c cc c c An Act to consolidate and amend the law relating to ½Ê momestic arbitration, ½Ê pnternational commercial arbitration and ½Ê nforcement of foreign arbitral awards ½Ê Also to define the law relating to conciliation and for matters connected therewith or incidental thereto. Ê
0 Ê
½Ê che United Nations Commission on pnternational crade Law (UNCpc AL) has adopted the UNCpc AL Model Law on pnternational Commercial Arbitration in 1985 ½Ê che General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international Commercial arbitration practice;Ê ½Ê General Assembly of the United Nations has recommended the use of the said ules in cases where a dispute arises in the context of international commercial relations and the parties seek an amicable settlement of that dispute by recourse to conciliationÊ ½Ê And Where Model Law and ules make significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in international commercial relationsÊ Ê
Ñ !" #!$ che Act is based on the Model Law (a set of 36 Articles) which was drafted to govern all international arbitrations by a working group of the UN and was finally adopted by the U.N. Commission on pnternational crade Law (UNCpc AL) on June 21, 1985. che esolution of the UN General Assembly envisages that all countries should give due consideration to the Model Law, in view of the desirability of uniformity of the law on arbitral procedures and the specific needs of international commercial practice. pt is also stated in the Preamble of Act of 1996: ³it is expedient to make law respecting arbitration and conciliation, taking into account the aforesaid Model Law «´.
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2 ÊÊ9Ê "Ê "Ê "ÊÊ9ÊÊ Ê Ê Ê ? Ê Ê Ê Ê Ê Ê ÊÊÊÊ!ÊÊÊ Ê8-$c(7Ê6Ê ÊÊÊ Ê ÊÊ ÊÊÊÊ Ê Ê !Ê Ê ÊÊÊit to the arbitrator, to proceed or not to proceed further pending the appeal. chis was intended to see that the appeal proceedings are not allowed to be unreasonably delayed. pt is, therefore, necessary to emphasize that the proposed amendments do not result in permitting parties to prolong the arbitration proceedings unnecessarily. While considering the need for amendments, the Commission has, therefore, not deviated from this main objective of the Act. che Commission has rejected quite a lot of proposals that have been made before it as it felt that the said proposals would certainly contribute to the delay in arbitration proceedings. ;! Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê !Ê !@Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê c Ê Ê Ê Ê A Ê Ê Ê / ÊÊ Ê Ê@ ÊÊ ÊÊ Ê Ê Ê Ê Ê Ê Ê ! Ê Ê Ê Ê Ê Ê Ê Ê BÊ Ê Ê Ê Ê 2Ê Ê Ê Ê Ê "Ê Ê 4 Ê Ê Ê Ê Ê Ê !Ê ÊÊ ÊÊ@ Ê ÊÊÊ Ê Ê"ÊÊ4 ÊÊÊÊÊ Ê ÊÊÊ /ÊÊ Ê Ê + ÊÊ ÊÊ!! Ê <Ê c Ê Ê !Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê Ê ÊÊ Ê Ê2ÊÊ Ê Ê Ê Ê Ê Ê!ÊÊÊÊÊ Ê Ê Ê Ê
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%&' ()$$!"$ * $ &Notwithstanding anything contained in any other law for the time being in force, in matter governed by this Part, no judicial authority shall intervene except where so provided in this Part.
chis basic provision is found in the laws of all the countries which have adopted the UNCpc AL Model. che provisions as to waiving objections etc. contained in Sections 4, 12, 14(4), 16(5), 19(1) and 25 amply demonstrate that the objective is to see that the disputes are not unduly prolonged. pn fact, the UNpCc AL Model, wherever it permitted intervention by court, by way of appeal, before the passing of the award, left it to the arbitrator, to proceed or not to proceed further pending the appeal. chis was intended to see that the appeal proceedings are not allowed to be unreasonably delayed. pt is, therefore, necessary to emphasize that the proposed amendments do not result in permitting parties to prolong the arbitration proceedings unnecessarily. While considering the need for amendments, the Commission has, therefore, not deviated from this main objective of the Act. che Commission has rejected quite a lot of proposals that have been made before it as it felt that the said proposals would certainly contribute to the delay in arbitration proceedings. Section 5 corresponds to Art. 5 of the Model Law but has a non-obstante clause added at the beginning of the section. pt is to be noted that the important purpose of Art. 5, according to the UN Commission, was not to negate court intervention altogether or cut down the proper role of courts but to list out, in the national law, all the situations which permit court intervention and exclude any plea based on a remedy outside the Act or based on a residual power of the national courts. (See paras 62 and 63 of the UN Commission¶s eport (1985) on the Adaptation of Model Law). chese paragraphs are worth quoting and read as follows: ;Ê !Ê Ê Ê ?ÊÊ Ê @Ê ÊÊÊ4 ÊÊ 4 Ê Ê Ê ÊÊ Ê ÊÊ ÊÊÊ Ê!ÊÊ ÊÊ ÊÊ Ê !ÊÊ Ê Ê !!ÊÊÊÊ ÊÊ Ê ÊÊ Ê Ê Ê Ê Ê Ê ÊÊ ÊÊÊÊ ÊÊ ÊÊ Ê Ê Ê' ÊÊÊÊ Ê ÊÊ Ê ÊÊ ÊÊ Ê! Ê! Ê ÊÊÊÊÊ Ê ! ÊÊ Ê?ÊÊÊ! Ê Ê ÊÊÊ Ê Ê Ê Ê2 Ê'Ê ÊÊ Ê ÊÊ ÊÊÊ ÊÊ ÊÊÊ Ê! Ê ÊÊ ÊÊ ÊÊ Ê ÊÊ
