IhIAh 0h0IL F A8ITATIh

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!ransornng Inda nto a Clobal Arbtraton Venue
Vol XLVI / Aprl - June 2010
IndIan CouncII of
ArhItratIon
fditoriaI oard
Mr. ka|an hartl Mlttal
Mr. l. C. Markanda
Mr. D. M. lopat
Mr. C. l. Cool
Dr. llrtl Davo
Mr. akosh Anand
Mr. Arun Chavla
fditor
Ms. Shazla Usmanl
Statcmcnt o Purposc
1ho quartorly ls publlshod by lndlan Councll ol
Arbltratlon. 1ho quartorly ls dlstrlbutod lroo ol cost to lts
mombors. lt ls also avallablo onllno at
vvv.lcalndla.co.ln.
Spoochos, artlclos do not rolloct tho vlovs ol tho
mombors ol tho Ldltorlal oard ol lCA. 1ho ob|oct ol thls
quartorly ls to provldo porcoptlon on tho practlcos
dlroctly or lndlroctly rolatod to contomporary arbltratlon
lssuos and ln tho samo vay to contrlbuto to tho
dovolopmont ol thoso practlcos.
lCA volcomos tho contrlbutlon on lssuos rolovant to tho
commorclal arbltratlon and othor Altornatlvo Dlsputo
kosolutlon Mochanlsms. 1ho samo shall bo sont to.
1ho, Ldltor
lndlan Councll ol Arbltratlon,
lodoratlon houso 1anson Marg, Nov Dolhl
or can bo sont by omall.
lcallccl.com, lcaalrtolmall.ln.
Noto. 1ho submlsslon ol artlclo by tho publlshor shall
lmply automatlc translor ol all tho copyrlghts ol tho
author to tho publlshor ol quartorly.
' lCA volcomos tho contrlbutlon ol artlclos and papors.
1ho alm ol tho uartorly ls to provldo lts roador lnlormatlon on tho crltlcal
lssuos provalont ln commorclal arbltratlon.
1ho llrst artlclo-'Arbltratlon-ano or oon as ADk', ln tho artlclo tho author
comos up vlth tho shortcomlngs ol arbltratlon as a tochnlquo ol altornatlvo
dlsputo rosolutlon and oplnod that ll tho samo probloms aro not rosolvod thon
ADk vould bocomo anothor dlstross rosolutlon lor tho aggrlovod porson. 1ho
artlclo ls authorod by Mr. M.V. Shankar hat, AL, Advocato, Mangaloro.
kolo ol Arbltratlon ln Statutory Ad|udlcatlons', tho author ol thls artlclo ls Mr.
l.l. lradoop, Advocato/Covornmont lloador (1axos), Hlgh court ol lorala.
1hls artlclo talks about that tho morlt ol arbltratlon llos ln bolng lastor,
avallablllty ol oxports and productlvo rosult. Honco arbltratlon should not bo
conllnod to llold ol commorco but also ln llscal statutos.
1ho thlrd artlclo-'Mandato ol Arbltratlon'- tho proamblo ol tho artlclo ls that
tho consumor lora should mako lt mandatory to mako tho dlsputos rolorablo
to arbltratlon. 1ho ob|oct ol tho nov Act ls to mlnlmlzo tho suporvlsory control
ol courts ln arbltral procoss. 1ho artlclo ls authorod by Mr. Sudhoor
lulshroshtha, Advocato, lulshroshtha Assoclatos, Nov Dolhl.
o logally Smart-Solvo Dlsputos, last and ulck, through Modlatlon ln
lndlan'- 1hls artlclo ls vrltton by Mr. M.S. Cborol, Advocato, Hlgh Court ol
Dolhl. lt onllghtons us about tho uso ol modlatlon as a mothod ol dlsputo
rosolutlon on tho grounds that modlatlon brlngs out bottor communlcatlon,
tlmo savlng, saloguardlng long torm lntorosts.
1ho lllth artlclo-'}udlclal lntorvontlon ln tho Arbltratlon lrocoodlngs'- tho
artlclo talks about tho |udlclal lntorvontlon by tho courts ln arbltral
procoodlngs on tho grounds ol publlc pollcy. 1ho court's lntorloronco should
bo to tho mlnlmal and should holp try malntalnlng tho splrlt ol Arbltratlon. 1ho
artlclo ls authorod by Mr. Adltya Slnghl and Mr. }ltondra }anglr, Studonts ol
CNLU, Cu|rat.
fxccutivc Summary
fditoriaI oard
Mr. ka|an hartl Mlttal
Mr. l. C. Markanda
Mr. D. M. lopat
Mr. C. l. Cool
Dr. llrtl Davo
Mr. akosh Anand
Mr. Arun Chavla
fditor
Ms. Shazla Usmanl
Statcmcnt o Purposc
1ho quartorly ls publlshod by lndlan Councll ol
Arbltratlon. 1ho quartorly ls dlstrlbutod lroo ol cost to lts
mombors. lt ls also avallablo onllno at
vvv.lcalndla.co.ln.
Spoochos, artlclos do not rolloct tho vlovs ol tho
mombors ol tho Ldltorlal oard ol lCA. 1ho ob|oct ol thls
quartorly ls to provldo porcoptlon on tho practlcos
dlroctly or lndlroctly rolatod to contomporary arbltratlon
lssuos and ln tho samo vay to contrlbuto to tho
dovolopmont ol thoso practlcos.
lCA volcomos tho contrlbutlon on lssuos rolovant to tho
commorclal arbltratlon and othor Altornatlvo Dlsputo
kosolutlon Mochanlsms. 1ho samo shall bo sont to.
1ho, Ldltor
lndlan Councll ol Arbltratlon,
lodoratlon houso 1anson Marg, Nov Dolhl
or can bo sont by omall.
lcallccl.com, lcaalrtolmall.ln.
Noto. 1ho submlsslon ol artlclo by tho publlshor shall
lmply automatlc translor ol all tho copyrlghts ol tho
author to tho publlshor ol quartorly.
' lCA volcomos tho contrlbutlon ol artlclos and papors.
1ho alm ol tho uartorly ls to provldo lts roador lnlormatlon on tho crltlcal
lssuos provalont ln commorclal arbltratlon.
1ho llrst artlclo-'Arbltratlon-ano or oon as ADk', ln tho artlclo tho author
comos up vlth tho shortcomlngs ol arbltratlon as a tochnlquo ol altornatlvo
dlsputo rosolutlon and oplnod that ll tho samo probloms aro not rosolvod thon
ADk vould bocomo anothor dlstross rosolutlon lor tho aggrlovod porson. 1ho
artlclo ls authorod by Mr. M.V. Shankar hat, AL, Advocato, Mangaloro.
kolo ol Arbltratlon ln Statutory Ad|udlcatlons', tho author ol thls artlclo ls Mr.
l.l. lradoop, Advocato/Covornmont lloador (1axos), Hlgh court ol lorala.
1hls artlclo talks about that tho morlt ol arbltratlon llos ln bolng lastor,
avallablllty ol oxports and productlvo rosult. Honco arbltratlon should not bo
conllnod to llold ol commorco but also ln llscal statutos.
1ho thlrd artlclo-'Mandato ol Arbltratlon'- tho proamblo ol tho artlclo ls that
tho consumor lora should mako lt mandatory to mako tho dlsputos rolorablo
to arbltratlon. 1ho ob|oct ol tho nov Act ls to mlnlmlzo tho suporvlsory control
ol courts ln arbltral procoss. 1ho artlclo ls authorod by Mr. Sudhoor
lulshroshtha, Advocato, lulshroshtha Assoclatos, Nov Dolhl.
o logally Smart-Solvo Dlsputos, last and ulck, through Modlatlon ln
lndlan'- 1hls artlclo ls vrltton by Mr. M.S. Cborol, Advocato, Hlgh Court ol
Dolhl. lt onllghtons us about tho uso ol modlatlon as a mothod ol dlsputo
rosolutlon on tho grounds that modlatlon brlngs out bottor communlcatlon,
tlmo savlng, saloguardlng long torm lntorosts.
1ho lllth artlclo-'}udlclal lntorvontlon ln tho Arbltratlon lrocoodlngs'- tho
artlclo talks about tho |udlclal lntorvontlon by tho courts ln arbltral
procoodlngs on tho grounds ol publlc pollcy. 1ho court's lntorloronco should
bo to tho mlnlmal and should holp try malntalnlng tho splrlt ol Arbltratlon. 1ho
artlclo ls authorod by Mr. Adltya Slnghl and Mr. }ltondra }anglr, Studonts ol
CNLU, Cu|rat.
fxccutivc Summary
ltom lago
Akl1kA1lCN- ANL Ck CCN AS ADk
M|. M.v. S|ao|a| ||at.............................................................2
kCLL Cl Akl1kA1lCN lN S1A1U1Ck AD}UDlCA1lCNS
M|. |.|. ||aoee......................................................................8
MANDA1L Cl Akl1kA1lCN
M|. Suo|ee| |u|s||es|t|a......................................................11
L LLCALL SMAk1 SCLVL DlSlU1LS, lAS1 & UlCl,
1HkCUCH MLDlA1lCN lN lNDlA
M|. M.S. Ooe|o|....................................................................14
}UDlClAL lN1LkVLN1lCN lN Akl1kAL lkCCLLDlNCS
M|. ^o|tja S|og|| aoo M|. l|teoo|a laog|| ................................17
CASL LAW.
N..C.C. Ltd. VS }.C. LNClNLLklNC lvt. Ltd. ......................23
CONTfNTS
Ak8I1kA1ICN- 8ANL Ck
8CCN AS ADk
2
1
cbooobosoppo v. 8osolloqoyyo, Alk 1927 8om. 565 jl8, ot poqes 568 ooJ 569.
M.v. 5booket 8bot*
Arb|trat|on|f ADk-re||m|nary:
!udlclal resoluLlon of dlspuLed ls Lhe clvlllzed way of solvlng legal problems. ArblLraLlon ls one
such modeof resoluLlon of dlspuLes.
ArblLraLlon ls noL allen Lo Lhls counLry. 8esolvlng dlspuLes by 'panchayaLdar' ls an anclenL
lndlan meLhod, well known. 1hls ls whaL an emlnenL 8rlLlsh, !udge, Chlef !usLlce MarLen, of
8ombayPlgh CourL sLaLed:
. (ArblLraLlon or medlaLlon wlLhouL Lhe lnLervenLlon of Lhe courL oughL
undoubLedly Lo be permlLLed ln lndla. lL ls lndeed a sLrlklng feaLure of ordlnary
lndlan llfe. And l would go furLher and say LhaL lL prevalls ln all ranks of llfe Lo a
much greaLer exLenL Lhan ls Lhe case ln Lngland. 1o refer maLLers Lo a panch ls
one of Lhe naLural ways of decldlng many a dlspuLe ln lndla. lL may be LhaL ln
some cases Lhe panch more resemble a [udlclal courL because Lhe panch may
lnLervene on Lhe complalnL of one parLy and noL necessarlly on agreemenL of
boLh, e.g., ln a casLe maLLer. 8uL Lhere are many cases where Lhe declslon ls
glven byagreemenL beLween LheparLles."
now lL ls heralded as AlLernaLlve ulspuLe 8esoluLlon mechanlsm. Au8 for brlef. Cn paper,
Lhere ls loL of encouragemenL Lo resorL Lo lL. ln Lhe AmendmenL of 2002, Code of Clvll
rocedure1908also envlsages referenceLo arblLraLlon.
Lnactments:
1he old ArblLraLlon AcL of 1940 has been repealed. 1he ArblLraLlon and ConclllaLlon AcL of
1996 has been enacLed. lL wlll be referred as 'Lhe AcL'. 1hls enacLmenL has subsLanLlally
lmproved upon Lhe procedure regardlng arblLraLlon and enforceablllLy of award. Pow far Lhe
presenL ArblLraLlon AcL ls reallyeffecLlvels belng examlned ln Lhls arLlcle.
Arb|trat|on- source andscope of empowerment:
8aslcally, Lhe agreemenL beLween parLles empowers Lhe arblLraLor Lo resolve Lhe glven
dlspuLe. AL once, Lherefore, lL wlll be apparenL LhaL Lhe scope of agreemenL wlll deLermlne
Lhescopeof dlspuLeresoluLlon byarblLraLlon.
8uL Lhere are cerLaln dlspuLes whlch cannoL be resolved by arblLraLlon. lf any law
conLemplaLes LhaL cerLaln dlspuLes may noL be submlLLed Lo arblLraLlon, sec.2 (3) of Lhe
ArblLraLlon AcL of 1996 sLaLes LhaL sald law ls noL affecLed by Lhe ArblLraLlon AcL. ln oLher
* 8. A. 8. l., AJvocote, Mooqolote
ltom lago
Akl1kA1lCN- ANL Ck CCN AS ADk
M|. M.v. S|ao|a| ||at.............................................................2
kCLL Cl Akl1kA1lCN lN S1A1U1Ck AD}UDlCA1lCNS
M|. |.|. ||aoee......................................................................8
MANDA1L Cl Akl1kA1lCN
M|. Suo|ee| |u|s||es|t|a......................................................11
L LLCALL SMAk1 SCLVL DlSlU1LS, lAS1 & UlCl,
1HkCUCH MLDlA1lCN lN lNDlA
M|. M.S. Ooe|o|....................................................................14
}UDlClAL lN1LkVLN1lCN lN Akl1kAL lkCCLLDlNCS
M|. ^o|tja S|og|| aoo M|. l|teoo|a laog|| ................................17
CASL LAW.
N..C.C. Ltd. VS }.C. LNClNLLklNC lvt. Ltd. ......................23
CONTfNTS
Ak8I1kA1ICN- 8ANL Ck
8CCN AS ADk
2
1
cbooobosoppo v. 8osolloqoyyo, Alk 1927 8om. 565 jl8, ot poqes 568 ooJ 569.
M.v. 5booket 8bot*
Arb|trat|on|f ADk-re||m|nary:
!udlclal resoluLlon of dlspuLed ls Lhe clvlllzed way of solvlng legal problems. ArblLraLlon ls one
such modeof resoluLlon of dlspuLes.
ArblLraLlon ls noL allen Lo Lhls counLry. 8esolvlng dlspuLes by 'panchayaLdar' ls an anclenL
lndlan meLhod, well known. 1hls ls whaL an emlnenL 8rlLlsh, !udge, Chlef !usLlce MarLen, of
8ombayPlgh CourL sLaLed:
. (ArblLraLlon or medlaLlon wlLhouL Lhe lnLervenLlon of Lhe courL oughL
undoubLedly Lo be permlLLed ln lndla. lL ls lndeed a sLrlklng feaLure of ordlnary
lndlan llfe. And l would go furLher and say LhaL lL prevalls ln all ranks of llfe Lo a
much greaLer exLenL Lhan ls Lhe case ln Lngland. 1o refer maLLers Lo a panch ls
one of Lhe naLural ways of decldlng many a dlspuLe ln lndla. lL may be LhaL ln
some cases Lhe panch more resemble a [udlclal courL because Lhe panch may
lnLervene on Lhe complalnL of one parLy and noL necessarlly on agreemenL of
boLh, e.g., ln a casLe maLLer. 8uL Lhere are many cases where Lhe declslon ls
glven byagreemenL beLween LheparLles."
now lL ls heralded as AlLernaLlve ulspuLe 8esoluLlon mechanlsm. Au8 for brlef. Cn paper,
Lhere ls loL of encouragemenL Lo resorL Lo lL. ln Lhe AmendmenL of 2002, Code of Clvll
rocedure1908also envlsages referenceLo arblLraLlon.
Lnactments:
1he old ArblLraLlon AcL of 1940 has been repealed. 1he ArblLraLlon and ConclllaLlon AcL of
1996 has been enacLed. lL wlll be referred as 'Lhe AcL'. 1hls enacLmenL has subsLanLlally
lmproved upon Lhe procedure regardlng arblLraLlon and enforceablllLy of award. Pow far Lhe
presenL ArblLraLlon AcL ls reallyeffecLlvels belng examlned ln Lhls arLlcle.
Arb|trat|on- source andscope of empowerment:
8aslcally, Lhe agreemenL beLween parLles empowers Lhe arblLraLor Lo resolve Lhe glven
dlspuLe. AL once, Lherefore, lL wlll be apparenL LhaL Lhe scope of agreemenL wlll deLermlne
Lhescopeof dlspuLeresoluLlon byarblLraLlon.
8uL Lhere are cerLaln dlspuLes whlch cannoL be resolved by arblLraLlon. lf any law
conLemplaLes LhaL cerLaln dlspuLes may noL be submlLLed Lo arblLraLlon, sec.2 (3) of Lhe
ArblLraLlon AcL of 1996 sLaLes LhaL sald law ls noL affecLed by Lhe ArblLraLlon AcL. ln oLher
* 8. A. 8. l., AJvocote, Mooqolote
words, non-arblLrable dlspuLes cannoL be enLrusLed Lo arblLraLor for resoluLlon. Such
arblLraLlon wlll be wlLhouL [urlsdlcLlon. [L.g. maLrlmonlal maLLers, company cases, land
reforms or renL conLrol cases eLc whereexcluslve[urlsdlcLlon ls creaLed elsewhere].
ConLrasL Lhls wlLh Lhe power of clvll courL. Any dlspuLe of clvll naLure can be Laken Lo a courL
2
of law, because of Lhe wlde phrase of sec.9 of CC 1908. Clvll CourL has power Lo Lake up
dlspuLes afLer lL beglns, when Lhe aggrleved parLy Lakes lL Lo Lhe courL by way of a sulL. 1he
consenL of opponenL ls noL requlred.
8uL as regards arblLraLlon, lL cannoL be sLarLed afLer dlspuLes begln, aL Lhe wlsh of one of Lhe
dlspuLanLs. 1hls llmlLed sphere of ad[udlcaLory role llmlLs Lhe scope of arblLraLlon. AfLer
dlspuLes begln beLween LheparLles, lL ls noL posslbleLo LhlnkLhaL Lheywould agreeLo resolve
lL by Lhe arblLraLlon. lor LhaL maLLer sec. 90 and order 36 of CC 1908 exlsLed from 1908. lL
enabled Lhe parLles Lo agree ln wrlLlng Lo sLaLe a case for oplnlon of Lhe courL and geL lL
ad[udlcaLed by Lhe courL. 8uL none used Lhls. Cnce dlspuLes crop up parLles cannoL agree Lo
resolve lL by a forum of consensus. Suppose Lhe law were Lo provlde Lhus: 'Whenever any
parLy has Lo resolve a dlspuLe Louchlng cerLaln legal relaLlonshlp, be lL conLracLual or noL,
such parLy may apply Lo courL Lo geL such dlspuLe resolved by arblLraLlon. 1he courL shall
Lhereupon nomlnaLe an arblLraLor who shall resolve Lhe sald dlspuLe'. 8uL LhaL ls noL Lhe law.
1here should be arblLraLlon agreemenL beLween Lhe parLles lf Lhey have Lo resolve Lhe
dlspuLebyarblLraLlon.
What |s arb|trat|onagreement:
WhaL ls an engagemenL of arblLraLlon ls sLaLed ln sec. 7 of Lhe AcL. AgreemenL by Lhe parLles
Lo submlL all or cerLaln dlspuLes already arlsen or whlch may arlse beLween Lhe parLles ln
respecL of deflned legal relaLlonshlp belL conLracLual or noL, would bearblLraLlon agreemenL.
AgreemenL should be ln wrlLlng. lL can be a clause ln a conLracL or ln Lhe form of separaLe
agreemenL. 1he agreemenL could be slgned by Lhe parLles. Cr lL can be by exchangeof leLLers,
Lelex or Lelegrams or oLher means of LelecommunlcaLlon whlch provlde a record of Lhe
agreemenL or can exchange sLaLemenLs of clalm and defence ln whlch Lhe exlsLence of Lhe
agreemenL ls alleged by oneparLy and noL denled by LheoLher parLy. 1herecan beagreemenL
of arblLraLlon by reference Lo some oLher documenL conLalnlng arblLraLlon clause. 1here are
borne ouL from sec. 7 of Lhe AcL. ulspuLes relaLlng Lo legal relaLlonshlps, agreelng Lo have lL
resolved by arblLraLlon, and puLLlng lL ln wrlLlng are Lhe essenLlal requlremenLs Lo brlng abouL
arblLraLlon agreemenL. lL ls noL necessary Lo name Lhe arblLraLor or menLlon Lhe mode of
appolnLlng arblLraLor ln order Lo brlng abouL arblLraLlon agreemenL. Cf course, ln acLual
pracLlce, Lhese aspecLs would be Laken care of whlle drafLlng agreemenL or arblLraLlon clause
ln conLracL.
1o summarlse: arblLraLlon agreemenL should bebaslcallyan agreemenL as undersLood by law
of conLracL, lL shall be ln wrlLlng, lL need noL be slgned, lL can be a clause ln conLracL, lL can be
spelL ouL from correspondence or from more Lhan one documenL, lL can be agreed by
lncorporaLlon of some oLher documenL whlch provlded for arblLraLlon, and lL should noL be
relaLlng Lo legallynon-arblLrablemaLLers.

2
"1be cootts sboll bove jotlsJlctloo to tty oll solts of o clvll ootote exceptloq solts of wblcb tbelt coqolzooce ls eltbet exptessly
ot lmplleJly botteJ.
3
Mode of d|spute reso|ut|on:

