cost effective method: it saves lot of money if one undergoes in litigation process.
• It is free from technicalities of courts, here informal ways are applied in resolving dispute.
• People are free to express themselves without any fear of court of law. They can reveal the
true facts without disclosing it to any court.
• Efficient way: there are always chances of restoring relationship back as parties discuss their
issues together on the same platform.
• It prevents further conflict and maintains good relationship between the parties.
• It preserves the best interest of the parties.
Various modes of Alternative Dispute Resolution
Arbitration
The process of Arbitration cannot exist without valid arbitration agreement prior to the
emergence of dispute. In this technique of resolution parties refer their dispute to one or more
persons called arbitrators. Decision of arbitrator is bound on parties and their decision is called
'Award'. The object of Arbitration is to obtain fair settlement of dispute outside of court without
necessary delay and expense.
Any party to a contract where arbitration clause is there, can invoke arbitration clause either
himself or through their authorized agent which refer the dispute directly to the arbitration as
per the Arbitration clause. Here, arbitration clause means a clause that mention the course of
actions, language, number of arbitrators, seat or legal place of the arbitration to be taken place
in the event of dispute arising out between the parties.
Mediation
Mediation is an Alternative Dispute resolution where a third neutral party aims to assist two or
more disputants in reaching agreement. It is an easy and uncomplicated party centered
negotiation process where third party acts as a mediator to resolve dispute amicably by using
appropriate communication and negotiation techniques. This process is totally controlled by
the parties. Mediator's work is just to facilitate the parties to reach settlement of their dispute.
Mediator doesn't impose his views and make no decision about what a fair settlement should
be.
Conciliation
Conciliation is a form of arbitration but it is less formal in nature. It is the process of facilitating
an amicable resolution between the parties, whereby the parties to the dispute use conciliator
who meets with the parties separately to settle their dispute. Conciliator meet separately to
lower the tension between parties, improving communication, interpreting issue to bring about
a negotiated settlement There is no need of prior agreement and cannot be forced on party who
is not intending for conciliation. It is different from arbitration in that way.
Lok Adalat
Lok Adalat is called 'People's Court' presided over by a sitting or retired judicial officer, social
activists or members of Legal profession as the chairman. National Legal Service Authority
(NALSA) along with other Legal Services Institutions conducts Lok Adalats on regular
intervals for exercising such jurisdiction. Any case pending in regular court or any dispute
which has not been brought before any court of law can be referred to Lok Adalat. There is no
court fees and rigid procedure followed, which makes the process fast. If any matter pending
in court of referred to the Lok Adalat and is settled subsequently, the court fee originally paid
in the court when the petition filed is also refunded back to the parties.
Parties are in direct interaction with the judge, which is not possible in regular courts. It depends
on the parties if both the parties agree on case long pending in regular court can be transferred
to Lok Adalat. The persons deciding the cases have the role of statutory conciliators only, they
can only persuade the parties to come to a conclusion for settling the dispute outside the regular
court in the Lok Adalat. Legal Services Authorities (State or District) as the case may be on
receipt of an application from one of the parties at a pre-litigation stage may refer such matter
to the Lok Adalat for which notice would then be issued to the other party. Lok Adalats do not
have any jurisdiction to deal with cases of non-compoundable offenses.
Challenges faced by ADR mechanisms in India
Alternative Dispute Resolution (ADR) mechanisms, such as arbitration, mediation, and
conciliation, are widely recognized as effective ways to resolve disputes outside of the
traditional court system. However, in India, like many other countries, ADR mechanisms face
several challenges. Here is an overview of some of the key challenges in the ADR mechanism
in India:
Lack of Awareness and Acceptance:
One of the primary challenges is the lack of awareness among the general public and businesses
about ADR methods. Many individuals and organizations in India still prefer traditional
litigation as they are not familiar with ADR processes.
Delay and Backlog:
While ADR methods are intended to provide faster dispute resolution, they can also face delays.
Overburdened ADR institutions, lack of qualified mediators/arbitrators, and procedural
complexities can lead to cases piling up and defeating the purpose of expeditious resolution.
Enforceability of Awards and Settlements:
Enforcement of arbitral awards and mediated settlements can be a challenge in India. Parties
often need to approach the courts for enforcement, which can lead to further delays and
litigation.
Quality of Mediators and Arbitrators:
The effectiveness of ADR largely depends on the skills and impartiality of the mediators and
arbitrators. India faces a shortage of trained and experienced professionals in these roles,
leading to varying levels of expertise and efficiency.
Complex Legal Framework:
India’s legal framework governing ADR is complex and fragmented, with different laws
governing arbitration and mediation. This can create confusion and inconsistencies in the
application of ADR methods.
Costs and Accessibility:
While ADR is often considered more cost-effective than litigation, it can still be expensive,
especially for parties with limited resources. Additionally, ADR institutions may not be
accessible in all regions of the country, making it difficult for some parties to access these
services.
Mediation vs. Arbitration Preference:
Parties may have varying preferences for mediation or arbitration, and reaching a consensus on
the appropriate ADR method can be challenging. Sometimes, parties may not agree to
mediation when it could be a more suitable option.
Cultural and Language Differences:
India is a diverse country with multiple languages and cultures. These differences can
sometimes pose challenges in ADR proceedings, particularly when communication issues arise
between parties and mediators/arbitrators.
Public Policy and Public Interest Considerations:
Some disputes involve issues that are considered to be of public policy or public interest. In
such cases, ADR may be limited in its ability to address these broader concerns adequately.
Institutional Support:
The functioning of alternative dispute resolution institutions and the availability of resources,
such as well-equipped mediation centers and arbitral institutions, can vary across different
states and regions in India.
Resistance to Settlement:
In certain cases, parties may resist settling through ADR methods due to the perception that
they might not receive as favourable an outcome as they would in court.
Standard Practice To Appoint Retired Judges As Arbitrators:
It is astounding to learn that the best arbitrators are overworked owing to a lack of options.
The reason is, since we forbid the appointment of new arbitrators who are also solicitors, retired
judges are frequently chosen. New lawyers should be engaged to arbitrate disputes in order to
put an end to this practice. The level of awards will not suffer as a result, making the arbitration
process more resilient overall. When there are numerous arbitration hearings, it is typically
challenging to maintain the quality of awards. No other government, save for ours, favours
choosing only retired judges as arbitrators.
To overcome these challenges, India must continue to invest in ADR infrastructure, provide
training for mediators and arbitrators, raise awareness about ADR methods, streamline and
simplify the legal framework, and promote a culture of dispute resolution through alternative
dispute resolution. Addressing these challenges can lead to more efficient and accessible ADR
mechanisms in the country, reducing the burden on the traditional court system and facilitating
quicker resolution of disputes.
Conclusion
India is estimated to have 3.53 crore pending cases in total, where 58,669 cases are pending in
supreme court, 43,63,260 pending cases across all high courts and a whopping 3.11 crore
pending cases only across all District and Subordinate courts in India. Despite these statistics,
more and more people are tilted towards the judiciary to resolve their disputes. Alternate
dispute resolution methods are very helpful and very crucial for any business firm. It helps
them to resolve any disputes internally and with a greater pace than any judicial system can
ever do. India ranked 131 out of 189 countries in the 2016 World Bank ranking for ease of
doing business. According to 2019 rankings, India has gained 63th rank out of 190 countries.
On the other hand, India has a very lower ranking in Enforcement of contracts, that is, 163,
while it may have improved in comparison to before. Nonetheless efforts are being made by
the legislative and judicial wing to enhance Arbitration in India.

Q.5 Define Lok Adalat? Discuss Award, Jurisdiction and Power of Lok Adalat?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
16. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
17. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
18. Conciliation – Similar to mediation but with a more active role for the conciliator.
19. Negotiation – Direct discussions between parties to reach a settlement.
20. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Lok Adalat
Lok Adalat (People’s Court) is an alternative dispute resolution mechanism in India, organized
under the Legal Services Authorities Act, 1987. It aims to provide speedy and cost-effective
justice by settling disputes through conciliation and compromise. Lok Adalats have the
authority to settle civil cases, matrimonial disputes, land disputes, and compoundable criminal
cases. The decisions made by Lok Adalats are binding and hold the same legal status as a court
decree, but without the possibility of appeal, ensuring finality. They play a crucial role in
reducing the burden on regular courts while promoting amicable settlements.
Types of Lok Adalat
In India, various types of Lok Adalats have been established to cater to specific categories of
cases, ensuring accessible and efficient justice for all.
1. Permanent Lok Adalats
Permanent Lok Adalats are created under the Legal Services Authorities Act of 1987 to resolve
specific types of disputes. These lok adalats have authority over public utility services such as
transportation, postal services and telegraph services.
They have the same powers as a Civil Court and are presided over by a sitting or retired judicial
officer. Permanent Lok Adalats ensure that issues are resolved quickly and conveniently for all
parties concerned.
2. National Lok Adalat
National Lok Adalat is a unique initiative by the Indian government aiming to reduce the
burden of pending cases across the country. It is conducted on specific days as specified by the
National Legal Services Authority (NALSA). The National Lok Adalat aims to encourage
compromise and settlement offering an opportunity to resolve a vast number of cases
expeditiously. By making justice accessible to all this initiative promotes the principle of
“justice at the doorstep”.
3. State Lok Adalat
State Lok Adalats operate at the state level and focus on resolving disputes that are pending
before various courts within the jurisdiction of the respective state. These adalats are organized
by the State Legal Services Authorities (SLSA) and serve as an alternative forum for litigants
to seek resolution.
4. Mega Lok Adalat
Mega Lok Adalat is an extended version of the National Lok Adalat. It mainly aim to address
a large number of cases pending in various courts and tribunals within a specific jurisdiction.
The Mega Lok Adalat brings together multiple Lok Adalats, including Permanent Lok Adalats,
to handle a substantial volume of cases on a single day.
5. Mobile Lok Adalat
The Mobile Lok Adalat is a very progressive concept that takes the Lok Adalat system to the
doorstep of the interested litigants. It involves the establishment of temporary Lok Adalat. It
centres in the different locations to cater to the needs of people who may face challenges in
accessing regular courts. The Mobile Lok Adalat plays very important role to reach out the
remote areas for ensuring easy access to justice for all irrespective of their geographical
location.
6. Special Lok Adalats
Special Lok Adalats are organized to deal with specific categories of cases tailoring the
approach to meet their unique requirements. These adalats address matters such as motor
vehicle accident claims, land acquisition disputes and family matters etc. By focusing on
specific types of cases Special Lok Adalats streamline the resolution process ensuring
specialized attention and timely justice.
Lok Adalat under Legal Services Authority Act, 1987
Section 19 of the Act provides for the establishment of Lok Adalats. Legal service authorities
at all levels, including the central, state, and district levels, shall hold Lok Adalats. Lok Adalats
serve as an alternate dispute resolution system. Their purpose is to settle cases that are pending
or that have not been heard in the courts. It consists of judicial officers or an authorized person
under the jurisdiction of the state, central government, or local government. Following the
conciliation of disputes between the parties and the agreement of the parties, the award is
handed down by conciliators in accordance with Section 21 of the Act. The award has the same
legal effect as a court decision.
Scope of Lok Adalat
Unlike the Supreme Court, Lok Adalat is extremely broad to incorporate most of the cases
pending before it as well as new cases that will be filed in the near future to be settled. The Lok
Adalat does not have jurisdiction over cases relating to offences that cannot be compounded
under any law. The Lok Sabha does not refer such matters to committees without giving the
other party a reasonable opportunity to be heard. The Lok Adalat proceeds to resolve any case
referred to it and tries to negotiate a mutually acceptable outcome between the parties involved
with the case. Whenever a Lok Adalat decides a case before it, it adopts the most extreme
efforts for a trade-off or settlement. The following points elaborate on the scope of Lok Adalats:
• If no settlement or compromise is reached by the parties after the Lok Adalat passes, no order
is given.
• A reference will be sent automatically to the Court that drew up the reference for disposition.
Those involved in the dispute are urged to seek redressal in courts.
• If the terms proposed by the bench do not satisfy the parties, the Lok Adalat cannot be forced
to compromise or reach a settlement. Orders from Lok Adalats are definitive and restrict the
parties.
• An order passed by a judge is a satisfactory means of stopping the proceedings that demand
justice.
• Lok Adalats have enough powers under the Act to make justice without compromising the
quality of their awards. The Lok Adalat's final order is considered judicial since it is given the
status of a decree.
• A Civil Court recognizes it as a form of evidence and is given the power to summon, discover,
and get an affirmation.
Functions of Lok Adalat
The following are the functions of Lok Adalat:
• Lok Adalat members should be impartial and fair to the parties.
• Lok Adalat is responsible for handling pending cases in court. In the case of a Lok Adalat
settlement, the court fee paid to the court on the petition will be reimbursed
• When filing a dispute with Lok Adalat, you do not have to pay a court fee.
Jurisdiction of Lok Adalats
Lok Adalats fall under the jurisdiction of the courts which organize them, thus, they cover any
cases heard by that Court under its jurisdiction. This jurisdiction does not apply to cases
regarding offences which are not compoundable by law and the Lok Adalats cannot resolve
these cases. The respective courts may accept cases presented to them by parties concurring
that the dispute should be referred to the Lok Adalat. The Courts may accept such cases in
situations where one party makes an application to the court for the referral of the case to the
Lok Adalat and the court might consider that there is a possibility of compromise through the
Act.
Powers of Lok Adalat
o The Lok Adalat shall have the same powers as are vested in a Civil Court under
the Code of Civil Procedure (1908).
o Further, a Lok Adalat shall have the requisite powers to specify its own
procedure for the determination of any dispute coming before it.
o All proceedings before a Lok Adalat shall be deemed to be judicial proceedings
within the meaning of the Bharatiya Nyaya Sanhita 2023 and every Lok Adalat
shall be deemed to be a Civil Court for the purpose of the Bharatiya Nagarik
Suraksha Sanhita 2023.
o An award of a Lok Adalat shall be deemed to be a decree of a Civil Court or an
order of any other court.
o Every award made by a Lok Adalat shall be final and binding on all the parties
to the dispute. No appeal shall lie to any court against the award of the Lok
Adalat.
Advantages of Lok Adalat
o There is no court fee and if court fee is already paid the amount will be refunded if the
dispute is settled at Lok Adalat.
o There is procedural flexibility and speedy trial of the disputes. There is no strict
application of procedural laws while assessing the claim by Lok Adalat.
o The parties to the dispute can directly interact with the judge through their counsel
which is not possible in regular courts of law.
o The award by the Lok Adalat is binding on the parties and it has the status of a decree
of a civil court and it is non-appealable, which does not cause the delay in the settlement
of disputes finally.
Importance of Lok Adalats
Lok Adalats hold paramount importance in the Indian legal system due to their role in
expediting justice and easing the burden on conventional courts. They provide a swift and cost-
effective resolution mechanism, emphasising reconciliation and compromise.
By encouraging community participation, Lok Adalats contributes to a more accessible and
citizen-centric legal process. The diverse types of Lok Adalats, such as Permanent, National,
Mega, Mobile, Daily and Continuous, address a wide spectrum of disputes, ensuring flexibility
and relevance.
This alternative dispute resolution model underscores the democratic principle of people’s
participation in justice delivery, making it a vital component of India’s legal landscape.
Award Passed by Lok Adalat:
▪ Section 21 of Legal Services Authority Act provides for the award of Lok Adalat.
▪ Section 21 (1) provides that:
o Every award passed by the Lok Adalat shall be deemed to be a decree of Civil
Court or as the case may be an order of any other Court
o Where a compromise or settlement has been arrived at by the Lok Adalat the
court fee paid in such case shall be refunded in the manner provided under the
Court fees Act, 1870.
▪ Section 21 (2) provides that every award made by a Lok Adalat shall:
o Be final and binding on all parties to the dispute.
o No appeal shall be made to any court against the award.
Every award of lok Adalat shall be deemed as a decree of civil court. Every award of lok Adalat
shall be final and binding on all the parties to the disputed parties. No appeal shall lie from the
award of Lok Adalat. It focus on the compromise between the parties, if compromise is reached
an award is made and it is binding on all the parties of the dispute. The evidence act and
procedures law are not strictly followed, while assessing the merits of the case.
Composition of the Lok Adalat: The persons deciding the cases in the Lok Adalat are called
the members of the lok Adalat. Every Lok Adalat organised for an area shall consist of -
sitting/retired judicial officer as a chairman, and two members - one is lawyer and another is
social worker ( a person working for the upliftment of the society).
Conclusion
Lok Adalats have become an integral part of the Indian legal system, providing opportunities
for the poor and discouraged to access justice. The organization has overcome all obstacles to
lawful aid, although there are specific areas for improvement that could make it more effective.
Although they are overcoming any barriers to access to justice, they should also provide
genuine admittance to equity for aggrieved parties. There is more activity than was expected,
which could make Lok Adalats a better mechanism to deal with cases that are on the rise.

