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PPT on Arbitration.pptx

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PPT on Arbitration.pptx

  1. 1. DISCOVER . LEARN . EMPOWER Arbitration INSTITUTE- UILS DEPARTMENT OF LAWS BBA LLB AND B.COM LLB SUBJECT- Clinical - I- Alternative Dispute Resolution CODE- LLT-414 Name of the Faculty : PUNEETISH KAUR
  2. 2. Clinical – I - Alternative Dispute Resolution • Space for visual (size 24) 2 CO Number Title Level CO 1 The student will understand the meaning of arbitration Rememb er CO2 The students will understand the approaches ofarbitration Understa nd Course Outcome Will be covered in this lecture
  3. 3. Arbitration • Arbitration, a form of alternative dispute resolution (ADR), is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons – arbitrators, by whose decision they agree to be bound. • Not defined in Arbitration and conciliation Act, 1996. • The entire law of Arbitration is based on UNICITRAL model Law. • Arbitration is the means by which the parties to a dispute get the matter settled through the intervention of an agreed third party.
  4. 4. • he United Nations have given due recognition to Model Law of International Commercial Arbitration and Conciliation rules given by the United Nations Commission on trade and law ( UNCITRAL). • The model law and rules have played a significant role in the settlement of commercial disputes and provided rules to various other countries. • These can be adapted and made according to their municipal laws as earlier there was no unified law related to trade and its need was felt with globalization which further gave rise to disputes related to it.
  5. 5. • In spite of the need for arbitration, there are some disadvantages where arbitration cannot be used as an effective mode of settlement, as: • Arbitration lacks in granting authoritative remedies such as permanent injunction and specific performance order. • In certain cases, the arbitrators do not have jurisdiction and are excluded to try the case. • The cost can be a major factor as, if the arbitration proceeding is delayed, the cost keeps on increasing and especially, in the cases where three arbitrators are appointed by the parties. • No appeal can be made for an arbitration order granted by the arbitrator. • Lack of cross-examination as the process relies on evidence and not on witnesses.
  6. 6. • Conditions:- a. There should be an arbitration clause in the agreement to resolve disputes. b. There is a arbitral disputes between 2 or more parties c. Dispute is referred to 3rd person other than a court of competent jurisdiction. d. Persons or persons constituting arbitration are under obligation to resolve the dispute/difference in a judicial manner- that is by hearing both the parties.
  7. 7. • Arbitration can be either voluntary or mandatory. • Of course, mandatory Arbitration can only come from s statute or from a contract that is voluntarily entered into, where the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur. • Arbitrator: The Arbitrator always acts like a Judge. He discharges quasi-judicial functions. He must act honestly and impartially.
  8. 8. Scope of Arbitration: • “Arbitrability” – It is one of the matters which involve the simple question . What type of issues cannot be submitted to Arbitration. • In Booz Allen and Hamilaton v. SBI Home Finance Limited and others, the courts and laid down the “Test of arbitrability” and held disputes concerning only rights in personam to be amenable to arbitration and not rights in Rem.
  9. 9. • Though Supreme Court did not enunciate any exhaustive list for the subject matters outside the ambit of arbitrability, some of the well recognized examples of non-arbitrable disputes in India are: • § Disputes relating to rights and liabilities which give rise to or arise out of criminal offences; • § Matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights. • § Guardianship matters • § Insolvency and winding up matters • § Testamentary matters (grant of probate, letters of administration and succession certificate) • § Eviction or tenancy matters governed by special statutes • § Matters related to mortgage • § Industrial Disputes • § consumer disputes • Actionable torts
  10. 10. • In any arbitral dispute ensuring the objective arbitrability becomes pivotal since courts in India and all major countries are empowered to even set aside an arbitral award on the ground that the subject matter of the dispute was not capable of resolution by arbitration.
  11. 11. SC taking Pro Arbitration approach • Frauds • Delivering a pro-arbitration judgment, the Hon’ble Supreme Court of India recently in A Ayyasamy v. A Paramasivam & Ors. The Supreme Court had held that where there are simple allegations of fraud, touching upon the internal affairs of the parties inter se without any implication in the public domain, the arbitration clause need not be avoided and the parties can be relegated to arbitration.