Clven a valld agreemenL, how Lhe dlspuLe geLs resolved by arblLraLlon? lf Lhere ls a named
arblLraLor, elLher parLy can move Lhe arblLraLor Lo resolve Lhe dlspuLe. 1hls aspecL was clearly
3
spelL ouL ln Lhe 1940 AcL, Lhough ln Lhe 1996 AcL such clear provlslon ls noL found on Lhls

aspecL. lf LheparLles haveagreed upon anamed person as arblLraLor, and menLloned anoLher

name as Lhe subsLlLuLe, Lhe courL wlll noL lnLerveneLo appolnL any oLher person as arblLraLor
4
under sec. 11(6) of LheAcL.
lf as per agreemenL Lhe arblLraLlon ls by an lnsLlLuLlon. Lhe aggrleved parLy can move LhaL
lnsLlLuLlon Lo appolnL arblLraLor as per lLs procedure. Lven lf LhearblLraLlon argumenL wereLo

slmply sLaLe LhaL parLles shall resolve dlspuLes by submlLLlng lL Lo lnsLlLuLlonal arblLraLlon,
wlLhouL lndlcaLlng whlch lnsLlLuLlon, Lhe Supreme CourL has presenLly vlewed lL as valld and
3
noL vold for uncerLalnLy. lf lnsLlLuLe falls Lo appolnL arblLraLor, Lhen Lhe aggrleved parLy can
approach LhecourL under sec. 11(6) (c) of ArblLraLlon AcL of 1996.
lf LheparLles have noL named LhearblLraLor, and lf parLles havenoL agreed upon lnsLlLuLlonal
arblLraLlon, Lhen Lhe aggrleved parLy musL glve noLlce Lo Lhe opponenL as requlred by sec. 11
(3), walL for LhlrLy days, and Lhen move Lhe Plgh CourL under sec 11 (6) of Lhe AcL for
appolnLmenL of arblLraLor.
6
As regards Lhe scope of sec. 11 of Lhe AcL, Lhe former vlew was LhaL Lhe appolnLmenL was
merely admlnlsLraLlve declslon, and no enqulry was conLemplaLed. 8uL now Lhe Supreme
CourL has vlewed lL as a[udlclal power, enabllng LheCourL Lo decldeupon prellmlnary aspecLs
7
such as exlsLence of arblLraLlon agreemenL, exlsLence of a llve clalm eLc. AnoLher subsldlary
aspecL ls LhaL Lhe pre-S8 & Co declslons appolnLlng arblLraLors by admlnlsLraLlve orders

would noL be quesLlonable. 8uL subsequenLly, when Chlef !usLlce of Allahabad passed a
senLence on admlnlsLraLlve order for appolnLlng an arblLraLor, Lhe same was successfully
8
challenged before Lhe Supreme CourL. 1he Supreme CourL seL aslde Lhe order and
remanded lL for fresh dlsposal by Chlef !usLlce ln Lhe llghL of S8 & Co rullng. 1he dlspuLe
whlch began ln 2003was sLlll llngerlng ln 2008aL LhesLageof appolnLlng arblLraLor. 1heeffecL
of S8 &Co rullng ls LhaL LheappolnLmenL of arblLraLor now Lakes Llmeand Lhedeclslon glven
would beopen for appeal, and ln Lhls process, whaL was happenlng under 1940-AcL regardlng
delayln appolnLlng arblLraLor has re-enLered.
lrom Lhe above lL wlll become clear LhaL excepL lncases where Lhe arblLraLor ls named ln Lhe
agreemenL, ln all oLher respecLs, securlng appolnLmenL of arblLraLor would now consume
Llme even under Lhe 1996-AcL. AfLer S8 & Co rullng, Lhe appolnLmenL of arblLraLor, and
maklng lL appealableaL LhaL sLagelLself. S8 &Co rullng ls oneblg blow Lo Lheefflcacy of 1996
AcL.
J
l. c. Aqqotwol v. k. N. kboslo, Alk 1975 uelbl 54.
4
M/s. komolo 5olveot v. Moolpol lloooce cotpototloo ltJ, Alk 2001 MoJtos 440
5
NoooJoo 8lomettlx ltJ. v u l Olls ltJ, (2009) 4 5cc 495.
6
kookoo kollwoy v. kool coosttoctloos, (2002) 2 5cc J88.
7
58l & co v. lotel oqloeetloq ltJ, (2005) 8 5cc 618.
8
komesbwot uos Aqotwol v. kltoo Aqotwol, Alk 2008 5c 95J.
4
words, non-arblLrable dlspuLes cannoL be enLrusLed Lo arblLraLor for resoluLlon. Such
arblLraLlon wlll be wlLhouL [urlsdlcLlon. [L.g. maLrlmonlal maLLers, company cases, land
reforms or renL conLrol cases eLc whereexcluslve[urlsdlcLlon ls creaLed elsewhere].
ConLrasL Lhls wlLh Lhe power of clvll courL. Any dlspuLe of clvll naLure can be Laken Lo a courL
2
of law, because of Lhe wlde phrase of sec.9 of CC 1908. Clvll CourL has power Lo Lake up
dlspuLes afLer lL beglns, when Lhe aggrleved parLy Lakes lL Lo Lhe courL by way of a sulL. 1he
consenL of opponenL ls noL requlred.
8uL as regards arblLraLlon, lL cannoL be sLarLed afLer dlspuLes begln, aL Lhe wlsh of one of Lhe
dlspuLanLs. 1hls llmlLed sphere of ad[udlcaLory role llmlLs Lhe scope of arblLraLlon. AfLer
dlspuLes begln beLween LheparLles, lL ls noL posslbleLo LhlnkLhaL Lheywould agreeLo resolve
lL by Lhe arblLraLlon. lor LhaL maLLer sec. 90 and order 36 of CC 1908 exlsLed from 1908. lL
enabled Lhe parLles Lo agree ln wrlLlng Lo sLaLe a case for oplnlon of Lhe courL and geL lL
ad[udlcaLed by Lhe courL. 8uL none used Lhls. Cnce dlspuLes crop up parLles cannoL agree Lo
resolve lL by a forum of consensus. Suppose Lhe law were Lo provlde Lhus: 'Whenever any
parLy has Lo resolve a dlspuLe Louchlng cerLaln legal relaLlonshlp, be lL conLracLual or noL,
such parLy may apply Lo courL Lo geL such dlspuLe resolved by arblLraLlon. 1he courL shall
Lhereupon nomlnaLe an arblLraLor who shall resolve Lhe sald dlspuLe'. 8uL LhaL ls noL Lhe law.
1here should be arblLraLlon agreemenL beLween Lhe parLles lf Lhey have Lo resolve Lhe
dlspuLebyarblLraLlon.
What |s arb|trat|onagreement:
WhaL ls an engagemenL of arblLraLlon ls sLaLed ln sec. 7 of Lhe AcL. AgreemenL by Lhe parLles
Lo submlL all or cerLaln dlspuLes already arlsen or whlch may arlse beLween Lhe parLles ln
respecL of deflned legal relaLlonshlp belL conLracLual or noL, would bearblLraLlon agreemenL.
AgreemenL should be ln wrlLlng. lL can be a clause ln a conLracL or ln Lhe form of separaLe
agreemenL. 1he agreemenL could be slgned by Lhe parLles. Cr lL can be by exchangeof leLLers,
Lelex or Lelegrams or oLher means of LelecommunlcaLlon whlch provlde a record of Lhe
agreemenL or can exchange sLaLemenLs of clalm and defence ln whlch Lhe exlsLence of Lhe
agreemenL ls alleged by oneparLy and noL denled by LheoLher parLy. 1herecan beagreemenL
of arblLraLlon by reference Lo some oLher documenL conLalnlng arblLraLlon clause. 1here are
borne ouL from sec. 7 of Lhe AcL. ulspuLes relaLlng Lo legal relaLlonshlps, agreelng Lo have lL
resolved by arblLraLlon, and puLLlng lL ln wrlLlng are Lhe essenLlal requlremenLs Lo brlng abouL
arblLraLlon agreemenL. lL ls noL necessary Lo name Lhe arblLraLor or menLlon Lhe mode of
appolnLlng arblLraLor ln order Lo brlng abouL arblLraLlon agreemenL. Cf course, ln acLual
pracLlce, Lhese aspecLs would be Laken care of whlle drafLlng agreemenL or arblLraLlon clause
ln conLracL.
1o summarlse: arblLraLlon agreemenL should bebaslcallyan agreemenL as undersLood by law
of conLracL, lL shall be ln wrlLlng, lL need noL be slgned, lL can be a clause ln conLracL, lL can be
spelL ouL from correspondence or from more Lhan one documenL, lL can be agreed by
lncorporaLlon of some oLher documenL whlch provlded for arblLraLlon, and lL should noL be
relaLlng Lo legallynon-arblLrablemaLLers.

2
"1be cootts sboll bove jotlsJlctloo to tty oll solts of o clvll ootote exceptloq solts of wblcb tbelt coqolzooce ls eltbet exptessly
ot lmplleJly botteJ.
3
Mode of d|spute reso|ut|on:

Clven a valld agreemenL, how Lhe dlspuLe geLs resolved by arblLraLlon? lf Lhere ls a named
arblLraLor, elLher parLy can move Lhe arblLraLor Lo resolve Lhe dlspuLe. 1hls aspecL was clearly
3
spelL ouL ln Lhe 1940 AcL, Lhough ln Lhe 1996 AcL such clear provlslon ls noL found on Lhls

aspecL. lf LheparLles haveagreed upon anamed person as arblLraLor, and menLloned anoLher

name as Lhe subsLlLuLe, Lhe courL wlll noL lnLerveneLo appolnL any oLher person as arblLraLor
4
under sec. 11(6) of LheAcL.
lf as per agreemenL Lhe arblLraLlon ls by an lnsLlLuLlon. Lhe aggrleved parLy can move LhaL
lnsLlLuLlon Lo appolnL arblLraLor as per lLs procedure. Lven lf LhearblLraLlon argumenL wereLo

slmply sLaLe LhaL parLles shall resolve dlspuLes by submlLLlng lL Lo lnsLlLuLlonal arblLraLlon,
wlLhouL lndlcaLlng whlch lnsLlLuLlon, Lhe Supreme CourL has presenLly vlewed lL as valld and
3
noL vold for uncerLalnLy. lf lnsLlLuLe falls Lo appolnL arblLraLor, Lhen Lhe aggrleved parLy can
approach LhecourL under sec. 11(6) (c) of ArblLraLlon AcL of 1996.
lf LheparLles have noL named LhearblLraLor, and lf parLles havenoL agreed upon lnsLlLuLlonal
arblLraLlon, Lhen Lhe aggrleved parLy musL glve noLlce Lo Lhe opponenL as requlred by sec. 11
(3), walL for LhlrLy days, and Lhen move Lhe Plgh CourL under sec 11 (6) of Lhe AcL for
appolnLmenL of arblLraLor.
6
As regards Lhe scope of sec. 11 of Lhe AcL, Lhe former vlew was LhaL Lhe appolnLmenL was
merely admlnlsLraLlve declslon, and no enqulry was conLemplaLed. 8uL now Lhe Supreme
CourL has vlewed lL as a[udlclal power, enabllng LheCourL Lo decldeupon prellmlnary aspecLs
7
such as exlsLence of arblLraLlon agreemenL, exlsLence of a llve clalm eLc. AnoLher subsldlary
aspecL ls LhaL Lhe pre-S8 & Co declslons appolnLlng arblLraLors by admlnlsLraLlve orders

would noL be quesLlonable. 8uL subsequenLly, when Chlef !usLlce of Allahabad passed a
senLence on admlnlsLraLlve order for appolnLlng an arblLraLor, Lhe same was successfully
8
challenged before Lhe Supreme CourL. 1he Supreme CourL seL aslde Lhe order and
remanded lL for fresh dlsposal by Chlef !usLlce ln Lhe llghL of S8 & Co rullng. 1he dlspuLe
whlch began ln 2003was sLlll llngerlng ln 2008aL LhesLageof appolnLlng arblLraLor. 1heeffecL
of S8 &Co rullng ls LhaL LheappolnLmenL of arblLraLor now Lakes Llmeand Lhedeclslon glven
would beopen for appeal, and ln Lhls process, whaL was happenlng under 1940-AcL regardlng
delayln appolnLlng arblLraLor has re-enLered.
lrom Lhe above lL wlll become clear LhaL excepL lncases where Lhe arblLraLor ls named ln Lhe
agreemenL, ln all oLher respecLs, securlng appolnLmenL of arblLraLor would now consume
Llme even under Lhe 1996-AcL. AfLer S8 & Co rullng, Lhe appolnLmenL of arblLraLor, and
maklng lL appealableaL LhaL sLagelLself. S8 &Co rullng ls oneblg blow Lo Lheefflcacy of 1996
AcL.
J
l. c. Aqqotwol v. k. N. kboslo, Alk 1975 uelbl 54.
4
M/s. komolo 5olveot v. Moolpol lloooce cotpototloo ltJ, Alk 2001 MoJtos 440
5
NoooJoo 8lomettlx ltJ. v u l Olls ltJ, (2009) 4 5cc 495.
6
kookoo kollwoy v. kool coosttoctloos, (2002) 2 5cc J88.
7
58l & co v. lotel oqloeetloq ltJ, (2005) 8 5cc 618.
8
komesbwot uos Aqotwol v. kltoo Aqotwol, Alk 2008 5c 95J.
4
5
Conduct of proceed|ngs of arb|trat|on:
AfLer a hard foughL baLLle Lo geL an arblLraLor appolnLed, whaL happens Lo commencemenL
and holdlng of arblLraLlon?
1hecourL wlll lnLlmaLeLheperson who was appolnLed as arblLraLor.
8uL Lhere ls no provlslon ln Lhe AcL Lo provlde for paymenL of even expenses requlred for Lhe
arblLraLor Lo send noLlceLo LheparLles. ln lnsLlLuLlonal arblLraLlon, for example, lndlan Councll
of ArblLraLlon, Lhere ls provlslon made for deposlLlng money by Lhe parLy movlng for
arblLraLlon Lo meeL conLlngency expendlLure. ln non-lnsLlLuLlonal arblLraLlon, Lhe arblLraLor
appolnLed by Lhe CourL has Lo lnlLlally lnvesL for sendlng noLlce and for sLaLlonary. Pe should
flnd ways and means Lo geL Lhe noLlce prepared, Lyped and posLed Lo parLles. WheLher Lhe
lnLenLlon of leglslaLure ls LhaL Lhe ArblLraLor should spend for Lhe expenses of arblLraLlon and
laLer on recover lL? 1haL Lhls ls whaL ls conLemplaLed by law appears probable lf we read sec.
39 (1) whlch creaLed llen for unpald cosLs of arblLraLlon. lf arblLraLor refused Lo hand over
records by exerclslng llen, Lhe dlspuLe whlch arlses wlll have Lo be resolved by Lhe CourL as
conLemplaLed bysub-secLlon (2) of Sec. 39.
Sec. 3 of Lhe AcL conLemplaLes sendlng noLlce by reglsLered posL. Suppose Lhe parLy does noL
recelve Lhe noLlce, wheLher arblLraLor has Lo resorL Lo any oLher mode of servlce, llke
subsLlLuLed servlce as conLemplaLed by Code of Clvll rocedure 1908. Cn Lhls aspecL Lhe law ls
sllenL. ApparenLly, lf noLlce ls senL, LhaL would meeL Lhe requlremenLs of law. lL need noL be
served.
WhaL procedurearblLraLor should adopL ln conducLlng Lheproceedlngs of arblLraLlon?
lf Lhe agreemenL of arblLraLlon ls sllenL, Lhen Lhe provlslons of law come Lo play. llrsLly,
arblLraLor should flx place of arblLraLlon and languageof Lhe proceedlngs. [See sec. 20 and 22
of ArblLraLlon AcL). 8ecelve clalm sLaLemenL and defence sLaLemenL. [See sec. 23]. Pow Lhe
hearlng should be conducLed ls regulaLed by sec. 24. 1hroughouL Lhe proceedlngs, Lhe
arblLraLor has Lo LreaL Lhe parLles equally and glven Lhem full opporLunlLy. [sec. 18].
ArblLraLor should declde dlspuLes as per law and Lerms of conLracL and usages of Lhe Lrade.
[sec 28 (1)(a) and (3)]. Cn maklng award, Lhe arblLraLor should dellver lLs copy Lo Lhe parLles.
[sec. 31(3)].
WhaL should bedonewlLh Lherecords of arblLraLlon? 1helaw ls sllenL.
1herels no provlslon Lo granL cerLlfled coples Lo LheparLles.
under sec.84of LheAcL LheCenLral CovernmenL may make8ules Lo carryouL Lheprovlslons of
Lhe ArblLraLlon AcL. lL appears LhaL Llll now no rule has been framed provldlng for all Lhese
pracLlcal aspecLs of arblLraLlon.
1he Code of Clvll rocedure 1908 and Lvldence AcL, 1872 do noL apply Lo arblLraLlon. 1he
arblLraLor ls havlng freedom of procedure, (vlde sec.19.). ln pracLlcal effecL, lf Lhe ArblLral
1rlbunal ls manned by legally Lralned person, llke a lawyer or a reLlred [udge, Lhe procedure
falls lnLo CC-Lvldence AcL-mode, unwlLLlngly and by force of hablL. ArblLraLor can glve
declslon as frlendly advlser only lf parLles expressly auLhorlze hlm Lo do so, wlde sec. 28 (2)
1hus ln effecL, LhearblLraLlon llngers procedurally.
1he challenge procedure, Lhe procedure of glvlng declslon on quesLlon of [urlsdlcLlon eLc, as
conLemplaLed bysec.13and 16of LheAcL also makeLhearblLraLlon llnger on.
1hen Lherels LhequesLlon of sLamp duLy on arblLral award. lf award ls glven by referencemade
9
by an order of courL ln Lhecourseof a sulL sLamp duLy ls noL payable . PencesLamp duLy would
noL be aLLracLed as regards awards LhaL would be glven by arblLraLors Lo be appolnLed by Lhe
CourL under sec.89 of CC, as amended ln 2002. 1he sLamp AcL conLemplaLes LhaL Lhe
10
documenLs shall be sLamped before or aL Lhe Llme of execuLlon of Lhe lnsLrumenL . ln each
SLaLe sLamp duLy would vary. lf sLamp duLy ls noL pald, Lhe courL can lmpose Len Llmes of Lhe
duLy as penalLy before admlLLlng lL ln evldence as conLemplaLed by sec. 33 of CenLral SLamp
AcL, or e.g. sec. 34 of karnaLaka AcL. lf award ls noL sLamped lL ls noL admlsslble ln evldence.
CerLaln awards, llke Lhe ones relaLlng Lo parLlLlon of lmmoveable properLy, would requlre
reglsLraLlon also. 1hese are some Llmes expenslve. lor example, now Lhe karnaLaka sLamps
11
AcL has been so amended LhaL Lhe sLamp duLy on award ls payable as for conveyance . lL ls 6
[usL aL presenL from 1.4.09. 1hls would keep changlng wlLh each budgeL.
rocedural delay and lncurrlng of heavy cosLs Lake away Lhe aLLracLlon for Lhe parLy Lo resorL
Lo arblLraLlon.
ost awardprob|ems:
AfLer LheAward lf parLyls aggrleved whaL ls Lheremedy?
under secLlon 34 of Lhe AcL wlLhln 90 days of recelpL of Lhe copy of award Lhe parLy should
challenge lL lf grounds enumeraLed ln LhaL secLlon can be made ouL. Cnce Lhe appllcaLlon for
seLLlng aslde award ls flled, ln vlew of Lhe wordlngs of sec. 36 Lhe award would noL be
execuLable. ln oLher words, Lhe award geLs auLomaLlcally sLayed once Lhe parLy challenges Lhe
award by resorLlng Lo sec.34. 1hus, every award would be sub[ecLed Lo challenge as lL enables
Lhe parLy Lo prevenL execuLlon of Lhe award, wlLhouL any requlremenL llke glvlng securlLy Lo
prevenL lLs enforcemenL and so on.
WhaL procedure should be followed by Lhe CourL Lo dlspose of Lhe appllcaLlon Lo seL aslde
award ls noL sLaLed ln Lhe AcL. Sec. 82 glves power Lo Plgh CourL Lo frame rules relaLlng Lo
proceedlngs before Lhe CourL. Plgh CourL have framed 8ules. As regard karnaLaka, Lhe
procedure of sulL would be followed ln vlew of Lhe 8ules framed by Lhe Plgh CourL. 1he 8ule ls
known as Lhe Plgh CourL of karnaLaka ArblLraLlon (roceedlng before Lhe CourL) 8ules, 2001
Accordlng Lo lLs requlremenLs, Lhe appllcaLlon Lo seL aslde Lhe award would be reglsLered as a
sulL, appllcaLlon would be llke a plalnL, and as far as posslble, Lhe procedure as conLemplaLed
by Clvll rocedure Code would be followed. 1hls would enable Lhe award Lo geL sLuck up ln
courL proceedlngs. An award broughL abouL wlLhouL adherlng Lo CC, as conLemplaLed by
sec.19of LheAcL would, aL LhesLageof lLs challenge, beregulaLed byLheprocedureof CC!
lf Lhe award becomes flnal, Lhen Lhe problem of lLs execuLlon, llke a decree of clvll courL, as
conLemplaLed bysec. 36of AcL would begln.
1hus Lhe process of arblLraLlon ls rlddled wlLh problems galore, Lhere by undermlnlng lLs
effecLlveness.
6
5
Conduct of proceed|ngs of arb|trat|on:
AfLer a hard foughL baLLle Lo geL an arblLraLor appolnLed, whaL happens Lo commencemenL
and holdlng of arblLraLlon?
1hecourL wlll lnLlmaLeLheperson who was appolnLed as arblLraLor.
8uL Lhere ls no provlslon ln Lhe AcL Lo provlde for paymenL of even expenses requlred for Lhe
arblLraLor Lo send noLlceLo LheparLles. ln lnsLlLuLlonal arblLraLlon, for example, lndlan Councll
of ArblLraLlon, Lhere ls provlslon made for deposlLlng money by Lhe parLy movlng for
arblLraLlon Lo meeL conLlngency expendlLure. ln non-lnsLlLuLlonal arblLraLlon, Lhe arblLraLor
appolnLed by Lhe CourL has Lo lnlLlally lnvesL for sendlng noLlce and for sLaLlonary. Pe should
flnd ways and means Lo geL Lhe noLlce prepared, Lyped and posLed Lo parLles. WheLher Lhe
lnLenLlon of leglslaLure ls LhaL Lhe ArblLraLor should spend for Lhe expenses of arblLraLlon and
laLer on recover lL? 1haL Lhls ls whaL ls conLemplaLed by law appears probable lf we read sec.
39 (1) whlch creaLed llen for unpald cosLs of arblLraLlon. lf arblLraLor refused Lo hand over
records by exerclslng llen, Lhe dlspuLe whlch arlses wlll have Lo be resolved by Lhe CourL as
conLemplaLed bysub-secLlon (2) of Sec. 39.
Sec. 3 of Lhe AcL conLemplaLes sendlng noLlce by reglsLered posL. Suppose Lhe parLy does noL
recelve Lhe noLlce, wheLher arblLraLor has Lo resorL Lo any oLher mode of servlce, llke
subsLlLuLed servlce as conLemplaLed by Code of Clvll rocedure 1908. Cn Lhls aspecL Lhe law ls
sllenL. ApparenLly, lf noLlce ls senL, LhaL would meeL Lhe requlremenLs of law. lL need noL be
served.
WhaL procedurearblLraLor should adopL ln conducLlng Lheproceedlngs of arblLraLlon?
lf Lhe agreemenL of arblLraLlon ls sllenL, Lhen Lhe provlslons of law come Lo play. llrsLly,
arblLraLor should flx place of arblLraLlon and languageof Lhe proceedlngs. [See sec. 20 and 22
of ArblLraLlon AcL). 8ecelve clalm sLaLemenL and defence sLaLemenL. [See sec. 23]. Pow Lhe
hearlng should be conducLed ls regulaLed by sec. 24. 1hroughouL Lhe proceedlngs, Lhe
arblLraLor has Lo LreaL Lhe parLles equally and glven Lhem full opporLunlLy. [sec. 18].
ArblLraLor should declde dlspuLes as per law and Lerms of conLracL and usages of Lhe Lrade.
[sec 28 (1)(a) and (3)]. Cn maklng award, Lhe arblLraLor should dellver lLs copy Lo Lhe parLles.
[sec. 31(3)].
WhaL should bedonewlLh Lherecords of arblLraLlon? 1helaw ls sllenL.
1herels no provlslon Lo granL cerLlfled coples Lo LheparLles.
under sec.84of LheAcL LheCenLral CovernmenL may make8ules Lo carryouL Lheprovlslons of
Lhe ArblLraLlon AcL. lL appears LhaL Llll now no rule has been framed provldlng for all Lhese
pracLlcal aspecLs of arblLraLlon.
1he Code of Clvll rocedure 1908 and Lvldence AcL, 1872 do noL apply Lo arblLraLlon. 1he
arblLraLor ls havlng freedom of procedure, (vlde sec.19.). ln pracLlcal effecL, lf Lhe ArblLral
1rlbunal ls manned by legally Lralned person, llke a lawyer or a reLlred [udge, Lhe procedure
falls lnLo CC-Lvldence AcL-mode, unwlLLlngly and by force of hablL. ArblLraLor can glve
declslon as frlendly advlser only lf parLles expressly auLhorlze hlm Lo do so, wlde sec. 28 (2)
1hus ln effecL, LhearblLraLlon llngers procedurally.
1he challenge procedure, Lhe procedure of glvlng declslon on quesLlon of [urlsdlcLlon eLc, as
conLemplaLed bysec.13and 16of LheAcL also makeLhearblLraLlon llnger on.
1hen Lherels LhequesLlon of sLamp duLy on arblLral award. lf award ls glven by referencemade
9
by an order of courL ln Lhecourseof a sulL sLamp duLy ls noL payable . PencesLamp duLy would
noL be aLLracLed as regards awards LhaL would be glven by arblLraLors Lo be appolnLed by Lhe
CourL under sec.89 of CC, as amended ln 2002. 1he sLamp AcL conLemplaLes LhaL Lhe
10
documenLs shall be sLamped before or aL Lhe Llme of execuLlon of Lhe lnsLrumenL . ln each
SLaLe sLamp duLy would vary. lf sLamp duLy ls noL pald, Lhe courL can lmpose Len Llmes of Lhe
duLy as penalLy before admlLLlng lL ln evldence as conLemplaLed by sec. 33 of CenLral SLamp
AcL, or e.g. sec. 34 of karnaLaka AcL. lf award ls noL sLamped lL ls noL admlsslble ln evldence.
CerLaln awards, llke Lhe ones relaLlng Lo parLlLlon of lmmoveable properLy, would requlre
reglsLraLlon also. 1hese are some Llmes expenslve. lor example, now Lhe karnaLaka sLamps
11
AcL has been so amended LhaL Lhe sLamp duLy on award ls payable as for conveyance . lL ls 6
[usL aL presenL from 1.4.09. 1hls would keep changlng wlLh each budgeL.
rocedural delay and lncurrlng of heavy cosLs Lake away Lhe aLLracLlon for Lhe parLy Lo resorL
Lo arblLraLlon.
ost awardprob|ems:
AfLer LheAward lf parLyls aggrleved whaL ls Lheremedy?
under secLlon 34 of Lhe AcL wlLhln 90 days of recelpL of Lhe copy of award Lhe parLy should
challenge lL lf grounds enumeraLed ln LhaL secLlon can be made ouL. Cnce Lhe appllcaLlon for
seLLlng aslde award ls flled, ln vlew of Lhe wordlngs of sec. 36 Lhe award would noL be
execuLable. ln oLher words, Lhe award geLs auLomaLlcally sLayed once Lhe parLy challenges Lhe
award by resorLlng Lo sec.34. 1hus, every award would be sub[ecLed Lo challenge as lL enables
Lhe parLy Lo prevenL execuLlon of Lhe award, wlLhouL any requlremenL llke glvlng securlLy Lo
prevenL lLs enforcemenL and so on.
WhaL procedure should be followed by Lhe CourL Lo dlspose of Lhe appllcaLlon Lo seL aslde
award ls noL sLaLed ln Lhe AcL. Sec. 82 glves power Lo Plgh CourL Lo frame rules relaLlng Lo
proceedlngs before Lhe CourL. Plgh CourL have framed 8ules. As regard karnaLaka, Lhe
procedure of sulL would be followed ln vlew of Lhe 8ules framed by Lhe Plgh CourL. 1he 8ule ls
known as Lhe Plgh CourL of karnaLaka ArblLraLlon (roceedlng before Lhe CourL) 8ules, 2001
Accordlng Lo lLs requlremenLs, Lhe appllcaLlon Lo seL aslde Lhe award would be reglsLered as a
sulL, appllcaLlon would be llke a plalnL, and as far as posslble, Lhe procedure as conLemplaLed
by Clvll rocedure Code would be followed. 1hls would enable Lhe award Lo geL sLuck up ln
courL proceedlngs. An award broughL abouL wlLhouL adherlng Lo CC, as conLemplaLed by
sec.19of LheAcL would, aL LhesLageof lLs challenge, beregulaLed byLheprocedureof CC!
lf Lhe award becomes flnal, Lhen Lhe problem of lLs execuLlon, llke a decree of clvll courL, as
conLemplaLed bysec. 36of AcL would begln.
1hus Lhe process of arblLraLlon ls rlddled wlLh problems galore, Lhere by undermlnlng lLs
effecLlveness.
6
Defect of system notedby Supreme Court:
Pow arblLraLlon as an alLernaLlve dlspuLe resoluLlon sysLem ls faclng problems has been
noLlced by Lhe Supreme CourL ln a recenL rullng where Lhe problem of appolnLlng subsLlLuLed
arblLraLor came Lo be declded vls--vls a conLracL relaLlng Lo 8allway work. 1he relevanL
observaLlons arequoLed below:
13. 1he ob[ecL of Lhe alLernaLlve dlspuLe resoluLlon process of arblLraLlon ls Lo have
expedlLlous and effecLlve dlsposal of Lhe dlspuLes Lhrough a prlvaLe forum of Lhe parLles'
cholce...
19. 1he delays and frequenL changes ln Lhe ArblLral 1rlbunal make a mockery of Lhe process of
arblLraLlon..
21. When a reLlred !udge ls appolnLed as arblLraLor ln place of servlng offlcers, Lhe
CovernmenL ls forced Lo bear Lhe hlgh cosL of arblLraLlon by way of prlvaLe arblLaLor's fee even
Lhough lL had noL consenLed for Lhe appolnLmenL of such non-Lechnlcal non-servlng person as
arblLraLor(s). 1here ls no doubL ln Lhe prevalenL oplnlon LhaL Lhe cosL of arblLraLlon becomes
very hlgh ln many cases where reLlred !udge(s) are arblLraLors. 1he large number of slLLlngs
and charglng of very hlgh fees per slLLlng, wlLh several ad-ons, wlLhouL any celllng, havemany a
Llme resulLed ln Lhe cosL of arblLraLlon approachlng or even exceedlng Lhe amounL lnvolved ln
LhedlspuLeor LheamounL of Lheaward.
22. When an arblLraLor ls appolnLed by a CourL wlLhouL lndlcaLlng fees, elLher boLh parLles or
aL leasL oneparLy ls aL a dlsadvanLage. llrsLly, LheparLles feel consLralned Lo agreeLo whaLever
fees ls suggesLed by Lhe arblLraLor, even lf lL ls hlgh or beyond Lhelr capaclLy. Secondly, lf a hlgh
fee ls clalmed by Lhe arblLraLor and one parLy agrees Lo pay such fee, Lhe oLher parLy, whlch ls
unable Lo afford such fee or relucLanL Lo pay such hlgh fee, ls puL Lo an embarrasslng poslLlon.
Pe wlll noL be ln a poslLlon Lo express hls reservaLlon or ob[ecLlon Lo hlgh fee, owlng Lo an
apprehenslon LhaL refusal by hlm Lo agree for Lhe fee suggesLed by Lhe arblLraLor, may
pre[udlce hls case or creaLe a blas ln favour of Lhe oLher parLy whlch readlly agreed Lo pay Lhe
hlgh fee.
24. lL ls unforLunaLe LhaL delays, hlgh cosLs, frequenL and someLlmes unwarranLed [udlclal
lnLerrupLlons aL dlfferenL sLages are serlously hamperlng Lhe growLh of arblLraLlon as an
effecLlve dlspuLe resoluLlon process. uelay and hlgh cosLs are Lwo areas where Lhe arblLraLors
12
byself-regulaLlon can brlng abouL marked lmprovemenL."
Conc|us|on:
ln sum, Lhe resoluLlon of dlspuLe by arblLraLlon, heralded as an Au8, would become anoLher
ulsLress 8esoluLlon for Lhe aggrleved person who wanLs Lo obLaln some rellef. lor Lhe
aggrleved parLy, lL ls caLch-22 slLuaLlon ln chooslng beLween llLlgaLlon and arblLraLlon. lf
llLlgaLlon llngers, arblLraLlon ls noL far behlnd. ArblLraLedon'L, llLlgaLe- would beequallygood.
1
kCLL CI Ak8I1kA1ICN IN
S1A1U1Ck ADIUDICA1ICNS
k.l. ltoJeep*
ArblLraLlon ls a fasL growlng mode of alLernaLlve dlspuLe resoluLlon. lL has an early orlgln ln
1 2
AnclenL Creeceand 8ome . ln Common Law lL has LhefoundaLlon ln sevenLeenLh cenLury . ln
lndla durlng Lhe nlneLeenLh cenLury lLself a legal frame work was lnLroduced ln Lhe fleld of
3
arblLraLlon , buL lL aLLalned Lhe wldesL popularlLy ln Lhe recenL years only. A comprehenslve
law was lnLroduced by Lhe arllamenL of lndla ln 1996, by enacLlng Lhe ArblLraLlon and
ConclllaLlon AcL, 1996, ln Lerms of unlversal pollcy adopLed by Lhe unlLed naLlons
Commlsslon on lnLernaLlonal 1radeLaw (unlCl18AL).
lL has sLaLuLory recognlLlon noL only ln Lhe 1996 AcL, buL also ln Lhe Clvll rocedure Code,
1908, when secLlon 89 was relnLroduced wlLh a mandaLe Lo arrange seLLlemenL ln all klnds of
4
llLlgaLlons governed by Lhe Code . ln Clvll rocedure Code, Lhe Clvll !udges are obllged Lo refer
a dlspuLe Lo seLLlemenL, lf lL appears LhaL Lhere ls an elemenL of seLLlemenL, ln Lhe dlspuLe
beforehlm. AfLer formulaLlng LheLerms of seLLlemenL, LheClvll !udgemay refer LhemaLLer for
a seLLlemenL elLher Lhrough arblLraLlon, conclllaLlon, medlaLlon or Lhrough a [udlclal
seLLlemenL llkeLokAdalaL.
1he usual meLhod Lo resolve dlspuLes under SecLlon 89 of Lhe Code ls seLLlemenL Lhrough Lhe
Lok AdalaLs. Powever, Lhe pracLlcal experlences demonsLraLe dlfflculLles ln ensurlng Lhe
parLlclpaLlons of llLlganLs ln seLLlemenLs Lhrough Lhese popular forums llke Lok AdalaL eLc. ln
such a slLuaLlon Lhe role of ArblLraLlon ls slgnlflcanL, as ArblLraLlon ls legal Lechnlque where ln
an lndependenL ad[udlcaLor resolves Lhe dlspuLes whlch ls blndlng on Lhe parLles Lo
arblLraLlon.
1here are enormous advanLages Lo Lhls sysLem of dlspuLe resoluLlon. Cne of such merlLs ls
LhaL Lhe ad[udlcaLlon ls much fasLer Lhan Lhe LradlLlonal [udlclal proceedlngs. When Lhe
naLureof dlspuLels hlghly Lechnlcal and complex one, LheuLlllzaLlon of an experL ln Lhefleld as
an arblLraLor ls hlghly producLlve. Such a sysLem of ad[udlcaLlon by uslng Lhe experLlse of an
ad[udlcaLor ls noL posslbleln LheLradlLlonal [udlclal process, as lL ls lmposslbleLo mandaLeLhe
Clvll !udgeLo befamlllar wlLh all Lhesub[ecLs.
1he role of experLlsed person as arblLraLor advanced Lhe recognlLlon of arblLraLlon ln
sLaLuLory ad[udlcaLlons. 1he Lerm arblLraLlon ls famlllar ln speclal sLaLuLes llke lndlan
3
1elegraph AcL, 1883 and LlecLrlclLy AcL, 2003. As per SecLlon 78 of Lhe lndlan 1elegraph AcL a
1
colemoo lbllllpsoo, 1be lotetootloool low ooJ costoms of Aocleot Cteece ooJ kome",