Q.6 What are the provisions relating to correction, interpretation and additional award?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
6. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
7. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
8. Conciliation – Similar to mediation but with a more active role for the conciliator.
9. Negotiation – Direct discussions between parties to reach a settlement.
10. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Award
According to Section 2(1)(c) of the 1996 Act an arbitral award includes an interim award. As a
preventive measure and at the request of the party an arbitrator can issue an interim order or
award regarding the dispute. Interim orders are orders that are valid only during the arbitration
process, mandating the party to refrain from doing some actions that may fall counter to or
harm the other party's interest. Such an order is passed in the form of an interim injunction.
Unlike a usual interim measure, an interim award under the 1996 Act forms a part of the final
award, that is binding on the parties involved. An interim award is granted after a thorough
hearing, encompassing the accepted interim measures.
However, once the arbitration proceedings have been completed, the arbitral tribunal grants an
arbitral/arbitration award, as the final award. An arbitral award can be monetary or non-
monetary. It can be monetary which is made for payment of a sum of money from one party to
the other and it can be non-monetary when no money needs to be paid, but it includes decisions
like stopping a certain business practice or increasing unemployment perks and incentives.
An arbitral award is the final decision given by the Arbitral Tribunal to resolve a dispute. It is
similar to a court judgment but is given by an arbitrator instead of a judge. The award is issued
after all parties have had a fair chance to present their case, provide evidence, and make
arguments.
For an award to be held valid, it must fulfil two conditions. Firstly it should be certain, meaning
that it should be clear, definite, and unambiguous in terms of the decision made with regard to
the rights of the parties. Secondly, it must contain a decision. An award without a valid decision
or unclear decision on every issue raised before the arbitral tribunal shall be considered invalid.
In addition to fulfilling these conditions, an award must bear the signature of an arbitrator. It
must also contain specific reasons for the decision made in an award regarding the particular
case. The award should not leave any room for confusion and must clearly outline the duties
and liabilities imposed on the parties. An award must deal with every aspect of the issue that is
a matter of concern between the parties, giving a clear and final decision on every such aspect
of the issue.
The form and content of an arbitral award are regulated by Section 31 of the Arbitration and
Conciliation Act, 1996. This section ensures that the award is made in writing, signed by the
arbitrators, and includes reasons for the decision (unless the parties agree otherwise). It also
mentions details such as the date and place of arbitration. The award is final and binding,
meaning that both parties must follow its terms, just like a court ruling. This process ensures
fairness, transparency, and enforceability in arbitration.
The following are the fundamental parts of a legitimate Award, as determined by a cursory
perusal of this Section:
• The Award shall be made in writing.
• Award must be signed by all the members of the panel.
• Award should be describe the reasons for its existence.
• The date of award should be stated.
• The award shall identify the location.
• An interim award can also be given under Section 17.
• After the Award is made each party should receive a signed copy.
• The Award may be made without stating any grounds if the parties agree, Giving reason
for the award is not required in the case of a settlement.
• Award as may be justified. Any such correction, interpretation of award and additional
award shall form as a part of the final award.
• An Award becomes final either upon expiry of the period provided under the statute to
challenge the Award or if challenged, after the final decisions on such challenges.
Correction of Arbitral Award
A legally enforceable award must be free from errors and aptly made. However, human errors
are inevitable. However, the Arbitration and Conciliation Act, 1996, provides a provision to
which parties can resort for correction of such awards.
Errors that can be corrected
Computation errors
If the award involves the amount to be paid by the parties or the computation of any liability
that is levied on any or both parties. The computed amounts must be accurate. When both the
parties and the arbitrators know how it is going to be calculated and the amount in the award
is merely a calculation error, then under Section 33(1)(a), relief can be sought.
Clerical or typographical errors
Clerical or typographical mistakes that change the meaning of the award. Where both the
parties and the arbitrator know the intention of the award, but either the use of words makes
the meaning otherwise or the parties are incorrectly named. In such a case, recourse to Section
33(1)(a) can be taken.
Accidental slip or omission
At times, issues are mentioned in the claim about which the award is silent. Such omissions
need to be conveyed and addressed. A new award, thus covering the omitted issue, is necessary.
In Rees vs. Earl of Plymouth and Ors. (2020), it was a case of appeal. The issue before the
judge was whether an accidental slip meant just a typographical error or an accidental slip in
the judge's thought process as well? The appeal was rejected, saying that an accidental slip
includes an error in the judge's interpretation of evidence, causing an error in a decision.
It is pertinent to note that on the pretext of applying for a correction of the award, a party cannot
request to make material changes to the award that tries to change its decision made on merit.
Procedure to apply for correction
The party seeking to apply for correction has to complete the following two things within 30
days from the receipt of the arbitral award:
Give notice to the other party that he/she is applying for correction of the arbitral award.
This notice must be in writing and must be served on the other party in the manner prescribed
by the arbitration rules. The notice must state the grounds on which the correction is sought
and must be accompanied by a copy of the arbitral award.
Apply before the arbitrator for correction of the arbitral award through a request letter.
This request letter must be in writing and must be submitted to the arbitrator in the manner
prescribed by the arbitration rules. The request letter must state the grounds on which the
correction is sought and must be accompanied by a copy of the arbitral award.
The arbitrator must consider the request for correction and issue a decision within 30 days of
receiving the request. The decision of the arbitrator is final and binding on the parties.
If the arbitrator denies the request for correction, the party seeking correction may appeal to
the court. The appeal must be filed within 30 days of the arbitrator's decision. The court will
review the arbitrator's decision and may uphold, modify, or vacate the award.
However, if some other period is agreed upon for requesting a correction in the arbitration
agreement, that shall apply.
Suo moto correction
An arbitrator has the authority to correct certain errors in their award on their own initiative.
This authority is limited to clerical or typographical mistakes, accidental slips, or omissions.
The arbitrator must act within 30 days of passing the award to make these corrections.
The purpose of this provision is to allow arbitrators to correct minor errors that do not affect
the substance of the award. This helps to ensure that the award is accurate and reflects the
arbitrator's true intent.
Here are some examples of errors that an arbitrator may correct under this provision:
• A typographical error in the name of a party.
• A mistake in the calculation of damages.
• The omission of a provision that was clearly intended to be included.
If an arbitrator discovers an error that they believe is substantial and affects the substance of
the award, they cannot correct it on their own initiative. In this case, the arbitrator must seek
the consent of the parties to correct the error. If the parties do not consent, the arbitrator may
only correct the error if they are directed to do so by a court.
The ability of arbitrators to correct errors on their own initiative is an important safeguard that
helps to ensure the fairness and accuracy of arbitration awards. This provision allows arbitrators
to correct minor errors without the need for a lengthy and expensive court proceeding.
Interpretation of an Arbitral Award
An arbitral award must be clear and self-explaining. To execute an award, there should be
clarity in understanding an arbitral award. If any of the parties are unable to interpret the arbitral
award or any of its clauses specifically, they can seek an interpretation from the arbitrator of
the same.
Procedure:
Within 30 days from the receipt of the award, the party seeking interpretation has to:
1. Give notice to the other party that he/she is seeking an interpretation of the arbitral award.
2. Apply for an interpretation of the arbitral award before the arbitrator through a request.
However, if some other period is agreed upon between the parties in their agreement, that shall
apply.
The time limit for giving an interpretation:
An arbitrator has to, within 30 days from the receipt of such a request, give an interpretation of
the award.
Effect:
The interpretation given by the arbitrator will form part of the original award.
Court on the misuse of this provision:
In CMI Ltd. vs. BSNL (2011), it was pointed out that under the pretext of seeking interpretation,
a party cannot reargue their claim.
Additional Award
In the realm of arbitration, it occasionally occurs that certain claims raised by the parties during
the proceedings are not explicitly addressed or resolved in the final arbitral award. This
situation, known as an omission or silence in the award, requires careful attention and
appropriate action to ensure that all claims are adequately dealt with.
When an arbitral award remains silent on specific claims, it is crucial that the issue be promptly
brought to the attention of the arbitrator. The party or parties affected by the omission may file
a request for an additional or supplementary award, also referred to as an "additional ward."
This request serves to clarify or rectify the incomplete nature of the initial award by addressing
the outstanding claims.
The process of obtaining an additional ward typically involves submitting a formal request to
the arbitral tribunal or the institution administering the arbitration. The request should clearly
identify the specific claims that were omitted from the original award and provide any relevant
arguments or evidence supporting the request. The tribunal or institution will then consider the
request and decide whether to issue an additional ward.
The issuance of an additional ward is generally governed by the arbitration rules and applicable
laws. In some jurisdictions, there may be specific time limits or procedural requirements that
must be met when requesting an additional ward. It is essential to comply with these
requirements to ensure the validity and enforceability of the subsequent award.
Once an additional ward is issued, it becomes part of the original arbitral award and has the
same binding effect. The additional ward may address the omitted claims in full or may provide
partial resolution, depending on the circumstances of the case.
Procedure
The party seeking an additional award within 30 days from the receipt of the award has to:
1. Send a notice to the other party notifying them of his intention to seek an additional award
on the claims that the original award was silent on.
2. Formally request the arbitrator for an additional award by bringing his attention to the claims
that the original award was silent on.
However, if some other period has been agreed upon by the parties, that shall apply.
The time limit for passing an additional award:
An arbitrator has to pass an arbitral award within 60 days from the receipt of a request for it.
Effect:
An additional award will be considered a separate award with a distinct identity.
Extension of Period:
An arbitrator or arbitral tribunal may extend the time limit for correction, interpretation, or
passing an additional award.
Application on Section 31:
Section 31 will also apply to the correction made, the interpretation stated, or the additional
award passed by the arbitrator or the arbitral tribunal.
Case Law
Role of Section 34
Geojit Financial Services Ltd. vs. Kritika Nagpal (2013)
In the landmark case of Geojit Financial Services Ltd. vs. Kritika Nagpal (2013), the Indian
courts focused on the crucial issue concerning the scope of judicial intervention in arbitration
proceedings. The case centred around the question of whether a party could seek judicial
recourse if an arbitrator refused to adjudicate on a claim that had not been considered in the
original arbitral award. The court's decision in this case has significant implications for the
interpretation of Section 34(4) of the Arbitration and Conciliation Act, 1996, which empowers
courts to intervene in certain limited circumstances.
The facts of the case were as follows: The parties had entered into an agreement containing an
arbitration clause. A dispute arose, and the matter was referred to arbitration. In the course of
the arbitration, the claimant raised additional claims that were not part of the original claim.
The arbitrator, however, declined to consider these additional claims, holding that they were
beyond the scope of the arbitration agreement. The claimant then approached the court under
Section 34(4) of the Arbitration Act, seeking a direction from the arbitrator to adjudicate on the
additional claims.
In the landmark case of Geojit Financial Services Ltd. vs. Kritika Nagpal (2013), the Indian
courts focused on the crucial issue concerning the scope of judicial intervention in arbitration
proceedings. The case centred around the question of whether a party could seek judicial
recourse if an arbitrator refused to adjudicate on a claim that had not been considered in the
original arbitral award. The court's decision in this case has significant implications for the
interpretation of Section 34(4) of the Arbitration and Conciliation Act, 1996, which empowers
courts to intervene in certain limited circumstances.
The facts of the case were as follows: The parties had entered into an agreement containing an
arbitration clause. A dispute arose, and the matter was referred to arbitration. In the course of
the arbitration, the claimant raised additional claims that were not part of the original claim.
The arbitrator, however, declined to consider these additional claims, holding that they were
beyond the scope of the arbitration agreement. The claimant then approached the court under
Section 34(4) of the Arbitration Act, seeking a direction from the arbitrator to adjudicate on the
additional claims.
Conclusion
The purpose of Section 33 of the Arbitration and Conciliation Act, 1996, is nothing but to
provide procedural efficiency. The remedy it gives should be sought before the Arbitrator
within time, as no such applications for correction of the award can be sought before the
executing court or under the Application before the court under Section 34 which deals with
grounds for setting aside an award. Section 33 helps in eliminating human errors and thus
makes the arbitration mechanism even more preferable, along with its other major benefits

Q.7 Lok Adalat vis-à-vis permanent Lok Adalat?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Lok Adalat
Lok Adalat (People’s Court) is an alternative dispute resolution mechanism in India, organized
under the Legal Services Authorities Act, 1987. It aims to provide speedy and cost-effective
justice by settling disputes through conciliation and compromise. Lok Adalats have the
authority to settle civil cases, matrimonial disputes, land disputes, and compoundable criminal
cases. The decisions made by Lok Adalats are binding and hold the same legal status as a court
decree, but without the possibility of appeal, ensuring finality. They play a crucial role in
reducing the burden on regular courts while promoting amicable settlements.
Types of Lok Adalat
In India, various types of Lok Adalats have been established to cater to specific categories of
cases, ensuring accessible and efficient justice for all.
1. Permanent Lok Adalats
Permanent Lok Adalats are created under the Legal Services Authorities Act of 1987 to resolve
specific types of disputes. These lok adalats have authority over public utility services such as
transportation, postal services and telegraph services.
They have the same powers as a Civil Court and are presided over by a sitting or retired judicial
officer. Permanent Lok Adalats ensure that issues are resolved quickly and conveniently for all
parties concerned.
2. National Lok Adalat
National Lok Adalat is a unique initiative by the Indian government aiming to reduce the
burden of pending cases across the country. It is conducted on specific days as specified by the
National Legal Services Authority (NALSA). The National Lok Adalat aims to encourage
compromise and settlement offering an opportunity to resolve a vast number of cases
expeditiously. By making justice accessible to all this initiative promotes the principle of
“justice at the doorstep”.
3. State Lok Adalat
State Lok Adalats operate at the state level and focus on resolving disputes that are pending
before various courts within the jurisdiction of the respective state. These adalats are organized
by the State Legal Services Authorities (SLSA) and serve as an alternative forum for litigants
to seek resolution.
4. Mega Lok Adalat
Mega Lok Adalat is an extended version of the National Lok Adalat. It mainly aim to address
a large number of cases pending in various courts and tribunals within a specific jurisdiction.
The Mega Lok Adalat brings together multiple Lok Adalats, including Permanent Lok Adalats,
to handle a substantial volume of cases on a single day.
5. Mobile Lok Adalat
The Mobile Lok Adalat is a very progressive concept that takes the Lok Adalat system to the
doorstep of the interested litigants. It involves the establishment of temporary Lok Adalat. It
centres in the different locations to cater to the needs of people who may face challenges in
accessing regular courts. The Mobile Lok Adalat plays very important role to reach out the
remote areas for ensuring easy access to justice for all irrespective of their geographical
location.
6. Special Lok Adalats
Special Lok Adalats are organized to deal with specific categories of cases tailoring the
approach to meet their unique requirements. These adalats address matters such as motor
vehicle accident claims, land acquisition disputes and family matters etc. By focusing on
specific types of cases Special Lok Adalats streamline the resolution process ensuring
specialized attention and timely justice.
Lok Adalat under Legal Services Authority Act, 1987
Section 19 of the Act provides for the establishment of Lok Adalats. Legal service authorities
at all levels, including the central, state, and district levels, shall hold Lok Adalats. Lok Adalats
serve as an alternate dispute resolution system. Their purpose is to settle cases that are pending
or that have not been heard in the courts. It consists of judicial officers or an authorized person
under the jurisdiction of the state, central government, or local government. Following the
conciliation of disputes between the parties and the agreement of the parties, the award is
handed down by conciliators in accordance with Section 21 of the Act. The award has the same
legal effect as a court decision.
Scope of Lok Adalat
Unlike the Supreme Court, Lok Adalat is extremely broad to incorporate most of the cases
pending before it as well as new cases that will be filed in the near future to be settled. The Lok
Adalat does not have jurisdiction over cases relating to offences that cannot be compounded
under any law. The Lok Sabha does not refer such matters to committees without giving the
other party a reasonable opportunity to be heard. The Lok Adalat proceeds to resolve any case
referred to it and tries to negotiate a mutually acceptable outcome between the parties involved
with the case. Whenever a Lok Adalat decides a case before it, it adopts the most extreme
efforts for a trade-off or settlement. The following points elaborate on the scope of Lok Adalats:
• If no settlement or compromise is reached by the parties after the Lok Adalat passes, no order
is given.
• A reference will be sent automatically to the Court that drew up the reference for disposition.
Those involved in the dispute are urged to seek redressal in courts.
• If the terms proposed by the bench do not satisfy the parties, the Lok Adalat cannot be forced
to compromise or reach a settlement. Orders from Lok Adalats are definitive and restrict the
parties.
• An order passed by a judge is a satisfactory means of stopping the proceedings that demand
justice.
• Lok Adalats have enough powers under the Act to make justice without compromising the
quality of their awards. The Lok Adalat's final order is considered judicial since it is given the
status of a decree.
• A Civil Court recognizes it as a form of evidence and is given the power to summon, discover,
and get an affirmation.
Functions of Lok Adalat
The following are the functions of Lok Adalat:
• Lok Adalat members should be impartial and fair to the parties.
• Lok Adalat is responsible for handling pending cases in court. In the case of a Lok Adalat
settlement, the court fee paid to the court on the petition will be reimbursed
• When filing a dispute with Lok Adalat, you do not have to pay a court fee.
Permanent Lok Adalat
Unlike any other courts or tribunals, Permanent Lok Adalats works on a regular basis for
permanent dispute resolution. However, the Legal Services Authorities Act was amended in the
year 2002 and the chapter pertaining to Permanent Lok Adalats was inserted.
The jurisdiction of the Permanent Lok Adalats can only be invoked at pre-litigation stage by
making an application to the Permanent Lok Adalat for the settlement of the dispute. Once, the
jurisdiction has been invoked, the parties cannot take a recourse before a court of law. However,
the jurisdiction of Permanent Lok Adalats does not relate to any non-compoundable offence or
where the value of the property in dispute exceeds Ten Lakhs. Permanent Lok Adalats cannot
take cognizance of a matter which is already sub-judice in a court of law.
A permanent Lok Adalat can direct the parties to produce any sort of evidence or any other
documents, if the case requires to be before it while conduction a conciliation proceeding. It
also must follow the principles of natural justice, fair play and equity, and is not bound by the
Code of Civil Procedure, 1908 and The Indian Evidence Act, 1872.
Where the parties reach an agreement on the settlement of the dispute, they have to sign the
settlement agreement and the Permanent Lok Adalat then passes an award in terms thereof and
must furnish a copy of the agreement to each of the parties concerned. The idea of a Lok Adalat
and a permanent Lok Adalat clearly differs here. Where the parties fail to reach a settlement or
if the dispute does not relate to any offence, then the matter is decided based upon the merits
of the case. Thus, Permanent Lok Adalats have a residuary jurisdiction, in addition to the
jurisdiction enjoyed by the Lok-Adalats, to decide the dispute by virtue of Section 22 C (8),
even if the parties have failed to resolve the dispute after conciliation.
The award of a permanent Lok Adalat is final and binding upon the parties and on every such
person claiming under them and the same is deemed to be a degree of a civil court. No appeal
lies against the judgement of the Permanent Lok Adalat and hence, the award is final. The
award shall, however, be made by a majority of the members constituting the Permanent Lok
Adalat.
Permanent Lok Adalat as an ADR Mechanism
The classification of the Permanent Lok Adalats as an ADR mechanism has always been in
question and much clarification hasn't been provided with respect to it. In State of Punjab v.
Jalour Singh. The Supreme Court held that such type of Lok Adalats only have a conciliatory
role and the award of the Lok Adalats does not mean and imply any form of an independent
verdict or an opinion derived out of the decision-making process.
The second question that comes within the ambit of questioning is whether the concept of Lok
Adalats co-exists with this judgement of the Supreme Court. In State of Punjab v. Jalour Singh,
the Supreme Court was dealing with an issue involving a Lok Adalat within the definition and
the ambit of Sections 19, 20, 21 and 22 of the Legal Services Authorities Act, 1987. The
Permanent Lok Adalats in contradistinction to Lok Adalats have been expressly conferred as
an adjudicatory role by the statute. When a matter, at a Permanent Lok Adalat cannot be settled
by means of conciliation, it is then statutorily enjoined to decide the dispute of its merit.
Therefore, the judgement laid down in the said case, does not apply with Permanent Lok
Adalats as because the court was not at all considering the provision as enshrined under Section
22 C (8) of the Legal Services Authorities Act, 1987.
Moreover, as soon as the amendments were made to the Legal Services Authorities Act, 1987,
they were challenged, but were upheld by the Supreme Court of India.
Hence, it is said that the dispute resolution through the system of Permanent Lok Adalats is an
ADR mechanism which is hybrid in nature, and has both adjudicatory and non-adjudicatory
trappings that offers a substitute to conventional system of litigation and makes the public free
from the system of complexity and rigidity. A permanent Lok Adalat is a special tribunal which
is not a court and its decision is not subjected to successive appeals.
Conclusion
The Permanent Lok Adalats have similar benefits to that of a normal Lok Adalat and they suffer
from the same disadvantages as well. However, the permanent Lok Adalats functions
continuously and they require an additional and a separate expenditure. They provide us with
an additional state-owned conciliation mechanism with the capacity and the time to deal with
a much greater number of complex cases than that of the ordinary Lok Adalats.

Q.8 Explain the special features of Geneva Convention?

Ans: Alternate Dispute Resolution is a new mechanism for dispute resolution. It has gained a
worldwide support of various nations as a mechanism for the settlement of disputes of
commercial nature. This mechanism is used when the dispute arises during the course of trade,
business, commerce etc. at both national and international level. The most reliable method is
arbitration. There are various international treaties or Convention on the arbitration mechanism
so that the award can be recognized, implemented or executed in the foreign lands and also for
the administration of foreign awards in India. But the first ever formal document on the foreign
arbitration award enforcement was the Geneva Convention of 1927 which was drafted and
made by the League of Nation. It was signed at Geneva, Switzerland on 26 Sept 1927. The law
on arbitration in India i.e., the Arbitration and conciliation Act, 1996 includes the guidelines
for the implementation of Geneva Convention award under part 2, chapter 2.
The provisions of foreign arbitration award enforcement which are given under the Indian law
of arbitration are same as those which are provided by the Geneva Convention on
implementation of foreign arbitral award of 1927 because the Geneva Convention itself
includes the procedure for implementation of foreign arbitral award which is given merely a
statutory recognition through the enabling legislation of India called The Arbitration &
Conciliation Act, 1996. Although the Geneva Convention of 1927 along with its Protocol of
Arbitration clauses (GPAC) of 1923 was replaced by the New York Convention, 1958 but it
still stands valid under the Indian law along with the New York Convention as there are many
nations which are not the party to the modern Convention.
Presently, the commercial transactions take place between almost every country. Every nation
is engaged in some trade or business with the other nation. While doing these commercial
businesses, dispute may arise between the parties. But as the dispute resolution through the
court procedure takes time and is not cost-efficient, the international community came up with
an alternate method called Arbitration. Any dispute of commercial nature, which arises between
2 different nations, was dealt by the method of arbitration. But the problem arose during the
administration of the arbitral award in the other country due to the difference of laws. This
made it difficult for the decree holder to get the fruit of his decree. To solve this administration
problem of foreign arbitral award, the international community drafted some treaties.
During that time, the league of nation came up and drafted a Geneva protocol and convention
on the implementation of the foreign arbitration award. It was then signed by many nations
who were at that time also, the party to the League of Nations. It laid down the course of action
for implementation of overseas arbitral award. This Convention made administration of the
external arbitral award, easy & smooth. As India was party to that convention, and has signed
it, the Convention applies to it also.
The current Indian law on arbitration proceedings i.e., the Arbitration and Conciliation Act,
1996 includes the provisions of Geneva Convention under Part 2, Chapter 2, under section 53
to 60. These sections include the procedure for implementation of the foreign arbitral award
and the particulars which must be submitted in the court for the enforcement. This also lay
down the grounds on which the court may ignore the enforcement. The arbitral award given
under the submission to arbitration, made in accordance with the Geneva Convention may be
administered in any of the countries which are a party to the Convention. The arbitral award
can be easily administered in nations which are signatory to it. But there were several issues
which arose during the award administration under this; therefore it was replaced by the New
York Convention of 1958 which is the most successful treaty on foreign award administration
till.
Geneva Convention of 1927
It is also called Convention on the execution of Foreign Arbitral Awards and was signed at
Geneva, Switzerland on 26 September 1927. It draws out the standard and policy for the
implementation of arbitral award given by a foreign tribunal by domestic courts. It comprises
of 11 articles. The convention is applicable only on the arbitral awards pronounced after
coming into force of GPAC, 1923. This convention was adopted and accepted by the League
of Nations. It came into force after 3 months from the date of its ratification by the 2 high
contracting parties. The important articles of this convention are:
Article 1: it talks about the application of this convention on the parties. It says that any arbitral
award made in performance of any agreement to which this convention applies and is covered
by the GPAC, 1923, relating to present or future disputes will be irrevocable or conclusive on
both the high contracting parties and is recognized and enforceable in their territories (subject
to the condition that the territories of those high contracting parties are signatory of this
convention).

Article 2: this provides for the ground for ignorance of administration of the arbitral award. It
says that even if the circumstances laid down in article 1 are completed, the court, if satisfied,
may ignore the administration of the award.

Article 3: the court may also either, ignore the administration of the arbitral award or may
adjourn its deliberation, if the party against whom such award has been passed proves that
under the laws dealing with the arbitration procedure, there exist some other grounds other than
those mentioned in Art. 1(a) and (c) and Art. 2(b) and (c), which entitles it to question the
viability of that arbitral award in the court of law, giving him reasonable time in which the
award may be annulled by capable and qualified power or officials.

