a. Arbitration & Conciliation Act, 1996. Group members. 04 Scarlet Almeida 05 Mihir Bhammar 09 Sumitra Cardoz 10 Anshul Chadha 29 Fazeel Kazi 31 Prashant Kokare 50 Sandip Saha. Introduction. An Act covering: domestic arbitration international commercial arbitration
Arbitration & Conciliation Act, 1996
04 Scarlet Almeida
05 Mihir Bhammar
09 Sumitra Cardoz
10 Anshul Chadha
29 Fazeel Kazi
31 Prashant Kokare
50 Sandip Saha
Mechanism used across the world - effective, faster and less expensive.
4 methods of ADR:
Recognized by the Arbitration and Conciliation Act, 1996
The present Act is based on model law drafted by United Nations Commission on International Trade Laws (UNCITRAL), both on domestic arbitration as well as international commercial arbitration, to provide uniformity and certainty to both categories of cases.
All disputes of a civil nature or quasi-civil nature which can be decided by a civil court can be referred to arbitration:
The law has given jurisdiction to determine certain matters to specified tribunal only; these cannot be referred to arbitration:
The Act is divided in to the following parts
(a) Part I - Domestic arbitration.
(b) Part II - Enforcement of foreign awards.
(c) Part III - Conciliation procedures.
(d) Part IV - Supplementary provisions.
Part I - Domestic arbitration
Interim Measures by Court
Each party will appoint one arbitrator and the two appointed arbitrators will appoint the third arbitrator who will act as a presiding arbitrator.
Appointment of Arbitrator can be challenged only if
The mandate of an arbitrator shall terminate if---
An arbitral award may be set aside by the Court only if;
Part II – Enforcement of Foreign Awards
Part III-Conciliation Procedure
The act makes provision for conciliation proceedings. In conciliation proceedings:
Matters of a –
Matters of –
Part IV- Supplementary Provisions
Bhatia International V Bulk Trading & Others
Appeal (civil) 6527 of 2001
Petitioner : Bhatia International
Respondents : Bulk Trading & others
Date of Judgement : 13.2.2002
Bench : G B Pattanik & S N Variava
Appeal : Against the Judgement Dated 10.10.2000: Madras High Court
Petitioner Counsel : Mr.S. Sen
Respondent Counsel : Mr. Sundaram
Bhatia International contract with Bulk trading in 1997 - arbitration clause
Governed by as per rules of International Chambers of Commerce (ICC)
Bulk trading filed a request with ICC for arbitration with parties agreed process to be held in Paris and appointment of Sole Arbitrator
Respondents filed an application u/s 9 of Arbitration & concilation Act 1996 is district courts of Indore & Orissa against Bhatia International
Interim relief was sought – injunction restraining the parties from transferring/creating any third party right & dealing or selling their business assests or properties
Bhatia international – raised plea of maintainability of such an applicaton
Mr. Sen on behalf of the petitioner Bhatia International stated that Part – I of the act wouldnot apply to arbitrations where the place of arbitrations is not in India
The application was dismissed by the IIIrd Additional District Judge on 1st Feb 2000
A writ petition was filed before the High Court of Madhya Pradesh, Indore Bench & same was dismissed on 10th Oct 2000
Counsel Sen – Part –I of the Act applies to arbitration where the place of arbitration is in India other wise it will be Part –II of the Act would apply
Section 2 (2) states that provisions of the Part –I of the Act do not apply where the place of arbitration is not in India
Section 2 (8) of the Act defines international arbitration can take place in India or outside India, if outside India then Part –I doesn’t apply
Arbitration outside India – Part I does not apply hence section 9 & section 17 would not apply.
Part –II of the Act deals with the enforcement of the foreign Awards.
Section 2 & Section 17 have been purposely omitted – reason for this is arbitration take places outside India
Jurisdiction – of courts of that particular country where it is held.