  12. 12. • Intellectual Property Disputes • While dealing with arbitrability of intellectual property disputes (“IP Disputes”), recent cases discuss IPR disputes to be traditionally “non- arbitrable disputes”. • In the case of Indian Performing Right Society Limited (IPRS) v. Entertainment Network 2016 SCC OnLine Bom 5893, a coordinate bench of Hon’ble High Court held that in cases of copyright infringement, the remedies of injunctions, damages, etc., may only be conferred by a Court, and are hence not arbitrable. • Ayyasamy case created further confusion when the Supreme Court in its obiter declared patents, trademarks, and copyright disputes to be non- arbitrable. • he Madras High Court through its decision in Lifestyle Equities CV v. QD Seatoman Designs Pvt. Ltd (2017) 8 MLJ 385. The Court applied the Booz Allen caveat and held that disputes relating to patent use and infringement concern ‘rights in personam’, and therefore, are arbitrable.
  13. 13. Types of Arbitration The following are the different kinds of Arbitrations found in India: 1. Institutional Arbitration – It means that the parties conduct their arbitration procedure in accordance with rules and with the assistance of arbitral institution. • Usually administered by an arbitral institution. • THEY Expect from the institution certain services in connection with organization and supervision of the proceedings. • They charge a price to render these services. • Services rendered by these tribunals:- 1. Setting the Arbitration in motion. 2. Fixing and supervising time limits 3. Deciding on challenges and replacement of arbitrators 4. Supervising the process in absence of party 5. Premises 6. Support staff 7. Notifying the Award etc. • In order to obtain the assistance of the arbitral institution, the parties will have to agree to it explicitly, usually in the wording of arbitration clause in their contract. Otherwise an unclear arbitral institution can lead to conflict between the parties.
  14. 14. • 2. Ad-hoc Arbitration – • Arbitration which is not conducted under the auspices of any arbitral institution is termed as ad-hoc arbitration. • The present arbitration law has laid greater emphasis on institutional arbitration set up under the well defined rules of procedure rather than the use of ad hoc arbitration especially in the Arbitration Amendment Act, 2019. • Parties do not have an obligation to submit their arbitration to the rules of an arbitral institution; they are free to state their own rules of procedure. • Do it yourself Arbitration.
  15. 15. • c. Statutory Arbitration – It is an Arbitration imposed on the parties by operation of law. • Obligatory, binding on parties • Examples: • Section 43 {c } of Indian Trusts Act, 1882 • Section 24, 31 and 32 of Defense of India Act, 1971 • Section 5 of Delhi Transport Laws (Amendment Act), 1971
  16. 16. 4. International Arbitration – • When arbitration happens within India or outside India containing elements which are foreign in origin in relation to the parties or the subject of the dispute, it is called as International Arbitration. The law applicable can be Indian or foreign depending upon the facts and circumstances of the case and the contract in this regard between the respective parties. • Defined in 2 (1) (f) of the Arbitration and Conciliation Act , 1996
  17. 17. 5. Domestic Arbitration : • Domestic arbitration is that type of arbitration, which happens in India, wherein both parties must be Indians and the conflict has to be decided in accordance with the substantive law of India. • Section 2 (2) (7) of the Act 1996 together, it is implied that - domestic arbitration means an arbitration in which the arbitral proceedings must necessarily be held in India, and according to Indian substantive and procedural law, and the cause of action for the dispute has completely arisen in India, or in the event that the parties are subject to Indian jurisdiction.
  18. 18. 6. Foreign Arbitration : A foreign Arbitration is an arbitration which is conducted in a place outside India, and the resulting award is sought to be enforced as a foreign award.
  19. 19. Arbitration and Conciliation Act, 1996 • The Arbitration and Conciliation Act, 1996 (Act) provides the framework for arbitration and conciliation in India. • Drafted on the basis of the UNCITRAL Model Law, it is divided into four parts. Each part governs a different aspect of the arbitration and conciliation process: • Part 1 governs commercial arbitration; • Part 2 governs the enforcement of certain foreign awards; • Part 3 governs conciliation; and • Part 4 contains supplementary provisions (regarding the power of the court to make rulings, etc.). • The Act was amended in 2016 and recently in 2019 with an aim to make it more robust by plugging the lacunae that existed in the original legislation.
  20. 20. Arbitration agreement • Defined under Section 2(b) read with Section 7 of the Act. • It can be defined as a written statement or exchange of communication between the parties or any statement made through means of telecommunication. • It is not compulsory for the parties to sign or unsign it. • Even if an arbitration clause is present in the agreement it would be considered as an arbitration agreement. • Rickners Verwaltung Gmbh vs. Indian Oil Corporation, 1998 stated that the intention of the party in arbitration gathers information in the form of expression and the meaning it conveys. An arbitration agreement would be a statement made by one party regarding the claim in dispute and not denied by the other party.