Article 5: it says that the rules of article 1, 2, 3 and 4 will not deprive any party interested in
litigation of his right of utilizing an arbitral award for himself to the extent and in the manner
permitted by law of the nation where such award is sought to depend upon.

Enforcement of Geneva Convention awards in India

Any arbitral award passed by any foreign tribunal is administered by the Arbitration and
Conciliation Act, 1996 which is the prime legislation in India for such awards. One of the main
objectives of this act is the enforcement of the arbitral award determined by any foreign court
in the same mode as a decree or award determined by any Indian court. It has 2 parts; Part 1
deals with the administration of the arbitral awards not shielded by the New York Convention
or Geneva Convention while part 2 contains the provisions of the New York Convention. But
this part 2, under chapter 2 contains the provisions for the administration of the awards under
the Geneva Convention in the same manner as in the New York Convention. Part 2 of the act
is applicable only for the implementation of those arbitral awards which are passed in the
accordance with an arbitration agreement under the New York or Geneva Convention.

Sections 53 to 60 of the act deals with the provisions regarding the foreign awards passed under
the Geneva Convention of 1927. According to the Convention, an arbitral award is considered
as a foreign award if it is made on the distinctions relating to the matters which are considered
as commercial under the law in force in India made after 28 July, 1924-

Section 55 of the act says that the award which is administrable under this chapter shall be
irrevocable on the part of the parties of arbitration and can be used by them as defence, set off
or otherwise in any of the legal proceedings in India.

Section 56 talks about evidence which are to be given to court by the party asking the
implementation of foreign arbitral award. This section says that the party which is requesting
for implementation of any foreign arbitral award shall produce before court, at the time of
presentation of application, the following particulars:-

1. Actual award or its aptly certified or validated copy

2. Evidences to prove that the award has become irrevocable and
3. Evidences proving that the arbitral award is constructed in accordance with the
submission to arbitration, which is reasonable as per the law relevant on such
submissions and that the award is made by that arbitral tribunal which is constituted by
the mutual agreement of parties or under the submission to arbitration and is in
accordance with law dealing with arbitration

According to the new act, the enforcement application of foreign arbitral award shall only be
made to the High Court.

Section 57 of the act provides for the conditions for implementation of any foreign arbitral
award given under the Geneva Convention. Any foreign arbitral award made under the
convention may be implemented in India if the given requisites are fulfilled:

1. Arbitral award is made after following the submission to arbitration which is reasonable
as per the law relevant to it;
2. The content on which the award is built is of such nature that it can be settled under the
law of arbitration of India;
3. The arbitral award is made by that arbitral tribunal which is constituted by the mutual
agreement of the parties or under the submission to arbitration and is in accordance
with the law dealing with the arbitration
4. The award which has been made by the tribunal is final in the nation where it was made
in the way that no appeal or opposition can be considered against it or if it is proved
that any legal proceeding regarding the viability of such award is awaiting;
5. The administration of that arbitral award is not against the public order.

Special Features Under the Arbitration and Conciliation Act, 1996 Related to the
Geneva Convention

The Arbitration and Conciliation Act, 1996 consolidates various international principles,
including those from the Geneva Protocol (1923) and the Geneva Convention (1927),
which governed international arbitration before the New York Convention (1958) took
precedence. Some key features include:

Recognition of Geneva Convention Awards

Part II, Chapter II of the Arbitration and Conciliation Act, 1996, deals with the enforcement
of foreign awards under the Geneva Convention, although it primarily focuses on the New
York Convention.

Awards made in Geneva Convention signatory countries can still be enforced if they meet
the prescribed criteria.

Conditions for Enforcement

Under Section 53 of the Act, foreign awards under the Geneva Convention can be enforced
in India if:

The award was made in pursuance of a valid arbitration agreement.

The dispute was arbitrable under the law of the country where the arbitration took place

The award is final under the governing law.

Grounds for Refusal of Enforcement

Similar to the New York Convention, the enforcement of Geneva Convention-based awards
can be refused under Section 57 of the Act if:

The arbitration agreement was invalid.

The award exceeded the scope of the arbitration agreement.

The award was not binding or was set aside by a competent authority.

Harmonization with International Law

The Act follows a pro-enforcement bias, meaning it supports the recognition and execution
of valid arbitral awards, including those made under earlier Geneva Convention
frameworks.

It aligns India with international arbitration norms, ensuring compliance with historical and
modern treaties.

Limited Practical Relevance

In practice, the New York Convention (1958) has largely replaced the Geneva Convention
(1927) for the enforcement of foreign arbitral awards.

However, the Geneva Convention provisions under Part II, Chapter II of the Arbitration
and Conciliation Act, 1996, still apply to awards from non-New York Convention
countries.

Conclusion

The Geneva Convention on implementation of foreign award was the first ever formal
document on the administration of foreign arbitration award which was drafted by the
League of Nations. The Convention gives the procedure and conditions for the
administration of overseas arbitral award in nation to which the decree holder lives or
carries business. But the Geneva Protocol on Arbitration Clauses, 1923 and the Convention
on implementation of foreign arbitral award of 1927 was replaced, as a result of
dissatisfaction, by the New York Convention of 1958. The action to replace these Geneva
Convention treaties was taken up by the ICC which was taken over by the United Nations
ECOSOC. The reason for the criticism of Geneva Convention was that it was difficult for
the party asking for the administration of award in 1 nation to prove that the tribunal was
formed following the law of the other nation and that in that nation, the award has become
final. Also the grounds which were provided for questioning the viability of the award made
it easy for the defendant to avoid its enforcement. This made the ICC to come up with a
proposal for its replacement with a convention which recognizes as well as enforces the
award given by a foreign tribunal. The New York Convention has become the most
successful treaty for arbitration award and has been signed by more than 140 nations. But
the Arbitration act of India still hold the provisions regarding the Geneva Convention
because India was a signatory to the it also, besides the New York Convention of 1958.
The provisions of the Geneva and New York Conventions are almost same because the
New York convention has taken some of its provisions from the Geneva Convention only.
But the latest Convention contains more clear and specific provisions and is signed by
almost every country of the world. It’s the New York Convention only under which,
presently all the agreements are made and awards are given. All the arbitral awards are
administered either under New York Convention or under UNCITRAL model law.

Q.9 State the procedure for setting aside an arbitral award?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
11. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
12. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
13. Conciliation – Similar to mediation but with a more active role for the conciliator.
14. Negotiation – Direct discussions between parties to reach a settlement.
15. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Award
According to Section 2(1)(c) of the 1996 Act an arbitral award includes an interim award. As a
preventive measure and at the request of the party an arbitrator can issue an interim order or
award regarding the dispute. Interim orders are orders that are valid only during the arbitration
process, mandating the party to refrain from doing some actions that may fall counter to or
harm the other party's interest. Such an order is passed in the form of an interim injunction.
Unlike a usual interim measure, an interim award under the 1996 Act forms a part of the final
award, that is binding on the parties involved. An interim award is granted after a thorough
hearing, encompassing the accepted interim measures.
However, once the arbitration proceedings have been completed, the arbitral tribunal grants an
arbitral/arbitration award, as the final award. An arbitral award can be monetary or non-
monetary. It can be monetary which is made for payment of a sum of money from one party to
the other and it can be non-monetary when no money needs to be paid, but it includes decisions
like stopping a certain business practice or increasing unemployment perks and incentives.
An arbitral award is the final decision given by the Arbitral Tribunal to resolve a dispute. It is
similar to a court judgment but is given by an arbitrator instead of a judge. The award is issued
after all parties have had a fair chance to present their case, provide evidence, and make
arguments.
For an award to be held valid, it must fulfil two conditions. Firstly it should be certain, meaning
that it should be clear, definite, and unambiguous in terms of the decision made with regard to
the rights of the parties. Secondly, it must contain a decision. An award without a valid decision
or unclear decision on every issue raised before the arbitral tribunal shall be considered invalid.
In addition to fulfilling these conditions, an award must bear the signature of an arbitrator. It
must also contain specific reasons for the decision made in an award regarding the particular
case. The award should not leave any room for confusion and must clearly outline the duties
and liabilities imposed on the parties. An award must deal with every aspect of the issue that is
a matter of concern between the parties, giving a clear and final decision on every such aspect
of the issue.
The form and content of an arbitral award are regulated by Section 31 of the Arbitration and
Conciliation Act, 1996. This section ensures that the award is made in writing, signed by the
arbitrators, and includes reasons for the decision (unless the parties agree otherwise). It also
mentions details such as the date and place of arbitration. The award is final and binding,
meaning that both parties must follow its terms, just like a court ruling. This process ensures
fairness, transparency, and enforceability in arbitration.
The following are the fundamental parts of a legitimate Award, as determined by a cursory
perusal of this Section:
• The Award shall be made in writing.
• Award must be signed by all the members of the panel.
• Award should be describe the reasons for its existence.
• The date of award should be stated.
• The award shall identify the location.
• An interim award can also be given under Section 17.
• After the Award is made each party should receive a signed copy.
• The Award may be made without stating any grounds if the parties agree, Giving reason
for the award is not required in the case of a settlement.
• Award as may be justified. Any such correction, interpretation of award and additional
award shall form as a part of the final award.
• An Award becomes final either upon expiry of the period provided under the statute to
challenge the Award or if challenged, after the final decisions on such challenges.
Setting aside the Arbitral Award
The 1996 Act is underpinned by two core provisions aimed at ensuring the efficiency and
effectiveness of arbitration proceedings: firstly, the principle of Minimum Judicial Interference,
which emphasises limited court intervention; and secondly, the principles of Finality and
Enforcement of Awards, which emphasise the conclusive nature of arbitral decisions and the
mechanisms for their enforcement. Therefore, when two parties enter into an arbitration
agreement as outlined in Section 7 of the 1996 Act, they mutually commit to abiding by the
terms of the agreement and if in the event of a future dispute where arbitration is chosen as the
resolution method, the decision rendered by the arbitrator becomes conclusive and obligatory
for both parties.
However, instances may arise where either one party or both parties express dissatisfaction
with the decision reached through arbitration. In such circumstances, the 1996 Act provides a
recourse. The 1996 Act delineates specific grounds upon which parties can file an application
in the court for setting aside such an award.
It is important to note that an application for setting aside an arbitral award has to be made in
an appropriate court having jurisdiction on such matters. According to Section 2(1) (e) (i) of
the 1996 Act, an application for setting aside an arbitral award rendered in an arbitration other
than an international commercial arbitration must be submitted to either a District Court,
specifically the principal Civil Court of original jurisdiction, or to the High Court with ordinary
original civil jurisdiction. This High Court should have the authority to adjudicate on the issues
central to the arbitration proceedings.
In the case of an arbitral award in an international commercial arbitration, the application to
set aside the award must be submitted to the High Court with ordinary civil jurisdiction.
According to Section 2(1)(e) (ii) of the 1996 Act, the High Court should have authority to
decide on the issues central to the arbitration or, in alternative situations, possess jurisdiction
to hear appeals from lower court decrees. The Section further states that If a commercial
division exists within the high court under the Commercial Courts Act, the application will be
addressed and resolved by this specialised division.
Procedure for setting aside an Arbitral Award
The jurisdiction of the court is generally barred from an arbitration proceeding. However, there
are circumstances wherein the court can interfere to ascertain the proper conduct of the
arbitration proceeding. For this purpose, certain remedies are provided under the 1996 Act
against the arbitral award issued by an arbitrator. Under the provisions contained in the 1996
Act, an aggrieved party may approach a court to set aside an arbitral award on the presence of
certain grounds provided under Section 34 of the 1996 Act.
Any party to an agreement who wants to challenge an arbitral award passed by an arbitrator
needs to file an application for setting aside an award. The procedure for filing such an
application is provided under the provisions contained in Section 34 of the 1996 Act. In
accordance with Section 34(3) of the 1996 Act, a party desiring to challenge a domestic arbitral
award has to file an application within the period of 3 months from the date of the receipt of an
award or the disposition of the request seeking rectification as per Section 33, whatever occurs
later. Prior to filling out an application, the party is required to issue the notice to the other
party and file an affidavit, which confirms that they have complied with Section 34(5) of the
1996 Act.
After an application has been presented to the court, the applicant needs to convince the court
that the grounds on the basis of which an award is challenged are just in order to set aside the
arbitral award. Once the judge is satisfied, a notice is released requiring the other party to
respond. Upon the completion of the pleadings, the court takes oral arguments to ensure that
the grounds outlined in Subsection (2) and (2A) of Section 34 are fulfilled. Based on this, the
court can either set aside the award or simply refuse the application. Usually, the court doesn't
reevaluate the evidence examined by the arbitral tribunal, which is why witness cross-
examination is often a rarity.
The application to set aside a domestic arbitral award must be determined expeditiously and at
the earliest opportunity, nominally within a year by virtue of Section 34(6) of the 1996 Act.
However, the Supreme Court clarified that this requirement is a directive, not mandatory.
With respect to a foreign award, the award debtor must wait for execution of the award under
Section 47 read with Section 49 of the 1996 Act. Then, the debtor can object to the award under
Section 48. The proceedings involve completing pleadings and oral arguments, similar to
domestic awards. However, the enforcement court in India can only refuse to enforce the
foreign award. It has no jurisdiction or authority to set it aside.
Whenever an application for setting aside an arbitral award is filed before an appropriate court,
such court can have the authority to set aside an arbitral award only when the grounds
mentioned under Section 34 are present and not otherwise.
Grounds for setting aside an Arbitral Award
Section 34 of the 1996 Act provides the provisions of certain specific grounds on the basis of
which an arbitral award rendered in India can be set aside. They are-
1. Incapacity of a party while making an application to enter the agreement.
2. Arbitration agreement not being valid under the law.
3. Parties were not given proper notice of the appointed Arbitrators or the Arbitral Tribunal.
4. Nature of dispute not capable of settlement by arbitration.
5. The composition of the arbitral award was not in accordance with the agreement of the
parties.
6. The arbitral award is in violation of the public policy of a state.
7. The arbitral award deals with a dispute not falling within the terms of submissions to an
arbitration.
Limitation for filing an application to set aside an arbitral award
Section 34(3) provides the limitation period for filing an application to set aside an arbitration
order. It states that an appeal to set aside an arbitration order by an aggrieved party has to be
strictly made within the period of 3 months from the date of receipt of the same. The importance
of this is set out by Section 36 which asserts that the award becomes enforceable as soon as the
limitation period under Section 34 expires. Under Section 33, the Court may, however, allow a
delay of 30 days on a request made by the aggrieved party if the court is satisfied with the
evidence of sufficient cause.
Case Law
NHAI vs. Trichy Thanjavur Expressway Ltd. (2023)
The Delhi High Court in the recent case of NHAI v. Trichy Thanjavur Expressway Ltd. (2023)
("NHAI case") provides the difference between modification and partial setting aside of an
award. Such an analysis by the court clarifies that the decision given in the case of NHAI v.
Hakeem & Anr. (2021) does not serve as an authority on the matters related to the partial setting
aside of an award.
The court also put some light on the purpose and scope of Section 34(4) clarifying that this
section aims to ensure defects in the awards without reassessing past findings. Thereby
ensuring a limited opportunity for rectification while preserving the overall integrity of the
award.
Background of the case
The Delhi High Court in the NHAI case was approached to decide upon the court's authority
to partially set aside an arbitral award under Section 34 of the 1996 Act.
The case is based on the legal principle established in NHAI v. In Hakeem & Ors.(2021)
("Hakeem case"). The Supreme Court in this case, clarified that the authority of the court to set
aside an arbitral award under Sectio 34 of the 1996 Act does not mean that the court also has
the authority to change and amend the award that was granted by the arbitral tribunal. In the
Hakeem case, the principal point of interest was the judgment of the District and Sessions Judge
to increase compensation awarded by the arbitrator in an award. In its decision, the Supreme
Court underlined the fact that if defects or gaps were found in the award or ground provided
under Section 34 were identified, setting aside an award is the only option available, as opposed
to modification which is not expressly provided in the 1996 Act. This leads to a crucial question
as to whether decisions made in the Hakeem case also prohibit the court from partially setting
aside the award.
As per the provisions contained in the proviso to Section 34(2)(a) (iv), the court has the
authority to partially set aside an award, provided that the matter that is submitted to the
arbitrator for the resolution is severed from the matters that is not submitted. Only those matters
forming part of an award that are not submitted to arbitration may be set aside.
The Delhi High Court, aligning its judgment with the said provision, has cleared the confusion
posed by the Hakeem case on the issue of the court's authority to partially setting aside an
award.
Conclusion
India has a modern and efficient Arbitration Act. Sections 34 and 37 provide for recourse
against an arbitral award which may be set aside by a court on certain specified grounds. All
these grounds are common to both domestic as well as international arbitral awards. The ground
of public policy should only be interpreted as far as it aims towards broadening the public
interest and not violating the basic notions of Indian laws. The judicial intervention should also
be minimal for success and further promotion of Arbitration in India.

Q.10 When arbitral award can be set aside?