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Arbitration agreement: Section 7 Sec.7 defines µarbitration agreement¶ and is almost a verbatim reproduction of Art.7 of the Model Law except that a single paragraph in the Model Law is split up into different clauses. pt has been suggested that the definition of µarbitration agreement¶ in sec.5 of the nglish Act of 1996 is wider than sec. 7 of the pndian Act of 1996 and can be adopted under sub-section (4) of Section 7 of our Act because the term includes, under sub-section (4) of section 5 that ³an agreement which is endorsed in writing if an agreement made otherwise than in writing is recorded by one of parties or by a third party, with the authority of the parties to the agreement.´ che Commission is of the view that it is not necessary to amend sec.7 of the Act by bringing into it the provision of sec.5(4) of the nglish Act, 1996 in as much it is likely to result in unnecessary litigation if the clause is to be based only on a record of one of the parties or of a third party. pt has been suggested that sec.5(2)(a) of the nglish Act says in brackets ³whether or not it is signed by the parties´ and those words should be introduced in section 7 of 1996 Act. Now sec.7(3) says that an arbitration agreement shall be in writing. Sec.7(4)(a) suggests that an arbitration agreement is in writing if it is contained in a document signed by the parties. pn as much as sec.7(4)(a) does not use the word µonly¶, it does not appear that it is a mandatory requirement that the agreement must be signed. pn fact, the Supreme Court has held under the 1940 Act in Jugal Kishore ameshwardes vs. Mrs. Gorbbi Ap 1955 SC, Banardas vs. Carve Commission Ap 1963 SC 1417 (1425) and Satish Chandra vs. State of UP Ap 1983 SC 347: 1983(2)SCC 141 that a submission must no doubt be made in writing but need not be signed. All that is necessary is that there should be a formal written agreement and the parties should agree to submit present and future disputes to arbitration. chis legal position was declared under sec.2(a) of the 1940 Act which used the words µwritten agreement¶ and did not refer to any requirement of signature of the parties. pn view of the law declared by the Supreme Court, and the specific language of section 7(4) it is considered not necessary to use the words ³whether signed or not´ as used in sec.5 of the nglish Act. 2.3.2 pt has been suggested that ³share brokers´ use certain documents which contain an arbitration clause and these documents are received by other parties without demur, that is to say, accepting the clause by conduct. pn the Bombay seminar, it was suggested that this contingency is to be provided for in section 7(4)(b). chis suggestion is accepted. Hence certain other words are required to be added in sec. 7(4)(b).
£&0+!$!,$!$ +$! !,$!$ !# & (1) A judicial authority before which an action is brought in a matter, which is the subject of an arbitration agreement, shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) che application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitrat award made.
2ÊÊ Ê ÊÊ Ê ÊÊÊ ÊÊ ÊÊ;?Ê <ÊÊ Ê ÊÊ ÊÊÊ Ê ÊÊÊ ÊÊ Ê Ê$ÊE +ÊÊ ÊÊÊ Êc Ê2Ê$Ê Ê Ê Ê Ê !Ê ÊÊE +Ê Ê ÊÊ ÊÊE+Ê ÊÊ Ê%ÊÊ ÊÊÊÊ"Ê Ê ÊÊ Ê ÊÊ Ê>Ê ÊÊ Ê ÊÊ Ê ÊÊ 2Ê#Ê!? Ê(?Ê Ê#10Ê(?Ê 9" "Ê2$$Ê%GÊ(Ê9Ê2$Ê "ÊÊ ÊÊ ÊÊ ÊÊ Ê ÊÊ ÊÊ Ê Ê)! ÊÊ Ê Ê Ê ÊÊÊ Ê Ê Ê ÊÊ ÊÊ Ê Ê Ê ÊÊ Ê ÊÊ)!Ê Ê Ê ÊÊ Ê Ê ÊÊ Ê ! ÊÊÊÊÊ ÊÊÊ Ê ÊÊ ÊÊ/ÊÊ Ê ! ÊÊÊÊ ÊÊ?!Ê ÊÊ Ê2Ê$Ê Ê ÊÊ6H Ê'ÊÊ)! Ê # Ê7Ê Ê6IÊ6Ê (Ê&Ê2$Ê%%"Ê Ê!Ê Ê ÊÊ ÊE?Ê +Ê ÊÊ Ê !Ê Ê %ÊÊ ÊÊ ÊÊÊ Ê Ê Ê ÊÊ Ê$ Ê$ ÊÊ Ê Ê Ê Ê ÊÊÊ= Ê?Ê Ê!Ê Ê Ê!ÊÊ Ê Ê E?Ê +ÊÊÊÊ ÊÊ ÊÊ Ê Ê Ê Ê ÊÊ ÊÊ Ê! Êc ! Ê Ê Ê ÊÊ ÊÊ Ê ÊÊ ÊÊÊ Ê?!ÊÊ ÊCÊÊ Ê Ê Ê Ê ÊÊÊÊ ÊÊÊ ÊCÊ!ÊÊ Ê ÊÊ= :?Ê Ê Ê pn this context, we have also to refer to a latter three judge judgment of the Supreme Court in Skypack Couriers Ltd. vs. N.K. Modi (200(5) SCC 294), wherein the Court set aside an award made by a third party to whom the National Consumer Commission referred the dispute for final adjudication without any further scope for filing objections. pn the order of the National Commission making the reference, it was stated that they were not invoking the provisions of the
