Council For National and International
Commercial Arbitration
World's Trusted Arbitration Centre
Arbitration

It is a legal process whereby the parties to the dispute by virtue of a prior agreement, agreed to resolve their disputes by decision of an Arbitrator. The attendance of the parties is compulsory in arbitration.
Should the parties fail to attend, the Arbitrator may proceed in their absence and pass an award on merits and the award of the Arbitrator is final and binding on the parties which can be enforced in the same parlance as that of a Civil Court’s decree.
Even if the aggrieved parties prefer to challenge the award, the award can be set aside only on limited grounds. The parties will not be allowed to re-agitate on factual aspects.

What is Arbitration?
• Final and binding resolution of civil disputes by Arbitrator, chosen by the parties.
• The decision rendered in Arbitration proceedings is binding in nature as such it differs from mediation and other ADR methods.
• Arbitration differs from the courts as it is private, based on an agreement/contractual process.
Why Arbitration?
• Large back log of litigations in the courts.
• To lessen the courts burden.
• Facilitates parties to choose their own procedures.
Advantages of Arbitration
• Flexibility
• Cost savings
• Time saving
• Confidentiality
• Scope of settlement
• Enforceability
Legal sanctity of Arbitration
• Arbitration and Conciliation Act, 1996, sanctifies, arbitration and it’s procedure.
• Section 89 of Civil procedure Code encourages parties to dispute to opt for Arbitration and other ADR mechanisms.

Arbitration Procedures

Duties of Arbitrator

• On accepting the appointment, the arbitrator shall declare in writing to the parties concern that “there is no circumstances exist that give rise to justifiable doubts as to his independence or impartiality”.
• As soon as appointment is made, the arbitrator shall arrange a preliminary meeting/first hearing.
In General
• On claim statement being filed, arbitrator shall ensure that a copy is furnished to the other party.
• On respondent raising objections as to jurisdiction, the Arbitrator, shall decide such objections as preliminarily issue. (Section 16).
• If the jurisdiction is upheld, the respondent shall be given time to file their reply statement and if the reply statement is filed, time will be given to the claimant to file their rejoinder, if any.
• Oral evidence of the parties on specific request (including Chief & Cross Examination).
• Marking of documents.
• Arguments
• Award
• Communication of Award as Certified Copies.
• Retaining of original file with arbitrator until it is called for by courts.
Recording of Proceedings
• The arbitrator shall record the minutes of proceedings in each & every hearing.
• If the parties appear, their signature is to be obtained in the minutes.
• When one of the parties fail to appear, minutes of proceedings has to be communicated with due acknowledgement.
Service of Notice
• Notice served on the parties with due acknowledgement would constitute sufficient service.
• Returned postal covers with remarks ‘Refused’, ‘Unclaimed’ or ‘Not Claimed’ and ‘Intimation Delivered’ which would also constitute sufficient service.
• After service of notice, if the respondent fails to appear, it is recommended to send another notice expressing the arbitrator’s intention to proceed exparte.
• It is also recommended to serve notice through local News Papers, if the claimant could not serve the notice on the respondent by post (i.e., Left, Not Known, Left India ).
• If the notice is returned as ‘expired’ or ‘Deceased’, it is for the claimant to proceed against the legal representatives of the deceased.
• If the parties are represented by either Advocates or Representatives, they shall furnish either ‘vakalat’ or ‘letter of authorization’ signed by the concerned parties.
Dragging of Arbitral Proceedings - Possibilities
a) Objection as to jurisdiction
b) Objection as to qualification of arbitrator
c) Objection as to venue
d) Taking enormous time to file reply/counter statement
e) Request to furnish unnecessary documents
f) Attempt to implead third parties
Interim Orders by Arbitrator
• On an application for interim order, the arbitrator has power to grant or deny the same.(Section 17).
Settlement
• With the consent of parties, the arbitrator can encourage settlement at any time during the arbitral proceedings.
• If any settlement in the form of memorandum of compromise, the arbitrator shall pass an “Award on Agreed Terms”.
• If the matter is settled out of arbitration, the arbitrator can terminate the proceedings. (Section 30).
COMPARISON
 
Sl.No. COURT ARBITRATION
1 7.5  % Court Fee No Court Fee, However nominal fee has to be paid to the Arbitrator by both the parties equally.
2 Cumbersome Procedure Simple & flexible Procedure
3 Strict and Cumbersome procedure in the Court Registry even for numbering the case itself. No filing procedure. Papers can be filed before the Arbitrator straight away.
4 All technicalities have to be strictly adhered No room for technicalities. Merits of the case alone are the paramount consideration.
5 Takes years to complete Maximum of six to twelve months with shorter adjournments
6 CPC & Evidence Act is applicable Not applicable
7 Chances of settlement is less Chances of settlement are bright due to professional expertise of the arbitrator who can act as conciliator so as to assist the parties to arrive at a settlement.
8 Once litigation is filed before the Court the enmity between the parties may last long. During execution of contract, a particular dispute alone can be referred to arbitration allowing the parties to proceed with the execution of other parts of contract.
9 Conservative atmosphere Friendly atmosphere as arbitration gives a way as discussion table
10 Hearing on working days in working hours Hearing at the convenient days and time of the parties
11 Right of fixing hearing dates vested with the court Hearings can be fixed on day to day basis with the convenience of both the parties.
12 Cost is enormous. Cost is comparatively lesser i.e., 1/3rd of the Court Expenses. (Apprx.)
13 Time and process taken for obtaining copy of the decree is prolonged Immediate and simple procedure
14 Appeal Remedy No appeal. But petition to set aside the award will lie but on limited grounds. Finding on fact can not be re -agitated.
15 Lack of expertise knowledge in commercial transactions Persons with expertise knowledge in the matter in dispute can be appointed a Arbitrators.
16 Hearings are held in public Confidential hearings. No third parties will be allowed.
17 Decree is enforceable Award is enforceable as that of Civil Court’s Decree after expire of 90 days straight away.
18 Cause of action is very important to file a case in a particular jurisdiction Arbitration can be conducted in a Place of arbitration agreed between parties. Cause of action is irrelevant.
19 Proceedings shall go on as per Court’s Language Proceedings shall go on as per the language agreed between the parties
20 Procedure shall be followed as per the law enacted Procedures agreed between the parties become the governing law.
21 All Substantive law of country will be applicable All Substantive law of country will be applicable

 

 

 

 

 

 
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