Ans: Brief Question No. 9 is similar refer that for question No 10

Q.12 Write in detail about arbitration?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
It is defined under Section 2 (1)(a) of the Act. It is an alternative to litigation in courts and is
advantageous as it provides flexibility and confidentiality. According to Black Law Dictionary,
it means a method of resolving disputes which includes two parties and a neutral third party
whose decision is binding on both parties.
Section 8 of the Act talks about the powers of any judicial authority to refer a case to arbitration.
It must be followed by an arbitration agreement. The Hon'ble Supreme Court in the case of P.
Anand Gajapati Raju v. P.V.G Raju (2000) gave certain requirements necessary for referring
parties to arbitration:
• An arbitration agreement must be there.
• A party must bring an action in court against others.
• The subject matter must be the same as in arbitration.
• One party demands arbitration in court.
Types of Arbitration
1. Domestic arbitration - It means that the proceedings of arbitration will take place as per
Indian laws and be subject to Indian jurisdiction.
2. International and commercial arbitration - This is done in cases involving disputes out of a
legal relationship where one of the parties is a foreign national, body corporate in some other
country, a company or group which is under the control of some other country and government
of a foreign country.
3. Institutional arbitration - It is administered by arbitration institutions like the Indian Council
of Arbitration, the International Centre for Alternative Dispute Resolution (ICADR) etc.
4. Statutory arbitration - some acts provide for the resolution of disputes by arbitration. In case
there is any inconsistency between any Act and Part I of the Arbitration Act then the provisions
given in that Act will prevail.
5. Ad hoc arbitration - It means an arbitration where parties agree without any assistance from
the Arbitral tribunal.
6. Fast track arbitration - It is also called documentary arbitration. The arbitration proceedings
are very fast and time-saving. It is solely based on the claim statement by one party and its
written reply by another.
Advantages of arbitration
• A person appointed as arbitrator is based on the whims of the parties.
• If parties agree only then an arbitral tribunal is taken into matter.
• It is inexpensive and saves time.
• It ensures a fair trial.
• Gives freedom to the parties from judicial intervention.
• Parties choose the place of arbitration themselves (Section 20).
• The proceedings are kept private and confidentiality is maintained.
• The arbitral award is enforced in the same way a decree of the court is enforced.
Disadvantages of arbitration
• It does not always guarantee an expeditious resolution.
• The procedure is at times uncertain.
• It cannot give remedies like punishment, imprisonment, injunction, etc. which are given in
courts.
• Due to flexibility, it is ineffective.
• The method cannot be easily used in disputes involving multiple parties.
Cases not referred to arbitration
Generally, cases of civil rights where the remedy is the damages are referred to arbitration but
Section 2(3) of the Act gives the list of such cases which cannot be submitted to arbitration.
These are:
• Winding up proceedings of any company. (Haryana Telecom Ltd. v. Sterlite Industries (1999);
• Disputes that have to be determined by any particular tribunal as the law may provide;
• Proceedings related to insolvency;
• Probate proceedings;
• Question of will and genuineness;
• Guardianship matters;
• Succession disputes;
• Disputes related to immovable property;
• Illegal transaction cases;
• Proceeding under Section 164 of the Bharatiya Nagarik Suraksha Sanhita; and
• A criminal case cannot be referred to arbitration.
Arbitral tribunals
Composition of tribunals
It is the creation of an agreement which conforms with the law. Section 10 of the Act enables
the parties to determine freely the number of arbitrators to settle their dispute. The only
restriction is that the number of such arbitrators must not be even. If the parties are not able to
decide then there will be only 1 arbitrator. But if there are even number of arbitrators then the
agreement cannot be held invalid merely on this ground.
Procedure for appointment of arbitrators
Further, Section 11 of the Act provides the procedure for the appointment of arbitrators.
The valid requirements for any such appointment are:
• Party must give proper notice of appointment to the other party. If it does not do so, the
appointment is held invalid.
• A person appointed as an arbitrator must be duly informed and his consent must be taken.
• The consent must be obtained before finalising his appointment.
It also says that if the parties fail to appoint an arbitrator within 30 days of the request or if two
arbitrators are appointed and not the third one, then the appointment will be made by Chief
Justice or any person on his behalf designated by him but with the prior request of the parties.
Termination of arbitrator
The grounds for termination are given under Section 14 and Section 15 of the Act. These are:
• If he is not able to perform his functions without undue delay (whether de jure or de facto),
• If he withdraws or is terminated by the parties,
• He shall be terminated where he withdraws himself or by agreement of the parties.
• On his termination, a substitute arbitrator will be appointed as per Section 15.
Jurisdiction
Section 16 of the Act provides that the tribunal will act in its jurisdiction. If the arbitral tribunal
has no jurisdiction then a plea will be raised but not later than when the statement of defence
is submitted. It also provides that in case a party is not satisfied with the arbitral award, it can
make an application to set it aside according to Section 34 of the Act. The Supreme Court in
the case of Centrotrade Minerals and Metals v. Hindustan Copper Ltd. (2006), held that any
issue related to the jurisdiction can be raised by people in the proceedings or anyone from
outside. But if it is made by the party then it must be done during the proceedings or at the
initial stage.
Arbitral award
It is a final determination of a claim or a part of it or a counter-claim awarded by the arbitral
tribunal. It must be written and duly signed by the members of the arbitral tribunal as given
under Section 31 of the Act. The Section further gives the power to the tribunal to make interim
awards for any matter. In case of payment of money, it can award the interest which seems
reasonable, just and fair to the tribunal.
Section 32 of the Act empowers the arbitral tribunal to terminate the proceedings by making a
final arbitral award. The procedure for any correction in the award or its interpretation is given
under Section 33 of the Act. It also gives the power to the tribunal or the arbitrator to amend,
correct or remove any errors of any kind within 30 days but is silent on judicial review. The
tribunals cannot exercise their jurisdiction beyond whatever has been mentioned in this section.
Types of arbitral awards
1. Interim award - It is the determination of any issue arising out of the main dispute. It is a
temporary arrangement to satisfy a party and is subject to the final award.
2. Additional award - According to Section 33 of the Act, if the parties find that certain claims
have been missed out by the arbitral tribunal and they were present in the proceedings then it
can after notifying other parties, make a request to the arbitral tribunal to make an additional
award and cover the claims which have been left.
3. Settlement awards - It is made if the parties agree on certain terms of the settlement. As per
Section 30 of the Act, the arbitral tribunal may use any method of dispute resolution like
mediation, conciliation or negotiation to bring a settlement between the parties.
4. Final award - It is an award which finally determines all the issues in a dispute. It is
conclusive unless set aside by courts and binding on the parties.
Recourse against arbitral awards
Under Section 34 of the Act, a party if not satisfied can make an application to set aside the
award granted by an arbitral tribunal. The time limit to make such an application is not more
than 3 months from the date the arbitral award was made. The grounds are:
• Incapacity of parties.
• Non-existence of the agreement of arbitration.
• Did not follow the due process.
• Error on the part of the arbitral tribunal to exercise its jurisdiction.
• Improper composition of the arbitral tribunal.
• The subject matter is not capable of being referred to arbitration.
• It is against public policy.
• Fraud or corruption.
Section 37 of the Act provides that if a person is not satisfied with the order passed by the
tribunal, he/she can appeal to the court. However, there are no provisions for a second appeal
once an appeal has been made. In the case of Pandey and Co. Builders Pvt. Ltd. v. State of
Bihar (2007), it was held that the appellate authority in any case which is referred to arbitration
must be decided from the definition of court given under Section 2 of the Act
Foreign awards (Part II)
Foreign awards are given in the disputes arising out of some legal relations which can either
be contractual or not and are considered under any commercial law of the country. In simple
terms, it means the awards given in International commercial arbitration. Foreign awards are
granted in foreign countries and are enforceable in India under the Act. It is divided into two
chapters:
• The New York Convention (1958)
• The Geneva Convention (1927)
The foreign award related to the New York Convention is given under Section 44 of the Act
and that related to the Geneva Convention under Section 53 of the Act. The conditions to
enforce these awards in the country are given under Section 48 and Section 57 of the Act
respectively.
Case Law
Indus Biotech Pvt Ltd. Vs Kotak India Venture Fund (2021)
Facts of the case
Indus Biotech issued some preference shares which are convertible at the option to funds of
Kotak India. A clause was added in the agreement of shareholders but they could not agree on
how to convert these shares into paid-up equity shares. As a result, Kotak India filed an
application when the other party failed to redeem those shares.
Issue involved in the case
Whether the subject matter of the dispute falls in those that could be referred to arbitration if
the case is pending in NCLT?
Judgement of the Court
The Supreme Court opined that the case cannot be referred to arbitration if the process is in
rem. It further stated that if any proceedings are pending before NCLT under Section 7 of IBC,
then any application under the Arbitration and Conciliation Act, 1996 will not be entertained.
In the instant case, the Supreme Court held that the decision of NCLT was reasonable and the
case (Indus Biotech Pvt. Ltd. v. Kotak India Venture Fund, 2021) was successfully referred to
an arbitral tribunal.
Conclusion
The Act deals with alternate dispute resolution methods which are effective, cost-friendly, and
time-saving. Due to the pendency of cases and rigid procedural laws of the courts and to prevent
litigation, people nowadays generally prefer settling a dispute outside the courts with the help
of ADRs like arbitration, conciliation, mediation etc. The Act provides the procedure to be
followed in arbitration proceedings, arbitral tribunal, the conduct of the tribunal along with the
arbitral awards to be made in a dispute. The decision is binding on the parties and given in the
form of an arbitral award in an arbitration agreement. It also prescribes the procedure of appeal
to courts in case of discrepancies.
Q.13 Discuss briefly provisions governing conduct of arbitral proceedings?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Proceedings
Arbitral proceedings refer to the step-by-step process followed by an Arbitral Tribunal to
resolve a dispute between parties through arbitration. These proceedings are designed to be
faster, more flexible, and less formal than court trials. The process begins when the parties
agree to resolve their dispute through arbitration, either as per a prior agreement (arbitration
clause in a contract) or by mutual consent after a dispute arises.
The arbitration process officially starts when a party sends a notice of arbitration to the other
party. The parties then appoint an arbitrator or a panel of arbitrators. Once the Arbitral Tribunal
is formed, it conducts hearings where both parties present their arguments, evidence, and
witnesses. The tribunal ensures that the proceedings are conducted fairly and impartially. It has
the power to make procedural decisions, such as setting deadlines, deciding on the admission
of evidence, and granting interim relief if necessary. After hearing both sides, the tribunal
delivers a final decision, known as an arbitral award, which is legally binding and enforceable
like a court judgment.
Arbitrator
The role of an arbitrator is to resolve disputes that the parties have in agreement to submit
to arbitration. The decisions of the arbitrator require a document subject to certain formalities,
and referred to as the arbitral award. The content and form of an arbitral award, and also the
discretion enjoyed by arbitrators in creating an award can essentially vary according to the
procedural law applicable to the arbitral procedure, the powers presented by the parties upon
the arbitrator under the applicable arbitration agreement, and also the specific sort of arbitration
used.
Stages of Arbitral Proceedings
Arbitration clause or arbitration agreement
During the drafting of any contract pertaining to either insurance, partnership, any civil matter,
or any other matter. The parties shall add an arbitration clause in the contract, the clause should
state that in the future, if any disputes arise among the parties then, in that case, they can resolve
it through the arbitration process. During the drafting of an arbitration clause in the contract,
the person who is drafting needs to be very careful to make the clause in a detailed manner and
ensure every possibility in which the disputes can be raised out of contract or due to the relation
of the contract. In the event that the parties do not have an arbitration clause in the contract, the
parties at that point can make an arbitration agreement, but it should be with their mutual
consent, in order to solve the disputes arising out of the previous contract.
Notice of arbitration
Section 21 of the Act states about when arbitration can commence. The dispute among the party
begins on that particular date on which a request for the dispute as referred to arbitration is
received by the respondent. From the date the respondent has received the legal notice to the
date of completion of the fixed period given in the notice, the parties must give a reply to the
notice.
Appointment of arbitrators
Section 10(1) of the Act states that the parties are free to agree on any number of arbitrators,
however, the number of arbitrators should not be in the even number. Further, Section 10(2)
enunciates that in case parties fail to decide arbitrators in accordance with Section 10(1), then
under that circumstance the arbitral tribunal shall consist of a sole arbitrator.
Parties mutually decide on the matter of the appointment of arbitrators. The parties to the
arbitration agreement or clause must mention the name of the concerned arbitrator who will
resolve the dispute. In case the parties fail to decide mutually on the appointment of the
arbitrator then under those circumstances, Section 11 of the Act, states that the parties must
move to the court and request for the appointment of an arbitrator.
Statement of claim
Section 23 of the Act, states that within the time period that is fixed by the parties, the claimant
must state supporting facts about his claim, the point of issue and relief.
The parties need to submit their statement of claim which should be accompanied by all the
documents that must be supported by the relevant facts and the issues of the arbitration. It is
pertinent to note that the claim can be changed if the parties agree to it, then they can alter or
change the claim during the arbitral proceeding or unless the arbitral tribunal considers the
claim to be inappropriate.
Hearing of parties
Steps that are involved during the process of hearing of the parties:
Preliminary hearing and exchange of information stage
After the arbitrator is appointed and is confirmed, the preliminary hearing of the arbitration
proceeding begins in which the parties call their arbitrator so that the schedule can be fixed.
During the preliminary meeting, primarily the issues of the dispute are addressed, and then the
exchange of information is done among the parties and the next hearing date is scheduled. On
the next date which was scheduled, the arbitrator will issue a written document commonly
known as a 'scheduling order.'
Stage of hearing
At this stage, the case is presented to the arbitrators by the parties. This process cans take place
in person, or can be over the telephone, or by submitting the written documents or arbitration
agreements and applicable rules that govern the case. Parties need to submit written arguments
after hearings, as directed by the arbitrator.
Arbitral award
An arbitral award is considered as a final order which is given by the arbitrator. The award can
either be in terms of monetary relief by one party or by other parties. Also an award can be a
non-financial one such as adding the incentives of employment or stopping the business
practices.
Essentials of the award
Essentials of the award given in an arbitral proceeding -
The award must be in written form and duly signed either by the majority or by all..
The date and place of the award should be mentioned.
• The reason for the decision must be mentioned in the award, except when parties have agreed
that there is no need to give that reason or when there is a mutual settlement during the
proceeding which is recorded as an award.
• The arbitral award should be certain and the final award must not be vague, unce and
ambiguous.
• There is no such need for the registration of an award, award is like a final judicial decree and
must be enforced in the same way.
Types of arbitral awards
Interim award
This is a temporary award given by the tribunal during which the proceeding is going on. An
Interim award can be made by such a tribunal which has the authority to grant a final award.
Interim orders are generally given for the money payment or for property's disposition between
the parties and an order to make an interim payment is on account of the costs of the arbitration.
Final award
The final award is the order given by the arbitrator after the completion of the entire arbitration
proceeding. The arbitrator must state the reason for the decisions made in the award. After the
final award is made it must be signed by all the arbitrators and the parties.
Challenge in court
For challenging the award the party in whose favour the award is given by the arbitrator needs
to wait for a period of 90 days and during this period, other parties have the right to challenge
awards i.e. aggrieved party.
In accordance with Section 34 of the Act, it states that the court can set aside the arbitral award
if:
The party was under some type of incapacity.
The contract of arbitration wasn't valid under the law to which the parties had been subjected.
• The party making an application for invoking the arbitration has not given proper opportunity
to the other party for the appointment of the arbitrator.
The award deals with disputes that do not fall under the submission of the arbitration or contain
any other matter which is beyond the scope of arbitration.
Seat and venue
In arbitration, a seat is the legal construct and it depends on the jurisdiction where the final
arbitral award will be made. However, the seat has a great impact on the entire legal procedure
of the arbitration. Every jurisdiction applies its own set of rules and regulations for the process
of arbitration and that is why it is necessary for the parties to decide the seat of the arbitration
with proper diligence. The selection of the seat for the arbitral proceedings not only determines
the law governing the arbitral proceedings but also the rights pertaining to the enforcement of
the arbitral awards.
The venue of arbitration is the place where parties meet, in the case the arbitration is an
institutional arbitration, it is generally conducted at that place where the institution is located
or at any other place that the institution deems fit. If the arbitration is ad hoc arbitration, the
place of arbitration is decided by the parties and hence changes accordingly. The venue does
not determine the seat of arbitration, it merely determines the geographical location where
arbitration proceedings will be conducted, which is chosen on the basis of convenience.
Cost
The cost of the entire arbitration proceeding must be borne by both parties to the arbitration. It
is well settled and completely against the law that only one party bears the cost of proceeding
solely, thus, the plaintiff, as well as the respondent, will have to pay the entire fees, or as decided
by both parties mutually.
Limitation to commencement of arbitration
Section 43(2) of the act, states that on the date on which the cause of arbitration occurred, the
period of limitation begins to run for the claimant to invoke the arbitration clause. The needless
communication or reminders cannot postpone this accrual of the cause of action nor stop the
limitation period from beginning, even if there is no mention of the limitation period in the
arbitration clause.
Case Law
Associate Builders Vs Delhi Development Authority
Facts
In the present case, the appellant was awarded with the construction work by the Delhi
Development Authority (DDA, defendant), and the construction work was given on the
contract to the appellant. The appellant has to build 168 Middle Income Group and 56 Lower
Income Group House as per, the contract which specified the tender amount of Rs. 87,66,678/-
was given to the appellant to complete the construction work. As per the contract, the
construction work has to be completed within 9 months but was completed in 34 months. The
contractor i.e. appellant has completed the work of only 166 Middle Income Group and 36
Lower Income Group House. The total value of work which was done by the contractor was
Rs. 62,84,845/-.
It was contended by the appellant that the delay in completion of the construction was because
of the defendant's fault; around 15 claims were made by the appellant regarding the default
made by the defendant. As a result, the Delhi High Court appointed a sole arbitrator to initiate
an arbitral proceeding on this matter. After going through all the 15 claims, the arbitrator
concluded that there are 4 claims that are most relevant. Considering these 4 claims, it was
stated that the delay was indeed because of the defendant's fault. It was further stated by the
arbitrator that the respondent failed to fulfil the obligation as a result delay was caused and
further the appellant has suffered a huge monetary loss.
The appellant then appealed to the Apex Court by the Special Leave Petition under Article 136
of the Indian Constitution against the order of the divisional bench.
Issues
The primary issue of this case was whether the divisional bench had surpassed its jurisdiction
in setting aside the award given by the arbitral tribunal.
Judgment
The court of law in this case allowed the appeal and further set aside the impugned award. It
was held by the Supreme Court that under Section 34 the court must not set aside the award
given by the arbitral tribunal if they don't agree with the interpretation of the agreement which
is given by the arbitral tribunal. In order to set aside the award the court must show that the
decision given by the tribunal was based on the irregular or no evidence.
Conclusion
The first and foremost important step in the arbitral process is the arbitration clause which must
be framed very diligently while making the arbitration clause or arbitration agreement.
Arbitration supports the party's autonomy. During the framing of the arbitration clauses, parties
have to decide the appointment of the arbitrator, the number of arbitrators, rules applicable in
the arbitration. After the final arbitration award, it is enforced by the law applicable in such
jurisdiction of the arbitration.

Q.14 Explain appointment of conciliator?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
6. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
7. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
8. Conciliation – Similar to mediation but with a more active role for the conciliator.
9. Negotiation – Direct discussions between parties to reach a settlement.
10. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Conciliation
Conciliation is a voluntary and confidential method of alternative dispute resolution (ADR) in
which a neutral third party, known as a conciliator, assists disputing parties in resolving their
differences and reaching a mutually acceptable settlement.
In conciliation, the conciliator acts as a facilitator, helping the parties communicate effectively,
understand each other’s perspectives, and find common ground for resolving their dispute. The
conciliator is a neutral and impartial intermediary who does not impose decisions but guides
the parties towards a resolution through dialogue and negotiation.
Conciliation is particularly effective in resolving commercial, family, labour, and community
disputes, as it fosters cooperation and preserves relationships. The process is less formal than
litigation and arbitration, making it a quicker, more cost-effective, and flexible method of
dispute resolution.
A conciliator is a neutral third party appointed or chosen to facilitate the conciliation process
in dispute resolution. The conciliator’s role is to assist the disputing parties in reaching a
mutually agreeable settlement through open communication, negotiation, and consensus-
building.
A conciliator is typically someone with expertise and experience in dispute resolution,
negotiation, and conflict management.
Roles and Responsibilities of a Conciliator
Assisting Parties in Reaching an Amicable Settlement
The primary role of a conciliator, as stated in Section 67, is to assist the parties in reaching a
mutually acceptable resolution to their dispute.
This involves facilitating communication, encouraging dialogue, and exploring possible
solutions. The conciliator acts as a neutral and impartial third party, promoting a cooperative
environment where parties can freely express their concerns and interests.
Guided by Principles of Objectivity, Fairness, and Justice
A conciliator must uphold objectivity, fairness, and justice principles throughout the
conciliation proceedings. This means treating both parties equally without favouring one over
the other.
Conducting the Conciliation Proceedings Appropriately
Section 67 grants conciliators the flexibility to conduct the conciliation proceedings in a
manner they deem appropriate. This enables them to tailor their approach to the case’s specific
needs.
They may take into account the circumstances of the dispute, the expressed wishes of the
parties, and the need for a speedy resolution. Furthermore, if a party requests the conciliator to
hear oral statements, the conciliator should consider such requests.
Making Proposals for Settlement
At any stage of the conciliation process, a conciliator is empowered to make settlement
proposals to the parties. These proposals, which need not be in writing and are not required to
be accompanied by a statement of reasons, can serve as potential solutions for the parties to
consider. The aim is to guide the parties towards a settlement that effectively accommodates
their interests and resolves their dispute.
The role of Conciliators is important in facilitating communication, promoting understanding,
and guiding the parties towards a mutually agreeable settlement. They must be neutral, and
impartial, and possess the necessary skills to conduct the conciliation process effectively. Their
primary objective is to assist the parties in reaching a voluntary resolution through dialogue
and negotiation.
Appointment of Conciliator
Under the provisions of the Arbitration and Conciliation Act, the number and qualifications of
conciliators are outlined in Sections 63 and 64:
Number of Conciliators (Section 63)
• By default, there shall be one conciliator in a conciliation proceeding.
• However, the parties involved in the dispute can agree on the appointment of two or
three conciliators if they wish.
• When multiple conciliators are appointed, they are generally expected to act jointly in
conducting the conciliation proceedings.
According to the provisions of the Arbitration and Conciliation Act, the appointment of a
conciliator in conciliation proceedings follows the following guidelines:
Appointment by Agreement
• In conciliation proceedings with one conciliator, the parties have the freedom to agree
on the name of a sole conciliator.
• In conciliation proceedings with two conciliators, each party has the right to appoint
one conciliator.
• In conciliation proceedings with three conciliators, each party has the right to appoint
one conciliator, and the parties may collectively agree on the name of the third
conciliator, who will act as the presiding conciliator.
Enlisting Assistance of an Institution or Person
Parties also have the option to seek the assistance of a suitable institution or person in
connection with the appointment of conciliators. This can be done through the following
means:
• A party may request such an institution or person to recommend the names of suitable
individuals to act as a conciliator.
• The parties may agree that the appointment of one or more conciliators be made directly
by such an institution or person.
In making recommendations or appointments, the institution or person involved must consider
factors that ensure the appointment of an independent and impartial conciliator. Additionally,
when appointing a sole or third conciliator, they should consider the desirability of appointing
a conciliator of a nationality different from that of the parties.
These provisions ensure that the appointment of a conciliator is conducted in a manner that
upholds the principles of neutrality, independence, and impartiality, thereby promoting a fair
and effective conciliation process.
Conclusion
Appointing conciliators in conciliation is a crucial aspect of alternative dispute resolution. The
Arbitration and Conciliation Act provides guidelines in Sections 63 and 64 regarding the
number and qualifications of conciliators.
Parties have the flexibility to agree on the appointment of one, two, or three conciliators, with
the expectation that they will act jointly in most cases. The Act also allows parties to seek the
assistance of a suitable institution or person in the appointment process.