Mocmllloo & co. Newyotk (1911)
2
Atblttotloo Act, 1697
J
Atblttotloo Act, 1899
4
5ectloo 89 of c.l.c. wos tepeoleJ by 5ectloo 49 of tbe Act 10 of 1940 ooJ oqolotelottoJoceJ by 5ectloo 7 of tbe Act 46 of 1999
wltb effect ftom1-7-2002.
5
5ectloo 78 losetteJ by 5ectloo J of tbe Act 47 of 1957 wltb effect ftom1-7-1959.
8
* AJvocote/ Covetomeot lleoJet (1oxes), nlqb coott of ketolo
Defect of system notedby Supreme Court:
Pow arblLraLlon as an alLernaLlve dlspuLe resoluLlon sysLem ls faclng problems has been
noLlced by Lhe Supreme CourL ln a recenL rullng where Lhe problem of appolnLlng subsLlLuLed
arblLraLor came Lo be declded vls--vls a conLracL relaLlng Lo 8allway work. 1he relevanL
observaLlons arequoLed below:
13. 1he ob[ecL of Lhe alLernaLlve dlspuLe resoluLlon process of arblLraLlon ls Lo have
expedlLlous and effecLlve dlsposal of Lhe dlspuLes Lhrough a prlvaLe forum of Lhe parLles'
cholce...
19. 1he delays and frequenL changes ln Lhe ArblLral 1rlbunal make a mockery of Lhe process of
arblLraLlon..
21. When a reLlred !udge ls appolnLed as arblLraLor ln place of servlng offlcers, Lhe
CovernmenL ls forced Lo bear Lhe hlgh cosL of arblLraLlon by way of prlvaLe arblLaLor's fee even
Lhough lL had noL consenLed for Lhe appolnLmenL of such non-Lechnlcal non-servlng person as
arblLraLor(s). 1here ls no doubL ln Lhe prevalenL oplnlon LhaL Lhe cosL of arblLraLlon becomes
very hlgh ln many cases where reLlred !udge(s) are arblLraLors. 1he large number of slLLlngs
and charglng of very hlgh fees per slLLlng, wlLh several ad-ons, wlLhouL any celllng, havemany a
Llme resulLed ln Lhe cosL of arblLraLlon approachlng or even exceedlng Lhe amounL lnvolved ln
LhedlspuLeor LheamounL of Lheaward.
22. When an arblLraLor ls appolnLed by a CourL wlLhouL lndlcaLlng fees, elLher boLh parLles or
aL leasL oneparLy ls aL a dlsadvanLage. llrsLly, LheparLles feel consLralned Lo agreeLo whaLever
fees ls suggesLed by Lhe arblLraLor, even lf lL ls hlgh or beyond Lhelr capaclLy. Secondly, lf a hlgh
fee ls clalmed by Lhe arblLraLor and one parLy agrees Lo pay such fee, Lhe oLher parLy, whlch ls
unable Lo afford such fee or relucLanL Lo pay such hlgh fee, ls puL Lo an embarrasslng poslLlon.
Pe wlll noL be ln a poslLlon Lo express hls reservaLlon or ob[ecLlon Lo hlgh fee, owlng Lo an
apprehenslon LhaL refusal by hlm Lo agree for Lhe fee suggesLed by Lhe arblLraLor, may
pre[udlce hls case or creaLe a blas ln favour of Lhe oLher parLy whlch readlly agreed Lo pay Lhe
hlgh fee.
24. lL ls unforLunaLe LhaL delays, hlgh cosLs, frequenL and someLlmes unwarranLed [udlclal
lnLerrupLlons aL dlfferenL sLages are serlously hamperlng Lhe growLh of arblLraLlon as an
effecLlve dlspuLe resoluLlon process. uelay and hlgh cosLs are Lwo areas where Lhe arblLraLors
12
byself-regulaLlon can brlng abouL marked lmprovemenL."
Conc|us|on:
ln sum, Lhe resoluLlon of dlspuLe by arblLraLlon, heralded as an Au8, would become anoLher
ulsLress 8esoluLlon for Lhe aggrleved person who wanLs Lo obLaln some rellef. lor Lhe
aggrleved parLy, lL ls caLch-22 slLuaLlon ln chooslng beLween llLlgaLlon and arblLraLlon. lf
llLlgaLlon llngers, arblLraLlon ls noL far behlnd. ArblLraLedon'L, llLlgaLe- would beequallygood.
1
kCLL CI Ak8I1kA1ICN IN
S1A1U1Ck ADIUDICA1ICNS
k.l. ltoJeep*
ArblLraLlon ls a fasL growlng mode of alLernaLlve dlspuLe resoluLlon. lL has an early orlgln ln
1 2
AnclenL Creeceand 8ome . ln Common Law lL has LhefoundaLlon ln sevenLeenLh cenLury . ln
lndla durlng Lhe nlneLeenLh cenLury lLself a legal frame work was lnLroduced ln Lhe fleld of
3
arblLraLlon , buL lL aLLalned Lhe wldesL popularlLy ln Lhe recenL years only. A comprehenslve
law was lnLroduced by Lhe arllamenL of lndla ln 1996, by enacLlng Lhe ArblLraLlon and
ConclllaLlon AcL, 1996, ln Lerms of unlversal pollcy adopLed by Lhe unlLed naLlons
Commlsslon on lnLernaLlonal 1radeLaw (unlCl18AL).
lL has sLaLuLory recognlLlon noL only ln Lhe 1996 AcL, buL also ln Lhe Clvll rocedure Code,
1908, when secLlon 89 was relnLroduced wlLh a mandaLe Lo arrange seLLlemenL ln all klnds of
4
llLlgaLlons governed by Lhe Code . ln Clvll rocedure Code, Lhe Clvll !udges are obllged Lo refer
a dlspuLe Lo seLLlemenL, lf lL appears LhaL Lhere ls an elemenL of seLLlemenL, ln Lhe dlspuLe
beforehlm. AfLer formulaLlng LheLerms of seLLlemenL, LheClvll !udgemay refer LhemaLLer for
a seLLlemenL elLher Lhrough arblLraLlon, conclllaLlon, medlaLlon or Lhrough a [udlclal
seLLlemenL llkeLokAdalaL.
1he usual meLhod Lo resolve dlspuLes under SecLlon 89 of Lhe Code ls seLLlemenL Lhrough Lhe
Lok AdalaLs. Powever, Lhe pracLlcal experlences demonsLraLe dlfflculLles ln ensurlng Lhe
parLlclpaLlons of llLlganLs ln seLLlemenLs Lhrough Lhese popular forums llke Lok AdalaL eLc. ln
such a slLuaLlon Lhe role of ArblLraLlon ls slgnlflcanL, as ArblLraLlon ls legal Lechnlque where ln
an lndependenL ad[udlcaLor resolves Lhe dlspuLes whlch ls blndlng on Lhe parLles Lo
arblLraLlon.
1here are enormous advanLages Lo Lhls sysLem of dlspuLe resoluLlon. Cne of such merlLs ls
LhaL Lhe ad[udlcaLlon ls much fasLer Lhan Lhe LradlLlonal [udlclal proceedlngs. When Lhe
naLureof dlspuLels hlghly Lechnlcal and complex one, LheuLlllzaLlon of an experL ln Lhefleld as
an arblLraLor ls hlghly producLlve. Such a sysLem of ad[udlcaLlon by uslng Lhe experLlse of an
ad[udlcaLor ls noL posslbleln LheLradlLlonal [udlclal process, as lL ls lmposslbleLo mandaLeLhe
Clvll !udgeLo befamlllar wlLh all Lhesub[ecLs.
1he role of experLlsed person as arblLraLor advanced Lhe recognlLlon of arblLraLlon ln
sLaLuLory ad[udlcaLlons. 1he Lerm arblLraLlon ls famlllar ln speclal sLaLuLes llke lndlan
3
1elegraph AcL, 1883 and LlecLrlclLy AcL, 2003. As per SecLlon 78 of Lhe lndlan 1elegraph AcL a
1
colemoo lbllllpsoo, 1be lotetootloool low ooJ costoms of Aocleot Cteece ooJ kome",

Mocmllloo & co. Newyotk (1911)
2
Atblttotloo Act, 1697
J
Atblttotloo Act, 1899
4
5ectloo 89 of c.l.c. wos tepeoleJ by 5ectloo 49 of tbe Act 10 of 1940 ooJ oqolotelottoJoceJ by 5ectloo 7 of tbe Act 46 of 1999
wltb effect ftom1-7-2002.
5
5ectloo 78 losetteJ by 5ectloo J of tbe Act 47 of 1957 wltb effect ftom1-7-1959.
8
* AJvocote/ Covetomeot lleoJet (1oxes), nlqb coott of ketolo
dlspuLe concernlng any Lelegraph llne, appllance or apparaLus arlses beLween Lhe Lelegraph
auLhorlLy and Lhebeneflclary person requlres Lo bead[udlcaLed by an arblLraLor appolnLed by
LheCenLral CovernmenL.
As per SecLlon 138 of Lhe LlecLrlclLy AcL, 2003, lf Lhe dlspuLe ls referred by Lhe CenLral
6 7
Commlsslon or SLaLe Commlsslon , lL shall be resolved elLher by an ArblLraLor appolnLed by
Lhe approprlaLe Commlsslons or ln oLher cases by an ArblLraLor appolnLed as per Lhe
provlslons of Lhe ArblLraLlon and ConclllaLlon AcL, 1996. 1he dlspuLe wlLh regard Lo
8
compensaLlon payable by an operaLor ls also a sub[ecL for arblLraLlon under Lhe LlecLrlclLy

AcL, 2003. ln Lhe SLaLe Co-operaLlve SocleLles AcL, also Lhere are provlslons for sLaLuLory
arblLraLlon, ln caseof deflnlLedlspuLes.
ln currenL Llmes, lL ls a naked LruLh LhaL Lhe ad[udlcaLlons under flscal sLaLuLes, whlch deals
wlLh levy and collecLlon of dlfferenL Laxes and duLles, are Llme consumlng and noLorlous for
offlclal blas. ln pracLlce, Lhe quasl [udlclal ad[udlcaLlons under Lhe rule of appellaLe and
revlslonal [urlsdlcLlons by Lhe offlcers of Lhe concerned deparLmenL are found unreasonable
and vlLlaLed by corrupL pracLlces. 1he presenL sysLem of quasl [udlclal ad[udlcaLlon ls nelLher
lmparLlal nor producLlve. 1here are several lnsLances of loss of revenue Lo Lhe CovernmenL
dueLo mal- pracLlces of Lhead[udlcaLors appolnLed under LheSLaLuLes.
under Lhe lncome 1ax AcL 1961, CenLral Lxclse & SalL AcL 1944, dlfferenL Sales 1ax/ value
Added 1ax AcLs and also ln ChapLer v of Lhe llnance AcL, 1994, whlch deals wlLh levy and
collecLlon of servlce Lax, Lhere are provlslons for flrsL Ller ad[udlcaLlon wlLh respecL Lo Lhe
assessmenL of Lax or lmposlLlon of penalLles and secondly an ad[udlcaLlon Lhrough sLaLuLorlly
lnsLlLuLed appeal/ revlslon before Lhe appellaLe/ revlslonal auLhorlLy. 1hese Lwo level
ad[udlcaLlons are managed by Lhe admlnlsLraLlve offlclals of Lhe deparLmenL. Such
ad[udlcaLlons are nelLher lmparLlal nor lndependenL, as Lhere ls always a regulaLory
supervlslon over Lhese ad[udlcaLors by Lhe hlgher offlclals of Lhe deparLmenL, Lo curLall Lhelr
dlscreLlons. 1he Lenure of Lhese ad[udlcaLors ls varlable sub[ecL Lo Lhe pleasure of Lhe head of
LhedeparLmenL.
AnoLher ma[or dlsadvanLage of presenL ad[udlcaLory sysLem ls Lhe lapse of Llme. uue Lo Lhe
delay ln compleLlon of ad[udlcaLlon, Lhe presenL sysLem ls harmful Lo elLher sldes of Lhe
llLlgaLlon, Lhe assessee or Lhe revenue. CfLen Lhe assessee ls obllged Lo compensaLe Lhe
revenue by paylng hlgher raLe of lnLeresL on arrears and revenue ls burden wlLh paymenL of
lnLeresL ln case of refund of Lax/duLles. 1he slmpllfled naLure of arblLraLlon wlll resolve Lhe
hazards of delay ln ad[udlcaLlon and wlll ensure Lhe Llme bound and lmparLlal ad[udlcaLlon by
lndependenceof Lhead[udlcaLors.
ln LgypL, LheCeneral Sales 1ax AcL, 1991provldes for arblLraLlon Lo resolvedlspuLes regardlng
value, klnd and quanLlLy of goods and servlces Laxed or deLermlnaLlon of Lax under Lhe AcL.
ArLlcle 33 of Lhe AcL provldes for a prellmlnary arblLraLlon by Lwo arblLraLors, each appolnLed
by deparLmenL and assessee. ln case of non concluslon of prellmlnary arblLraLlon, Lhe
6
5ee 5ectloo 79(1) (f) of tbe lecttlclty Act, 200J
7
5ee 5ectloo 86 (1) (f) of tbe lecttlclty Act, 200J.
8
5ee 5ectloo 160 (J) of tbe lecttlclty Act, 200J
9
dlspuLes shall be referred Lo an ArblLral CommlLLee conslsLs of dlfferenL members lncludlng
Lhe Chalrman, who wlll be Lhe permanenL delegaLe member appolnLed by Lhe MlnlsLer wlLh
oLher represenLaLlve members nomlnaLed by occupaLlonal or professlonal organlzaLlon or
chamber eLc. 1he slgnlflcanL feaLure of LgypLlan sysLem ls LhaL Lhe assessee/ reglsLranL has
equal roleln ad[udlcaLlon of LhedlspuLes Lhrough Lhemechanlsm of arblLraLlon.
resenLly Lhe sysLem of arblLraLlon ls famlllar and conflned only ln Lhe flled of commerce. 1he
buslness people largely depend on arblLraLlon, Lo resolve Lhe dlspuLes regardlng conLracLual
obllgaLlons. lL ls Lhe Llme Lo Lhlnk abouL adopLlng Lhe Lechnlques of arblLraLlon ln all klnds of
sLaLuLory ad[udlcaLlons, parLlcularly LhaL ln flscal sLaLuLes, Lo malnLaln lLs purlLy and
confldence. AfLer Lhe ad[udlcaLlon of assessmenL of Lax/duLy and penal llablllLy of Lhe
assessee, Lhe maLLer shall be referred Lo an lndependenL arblLraLor or arblLraLlon Lrlbunal, on
Lhe requesL of Lhe aggrleved, may be by Lhe assessee or Lhe revenue. 8y Lhe opLlon Lo refer
Lhe dlspuLes aL Lhe lnsLance of Lhe revenue, Lhe suo moLu [urlsdlcLlons of Lhe hlgher offlcers
can be concluded, whlch wlll, of course relleve Lhose offlcers from lnLense admlnlsLraLlve
works.
Sooner a dlspuLe ls resolved, cheaper lL ls for Lhe parLles ln Lhe dlspuLe. ln 1996 AcL, cerLalnly
Lhere ls no Llme perlod seL for compleLlon of arblLraLlon. 1he perfecLlon of every sysLem
depends on Lhe person who mans lL. 1hls lacuna can be answered by lncorporaLlng
approprlaLe provlslons ln Lhe SLaLuLes, whlch provldes for arblLraLlon as sysLem of
ad[udlcaLlon.
10
dlspuLe concernlng any Lelegraph llne, appllance or apparaLus arlses beLween Lhe Lelegraph
auLhorlLy and Lhebeneflclary person requlres Lo bead[udlcaLed by an arblLraLor appolnLed by
LheCenLral CovernmenL.
As per SecLlon 138 of Lhe LlecLrlclLy AcL, 2003, lf Lhe dlspuLe ls referred by Lhe CenLral
6 7
Commlsslon or SLaLe Commlsslon , lL shall be resolved elLher by an ArblLraLor appolnLed by
Lhe approprlaLe Commlsslons or ln oLher cases by an ArblLraLor appolnLed as per Lhe
provlslons of Lhe ArblLraLlon and ConclllaLlon AcL, 1996. 1he dlspuLe wlLh regard Lo
8
compensaLlon payable by an operaLor ls also a sub[ecL for arblLraLlon under Lhe LlecLrlclLy