Section 9 – an application for interim measure must be made before the award is enforced also section 36 deals with enforcement of domestic award only
Section 5 of the Act – Judicial authority should not interfere except as provided in the said Act. “reason”
M.P. High court of Indore Bench were wrong in entertaining the application u/s 9 of the Act based on which rejected the appilcation of the Appellant
Inspite of the fact that – A number of high courts Orissa,Madras, & Delhi have held that Part – I of the act would not apply to arbitrations which take place outside India
Judgments – Mariott International V Ansal Hotels Ltd – Delhi Court- accepted the same canvassing as the that of learned counsel Sen
The Respondents – Counselor Advocate Sundaram provided with the argument that if parties by their agreement exclude its provisions of Part I then only will not be part otherwise would apply to all international commercial arbitrations including those that take place outside India
If Sen agruments are taken into account – there would be a lacunae as neither Part I nor Part II would apply to arbitration held in a non-conventional country It would mean that there is no law in India governing such arbitrations
International Commercial Arbitration which takes place outside India – no protection to its citizens
Object of the Act was to establish a uniform legal frame work for fair & efficient settlement of disputes arising in international commercial arbitration
Always to look at the intension of the legislative makers
Not possible for most imaginative legislature to forecast exhaustively situations – courts duty to expound arises with a caution that courts should not try to legislate
Section 1 of the Act – implies to the whole of India, inclduing the state of Jammu & Kashmir.
Section 2 (a) – defines arbitration - arbitration could be under a body
like the ICC
Section 2 (f) International Commercial Arbitration makes no difference between International Arb. Takes places in India or internal Arb. which takes place outside India
Section 2 (2) – provides that part I would apply to cases where Arb. Takes place in India – to emphasis that the word “ only” not used hence legislature did not mean that the Part I would not apply to Arb. Outside India
Section 2 (4) & (5) – defines every arbitration - hence the word every arbitration includes all types
Section (5) – judicial intervention not except in Part I, Section (8) allows parties to approach Judicial but only to court is u/s 2 (e)
Legistalure has kept in mind that even international arb. Part I implies
Section 28 – does not provide to rules where Arb. Outside India
Seimilar to u/s 9 & u/s 17 – no section foreign Awards – indicating that legislature that no injunction can be brought – Stated by Sen
Said Act - Consolidated & Integratd Act – General provisons appilcable to all arbitrations would not be repeated in all chapters
Article 23 of the ICC rules permits parties to apply to a competent judicial authority for interim and conservatory measures Therefore, in such cases an application can be made under Section 9
of the said Act.
Act does not appear to be a well drafted legislation Therefore the High Courts of Orissa, Bombay,Madras, Delhi and Calcutta cannot be faulted for interpreting it in the manner indicated above
In this view of the matter we see no reason to interfere with the impugned judgment. The Appeal stands dismissed. There will be no Order as to costs throughout
Supreme Court Judgment, Civil appeal under ‘Arbitration And Conciliation Act’ for setting aside of Foreign Award
It means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is---
(i) an individual who is a national of, or habitually resident in, any country other than India; or
(ii) a body corporate which is incorporated in any country other than India; or
(iii) a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or
(iv) the Government of a foreign country
Appellants: TDM Infrastructure Private Limited
Respondent: UE Development India Private Limited
“When both the companies are incorporated in India, and have been domiciled in India, the arbitration agreement entered into by and between them would not be an international commercial arbitration agreement.”
Appellants: India Household and Healthcare Ltd.Vs.Respondent: LG Household and Healthcare Ltd.
Petitioner called upon the respondent to appoint an Arbitrator to decide the dispute
Respondent contended that arbitration proceedings under MoU and agreement would be null and void as both were vitiated by fraud
On appeal Madras High Court granted interim injunction restricting Petitioner from taking any action in terms of the agreement
Held, a judicial authority obligated to refer the parties to arbitration where arbitration agreement exists
But when instance of fraud is proved, it goes on to vitiate the entire agreement.
Arbitration agreement is rendered null and incapable of being performed due to the effect of fraud
Hence, in cases of fraud, no judicial authority can enforce arbitration clause as the same ceases to operate
Application for appointment of Arbitrator, not maintainable unless the procedure and mechanism agreed to by and between the parties complied with — Application dismissed
Malaysian Airlines Systems BHD (II)
Stic Travels (P) Ltd(Arbitration Petition No. 18 of 2000),
Supreme Court’s ruling on arbitrator’s nationality
Decided by Justice M. Jagannadha Rao, the nominee of the Chief Justice of India.