Q.15 Explain the concept of foreign award with the help of two conventions?
Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
Arbitration serves as an alternate dispute resolution mechanism for two parties in a contractual
relationship who want to solve disputes without going to court due to cost and time factors. In
such cases, they can add an arbitration clause in the contract, which proves to be very helpful
in times of dispute.
To understand foreign arbitral awards, one should be able to distinguish between international
commercial arbitration and foreign arbitration.
Arbitration, in India, is governed by the Arbitration and Conciliation Act, 1996 where Section
2(1)(f) defines international commercial arbitration. In other words, it can be understood as an
arbitration between two parties, where at least one of the parties is a foreign national, company,
or government entity, thereby qualifying as international commercial arbitration.
Arbitration involves the concept of "seat", which determines the jurisdiction whose laws apply
to the arbitration proceedings. For example, if arbitration occurs between a foreign company
and an Indian company with that in India, then it constitutes international commercial
arbitration. Conversely, if the seat is outside India, i.e., governed by foreign laws of arbitration,
then it will be a foreign arbitration.
Foreign Arbitral Award
Foreign arbitral awards, being closely associated with arbitration, can be defined as awards
issued in foreign jurisdictions. Typically, these awards stem from the proceedings held in
foreign arbitral tribunals and need to be recognized as "foreign signs". They are governed by
various international treaties, conventions, and respective national laws to ensure uniformity
and predictability in their recognition and enforcement on a global scale.
Foreign arbitral awards specifically refer to those arbitral awards that are issued in a country
other than where the enforcement takes place. These awards are internationally recognizable
and are subject to specific legal structures and frameworks for enforcement. They fall under
the purview of various laws, specific legislations, and international conventions to facilitate
their recognition and application across borders. With regard to India, the Arbitration and
Conciliation Act, 1996 defines "foreign award" under Section 44 of Arbitration and
Conciliation Act.
Foreign arbitral awards play a crucial role in international arbitration, expediting the dispute
resolution process between parties from different nations while adhering to legal conventions
and frameworks.
The term "foreign arbitral awards" specifically refers to the award issued through foreign
arbitration, which is distinct from domestic arbitration. In the case of Serajuddin and Co. v.
Michael Golodetz and Others, (1959) the Calcutta High Court elucidated necessary
restrictions and conditions aligning with the term "foreign arbitration". The court laid down
certain essentials for what constitutes a foreign arbitration. According to this decision,
arbitration will be considered to be foreign arbitration, if:
Enforcement of Arbitral Award
The enforcement of arbitral awards involves two primary aspects: domestic awards, governed
by Section 36 of Part I of the Arbitration and Conciliation Act, 1996, and foreign arbitral
awards, which are recognized and enforced through two avenues: the New York Convention,
outlined in Chapter I of Part II of the Arbitration and Conciliation Act, 1996, and the Geneva
Convention, specified in Chapter II of Part II of the Arbitration and Conciliation Act, 1996.
When the arbitral award from one country is recognized and enforced in another, this
involvement is considered as the enforcement of foreign arbitral awards.
Enforcement of foreign arbitral awards under the New York Convention
Chapter I of Part II of the Arbitration and Conciliation Act, 1996 deals with the enforcement of
New York Convention Awards. From Sections 44 to 52, this chapter essentially outlines the
conditions under which a foreign award is recognized and enforced in accordance with the New
York Convention.
Definition of a foreign award
The foreign award is an arbitration settling disputes between those parties arising out of the
legal relationship, whether contractual or not, to be considered as commercial under law.
Thereby, the definitions outline two essential conditions for the Enforcement of Foreign
Arbitral Awards under New York Convention: Firstly, the country
According to the Supreme Court of India, the term "commercial" encompasses various
activities structured towards international trade. This interpretation was elucidated in R.M.
Investments & Trading.Co. Pvt. Ltd. v. Boeing Co (1994) wherein the Court stated that the
Arbitration Act was enacted to facilitate international trade through a speedy redressal of
disputes, therefore, the meaning of terms like "commercial" occurring in the Act should be
given a "liberal construction".
Evidence
Section 47 lists the evidence to be presented before the court by the party seeking the
enforcement of a foreign arbitral award. Such evidence must be produced at the time of
application and must include:
1. Original award or its duly authenticated copy;
2. Original arbitration agreement or its duly certified copy;
3. Any evidence of relevance that can show that the award in question is foreign; and
4. A certified copy of the award and/or agreement translated into English if the award or
agreement is in a foreign language.
Enforcement of foreign arbitral awards under the Geneva Convention
Chapter II of Part II of the Arbitration and Conciliation Act deals with the avenue of
enforcement of the Geneva Convention Awards. This Chapter comprises Sections 53 to 60,
which incorporate the principles of enforcement as laid down in the Geneva Convention.
It involves the recognition and enforcement of arbitral awards made in accordance with an
arbitration agreement governed by the Geneva Convention. The conditions for recognition of
such an award are:
• Validity under applicable law,
• Potential for arbitration settlement,
• Finality in the country of origin, and
• Abidance with public policy
Foreign arbitral awards under the Geneva Convention
According to Section 53, of Geneva Protocol the three essential requirements for the
enforcement of a foreign arbitral award are:
1. The award is based on an arbitration agreement that falls under the Geneva Protocol on
Arbitration Clauses, 1923;
2. The award involves parties who come under the jurisdiction of territories designated as
"reciprocating" by the Central Government and where the Geneva Convention on the
Execution of Foreign Arbitral Awards is applicable; and
3. The award in question is issued in a reciprocating territory recognized by the Central
Government.
Conditions for enforcement
Section 57 enlists the conditions necessary for the enforcement of foreign arbitral awards under
the Geneva Convention. They are as follows:
1. The award must have been issued based on an arbitration agreement valid under the relevant
laws;
2. The subject matter of the award must be one that can be resolved through arbitration under
Indian law;
3. The award must be issued by the arbitral tribunal specified in the arbitral agreement or agreed
upon by both parties;
4. The award must be final in the country where it was issued, meaning there are no appeals or
challenges to such award pending; and
5. The enforcement of the award must not be against "public policy" under Indian laws.
Timeline for enforcement of foreign arbitral awards in India
The timeline for the enforcement of foreign arbitral awards in India is categorised as under:
• Upon receiving the award, the party must wait for 3 months for the application and execution
to take place. During this time, the award may be challenged under Section 34 of the Arbitration
and Conciliation Act, 1996. After the elapse of this period, if the court agrees to enforce the
award, no further challenges or refusals can be made during the execution stage.
• Within 3 years, the application for the enforcement and the recognition of the foreign arbitral
awards must be filed, as clarified by the Supreme Court regarding Article 137 of the Schedule
to the Limitation Act, 1963. Although the Arbitration Act does not establish or specify any time
limit for the enforcement of foreign arbitral awards, the Supreme Court's guideline of the 3-
year period must be adhered to.
Conclusion
The enforcement of foreign arbitral awards plays a pivotal role in resolving international
disputes and promoting cross-border business transactions. India through the recognition and
enforcement of foreign arbitral awards demonstrates its dedication to upholding its
commitment towards the international Conventions and legal frameworks, ensuring that parties
from different nations can effectively seek timely resolution of their disputes. The Arbitration
and Conciliation Act, 1996, along with the avenues provided by the New York Convention and
the Geneva Convention, set forth a legal structure for the recognition and enforcement of
foreign arbitral awards in India. It is of vital importance for individuals and businesses involved
in international arbitration to follow and work as per the procedural setup, limitations, and
adapt to the recent development in this area.

Q.16 Explain the procedures and powers of conciliator for settlement of disputes?
Ans: Alternative Dispute Resolution (ADR) refers to methods of resolving disputes outside the
traditional court system. In India, ADR is encouraged to reduce the burden on courts and
provide quicker, cost-effective solutions. The main types of ADR include arbitration,
mediation, conciliation, negotiation, and Lok Adalats (people’s courts).
The Arbitration and Conciliation Act, 1996 governs arbitration and conciliation in India,
aligning with international standards. Mediation and Lok Adalats are also widely used,
especially for family, business, and commercial disputes. Courts in India actively promote ADR
through initiatives like court-annexed mediation.
Conciliation is a way to resolve disputes without going to court. It is a voluntary and
confidential process where both parties agree to find a solution with the help of a neutral third
person called a conciliator.
The conciliator does not make a decision like a judge but helps both sides talk, understand each
other, and reach an agreement. The process is flexible, meaning the parties can discuss their
issues freely. It is confidential, so whatever is discussed cannot be used against either party
later. The goal is to find a fair solution that both sides accept.
In India, conciliation is legally recognized under the Arbitration and Conciliation Act, 1996.
This law lays down rules for how conciliation should take place. It is widely used in
commercial, family, and business disputes because it is faster, less expensive, and more
cooperative than litigation.
Conciliation helps avoid long court battles while ensuring both parties reach a fair and peaceful
settlement.
Conciliation is a voluntary process where parties try to resolve their dispute with the help of a
neutral third party, called a conciliator. It is similar to negotiation, but with an expert guiding
the discussion.
The conciliator helps each party identify their goals, understand the other side’s perspective,
and find common ground. The final settlement is reached only if both parties agree, making it
a mutually acceptable and fair solution. This process is widely used because it is faster, cost-
effective, and helps maintain relationships compared to litigation.
Process of Conciliation
Part 3 of the Arbitration and Conciliation Act 1996 discusses the process of conciliation, which
is an alternative method of resolving disputes outside of court. Conciliation is governed by the
provisions outlined in the Arbitration and Conciliation Act, 1996.
Step 1: Commencement of Conciliation Proceedings
Section 62 of the Act addresses the initiation of conciliation proceedings. To begin the process,
one party must send a written invitation to the other party. The conciliation proceedings can
only proceed if the other party accepts the invitation. If no response is received within 30 days
of sending the invitation, it will be deemed non-acceptance.
Step 2: Appointment of Conciliators
Once the parties have agreed to engage in conciliation proceedings, appointing a conciliator is
next. Section 64 covers the appointment of conciliators. If the parties agree, they can appoint a
single conciliator. If the parties opt for two conciliators, each party will appoint one. In the case
of three conciliators, each party will appoint one conciliator, and the parties together can agree
upon a third conciliator who will act as the presiding conciliator.
Step 3: Submission of Written Statements to the Conciliator
The conciliator may request both parties to provide written statements detailing the relevant
facts pertaining to the case. Both parties must submit their written statements to the conciliator.
Additionally, the parties are required to exchange their written statements with each other.
Step 4: Conduct of the Conciliation Proceedings
Sections 67(3) and 69(1) describe the conduct of conciliation proceedings. The conciliator has
the discretion to communicate with the parties through written or oral means. They can choose
to meet with the parties collectively or separately. The conduct of the proceedings will be
tailored to suit the case’s specific circumstances.
Step 5: Administrative Assistance
Section 68 of the Act addresses the option of seeking administrative assistance. The parties or
the conciliator may seek assistance from an institution or individual if necessary. However, the
consent of the parties is required to engage in such administrative assistance.
Principle of Process of Conciliation
Independence and Impartiality (Section 67(1))
The conciliator must maintain independence and impartiality throughout the conciliation
process. They should assist the parties unbiasedly and fairly while striving to reach an amicable
settlement.
Fairness and Justice (Section 67(2))
The conciliator should adhere to principles of objectivity, fairness, and justice. This involves
considering the rights and obligations of the parties, relevant trade practices, and the
circumstances surrounding the dispute, including any prior business dealings between the
parties.
Confidentiality (Sections 75, 70, proviso)
All matters relating to the conciliation proceedings are to be treated as confidential by the
conciliator and the parties involved. If a party provides information with the condition of
confidentiality, the conciliator must not disclose that information to the other party without
consent.
Disclosure of Information (Section 70)
When the conciliator receives information regarding any facts related to the dispute from one
party, they should disclose the substance of that information to the other party. This allows the
other party to provide an appropriate explanation.
Cooperation of Parties with Conciliator (Section 71)
The parties are expected to cooperate in good faith with the conciliator. This includes
submitting written materials, providing evidence, and attending meetings as requested by the
conciliator.
Rules of Procedure (Section 66)
The conciliator is not bound by the procedural rules outlined in the Code of Civil Procedure,
1908, or the Indian Evidence Act, 1872. However, while not strictly bound by technical
procedural rules, the conciliator should still uphold the principles of natural justice.
Place of Meeting (Section 69(2))
The parties can agree upon the location for meetings with the conciliator. In the absence of
such an agreement, the conciliator will determine the meeting place after consulting with the
parties, considering the circumstances of the conciliation proceedings.
Communication between Conciliator and Parties (Section 69(1))
The conciliator may invite the parties to meet, communicate with them orally or in writing, and
may choose to engage with the parties collectively or separately as necessary.
Termination of Conciliation Proceedings – Section 76
Section 76 of the Arbitration and Conciliation Act provides four ways in which conciliation
proceedings can be terminated:
Termination by Signing of Settlement Agreement (Section 76(a))
Conciliation proceedings end when the parties involved sign a settlement agreement. The date
of termination is considered to be the date on which the settlement agreement is signed.
Termination by Conciliator’s Declaration (Section 76(b))
The conciliation proceedings can be terminated if the conciliator declares in writing that further
efforts at conciliation are no longer justified. The date of termination is the date of the
conciliator’s declaration.
Termination by Written Declaration of Parties (Section 76(c))
The parties have the authority to terminate the conciliation proceedings by providing a written
declaration to the conciliator stating that they wish to end the proceedings. The date of
termination is the date of the declaration.
Termination by Party’s Written Declaration to Other Party and Conciliator (Section
76(d))
A party can unilaterally terminate the conciliation proceedings by sending a written declaration
to both the other party and the conciliator, expressing their intention to terminate the
proceedings. The date of termination is the date of the declaration.
Roles and Responsibilities of a Conciliator
Assisting Parties in Reaching an Amicable Settlement
The primary role of a conciliator, as stated in Section 67, is to assist the parties in reaching a
mutually acceptable resolution to their dispute.
This involves facilitating communication, encouraging dialogue, and exploring possible
solutions. The conciliator acts as a neutral and impartial third party, promoting a cooperative
environment where parties can freely express their concerns and interests.
Guided by Principles of Objectivity, Fairness, and Justice
A conciliator must uphold objectivity, fairness, and justice principles throughout the
conciliation proceedings. This means treating both parties equally without favouring one over
the other.
Conducting the Conciliation Proceedings Appropriately
Section 67 grants conciliators the flexibility to conduct the conciliation proceedings in a
manner they deem appropriate. This enables them to tailor their approach to the case’s specific
needs.
They may take into account the circumstances of the dispute, the expressed wishes of the
parties, and the need for a speedy resolution. Furthermore, if a party requests the conciliator to
hear oral statements, the conciliator should consider such requests.
Making Proposals for Settlement
At any stage of the conciliation process, a conciliator is empowered to make settlement
proposals to the parties. These proposals, which need not be in writing and are not required to
be accompanied by a statement of reasons, can serve as potential solutions for the parties to
consider. The aim is to guide the parties towards a settlement that effectively accommodates
their interests and resolves their dispute.
The role of Conciliators is important in facilitating communication, promoting understanding,
and guiding the parties towards a mutually agreeable settlement. They must be neutral, and
impartial, and possess the necessary skills to conduct the conciliation process effectively. Their
primary objective is to assist the parties in reaching a voluntary resolution through dialogue
and negotiation.
Powers of Conciliator
1. The conciliator shall assist the parties in an independent manner thereby helping them to
reach an amicable settlement
2. The conciliator shall conduct the proceedings of conciliation taking into account and
consideration the facts and circumstances of the case and also the wishes of the parties are to
be considered.
3. The Conciliator shall consider the rights and obligations of the parties and the previous
relations between the parties.
4. The Conciliator has the duty and power to make proposals for settlement of dispute at any
stage of the proceedings. These proposals are not mandatory to be in writing and need not be
accompanied by a statement of the reasons.
5. The conciliator has a duty to disclose all information received from one party to the other
party so as to give the other party an opportunity to present their side of the case.
6. The conciliator has a duty to keep all matters relating to the proceedings confidential
Case Law
Haresh Dayaram Thakur v. State of Maharashtra and Ors.
In the case of Haresh Dayaram Thakur v. State of Maharashtra and Ors. (AIR 2000 SC 2281),
the Supreme Court examined the provisions of Sections 73 and 74 of the Arbitration and
Conciliation Act 1996. In paragraph 19 of the judgment, the court made the following
observations:
According to the statutory provisions mentioned above, it is evident that a conciliator’s role is
to assist the parties in settling their disputes amicably. The conciliator is granted broad powers
to determine the procedure to be followed without being bound by procedural laws such as the
Code of Civil Procedure or the Indian Evidence Act 1872.
When the parties are able to reach a mutual agreement, and the conciliator believes that there
is a potential settlement acceptable to the parties, the conciliator should follow the procedure
outlined in Section 73. This involves formulating the settlement terms and presenting it to the
parties for their observations. The final step for the conciliator is to draft the settlement based
on the parties’ observations.
The settlement becomes legally binding only when the parties themselves draw up the
settlement agreement or request the conciliator to prepare it and affix their signatures. As per
Sub-section (3) of Section 73, once the parties sign the settlement agreement is considered final
and binding on them and any individuals claiming under them.
Conclusion
Conciliation is a valuable alternative dispute resolution process guided by the Arbitration and
Conciliation Act. It involves a neutral conciliator assisting parties to settle. The process begins
with a written invitation, followed by the appointment of a conciliator. Written statements are
exchanged, and the conciliator conducts proceedings based on fairness and justice.
Confidentiality is maintained throughout.
The goal is to reach a settlement agreement, which becomes final and binding when the parties
sign. Conciliation allows parties to resolve disputes amicably, avoiding litigation while
preserving relationships.