AcL, 2003. ln Lhe SLaLe Co-operaLlve SocleLles AcL, also Lhere are provlslons for sLaLuLory
arblLraLlon, ln caseof deflnlLedlspuLes.
ln currenL Llmes, lL ls a naked LruLh LhaL Lhe ad[udlcaLlons under flscal sLaLuLes, whlch deals
wlLh levy and collecLlon of dlfferenL Laxes and duLles, are Llme consumlng and noLorlous for
offlclal blas. ln pracLlce, Lhe quasl [udlclal ad[udlcaLlons under Lhe rule of appellaLe and
revlslonal [urlsdlcLlons by Lhe offlcers of Lhe concerned deparLmenL are found unreasonable
and vlLlaLed by corrupL pracLlces. 1he presenL sysLem of quasl [udlclal ad[udlcaLlon ls nelLher
lmparLlal nor producLlve. 1here are several lnsLances of loss of revenue Lo Lhe CovernmenL
dueLo mal- pracLlces of Lhead[udlcaLors appolnLed under LheSLaLuLes.
under Lhe lncome 1ax AcL 1961, CenLral Lxclse & SalL AcL 1944, dlfferenL Sales 1ax/ value
Added 1ax AcLs and also ln ChapLer v of Lhe llnance AcL, 1994, whlch deals wlLh levy and
collecLlon of servlce Lax, Lhere are provlslons for flrsL Ller ad[udlcaLlon wlLh respecL Lo Lhe
assessmenL of Lax or lmposlLlon of penalLles and secondly an ad[udlcaLlon Lhrough sLaLuLorlly
lnsLlLuLed appeal/ revlslon before Lhe appellaLe/ revlslonal auLhorlLy. 1hese Lwo level
ad[udlcaLlons are managed by Lhe admlnlsLraLlve offlclals of Lhe deparLmenL. Such
ad[udlcaLlons are nelLher lmparLlal nor lndependenL, as Lhere ls always a regulaLory
supervlslon over Lhese ad[udlcaLors by Lhe hlgher offlclals of Lhe deparLmenL, Lo curLall Lhelr
dlscreLlons. 1he Lenure of Lhese ad[udlcaLors ls varlable sub[ecL Lo Lhe pleasure of Lhe head of
LhedeparLmenL.
AnoLher ma[or dlsadvanLage of presenL ad[udlcaLory sysLem ls Lhe lapse of Llme. uue Lo Lhe
delay ln compleLlon of ad[udlcaLlon, Lhe presenL sysLem ls harmful Lo elLher sldes of Lhe
llLlgaLlon, Lhe assessee or Lhe revenue. CfLen Lhe assessee ls obllged Lo compensaLe Lhe
revenue by paylng hlgher raLe of lnLeresL on arrears and revenue ls burden wlLh paymenL of
lnLeresL ln case of refund of Lax/duLles. 1he slmpllfled naLure of arblLraLlon wlll resolve Lhe
hazards of delay ln ad[udlcaLlon and wlll ensure Lhe Llme bound and lmparLlal ad[udlcaLlon by
lndependenceof Lhead[udlcaLors.
ln LgypL, LheCeneral Sales 1ax AcL, 1991provldes for arblLraLlon Lo resolvedlspuLes regardlng
value, klnd and quanLlLy of goods and servlces Laxed or deLermlnaLlon of Lax under Lhe AcL.
ArLlcle 33 of Lhe AcL provldes for a prellmlnary arblLraLlon by Lwo arblLraLors, each appolnLed
by deparLmenL and assessee. ln case of non concluslon of prellmlnary arblLraLlon, Lhe
6
5ee 5ectloo 79(1) (f) of tbe lecttlclty Act, 200J
7
5ee 5ectloo 86 (1) (f) of tbe lecttlclty Act, 200J.
8
5ee 5ectloo 160 (J) of tbe lecttlclty Act, 200J
9
dlspuLes shall be referred Lo an ArblLral CommlLLee conslsLs of dlfferenL members lncludlng
Lhe Chalrman, who wlll be Lhe permanenL delegaLe member appolnLed by Lhe MlnlsLer wlLh
oLher represenLaLlve members nomlnaLed by occupaLlonal or professlonal organlzaLlon or
chamber eLc. 1he slgnlflcanL feaLure of LgypLlan sysLem ls LhaL Lhe assessee/ reglsLranL has
equal roleln ad[udlcaLlon of LhedlspuLes Lhrough Lhemechanlsm of arblLraLlon.
resenLly Lhe sysLem of arblLraLlon ls famlllar and conflned only ln Lhe flled of commerce. 1he
buslness people largely depend on arblLraLlon, Lo resolve Lhe dlspuLes regardlng conLracLual
obllgaLlons. lL ls Lhe Llme Lo Lhlnk abouL adopLlng Lhe Lechnlques of arblLraLlon ln all klnds of
sLaLuLory ad[udlcaLlons, parLlcularly LhaL ln flscal sLaLuLes, Lo malnLaln lLs purlLy and
confldence. AfLer Lhe ad[udlcaLlon of assessmenL of Lax/duLy and penal llablllLy of Lhe
assessee, Lhe maLLer shall be referred Lo an lndependenL arblLraLor or arblLraLlon Lrlbunal, on
Lhe requesL of Lhe aggrleved, may be by Lhe assessee or Lhe revenue. 8y Lhe opLlon Lo refer
Lhe dlspuLes aL Lhe lnsLance of Lhe revenue, Lhe suo moLu [urlsdlcLlons of Lhe hlgher offlcers
can be concluded, whlch wlll, of course relleve Lhose offlcers from lnLense admlnlsLraLlve
works.
Sooner a dlspuLe ls resolved, cheaper lL ls for Lhe parLles ln Lhe dlspuLe. ln 1996 AcL, cerLalnly
Lhere ls no Llme perlod seL for compleLlon of arblLraLlon. 1he perfecLlon of every sysLem
depends on Lhe person who mans lL. 1hls lacuna can be answered by lncorporaLlng
approprlaLe provlslons ln Lhe SLaLuLes, whlch provldes for arblLraLlon as sysLem of
ad[udlcaLlon.
10
MANDA1L CI Ak8I1kA1ICN
1he ArblLraLlon AcL, 1940 whlch ls Lhe repealed AcL by Lhe new AcL of 1996 called 1he
ArblLraLlon and ConclllaLlon AcL, 1996 whlch has been enacLed Lo brlng boLh domesLlc and
lnLernaLlonal arblLraLlons and conclllaLlon under one roof. 1hough Lhe AcL ls speclal AcL buL lL
ls sllenL regardlng Lhe quesLlon as Lo Lhe guldance on lmporLanL aspecLs of seLLlemenL of
dlspuLes perLalnlng Lo consumers and conLracLual maLLers wlLh respecL Lo moneLary-flnanclal
clalms ln Lheshapeof compensaLlon, damages and lnLeresL.
lL ls nelLher ln Lhe Consumer roLecLlon AcL, 1986, nor ln Lhe ArblLraLlon and ConclllaLlon AcL,
1996, Lhe provlslons and Lhe procedures lald down as provlded ln general, ln Lhe Code of Clvll
rocedure, 1908, has been made dlrecLly appllcable and bldlng on Lhe quasl-[udlclal
auLhorlLles deflned under Lhe provlslons of Lhe Consumer roLecLlon AcL, 1986 and Lhe
provlslons of Lhe ArblLraLlon and ConclllaLlon AcL, 1996. 1hough, ungulded dlscreLlon ls
exerclsed Lo follow cerLaln provlslons and Lhe procedures enshrlned Lhereln (Code Cf Clvll
rocedure) as sulLable Lo Lhem. 1he resulL ls LhaL Lhe lnLenLlon of Lhe leglslaLure ln arL v of
LheCodeof Clvll rocedure, 1908lnserLed SecLlon 89by AcL no. 46of 1999by SecLlon 7whlch
provldes for alLernaLe resoluLlon and Lhese provlslons are based on Lhe recommendaLlons
made by Lhe Law Commlsslon, maklng lL obllgaLory Lo refer Lhe dlspuLe for seLLlemenL elLher
by way of arblLraLlon, conclllaLlon, [udlclal seLLlemenL Lhrough Lok-AdalaL and MedlaLlon. ln
Code of Clvll rocedure, SecLlon 89 ln parL (v) has been added by Lhe CC amendmenL AcL,
1999 w.e.f. 1 !uly, 2002. 1he ob[ecL of new lnserLed SecLlon 89 ls obvlously Lo promoLe
alLernaLlve meLhod for seLLlemenL of dlspuLe ouLslde Lhe courL. lL ls obllgaLory for Lhe courL Lo
refer Lhe dlspuLe afLer lssues are framed for seLLlemenL of Lhe dlspuLe elLher by way of
arblLraLlon, conclllaLlon, medlaLlon, [udlclal seLLlemenL or Lhrough Lok AdalaL. 1hus, Lhe
ArblLraLlon AcL ls Lhe alLernaLe and qulck resoluLlon of Lhe dlspuLe beLween Lhe parLles. lL ls
only on fallure of Lhe parLles Lo geL Lhelr dlspuLe seLLled Lhrough Lhe alLernaLe dlspuLe
resoluLlon, LhesulL could proceed furLher.
1he expresslon of Lhls arLlcle ls noL only experlmenLed buL ls also lnfluenced by varlous
pronouncemenLs of Pon'ble Supreme CourL LhaL as per SecLlon 8 of Lhe ArblLraLlon and
conclllaLlon AcL, 1996, Lhe provlslons ls perempLory ln naLure. ln Lhe case Agrl Cold Lxlms LLd.
vs. Shrl Laxml knlLs & Woven and Crs. reporLed ln (2007) 3 SCC 686. Pon'ble Supreme CourL
Look Lhe vlew LhaL where Lhere arblLraLlon agreemenL exlsLs, courL ls obllged Lo refer Lhe
parLles Lo arblLraLlon.
Slmllarly ln Lhe case of PlndusLan eLroleum CorporaLlon LLd. vs. lnk ClLy Mldways
eLroleums reporLed ln (2003) 6 SCC303 Pon'ble Supreme courL Look Lhe same vlew LhaL Lhe
exlsLence of ArblLraLlon clause makes lL mandaLory for Lhe courL Lo refer Lhe parLles Lo
arblLraLlon as secLlon 8 of Lhe ArblLraLlon and conclllaLlon AcL ls perempLory ln naLure. 1he
Pon'ble Supreme courL also Look Lhe vlew LhaL fallure of Lhe courL Lo re[ecL and noL referrlng
Lhe caseLo arblLraLlon would amounL fallure of [usLlce as also causlng lrreparable ln[ury Lo Lhe
5oJbeet kolsbtesbtbo*
11
* AJvocote & A.O.k., 5opteme coott of loJlo
person requesLlng for arblLraLlon. ln anoLher case of . Anand Ca[apaLl 8a[u vs .v.C. 8a[u
reporLed ln (2000) 4SCC339, Pon'bleSupremeCourL LookLhesamevlew.
A bench of 4 Members lncludlng Lhe lormer resldenL of Pon'ble naLlonal Commlsslon ln Lhe
case of Shrl Canesh Splnners vs. unlLed lndla lnsurance Company LLd. reporLed ln lll (1996)
C! 183 (nC) Look Lhe vlew LhaL slnce clause of arblLraLlon exlsLs, Lhe maLLer ls requlred Lo be
referred Lo arblLraLlon under Lheprovlslons of ArblLraLlon and ConclllaLlon AcL, 1996.
ln Lhe case of lalr Alr Lnglneers vL. LLd. & Anr. vs. n.k. Modl reporLed ln (1996) 6 SCC 383
Pon'ble Supreme CourL has been examlnlng Lhe provlslons of Lhe Cld ArblLraLlon AcL, 1940
and Lhe provlslons of Lhe Consumer roLecLlon AcL, 1986 and Look Lhe vlew LhaL Lhe lora
under Lhe AcL have all Lhe Lrapplngs of Lhe Clvll CourLs and [udlclal auLhorlLy, Lhe proceedlngs
before Lhem are legal proceedlngs. under SecLlon 34 of Lhe Cld ArblLraLlon AcL, Lhe Pon'ble
Supreme CourL Look Lhe vlew LhaL Lhe AcL does noL confer an auLomaLlc rlghL nor creaLes an
auLomaLlc embargo on Lhe exerclse of Lhe powers by Lhe [udlclal auLhorlLy under Lhe AcL and
lL ls amaLLer of dlscreLlon. ln nuLshell, ln Lhls declslon Pon'bleSupremeCourL dld noL examlne
Lhe new ArblLraLlon and conclllaLlon AcL, 1996 where Lhe procedure and remedy ls noL
cumbersome as ln Lhe Cld AcL. 1o Lhe conLrary, Lhe presenL AcL ls noL only Lhe speclal AcL buL
lLs maln ob[ecLlve ls also dlfferenL and award ls as good as decree of Lhe courL. Pon'ble
Supreme CourL ln Lhe case of kalpna koLarl (SmL) vs. Sudha ?adav (SmL.) & Crs. 8eporLed ln
(2002) 1 SCC 203 whlle examlnlng Lhe provlslons of Lhe SecLlon 34 of Lhe Cld ArblLraLlon AcL,
and lLs correspondlng provlslons ln Lhe new AcL Look Lhe vlew LhaL Lhere ls no provlslon ln
1996 AcL correspondlng Lo SecLlon 34 of 1940 ArblLraLlon AcL and no speclflc sLage ls
requlred. lL also Look Lhe vlew LhaL Lhe provlslons are comprehenslve and mandaLory ln
characLer Lo haveLhemaLLer referred Lo arblLraLlon ln Lerms of LheArblLraLlon AgreemenL.
ln Lhe recenL case of 8ala[l Coke lndusLry () LLd. vs. Maa 8hagwaLl Coke Cu[araL () LLd.
reporLed ln 2009 (9) SCC 403 Pon'ble Supreme CourL dlrecLed Lo follow Lhe procedure Lo
refer Lhe case Lo Lhe arblLraLlon Lo LhaL courL whlch has agreed upon under Lhe arblLraLlon
agreemenL. 1he raLlo of Lhls [udgemenL ls fully appllcableeven Lo Lhose cases where beLween
Lhe seller and Lhe purchaser of seeds, Lhere ls arblLraLlon agreemenL Lo refer Lhe dlspuLe Lo
Lhe arblLraLlon buL unforLunaLely Pon'ble naLlonal Commlsslon ls noL followlng Lhls raLlo and
under Lhe shelLer of SecLlon 3 of Lhe Consumer roLecLlon AcL, have been enLerLalnlng Lhe
consumer complalnLs wholly conLrary Lo Lhe aforesald verdlcL. ln supporL of Lhls submlsslons,
Lhey relled upon Lhe [udgmenL of Lhe uelhl Plgh CourL ln Ceo Mlller &Co. LLd. v. unlLed 8ank
of lndla, where slnce Lhe parLles has agreed Lo Lhe [urlsdlcLlon of a parLlcular courL Lo
enLerLaln dlspuLes arlslng ouL of an arblLraLlon agreemenL beLween Lhe parLles, lL was held
LhaL where Lwo or more courLs have Lhe [urlsdlcLlon under Lhe Code of Clvll rocedure Lo Lry a
sulL or proceedlngs, an agreemenL beLween Lhe parLles LhaL Lhe dlspuLes beLween Lhem shall
be Lrled ln one of such courLs ls noL conLrary Lo publlc pollcy nor does lL conLravene Lhe
provlslons of SecLlon 28 of Lhe ConLracL AcL, 1872. lL was also observed LhaL Lhe cholce of Lhe
forum agreed Lo and accepLed byLheparLles should normallyberespecLed.
ln Lhe case of Ceneral Manager, 1elecom vs. M. krlshnan and Anr. reporLed ln 2009 (8) SCC
481 Pon'ble Supreme CourL Look Lhe vlew and oplned LhaL lL ls well seLLled LhaL Lhe speclal
law overrldes Lhe general law and where Lhere ls a speclal remedy provlded ln SecLlon 7-8 of
Lhe 1elegraph AcL regardlng dlspuLes ln respecL of Lelephone bllls, Lhen Lhe remedy under Lhe
Consumer roLecLlon AcL ls by lmpllcaLlon barred and ln Lhe case of 1hlruvallurvar 1ransporL
12
MANDA1L CI Ak8I1kA1ICN
1he ArblLraLlon AcL, 1940 whlch ls Lhe repealed AcL by Lhe new AcL of 1996 called 1he
ArblLraLlon and ConclllaLlon AcL, 1996 whlch has been enacLed Lo brlng boLh domesLlc and
lnLernaLlonal arblLraLlons and conclllaLlon under one roof. 1hough Lhe AcL ls speclal AcL buL lL
ls sllenL regardlng Lhe quesLlon as Lo Lhe guldance on lmporLanL aspecLs of seLLlemenL of
dlspuLes perLalnlng Lo consumers and conLracLual maLLers wlLh respecL Lo moneLary-flnanclal
clalms ln Lheshapeof compensaLlon, damages and lnLeresL.
lL ls nelLher ln Lhe Consumer roLecLlon AcL, 1986, nor ln Lhe ArblLraLlon and ConclllaLlon AcL,
1996, Lhe provlslons and Lhe procedures lald down as provlded ln general, ln Lhe Code of Clvll
rocedure, 1908, has been made dlrecLly appllcable and bldlng on Lhe quasl-[udlclal
auLhorlLles deflned under Lhe provlslons of Lhe Consumer roLecLlon AcL, 1986 and Lhe
provlslons of Lhe ArblLraLlon and ConclllaLlon AcL, 1996. 1hough, ungulded dlscreLlon ls
exerclsed Lo follow cerLaln provlslons and Lhe procedures enshrlned Lhereln (Code Cf Clvll
rocedure) as sulLable Lo Lhem. 1he resulL ls LhaL Lhe lnLenLlon of Lhe leglslaLure ln arL v of
LheCodeof Clvll rocedure, 1908lnserLed SecLlon 89by AcL no. 46of 1999by SecLlon 7whlch
provldes for alLernaLe resoluLlon and Lhese provlslons are based on Lhe recommendaLlons
made by Lhe Law Commlsslon, maklng lL obllgaLory Lo refer Lhe dlspuLe for seLLlemenL elLher
by way of arblLraLlon, conclllaLlon, [udlclal seLLlemenL Lhrough Lok-AdalaL and MedlaLlon. ln
Code of Clvll rocedure, SecLlon 89 ln parL (v) has been added by Lhe CC amendmenL AcL,
1999 w.e.f. 1 !uly, 2002. 1he ob[ecL of new lnserLed SecLlon 89 ls obvlously Lo promoLe
alLernaLlve meLhod for seLLlemenL of dlspuLe ouLslde Lhe courL. lL ls obllgaLory for Lhe courL Lo
refer Lhe dlspuLe afLer lssues are framed for seLLlemenL of Lhe dlspuLe elLher by way of
arblLraLlon, conclllaLlon, medlaLlon, [udlclal seLLlemenL or Lhrough Lok AdalaL. 1hus, Lhe
ArblLraLlon AcL ls Lhe alLernaLe and qulck resoluLlon of Lhe dlspuLe beLween Lhe parLles. lL ls
only on fallure of Lhe parLles Lo geL Lhelr dlspuLe seLLled Lhrough Lhe alLernaLe dlspuLe
resoluLlon, LhesulL could proceed furLher.
1he expresslon of Lhls arLlcle ls noL only experlmenLed buL ls also lnfluenced by varlous
pronouncemenLs of Pon'ble Supreme CourL LhaL as per SecLlon 8 of Lhe ArblLraLlon and
conclllaLlon AcL, 1996, Lhe provlslons ls perempLory ln naLure. ln Lhe case Agrl Cold Lxlms LLd.
vs. Shrl Laxml knlLs & Woven and Crs. reporLed ln (2007) 3 SCC 686. Pon'ble Supreme CourL
Look Lhe vlew LhaL where Lhere arblLraLlon agreemenL exlsLs, courL ls obllged Lo refer Lhe
parLles Lo arblLraLlon.
Slmllarly ln Lhe case of PlndusLan eLroleum CorporaLlon LLd. vs. lnk ClLy Mldways
eLroleums reporLed ln (2003) 6 SCC303 Pon'ble Supreme courL Look Lhe same vlew LhaL Lhe
exlsLence of ArblLraLlon clause makes lL mandaLory for Lhe courL Lo refer Lhe parLles Lo
arblLraLlon as secLlon 8 of Lhe ArblLraLlon and conclllaLlon AcL ls perempLory ln naLure. 1he
Pon'ble Supreme courL also Look Lhe vlew LhaL fallure of Lhe courL Lo re[ecL and noL referrlng
Lhe caseLo arblLraLlon would amounL fallure of [usLlce as also causlng lrreparable ln[ury Lo Lhe
5oJbeet kolsbtesbtbo*
11
* AJvocote & A.O.k., 5opteme coott of loJlo
person requesLlng for arblLraLlon. ln anoLher case of . Anand Ca[apaLl 8a[u vs .v.C. 8a[u
reporLed ln (2000) 4SCC339, Pon'bleSupremeCourL LookLhesamevlew.
A bench of 4 Members lncludlng Lhe lormer resldenL of Pon'ble naLlonal Commlsslon ln Lhe
case of Shrl Canesh Splnners vs. unlLed lndla lnsurance Company LLd. reporLed ln lll (1996)
C! 183 (nC) Look Lhe vlew LhaL slnce clause of arblLraLlon exlsLs, Lhe maLLer ls requlred Lo be
referred Lo arblLraLlon under Lheprovlslons of ArblLraLlon and ConclllaLlon AcL, 1996.
ln Lhe case of lalr Alr Lnglneers vL. LLd. & Anr. vs. n.k. Modl reporLed ln (1996) 6 SCC 383
Pon'ble Supreme CourL has been examlnlng Lhe provlslons of Lhe Cld ArblLraLlon AcL, 1940
and Lhe provlslons of Lhe Consumer roLecLlon AcL, 1986 and Look Lhe vlew LhaL Lhe lora
under Lhe AcL have all Lhe Lrapplngs of Lhe Clvll CourLs and [udlclal auLhorlLy, Lhe proceedlngs
before Lhem are legal proceedlngs. under SecLlon 34 of Lhe Cld ArblLraLlon AcL, Lhe Pon'ble
Supreme CourL Look Lhe vlew LhaL Lhe AcL does noL confer an auLomaLlc rlghL nor creaLes an
auLomaLlc embargo on Lhe exerclse of Lhe powers by Lhe [udlclal auLhorlLy under Lhe AcL and
lL ls amaLLer of dlscreLlon. ln nuLshell, ln Lhls declslon Pon'bleSupremeCourL dld noL examlne
Lhe new ArblLraLlon and conclllaLlon AcL, 1996 where Lhe procedure and remedy ls noL
cumbersome as ln Lhe Cld AcL. 1o Lhe conLrary, Lhe presenL AcL ls noL only Lhe speclal AcL buL
lLs maln ob[ecLlve ls also dlfferenL and award ls as good as decree of Lhe courL. Pon'ble
Supreme CourL ln Lhe case of kalpna koLarl (SmL) vs. Sudha ?adav (SmL.) & Crs. 8eporLed ln
(2002) 1 SCC 203 whlle examlnlng Lhe provlslons of Lhe SecLlon 34 of Lhe Cld ArblLraLlon AcL,
and lLs correspondlng provlslons ln Lhe new AcL Look Lhe vlew LhaL Lhere ls no provlslon ln
1996 AcL correspondlng Lo SecLlon 34 of 1940 ArblLraLlon AcL and no speclflc sLage ls
requlred. lL also Look Lhe vlew LhaL Lhe provlslons are comprehenslve and mandaLory ln
characLer Lo haveLhemaLLer referred Lo arblLraLlon ln Lerms of LheArblLraLlon AgreemenL.
ln Lhe recenL case of 8ala[l Coke lndusLry () LLd. vs. Maa 8hagwaLl Coke Cu[araL () LLd.
reporLed ln 2009 (9) SCC 403 Pon'ble Supreme CourL dlrecLed Lo follow Lhe procedure Lo
refer Lhe case Lo Lhe arblLraLlon Lo LhaL courL whlch has agreed upon under Lhe arblLraLlon
agreemenL. 1he raLlo of Lhls [udgemenL ls fully appllcableeven Lo Lhose cases where beLween
Lhe seller and Lhe purchaser of seeds, Lhere ls arblLraLlon agreemenL Lo refer Lhe dlspuLe Lo
Lhe arblLraLlon buL unforLunaLely Pon'ble naLlonal Commlsslon ls noL followlng Lhls raLlo and
under Lhe shelLer of SecLlon 3 of Lhe Consumer roLecLlon AcL, have been enLerLalnlng Lhe
consumer complalnLs wholly conLrary Lo Lhe aforesald verdlcL. ln supporL of Lhls submlsslons,
Lhey relled upon Lhe [udgmenL of Lhe uelhl Plgh CourL ln Ceo Mlller &Co. LLd. v. unlLed 8ank
of lndla, where slnce Lhe parLles has agreed Lo Lhe [urlsdlcLlon of a parLlcular courL Lo
enLerLaln dlspuLes arlslng ouL of an arblLraLlon agreemenL beLween Lhe parLles, lL was held
LhaL where Lwo or more courLs have Lhe [urlsdlcLlon under Lhe Code of Clvll rocedure Lo Lry a
sulL or proceedlngs, an agreemenL beLween Lhe parLles LhaL Lhe dlspuLes beLween Lhem shall
be Lrled ln one of such courLs ls noL conLrary Lo publlc pollcy nor does lL conLravene Lhe
provlslons of SecLlon 28 of Lhe ConLracL AcL, 1872. lL was also observed LhaL Lhe cholce of Lhe
forum agreed Lo and accepLed byLheparLles should normallyberespecLed.
ln Lhe case of Ceneral Manager, 1elecom vs. M. krlshnan and Anr. reporLed ln 2009 (8) SCC
