BORN IN INDIA I SERVED FROM INDIA I TO THE GLOBE
Dated: 08.02.2024
Arbitration- An Overview in the Indian Law
ArbitrationΒ is an out-of-court proceeding in which a neutral third party called an arbitrator hears evidence and then makes a binding decision. Arbitration is the most commonly used method of alternative dispute resolution (ADR), and you’ll find an arbitration clause in the fine print of all kinds ofΒ contractsΒ these days. Read on to find out whether you should include an arbitration clause in your agreement.
The Indian Context of the Arbitration Law, as envisaged in the Arbitration & Conciliation Act, 1996, is briefly pointed out below:
Β
Arbitration:
Section 2(a)– βArbitrationβ means any arbitration whether or not administered by permanent arbitral institution.
Section 7: Arbitration agreement- βArbitration agreementβ means an agreement by the parties to submit to arbitration all or certain disputes which have arisen, or which may arise between them in respect of a defined legal relationship, whether contractual or not.
Section 9(1): Interim measures- A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36.
Section 9(2)- Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection under sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine.
Section 9(3)- Once the arbitral tribunal has been constituted, the Court shall not entertain an application under sub-section (1), unless the Court finds that circumstances exist which may not render the remedy provided under section 17 efficacious.
Section 11 (1)-Appointment of arbitrators: A person of any nationality may be an arbitrator, unless otherwise agreed by the parties.
Section 11 (2)– Subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
Section 11(3)- Failing any agreement referred to in sub-section (2), in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator.
Section 11(4)- If the appointment procedure in sub-section (3) applies andβ (a) a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party; or
Section 11(4)(b)– the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be Β made, upon request of a party, by 1[the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court];
As per the amendment in βTHE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2021β based on the 246th Law Commission report the changes have been made to allow the Honβble Supreme Court & Honβble High Courts to designate other judicial authorities to take up Arbitration proceedings at courts within whose jurisdiction the seat of arbitration falls.
NEW REGISTRATION RATE OF FEE FOR DOMESTIC COMMERCIAL ARBITRATION AT ICA:
Non-Refundable Registration Fee of Rs.15,000/- plus applicable taxes for claims up to Rs. 2 Crore
Non-Refundable Registration Fee of Rs.30,000/- plus applicable taxes for claims above Rs. 2 Crore
NEW REGISTRATION FEE FOR INTERNATIONAL COMMERCIAL ARBITRATION AT ICA:
Non-Refundable Registration Fee of U S Dollars 1,650 plus applicable taxes (No Change)
NEW REGISTRATION FEE FOR MARITIME ARBITRATION AT ICA:
Non-Refundable Registration Fee of Rs.15,000/- plus applicable taxes for claims up to Rs.1 Crore
Non-Refundable Registration Fee of Rs.30,000/- plus applicable taxes for claims above Rs.1 Crore
Fee Details & Source: Indian Arbitration Council
Arbitrators Fee:
Section 11(14)- For the purpose of determination of the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal, the High Court may frame such rules as may be necessary, after taking into consideration the rates specified in the Fourth Schedule.
ExplanationβFor the removal of doubts, it is hereby clarified that this sub-section shall not apply to international commercial arbitration and in arbitrations (other than international commercial arbitration) in case where parties have agreed for determination of fees as per the rules of an arbitral institution.]
Section 29A: Time limit for arbitral awardβ (1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23.
Section-78: Costsβ (1) Upon termination of the conciliation proceedings, the conciliator shall fix the costs of the conciliation and give written notice thereof to the parties.
THE FOURTH SCHEDULE
| See section 11(14) Sum in dispute | Model fee |
| Up to Rs. 5,00,000 | Rs. 45,000 |
| Above Rs. 5,00,000 and up to Rs. 20,00,000 | Rs. 45,000 plus 3.5 per cent. of the claim amount
over and above Rs. 5,00,000 |
| Above Rs. 20,00,000 and up to Rs. 1,00,00,000 | Rs. 97,500 plus 3 per cent. of the claim amount
over and above Rs. 20,00,000 |
| Above Rs. 1,00,00,000 and up to
Rs. 10,00,00,000 |
Rs. 3,37,500 plus 1 per cent. of the claim amount
over and above Rs. 1,00,00,000 |
| Above Rs. 10,00,00,000 and up to
Rs. 20,00,00,000 |
Rs. 12,37,500 plus 0.75 per cent. of the claim
amount over and above Rs. 1,00,00,000 |
| Above Rs. 20,00,00,000 | Rs. 19,87,500 plus 0.5 per cent. of the claim amount over and above Rs. 20,00,00,000 with a ceiling of Rs. 30,00,000 |
Section-20: Place of arbitrationβ (1) The parties are free to agree on the place of arbitration.
(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.
(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at anyplace it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.
Section-34: Application for setting aside arbitral award β (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
Section-35: Finality of arbitral awards βSubject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.
Section-36: Enforcement β (1) Where the time for making an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the court.
Section-38: Deposits β (1) The arbitral tribunal may fix the amount of the deposit or supplementary deposit, as the case may be, as an advance for the costs referred to in sub-section (8) of section 31, which it expects will be incurred in respect of the claim submitted to it: Provided that where, apart from the claim, a counter-claim has been submitted to the arbitral tribunal, it may fix separate amount of deposit for the claim and counter-claim.
Section-37: Appealable orders β (1) [Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the Court authorized by law to hear appeals from original decrees of the Court passing the order, namely:
(a) refusing to refer the parties to arbitration under section 8;
(b) granting or refusing to grant any measure under section 9;
(c) setting aside or refusing to set aside an arbitral award under section 34.]
(2) Appeal shall also lie to a court from an order of the arbitral tribunalβ
(a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or
(b) granting or refusing to grant an interim measure under section 17.
(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.
Section-41: Provisions in case of insolvency β (1) Where it is provided by a term in a contract to which an insolvent is a party that any dispute arising there out or in connection therewith shall be submitted to arbitration, the said term shall, if the receiver adopts the contract, be enforceable by or against him so far as it relates to any such dispute.
(2) Where a person who has been adjudged an insolvent had, before the commencement of the insolvency proceedings, become a party to an arbitration agreement, and any matter to which the agreement applies is required to be determined in connection with, or for the purposes of, the insolvency proceedings, then, if the case is one to which sub-section (1) does not apply, any other party or the receiver may apply to the judicial authority having jurisdiction in the insolvency proceedings for an order directing that the matter in question shall be submitted to arbitration in accordance with the arbitration agreement, and the judicial authority may, if it is of opinion that, having regard to all the circumstances of the case, the matter ought to be determined by arbitration, make an order accordingly.
(3) In this section the expression βreceiverβ includes an Official Assignee.
Section-42: Jurisdiction βNotwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.
Section-42A: Confidentiality of information βNotwithstanding anything contained by any other law for the time being in force, the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentially of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award.
Section-43: Limitations β (1) The Limitation Act, 1963 (36 of 1963), shall apply to arbitrations as it applies to proceedings in court.
(2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have commenced on the date referred to in section 21.
(3) Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.
(4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted.
Enforcement of Foreign Awards in India
The enforcement of foreign awards is regulated under the following-
- New York Convention: Section-44 to 52
- Geneva Convention: Section-53-60
Download the Document below:
Source: Law Commission of India & Legislative Department, Govt of India
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