Q.17 How does an Arbitrator is appointed?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
Arbitration is a structured and legally binding dispute resolution process in which a neutral
third party, known as an arbitrator, hears arguments and evidence from the disputing parties
and renders a decision. Arbitration serves as an alternative to litigation, offering a private,
efficient, and often quicker resolution.
Arbitration is commonly used in commercial, contractual, labour, construction, and
international disputes due to its confidential nature, expert decision-making, and finality. Many
business contracts include arbitration clauses to ensure disputes are resolved outside traditional
court systems.
The World Intellectual Property Organization (WIPO) defines arbitration as
"Arbitration is a process in which parties by an agreement submit the dispute to one or more
arbitrators, who then make a decision binding to the parties on the dispute. Arbitration is a
method of resolving disputes by way of private dispute resolution, instead of going to a court".
Section 2(1)(a) states that arbitration means any arbitration administered or not administered
by a permanent arbitral institution.
Parties choose an arbitration method to resolve their disputes, as it provides more flexibility
and efficiency as compared to the litigation method. The process of arbitration begins with
drafting an arbitration agreement between the parties. This arbitration agreement is referred to
when any dispute arises between the parties. All the important terms and conditions are
mentioned in this agreement. There can be cases wherein an agreement is not present and the
parties decide to resolve a dispute by choosing the method of arbitration after the dispute has
arisen. In such cases Section 11 of the Act lays down the provisions that are to be followed
when it comes to appointing an arbitrator.
Provisions under Section 11 of the Arbitration and Conciliation Act
Section 11(1)
The arbitrator can be of any nationality unless something specific is agreed by the parties. There
is no restriction on the arbitrator's nationality if both the parties to the dispute agree to the same.
The key point to keep in mind here is that an arbitrator is appointed only after there has been a
mutual agreement between the parties to the dispute. This sub-section also mentions that the
nationality of the arbitrator may also be priorly mentioned in the agreement, For example, in
case of disputes between two companies that work in different countries, they can have a clause
in the agreement that states that they shall appoint an arbitrator from a specific nationality in
case of dispute. There is no strict rule that the arbitrator has to be a citizen of India if the
arbitration is taking place in India.
Section 11(2)
The parties can freely decide the process for arbitrator or arbitrator's appointment, subject to
sub-section (6) of the Section. The parties themselves decide the procedure for arbitration and
appointment of the arbitration. The parties are free to follow whichever method they want
which is comfortable for both the parties and also ensures the resolution of the dispute.
The parties are free to decide the place of arbitration, the language in which the arbitration is
to be carried out, how they want to appoint the arbitrator, what procedure they want to follow
when the arbitration proceedings take place, etc. These details are also often added to the
agreement itself. If some specific venue or process is mentioned in the agreement then that is
to be followed.
Section 11(3)
In case of failure to reach an agreement on the procedure of appointment, sub-section (3)
prescribes the following procedure for the appointment of three arbitrators:
1. Each party appoints an arbitrator.
2. The two arbitrators then jointly appoint the third arbitrator, who acts as the presiding
arbitrator.
The main aim of this sub-section is to ensure that there is a balanced approach when it comes
to appointing arbitrators. When the agreement between the parties states that three arbitrators
shall be appointed then in that case each party shall appoint one arbitrator from their side, and
the third arbitrator will be appointed as the presiding arbitrator by the other 2 appointed
arbitrators.
Section 11(3A)
The power to designate an arbitral tribunal from time to time is vested in the Supreme Court
and the High Court. These arbitral tribunals will be graded by council under the Section 43-I.
Provided that if a graded arbitral tribunal is not present in the jurisdictions of any High Court,
then the concerned High Court's Chief Justice can maintain an arbitrator's panel that discharges
all the duties and functions of the arbitral institution.
When any reference is made to the arbitrators, it will be deemed that it is made to the arbitral
tribunal. The arbitrators that are appointed under this Section are entitled to the fees which are
prescribed in the Fourth Schedule. A review on a periodic basis is also conducted of the arbitral
tribunal by the Chief Justice of the concerned High Court.
Section 11(4)
If the procedure of appointment in the sub-section (3) is applied
1. Each party must appoint an arbitrator within thirty days of receiving the request from the
other party to do so.
2. The two arbitrators must reach an agreement on appointing the third arbitrator within thirty
days from the date of their appointment. Such appointment of an arbitrator will be made when
the party makes an application for the same. In case of an international commercial matter, the
Supreme Court will make the appointment of arbitrators, while in case of matters, other than
international commercial matter, the High Courts will appoint.
When the parties fail to appoint the arbitrators the Supreme Court and High Court help the
parties by appointing an arbitrator. The timelines are provided in order to make the process
quick in order to resolve the dispute faster than the traditional courts. Both the parties are given
the right to select an arbitrator in order to maintain partiality. The Supreme Court and High
Court shall help the parties who have opted for arbitration when they are having problems with
the appointment of the arbitrator.
Section 11(5)
This sub-section states when in an arbitration with a sole arbitrator and the parties to the dispute
cannot reach an agreement on the procedure of appointment, then in that case if the arbitrator
is not appointed within thirty days from the day on which one party had requested the other
party to agree, then such appointment shall be made by the High Court if the arbitration is a
non international commercial arbitration, while in case of international commercial arbitration
the appointment of arbitrator will be done by the institution designated by the Supreme Court.
Section 11(6)
This sub-section states that where an agreement on the appointment procedure has been made
by the parties, if
1. A party fails to act as prescribed by the procedure, or
2. The parties or the appointed arbitrators fail to reach an agreement as prescribed by the
procedure, or
3. The person or institution entrusted with any function by the procedure fails to perform it,
then such appointment of an arbitrator will be made when the party makes an application for
the same. In case of an international commercial matter, the Supreme Court will make the
appointment of arbitrators, while in case of matters, other than international commercial
matters, the High Courts will appoint in order to take measures that are necessary, unless there
is some other means for securing appointment as per the agreement.
Section 11(8)
The Supreme Court, High Court, or the institution or person designated by the court before an
arbitrator is appointed, must give in writing a disclosure from the prospective arbitrator in terms
of Section 12(1) and make the decision taking in the following considerations
1. Qualifications required for an arbitrator as per the agreement of the parties,
2. Contents of disclosure and other considerations for appointing an independent and impartial
arbitrator
Section 11(9)
In case of appointment for arbitrator is to be made in international commercial matters, and
there is a need to appoint a sole arbitrator or a third arbitrator, the arbitral institution designated
by the Supreme Court or a High Court may appoint an arbitrator of a nationality other than the
nationalities of the parties.
This sub-section governs that in case of the international commercial arbitration, the party can
approach the Supreme Court for the arbitrator appointment. In the case of international
commercial arbitration, the person or the institution which is designated by the court or the
Supreme Court may appoint a third arbitrator or a sole arbitrator. The arbitrator that is to be
appointed must be of any other nationality than the parties' nationality.
Section 11(11)
If there has been more than one request or application made to Chief Justices of different High
Courts or designates during the application made under the sub-section (4), (5), (6), the High
Court receiving the first request will be competent.
Section 11(12)
When the matters referred under sub-sections (4), (5), (6), and (8). in relation to international
commercial arbitration or other arbitration, the arbitral institution is referred, is the arbitral
institution which was designated under sub-section 3A.
Section 11(13)
An application or request for the appointment of arbitrators shall be disposed of expeditiously
by the arbitral institution. It shall be disposed of within thirty days from the date of service of
notice on the opposite party.
Section 11(14)
The arbitral institution shall determine the fee and manner of its payment to the arbitral tribunal
after considering the rates prescribed in the Fourth Schedule of the Act. However, the
explanation of this subsection provides that in the case of international arbitration in non-
commercial matters, the parties may agree to determine fees as per the rules prescribed by an
arbitral tribunal.
Number of Arbitrator
The parties have the freedom to decide the number of arbitrators that they want to appoint in
the arbitration process as per Section 10 of the Act, provided that the number of arbitrators in
the arbitration procedure should not be an even number. For example, there can be three
arbitrators appointed, where one party each appoints an arbitrator and then the two arbitrators
appoint the third one who is known as the presiding arbitrator. The number of arbitrators cannot
be two or four. When the parties are not able to appoint an odd number of arbitrators then the
arbitral tribunal in that case will be constituted with a sole arbitrator. The court will appoint an
arbitrator if the parties fail to appoint the same or in case of an agreement of three arbitrators,
the two arbitrators cannot appoint the third arbitrator.
Case Law
M/S Comed Chemicals Ltd. vs. CN Ramchand (2008)
In the case of M/S Comed Chemicals Ltd. vs. CN Ramchand (2008) a petition was filed by the
petitioner under Section 11. The petitioner has prayed to the Chief Justice of India to appoint a
presiding arbitrator or a sole arbitrator. The preferred arbitrator was mentioned and the same
was conveyed by sending a notice by the petitioner in 2005. The appointment of an arbitrator
was rejected by the respondent. The respondent stated that as it is an international commercial
matter it should be referred to the Chief Justice and not the High Court. The Supreme Court
appointed a sole arbitrator as it was a case of International Commercial Arbitration.
Brahmani River Pellets Limited vs. Kamachi Industries Limited (2019)
In the case of Brahmani River Pellets Limited vs. Kamachi Industries Limited (2019), the
Supreme Court held that only the courts that satisfy the jurisdiction as per the contract will
have the jurisdiction in relation to that matter. The parties to the dispute had already decided
the venue for arbitration, which was Bhubaneswar. This proves that the parties intended to
exclude other courts from having jurisdiction. The High Court of Madras had no jurisdiction
under the Section 11(6) of the Act in relation to the appointment of the application for an
arbitrator.

Q.18 Explain the procedures of Lok Adalat?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
21. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
22. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
23. Conciliation – Similar to mediation but with a more active role for the conciliator.
24. Negotiation – Direct discussions between parties to reach a settlement.
25. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Lok Adalat
Lok Adalat (People’s Court) is an alternative dispute resolution mechanism in India, organized
under the Legal Services Authorities Act, 1987. It aims to provide speedy and cost-effective
justice by settling disputes through conciliation and compromise. Lok Adalats have the
authority to settle civil cases, matrimonial disputes, land disputes, and compoundable criminal
cases. The decisions made by Lok Adalats are binding and hold the same legal status as a court
decree, but without the possibility of appeal, ensuring finality. They play a crucial role in
reducing the burden on regular courts while promoting amicable settlements.
Types of Lok Adalat
In India, various types of Lok Adalats have been established to cater to specific categories of
cases, ensuring accessible and efficient justice for all.
1. Permanent Lok Adalats
Permanent Lok Adalats are created under the Legal Services Authorities Act of 1987 to resolve
specific types of disputes. These lok adalats have authority over public utility services such as
transportation, postal services and telegraph services.
They have the same powers as a Civil Court and are presided over by a sitting or retired judicial
officer. Permanent Lok Adalats ensure that issues are resolved quickly and conveniently for all
parties concerned.
2. National Lok Adalat
National Lok Adalat is a unique initiative by the Indian government aiming to reduce the
burden of pending cases across the country. It is conducted on specific days as specified by the
National Legal Services Authority (NALSA). The National Lok Adalat aims to encourage
compromise and settlement offering an opportunity to resolve a vast number of cases
expeditiously. By making justice accessible to all this initiative promotes the principle of
“justice at the doorstep”.
3. State Lok Adalat
State Lok Adalats operate at the state level and focus on resolving disputes that are pending
before various courts within the jurisdiction of the respective state. These adalats are organized
by the State Legal Services Authorities (SLSA) and serve as an alternative forum for litigants
to seek resolution.
4. Mega Lok Adalat
Mega Lok Adalat is an extended version of the National Lok Adalat. It mainly aim to address
a large number of cases pending in various courts and tribunals within a specific jurisdiction.
The Mega Lok Adalat brings together multiple Lok Adalats, including Permanent Lok Adalats,
to handle a substantial volume of cases on a single day.
5. Mobile Lok Adalat
The Mobile Lok Adalat is a very progressive concept that takes the Lok Adalat system to the
doorstep of the interested litigants. It involves the establishment of temporary Lok Adalat. It
centres in the different locations to cater to the needs of people who may face challenges in
accessing regular courts. The Mobile Lok Adalat plays very important role to reach out the
remote areas for ensuring easy access to justice for all irrespective of their geographical
location.
6. Special Lok Adalats
Special Lok Adalats are organized to deal with specific categories of cases tailoring the
approach to meet their unique requirements. These adalats address matters such as motor
vehicle accident claims, land acquisition disputes and family matters etc. By focusing on
specific types of cases Special Lok Adalats streamline the resolution process ensuring
specialized attention and timely justice.
Lok Adalat under Legal Services Authority Act, 1987
Section 19 of the Act provides for the establishment of Lok Adalats. Legal service authorities
at all levels, including the central, state, and district levels, shall hold Lok Adalats. Lok Adalats
serve as an alternate dispute resolution system. Their purpose is to settle cases that are pending
or that have not been heard in the courts. It consists of judicial officers or an authorized person
under the jurisdiction of the state, central government, or local government. Following the
conciliation of disputes between the parties and the agreement of the parties, the award is
handed down by conciliators in accordance with Section 21 of the Act. The award has the same
legal effect as a court decision.
Scope of Lok Adalat
Unlike the Supreme Court, Lok Adalat is extremely broad to incorporate most of the cases
pending before it as well as new cases that will be filed in the near future to be settled. The Lok
Adalat does not have jurisdiction over cases relating to offences that cannot be compounded
under any law. The Lok Sabha does not refer such matters to committees without giving the
other party a reasonable opportunity to be heard. The Lok Adalat proceeds to resolve any case
referred to it and tries to negotiate a mutually acceptable outcome between the parties involved
with the case. Whenever a Lok Adalat decides a case before it, it adopts the most extreme
efforts for a trade-off or settlement. The following points elaborate on the scope of Lok Adalats:
• If no settlement or compromise is reached by the parties after the Lok Adalat passes, no order
is given.
• A reference will be sent automatically to the Court that drew up the reference for disposition.
Those involved in the dispute are urged to seek redressal in courts.
• If the terms proposed by the bench do not satisfy the parties, the Lok Adalat cannot be forced
to compromise or reach a settlement. Orders from Lok Adalats are definitive and restrict the
parties.
• An order passed by a judge is a satisfactory means of stopping the proceedings that demand
justice.
• Lok Adalats have enough powers under the Act to make justice without compromising the
quality of their awards. The Lok Adalat's final order is considered judicial since it is given the
status of a decree.
• A Civil Court recognizes it as a form of evidence and is given the power to summon, discover,
and get an affirmation.
Functions of Lok Adalat
The following are the functions of Lok Adalat:
• Lok Adalat members should be impartial and fair to the parties.
• Lok Adalat is responsible for handling pending cases in court. In the case of a Lok Adalat
settlement, the court fee paid to the court on the petition will be reimbursed
• When filing a dispute with Lok Adalat, you do not have to pay a court fee.
Powers of Lok Adalat
o The Lok Adalat shall have the same powers as are vested in a Civil Court under
the Code of Civil Procedure (1908).
o Further, a Lok Adalat shall have the requisite powers to specify its own
procedure for the determination of any dispute coming before it.
o All proceedings before a Lok Adalat shall be deemed to be judicial proceedings
within the meaning of the Bharatiya Nyaya Sanhita 2023 and every Lok Adalat
shall be deemed to be a Civil Court for the purpose of the Bharatiya Nagarik
Suraksha Sanhita 2023.
o An award of a Lok Adalat shall be deemed to be a decree of a Civil Court or an
order of any other court.
o Every award made by a Lok Adalat shall be final and binding on all the parties
to the dispute. No appeal shall lie to any court against the award of the Lok
Adalat.
Procedure of Lok Adalat
Step 1: Suitability of the Case
The first step is to determine whether the case is suitable for resolution through the Lok Adalat.
Lok Adalats primarily handle civil cases, including disputes related to property, family matters,
labour disputes, and motor accident claims. Criminal cases, matters involving serious offenses,
and cases where the law does not allow for a compromise cannot be referred to Lok Adalats.
Step 2: Consent of Parties
it is essential that all the parties involved in the dispute must agree to refer the case to the Lok
Adalat. No matter shall be referred to Lok Adalat without free consent of both the parties.
Consent can be given either at the stage of pre-litigation that is before filing a case in court or
even during the court proceedings before the regular court.
Step 3: Application for Referral
To get the case referred to the Lok Adalat, its needed to file an application in the appropriate
court. The application should be in proper format. Formats of application for lok adalats are
available with the court clerk.
Step 4: Evaluation by the Court
After the application is filed, the court considers its merits and decides if the case should be
sent to the Lok Adalat. The court may before considering the matter may examine the criteria
such as the nature of the dispute, the willingness of the parties, and the stage of the proceedings.
If the court finds the case is appropriate for the Lok Adalat, it will issue an order referring the
case to the Lok Adalat.
Step 5: Lok Adalat Proceedings
After referring the case to the Lok Adalat, the court may provide notice to both parties
concerned, advising them of the date, time, and location of the Lok Adalat proceedings. Both
parties are obligated to attend the Lok Adalat hearings on the appointed date. The Lok Adalat
functions in a casual and participative manner, allowing parties to present their points,
negotiate, and reach an agreement. The Lok Adalat bench, comprising judicial officers and
other members, facilitates the resolution process and ensures fairness.
Step 6: Conciliation and Mediation
The Lok Adalat panel, comprising a judicial officer and other experts, facilitates conciliation
and mediation between the parties. They encourage open communication and guide the parties
towards a mutually agreeable settlement.
Step 7: Settlement and Award
If an agreement is reached between the parties during the Lok Adalat proceedings, it is recorded
as a settlement. The settlement agreement has the same legal validity and enforceability as a
court decree. If the parties fail to reach a settlement and act as per the settlement deed, then the
case will be referred back to the regular court for further regular proceedings as per the law.
Step 8: Implementation of Settlement
Once a settlement is reached in the Lok Adalat, it is binding on the parties. The settlement is
implemented by the regular court as per the terms agreed upon.
Step 9: Enforceability
The settlement reached in Lok Adalat is final and binding. It has the same legal standing as a
decree passed by a civil court, making it enforceable through execution proceedings.
Step 10: Non-Settlement Cases
If a case does not reach a settlement in Lok Adalat, it is referred back to the appropriate court
for further proceedings. The proceedings and discussions held during the Lok Adalat are not
admissible as evidence in the subsequent court proceedings.
Advantages of Lok Adalat
o There is no court fee and if court fee is already paid the amount will be refunded if the
dispute is settled at Lok Adalat.
o There is procedural flexibility and speedy trial of the disputes. There is no strict
application of procedural laws while assessing the claim by Lok Adalat.
o The parties to the dispute can directly interact with the judge through their counsel
which is not possible in regular courts of law.
o The award by the Lok Adalat is binding on the parties and it has the status of a decree
of a civil court and it is non-appealable, which does not cause the delay in the settlement
of disputes finally.
Conclusion
The procedure of Lok Adalat in India provides a valuable avenue for individuals to resolve
their legal disputes swiftly and amicably. By emphasizing conciliation and compromise, Lok
Adalats offer a more accessible and cost-effective alternative to the formal court system. The
unique features and benefits of Lok Adalats have led to their widespread adoption and success
in resolving a diverse range of cases.
Lok Adalats have become an integral part of the Indian legal system, providing opportunities
for the poor and discouraged to access justice. The organization has overcome all obstacles to
lawful aid, although there are specific areas for improvement that could make it more effective.
Although they are overcoming any barriers to access to justice, they should also provide
genuine admittance to equity for aggrieved parties. There is more activity than was expected,
which could make Lok Adalats a better mechanism to deal with cases that are on the rise.

Q.19 State the form and content of arbitration agreement?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
16. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
17. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
18. Conciliation – Similar to mediation but with a more active role for the conciliator.
19. Negotiation – Direct discussions between parties to reach a settlement.
20. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Award
According to Section 2(1)(c) of the 1996 Act an arbitral award includes an interim award. As a
preventive measure and at the request of the party an arbitrator can issue an interim order or
award regarding the dispute. Interim orders are orders that are valid only during the arbitration
process, mandating the party to refrain from doing some actions that may fall counter to or
harm the other party's interest. Such an order is passed in the form of an interim injunction.
Unlike a usual interim measure, an interim award under the 1996 Act forms a part of the final
award, that is binding on the parties involved. An interim award is granted after a thorough
hearing, encompassing the accepted interim measures.
However, once the arbitration proceedings have been completed, the arbitral tribunal grants an
arbitral/arbitration award, as the final award. An arbitral award can be monetary or non-
monetary. It can be monetary which is made for payment of a sum of money from one party to
the other and it can be non-monetary when no money needs to be paid, but it includes decisions
like stopping a certain business practice or increasing unemployment perks and incentives.
An arbitral award is the final decision given by the Arbitral Tribunal to resolve a dispute. It is
similar to a court judgment but is given by an arbitrator instead of a judge. The award is issued
after all parties have had a fair chance to present their case, provide evidence, and make
arguments.
For an award to be held valid, it must fulfil two conditions. Firstly it should be certain, meaning
that it should be clear, definite, and unambiguous in terms of the decision made with regard to
the rights of the parties. Secondly, it must contain a decision. An award without a valid decision
or unclear decision on every issue raised before the arbitral tribunal shall be considered invalid.
In addition to fulfilling these conditions, an award must bear the signature of an arbitrator. It
must also contain specific reasons for the decision made in an award regarding the particular
case. The award should not leave any room for confusion and must clearly outline the duties
and liabilities imposed on the parties. An award must deal with every aspect of the issue that is
a matter of concern between the parties, giving a clear and final decision on every such aspect
of the issue.
The form and content of an arbitral award are regulated by Section 31 of the Arbitration and
Conciliation Act, 1996. This section ensures that the award is made in writing, signed by the
arbitrators, and includes reasons for the decision (unless the parties agree otherwise). It also
mentions details such as the date and place of arbitration. The award is final and binding,
meaning that both parties must follow its terms, just like a court ruling. This process ensures
fairness, transparency, and enforceability in arbitration.
The following are the fundamental parts of a legitimate Award, as determined by a cursory
perusal of this Section:
• The Award shall be made in writing.
• Award must be signed by all the members of the panel.
• Award should be describe the reasons for its existence.
• The date of award should be stated.
• The award shall identify the location.
• An interim award can also be given under Section 17.
• After the Award is made each party should receive a signed copy.
• The Award may be made without stating any grounds if the parties agree, Giving reason
for the award is not required in the case of a settlement.
• Award as may be justified. Any such correction, interpretation of award and additional
award shall form as a part of the final award.
• An Award becomes final either upon expiry of the period provided under the statute to
challenge the Award or if challenged, after the final decisions on such challenges.
Forms and Content of an Award
Section 31 of the Arbitration and Conciliation Act, 1996, lays down the essential requirements
for the form and content of arbitral awards. It ensures that awards are comprehensive,
enforceable, and conform to procedural fairness. This section mandates written awards,
inclusion of reasons, and proper documentation to instil confidence in the arbitration process.
By setting clear guidelines, Section 31 provides a robust framework for arbitrators and parties,
promoting clarity, transparency, and adherence to international standards.
Section 31 of the Arbitration and Conciliation Act, 1996, establishes the foundational rules for
the form and content of arbitral awards. This section ensures that awards are precise,
enforceable, and reflective of due process. Below is a detailed analysis of the legal framework
provided under this provision:
2. Requirement for a Written Award
Section 31 mandates that every arbitral award must be in writing. This requirement ensures a
tangible and verifiable record of the tribunal’s decision, which is essential for enforcement,
judicial review, and archival purposes.
3. Statement of Reasons
The section requires arbitral tribunals to provide reasons for their decisions unless:
• The parties agree that reasons are not necessary, or
• The award is based on a settlement under Section 30 (settlement award).
5. Key Details in the Award
Section 31 specifies that an arbitral award must include the following details:
• Date of the Award: The date is crucial for calculating statutory time limits, such as
challenges under Section 34 or enforcement under Section 36.
• Place of Arbitration: The place (or seat) of arbitration determines the legal framework
applicable to the arbitration and the supervisory jurisdiction of the courts.
6. Signing of the Award
The arbitral award must be signed by all members of the arbitral tribunal. However, if an
arbitrator cannot or refuses to sign, the award remains valid provided the majority of arbitrators
sign and the reason for the absence of a signature is recorded. This provision balances
procedural fairness with practicality, ensuring that awards are not invalidated due to the refusal
of a minority member.
6. Communication to Parties
The tribunal is required to deliver a signed copy of the award to each party. This delivery
ensures that parties are formally notified of the decision and can take subsequent steps such as
enforcement or challenge within prescribed time limits.
7. Costs of Arbitration
Section 31(8) empowers the tribunal to:
• Decide the allocation of arbitration costs among the parties.
• Specify the amount of costs, including tribunal fees, expenses, and legal representation
costs. The tribunal’s discretion in cost allocation incentivizes fair conduct by parties
and discourages frivolous claims or delays.
9. Interest on the Award
Section 31(7) provides for interest on the awarded amount:
• The tribunal may award interest at a rate it deems reasonable unless otherwise agreed
by the parties.
• If no specific rate is awarded, the awarded amount accrues interest at 2% higher than
the prevailing current rate as defined under Section 2(b) of the Interest Act, 1978. This
provision ensures compensation for delayed payments post-award, encouraging prompt
compliance.
10. Compliance with International Standards
The requirements outlined in Section 31 align with global arbitration practices, particularly
those under the UNCITRAL Model Law. This alignment facilitates the enforceability of Indian
awards under international frameworks such as the New York Convention.
Importance of Section 31 of the Act
6. Transparency and Accountability
By requiring reasons for the award, Section 31 promotes transparency and holds the
tribunal accountable for its decision-making process.
7. Ensuring Enforceability
Compliance with the formal requirements under Section 31 enhances the enforceability
of awards, both domestically and internationally, under the New York Convention.
8. Clarity for Parties
Detailed awards provide clarity to the parties about the tribunal’s findings, ensuring
there is no ambiguity regarding the decision or the reasoning.
9. Judicial Review
Section 31 plays a crucial role during challenges to arbitral awards under Section 34.
Courts rely on the reasoning and formal compliance of the award to determine its
validity.
10. Cost Allocation
By explicitly addressing the costs of arbitration, Section 31 provides certainty and
prevents further disputes over financial responsibilities.
Significance in International Arbitration
5. Global Standards
Section 31 aligns with international norms for the form and content of arbitral awards,
ensuring that Indian awards meet global enforceability standards.
6. Cross-Border Enforceability
Awards adhering to Section 31 are more likely to be recognized and enforced under the
New York Convention, bolstering India’s credibility in international arbitration.
7. Cultural Nuances
In international disputes, detailed reasoning helps bridge cultural and legal differences,
ensuring all parties understand the basis of the decision.
8. Compliance with Multi-Tiered Procedures
Section 31 ensures awards are well-documented and compliant with multi-tiered
dispute resolution clauses, which are common in international contracts.
Interplay with Other Provisions
5. Section 30: Settlement
If parties reach a settlement, the award must reflect the agreed terms. Section 31 ensures
such awards retain their enforceable nature.
6. Section 34: Setting Aside Arbitral Awards
Courts scrutinize awards under Section 34 for procedural compliance with Section 31,
emphasizing its importance in ensuring the validity of awards.
7. Section 36: Enforcement of Awards
Section 31’s adherence to formal requirements is critical for the smooth enforcement of
awards under Section 36.
8. Section 29A: Time Limit for Award
The requirement for detailed reasoning under Section 31 must align with the time
constraints imposed by Section 29A, creating a balance between quality and efficiency.
Enforcement and Implementation of Awards under Section 31
Section 31 also plays a critical role in the enforcement and implementation of arbitral awards.
By specifying the mandatory components of an award, it helps ensure that awards are clear and
complete, making them easier to enforce in courts. Once an award is issued in compliance with
Section 31, it holds legal force and can be enforced in the same manner as a court judgment
under Section 36 of the Arbitration and Conciliation Act, 1996. This contributes to the
credibility of the arbitration process, as parties are more likely to comply with an award that
meets the standards outlined in Section 31.
Courts in India and internationally often scrutinize the form and content of the award as per
Section 31 before granting enforcement. If the award does not adhere to the guidelines, it may
be challenged, delayed, or not recognized. Therefore, Section 31 ensures that arbitral awards
are enforceable, fostering a predictable and efficient dispute resolution mechanism.
Judicial Scrutiny and Challenges to Awards under Section 31
While Section 31 provides clear guidelines for the form and content of an arbitral award,
judicial scrutiny remains an essential aspect of the post-arbitration process. Section 31 is
designed to make arbitral awards enforceable, but it also allows for limited judicial intervention
under Section 34 if any party believes that the award does not meet the legal standards or
procedural fairness.
Judicial challenges may arise if the award lacks clarity, does not follow the procedure
prescribed by law, or if the tribunal exceeded its jurisdiction. Courts can also review whether
the award is in accordance with public policy, ensuring that it adheres to principles of justice,
fairness, and legality. As such, while Section 31 aims to ensure that arbitral awards are both
structured and substantive, it balances the award’s form with a degree of judicial oversight to
protect parties’ rights and interests.
Conclusion
Section 31 of the Arbitration and Conciliation Act, 1996, establishes the framework for drafting
arbitral awards that are transparent, reasoned, and enforceable. Its adherence ensures that
arbitration remains a credible and efficient dispute resolution mechanism, both domestically
and internationally. By bridging procedural formalities with practical requirements, Section 31
plays a pivotal role in maintaining the integrity of the arbitral process.