Arbitration Act but were referring the matter to a third party for consensual adjudication. che Supreme Court set aside the award and held that the Commission could not have adopted the above procedure of reference to a third party, for final decision without a right to file objections thereto. At the same time, the Supreme Court stated that it was not deciding whether the consumer courts could refer matters to arbitration under the Arbitration laws. We are referring to this case only to highlight that the earlier decision in M/s. Fair Air ngineers Ltd. vs. M.K. Modi was neither referred to nor overruled in the Skypack Courier case. pn the Consultation Paper (Annexure pp), it was proposed that the words µjudicial authority¶ be dropped and the words µCourts¶ substituted instead. chis proposal was made keeping in view that the remedies that may be resorted to for questioning orders passed by different µjudicial authorities¶ may not be uniform. But in view of the subsequent discussion in various seminars, it was pointed out that it would be better if quasi judicial authorities before whom some actions are pending, are in a position to refer matters to arbitrators, wherever reliance is placed upon an arbitration clause. che Commission is of the view that the words µjudicial authority¶ can be retained to enable easy reference to arbitration under section 8 itself by the judicial authority concerned, (as held in Fair Air ngineers case) before whom the matter may be pending rather than drive the party who is relying on the arbitration clause to a separate application under sec.11. pt is true that remedies against an order passed by different judicial bodies under sec.8 may normally be different. But because of sec. 5, remedy under sec.115 Code of Civil Procedure is barred and the remedy may be only under Art.227 of the Constitution of pndia. pf it is an order passed by any quasi-judicial statutory authority, then because of sec. 5, the remedy under the special Act applicable to the tribunal is barred and remedy may be only under Art.227. cherefore, there is no scope for different remedies becoming available under different special statutes applicable to different quasi-judicial authorities. chus the remedies are perhaps restricted to Art. 227. cherefore the word µjudicial authority¶ will remain and will, therefore, cover quasi-judicial tribunals also as per the law declared by the Supreme Court in Fair Air ngineers case. We have already referred to the proposal to add a definition of 'judicial authority' in section 2(1) as follows: Section 2(1)(fa): µjudicial authority¶ includes any quasi-judicial statutory authority. D et er certain preliminary issues at t e stage of section 8 could be decided 5Ê ÊÊÊ ÊÊÊÊ ÊÊÊ "ÊÊ Ê6Ê 7ÊÊ Ê Ê Ê ÊÊ Ê ÊÊÊ Ê ! Ê ÊÊÊ Ê!Ê ÊÊÊ Ê ÊÊ Ê< ÊÊ Ê Ê Ê!Ê ÊÊÊ Ê ÊÊ ÊÊ !Ê<Ê
c Ê Ê Ê ÊÊÊ ÊÊ Ê ÊÊc Ê ÊÊ Ê Ê Ê ÊÊ ÊÊ Ê Ê?Ê ÊÊÊÊ Ê Ê!Ê ÊEÊÊ Ê ÊÊ ÊÊ !Ê +ÊÊ Ê$ Ê#Ê 4:"ÊÊ Ê Ê Ê Ê Ê Ê ÊÊÊ !ÊÊÊÊ Ê "ÊÊ Ê6Ê7Ê Ê ÊÊ Ê Ê?Ê ÊÊÊ Ê? Ê ÊÊ ÊÊ !ÊÊ Ê Ê !! ÊÊ Ê Ê Ê Ê ÊE?Ê +Ê Ê ÊÊÊÊ ÊÊÊ Ê ÊÊ Ê ÊÊ Ê ÊÊÊ ÊÊ ÊÊ Ê !ÊÊ ÊÊ Ê Ê ÊÊ/ ÊÊÊ Ê Section 9 Interim measures etc. by court - Ê (1) A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court (i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely:(a) the preservation, interim custody or sale of any goods which are the subjectmatter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver. (e) for such other interim measure of protection as may appear to the court to be just and convenient,
and the court shall have the same power for making orders as it has for the purpose of and in relation to, any proceedings before it.´ Ê
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&$ # !,$!&- (1) A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. (2) Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. (3) Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. (4) pf the appointment procedure in sub-section (3) applies and(a) A party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or (b) che two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, che appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him.Ê