Arbitration And Conciliation

PRESENTATION PRESENTATION on on

ARBITRATION ARBITRATION ToTo

INSTITUTE OF INSTITUTE OF CHARTERED CHARTERED

ACCOUNTANTS OF INDIAACCOUNTANTS OF INDIA

JANUARY 18, 2009JANUARY 18, 2009

Apurva Agarwal , PartnerApurva Agarwal , PartnerUniversal Legal Advocates Universal Legal Advocates

““It is a good and fair It is a good and fair settlement settlement

when neither party when neither party likes the likes the

outcome, but agree to outcome, but agree to it”it”

Outline of Topics:Outline of Topics:

Introduction into ArbitrationIntroduction into Arbitration Benefits & drawbacks Benefits & drawbacks Kinds of arbitrationKinds of arbitration Sources of arbitrationSources of arbitration Arbitration & Conciliation Act, 1996Arbitration & Conciliation Act, 1996

IntroductionIntroduction

ARBITRATION ARBITRATION

Form of Alternative Dispute Resolution Form of Alternative Dispute Resolution Alternative to court room litigation Alternative to court room litigation Parties submit their disputes to a Parties submit their disputes to a

NEUTRAL third party called the Arbitrator NEUTRAL third party called the Arbitrator (s) or Arbiter (s) for resolution(s) or Arbiter (s) for resolution

Binding dispute resolution, equivalent to Binding dispute resolution, equivalent to litigation in the courtslitigation in the courts

Benefits of ArbitrationBenefits of Arbitration

ConfidentialityConfidentiality

Limited DiscoveryLimited Discovery

SpeedSpeed

Expert NeutralsExpert Neutrals

Cost SavingsCost Savings

Preservation of Business RelationshipsPreservation of Business Relationships

Drawbacks of Arbitration Drawbacks of Arbitration

Arbitration agreements are Arbitration agreements are sometimes misleadingsometimes misleading

If arbitration is not mandatory parties If arbitration is not mandatory parties waive their to access the courts.waive their to access the courts.

Types of ArbitrationTypes of Arbitration Ad-hoc ArbitrationAd-hoc Arbitration

Institutional ArbitrationInstitutional Arbitration

Statutory ArbitrationStatutory Arbitration

Domestic or International ArbitrationDomestic or International Arbitration

Foreign ArbitrationForeign Arbitration

Sources of Arbitration Sources of Arbitration

State regulate arbitration through a variety State regulate arbitration through a variety of lawsof laws

A number of national procedural laws may A number of national procedural laws may also contain provisions relating to also contain provisions relating to arbitrationarbitration

Key international instrument – Key international instrument – 1958 New 1958 New York Convention on Recognition and York Convention on Recognition and Enforcement of Foeign Arbitral Awards Enforcement of Foeign Arbitral Awards

INTERNATIONAL INSTRUMENTS INTERNATIONAL INSTRUMENTS

The Geneva Protocol of 1923 The Geneva Protocol of 1923 The Geneva Convention of 1927 The Geneva Convention of 1927 The European Convention of 1961 The European Convention of 1961 The Washington Convention of 1965 The Washington Convention of 1965

(governing settlement of international (governing settlement of international investment disputes) investment disputes)

The UNCITRAL Model Law (providing a model The UNCITRAL Model Law (providing a model for a national law of arbitration) for a national law of arbitration)

The UNCITRAL Arbitration Rules (providing a The UNCITRAL Arbitration Rules (providing a set of rules for an ad hoc arbitration)set of rules for an ad hoc arbitration)

Arbitral Disputes Arbitral Disputes

Some types of arbitral disputes areSome types of arbitral disputes are

PropertyProperty Insurance Insurance Contract (including employment contracts)Contract (including employment contracts) Business / partnership disputesBusiness / partnership disputes Family disputesFamily disputes (except divorce matters) (except divorce matters) ConstructionConstruction Commercial recoveriesCommercial recoveries

Non Arbitral Disputes Non Arbitral Disputes

The following cannot be resolved by The following cannot be resolved by arbitrationarbitration

InsolvencyInsolvency

Matrimony Matrimony

Criminal mattersCriminal matters

Torts etc.Torts etc.

Arbitration and Arbitration and Conciliation Act, 1996Conciliation Act, 1996

An act to consolidate the law relating to An act to consolidate the law relating to domestic arbitration domestic arbitration international commercial arbitration and international commercial arbitration and enforcement of foreign arbitral awards enforcement of foreign arbitral awards

It extends to the whole of India It extends to the whole of India

ARBITRATION ARBITRATION AGREEMENTAGREEMENT

Formulation of the arbitration agreementFormulation of the arbitration agreement

"Arbitration Agreement" means an "Arbitration Agreement" means an agreement to submit to arbitration all or agreement to submit to arbitration all or certain disputes in respect of a defined certain disputes in respect of a defined legal relationship, whether contractual or legal relationship, whether contractual or notnot

which have arisen or which have arisen or which may arise between them. which may arise between them.

Arbitration Agreement … Arbitration Agreement … ContdContd

An arbitration agreement may be in the An arbitration agreement may be in the form of an arbitration clause in a contract form of an arbitration clause in a contract or in the form of a separate agreement.or in the form of a separate agreement.