Q.21 State the Jurisdiction of Arbitral Tribunal?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Tribunal
An Arbitral Tribunal is a neutral body appointed to resolve disputes through arbitration,
offering an alternative to traditional court litigation. It is composed of one or more arbitrators
chosen by the parties involved or appointed by a designated authority if the parties fail to agree.
The tribunal functions similarly to a court but operates in a more flexible, private, and efficient
manner. It has the authority to hear arguments, evaluate evidence, and issue a binding decision
known as an arbitral award, which is enforceable under the Arbitration and Conciliation Act,
1996. Unlike courts, arbitral tribunals allow parties to select arbitrators with expertise relevant
to their dispute, ensuring a more specialized and informed resolution. The tribunal's procedures
are less formal than traditional litigation, making arbitration a preferred choice in commercial,
contractual, and international disputes. The primary objective of an arbitral tribunal is to
provide a fair, impartial, and legally sound resolution while maintaining confidentiality and
efficiency in dispute settlement.
According to section 2(1) (d), an ‘Arbitral Tribunal’ means a sole arbitrator or a panel of
arbitrators. The Amendment Act enables the Supreme Court (on account of international
commercial arbitration) and the High Court (in cases other than international commercial
arbitration) to assign arbitral establishments with the end goal of arrangement of arbitrators.
Such arbitral establishments will be evaluated by the Arbitration Council of India. Where a
reviewed arbitral establishment isn’t accessible, the Chief Justice of the concerned High Court
may keep up a board of arbitrators for releasing the capacities and obligations of the arbitral
organization.
The arbitrator may be of any nationality and parties are at liberty to agree on the procedure for
appointing the arbitrator or arbitrators for their cause. But Section 11(9) of the Arbitration Act,
1996 provides that in case of arbitrator which involves international commercial transaction,
an arbitrator or arbitrators shall be appointed of different nationality, other than the nationality
of parties. Thus in case of an international commercial dispute between India or Bangladesh,
an Indian or Bangladesh must not be appointed as an arbitrator.
Where the number of arbitrators agreed upon is three and no procedure has been is laid down,
each party shall appoint one arbitrator and the two arbitrators shall appoint a ‘third arbitrator’
as Presiding Arbitrator.
Under the 1996 Act parties are free to appoint the arbitrators on its own. But according to The
Arbitration And Conciliation (Amendment) Act, 2019 the parties are allowed to appoint the
arbitrator from the receipt date within 30 days, so on the arbitrators also given a period of 30
days to appoint a third arbitrator for completing arbitration. If the parties fail to appoint the
arbitrator, the Chief Justice of High Court shall have the power to appoint the arbitrator or
Presiding arbitrator within the territory of parties to settle the dispute. Therefore in case of
international commercial arbitration, the Chief Justice of India shall have the power to appoint
such person. However the arbitral institution will determine the fees of the arbitral tribunal and
the manner of its payment which is specified in the fourth schedule of the Act.
COMPOSITION
Prior to this amendment Act, no doubt parties were free to appoint the arbitrators, provided that
such number shall not be an even number. But as per the Arbitration and Conciliation
(Amendment) Act, 2019 it shall be consist of a chairperson who is either judge of Supreme
Court; or a judge of a High Court; or a Chief Justice of High Court; or an eminent person with
expert knowledge in conduct of arbitration proceeding. Therefore other members consist of an
eminent arbitration practitioner, an academician with experience in arbitration, and government
appointees. The ex-officio Members of the Council will remember the Secretary to the
Government of India for the Department of Legal Affairs, Ministry of Law and Justice and
Secretary to the Government of India in the Department of Expenditure, Ministry of Finance
or their individual agents not underneath the position of Joint Secretary. One representative of
a recognised body of commerce and industry will be a part time member.
JURISDICTION OF ARBITRAL TRIBUNAL
The term ‘jurisdiction’ signifies ‘the power to decide. If there is any irregularity or illegality in
the procedure or in the pleading it would not be covered by term jurisdiction. Section 16
empowers the arbitral tribunal to decide the vires of its own jurisdiction that is the scope of
arbitration on the basis of arbitration agreement and the reference made to it. Therefore the
court has no jurisdiction to adjudicate upon the question of arbitral tribunal’s jurisdiction.
However if the parties desirous to challenge the jurisdiction of arbitral tribunal shall raise the
objection before the statement of defence submit.
The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with
reference to the existence or validity of the arbitration agreement for this purpose:-
(a) A clause which forms a part of contract shall be treated as an agreement independent of the
opposite terms of the contract; and
(b) A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure
by law itself the invalidity of the arbitration clause. [Section 16 (1)]
Thus, the Act confers competence on the arbitral tribunal to decide on its own jurisdiction and
to consider objections with respect to the existence or validity of the arbitration agreement.
Similarly, a plea may be made that the arbitral tribunal is exceeding the scope of its authority
during the arbitral proceedings. [Section16 (3)].
ARBITRAL TRIBUNAL AWARDS
An arbitral award is a final decision or judgement of the arbitral tribunal on all matters referred
to it. It is as binding in its nature as the judgement of a court. It is required to be in writing and
to be signed by all the members of tribunal or by the majority with reasons for any omitted
signatures. An award should state the date and place of the arbitration, and signed copy must
be delivered to each party.
Under the Arbitration and Conciliation (Amendment) Act, an Arbitral Tribunal must issue its
final award within 12 months from the date it starts working on the case (enters the reference).
If both parties agree, this 12-month period can be extended by up to 6 more months, making it
a total of 18 months. However, if the tribunal fails to give its decision within this time, its
authority (mandate) automatically ends. The only exception is if a court grants further extension
beyond 18 months.
This rule ensures that arbitration remains fast and efficient, preventing unnecessary delays in
dispute resolution.
This Act does not impose any specific limitation on the remedies available through arbitration.
Thus the limitations are same as those applicable in Indian court proceeding. However the
tribunal can order specific performance and award damages, declarations, costs and interest.
Although under Indian law, exemplary or punitive damages for breach of contract are not
available but courts can issue interim measures pending constitution of the tribunal. Thereafter,
this power continues through the proceedings until the declaration of the award, only if the
courts recognised that the interim measures ordered would not be effective by the tribunal.
Though courts and tribunals both can issue interim measures, but court has wider powers to
grant interim protection. It includes injunctions, appointment of a receiver, order for
preservation, custody, sale and protection of goods, to secure the amount in arbitration dispute
and any other interim measure that may be justified. Thus the Arbitration and Conciliation
(Amendment) Act has cleared that the Indian courts will have the power to provide interim
measures of protection in relation to arbitrations seated outside India.
Conclusion
An arbitrator(s) or arbitral tribunal performs the function of a judge, in other words an arbitrator
adjudicates/judges the dispute between the parties. The terms arbitrator(s) or arbitral tribunal
are interchangeable and refers to an equivalent person or group of persons. Thus there might
be one (sole) arbitrator or quite one arbitrator. Both would be mentioned as arbitral tribunal
A unique feature of arbitration unlike court based adjudication is that the parties get to pick
their arbitrators or delegate to an establishment (like ICC, FICCI, ICADR, etc.) the facility to
appoint on their behalf. This is often considered to be a key advantage because the parties can
choose the one that will adjudicate their dispute as compared a court based system where they
need no control over the judge.
In India, appointment and termination (removal) of arbitral tribunal is regulated by the
Arbitration and Conciliation Act 1996. The law prescribes various provisions for various
possibilities which may arise in appointing or removal of arbitrators. The various authorities
which have the facility for appointment and removal are the District Court (Court), High court
and Supreme Court of India.
The Arbitral Tribunal is crucial in the arbitration method which offers a fair and unbiased
resolution of disputes outdoor of conventional court litigation. Events concerned in
arbitration must apprehend the appointment, composition, jurisdiction, and functions of the
Tribunal. By following established strategies and guidelines, Arbitral Tribunals contribute to
the green and powerful resolution of disputes. Hence, the growth of arbitration proceedings in
India helps to solve the unwanted condition of court burden.

Q.22 State the procedure and importance of settlement agreement?

Ans:

Q.23 When award is considered as final award?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Proceedings
Arbitral proceedings refer to the step-by-step process followed by an Arbitral Tribunal to
resolve a dispute between parties through arbitration. These proceedings are designed to be
faster, more flexible, and less formal than court trials. The process begins when the parties
agree to resolve their dispute through arbitration, either as per a prior agreement (arbitration
clause in a contract) or by mutual consent after a dispute arises.
The arbitration process officially starts when a party sends a notice of arbitration to the other
party. The parties then appoint an arbitrator or a panel of arbitrators. Once the Arbitral Tribunal
is formed, it conducts hearings where both parties present their arguments, evidence, and
witnesses. The tribunal ensures that the proceedings are conducted fairly and impartially. It has
the power to make procedural decisions, such as setting deadlines, deciding on the admission
of evidence, and granting interim relief if necessary. After hearing both sides, the tribunal
delivers a final decision, known as an arbitral award, which is legally binding and enforceable
like a court judgment.
Arbitrator
The role of an arbitrator is to resolve disputes that the parties have in agreement to submit
to arbitration. The decisions of the arbitrator require a document subject to certain formalities,
and referred to as the arbitral award. The content and form of an arbitral award, and also the
discretion enjoyed by arbitrators in creating an award can essentially vary according to the
procedural law applicable to the arbitral procedure, the powers presented by the parties upon
the arbitrator under the applicable arbitration agreement, and also the specific sort of arbitration
used.
Stages of Arbitral Proceedings
Arbitration clause or arbitration agreement
During the drafting of any contract pertaining to either insurance, partnership, any civil matter,
or any other matter. The parties shall add an arbitration clause in the contract, the clause should
state that in the future, if any disputes arise among the parties then, in that case, they can resolve
it through the arbitration process. During the drafting of an arbitration clause in the contract,
the person who is drafting needs to be very careful to make the clause in a detailed manner and
ensure every possibility in which the disputes can be raised out of contract or due to the relation
of the contract. In the event that the parties do not have an arbitration clause in the contract, the
parties at that point can make an arbitration agreement, but it should be with their mutual
consent, in order to solve the disputes arising out of the previous contract.
Notice of arbitration
Section 21 of the Act states about when arbitration can commence. The dispute among the party
begins on that particular date on which a request for the dispute as referred to arbitration is
received by the respondent. From the date the respondent has received the legal notice to the
date of completion of the fixed period given in the notice, the parties must give a reply to the
notice.
Appointment of arbitrators
Section 10(1) of the Act states that the parties are free to agree on any number of arbitrators,
however, the number of arbitrators should not be in the even number. Further, Section 10(2)
enunciates that in case parties fail to decide arbitrators in accordance with Section 10(1), then
under that circumstance the arbitral tribunal shall consist of a sole arbitrator.
Parties mutually decide on the matter of the appointment of arbitrators. The parties to the
arbitration agreement or clause must mention the name of the concerned arbitrator who will
resolve the dispute. In case the parties fail to decide mutually on the appointment of the
arbitrator then under those circumstances, Section 11 of the Act, states that the parties must
move to the court and request for the appointment of an arbitrator.
Statement of claim
Section 23 of the Act, states that within the time period that is fixed by the parties, the claimant
must state supporting facts about his claim, the point of issue and relief.
The parties need to submit their statement of claim which should be accompanied by all the
documents that must be supported by the relevant facts and the issues of the arbitration. It is
pertinent to note that the claim can be changed if the parties agree to it, then they can alter or
change the claim during the arbitral proceeding or unless the arbitral tribunal considers the
claim to be inappropriate.
Hearing of parties
Steps that are involved during the process of hearing of the parties:
Preliminary hearing and exchange of information stage
After the arbitrator is appointed and is confirmed, the preliminary hearing of the arbitration
proceeding begins in which the parties call their arbitrator so that the schedule can be fixed.
During the preliminary meeting, primarily the issues of the dispute are addressed, and then the
exchange of information is done among the parties and the next hearing date is scheduled. On
the next date which was scheduled, the arbitrator will issue a written document commonly
known as a 'scheduling order.'
Stage of hearing
At this stage, the case is presented to the arbitrators by the parties. This process cans take place
in person, or can be over the telephone, or by submitting the written documents or arbitration
agreements and applicable rules that govern the case. Parties need to submit written arguments
after hearings, as directed by the arbitrator.
Arbitral award
An arbitral award is considered as a final order which is given by the arbitrator. The award can
either be in terms of monetary relief by one party or by other parties. Also an award can be a
non-financial one such as adding the incentives of employment or stopping the business
practices.
Essentials of the award
Essentials of the award given in an arbitral proceeding -
The award must be in written form and duly signed either by the majority or by all..
The date and place of the award should be mentioned.
• The reason for the decision must be mentioned in the award, except when parties have agreed
that there is no need to give that reason or when there is a mutual settlement during the
proceeding which is recorded as an award.
• The arbitral award should be certain and the final award must not be vague, unce and
ambiguous.
• There is no such need for the registration of an award, award is like a final judicial decree and
must be enforced in the same way.
Types of arbitral awards
Interim award
This is a temporary award given by the tribunal during which the proceeding is going on. An
Interim award can be made by such a tribunal which has the authority to grant a final award.
Interim orders are generally given for the money payment or for property's disposition between
the parties and an order to make an interim payment is on account of the costs of the arbitration.
Final award
The final award is the order given by the arbitrator after the completion of the entire arbitration
proceeding. The arbitrator must state the reason for the decisions made in the award. After the
final award is made it must be signed by all the arbitrators and the parties.
Enforcement of domestic awards
The process for enforcement of a domestic award is provided in Section 36 of the 1996 Act.
Once the award attains finality in terms of Section 35 of the 1996 Act, the parties may approach
the appropriate court for enforcement of the award.
Finality of an award
Every arbitration proceeding has one ultimate objective, which is to result in an award that is
both valid and enforceable. For this reason, the final award must be such that it fully decides
all the issues and differences that had arisen between the parties and were in dispute between
the parties, which they had ultimately raised for determination in the arbitration proceeding.
Section 35 of the 1996 Act confers the status of finality on an arbitral award. It goes on to state
that an arbitral award shall be final and binding not just on those who have been parties to the
arbitration proceedings but also on every person claiming under the parties. Therefore, this
arbitral award that has attained finality and which has decided all the differences raised and in
dispute between the parties would be binding on the parties as well as those other persons who
seek to claim through the parties.
Enforcement of an arbitral award
After the arbitral tribunal forms an opinion and subsequently passes the award, the award may
be challenged in accordance with the grounds provided under Section 34 of the 1996 Act. If a
challenge to the award has been made and is unsuccessful, or if the grounds under Section 34
of the 1996 Act have not been made out, the award attains finality in terms of Section 35 of the
1996 Act. Further, as already discussed above, this final award becomes binding on both the
parties to the proceedings and their privies who claim through the parties.
Enforcement of foreign awards
Part II of the 1996 Act governs and regulates the enforcement procedures for foreign awards in
India. This part is further subdivided into two chapters. Chapter I deals with the enforcement
of the New York Convention Awards, 1958. It runs from Sections 44-52 of the 1996 Act.
Further, Chapter II deals with the enforcement of Geneva Convention Awards. This chapter
runs from Sections 53-66 of the 1996 Act.
Enforcement of New York Convention Awards
Part II, Chapter I, of the 1996 Act deals with the mode of enforcement of New York Convention
Awards. Under this part, while the courts do have the power to refuse enforcement, they do not
possess the power to set aside such an award. This is different from Part I of the 1996 Act,
wherein, under Section 34, courts have the power to set aside the award in accordance with
Section 34. Thus, in instances of foreign awards, the opposing party has no recourse against
that award other than seeking its non enforcement at the time when the award holder seeks to
enforce it.
Process of enforcement of the Geneva Convention Awards
Part II, Chapter II, of the 1996 Act deals with the enforcement of awards made in pursuance of
the Geneva Convention. This chapter, titled "Geneva Convention Awards," runs from Sections
53-60. This chapter, in effect, replaces the now repealed Arbitration (Protocol and Convention)
Act, 1937. India is a signatory to both the Geneva Protocol, 1923 and the Geneva Convention,
1927. In order to put these conventions into effect in the Indian scenario, the earlier Arbitration
(Protocol and Convention) Act, 1937, was enacted. Chapter II, Part II, of the 1996 Act is thus
a replacement for the Arbitration (Protocol and Convention) Act, 1937. While the Geneva
Convention is not as prevalent as it used to be when it was enacted, it is relevant since it
represents prior attempts to address the concerns and problems faced in the enforcement of
foreign awards.
Conditions for Enforcement of Geneva Convention Awards
In order to enforce a foreign award under Part II of Chapter II of the Arbitration and
Conciliation Act, 1996, Section 57(1) lays down five conditions. These are:
Arbitration agreement should be valid
Section 57(1)(a) of the 1996 Act provides that the foreign award would be liable to be enforced
only if such award is made in accordance with a valid arbitration agreement. The test of the
validity of the arbitration agreement would be in accordance with the law applicable to the
agreement. In the event that the arbitration agreement is invalid, then the award too would not
be enforceable.
Subject matter should be arbitrable
Section 57(1)(b) of the 1996 Act provides that the subject matter of the award must be arbitrable
as per Indian law. If the same is not arbitrable in accordance with Indian law, then the foreign
award would not be enforceable.
Constitution of the tribunal and due process
Section 57(1)(c) of the 1996 Act provides that the award must be made by such an arbitral
tribunal as was provided in the submission to arbitration by the parties. Further, the constitution
of the tribunal should be in a manner as agreed by the parties. In doing so, it should also
conform to such laws as are applicable to the arbitration procedure.
Award must be final
Section 57(1)(d) of the 1996 Act states that the award sought to be enforced must have attained
the status of finality in the country in which it was made. By finality, the provision means that
the award should not be open to any form of opposition or appeal. For example, a foreign award
would be considered to have attained finality if the time period for challenging the award by
virtue of a proceeding had expired long before. Such an award would be considered to have
attained finality and would be enforceable.
Section 58: Enforcement of the Geneva Convention Awards
Section 58 of the 1996 Act provides that upon satisfaction of the Court that the award is
enforceable under Chapter II of Part II, such award would be deemed to be a decree of the
Court.
Conclusion
An arbitral award is considered final under the Arbitration and Conciliation Act, 1996, when it
fully resolves the disputes between the parties, leaving no outstanding issues for the arbitral
tribunal to decide. Once the tribunal has issued the award, it becomes functus officio, meaning
it has no further jurisdiction except for limited corrections or clarifications under Section 33.
The award attains finality when the period for filing a challenge under Section 34 expires or
when a challenge is dismissed by the court. Upon reaching this stage, the award becomes
binding on the parties under Section 35 and is enforceable as a decree under Section 36. Thus,
finality is achieved when the dispute is conclusively determined, the tribunal’s role is
completed, and the award is either unchallenged or upheld by the court.