481 Pon'ble Supreme CourL Look Lhe vlew and oplned LhaL lL ls well seLLled LhaL Lhe speclal
law overrldes Lhe general law and where Lhere ls a speclal remedy provlded ln SecLlon 7-8 of
Lhe 1elegraph AcL regardlng dlspuLes ln respecL of Lelephone bllls, Lhen Lhe remedy under Lhe
Consumer roLecLlon AcL ls by lmpllcaLlon barred and ln Lhe case of 1hlruvallurvar 1ransporL
12
Corpn. v. Consumer roLecLlon Councll reporLed ln (1993) 2 SCC 479 lL was held LhaL Lhe
naLlonal Commlsslon has no [urlsdlcLlon Lo ad[udlcaLe upon clalms for compensaLlon arlslng
ouL of moLor vehlcles accldenLs.
Where Lhe !udlclal AuLhorlLles consLlLuLed under Lhe Consumer roLecLlon AcL compleLely
lgnored Lhe mandaLory characLer of Lhe ArblLraLlon Clause Lo be governed by Lhe Speclal AcL
l.e. ArblLraLlon and ConclllaLlon AcL, 1996 Lo prevall over Lhe Consumer roLecLlon AcL, 1986
whlch ls general law.
1aklng shelLer under Lhe provlslons of SecLlon 3 of Lhe Consumer roLecLlon AcL, Lhe quasl-
[udlclal auLhorlLles under Lhe Consumer roLecLlon AcL have been pronounclng upon Lhe
varlous dlspuLes board before lL even when Lhey are conLracLual and Lhe parLles have
conLracLed for reference Lo Lhe arblLraLlon ln Lhe evenL of dlspuLe. 1he lnLerference by
Consumer AuLhorlLles by readlng lnLo Lhe addlLlonal remedy ls provlded under Consumer
roLecLlon AcL, Lhe facL remalns, lf everyLhlng ls declded by way of clalms, compensaLlon,
damages noLhlng would be lefL Lo be arblLraLed under Lhe ArblLraLlon and ConclllaLlon AcL. 8y
Lhls exerclse of [urlsdlcLlon by Lhe Consumer lora, Lhe provlslons of Lhe ArblLraLlon AcL
becomeredundanL and rendered lllusory even ln conLracLual maLLers. lL ls maLLer of common
prudence LhaL Lhe momenL consumer complalnLs are enLerLalned wlLh relaLlon Lo
compensaLlon keeplng asldeLheprocedureof conLracLual arblLraLlon agreemenL Lo go for Lhe
arblLraLlon, LheConsumer roLecLlon AcL becomes derogaLory and noL addlLlonal as provlded
ln SecLlon 3 of Lhe Consumer roLecLlon AcL lnasmuch as noLhlng ls lefL Lo be declded
addlLlonally under Lhe ArblLraLlon AcL once compensaLlon and lnLeresL ls granLed under Lhe
Consumer roLecLlon AcL.
Lven Lhough LherepeaLed lnLerferenceby LheConsumer lora ln such maLLers ls wlLh a vlew Lo
avold harassmenL and provlde lmmedlaLe redressal Lo Lhe consumers, ls on Lhe
undersLandlng LhaL Lhenew ArblLraLlon AcL, ls cumbersome. lL may noL beforgoLLen LhaL such
a dlscreLlonary [urlsdlcLlon exerclsed by Lhe Consumer lora make lL more cumbersome Lo Lhe
consumers as lL ls lnablLablefor LheopposlLeparLles Lo rush for redressal beforehlgher lorum
lncludlng LheApex CourL ln lndla.
ln anuLshell, lL should bemadeblndlng and mandaLory for even Lo LheConsumer loraLo refer
Lhe dlspuLes for arblLraLlon, as soon as lL ls broughL Lo Lhelr noLlce LhaL Lhe dlspuLes come
wlLhln Lhe purvlew of Lhe Speclal AcL or Lhe ArblLraLlon AcL by a vlrLue of Lhe ArblLraLlon
AgreemenL. 1he ArblLraLlon AcL of 1996 ls noL cumbersome and Lhe arblLraLors have Lhe wlde
powers Lhereln, hence Lhe Consumer roLecLlon AcL Lo Lhe exLenL of arblLraLlon agreemenL
beLween Lhe parLles shall be Lhe general law and Lhe consumer complalnLs should Lherefore,
be noL enLerLalned as lL ls agalnsL Lhe publlc pollcy and noL ln Lhe lnLeresL of even consumers
who has Lo Lravel Lhe Lrauma of faclng Lhe llLlgaLlon upLo apex sLage and Lhen ulLlmaLely Lhe
arblLraLlon. 1he arblLraLlon can equally and ln a beLLer way proLecL Lhe conLracLual parLles
wlLh respecL Lo Lhe compensaLlon and Lhe damages by way of lnLeresL and Lhe AcL belng Lhe
speclal should yleld Lhegeneral AcL of consumers.
13
8L LLGALL SMAk1 - SCLVL
DISU1LS, IAS1 AND UICk,
1nkCUGn MLDIA1ICN IN INDIA
"Unmanaged conf||ct |s the |argest reduc|b|e cost |n organ|zat|ons today, and the |east
recogn|zed." -DanDana
l am sure, you agree wlLh Lhe above sLaLemenL. l am sure, as a declslon maker you ofLen
wonder, ls Lhere an alLernaLe Lo cosLly, endless, frulLless llLlgaLlon and arblLraLlon, as
experlenced ln lndlaLoday?
1he good news ls, yes Lhere ls an alLernaLlve Lo rlgors of llLlgaLlon and arblLraLlon. lL ls
'medlaLlon' le. solvlng knoLLy commerclal and oLher confllcLs Lhrough Lhe process of
'medlaLlon', whlch ls conducLed byaneuLral person, called medlaLor".
lL ls very much posslbleLhaL you havenoL heard of seLLlemenL of dlspuLes, uslng Lheprocess of
medlaLlon, because, unLll recenLly, lL was noL a vlable or recognlzed mode of seLLlemenL of
dlspuLes ln lndla. unLll recenLly, Lhe only recognlzed mode of seLLlemenL of dlspuLes ln lndla,
was llLlgaLlon and lf provlded for ln Lhe conLracL, 'arblLraLlon'. 8oLh of Lhem, by no means are
cosL effecLlveand areknown for legendary delay's.
ln an aLLempL Lo flnd soluLlons Lo Lhe above boLLlenecks ln Lhe [usLlce dellvery sysLem, ln Lhe
year 1996, Lhe arllamenL carrled ouL for reachlng changes ln law and repealed Lhe
ArblLraLlon AcL, 1940 and ln lLs place broughL abouL lndlan ArblLraLlon & ConclllaLlon AcL,
1996, whlch ln Lurn ls based on unCl18AL model law on lnLernaLlonal Commerclal
ArblLraLlon. ln facL, Lo promoLe ouL of courL seLLlemenLs Lhrough Lhe process of AlLernaLe
ulspuLes 8esoluLlon (Au8) ln Lhe 1996 AcL, lL was provlded, LhaL even ln arblLraLlon
proceedlngs, lf Lhe dlspuLe ls seLLled uslng medlaLlon Lechnlques Lhen such an agreemenL
shall beenforced as an arblLraLlon award.
1herefore, lL can be sald LhaL Lhe foundaLlon of Lhe 'neo medlaLlon movemenL', was lald ln Lhe
lndlan ArblLraLlon &ConclllaLlon AcL, 1996lLself.
LaLer, ln Lhe year 1999 and 2002, Lhe arllamenL amended Lhe Code of Clvll rocedure, 1908
and vlde secLlon 89, enlarged Lhe scope of use of medlaLlon process. 1he change ln law has
Lransformed Lhe role of [udges and Lhey are now Lo look ouL of 'elemenLs of seLLlemenLs' ln a
exlsLlng and even ln a ongolng proLracLed llLlgaLlon and refer lL Lo 'Lralned medlaLors' for a
negoLlaLed and ouL of courL seLLlemenL.
Agaln, Lhe good news ls LhaL lL ls worklng. 1hls has been posslble due Lo amendmenLs ln law as
menLloned above buL prlmarlly due Lo amendmenL ln Lhe Code of Clvll rocedure 1908
whereln as per secLlon 89 (2) (d) of Code of Clvll rocedure 1908, Lhe courL on belng saLlsfled
LhaL Lhere ls an elemenL of seLLlemenL Lhen Lhe courL can refer Lhe maLLer for belng seLLled
M.5. Obetol
14
* AJvocote, 5opteme coott of loJlo
Corpn. v. Consumer roLecLlon Councll reporLed ln (1993) 2 SCC 479 lL was held LhaL Lhe
naLlonal Commlsslon has no [urlsdlcLlon Lo ad[udlcaLe upon clalms for compensaLlon arlslng
ouL of moLor vehlcles accldenLs.
Where Lhe !udlclal AuLhorlLles consLlLuLed under Lhe Consumer roLecLlon AcL compleLely
lgnored Lhe mandaLory characLer of Lhe ArblLraLlon Clause Lo be governed by Lhe Speclal AcL
l.e. ArblLraLlon and ConclllaLlon AcL, 1996 Lo prevall over Lhe Consumer roLecLlon AcL, 1986
whlch ls general law.
1aklng shelLer under Lhe provlslons of SecLlon 3 of Lhe Consumer roLecLlon AcL, Lhe quasl-
[udlclal auLhorlLles under Lhe Consumer roLecLlon AcL have been pronounclng upon Lhe
varlous dlspuLes board before lL even when Lhey are conLracLual and Lhe parLles have
conLracLed for reference Lo Lhe arblLraLlon ln Lhe evenL of dlspuLe. 1he lnLerference by
Consumer AuLhorlLles by readlng lnLo Lhe addlLlonal remedy ls provlded under Consumer
roLecLlon AcL, Lhe facL remalns, lf everyLhlng ls declded by way of clalms, compensaLlon,
damages noLhlng would be lefL Lo be arblLraLed under Lhe ArblLraLlon and ConclllaLlon AcL. 8y
Lhls exerclse of [urlsdlcLlon by Lhe Consumer lora, Lhe provlslons of Lhe ArblLraLlon AcL
becomeredundanL and rendered lllusory even ln conLracLual maLLers. lL ls maLLer of common
prudence LhaL Lhe momenL consumer complalnLs are enLerLalned wlLh relaLlon Lo
compensaLlon keeplng asldeLheprocedureof conLracLual arblLraLlon agreemenL Lo go for Lhe
arblLraLlon, LheConsumer roLecLlon AcL becomes derogaLory and noL addlLlonal as provlded
ln SecLlon 3 of Lhe Consumer roLecLlon AcL lnasmuch as noLhlng ls lefL Lo be declded
addlLlonally under Lhe ArblLraLlon AcL once compensaLlon and lnLeresL ls granLed under Lhe
Consumer roLecLlon AcL.
Lven Lhough LherepeaLed lnLerferenceby LheConsumer lora ln such maLLers ls wlLh a vlew Lo
avold harassmenL and provlde lmmedlaLe redressal Lo Lhe consumers, ls on Lhe
undersLandlng LhaL Lhenew ArblLraLlon AcL, ls cumbersome. lL may noL beforgoLLen LhaL such
a dlscreLlonary [urlsdlcLlon exerclsed by Lhe Consumer lora make lL more cumbersome Lo Lhe
consumers as lL ls lnablLablefor LheopposlLeparLles Lo rush for redressal beforehlgher lorum
lncludlng LheApex CourL ln lndla.
ln anuLshell, lL should bemadeblndlng and mandaLory for even Lo LheConsumer loraLo refer
Lhe dlspuLes for arblLraLlon, as soon as lL ls broughL Lo Lhelr noLlce LhaL Lhe dlspuLes come
wlLhln Lhe purvlew of Lhe Speclal AcL or Lhe ArblLraLlon AcL by a vlrLue of Lhe ArblLraLlon
AgreemenL. 1he ArblLraLlon AcL of 1996 ls noL cumbersome and Lhe arblLraLors have Lhe wlde
powers Lhereln, hence Lhe Consumer roLecLlon AcL Lo Lhe exLenL of arblLraLlon agreemenL
beLween Lhe parLles shall be Lhe general law and Lhe consumer complalnLs should Lherefore,
be noL enLerLalned as lL ls agalnsL Lhe publlc pollcy and noL ln Lhe lnLeresL of even consumers
who has Lo Lravel Lhe Lrauma of faclng Lhe llLlgaLlon upLo apex sLage and Lhen ulLlmaLely Lhe
arblLraLlon. 1he arblLraLlon can equally and ln a beLLer way proLecL Lhe conLracLual parLles
wlLh respecL Lo Lhe compensaLlon and Lhe damages by way of lnLeresL and Lhe AcL belng Lhe
speclal should yleld Lhegeneral AcL of consumers.
13
8L LLGALL SMAk1 - SCLVL
DISU1LS, IAS1 AND UICk,
1nkCUGn MLDIA1ICN IN INDIA
"Unmanaged conf||ct |s the |argest reduc|b|e cost |n organ|zat|ons today, and the |east
recogn|zed." -DanDana
l am sure, you agree wlLh Lhe above sLaLemenL. l am sure, as a declslon maker you ofLen
wonder, ls Lhere an alLernaLe Lo cosLly, endless, frulLless llLlgaLlon and arblLraLlon, as
experlenced ln lndlaLoday?
1he good news ls, yes Lhere ls an alLernaLlve Lo rlgors of llLlgaLlon and arblLraLlon. lL ls
'medlaLlon' le. solvlng knoLLy commerclal and oLher confllcLs Lhrough Lhe process of
'medlaLlon', whlch ls conducLed byaneuLral person, called medlaLor".
lL ls very much posslbleLhaL you havenoL heard of seLLlemenL of dlspuLes, uslng Lheprocess of
medlaLlon, because, unLll recenLly, lL was noL a vlable or recognlzed mode of seLLlemenL of
dlspuLes ln lndla. unLll recenLly, Lhe only recognlzed mode of seLLlemenL of dlspuLes ln lndla,
was llLlgaLlon and lf provlded for ln Lhe conLracL, 'arblLraLlon'. 8oLh of Lhem, by no means are
cosL effecLlveand areknown for legendary delay's.
ln an aLLempL Lo flnd soluLlons Lo Lhe above boLLlenecks ln Lhe [usLlce dellvery sysLem, ln Lhe
year 1996, Lhe arllamenL carrled ouL for reachlng changes ln law and repealed Lhe
ArblLraLlon AcL, 1940 and ln lLs place broughL abouL lndlan ArblLraLlon & ConclllaLlon AcL,
1996, whlch ln Lurn ls based on unCl18AL model law on lnLernaLlonal Commerclal
ArblLraLlon. ln facL, Lo promoLe ouL of courL seLLlemenLs Lhrough Lhe process of AlLernaLe
ulspuLes 8esoluLlon (Au8) ln Lhe 1996 AcL, lL was provlded, LhaL even ln arblLraLlon
proceedlngs, lf Lhe dlspuLe ls seLLled uslng medlaLlon Lechnlques Lhen such an agreemenL
shall beenforced as an arblLraLlon award.
1herefore, lL can be sald LhaL Lhe foundaLlon of Lhe 'neo medlaLlon movemenL', was lald ln Lhe
lndlan ArblLraLlon &ConclllaLlon AcL, 1996lLself.
LaLer, ln Lhe year 1999 and 2002, Lhe arllamenL amended Lhe Code of Clvll rocedure, 1908
and vlde secLlon 89, enlarged Lhe scope of use of medlaLlon process. 1he change ln law has
Lransformed Lhe role of [udges and Lhey are now Lo look ouL of 'elemenLs of seLLlemenLs' ln a
exlsLlng and even ln a ongolng proLracLed llLlgaLlon and refer lL Lo 'Lralned medlaLors' for a
negoLlaLed and ouL of courL seLLlemenL.
Agaln, Lhe good news ls LhaL lL ls worklng. 1hls has been posslble due Lo amendmenLs ln law as
menLloned above buL prlmarlly due Lo amendmenL ln Lhe Code of Clvll rocedure 1908
whereln as per secLlon 89 (2) (d) of Code of Clvll rocedure 1908, Lhe courL on belng saLlsfled
LhaL Lhere ls an elemenL of seLLlemenL Lhen Lhe courL can refer Lhe maLLer for belng seLLled
M.5. Obetol
14
* AJvocote, 5opteme coott of loJlo
Lhrough Lhe process of medlaLlon. Powever, lL ls added wlLh hasLe, LhaL any such proposal by
Lhe parLles Lhemselves ls also welcomed by Lhe courLs. lL ls also added LhaL, ln maLLers oLher
Lhan LhecourL annexed medlaLlon, any parLy can proposefor aseLLlemenL Lhrough medlaLlon
and any agreemenL, when slgned and recorded, ln accordance wlLh law, wlll be a valld and
enforceable. As Lhls agreemenL ls arrlved by LheparLles Lhemselves, lL ls noL appealableand ls
flnal and aL Lhe same Llme blndlng on all Lhe parLles Lo Lhe medlaLlon, conLrary Lo a [udgmenL
or an award, whlch areappealable.
1hls lnlLlaLlve now has Lhe sancLlon of Lhe LeglslaLure Lhe LxecuLlve and Lhe !udlclary. 1he
Chlef !usLlce of lndla, Pon'ble Mr. !usLlce k.C. 8alakrlshna ls now spearheadlng Lhls
movemenL however Lo be falr lL all sLarLed wlLh Pon'ble Mr. !usLlce kaL[u, as Chlef !usLlce of
Madras Plgh CourL and laLer on Chlef !usLlceof uelhl Plgh CourL , who now ls a senlor !udgeof
Pon'ble Supreme CourL of lndla. ln facL, on 6Lh. SepL. 2008, Chlef !usLlce k.C. 8alakrlshna had
lnauguraLed a Lok AdalaL where he declared LhaL he lnLends Lo open a MedlaLlon Cell ln
Supreme CourL of lndla as well. lL ls pleasure Lo reporL LhaL !udges of Supreme CourL are
vlgorously promoLlng medlaLlon movemenL. As a consequences of Lhese efforLs of Pon'ble
Supreme courL, all Lhe Plgh CourLs have Laken Lhe cue from Lhe Pon'ble Supreme CourL and
have sancLloned and approved Lhe use of 'medlaLlon' as a process for seLLlemenL of dlspuLes,
wlLhln Lhelr [urlsdlcLlons.
WlLh Lhe acLlve backlng of LeglslaLure, Lhe LxecuLlve and Pon'ble Supreme CourL and Lhe
Pon'ble Plgh CourLs, Lhe courL annexed medlaLlon cenLers have come up ln uelhl Plgh CourL,
Madras Plgh CourL, karnaLaka Plgh CourL, un[ab &Paryana Plgh CourL, Lo name a few. 1he
[udges are now referrlng, on golng llLlgaLlon, Lo Lhese medlaLlon cenLers. All klnds of maLLers,
corporaLe, commerclal, clvll, labour dlspuLes, famlly properLy llLlgaLlon, maLrlmonlal
llLlgaLlon, real esLaLe dlspuLes, l8 dlspuLes eLc. have been referred Lo Lhese medlaLlon
cenLer's and lL ls a maLLer of saLlsfacLlon, as per daLa avallable, more Lhan 60 maLLers have
been resolved Lhrough Lheprocess of medlaLlon.
1he Plgh CourLs have Lhe supervlsory [urlsdlcLlons over subordlnaLe [udlclary, have Lhus
encouraged courL annexed medlaLlon cenLer's Lo come up ln ulsLrlcL CourL's as well and Lhey
are also glven very encouraglng resulLs. 1he Pon'ble Supreme of lndla, as a maLLer of pollcy,
glvlng greaLer LhrusL Lo medlaLlon movemenL ln ulsLrlcL CourLs, Lo nlp Lhe monsLer of
llLlgaLlon aL LheLhreshold.
1he uelhl Plgh CourL on 11Lh. AugusL 2003, noLlfled MedlaLlon and ConclllaLlon 8ules, 2004
and all Lhe medlaLlons aL Lhe medlaLlon cenLre ln uelhl Plgh CourL are belng conducLed ln
accordancewlLh Lheserules and oLher Plgh CourL's areln process of dolng so.
ln Lhe maLLers whlch were noL resolved, aL leasL a new beglnnlng has been made Lo sLarL Lhe
process of 'negoLlaLlon' for posslbleseLLlemenL aL afuLuredaLe.
WhyChooseMedlaLlon:
1. MedlaLlon lmmedlaLely puLs you and your organlzaLlon ln conLrol of boLh LhedlspuLeand
lL's resoluLlon.
2. 1helaw mandaLes medlaLlon and LhecourLs areencouraglng and endorslng LheouLcome.
3. 1hrough medlaLlon, you can once agaln communlcaLe, ln real sense, wlLh Lhe oLher slde
whlch has noL been posslbleslnceLhedlspuLesLarLed.
15
4. 1he medlaLlon process ls confldenLlal, slmple and Lhe aLmosphere ls lnformal.
3. 1he medlaLlon process ls 'volunLary' and you can opL ouL of lL, aL any Llme, lf lL ls noL
helplng you.
6. MedlaLlon- ln long run saves preclous Llmeand energy.
7. MedlaLlon helps you Lo assess Lhe sLrengLh and weakness of your case ln 'sLrlcL
confldence' and Lhereforehelps you Lo opL for reallsLlc soluLlons.
8. MedlaLlon focuses on long Lerm lnLeresLs and Lhus allows you Lo Lake on Lhe opLlons for
seLLlemenL lnsLead of LhefrulLless dlspuLe.
9. MedlaLlon saves you and your organlzaLlon's cosLs, on oLherwlse, whaL could be long and
proLracLed llLlgaLlon.
10. MedlaLlon glves you a chance Lo lmprove broken relaLlonshlps and Lhereby glves you a
chanceof lmprovlng your fuLure.
now, you musL be wonderlng, how Lhls ls useful Lo you and your organlzaLlon? ln Lhe unlLed
klngdom and unlLed SLaLes of Amerlca, lndeed, Lhe enLlre wesL, more Lhan 90 of maLLers
referred Lo medlaLlon are seLLled ouL of courL. Well, when Lhey have beneflLed would you and
you're your company noL llke Lo beneflL from lL? So, Lhls ls your opporLunlLy Lo use, 'crlLlcal
lnformaLlon' for Lhe beneflL of your organlzaLlon. ?our organlzaLlon can reap Lhe beneflL of
Lhls process of dlspuLe resoluLlon, namely medlaLlon" by lnLroduclng and senslLlzlng your
legal and P8 deparLmenL Lo Lhls 'new process of medlaLlon'.
1he process of medlaLlon can be resorLed Lo boLh Lo on golng llLlgaLlon and well as Lo
'proposed llLlgaLlon' le. AL pre-llLlgaLlon sLage and Lhe uelhl Plgh CourL MedlaLlon and
ConclllaLlon CenLre has now sLarLed Laklng up maLLer's aL pre llLlgaLlon sLage also. Slmllarly
Crlme AgalnsL Women Cell of uelhl ollce have also sLarLed Laklng up maLrlmonlal dlspuLes aL
pre llLlgaLlon sLage. 1ruly, medlaLlon movemenL has Laken of ln lndla and day ls noL far when
LheclLlzens of Lhls counLry wlll beproud of lndlan !udlclary.
ln Lhe commerclal conLexL, acLually, an ln house 'medlaLlon Leam' can be ralsed, whlch ls
capable of negoLlaLlng wlLh a exlsLlng dlspuLanL as well as a poLenLlal dlspuLanL/s, before
acLually launchlng a full scale legal war and ln Lhe process saves mllllons of dollars / rupees
spenL ln frulLless llLlgaLlon cosLs Lo Lhecompany.
Cholcels yours!!!!
16
Lhrough Lhe process of medlaLlon. Powever, lL ls added wlLh hasLe, LhaL any such proposal by
Lhe parLles Lhemselves ls also welcomed by Lhe courLs. lL ls also added LhaL, ln maLLers oLher
Lhan LhecourL annexed medlaLlon, any parLy can proposefor aseLLlemenL Lhrough medlaLlon
and any agreemenL, when slgned and recorded, ln accordance wlLh law, wlll be a valld and
enforceable. As Lhls agreemenL ls arrlved by LheparLles Lhemselves, lL ls noL appealableand ls
flnal and aL Lhe same Llme blndlng on all Lhe parLles Lo Lhe medlaLlon, conLrary Lo a [udgmenL
or an award, whlch areappealable.
1hls lnlLlaLlve now has Lhe sancLlon of Lhe LeglslaLure Lhe LxecuLlve and Lhe !udlclary. 1he
Chlef !usLlce of lndla, Pon'ble Mr. !usLlce k.C. 8alakrlshna ls now spearheadlng Lhls