An arbitration agreement shall be in An arbitration agreement shall be in writing.writing.


An arbitration agreement is in writing if it An arbitration agreement is in writing if it is contained in— is contained in—

a)a) a document signed by the parties;a document signed by the parties;

a)a) an exchange of letters, telex, telegrams an exchange of letters, telex, telegrams or other means of telecommuni cation or other means of telecommuni cation which provide a record of the agreement; which provide a record of the agreement; oror


c)c) an exchange of statements of claim and an exchange of statements of claim and defence in which the existence of the defence in which the existence of the agreement is alleged by one party and not agreement is alleged by one party and not denied by the other.denied by the other.

Reference To Arbitration Reference To Arbitration

A judicial authority before which an action is A judicial authority before which an action is brought in a matter which is the subject of brought in a matter which is the subject of an arbitration agreement shall, refer the an arbitration agreement shall, refer the parties to arbitrationparties to arbitration

If the issue is pending before a judicial If the issue is pending before a judicial authority, arbitration may be commenced authority, arbitration may be commenced or continued and an arbitral award made or continued and an arbitral award made

COMPOSITION OF COMPOSITION OF ARBITRAL TRIBUNALARBITRAL TRIBUNAL

Number of arbitrators.Number of arbitrators.

The parties are free to determine the The parties are free to determine the number of arbitrators, provided that number of arbitrators, provided that such number shall not be an even such number shall not be an even number.number.

Failing the determination referred Failing the determination referred above the Arbitral Tribunal shall above the Arbitral Tribunal shall consist of a sole arbitrator.consist of a sole arbitrator.

Appointment of arbitratorsAppointment of arbitrators A person of any nationality may be an arbitrator, A person of any nationality may be an arbitrator,

unless otherwise agreed by the parties. unless otherwise agreed by the parties.

The parties are free to agree on a procedure for The parties are free to agree on a procedure for appointing the arbitrator or arbitrators. appointing the arbitrator or arbitrators.

An arbitration with three arbitrators, each party An arbitration with three arbitrators, each party appoints one arbitrator, and the two appointed appoints one arbitrator, and the two appointed arbitrators appoints the third arbitrator who shall arbitrators appoints the third arbitrator who shall act as the presiding arbitrator. act as the presiding arbitrator.

Appointment of Arbitrators … Appointment of Arbitrators … contdcontd

If the appointment procedure is not If the appointment procedure is not followed and the arbitrators not followed and the arbitrators not appointed then the appointment shall appointed then the appointment shall be made, upon request of a party, by be made, upon request of a party, by the Chief Justice of the State High Court the Chief Justice of the State High Court or any person or institution designated or any person or institution designated by him by him


In the case of appointment of sole or In the case of appointment of sole or third arbitrator in an international third arbitrator in an international commercial arbitration, an arbitrator of commercial arbitration, an arbitrator of a nationality other than the nationalities a nationality other than the nationalities of the parties where the parties belong of the parties where the parties belong to different nationalities may be to different nationalities may be appointedappointed


Where the dispute with regards to Where the dispute with regards to appointment of arbitrators arise in an appointment of arbitrators arise in an international commercial arbitration the international commercial arbitration the reference to "Chief Justice of High Court reference to "Chief Justice of High Court shall be construed as a reference to the shall be construed as a reference to the "Chief Justice of India""Chief Justice of India"

Grounds for challengeGrounds for challenge

An arbitrator may be challenged only if—An arbitrator may be challenged only if—

(a)(a) circumstances exist that give rise to circumstances exist that give rise to justifiable doubts as to his independence justifiable doubts as to his independence or impartiality, oror impartiality, or

(b)(b) he does not possess the qualifications he does not possess the qualifications agreed to by the parties.agreed to by the parties.

Termination of mandateTermination of mandate The mandate of an arbitrator shall The mandate of an arbitrator shall

terminate if—terminate if—

he becomes he becomes de jurede jure or or dede factofacto unable to unable to perform his functions or for other reasons perform his functions or for other reasons fails to act without undue delay; andfails to act without undue delay; and

he withdraws from his office or the parties he withdraws from his office or the parties agree to the termination of his mandate. agree to the termination of his mandate.

Substitution of arbitratorSubstitution of arbitrator

Where the mandate of an arbitrator Where the mandate of an arbitrator terminates, a substitute arbitrator shall be terminates, a substitute arbitrator shall be appointed according to the rules that were appointed according to the rules that were applicable applicable

Where an arbitrator is replaced, any Where an arbitrator is replaced, any hearings previously held may be repeated hearings previously held may be repeated at the discretion of the Arbitral Tribunal at the discretion of the Arbitral Tribunal

Substitution of arbitratorSubstitution of arbitrator

An order or ruling of the arbitral Tribunal An order or ruling of the arbitral Tribunal made prior to the replacement of an made prior to the replacement of an arbitrator under this section shall not be arbitrator under this section shall not be invalid solely because there has been a invalid solely because there has been a change in the composition of the arbitral change in the composition of the arbitral TribunalTribunal

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Arbitration And Conciliation