Malaysian Airlines(Foreign Co.) appointed Stic Travels Pvt. Ltd(Indian Co.) as the General Sales Agent(Passenger) for various countries.
Two agreement dated September 15, 1986 and January 11, 1989 were entered into for this purpose. The former agreement related to passenger, and latter related to cargo. The originals of these agreements were with the Indian company.
Further, the said agreements were terminated by the foreign company by notice dated March 1, 1999 delivered to the Indian company on the same date. This was done on the ground that the Indian company failed to remit and pay to the foreign company all the sums and money received by it in the course of agency on account of sale of passenger tickets and airway bills.
The foreign company claimed that the Indian Company had, in its letter dated June 15, 1999 admitted liability up to Rs 83,54,655.79 and failed to pay the same and had fraudulently attempted to `arbitrarily and illegally' adjust the same against false claims with a view to defraud it.
The application under Section 11 (5) for appointment of arbitrator by the Chief Justice of India or his nominee is by the Malaysian Airlines company.
The claim of the foreign company is that the Indian company is liable to pay it a sum of Rs 96,21,137 with interest at 24 per cent with quarterly rests with effect from May 1, 1999 besides other amounts.
The Indian company contended that the agreements in question had ceased to exist and, hence, there was no arbitration clause. The notice by the foreign company was bad in law.
The foreign company had not produced the original agreements. They are not with the Indian company. The foreign company cannot file attested copies of the two agreements.
After hearing the parties, the designated judge identified two points for consideration:
(1) Whether the preliminary issues raised by the Indian company can be decided at this stage or be referred to the arbitrator;
(2) Whether, in the case of an international arbitration agreement, where one of the parties is an Indian national, it is not permissible to appoint an arbitrator of Indian nationality
On the first point he declined to decide the preliminary issues and directed that the matter be straight away referred to an arbitrator.
On second point He observed that while the nationality of the Arbitration is a matter to be kept in view, it does not follow from Section 11(9) that the proposed arbitrator is necessarily disqualified because he belongs to the nationality of one of the parties.
In case the party who belongs to a nationality other than that of the proposed arbitrator, has no objection, the Chief Justice of India (or his nominee) can appoint an arbitrator belonging to a nationality of one of the parties.
In case, there is objection by the one party to the appointment of an arbitrator belonging to the nationality of the opposite party, the Chief Justice of India (or his nominee) can certainly consider the objection, and see if an arbitrator not belonging to the nationality of either parties can be appointed.
Petitioner : Haryana Telecom Ltd
Respondent : Sterlite Industries (India) Ltd
Date of Judgement : 13/7/1999
Bench B N Kirpal & S. Rajendra Babu
Case no: 1999 (3) SCR 861
Sections referred in the Act – Section 8 of Arbitration and Concilation Act 1996
Petitioner represented by Learned Counsel – Mr. Arun Jaitely
Haryana Telecom Ltd, a State – PSU entered into agreement with the Sterlite Industries for laying of cables a 150 crore order.
Due to business recession the venture could not be completed by Sterlite Industries and had to go for winding up of its business
A petition was filed in the session court by the respondent Sterlite Industries under the Companies Act for insolvency
The Government has raised objection and filed an application in the High Court for referring the matter to Arbitration
High court rejected its plea and petition was filed in the Supreme Court
- The Single Judge Dismissed the Application
- Same was upheld by the Division bench
The court held that : Judicial authorities will refer the matter to the Arbitration only when in their opinion the matter or dispute which the arbitrator is competent or empowered to decide
In this case, the courts held a view that the Claim in petition for winding up is not for money
The company has become commercially insolvent with the petition filed under the Companies Act, hence should wound up
An arbitrator has no jurisdiction to order the winding up of the company.
Notwithstanding any agreements between the parties
Therefore the matter pending before the high court could not be referred to the A and the High Court was right in rejecting the petition.
Hence the petition for the reasons stated above have been dismissed in Limein