movemenL however Lo be falr lL all sLarLed wlLh Pon'ble Mr. !usLlce kaL[u, as Chlef !usLlce of
Madras Plgh CourL and laLer on Chlef !usLlceof uelhl Plgh CourL , who now ls a senlor !udgeof
Pon'ble Supreme CourL of lndla. ln facL, on 6Lh. SepL. 2008, Chlef !usLlce k.C. 8alakrlshna had
lnauguraLed a Lok AdalaL where he declared LhaL he lnLends Lo open a MedlaLlon Cell ln
Supreme CourL of lndla as well. lL ls pleasure Lo reporL LhaL !udges of Supreme CourL are
vlgorously promoLlng medlaLlon movemenL. As a consequences of Lhese efforLs of Pon'ble
Supreme courL, all Lhe Plgh CourLs have Laken Lhe cue from Lhe Pon'ble Supreme CourL and
have sancLloned and approved Lhe use of 'medlaLlon' as a process for seLLlemenL of dlspuLes,
wlLhln Lhelr [urlsdlcLlons.
WlLh Lhe acLlve backlng of LeglslaLure, Lhe LxecuLlve and Pon'ble Supreme CourL and Lhe
Pon'ble Plgh CourLs, Lhe courL annexed medlaLlon cenLers have come up ln uelhl Plgh CourL,
Madras Plgh CourL, karnaLaka Plgh CourL, un[ab &Paryana Plgh CourL, Lo name a few. 1he
[udges are now referrlng, on golng llLlgaLlon, Lo Lhese medlaLlon cenLers. All klnds of maLLers,
corporaLe, commerclal, clvll, labour dlspuLes, famlly properLy llLlgaLlon, maLrlmonlal
llLlgaLlon, real esLaLe dlspuLes, l8 dlspuLes eLc. have been referred Lo Lhese medlaLlon
cenLer's and lL ls a maLLer of saLlsfacLlon, as per daLa avallable, more Lhan 60 maLLers have
been resolved Lhrough Lheprocess of medlaLlon.
1he Plgh CourLs have Lhe supervlsory [urlsdlcLlons over subordlnaLe [udlclary, have Lhus
encouraged courL annexed medlaLlon cenLer's Lo come up ln ulsLrlcL CourL's as well and Lhey
are also glven very encouraglng resulLs. 1he Pon'ble Supreme of lndla, as a maLLer of pollcy,
glvlng greaLer LhrusL Lo medlaLlon movemenL ln ulsLrlcL CourLs, Lo nlp Lhe monsLer of
llLlgaLlon aL LheLhreshold.
1he uelhl Plgh CourL on 11Lh. AugusL 2003, noLlfled MedlaLlon and ConclllaLlon 8ules, 2004
and all Lhe medlaLlons aL Lhe medlaLlon cenLre ln uelhl Plgh CourL are belng conducLed ln
accordancewlLh Lheserules and oLher Plgh CourL's areln process of dolng so.
ln Lhe maLLers whlch were noL resolved, aL leasL a new beglnnlng has been made Lo sLarL Lhe
process of 'negoLlaLlon' for posslbleseLLlemenL aL afuLuredaLe.
WhyChooseMedlaLlon:
1. MedlaLlon lmmedlaLely puLs you and your organlzaLlon ln conLrol of boLh LhedlspuLeand
lL's resoluLlon.
2. 1helaw mandaLes medlaLlon and LhecourLs areencouraglng and endorslng LheouLcome.
3. 1hrough medlaLlon, you can once agaln communlcaLe, ln real sense, wlLh Lhe oLher slde
whlch has noL been posslbleslnceLhedlspuLesLarLed.
15
4. 1he medlaLlon process ls confldenLlal, slmple and Lhe aLmosphere ls lnformal.
3. 1he medlaLlon process ls 'volunLary' and you can opL ouL of lL, aL any Llme, lf lL ls noL
helplng you.
6. MedlaLlon- ln long run saves preclous Llmeand energy.
7. MedlaLlon helps you Lo assess Lhe sLrengLh and weakness of your case ln 'sLrlcL
confldence' and Lhereforehelps you Lo opL for reallsLlc soluLlons.
8. MedlaLlon focuses on long Lerm lnLeresLs and Lhus allows you Lo Lake on Lhe opLlons for
seLLlemenL lnsLead of LhefrulLless dlspuLe.
9. MedlaLlon saves you and your organlzaLlon's cosLs, on oLherwlse, whaL could be long and
proLracLed llLlgaLlon.
10. MedlaLlon glves you a chance Lo lmprove broken relaLlonshlps and Lhereby glves you a
chanceof lmprovlng your fuLure.
now, you musL be wonderlng, how Lhls ls useful Lo you and your organlzaLlon? ln Lhe unlLed
klngdom and unlLed SLaLes of Amerlca, lndeed, Lhe enLlre wesL, more Lhan 90 of maLLers
referred Lo medlaLlon are seLLled ouL of courL. Well, when Lhey have beneflLed would you and
you're your company noL llke Lo beneflL from lL? So, Lhls ls your opporLunlLy Lo use, 'crlLlcal
lnformaLlon' for Lhe beneflL of your organlzaLlon. ?our organlzaLlon can reap Lhe beneflL of
Lhls process of dlspuLe resoluLlon, namely medlaLlon" by lnLroduclng and senslLlzlng your
legal and P8 deparLmenL Lo Lhls 'new process of medlaLlon'.
1he process of medlaLlon can be resorLed Lo boLh Lo on golng llLlgaLlon and well as Lo
'proposed llLlgaLlon' le. AL pre-llLlgaLlon sLage and Lhe uelhl Plgh CourL MedlaLlon and
ConclllaLlon CenLre has now sLarLed Laklng up maLLer's aL pre llLlgaLlon sLage also. Slmllarly
Crlme AgalnsL Women Cell of uelhl ollce have also sLarLed Laklng up maLrlmonlal dlspuLes aL
pre llLlgaLlon sLage. 1ruly, medlaLlon movemenL has Laken of ln lndla and day ls noL far when
LheclLlzens of Lhls counLry wlll beproud of lndlan !udlclary.
ln Lhe commerclal conLexL, acLually, an ln house 'medlaLlon Leam' can be ralsed, whlch ls
capable of negoLlaLlng wlLh a exlsLlng dlspuLanL as well as a poLenLlal dlspuLanL/s, before
acLually launchlng a full scale legal war and ln Lhe process saves mllllons of dollars / rupees
spenL ln frulLless llLlgaLlon cosLs Lo Lhecompany.
Cholcels yours!!!!
16
IUDICIAL IN1LkVLN1ICN IN
Ak8I1kAL kCCLLDINGS
A8S1kAC1
8efore Lhe 1996 AcL Lhere was wldespread dlsgrunLlemenL over excesslve [udlclal
lnLervenLlon ln Lhe arblLral proceedlngs wlLh aLLendanL delays and uncerLalnLy. Powever
ArblLraLlon and Lhe ConclllaLlon AcL 1996 aLLempLed Lo recLlfy Lhe problem by llmlLlng Lhe
basls on whlch awards could be challenged Lo a few narrow grounds. 1he lnLenLlon was Lo
mlnlmlse Lhe supervlsory role of courLs, ensure flnallLy of arblLral awards, and expedlLe Lhe
arblLral process. 8uL unforLunaLely, ln Lhe case of Lhe 1996 acL, Lhe reallLy has been far
removed from Lhe ldeals professed by Lhe leglslaLlon. ArLlcle scruLlnlzes Lhe role of Lhe
[udlclary ln Lhe ArblLraLlon proceedlngs by conslderlng Lhe ArblLraLlon laws under Lhe broad
Lhemeof IoJlclol lotetveotloolotbe AtblttotlooltoceeJloqs" wlLh Lhehelp of dlverse[udlclal
pronouncemenL. ln addlLlon Lo LhaL lL examlnes some aspecLs of Lhe growLh of [udlclal law
maklng by Lhe Supreme CourL ln Lhe lasL Lwelve years of Lhe worklng of Lhe lndlan ArblLraLlon
and ConclllaLlon AcL, 1996 wlLh Lhe negaLlve role of Lhe Supreme CourL ln Laklng Lhe law
backward Lhus prevenLlng LhegrowLh of lnLernaLlonal Lradeand commerce. lL also shows LhaL
[usL as pollLlclans and bureaucraLs do noL glveup power, [udges areno excepLlon.
Sect|on- 34of the Arb|trat|onandthe Conc|||at|onAct, 1996andub||c o||cy
1he exLreme sysLem of Lhe arblLraLlon was lnLroduced Lo endow wlLh an ouL of courL
seLLlemenL l.e. Lo provlde an opporLunlLy of seLLlemenL of dlspuLe Lo Lhe parLles and for Lhe
2
aforesald purpose 1he ArblLraLlon and Lhe ConclllaLlon AcL 1996 has been provlded Lhe
elaboraLe provlslons concernlng Lo Lhe seLLlemenL of Lhe uomesLlc as well as lnLernaLlonal
Commerclal ArblLraLlon. 8uL Whlle Lhe lndlan Law favours Lhe dlspuLe resoluLlon by Lhe
arblLraLlon, Lhe lndlan senLlmenL has always abhorred flnallLy aLLachlng Lo Lhe arblLral
awards. A slgnlflcanL volume of Lhe lndlan case laws bears LesLlmony Lo Lhe long and arduous
sLruggle Lo be freed from blndlng arblLral declslons. Alded and abeLLed by Lhe legal fraLernlLy,
Lhe alm of every parLy Lo arblLraLlon (domesLlc or forelgn) ls: 1ty to wlo lf yoo coo, lf yoo coo
oot, Jo yoot best to see tbot tbe otbet slJe coo oot eofotce tbe owotJ os looq os posslble." lo
tbot seose, otblttotlooos omeoos of settlloqJlspote ls ofollote- tbooqblt ls beloqlocteosloqly
3
teqotJeJos oosefol mecboolsmfot tesolvloqJlspotes."
8ule34of LheunCl18AL Model 8ules provldes grounds for seLLlng asldean arblLral award and
4
ooe of tbe qtoooJs ls tbot wbete tbe owotJls locoofllct wltbtbe pobllc pollcy of tbe stote . 1he
3
unCl18AL Model Law Commlsslon sLaLed ln lLs reporL LhaL Lhe Lerm publlc pollcy"
Mt. AJltyo 5loqbl ooJ Mt. IlteoJto Iooqlt*
2
8efote tbe 1996 oct, loJlo's otblttotloo teqlme cooslsteJ of tbe Atblttotloo Act 1940, tbe Atblttotloo (ltotocol ooJ cooveotloo)
Act 19J7, ooJ tbe lotelqo AwotJs (kecoqoltloo ooJ ofotcemeot) Act 1961.
J
l.5.Notlmoo, Atblttotloo ooJ Auk lo loJlo" lo l.c.koo & wllllom5befflelJ eJ., Altetootlve ulspote kesolotloo, (uelbl. uolvetsol
low lobllsbloq co. lvt. ltJ., 1997) p. 49
4
kole J4(2)(b)(ll) of uNcl1kAl
5
uNcl1kAl kepott oo tbe wotk of lts 18tb sessloo, Iooe J-21, 1985, poto.296
11
*5toJeots, Cojotot Notloool low uolvetslty, CooJblooqot, Cojotot
comprlses fundamenLal prlnclples of [usLlce". lL was undersLood LhaL Lhe Lerm publlc pollcy
whlch was used ln Lhe 1938 new ?ork ConvenLlon and many oLher LreaLles, covered
fundamenLal prlnclples of law and [usLlce ln subsLanLlve as well as procedural respecLs. 1hus,
lnsLances such as corrupLlon, brlbery, or fraud and slmllar serlous cases would consLlLuLe a
ground for seLLlng asldean award. 1hls provlslon was lnserLed ln LheModel 8ules afLer a greaL
deal of debaLe and Lhe words publlc pollcy" of Lhe SLaLe were preferred ln vlew of lLs
unlversal accepLance. ubllc pollcy ls always an unsafe and Lreacherous ground for legal
6
declslon and lL has also been descrlbed as 'a very unruly horse, and when you geL asLrlde lL
7
you never know where lL wlll carry you' . More recenLly Lhe 8rlLlsh courLs held LhaL ln order Lo
be conLrary Lo Lhe publlc pollcy, Lhe lmpugned conducL should lnvolve more Lhan
lnadverLence and should, save very excepLlonally, lnvolve someLhlng LhaL could be descrlbed
8
as unconsclonable or reprehenslble . 1bete ls oo Jlsoqteemeot to tbe foct tbot pobllc pollcy ls
copoble of o wlJe ot o oottow coosttoctloo. lo u5A tbe cootts bove ptefetteJ tbe oottow
lotetptetotloolotqely wltbovlew toqlve floollty tooolotetootloool commetclol owotJooJto
9
Jlscootoqe pottles ftomcbolleoqloqtbe some befote joJlclol fotoms.
ub||c o||cy andthe Ind|anLxper|ence
8ule 34 as menLloned above was verbaLlm reproduced ln SecLlon 34 of Lhe ArblLraLlon and
10
ConclllaLlon AcL, 1996. 1he words 'publlc pollcy' flnds place ln Lwo provlslons . 1he Lerm
publlc pollcy ln conLexL of arblLraLlon proceedlngs came Lo be examlned by Lhe Supreme
11
CourL ln keoosoqot lowet lloot co. v. Ceoetol lecttlc co . by Lhree !udge 8ench. 1hls case ls
relaLed Lo Lhe forelgn award ln whlch Supreme CourL was faced wlLh Lhe quesLlon wheLher Lo
glve Lhe words 'publlc pollcy' a narrow or a broad meanlng. Accordlng Lo Lhe narrow vlew
courLs cannoL creaLe new heads of publlc pollcy whereas Lhe broad vlew counLenances
12
[udlclal law maklng ln Lhls areas . Whlle observlng LhaL from Lhe very naLure of Lhlngs, Lhe
expresslons 'publlc pollcy', 'opposed Lo publlc pollcy' or 'conLrary Lo publlc pollcy' ls lncapable
of preclse deflnlLlon" Lhls courL lald down: lobllc pollcy.cooootes some mottet wblcb
coocetos tbe pobllc qooJ ooJ tbe pobllc lotetest. 1be coocept of wbot ls fot tbe pobllc qooJ ot
lotbe pobllc lotetest ot wbot woolJbe lojotloos ot botmfol totbe pobllc qooJot pobllc lotetest
1J
bos votleJftomtlme totlme."
1he courL ln vlew of Lhe absence of a workable deflnlLlon of lnLernaLlonal publlc pollcy"
found lL dlfflculL Lo consLrue Lhe expresslon publlc pollcy" ln ArLlcle v(2)(b) of Lhe new ?ork
ConvenLlon Lo mean lnLernaLlonal publlc pollcy as lL could be, consLrued boLh ln narrow or
wlde sense. ln Lhe 8enusagar case, lL has been observed: lL ls obvlous LhaL slnce Lhe AcL ls
6
Ioosoo v. utelfootelo coosollJoteJ ColJ Mloes ltJ, 1902 Ac 482,500 . (1900-0J) All k kl 426. 87 l1 J72 (nl)
7
klcbotJsoo v. Melllsb, (1824) 2 8loq 229 , 252 . 1J0 k 294
8
colfet cbottetloq v cotoosel 5blpploq co ltJ j2001]1 All k (comm.) J98 ooJ ltofllotl ltollo 5tl v loloewebbet loc j2001]1 All k
(comm.) 1062 opplleJ.
9
Mltsoblsbl Motots cotp v 5olet cbtyslet llymootb, loc (1985)47J u5, 87 l J 2J 444 1be lobllc lollcy Jefeose to tecoqoltloo
ooJ eofotcemeot of fotelqo otblttol owotJs, 7 col. w.lot'l.I.228 (1977)
10
J4(2)(b). Appllcotloo fot settloq oslJe otblttol owotJ
(b) 1be coott floJs tbot
ll. 1be otblttol owotJ ls lo coofllct wltb tbe pobllc pollcy of loJlo.
11
Alk 1994 5c 860, 1994 5opp (1) 644
12
cbltty oo coottocts, 26tb J., vol.l, poto 11JJ, p.685-686
1J
ceottol lolooJ wotet 1toospott cotpo. ltJ. v. 8tojo Notb Cooqoly, (1986)J 5cc 156
18
IUDICIAL IN1LkVLN1ICN IN
Ak8I1kAL kCCLLDINGS
A8S1kAC1
8efore Lhe 1996 AcL Lhere was wldespread dlsgrunLlemenL over excesslve [udlclal
lnLervenLlon ln Lhe arblLral proceedlngs wlLh aLLendanL delays and uncerLalnLy. Powever
ArblLraLlon and Lhe ConclllaLlon AcL 1996 aLLempLed Lo recLlfy Lhe problem by llmlLlng Lhe
basls on whlch awards could be challenged Lo a few narrow grounds. 1he lnLenLlon was Lo
mlnlmlse Lhe supervlsory role of courLs, ensure flnallLy of arblLral awards, and expedlLe Lhe
arblLral process. 8uL unforLunaLely, ln Lhe case of Lhe 1996 acL, Lhe reallLy has been far
removed from Lhe ldeals professed by Lhe leglslaLlon. ArLlcle scruLlnlzes Lhe role of Lhe
[udlclary ln Lhe ArblLraLlon proceedlngs by conslderlng Lhe ArblLraLlon laws under Lhe broad
Lhemeof IoJlclol lotetveotloolotbe AtblttotlooltoceeJloqs" wlLh Lhehelp of dlverse[udlclal
pronouncemenL. ln addlLlon Lo LhaL lL examlnes some aspecLs of Lhe growLh of [udlclal law
maklng by Lhe Supreme CourL ln Lhe lasL Lwelve years of Lhe worklng of Lhe lndlan ArblLraLlon
and ConclllaLlon AcL, 1996 wlLh Lhe negaLlve role of Lhe Supreme CourL ln Laklng Lhe law
backward Lhus prevenLlng LhegrowLh of lnLernaLlonal Lradeand commerce. lL also shows LhaL
[usL as pollLlclans and bureaucraLs do noL glveup power, [udges areno excepLlon.
Sect|on- 34of the Arb|trat|onandthe Conc|||at|onAct, 1996andub||c o||cy
1he exLreme sysLem of Lhe arblLraLlon was lnLroduced Lo endow wlLh an ouL of courL
seLLlemenL l.e. Lo provlde an opporLunlLy of seLLlemenL of dlspuLe Lo Lhe parLles and for Lhe
2
aforesald purpose 1he ArblLraLlon and Lhe ConclllaLlon AcL 1996 has been provlded Lhe
elaboraLe provlslons concernlng Lo Lhe seLLlemenL of Lhe uomesLlc as well as lnLernaLlonal
Commerclal ArblLraLlon. 8uL Whlle Lhe lndlan Law favours Lhe dlspuLe resoluLlon by Lhe
arblLraLlon, Lhe lndlan senLlmenL has always abhorred flnallLy aLLachlng Lo Lhe arblLral
awards. A slgnlflcanL volume of Lhe lndlan case laws bears LesLlmony Lo Lhe long and arduous
sLruggle Lo be freed from blndlng arblLral declslons. Alded and abeLLed by Lhe legal fraLernlLy,
Lhe alm of every parLy Lo arblLraLlon (domesLlc or forelgn) ls: 1ty to wlo lf yoo coo, lf yoo coo
oot, Jo yoot best to see tbot tbe otbet slJe coo oot eofotce tbe owotJ os looq os posslble." lo
tbot seose, otblttotlooos omeoos of settlloqJlspote ls ofollote- tbooqblt ls beloqlocteosloqly
3
teqotJeJos oosefol mecboolsmfot tesolvloqJlspotes."
8ule34of LheunCl18AL Model 8ules provldes grounds for seLLlng asldean arblLral award and
4
ooe of tbe qtoooJs ls tbot wbete tbe owotJls locoofllct wltbtbe pobllc pollcy of tbe stote . 1he
3
unCl18AL Model Law Commlsslon sLaLed ln lLs reporL LhaL Lhe Lerm publlc pollcy"
Mt. AJltyo 5loqbl ooJ Mt. IlteoJto Iooqlt*
2
8efote tbe 1996 oct, loJlo's otblttotloo teqlme cooslsteJ of tbe Atblttotloo Act 1940, tbe Atblttotloo (ltotocol ooJ cooveotloo)
Act 19J7, ooJ tbe lotelqo AwotJs (kecoqoltloo ooJ ofotcemeot) Act 1961.
J
l.5.Notlmoo, Atblttotloo ooJ Auk lo loJlo" lo l.c.koo & wllllom5befflelJ eJ., Altetootlve ulspote kesolotloo, (uelbl. uolvetsol
low lobllsbloq co. lvt. ltJ., 1997) p. 49
4
kole J4(2)(b)(ll) of uNcl1kAl
5
uNcl1kAl kepott oo tbe wotk of lts 18tb sessloo, Iooe J-21, 1985, poto.296
11
*5toJeots, Cojotot Notloool low uolvetslty, CooJblooqot, Cojotot
comprlses fundamenLal prlnclples of [usLlce". lL was undersLood LhaL Lhe Lerm publlc pollcy
whlch was used ln Lhe 1938 new ?ork ConvenLlon and many oLher LreaLles, covered
fundamenLal prlnclples of law and [usLlce ln subsLanLlve as well as procedural respecLs. 1hus,
lnsLances such as corrupLlon, brlbery, or fraud and slmllar serlous cases would consLlLuLe a
ground for seLLlng asldean award. 1hls provlslon was lnserLed ln LheModel 8ules afLer a greaL
deal of debaLe and Lhe words publlc pollcy" of Lhe SLaLe were preferred ln vlew of lLs
unlversal accepLance. ubllc pollcy ls always an unsafe and Lreacherous ground for legal
6
declslon and lL has also been descrlbed as 'a very unruly horse, and when you geL asLrlde lL
7
you never know where lL wlll carry you' . More recenLly Lhe 8rlLlsh courLs held LhaL ln order Lo
be conLrary Lo Lhe publlc pollcy, Lhe lmpugned conducL should lnvolve more Lhan
lnadverLence and should, save very excepLlonally, lnvolve someLhlng LhaL could be descrlbed
8
as unconsclonable or reprehenslble . 1bete ls oo Jlsoqteemeot to tbe foct tbot pobllc pollcy ls
copoble of o wlJe ot o oottow coosttoctloo. lo u5A tbe cootts bove ptefetteJ tbe oottow
lotetptetotloolotqely wltbovlew toqlve floollty tooolotetootloool commetclol owotJooJto
9
Jlscootoqe pottles ftomcbolleoqloqtbe some befote joJlclol fotoms.
ub||c o||cy andthe Ind|anLxper|ence
8ule 34 as menLloned above was verbaLlm reproduced ln SecLlon 34 of Lhe ArblLraLlon and
10
ConclllaLlon AcL, 1996. 1he words 'publlc pollcy' flnds place ln Lwo provlslons . 1he Lerm
publlc pollcy ln conLexL of arblLraLlon proceedlngs came Lo be examlned by Lhe Supreme
11
CourL ln keoosoqot lowet lloot co. v. Ceoetol lecttlc co . by Lhree !udge 8ench. 1hls case ls
relaLed Lo Lhe forelgn award ln whlch Supreme CourL was faced wlLh Lhe quesLlon wheLher Lo
glve Lhe words 'publlc pollcy' a narrow or a broad meanlng. Accordlng Lo Lhe narrow vlew
courLs cannoL creaLe new heads of publlc pollcy whereas Lhe broad vlew counLenances
12
[udlclal law maklng ln Lhls areas . Whlle observlng LhaL from Lhe very naLure of Lhlngs, Lhe
expresslons 'publlc pollcy', 'opposed Lo publlc pollcy' or 'conLrary Lo publlc pollcy' ls lncapable
of preclse deflnlLlon" Lhls courL lald down: lobllc pollcy.cooootes some mottet wblcb
coocetos tbe pobllc qooJ ooJ tbe pobllc lotetest. 1be coocept of wbot ls fot tbe pobllc qooJ ot
lotbe pobllc lotetest ot wbot woolJbe lojotloos ot botmfol totbe pobllc qooJot pobllc lotetest
1J
bos votleJftomtlme totlme."
1he courL ln vlew of Lhe absence of a workable deflnlLlon of lnLernaLlonal publlc pollcy"
found lL dlfflculL Lo consLrue Lhe expresslon publlc pollcy" ln ArLlcle v(2)(b) of Lhe new ?ork
ConvenLlon Lo mean lnLernaLlonal publlc pollcy as lL could be, consLrued boLh ln narrow or
wlde sense. ln Lhe 8enusagar case, lL has been observed: lL ls obvlous LhaL slnce Lhe AcL ls
6
Ioosoo v. utelfootelo coosollJoteJ ColJ Mloes ltJ, 1902 Ac 482,500 . (1900-0J) All k kl 426. 87 l1 J72 (nl)
7
klcbotJsoo v. Melllsb, (1824) 2 8loq 229 , 252 . 1J0 k 294
8
colfet cbottetloq v cotoosel 5blpploq co ltJ j2001]1 All k (comm.) J98 ooJ ltofllotl ltollo 5tl v loloewebbet loc j2001]1 All k
(comm.) 1062 opplleJ.
9
Mltsoblsbl Motots cotp v 5olet cbtyslet llymootb, loc (1985)47J u5, 87 l J 2J 444 1be lobllc lollcy Jefeose to tecoqoltloo