Q.24 When and how the arbitral award is challenged?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
21. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
22. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
23. Conciliation – Similar to mediation but with a more active role for the conciliator.
24. Negotiation – Direct discussions between parties to reach a settlement.
25. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitral Award
According to Section 2(1)(c) of the 1996 Act an arbitral award includes an interim award. As a
preventive measure and at the request of the party an arbitrator can issue an interim order or
award regarding the dispute. Interim orders are orders that are valid only during the arbitration
process, mandating the party to refrain from doing some actions that may fall counter to or
harm the other party's interest. Such an order is passed in the form of an interim injunction.
Unlike a usual interim measure, an interim award under the 1996 Act forms a part of the final
award, that is binding on the parties involved. An interim award is granted after a thorough
hearing, encompassing the accepted interim measures.
However, once the arbitration proceedings have been completed, the arbitral tribunal grants an
arbitral/arbitration award, as the final award. An arbitral award can be monetary or non-
monetary. It can be monetary which is made for payment of a sum of money from one party to
the other and it can be non-monetary when no money needs to be paid, but it includes decisions
like stopping a certain business practice or increasing unemployment perks and incentives.
An arbitral award is the final decision given by the Arbitral Tribunal to resolve a dispute. It is
similar to a court judgment but is given by an arbitrator instead of a judge. The award is issued
after all parties have had a fair chance to present their case, provide evidence, and make
arguments.
For an award to be held valid, it must fulfil two conditions. Firstly it should be certain, meaning
that it should be clear, definite, and unambiguous in terms of the decision made with regard to
the rights of the parties. Secondly, it must contain a decision. An award without a valid decision
or unclear decision on every issue raised before the arbitral tribunal shall be considered invalid.
In addition to fulfilling these conditions, an award must bear the signature of an arbitrator. It
must also contain specific reasons for the decision made in an award regarding the particular
case. The award should not leave any room for confusion and must clearly outline the duties
and liabilities imposed on the parties. An award must deal with every aspect of the issue that is
a matter of concern between the parties, giving a clear and final decision on every such aspect
of the issue.
The form and content of an arbitral award are regulated by Section 31 of the Arbitration and
Conciliation Act, 1996. This section ensures that the award is made in writing, signed by the
arbitrators, and includes reasons for the decision (unless the parties agree otherwise). It also
mentions details such as the date and place of arbitration. The award is final and binding,
meaning that both parties must follow its terms, just like a court ruling. This process ensures
fairness, transparency, and enforceability in arbitration.
The following are the fundamental parts of a legitimate Award, as determined by a cursory
perusal of this Section:
• The Award shall be made in writing.
• Award must be signed by all the members of the panel.
• Award should be describe the reasons for its existence.
• The date of award should be stated.
• The award shall identify the location.
• An interim award can also be given under Section 17.
• After the Award is made each party should receive a signed copy.
• The Award may be made without stating any grounds if the parties agree, Giving reason
for the award is not required in the case of a settlement.
• Award as may be justified. Any such correction, interpretation of award and additional
award shall form as a part of the final award.
• An Award becomes final either upon expiry of the period provided under the statute to
challenge the Award or if challenged, after the final decisions on such challenges.
Setting aside the Arbitral Award
The 1996 Act is underpinned by two core provisions aimed at ensuring the efficiency and
effectiveness of arbitration proceedings: firstly, the principle of Minimum Judicial Interference,
which emphasises limited court intervention; and secondly, the principles of Finality and
Enforcement of Awards, which emphasise the conclusive nature of arbitral decisions and the
mechanisms for their enforcement. Therefore, when two parties enter into an arbitration
agreement as outlined in Section 7 of the 1996 Act, they mutually commit to abiding by the
terms of the agreement and if in the event of a future dispute where arbitration is chosen as the
resolution method, the decision rendered by the arbitrator becomes conclusive and obligatory
for both parties.
However, instances may arise where either one party or both parties express dissatisfaction
with the decision reached through arbitration. In such circumstances, the 1996 Act provides a
recourse. The 1996 Act delineates specific grounds upon which parties can file an application
in the court for setting aside such an award.
It is important to note that an application for setting aside an arbitral award has to be made in
an appropriate court having jurisdiction on such matters. According to Section 2(1) (e) (i) of
the 1996 Act, an application for setting aside an arbitral award rendered in an arbitration other
than an international commercial arbitration must be submitted to either a District Court,
specifically the principal Civil Court of original jurisdiction, or to the High Court with ordinary
original civil jurisdiction. This High Court should have the authority to adjudicate on the issues
central to the arbitration proceedings.
In the case of an arbitral award in an international commercial arbitration, the application to
set aside the award must be submitted to the High Court with ordinary civil jurisdiction.
According to Section 2(1)(e) (ii) of the 1996 Act, the High Court should have authority to
decide on the issues central to the arbitration or, in alternative situations, possess jurisdiction
to hear appeals from lower court decrees. The Section further states that If a commercial
division exists within the high court under the Commercial Courts Act, the application will be
addressed and resolved by this specialised division.
Procedure for setting aside an Arbitral Award
The jurisdiction of the court is generally barred from an arbitration proceeding. However, there
are circumstances wherein the court can interfere to ascertain the proper conduct of the
arbitration proceeding. For this purpose, certain remedies are provided under the 1996 Act
against the arbitral award issued by an arbitrator. Under the provisions contained in the 1996
Act, an aggrieved party may approach a court to set aside an arbitral award on the presence of
certain grounds provided under Section 34 of the 1996 Act.
Any party to an agreement who wants to challenge an arbitral award passed by an arbitrator
needs to file an application for setting aside an award. The procedure for filing such an
application is provided under the provisions contained in Section 34 of the 1996 Act. In
accordance with Section 34(3) of the 1996 Act, a party desiring to challenge a domestic arbitral
award has to file an application within the period of 3 months from the date of the receipt of an
award or the disposition of the request seeking rectification as per Section 33, whatever occurs
later. Prior to filling out an application, the party is required to issue the notice to the other
party and file an affidavit, which confirms that they have complied with Section 34(5) of the
1996 Act.
After an application has been presented to the court, the applicant needs to convince the court
that the grounds on the basis of which an award is challenged are just in order to set aside the
arbitral award. Once the judge is satisfied, a notice is released requiring the other party to
respond. Upon the completion of the pleadings, the court takes oral arguments to ensure that
the grounds outlined in Subsection (2) and (2A) of Section 34 are fulfilled. Based on this, the
court can either set aside the award or simply refuse the application. Usually, the court doesn't
reevaluate the evidence examined by the arbitral tribunal, which is why witness cross-
examination is often a rarity.
The application to set aside a domestic arbitral award must be determined expeditiously and at
the earliest opportunity, nominally within a year by virtue of Section 34(6) of the 1996 Act.
However, the Supreme Court clarified that this requirement is a directive, not mandatory.
With respect to a foreign award, the award debtor must wait for execution of the award under
Section 47 read with Section 49 of the 1996 Act. Then, the debtor can object to the award under
Section 48. The proceedings involve completing pleadings and oral arguments, similar to
domestic awards. However, the enforcement court in India can only refuse to enforce the
foreign award. It has no jurisdiction or authority to set it aside.
Whenever an application for setting aside an arbitral award is filed before an appropriate court,
such court can have the authority to set aside an arbitral award only when the grounds
mentioned under Section 34 are present and not otherwise.
Grounds for setting aside an Arbitral Award
Section 34 of the 1996 Act provides the provisions of certain specific grounds on the basis of
which an arbitral award rendered in India can be set aside. They are-
1. Incapacity of a party while making an application to enter the agreement.
2. Arbitration agreement not being valid under the law.
3. Parties were not given proper notice of the appointed Arbitrators or the Arbitral Tribunal.
4. Nature of dispute not capable of settlement by arbitration.
5. The composition of the arbitral award was not in accordance with the agreement of the
parties.
6. The arbitral award is in violation of the public policy of a state.
7. The arbitral award deals with a dispute not falling within the terms of submissions to an
arbitration.
Limitation for filing an application to set aside an arbitral award
Section 34(3) provides the limitation period for filing an application to set aside an arbitration
order. It states that an appeal to set aside an arbitration order by an aggrieved party has to be
strictly made within the period of 3 months from the date of receipt of the same. The importance
of this is set out by Section 36 which asserts that the award becomes enforceable as soon as the
limitation period under Section 34 expires. Under Section 33, the Court may, however, allow a
delay of 30 days on a request made by the aggrieved party if the court is satisfied with the
evidence of sufficient cause.
Case Law
NHAI vs. Trichy Thanjavur Expressway Ltd. (2023)
The Delhi High Court in the recent case of NHAI v. Trichy Thanjavur Expressway Ltd. (2023)
("NHAI case") provides the difference between modification and partial setting aside of an
award. Such an analysis by the court clarifies that the decision given in the case of NHAI v.
Hakeem & Anr. (2021) does not serve as an authority on the matters related to the partial setting
aside of an award.
The court also put some light on the purpose and scope of Section 34(4) clarifying that this
section aims to ensure defects in the awards without reassessing past findings. Thereby
ensuring a limited opportunity for rectification while preserving the overall integrity of the
award.
Background of the case
The Delhi High Court in the NHAI case was approached to decide upon the court's authority
to partially set aside an arbitral award under Section 34 of the 1996 Act.
The case is based on the legal principle established in NHAI v. In Hakeem & Ors.(2021)
("Hakeem case"). The Supreme Court in this case, clarified that the authority of the court to set
aside an arbitral award under Sectio 34 of the 1996 Act does not mean that the court also has
the authority to change and amend the award that was granted by the arbitral tribunal. In the
Hakeem case, the principal point of interest was the judgment of the District and Sessions Judge
to increase compensation awarded by the arbitrator in an award. In its decision, the Supreme
Court underlined the fact that if defects or gaps were found in the award or ground provided
under Section 34 were identified, setting aside an award is the only option available, as opposed
to modification which is not expressly provided in the 1996 Act. This leads to a crucial question
as to whether decisions made in the Hakeem case also prohibit the court from partially setting
aside the award.
As per the provisions contained in the proviso to Section 34(2)(a) (iv), the court has the
authority to partially set aside an award, provided that the matter that is submitted to the
arbitrator for the resolution is severed from the matters that is not submitted. Only those matters
forming part of an award that are not submitted to arbitration may be set aside.
The Delhi High Court, aligning its judgment with the said provision, has cleared the confusion
posed by the Hakeem case on the issue of the court's authority to partially setting aside an
award.
Conclusion
India has a modern and efficient Arbitration Act. Sections 34 and 37 provide for recourse
against an arbitral award which may be set aside by a court on certain specified grounds. All
these grounds are common to both domestic as well as international arbitral awards. The ground
of public policy should only be interpreted as far as it aims towards broadening the public
interest and not violating the basic notions of Indian laws. The judicial intervention should also
be minimal for success and further promotion of Arbitration in India.

Q.25 State the importance of arbitration agreement in an arbitration process?

Ans: Alternative Dispute Resolution (ADR) refers to methods used to settle disputes outside
the traditional court system. These methods are faster, less expensive, and more flexible
compared to litigation. ADR is widely used in commercial, civil, and even family disputes to
reduce the burden on courts and promote amicable settlements.
The Act of 1996 is the fundamental source of Indian arbitration law. An act enacted to bring
together the laws governing domestic and international arbitration, as well as their
enforcement. Some substantial revisions were implemented in the years 2015 and 2019 to make
arbitration a favoured form of resolving commercial disputes and to make India a centre of
international commercial arbitration.
Common Methods of ADR
1. Arbitration – A neutral third party (arbitrator) hears both sides and makes a binding
decision.
2. Mediation – A mediator helps parties negotiate a mutually agreeable settlement.
3. Conciliation – Similar to mediation but with a more active role for the conciliator.
4. Negotiation – Direct discussions between parties to reach a settlement.
5. Lok Adalat (People’s Court) – A special ADR mechanism in India that settles disputes
quickly with binding decisions.
In India, ADR has gained significant importance due to a huge backlog of cases in courts. The
Arbitration and Conciliation Act, 1996, governs ADR processes, ensuring that disputes are
resolved efficiently. The Indian judiciary actively promotes ADR through various laws and
judicial precedents.
ADR is encouraged under Section 89 of the Code of Civil Procedure, 1908. The Arbitration
and Conciliation Act, 1996, was enacted to align with international standards (UNCITRAL
Model Law). Lok Adalats, as per the Legal Services Authorities Act, 1987, provide quick and
cost-effective dispute resolution.
Various sectors, such as commercial contracts, family law, and consumer disputes, actively use
ADR. The Supreme Court and High Courts promote ADR through mediation centres and
arbitration-friendly judgments.
Arbitration
Arbitration serves as an alternate dispute resolution mechanism for two parties in a contractual
relationship who want to solve disputes without going to court due to cost and time factors. In
such cases, they can add an arbitration clause in the contract, which proves to be very helpful
in times of dispute.
To understand foreign arbitral awards, one should be able to distinguish between international
commercial arbitration and foreign arbitration.
Arbitration, in India, is governed by the Arbitration and Conciliation Act, 1996 where Section
2(1)(f) defines international commercial arbitration. In other words, it can be understood as an
arbitration between two parties, where at least one of the parties is a foreign national, company,
or government entity, thereby qualifying as international commercial arbitration.
Arbitration involves the concept of "seat", which determines the jurisdiction whose laws apply
to the arbitration proceedings. For example, if arbitration occurs between a foreign company
and an Indian company with that in India, then it constitutes international commercial
arbitration. Conversely, if the seat is outside India, i.e., governed by foreign laws of arbitration,
then it will be a foreign arbitration.
Types of Arbitration
Ad Hoc Arbitration
Ad hoc arbitration is the type of arbitration where the parties mutually agree to resolve their
disputes by arbitration proceedings conducted by mutually appointed arbitrators but not by an
institution. This is one of the most common forms of arbitration in India where the parties
themselves agree to and arrange for arbitration.
Institutional Arbitration
Institutional Arbitration is the form of arbitration where an institute, which has been set up for
the purpose of settling disputes by arbitration or other ADR methods, is employed to conduct
arbitration. Such institutes may be national or international in character and they usually lay
down their own rules of arbitration. But such rules cannot override the provisions of the
Arbitration and Conciliation Act, 1996.
Domestic Arbitration
When the arbitration takes place in one jurisdiction and both the parties come under that
jurisdiction, then such an arbitration is called domestic arbitration. In other words, both the
parties must be nationals of the same jurisdiction.
International Arbitration
International arbitration is the type of arbitration where at least one of the parties at dispute is
a foreign national or in the case of a body corporate, has been incorporated in a foreign country.
In other words, at least one of the parties must be a foreign national or habitually resident in a
foreign country.
Stages of Arbitration in India
The stages of an arbitral process as per the provisions of the Arbitration and Conciliation Act,
1996 are described as follows:
Arbitration agreement (Section 7, Arbitration and Conciliation Act, 1996)
The arbitration agreement is the first step towards arbitration.
Arbitration Agreement
The formation of an arbitration agreement takes place when two parties, enter into a contract
and in which, the contract states that any dispute arising between the parties have to be solved
without going to the courts with the assistance of a person, who would be a neutral person, a
third party, appointed by both of the parties, known as the Arbitrator, who would act as a judge.
The arbitrator so appointed should have been previously mentioned in the contract that they
made. They should also state who should select the arbitrator, regarding the kind of dispute the
arbitrator should give decisions on, the place where the arbitration would take place.
Furthermore, they should also state the other kinds of procedures mentioned or that has to be
required during an arbitration agreement.
The parties are generally required to sign an Arbitration Agreement. The decision taken by the
arbitrator regarding any issue, is binding on both the parties, as stated by the agreement. In any
event, where one party decides that an agreement must be made prior to entering the contract,
it can be stated that the agreement was made to deviate from the hassles of the court. These
agreements are like contingent contracts, which means that these agreements shall only come
into force or become enforceable if any dispute happens, and on the basis of the same dispute
between two parties mentioned in the contract. It also takes place or is enforceable in the light
of any dispute that arises between the parties to the contract.
Essentials of an Arbitration Agreement
• There must be a dispute that should take place, only then the agreement will be valid. The
presence of a dispute amongst the parties is an essential condition for the contract to take place.
When the parties have already settled the dispute, in no case, they can invoke the arbitration
clause to refute the settlement.
• Another essential is the written agreement. An agreement related to the arbitration must
always be in writing.
• The Third essential is Intention.
• The fourth essential element is the signatures of the parties.
Constituents of Arbitration Agreement
While not deemed essential, certain essential elements can be included in an arbitration
agreement based on the parties’ preferences. These elements provide further clarity and
structure to the arbitration process. Here are some common optional components:
Seat of Arbitration
The “seat” refers to the location where the arbitration proceedings are based. Specifying the
seat is particularly crucial in international commercial arbitration. It determines the procedural
laws governing the arbitration.
Procedure for Appointing Arbitrators
The procedure for selecting arbitrators follows guidelines outlined in the Arbitration Act.
Generally, any qualified person, regardless of nationality, can be appointed as an arbitrator
unless the parties agree otherwise. Parties can also mutually decide on the arbitrator’s
appointment.
Language
Language plays a vital role in an agreement. The chosen language should be understood by all
parties involved to prevent misinterpretations. Clarity is essential to ensure both parties
comprehend each clause. Opting for a mutually understood language can reduce translation
costs.
Number and Qualifications of Arbitrators
The Arbitration Act permits parties to determine the number of arbitrators. However, an odd
number is required to prevent deadlock. This allows decisions to be reached even in the
presence of disagreements among arbitrators.
Importance of Arbitration Agreement
An arbitration agreement is the cornerstone of any arbitration proceeding, as it establishes the
parties' consent to resolve disputes outside of traditional courts. Without such an agreement,
arbitration cannot take place, as it is a voluntary process that requires mutual consent. The
arbitration agreement defines the scope of disputes that can be arbitrated, preventing
unnecessary conflicts over jurisdiction. It also specifies crucial procedural aspects, such as the
number of arbitrators, the arbitration rules to be followed, the seat of arbitration, and the
language of proceedings. Additionally, a well-drafted arbitration agreement ensures that parties
avoid litigation in national courts, as courts generally uphold valid arbitration agreements and
will refer disputes to arbitration when one exists. This not only saves time and legal costs but
also provides a neutral forum for resolving disputes, reducing concerns about bias in domestic
courts. Furthermore, arbitration agreements enhance enforceability since arbitral awards are
recognized and enforced in over 170 countries under the New York Convention (1958). They
also allow parties to maintain confidentiality, a key advantage over court litigation. Therefore,
an arbitration agreement is fundamental to the arbitration process, providing clarity, efficiency,
and enforceability while minimizing legal uncertainties.
his provides parties with confidence that any award issued by the arbitral tribunal will be upheld
and enforced, unlike court judgments, which may face challenges in foreign jurisdictions.
Moreover, arbitration agreements often include confidentiality provisions, ensuring that
sensitive business or financial information remains private, unlike court proceedings, which
are generally public.
In addition to enforceability and confidentiality, arbitration agreements contribute to cost and
time efficiency. Litigation in courts can be lengthy and expensive, involving multiple hearings,
appeals, and procedural delays. Arbitration, on the other hand, is typically faster and more
streamlined, with limited opportunities for appeal, allowing for a more efficient resolution of
disputes. The agreement can also provide for flexibility in selecting arbitrators who have
specialized expertise in the subject matter of the dispute, ensuring a more informed decision-
making process compared to court litigation, where judges may not have specialized
knowledge of certain industries.
Conclusion
An arbitration agreement is crucial for the arbitration process, as it provides legal certainty,
procedural clarity, and efficiency while minimizing the risk of protracted court disputes. By
clearly outlining the rules, procedures, and scope of arbitration, the agreement ensures a
smoother dispute resolution process, fostering trust between the contracting parties and
promoting a more predictable and enforceable outcome.