  21. 21. Arbitrators • Appointment of the Arbitrator • The appointment of arbitrator is given under Section 11 of the Act. • The parties are free to determine the number of arbitrators, provided that such number shall not be an even number. • A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. • The parties are free to agree on a procedure for appointing the arbitrator or arbitrators. • However, in the case of failure to appoint an arbitrator the parties can approach the court to make such an appointment. • In case of domestic arbitration, the Chief Justice of the High Court has the authority to appoint an arbitrator to the parties and in case of International Commercial Arbitration, the Chief Justice of India has the authority to make such appointment as in India, the foreign disputes must be dealt by the highest judicial officers. • In the case of Konkan Railway Corporation v. Rani Construction Pvt Ltd, 2002 the Supreme Court held that the function of Chief Justice of India and his designates is to ensure the nomination of an arbitrator who is independent, competent and impartial and settles the dispute between the parties to the best of his knowledge.
  22. 22. Powers and Duties of Arbitrator Power Duties Pass Interim Order Order of Appointment Decide the Process of Arbitration Proceedings Timely adjudicate the matter He has the power to Terminate the procedure Act Judicially and Impartial Appointing an Expert person Encourage settlement of the matter Seeks Court permission in taking evidence Misconduct is not allowed Correct the error in interpretation of the award Pass the final award
  23. 23. • Challenging an Arbitrator • An arbitrator can be challenged under Section 12 of the Act in the following two circumstances as • Grounds related to his independence or impartiality. • If he does not possess sufficient qualifications as to agreed by the parties. • Section 13 talks about the challenge procedure and specifies the time limit under Section 13(2) as within 15 days after becoming aware of the constitution of the Arbitral Tribunal and any other circumstance, the party can make a written statement specifying the reasons to the Arbitral Tribunal and it is the Arbitral Tribunal and not the court who will decide on the matter of challenge.
  24. 24. • Termination of an Arbitrator • The Act provides for the termination of an arbitrator under Section 14 of the Act and it can be made in two circumstances which are: • If he is unable to perform his function due to De jure or De facto or for other reasons fails to act without undue delay . • He withdraws from his office or the parties agree to the termination of his mandate.
  25. 25. International Commercial Arbitration • Section 2(1)(f) of The Arbitration and Conciliation Act, 1996, defines an International Commercial Arbitration which 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; • (iii) A company or an association or a body of individuals whose central management and control is exercised in any country other than India; • (iv) The Government of a foreign country
  26. 26. • When Arbitration is Deemed to be International In the United Nation Commission on International Trade Law (UNCITRAL) Model Law, arbitration is deemed to be international if any one of four different situations is present: • Article 1 (3) • (a) The parties to the arbitration agreement have, at the time of the conclusion of the agreement, their places of business in different States. • (b) One of the following places is situated outside the State in which the parties have their places of business: • (i) The place of arbitration, if determined in or pursuant to, the arbitration agreement, is situated outside the State in which the parties have their places of business • (ii) Any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected • (iii)The parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country
  27. 27. • In 2012, the face of International Commercial Arbitration changed when the Supreme Court of India made a judgement in the case of Bharat Aluminium Co. V. Kaiser Aluminium technical services Ltd, (2012) 9 SCC 552. Mostly commonly known as BALCO case and gave the following guidelines as: • In the case of International Commercial Arbitration where the seat is outside India, no application can be made in Indian courts for interim relief and they don’t have any authority in this regard. • The award granted in International Commercial Arbitration will be subject to Indian jurisdiction only when they are to be enforceable in India.
  28. 28. Main differences between arbitration and conciliation • The main differences between arbitration and conciliation are: • Arbitration is primarily a method used to resolve disputes where both parties present their case to a neutral third party who reaches a decision and then enforces that decision. Conciliation, on the other hand, involves an independent third party assisting the parties involved in the dispute to arrive at a mutually agreeable outcome. • The decision made by an arbitrator is enforceable similar to a judgement of a court. A conciliator, however, does not have the right to enforce its decisions. • Arbitration is a formal process and can follow similar procedures to court proceedings where witnesses can be called and evidence can be presented to argue the parties’ respective cases. Conciliation is an informal process and normally involves a ‘round table’ discussion. • An arbitral award is final and binding and has the effect of terminating the arbitral proceedings whereas conciliation does not always ensure a mutually agreeable outcome will arise between the parties.

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