Navigating Arbitration: A Comprehensive Guide Under the Arbitration and Conciliation Act of 1996

Arbitration is private, it does not have the tools to dig into the corporate files. Its usually controlled by arbitrators who want repeat business from corporations not from the injured person – RALPH NADER

 

The Alternative dispute resolution is a means of resolving the dispute by any method outside the courtroom. It is a pre-litigation process for which parties have agreed upon to use it as a way of resolving the dispute among them. There are four different types of ADRs for the civil cases:

1. Arbitration
2. Conciliation
3. Mediation
4. Negotiation

Arbitration is the most structured and formal way of resolving the dispute between the parties. Arbitration provides the party full autonomy to decide on how the arbitral proceeding should happen under the extent of arbitration and conciliation act of 1996. Here we are providing you with a comprehensive guide on how the arbitral proceedings happen under the arbitration and conciliation act of 1996.

 

Dispute resolution through arbitration

When two parties enter into a contract containing the arbitration clause or a separate arbitration agreement, to resolve all or certain disputes through arbitration  which have arisen or may arise in future in respect of the contract or the  defined legal relationship arising out of the contract.

 

The arbitral proceedings are divided into four stages.

1. Initiation of arbitration : one of the parties to the dispute files a request for the arbitration.
2. Appointment of arbitrators: with the mutual agreement of the parties a neutral 3rd party is appointed as  arbitrator or arbitrators.
3. Pleadings : the schedule for the pleadings are set by the arbitrator as per the agreement of the parties.
4. Arguments : the lawyers of parties cross examine the other party and then present their advanced arguments in front of the arbitrator
5. Award : at any point in the proceedings when arbitrator think that all the evidences has been put forward and all the statements have been made then he will frame the issues and based on that he will award the parties with the decision.

 

Procedure of arbitration under Arbitration And Conciliation Act 1996

 

The arbitral proceedings start when one of the party to the dispute sends a notice to the other party under section 21 of the arbitration and conciliation act of 1996 stating that “the said party is appointing an arbitrator and the arbitration proceedings will start as per the contract”. If both the parties cannot agree on the appointed arbitrator, then with the help of section 11 of the act any of the party can file an application in the court to appoint an arbitrator for resolving the dispute.

 

After the arbitrator or arbitrators have been appointed, the appointed tribunal sets the schedule for the proceedings to happen and the schedule is set as per the convenience of the parties. Section 23 of the act provides with mannerism of how the statement of claim and defence will take place.  Parties are requested to submit all the necessary documents and evidences and also if any amends or supplements are to be made in the statement of claim and defence by parties. Parties are required to complete all the necessities before the completion of six months from the date of appointment of the arbitrator or arbitrators.

To decide whether the proceedings will happen orally or written on the basis of the documents or other materials. Section 24 of the act gives power to the tribunal to decide unless otherwise explicitly decided by parties to not hold any oral hearing.

When all the proceedings have taken place and the submission of evidences and documents are done then arbitrator will present an award which will be legally binding on the parties as mentioned under section 35 of the act. If any of the party is at default which means that the claimant at any time during the proceeding is not able to communicate the sufficient cause or the defendant is not able to provide sufficient defense or any of the party fails to appear in the oral hearing or produce a document or evidence then the tribunal will grant the award accordingly as empowered under section 25 of the act.

After the award has been awarded it is legally binding on the parties but the Arbitration And Conciliation Act provides the parties with an option to set aside the award under section 34 of the act on the following six grounds by challenging it in the court.

 

Grounds for challenging the arbitral award

An arbitral award may be set aside by the Court only if:

The party making the application establishes that:

• A party was under some incapacity, or

• The arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
• The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
• The arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;or
• The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;or

• Award is not in accordance with the public policy of India.

 

Setting aside the arbitral award

An application for setting aside the arbitral award should not be made after three months of the receipt of the award in the court. The party filing the application should notify the other party about the application in the court and should satisfy the court that the award should be set aside on any of the given grounds.

If court finds it adequate the court will issue a notice to the other party to appear in court for the rejoinder and to begin with the oral arguments after the arguments have been concluded court will pass its final judgement.

 

Conclusion

Arbitration is one of the fastest, structured and formal mode of alternative dispute resolution.  It provides for total party autonomy to resolve the dispute. It is efficient and flexible and is a totally confidential procedure with simplified rules of proceedings and evidence. It provides with a guarantee to resolve the dispute with help of a neutral third party. Arbitration is a very useful tool for resolving disputes, but careful consideration has to be given as to whether it is applicable to or preferable in a particular dispute. At AMA legal solution our experienced attorneys will  provide you with the best advise on how to get the award in your favour.