In this article, Rishabh Saxena of NUALS does an analysis of Arbitration procedures and practices in India.
Arbitration proceedings are not in complex in nature unlike in regular courts, it’s pretty simple and easy. A party commences an arbitration proceeding by issuing a notice in written to the other party of its intention to refer the matter to arbitration. The respondent replies to the arbitration by filing answer against the arbitration claim within stipulated time period specifying relevant facts and available defences against the claim. Unless otherwise agreed by the parties, Arbitration proceedings are deemed to be commenced on the date on which the respondent receives such notice from the claimant. After the selection of Arbitrators, parties meet in persons for the conduct of the hearing in front of arbitrators. Lastly, after the examination of witnesses and evidences. The arbitrator, in concluding stage, gives ‘award’ which is binding in nature. Conduct of Arbitral proceedings are provided in Chapter V of Arbitration and Conciliation Act, 1996.
Limitation on commencement of arbitral proceedings
The Limitation Act, 1963 applies to all proceedings under Arbitration and Conciliation Act, 1996 as it applies to proceedings in Indian courts, except to the extent clearly keep out by the Arbitration and Conciliation Act. Any proceeding under arbitration commenced after the limitation period (three years from the date on which the cause of action arose) will be time-barred.
Equal treatment of Parties
Both the parties should be treated equally and equal opportunities should be given to them to be heard and to present their case.
Rules of procedure in arbitration
There are no such rules on the procedure for conducting the arbitration proceedings. The parties are free to agree on the procedure to be followed by the arbitral tribunals in conducting its proceedings. If no such procedure agreed by the parties, the tribunal is authorised to conduct the proceedings in such a manner it considers appropriate.
The arbitral tribunal is expressly not bound to apply any provisions of the Civil Procedure Code 1908 and the Evidence Act, 1872. If under arbitration agreement it is mentioned, the arbitration is to be administered by arbitral institute, the rules of that institution become part of the arbitration clause by implication. The rules of arbitral tribunal includes power to determine the admissibility, relevance, materiality and weight of any evidence.
Place of arbitration
The parties are free to agree on the place of arbitration as per their convenience. In case failed to agree upon place of arbitration, the arbitral tribunal shall determine the place of arbitration considering the circumstances of case including convenience of the parties.
Language of proceedings
Parties are free to agree upon the language to be used in the arbitral proceedings. If the parties fail to agree on any language then arbitral tribunal decides which language to be used in the arbitral proceedings.
Statement of claim and defence
The claimant have to state the facts supporting their claim, raise the points at issues and relief or remedy sought to the respondent within the time period stipulated by the parties or determined by the arbitral tribunal and the respondent replies filing an answer against the arbitration claim of claimant that specifies the relevant facts and available defenses to the statement of claim.
A party can amend or supplement his claim and defence throughout arbitral proceedings, unless the tribunal considers it unsuitable to allow the amendment or supplement in respect of the delay in making it.
The parties shall be given sufficient prior notice before any hearing and of any meeting of arbitral tribunal for the inspection and verification of documents, goods and property. The arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials:
Arbitration and Conciliation (Amendment) Act,2015 requires the arbitral tribunal at least, hold oral hearings for the presentation of evidences or for oral arguments on a day-to-day basis, and not grant adjournments unless reasonable cause is given.
All documents, statements and required information supplied, and application made to the arbitral tribunal by the one party shall be communicated to the other party and any evidentiary document or expert report on which an arbitral tribunal can rely in making it decision shall also be communicated to the parties.
Default of a party
If claimant without providing sufficient cause fails to communicate his statement of claim to the tribunal, the arbitral tribunal can terminate the proceedings with immediate effects. But it is not the same in case of respondent if he fails to communicate his statement of defence, the arbitral can continue the proceedings without treating that failure in itself as an admission of alienations by the claimant.
The parties are free to agree on the rules of gathering and submitting evidences. If they are not getting agree on these matters, the tribunal has the discretionary power to determine how evidence may be gathered and submitted to it. The arbitral tribunal can take both documentary and oral evidence on record. While considering evidence tribunal required to observe the fundamental principle of natural justice.
Local courts can assist tribunals in arbitration proceedings. This includes the power of providing interim order and appointment of arbitrator if the parties are unable to agree on the appointment of arbitrator.
If a party makes any default, refuses to give evidence or guilty of contempt of arbitral proceedings shall be subject to penalties or punishment by the order of the court on the representation of arbitral tribunal.
In India, the question is yet to be answered whether the non signatory party bound by arbitration agreement or not. Arbitral tribunals and courts take different methods to bound non signatory parties to an arbitration agreement like “group of companies” doctrine where a clear intent to bind such non signatory parties. However, in Indowind Energy Ltd V. Wescare (India) Ltd (2010) the Supreme court of India held a “third party not a signatory to an arbitration agreement would not be bound by such agreement, even if some sort of nexus exists between third party and transactions of questions.”