ARBITRATION

Arbitration: It is the method of settling the disputes and differences

between two or more parties whereby they appoint one or more
persons to adjudicate upon the said disputes and differences that have
arisen or that may hereafter arise and agree to abide by the decision of
said one or more persons nominated for the purpose adjudication.
Thus the Arbitration ends at the establishment of domestic tribunal by
the parties to adjudicate upon the disputes and the differences and the
Arbitration Act, 1940 helps the parties to enforce that decision.

Advantage of Settling the Disputes Through Arbitration:

1) Persons who are usually experts in the profession are appointed

as Arbitrator and such decision will be fair and refine. In case of
dispute concerning building construction job, the person chosen
as Arbitrators are usually Architects or Engineers who possess
expert knowledge of the subject and are fully qualified to act as
an Arbitrator.
2) In this procedure legal formalities are cut short and decisions can
be reached in a much shorter time as compared to the time
consumed in the court case.
3) Savings in the cost
4) Time date and place of meeting can be arranged so as to suit the
conveniences of all concerned.
5) There will be privacy for the hearing and it will not public.
6) The Arbitrator can view the subject at any convenient time.
7) Finality of the Award.

Arbitrator: Arbitrator is a person to whom the dispute and

differences are referred as necessary adjudication. If there are more
than one arbitrators they are known as “Joint Arbitrators”.

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Appointment of Arbitrators:

1) The appointment of Arbitrator is done with the consent of

agreement of both the parties.
2) In case of disagreement, appointment made by the court or by
the association.
3) In case of two Arbitrators each party will appoint one from each
side.

Powers and Duties of Arbitrator:

1) The Arbitrators have to appoint an umpire within one month from

the date of entering upon the reference.
2) To make their Awards within 4 months from the date of entering
upon the reference.
3) To examine the persons and witnesses appearing on oath and
hear the parties.
4) To seek the opinion of the court on the law points.
5) To enlarge the time limit for declaring the award on application
from the parties or direct the parties to apply to the court for
necessary enlargement of the time.
6) To decide on the cost of reference and award and in what
proportion the same are to be borne by the parties concerned.
7) To correct the mistakes of clerical nature in the award.
8) To decide upon the measurement and valuation of the work.
9) To decide upon the withholding of final certificate by the
architect.
10) To decide upon the determination of the contract by the
contractor.

The powers of the Arbitrator come to an end as soon as the award has
been filed and as such no correction can be made in the award except
of clerical and typographical nature after filing of the award, the
arbitrator becomes functus officio.

Umpire in Arbitration: Umpire in Arbitration is the person appointed

by the joint arbitrator to decide the disputes in case of differences of
opinion between the joint arbitrators. Both the parties in the
arbitration proceedings usually appoint their own arbitrator. It is likely
that some differences may arise between the two arbitrators either
during the course of proceedings or at the time of declaration of award,
and if these differences are not resolved, the proceedings will not come
to an end. Hence both the arbitrators appoint a third person who is
known as “umpire” and to whom all the differences between the two
arbitrators are referred for his decision and the same is final and
binding on both the parties. The powers and right of the umpire and

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arbitrator are the same. He is not bound by the evidence already
tendered before the arbitrator.

Award: It is the decision given by the Arbitrator or by an Umpire after

careful investigation of the case submitted to them for adjudication. It
conveys the findings of the arbitrators and binding on both the parties.
The essential ingredients of valid award are:

1) It must be done within four months from the date of entering

upon the reference.
2) The award must be self explanatory without any ambiguity.
3) No stamp papers is necessary when the arbitration is in suit.
4) In case of arbitration without the intervention of the court, the
award must be on stamp paper.
5) Due notice to be given to the parties about declaration of award.

Conduct of Arbitration Proceedings: As soon as the arbitrators are

appointed, they usually call a preliminary meeting which is customary
and a good practice. The said preliminary meeting is called before
they actually hold the hearing:

Purpose
(i) The subject matter is generally discussed.
(ii) Necessary directions are given to the parties -
(a) as to procedure to be followed,
(b) disclose the documents to be relied upon by the parties
and inspection of to either side.
(c ) parties to prepare and deliver pleading in the form of
“statement of claim” and a “defence”. Thus pleadings are
nothing but the statement of claim and counter claim.
Claim: Monetary considerations and/or compensation
which the plaintiffs think they are entitled to under a
contract.
Counter Claim: Monetary compensation which the
defendants think they are entitled to under a contract. It is
filed in rebuttal of the claim of the plaintiffs.
(iii) The name of the umpire to be appointed is agreed upon and
necessary letter is written to him to get his acceptance.
(iv) Architect’s fees are fixed up for the proceedings.
(v) Time, place and date of actual hearing is fixed.
(vi) Issues are framed on which adjudication is required in case the
same are not given in the order of reference.

Arbitration and Building Contract: If there will arise disputes and

differences between the employer and the contractor on any matter
connected with their contract either during the construction or after
the completion of the building, the same shall be referred to the

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arbitration of the architect to be chosen by the employer and the
contractor or failing agreement on the choice of a single arbitrator to
the arbitration of two arbitrators one to be chosen by the employer and
other by the contractor. Such arbitration will be governed by the
Indian Arbitration Act, 1940, and its subsequent amendments.

Condition No.56 of the form of contract of the Indian Institute of

Architects also provides for arbitration in case of all disputes and
differences of any kind whatsoever arising out of or in connection with
the contract or carrying out of the work.

(A) The arbitration proceedings not to take place unless -

(a) Work is complete or alleged to have been completed.
(b) Termination or alleged termination.
(c ) Abandonment of works.
(B) The decision of the architect on expected matters as provided in
clause No.55 is final and without appeal.
(C ) The architect is required to give his decision on the disputed
points and if either of the parties is dissatisfied with the decision
of the architect, then within 28 days after receiving notice of
decision, give a notice to the other party through the architect
requiring that such matters are required to be arbitrated upon.
(D) Arbitrations to be a sole arbitration or a joint arbitration (each
one to name his own arbitrator), with an umpire; all to be fellows
of the I.I.A.
(E) Though the clause states that the arbitration proceedings shall
be governed under the Indian Arbitration Act, 1899, but it should
be noted the Indian Arbitration Act, 1940, has repealed the Act of
1899 and as such arbitration proceedings shall be governed by
the Act of 1940.