Arbitration

 The process by which the parties under a contract get their disputes and differences settled
through the intervention of an impartial person or committee of experts in a judicial manner is
known as the Arbitration.

 "Arbitration is the reference of dispute between not less than two parties, for determination,
after hearing both sides in a judicial manner, by a person or persons other than a court of
competent jurisdiction.”

 The impartial person or persons are known as the Arbitrators.

Kinds of Arbitration

Following are the three kinds of arbitration as per the provisions in the arbitration Act1940 :

1) Arbitration based on the arbitration clause in the contract.

2) Arbitration with intervention of a court where there is no suit pending.

3) Arbitration in suits.

1) Arbitration based on the arbitration clause in the contract

It arises in case of arbitration clause of the contract whereby present or future disputes are
referred to the adjudication of the arbitral tribunal. No suit is filed in this case and the arbitral
award takes the form of a decree of court.

The parties can have arbitration in this manner under clause 56 of I.I.A form of contract or in any
other form of contract which carries with it the arbitration clause.

2) Arbitration with intervention of a court where there is no suit pending.

Where the disputes and differences have arisen between the parties to which the arbitration
agreement applies, the parties have a dual choice:

(i) Appoint arbitral tribunal and get an award.

(ii) One of the parties may apply to the appropriate judicial authority with the original arbitration
agreement or duly certified copy, the judicial authority will refer the parties to arbitration.

3) Arbitration in suits.

When a suit is pending in a court and when the parties desire to settle the same through
arbitration before the judgment is pronounced, they can apply for the same and in such cases
the court may refer the matter to the arbitrator, appoint in such a manner as may be agree upon
between the parties.
 Main advantages of settling the disputes and differences by arbitration:

 Time saving – Legal formalities are cut short and decision can be reached in much shorter time as
compared to the time consumed in a court case.

 Privacy – The arbitration proceedings are conducted in private and not in open as in case of the
court of law.

 Convenience- Time, date and place of meeting can be arranged so as to suit the convenience of
All concerned.

 Expertise – persons usually experts in the field are appointed and as such decisions will be fair
and refined. The person chosen as arbitrators are usually architects or engineers who possess
expert knowledge of the subject and are fully qualified to act as arbitrators.

 Saving the money –Expenses are reduced as compared to the expenses consumed in a court
case.

Arbitrator

An arbitrator is the person to whom the dispute and differences are referred for necessary
adjudication.

Sole arbitrator or single arbitrator: If there is one arbitrator appointed, to study and settle the
disputed matter is known as sole arbitrator or single arbitrator.

Joint arbitrator: In case if there is no agreement between two parties upon the appointment of a
single arbitrator, then each of the parties shall appoint his own arbitrator, they are known as
joint arbitrator.

Umpire: In an arbitration with three arbitrators, each party to appoint one arbitrator and the
joint arbitrators shall appoint the third arbitrator. This third arbitrator is to act as presiding
arbitrator, is known as umpire.

If the Joint arbitrators defer in their decisions on the points of dispute, then the joint
arbitrator shall refer the matter to the umpire. The umpire’s decision shall be final and binding
on both the parties.

Appointment of arbitrator and arbitral tribunal

 The parties are free to determine the number of arbitrators, provided that such number shall not
be an even number. The purpose of providing odd number of arbitrator is to finalise the outcome
by a majority decision in case unanimous decision is not forthcoming.

 A person of any nationality may be an arbitrator, unless otherwise agreed by the parties. He is
the “sole arbitrator.” The sole arbitrator alone by himself will constitute the Arbitral Tribunal.
 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.
All the three arbitrators will constitute the Arbitral tribunal Headed by presiding arbitrator.

Appointment by court:

 If a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so
from the other party; or

 The two appointed arbitrators fail to agree on the third arbitrator within thirty days from the
date of their appointment, the appointment shall be made upon the request of a party by the
Chief justice or his designate. Thus Arbitral Tribunal means a sole arbitral or a panel of
arbitrators.

Qualification of the arbitrator:

 He must be expert in particular branch of profession to which the dispute relates.

 He must be honest, disintegrated and independent of the parties.

 He must not be bias mind, having ill feeling against any of the parties.

 As per the conditions No. 56 I.I.A form of contract the arbitrators have to be Fellow of I.I.A, which
forms prime qualifications for being appointed as arbitrators.

 He should have working knowledge of the law.

Power and duties of arbitral tribunal:

 Equal treatment of parties.-The foundation of the arbitration has been based on fairness and
impartiality of the arbitral tribunal, The parties shall be treated with equality and each party shall
be given a full opportunity to present his case.

 If the appointed arbitrator is lacking in some qualification as per the agreement, the parties must
be informed about it.

 Can call for the deposit amount towards the cost of arbitral tribunal from both the parties in
equal part.

 Not to give any decision according to what the tribunal thinks just or reasonable. It has to decide
according to law except when the parties have expressly authorised to do so.

 The power of the arbitral tribunal includes the 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. Failing any
agreement referred to in this sub-section, 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.
 Termination of mandate of arbitrator:

 If any of the parties has justifiable doubts as to his independence or impartiality, or

 He does not possess the qualifications agreed to by the parties.

 He resigns from his office.

 When parties agree to the termination of his mandate.

 A party may challenge an arbitrator appointed by him, or in whose appointment he has

Arbitration agreement

“Arbitration agreement" is written agreement by the parties to submit to arbitration all or

The main requirements of the arbitration agreement are:

1. It must relate to some disputes or differences between the parties either present or future.

2. Parties must desire to settle the disputes by arbitration.

3. Parties must agree to abide by the decision of the arbitral tribunal.

4. An arbitration agreement may be in the form of an arbitration clause in the main contract like
CL. 56 of I.I.A form of contract or in the form of a separate agreement.

Arbitral award

It is the decision given by the arbitral tribunal after careful investigation of the case submitted to
it for adjudication. It conveys the findings of the arbitration tribunal and binding on both the
parties.

The essential requirements of the arbitral award are:

1. The award must be made without undue delay as otherwise the arbitrator’s mandate can be
terminated.

2. The award as a rule must be in writing and to be signed by the members of the arbitral tribunal

3. It must be complete and final. There should not be any successive awards. In other words the
award must be one and entire at one time covering all the matters referred to the arbitration.

4. It must be self explanatory, clear & certain and should not contain vague or indefinite clauses.

5. After the arbitral award is made, a signed copy to be supplied to each of the party.

6. The award must be made on a stamp paper.