ooJ eofotcemeot of fotelqo otblttol owotJs, 7 col. w.lot'l.I.228 (1977)
10
J4(2)(b). Appllcotloo fot settloq oslJe otblttol owotJ
(b) 1be coott floJs tbot
ll. 1be otblttol owotJ ls lo coofllct wltb tbe pobllc pollcy of loJlo.
11
Alk 1994 5c 860, 1994 5opp (1) 644
12
cbltty oo coottocts, 26tb J., vol.l, poto 11JJ, p.685-686
1J
ceottol lolooJ wotet 1toospott cotpo. ltJ. v. 8tojo Notb Cooqoly, (1986)J 5cc 156
18
calculaLed and deslgned Lo sub serve Lhe cause of faclllLaLlng lnLernaLlonal Lrade and
promoLlon Lhereof by provldlng for speedy seLLlemenL of dlspuLes arlslng ln such Lrade
Lhrough arblLraLlon, any expresslon or phrase occurrlng Lhereln should recelve, conslsLlng
wlLh lLs llLeral and grammaLlcal sense, a llberal consLrucLlon." 1he Supreme CourL, whlle
consLrulng Lhe Lerm 'publlc pollcy' ln SecLlon 7(1) (b) (ll) of lorelgn Awards (8ecognlLlon and
LnforcemenL) AcL, applled Lhe prlnclples of prlvaLe lnLernaLlonal law and held LhaL an award
would be conLrary Lo publlc pollcy lf such enforcemenL would be conLrary Lo (l) fundamenLal
pollcyof lndlan law, or (ll) LhelnLeresLs of lndla, or (lll) [usLlceor morallLy.
AfLer referrlng Lo Lhe varlous declslons of Lhe Lngllsh, and Amerlcan courLs and quoLlng classlc
14
LexLbooks on lnLernaLlonal commerclal arblLraLlon Lhe Supreme CourL wenL on Lo very
rlghLly glve narrow lnLerpreLaLlon Lo Lhe words publlc pollcy. 8enusagar Lhus was very
correcLly declded, when lL Look a narrow vlew of Lhe word 'publlc pollcy' Lhus leavlng llLLle
scope of [udlclal lnLerference ln arblLraLlon proceedlngs and Lhe flnal deLermlnaLlon of
awards.
1be llmlteJ qtoooJs of cbolleoqe ptovlJeJ ooJet 5ectloo J4 ote oolvetsolly tecoqolseJ. lt ls
well occepteJtbot tbe cootts bove oopowet toqet lototbe metlts of tbe Jlspote. nowevet, tbls
boslc ptoposltloo wos pot to test ooJ soffeteJ o setbock lo tbe cose of ONCc vs. 5ow llpes
15
ltJ. ln Lhelr bld Lo proLecL legalese Lhe CourL carved ouL a new and addlLlonal rouLe Lo
quesLlon arblLraLlon awards. lnsLead of llmlLlng LheconcepL of publlc pollcy Lo LhaL enunclaLed
ln Lhe 8enusagar case lL was wldened Lo lnclude 'paLenL lllegallLy'. ln Lhls case, an award was
challenged on Lhe ground LhaL Lhe arblLral Lrlbunal had lncorrecLly applled Lhe law of Lhe land
ln re[ecLlng a clalm for llquldaLed damages. 1he courL had Lhus Lo declde wheLher lL had
[urlsdlcLlon under secLlon 34 Lo seL aslde an award on Lhe ground LhaL lL ls paLenLly lllegal, or
ln conLravenLlon of Lhe provlslons of Lhe AcL, or any oLher subsLanLlve law, governlng Lhe
parLles or ls agalnsL LheLerms of LheconLracL.
1he Supreme CourL came Lo Lhe concluslon LhaL Lhe lmpugned award was legally flawed ln so
far as lL allowed llquldaLed damages on an lncorrecL vles of law. ln Lhe process lL held, as a
maLLer of law LhaL an award can also be challenged on Lhe ground LhaL lL conLravenes Lhe
provlslons of Lhe AcL or oLher subsLanLlve law governlng Lhe parLles or ls agalnsL Lhe Lerms of
Lhe conLracL. lurLher, Lhe [udgemenL expanded Lhe concepL of publlc pollcy Lo add LhaL award
would beconLrary Lo Lhepubllc pollcylf lL paLenLlylllegal".
1he [udgemenL ln Lhe CnCC case was full of errors whlch exLended Lhe scope of [udlclary ln
seLLlng aslde Lhe arblLral award by lnLerpreLlng Lhe word ubllc ollcy" ln lLs broader sense.
1wo errors of greaL magnlLudeLhaL havebeen commlLLed ln Lhls caseare:
(1) Whlle revlewlng Lhe merlLs of Lhe CnCC case, Lhe courL falled Lo conslder Lhe labour sLrlke
ln enLlre Luropean conLlnenL, someLhlng whlch was nelLher under Lhe conLrol nor could be
predlcLed bySAW lpes. 1hls parLlcular aspecL has been compleLelyoverlooked byLhecourL.
14
Albett Ioo voo Jeo 8etq lo bls tteotlse 1be New otk Atblttotloo cooveotloo of 1958. 1owotJs o oolfotmIoJlclol
lotetptetotloo," p. 269, keJfeto ooJ nootet, low ooJ ltoctlce of lotetootloool commetclol Atblttotloo", 2oJ Jo., p.461
15
Alk 200J 5c 2629
19
(2) 1he declslon of Lhe Lwo [udges 8ench ln CnCC has bypassed Lhe rullng of Lhe Lhree [udges
8ench of Supreme CourL ln Lhe 8enusagar case. 1haL shows boLh [udlclal lndlsclpllne and
vlolaLlon of Lhe blndlng precedenL of a larger 8ench. Whlle Lhe 8ench ln 8enusagar case held
LhaL Lhe Lerm 'publlc pollcy of lndla' was Lo be lnLerpreLed ln a narrow sense, Lhe ulvlslon
8ench wenL ahead unmlndful of Lheprlor precedenL and expanded LhesameLo such an exLenL
LhaL arblLral awards could now be revlewed on Lhelr merlLs. 1hls ls a huge sLep backwards ln
laws relaLlng Lo alLernaLedlspuLeresoluLlon ln Lheeraof globallsaLlon.
Looklng aL [udgemenL of Lhe case lL seems LhaL lndlan CourL [usL don'L wanL Lo leL go. Supreme
CourL wlLhouL looklng lnLo Lhe merlLs of Lhe prevlous larger bench declslon lnLerpreLed Lhe
Lerm ubllc ollcy" ln lLs broader sense showlng [udlclal lndlsclpllne. 1he publlc pollcy
excepLlon Lo Lhe general rule LhaL arblLraLlons declslons should be regarded as flnal and
blndlng ls no doubL Lo be respecLed, buL a proper dlrecLlon has Lo be glven Lo Lhls excepLlon
lesL lL becomes Lheoottostwottby qolJe" ot ooootoly botse" LhaL desLroys Lhevery ob[ecL of
Lhe AcL. ubllc pollcy ls noL so frall LhaL lL geLs LhreaLened ln all cases where an arblLraLor
dlsregards somelaw or somefacLs or aprovlslon ln LheconLracL beLween LheparLles. vlolaLlon
of Lhe publlc pollcy musL by deflnlLlon have wlde ramlflcaLlons. lor one, an award does noL
consLlLuLeprecedenL LhaL lL carrles wlLh lL Lhedanger of belng clLed ln subsequenL arblLraLlons
or courL proceedlngs. lor Lhe second, each and Lhe every sllp on Lhe parL of Lhe arblLraLor can
noL be regarded as Lhe vlolaLlng publlc pollcy unless Lhe harm done Lo Lhe parLy ls so colossal
LhaL lL shakes Lheconsclenceof LhecourL.
Cne musL remember LhaL lL was Lhe parLles who chose Lhe arblLraLlon and Lhereby accepLed
Lhe lnherenL rlsk of a declslon LhaL may noL be quesLlonable on Lhe same grounds as a
[udgemenL of an lnferlor courL. ln order LhaL an award ls seL asldeon ground of publlc pollcy:
- 1he publlc pollcy clLed oughL Lo be expllclL, well deflned and domlnanL, rooLed ln law
and can noL be based upon general conslderaLlons or noLlons of assumed publlc
pollcy, and
16
- 1heaward should beln wlLh clear confllcL wlLh LheclLed publlc pollcy.
1be cootts tole ls llmlteJ lo Jetetmloloq wbetbet tbe owotJ coolJ be solJ to bove Jtowo lts
esseoce ftomtbe coottoct betweeo tbe pottles. lf so, lt most be eofotceJ ootwltbstooJloq tbot
tbe coott moy ltself bove teocbeJ o Jlffeteot cooclosloo ooJ fottbet ootwltbstooJloq tbot tbe
owotJ moy be boseJ opoo mlstokes of low ot foct. lf tbls ls oot occepteJ os tbe cottect
lotetptetotlooof tbe oew low tbeolt wlll be opeofot ocoott toset oslJe ooowotJvlotbe pobllc
pollcy toote oo qtoooJs socb os tbot tbe otblttotot bos mlscoooJocteJ blmself ot tbe
ptoceeJloqs ot tbot tbe owotJ ls otbetwlse lovollJ, tbe vety qtoooJs tbot exlsteJ lo tbe 1940
Act bot wete Jellbetotely omltteJftomtbe 1996Act.
1he [udgmenL of CnCC case can noL be sald Lo be dellvered by applylng Lhe [udlclal mlnd
oLherwlse [udge would noL have been overlooked Lhe [udgemenL glven ln Lhe 8enusagar case.
ln 8enusagar caseLhe[udges has sald:
16
Ctoce v. locol uoloo 759, lotetootloool uoloo of uolteJ kobbet wotkets, 461 u5 757 (198J) wk
20
calculaLed and deslgned Lo sub serve Lhe cause of faclllLaLlng lnLernaLlonal Lrade and
promoLlon Lhereof by provldlng for speedy seLLlemenL of dlspuLes arlslng ln such Lrade
Lhrough arblLraLlon, any expresslon or phrase occurrlng Lhereln should recelve, conslsLlng
wlLh lLs llLeral and grammaLlcal sense, a llberal consLrucLlon." 1he Supreme CourL, whlle
consLrulng Lhe Lerm 'publlc pollcy' ln SecLlon 7(1) (b) (ll) of lorelgn Awards (8ecognlLlon and
LnforcemenL) AcL, applled Lhe prlnclples of prlvaLe lnLernaLlonal law and held LhaL an award
would be conLrary Lo publlc pollcy lf such enforcemenL would be conLrary Lo (l) fundamenLal
pollcyof lndlan law, or (ll) LhelnLeresLs of lndla, or (lll) [usLlceor morallLy.
AfLer referrlng Lo Lhe varlous declslons of Lhe Lngllsh, and Amerlcan courLs and quoLlng classlc
14
LexLbooks on lnLernaLlonal commerclal arblLraLlon Lhe Supreme CourL wenL on Lo very
rlghLly glve narrow lnLerpreLaLlon Lo Lhe words publlc pollcy. 8enusagar Lhus was very
correcLly declded, when lL Look a narrow vlew of Lhe word 'publlc pollcy' Lhus leavlng llLLle
scope of [udlclal lnLerference ln arblLraLlon proceedlngs and Lhe flnal deLermlnaLlon of
awards.
1be llmlteJ qtoooJs of cbolleoqe ptovlJeJ ooJet 5ectloo J4 ote oolvetsolly tecoqolseJ. lt ls
well occepteJtbot tbe cootts bove oopowet toqet lototbe metlts of tbe Jlspote. nowevet, tbls
boslc ptoposltloo wos pot to test ooJ soffeteJ o setbock lo tbe cose of ONCc vs. 5ow llpes
15
ltJ. ln Lhelr bld Lo proLecL legalese Lhe CourL carved ouL a new and addlLlonal rouLe Lo
quesLlon arblLraLlon awards. lnsLead of llmlLlng LheconcepL of publlc pollcy Lo LhaL enunclaLed
ln Lhe 8enusagar case lL was wldened Lo lnclude 'paLenL lllegallLy'. ln Lhls case, an award was
challenged on Lhe ground LhaL Lhe arblLral Lrlbunal had lncorrecLly applled Lhe law of Lhe land
ln re[ecLlng a clalm for llquldaLed damages. 1he courL had Lhus Lo declde wheLher lL had
[urlsdlcLlon under secLlon 34 Lo seL aslde an award on Lhe ground LhaL lL ls paLenLly lllegal, or
ln conLravenLlon of Lhe provlslons of Lhe AcL, or any oLher subsLanLlve law, governlng Lhe
parLles or ls agalnsL LheLerms of LheconLracL.
1he Supreme CourL came Lo Lhe concluslon LhaL Lhe lmpugned award was legally flawed ln so
far as lL allowed llquldaLed damages on an lncorrecL vles of law. ln Lhe process lL held, as a
maLLer of law LhaL an award can also be challenged on Lhe ground LhaL lL conLravenes Lhe
provlslons of Lhe AcL or oLher subsLanLlve law governlng Lhe parLles or ls agalnsL Lhe Lerms of
Lhe conLracL. lurLher, Lhe [udgemenL expanded Lhe concepL of publlc pollcy Lo add LhaL award
would beconLrary Lo Lhepubllc pollcylf lL paLenLlylllegal".
1he [udgemenL ln Lhe CnCC case was full of errors whlch exLended Lhe scope of [udlclary ln
seLLlng aslde Lhe arblLral award by lnLerpreLlng Lhe word ubllc ollcy" ln lLs broader sense.
1wo errors of greaL magnlLudeLhaL havebeen commlLLed ln Lhls caseare:
(1) Whlle revlewlng Lhe merlLs of Lhe CnCC case, Lhe courL falled Lo conslder Lhe labour sLrlke
ln enLlre Luropean conLlnenL, someLhlng whlch was nelLher under Lhe conLrol nor could be
predlcLed bySAW lpes. 1hls parLlcular aspecL has been compleLelyoverlooked byLhecourL.
14
Albett Ioo voo Jeo 8etq lo bls tteotlse 1be New otk Atblttotloo cooveotloo of 1958. 1owotJs o oolfotmIoJlclol
lotetptetotloo," p. 269, keJfeto ooJ nootet, low ooJ ltoctlce of lotetootloool commetclol Atblttotloo", 2oJ Jo., p.461
15
Alk 200J 5c 2629
19
(2) 1he declslon of Lhe Lwo [udges 8ench ln CnCC has bypassed Lhe rullng of Lhe Lhree [udges
8ench of Supreme CourL ln Lhe 8enusagar case. 1haL shows boLh [udlclal lndlsclpllne and
vlolaLlon of Lhe blndlng precedenL of a larger 8ench. Whlle Lhe 8ench ln 8enusagar case held
LhaL Lhe Lerm 'publlc pollcy of lndla' was Lo be lnLerpreLed ln a narrow sense, Lhe ulvlslon
8ench wenL ahead unmlndful of Lheprlor precedenL and expanded LhesameLo such an exLenL
LhaL arblLral awards could now be revlewed on Lhelr merlLs. 1hls ls a huge sLep backwards ln
laws relaLlng Lo alLernaLedlspuLeresoluLlon ln Lheeraof globallsaLlon.
Looklng aL [udgemenL of Lhe case lL seems LhaL lndlan CourL [usL don'L wanL Lo leL go. Supreme
CourL wlLhouL looklng lnLo Lhe merlLs of Lhe prevlous larger bench declslon lnLerpreLed Lhe
Lerm ubllc ollcy" ln lLs broader sense showlng [udlclal lndlsclpllne. 1he publlc pollcy
excepLlon Lo Lhe general rule LhaL arblLraLlons declslons should be regarded as flnal and
blndlng ls no doubL Lo be respecLed, buL a proper dlrecLlon has Lo be glven Lo Lhls excepLlon
lesL lL becomes Lheoottostwottby qolJe" ot ooootoly botse" LhaL desLroys Lhevery ob[ecL of
Lhe AcL. ubllc pollcy ls noL so frall LhaL lL geLs LhreaLened ln all cases where an arblLraLor
dlsregards somelaw or somefacLs or aprovlslon ln LheconLracL beLween LheparLles. vlolaLlon
of Lhe publlc pollcy musL by deflnlLlon have wlde ramlflcaLlons. lor one, an award does noL
consLlLuLeprecedenL LhaL lL carrles wlLh lL Lhedanger of belng clLed ln subsequenL arblLraLlons
or courL proceedlngs. lor Lhe second, each and Lhe every sllp on Lhe parL of Lhe arblLraLor can
noL be regarded as Lhe vlolaLlng publlc pollcy unless Lhe harm done Lo Lhe parLy ls so colossal
LhaL lL shakes Lheconsclenceof LhecourL.
Cne musL remember LhaL lL was Lhe parLles who chose Lhe arblLraLlon and Lhereby accepLed
Lhe lnherenL rlsk of a declslon LhaL may noL be quesLlonable on Lhe same grounds as a
[udgemenL of an lnferlor courL. ln order LhaL an award ls seL asldeon ground of publlc pollcy:
- 1he publlc pollcy clLed oughL Lo be expllclL, well deflned and domlnanL, rooLed ln law
and can noL be based upon general conslderaLlons or noLlons of assumed publlc
pollcy, and
16
- 1heaward should beln wlLh clear confllcL wlLh LheclLed publlc pollcy.
1be cootts tole ls llmlteJ lo Jetetmloloq wbetbet tbe owotJ coolJ be solJ to bove Jtowo lts
esseoce ftomtbe coottoct betweeo tbe pottles. lf so, lt most be eofotceJ ootwltbstooJloq tbot
tbe coott moy ltself bove teocbeJ o Jlffeteot cooclosloo ooJ fottbet ootwltbstooJloq tbot tbe
owotJ moy be boseJ opoo mlstokes of low ot foct. lf tbls ls oot occepteJ os tbe cottect
lotetptetotlooof tbe oew low tbeolt wlll be opeofot ocoott toset oslJe ooowotJvlotbe pobllc
pollcy toote oo qtoooJs socb os tbot tbe otblttotot bos mlscoooJocteJ blmself ot tbe
ptoceeJloqs ot tbot tbe owotJ ls otbetwlse lovollJ, tbe vety qtoooJs tbot exlsteJ lo tbe 1940
Act bot wete Jellbetotely omltteJftomtbe 1996Act.
1he [udgmenL of CnCC case can noL be sald Lo be dellvered by applylng Lhe [udlclal mlnd
oLherwlse [udge would noL have been overlooked Lhe [udgemenL glven ln Lhe 8enusagar case.
ln 8enusagar caseLhe[udges has sald:
16
Ctoce v. locol uoloo 759, lotetootloool uoloo of uolteJ kobbet wotkets, 461 u5 757 (198J) wk
20
- 1hedefenceof publlc pollcyshould beconsLrued narrowly
- ConLravenLlon of law alone wlll noL aLLracL Lhe bar of publlc pollcy and someLhlng
moreLhan conLravenLlon of law ls requlred.
- 1herefore, enforcemenL of Lhe award would be refused lf such enforcemenL ls
conLrary Lo (l) fundamenLal pollcy of lndlan Law (ll) Lhe lnLeresL of lndla (lll) [usLlce or
morallLy
CnCC's declslon came up for some sharp crlLlclsm. ln an arLlcle enLlLled 'IoJlclol Ambosb of
17
Atblttotloo lo loJlo', lL was observed LhaL arblLraLlon ls noL for falnL hearLed ln lndla. CuoLlng
from !am aulson lL observed LhaL Lhe courLs of lndla have revealed an alarmlng propenslLy Lo
exerclse auLhorlLy ln a manner conLrary Lo Lhe leglLlmaLe expecLaLlon of Lhe lnLernaLlonal
communlLy. Accordlng Lo hlm Lhe[udgmenL can be relled upon Lo encouragefurLher llLlgaLlon
by Lhe aggrleved parLy Lo arblLraLlon, and ln dolng so dlmlnlsh Lhe beneflLs of arblLraLlon as a
mode of dlspuLe resoluLlon. Markanda ln Lhe preface Lo hls book has crlLlclzed Lhe CnCC
[udgmenL by saylng LhaL Lhe Supreme CourL has vasLly enlarged Lhe scope of challenge Lo
awards much more LhaL whaL was avallable under AcL of 1940. lL ls Lhus conLrary Lo Lhe very
18
splrlL of Lhe acL of 1996". CnCC has lmplnged upon arblLraLlon as an effecLlve meLhod of
dlspuLeresoluLlon and LhreaLened cerLaln keygoods of arblLraLlon namely Lhoseof speed and
19
efflclency" and lL ls no longer sure LhaL when an award ls rendered lL wlll be flnal. lL has been
very rlghLly concluded LhaL Lhe courL musL Lake Lhe law forward based on Lhe LrusL and
confldence ln Lhe arblLral sysLem" and Lhe lndlan [udlclary.." conLaln Lhe lnLervenLlonlsL role
20
lL has assumed for lLself.
1be lost wotJs oo tbe sobject wete well solJ by tbe emloeot oJvocote ooJ jotlst l.5.Notlmoo
tbe Jlvlsloo beocb of tbe two joJqe bos olteteJ tbe eotlte tooJ mop of otblttotloo low ooJ pot
21
tbe clockbocktowbete we stotteJooJet tbe olJ1940Act''.
1bos lo ONCc cose o ftesb qtoooJ of cbolleoqe wos cteoteJ by joJlclol looovotloo ooJ ploceJ lt
ooJet tbe beoJ of tbe pobllc pollcy. lottbet lt ls olso oqolost tbe plolo loteot of tbe 1996 Act l.e.
oomely tbe oeeJfot floollty loAuk wltboot cootts lotetfeteoce.
Conc|us|onandSuggest|on
!udlclal lnLervenLlon Lo Lhe exLenL glven by Lhe 1996 acL or as lnLerpreLed by Lhe [udges ls noL
[usL. 1he AcL ls barely Lwelve years old and whaL ls Lhe lndlan experlence ls obvlous by Lhe facL
LhaL Lhe courL's lnLerference ls noL mlnlmal buL Lhe courLs are hyper acLlve. under Lhe head of
Lhe ubllc ollcy provlded under Lhe secLlon 34 of Lhe AcL, any arblLral award can easlly be seL
aslde. CnCC case ls clear example of Lhe Supreme CourL lgnorlng Lhls prlnclple. 1hey conLlnue
Lo fall ln Lhe Lrap of looklng backwards LhaL [udlclal lnLerference ls deslrable and necessary
17
IoveJ Coyo, IoJlclol ombosb of otblttotloo lo loJlo l.O.k.1004, 120 (Oc1), 571-574
18
l.c.MotkooJo, low telotloq to Atblttotloo ooJ cooclllotloo, ptefoce to slxtb eJltloo, 2006
19
NoJlo uotwozeb, 5et AslJe ooJ ofotcemeot ltoceeJloqs. 1be 1996 loJloo Atblttotloo Act ooJet 1bteot",
lot.A.l.k. 2004,p 81-87
20
5omeet kocbwobo, 1be loJloo Atblttotloo low. towotJs o oew jotlsptoJeoce, lot. A.l.k. 2007, p1J-17
21
1toosctlpt of tbe speecb JellveteJ ot tbe loooqotol sessloo of leqol tefotmlo loftosttoctote" New uelbl, Moy 2, 200J
21
whlch has been LoLally glven a go by under Lhe new AcL and ln parLlcular ln lnLernaLlonal
commerclal arblLraLlon awards.
1he leglslaLlve efforL was Lo creaLe a reallsLlc dlspuLe resoluLlon, whlch wlll resolve Lhelr
dlspuLe ln a speedy fashlon so LhaL parLles wlll noL have Lo geL embrolled ln years of llLlgaLlon
for whlch our counLry has become noLorlous. ArblLraLlon and Lhe ConclllaLlon AcL, 1996 was
enacLed for Lhe aforesald purpose (Lo lessen Lhe lnLervenLlon of Lhe courL ln arblLral
proceedlng) buL lL ls noL successful so far.
Ooe bos to ooJetstooJ tbe potpose ooJ object of otblttotloo ooJ olso wby cootts most keep
tbelt booJs off otblttotloo. Atblttotloo belooq to tbe teolm of ptlvote low tbot ollows tbe
pottles to Jetetmloe by woy of o ptlvote botqolo bow tbelt cboseo ttlboool wlll tesolve tbelt
Jlspote ooJ wbot tbelt tespectlve obllqotloo wlll be lo telotloo to tbe cooJoct of tefeteoce. 1be
stote ls oot coocetoeJ wltb lt. 1be stote ls ooly expecteJ to leoJ lts soppott to tbe ptocess of
otblttotloo ooJ ose lts coetclve powet to soppott tbe systemwbetevet socb soppott ls oeeJeJ.
1bot bos to be tbe tole of tbe cootts wblcb ls expecteJ to ploy. 8uL afLer golng Lhrough Lhe
varlous pronouncemenLs of Lhe Supreme CourL lL seems LhaL lL wanLs Lo Lake Lhe realm of Lhe
arblLraLlon ln lLs own hand.
ArblLraLlon ls compleLely allen Lo Lhe law and courLs LhaL's why ln Lhe arblLraLlon word exlsL,
aparL form oLhers, concepL such as amlable composlLeur and ex aequo eL bono. 1hese
concepLs permlL and lndeed auLhorlze an arblLraLor Lo declde dlspuLes beLween parLles on
some basls oLher Lhan Lhe law. ln facL Lhe splrlL musL be allowed and encouraged Lo pervade ln
arblLral awards so long as [usLlce ls done noLwlLhsLandlng some devlaLlons from esLabllshed
prlnclples of law or vlolaLlons of sLaLuLe. unwarranLed [udlclal lnLervenLlon led Lo a slLuaLlon
where Lhe remedy, ln many cases, had become far worse Lhan Lhe dlsease. A parLy, afLer golng
Lhrough Lhe enLlre arblLral process, and havlng secured an award ln hls favour, could flnd
hlmself back ln Lhe courL form whlch Lhe arblLral process was lnLended Lo save Lhem. A
challenge, lf enLerLalned, could ulLlmaLely reach Lhe Supreme CourL and Lhe LoLal delay would
begreaLer Lhan lf LheparLles had, ln LheflrsL place, chosen noL arblLraLlon buL acourL of law.
AfLer undersLandlng Lhe Lrue purpose of Lhe ArblLraLlon AcL and ln llghL of Lhe varlous [udlclal
pronouncemenL of Lhe Supreme CourL on concerned maLLer researcher would llke Lo say LhaL
lnLervenLlon of Lhe courLs ln arblLral maLLers ls noL [usLlfled and lLs lnLervenLlon musL
compleLely be abollshed by Laklng Lhe necessary amendmenLs so LhaL real peal purpose of Lhe
arblLraLlon remaln lnLacL.
22
- 1hedefenceof publlc pollcyshould beconsLrued narrowly
- ConLravenLlon of law alone wlll noL aLLracL Lhe bar of publlc pollcy and someLhlng
moreLhan conLravenLlon of law ls requlred.
- 1herefore, enforcemenL of Lhe award would be refused lf such enforcemenL ls
conLrary Lo (l) fundamenLal pollcy of lndlan Law (ll) Lhe lnLeresL of lndla (lll) [usLlce or
morallLy
CnCC's declslon came up for some sharp crlLlclsm. ln an arLlcle enLlLled 'IoJlclol Ambosb of
17
Atblttotloo lo loJlo', lL was observed LhaL arblLraLlon ls noL for falnL hearLed ln lndla. CuoLlng
from !am aulson lL observed LhaL Lhe courLs of lndla have revealed an alarmlng propenslLy Lo
exerclse auLhorlLy ln a manner conLrary Lo Lhe leglLlmaLe expecLaLlon of Lhe lnLernaLlonal
communlLy. Accordlng Lo hlm Lhe[udgmenL can be relled upon Lo encouragefurLher llLlgaLlon
by Lhe aggrleved parLy Lo arblLraLlon, and ln dolng so dlmlnlsh Lhe beneflLs of arblLraLlon as a
mode of dlspuLe resoluLlon. Markanda ln Lhe preface Lo hls book has crlLlclzed Lhe CnCC
[udgmenL by saylng LhaL Lhe Supreme CourL has vasLly enlarged Lhe scope of challenge Lo
awards much more LhaL whaL was avallable under AcL of 1940. lL ls Lhus conLrary Lo Lhe very
18
splrlL of Lhe acL of 1996". CnCC has lmplnged upon arblLraLlon as an effecLlve meLhod of
dlspuLeresoluLlon and LhreaLened cerLaln keygoods of arblLraLlon namely Lhoseof speed and
19
efflclency" and lL ls no longer sure LhaL when an award ls rendered lL wlll be flnal. lL has been
very rlghLly concluded LhaL Lhe courL musL Lake Lhe law forward based on Lhe LrusL and
confldence ln Lhe arblLral sysLem" and Lhe lndlan [udlclary.." conLaln Lhe lnLervenLlonlsL role
20
lL has assumed for lLself.
1be lost wotJs oo tbe sobject wete well solJ by tbe emloeot oJvocote ooJ jotlst l.5.Notlmoo
tbe Jlvlsloo beocb of tbe two joJqe bos olteteJ tbe eotlte tooJ mop of otblttotloo low ooJ pot
21
tbe clockbocktowbete we stotteJooJet tbe olJ1940Act''.
1bos lo ONCc cose o ftesb qtoooJ of cbolleoqe wos cteoteJ by joJlclol looovotloo ooJ ploceJ lt
ooJet tbe beoJ of tbe pobllc pollcy. lottbet lt ls olso oqolost tbe plolo loteot of tbe 1996 Act l.e.
oomely tbe oeeJfot floollty loAuk wltboot cootts lotetfeteoce.
Conc|us|onandSuggest|on
!udlclal lnLervenLlon Lo Lhe exLenL glven by Lhe 1996 acL or as lnLerpreLed by Lhe [udges ls noL
[usL. 1he AcL ls barely Lwelve years old and whaL ls Lhe lndlan experlence ls obvlous by Lhe facL
LhaL Lhe courL's lnLerference ls noL mlnlmal buL Lhe courLs are hyper acLlve. under Lhe head of
Lhe ubllc ollcy provlded under Lhe secLlon 34 of Lhe AcL, any arblLral award can easlly be seL
aslde. CnCC case ls clear example of Lhe Supreme CourL lgnorlng Lhls prlnclple. 1hey conLlnue
Lo fall ln Lhe Lrap of looklng backwards LhaL [udlclal lnLerference ls deslrable and necessary
17
IoveJ Coyo, IoJlclol ombosb of otblttotloo lo loJlo l.O.k.1004, 120 (Oc1), 571-574
18
l.c.MotkooJo, low telotloq to Atblttotloo ooJ cooclllotloo, ptefoce to slxtb eJltloo, 2006
19
NoJlo uotwozeb, 5et AslJe ooJ ofotcemeot ltoceeJloqs. 1be 1996 loJloo Atblttotloo Act ooJet 1bteot",
lot.A.l.k. 2004,p 81-87
20
5omeet kocbwobo, 1be loJloo Atblttotloo low. towotJs o oew jotlsptoJeoce, lot. A.l.k. 2007, p1J-17
21
1toosctlpt of tbe speecb JellveteJ ot tbe loooqotol sessloo of leqol tefotmlo loftosttoctote" New uelbl, Moy 2, 200J
21
whlch has been LoLally glven a go by under Lhe new AcL and ln parLlcular ln lnLernaLlonal
commerclal arblLraLlon awards.
1he leglslaLlve efforL was Lo creaLe a reallsLlc dlspuLe resoluLlon, whlch wlll resolve Lhelr
dlspuLe ln a speedy fashlon so LhaL parLles wlll noL have Lo geL embrolled ln years of llLlgaLlon
for whlch our counLry has become noLorlous. ArblLraLlon and Lhe ConclllaLlon AcL, 1996 was
enacLed for Lhe aforesald purpose (Lo lessen Lhe lnLervenLlon of Lhe courL ln arblLral
proceedlng) buL lL ls noL successful so far.
Ooe bos to ooJetstooJ tbe potpose ooJ object of otblttotloo ooJ olso wby cootts most keep
tbelt booJs off otblttotloo. Atblttotloo belooq to tbe teolm of ptlvote low tbot ollows tbe
pottles to Jetetmloe by woy of o ptlvote botqolo bow tbelt cboseo ttlboool wlll tesolve tbelt
Jlspote ooJ wbot tbelt tespectlve obllqotloo wlll be lo telotloo to tbe cooJoct of tefeteoce. 1be
stote ls oot coocetoeJ wltb lt. 1be stote ls ooly expecteJ to leoJ lts soppott to tbe ptocess of
otblttotloo ooJ ose lts coetclve powet to soppott tbe systemwbetevet socb soppott ls oeeJeJ.
1bot bos to be tbe tole of tbe cootts wblcb ls expecteJ to ploy. 8uL afLer golng Lhrough Lhe
varlous pronouncemenLs of Lhe Supreme CourL lL seems LhaL lL wanLs Lo Lake Lhe realm of Lhe
arblLraLlon ln lLs own hand.
ArblLraLlon ls compleLely allen Lo Lhe law and courLs LhaL's why ln Lhe arblLraLlon word exlsL,
aparL form oLhers, concepL such as amlable composlLeur and ex aequo eL bono. 1hese
concepLs permlL and lndeed auLhorlze an arblLraLor Lo declde dlspuLes beLween parLles on
some basls oLher Lhan Lhe law. ln facL Lhe splrlL musL be allowed and encouraged Lo pervade ln
arblLral awards so long as [usLlce ls done noLwlLhsLandlng some devlaLlons from esLabllshed
prlnclples of law or vlolaLlons of sLaLuLe. unwarranLed [udlclal lnLervenLlon led Lo a slLuaLlon
where Lhe remedy, ln many cases, had become far worse Lhan Lhe dlsease. A parLy, afLer golng
Lhrough Lhe enLlre arblLral process, and havlng secured an award ln hls favour, could flnd
hlmself back ln Lhe courL form whlch Lhe arblLral process was lnLended Lo save Lhem. A
challenge, lf enLerLalned, could ulLlmaLely reach Lhe Supreme CourL and Lhe LoLal delay would
begreaLer Lhan lf LheparLles had, ln LheflrsL place, chosen noL arblLraLlon buL acourL of law.
AfLer undersLandlng Lhe Lrue purpose of Lhe ArblLraLlon AcL and ln llghL of Lhe varlous [udlclal
pronouncemenL of Lhe Supreme CourL on concerned maLLer researcher would llke Lo say LhaL
lnLervenLlon of Lhe courLs ln arblLral maLLers ls noL [usLlfled and lLs lnLervenLlon musL
compleLely be abollshed by Laklng Lhe necessary amendmenLs so LhaL real peal purpose of Lhe
arblLraLlon remaln lnLacL.
22
N..C.C. ttd vcrsus ].G. fnginccring Pvt. ttd. AlR2010 SC640
1ho caso lav doals vlth Mandato ol Arbltrator altor stlpulatod tlmo.
ric facts: 1ho appollant had lssuod notlco lnvltlng tondor lor constructlon ol tormlnal bulldlngs and varlous
anclllary |obs at tho hubanoshvar Alrport at hubanoshvar, Crlssa. 1ho rospondont submlttod lts ollor, vhlch vas
accoptod by tho appollant.
1ho appollant ontorod lnto a contract vlth tho rospondont lor constructlon ol tho alorosald vork at tho
hubanoshvar Alrport. Hovovor, tho appollant tormlnatod tho contract ln botvoon ol tho rospondont alloglng that
tho rospondont had lallod to lulllll lts part ol tho obllgatlons roqulrod undor tho contract. 1ho rospondont lnvokod tho
arbltratlon clauso and tho Chalrman-cum-Managlng Dlroctor ol tho appollant appolntod a solo arbltrator to
ad|udlcato upon tho clalms and countor clalms ol tho partlos. Durlng thls porlod, tho appollant had vlrtually closod lts
roglonal olllco ln Calcutta as most ol tho vork dono ln lts olllco vas complotod, vhlch causod ln sovoral translors ol
tho arbltrators appolntod by tho appolntlng authorlty. Moanvhllo, tho appolntlng authorlty appolntod throo
arbltrators duo to tho abovo-montlonod roason and tho arbltratlon procoss had como to a stand stlll duo to tho
lnactlon ol tho rospondont and lts lalluro to partlclpato.
1hon rospondont lllod an appllcatlon boloro tho Calcutta Hlgh Court sooklng romoval ol tho thon lncumbont
arbltrator and tho arbltral procoodlngs voro stayod by tho Court. 1ho Hlgh Court dlroctod tho Chalrman-cum-
Managlng Dlroctor ol tho appollant company to appolnt a nov arbltrator ln torms ol tho arbltratlon clauso vlthln a
porlod ol lour vooks lrom tho dato ol communlcatlon ol lts ordor and tho so appolntod arbltrator shall comploto tho
procoodlngs vlthln slx months. lursuant to tho ordor ol tho Hlgh Court, tho Chalrman-cum-Managlng Dlroctor ol
tho appollant company appolntod a solo arbltrator. 1ho sald arbltrator llnally concludod tho procoodlngs altor tho
stlpulatod and ovon tho oxtondod tlmo to concludo agrood by tho partlos.
lt ls an admlttod posltlon that tho tlmo llmlt so llxod l.o. arbltratlon must bo concludod and avard must bo passod
vlthln slx months, could not bo adhorod to by tho arbltrator and ho lallod to publlsh tho avard vlthln thls porlod.
About throo months altor tho oxplry ol tho porlod ol concludlng tho procoodlng and passlng ol tho avard, tho
rospondont movod an appllcatlon boloro tho Hlgh Court lor a doclaratlon that tho mandato ol tho arbltrator had
alroady stood tormlnatod.
1ho Hlgh Court, by lts lmpugnod ordor, tormlnatod tho mandato ol tho arbltrator on tho ground ol dolay ln maklng
tho avard. 1ho appollant thon challongod tho abovo montlonod ordor ol tho Calcutta Hlgh Court boloro honorablo
Supromo Court.
1ho quostlon vhlchcamo up vas rogardlng tho valldlty ol tho mandato ol tho Arbltrator altor tho stlpulatod tlmo.
HcId: Arbitrator bound to makc and pubIish award, within thc timc mutuaIIy agrccd to by thc partics, unIcss
thc partics conscntcd to urthcr cnIargcmcnt o timc. Authority o Arbitrator ccascs i conscnt not givcn by
partics. Thc Courts arc not cmpowcrcd to incrcasc timc undcr thc Act. ln thc instant mattcr, mandatc o thc
Arbitrator cxtcndcd twicc by an agrccmcnt bctwccn thc partics but thc Arbitrator aiIcd to pass thc award in
thc stipuIatcd pcriod and passcd it bcyond thc pcriod as conscntcd by thc partics. Thcrcorc, thc mandatc was
automaticaIIy tcrminatcd as pcr Sub-scction 1(a) o Scction 14 o thc Act, thc mandatc o Arbitrator shaII
tcrminatc i hc aiIs to act without unduc dcIay.
CASf tAW
23
Thc Sccond icnniaI GIobaI Concrcncc o thc Socicty o lntcrnationaI fconomic taw
Dato. 8th }uly to 10th }uly 2010
llaco. Unlvorslty ol arcolona
1hls conloronco provldos a vonuo lor oxplorlng many dllloront lacos ol lntornatlonal oconomlc lav. Clvon that
tho alm ol tho Socloty lncludos lostorlng rosoarch ln tho aroa ol lLL and promotlng cooporatlon among all parts
vlthln tho llold, tho SlLL Clobal Conloronco ollors a lorum lor thoso lnsldo and outsldo acadomla to sharo
podagoglcal and rosoarch mothods, as voll as to oxploro groator cooporatlon among tho many dllloront
constltuonclos ol tho llold.
lor lurthor dotalls soo http://www.sicI2010.com/
tClAfuropcanUscrs' CounciI Symposium
Dato. 10 - 12 Sop 2010
llaco. 1ho Crovo, Hortlordshlro, Unltod llngdom
ln tho long ostabllshod LClA tradltlon , tho symposla vlll bo basod around tho curront lssuos ol koy lntorost ln
tho llold ol arbltratlon and ADk, proposod ln advancod by dologatos and hotly dobatod lrom tho lloor, undor
tho oxport guldanco ol voll-knovn co-chalr.
lor lurthor lnlo soo. http://www.Icia.org/documcnts/TyIncy-GrovcProgrammc2010.pd
2010 Taipci lntcrnationaI Arbitrationand McdiationConcrcncc
Dato. 17 - 18 Soptombor 2010
llaco. 1alpol, 1alvan
1ho lntornatlonal conloronco ls golng to bo organlzod by Aslan Contor lor W1Cand lntornatlonal Hoalth Lav
and lollcy ol Natlonal 1alvan Unlvorslty and Chlnoso Arbltratlon Assoclatlon, 1alpol ln 1alpol vhoro ln varlous
toplcs rolatod to arbltratlon and modlatlon vlll bo takon up lor dlscusslon lncludlng thoro lssuos and solutlons
lor tho probloms.
1ho conloronco vlll bo chalrod by many ostoomod spoakors lrom varlous countrlos.
lor lurthor lnlo soo. http://www.arbitration.org.tw/cngIish/indcx.htmI
forthcoming Concrcnccs
N..C.C. ttd vcrsus ].G. fnginccring Pvt. ttd. AlR2010 SC640
1ho caso lav doals vlth Mandato ol Arbltrator altor stlpulatod tlmo.
ric facts: 1ho appollant had lssuod notlco lnvltlng tondor lor constructlon ol tormlnal bulldlngs and varlous
anclllary |obs at tho hubanoshvar Alrport at hubanoshvar, Crlssa. 1ho rospondont submlttod lts ollor, vhlch vas
accoptod by tho appollant.
1ho appollant ontorod lnto a contract vlth tho rospondont lor constructlon ol tho alorosald vork at tho
hubanoshvar Alrport. Hovovor, tho appollant tormlnatod tho contract ln botvoon ol tho rospondont alloglng that
tho rospondont had lallod to lulllll lts part ol tho obllgatlons roqulrod undor tho contract. 1ho rospondont lnvokod tho
arbltratlon clauso and tho Chalrman-cum-Managlng Dlroctor ol tho appollant appolntod a solo arbltrator to
ad|udlcato upon tho clalms and countor clalms ol tho partlos. Durlng thls porlod, tho appollant had vlrtually closod lts
roglonal olllco ln Calcutta as most ol tho vork dono ln lts olllco vas complotod, vhlch causod ln sovoral translors ol
tho arbltrators appolntod by tho appolntlng authorlty. Moanvhllo, tho appolntlng authorlty appolntod throo
arbltrators duo to tho abovo-montlonod roason and tho arbltratlon procoss had como to a stand stlll duo to tho
lnactlon ol tho rospondont and lts lalluro to partlclpato.
1hon rospondont lllod an appllcatlon boloro tho Calcutta Hlgh Court sooklng romoval ol tho thon lncumbont
arbltrator and tho arbltral procoodlngs voro stayod by tho Court. 1ho Hlgh Court dlroctod tho Chalrman-cum-
Managlng Dlroctor ol tho appollant company to appolnt a nov arbltrator ln torms ol tho arbltratlon clauso vlthln a
porlod ol lour vooks lrom tho dato ol communlcatlon ol lts ordor and tho so appolntod arbltrator shall comploto tho
procoodlngs vlthln slx months. lursuant to tho ordor ol tho Hlgh Court, tho Chalrman-cum-Managlng Dlroctor ol
tho appollant company appolntod a solo arbltrator. 1ho sald arbltrator llnally concludod tho procoodlngs altor tho
stlpulatod and ovon tho oxtondod tlmo to concludo agrood by tho partlos.
lt ls an admlttod posltlon that tho tlmo llmlt so llxod l.o. arbltratlon must bo concludod and avard must bo passod
vlthln slx months, could not bo adhorod to by tho arbltrator and ho lallod to publlsh tho avard vlthln thls porlod.
About throo months altor tho oxplry ol tho porlod ol concludlng tho procoodlng and passlng ol tho avard, tho
rospondont movod an appllcatlon boloro tho Hlgh Court lor a doclaratlon that tho mandato ol tho arbltrator had
alroady stood tormlnatod.
1ho Hlgh Court, by lts lmpugnod ordor, tormlnatod tho mandato ol tho arbltrator on tho ground ol dolay ln maklng
tho avard. 1ho appollant thon challongod tho abovo montlonod ordor ol tho Calcutta Hlgh Court boloro honorablo
Supromo Court.
1ho quostlon vhlchcamo up vas rogardlng tho valldlty ol tho mandato ol tho Arbltrator altor tho stlpulatod tlmo.
HcId: Arbitrator bound to makc and pubIish award, within thc timc mutuaIIy agrccd to by thc partics, unIcss
thc partics conscntcd to urthcr cnIargcmcnt o timc. Authority o Arbitrator ccascs i conscnt not givcn by
partics. Thc Courts arc not cmpowcrcd to incrcasc timc undcr thc Act. ln thc instant mattcr, mandatc o thc
Arbitrator cxtcndcd twicc by an agrccmcnt bctwccn thc partics but thc Arbitrator aiIcd to pass thc award in
thc stipuIatcd pcriod and passcd it bcyond thc pcriod as conscntcd by thc partics. Thcrcorc, thc mandatc was
automaticaIIy tcrminatcd as pcr Sub-scction 1(a) o Scction 14 o thc Act, thc mandatc o Arbitrator shaII
tcrminatc i hc aiIs to act without unduc dcIay.
CASf tAW
23
Thc Sccond icnniaI GIobaI Concrcncc o thc Socicty o lntcrnationaI fconomic taw
Dato. 8th }uly to 10th }uly 2010
llaco. Unlvorslty ol arcolona
1hls conloronco provldos a vonuo lor oxplorlng many dllloront lacos ol lntornatlonal oconomlc lav. Clvon that
tho alm ol tho Socloty lncludos lostorlng rosoarch ln tho aroa ol lLL and promotlng cooporatlon among all parts
vlthln tho llold, tho SlLL Clobal Conloronco ollors a lorum lor thoso lnsldo and outsldo acadomla to sharo
podagoglcal and rosoarch mothods, as voll as to oxploro groator cooporatlon among tho many dllloront
constltuonclos ol tho llold.
lor lurthor dotalls soo http://www.sicI2010.com/
tClAfuropcanUscrs' CounciI Symposium
Dato. 10 - 12 Sop 2010
llaco. 1ho Crovo, Hortlordshlro, Unltod llngdom
ln tho long ostabllshod LClA tradltlon , tho symposla vlll bo basod around tho curront lssuos ol koy lntorost ln
tho llold ol arbltratlon and ADk, proposod ln advancod by dologatos and hotly dobatod lrom tho lloor, undor
tho oxport guldanco ol voll-knovn co-chalr.
lor lurthor lnlo soo. http://www.Icia.org/documcnts/TyIncy-GrovcProgrammc2010.pd
2010 Taipci lntcrnationaI Arbitrationand McdiationConcrcncc
Dato. 17 - 18 Soptombor 2010
llaco. 1alpol, 1alvan
1ho lntornatlonal conloronco ls golng to bo organlzod by Aslan Contor lor W1Cand lntornatlonal Hoalth Lav
and lollcy ol Natlonal 1alvan Unlvorslty and Chlnoso Arbltratlon Assoclatlon, 1alpol ln 1alpol vhoro ln varlous
toplcs rolatod to arbltratlon and modlatlon vlll bo takon up lor dlscusslon lncludlng thoro lssuos and solutlons
lor tho probloms.
1ho conloronco vlll bo chalrod by many ostoomod spoakors lrom varlous countrlos.
lor lurthor lnlo soo. http://www.arbitration.org.tw/cngIish/indcx.htmI
forthcoming Concrcnccs
Indian CounciI of Arbitration
Federation House, Tansen Marg, New Delhi - 110 001
Ph. : 91-11-23738760-70, 23719103, 23319849, 23319760, Fax : 23320714, 23721504
E-mail : ica@ficci.com / ica@airtelmail.in
Website : www.icaindia.co.in
IhIAh 0h0IL F A8ITATIh