UNCITRAL Model Law
Is the arbitration law based on the UNCITRAL Model Law?
Yes, the Indian arbitration law is based on the UNCITRAL Model Law.
What are the formal requirements for an enforceable arbitration agreement?
The formal requirements of an enforceable arbitration agreement are contained in section 7 of the Arbitration and Conciliation Act, 1996, which provides that an arbitration agreement is an agreement to submit to arbitration all or certain disputes that arise under a contract. Pertinently, an arbitration agreement must be in writing, either as an arbitration clause in a contract or as a separate agreement.
Choice of arbitrator
If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?
If an arbitration agreement and the relevant rules are silent on the matter, the arbitral tribunal would consist of a sole arbitrator to be appointed by mutual consent of the parties. On failure of consensus, the parties can approach the court having jurisdiction for constitution of the tribunal.
The right to challenge the appointment of an arbitrator is restricted, as it is available only in the following scenarios:
- The appointment can only be challenged on the ground that there exists no arbitration agreement between the parties.
- In the case of a challenge to the appointment to be made before the arbitrator so appointed, that challenge must be made within a period of 15 days from becoming aware of the appointment. The only grounds for that challenge are the existence of circumstances giving rise to justifiable doubts as to the independence and impartiality of the arbitrator, or the arbitrator not possessing the qualifications required by the parties.
What are the options when choosing an arbitrator or arbitrators?
In ad hoc arbitrations, retired judges of the Supreme Court or high courts are generally chosen as arbitrators. In some cases, particularly when the claim amount is small, practising counsel are appointed by parties. In arbitrations involving technical or complex subject matters, technical experts are often chosen to be part of the arbitral tribunal. In the case of institutional arbitrations, the tribunal comprises arbitrators from the panel of arbitrators of the respective institutions.
Does the domestic law contain substantive requirements for the procedure to be followed?
Under Indian Arbitration Law, the parties are free to decide upon the procedure of arbitration, subject to the timelines prescribed thereunder. Although strict rules of evidence and civil procedure are not applicable, these principles are generally relied on when determining procedure.
On what grounds can the court intervene during an arbitration?
Arbitration law provides for specific situations where courts can intervene in arbitration proceedings, which include the appointment of an arbitrator; for grant of interim reliefs; summoning witnesses and production of documentary evidence; extension of the mandate of an arbitrator or the panel; appeals against the interim orders passed by arbitrators; and setting aside and enforcement of an arbitral award.
The parties to the arbitration agreement cannot contract to exclude the powers of the court.
Do arbitrators have powers to grant interim relief?
Yes, an arbitrator has powers akin to a civil court in India to grant interim relief in the nature of injunctions, attachment of assets, furnishing of securities and appointment of a receiver in respect of immovable properties.
When and in what form must the award be delivered?
After the amendment in 2019 to the Arbitration and Conciliation Act, 1996, an arbitral award must be passed within a period of 12 months from the date on which filing of pleadings (ie, the statement of claim and response) is completed in the case of matters other than international commercial arbitrations.
The period of 12 months is extendable by a further six months with the consent of the parties. For any further extension, an application must be made to the court.
The Indian Arbitration Law provides that an award must be in writing and signed by the members of the tribunal. Further, the award must state the reasons upon which it is based, unless otherwise agreed between the parties or the award itself is a settlement. The award must be printed on a non-judicial stamp paper of denomination of 500 rupees. The tribunal may also pass interim or partial awards.
On what grounds can an award be appealed to the court?
The grounds on which the court may set aside an arbitral award are as follows:
- a party to the arbitration was under some incapacity;
- the arbitration agreement was not valid under the law to which the parties have subjected it or, failing any indication thereon, the law in force;
- the applicant party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his or her case;
- the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. If, however, the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the award containing decisions on matters not submitted to arbitration may be set aside;
- the composition of the tribunal or the procedure followed was different from that agreed by the parties or, in the absence of agreement, as per Part I of the Act;
- the subject matter of the dispute was incapable of resolution or settlement by arbitration under law for the time being in force; or
- the award conflicts with the public policy of India.
Any party aggrieved by the decision of the court may prefer an appeal under section 37 of the Indian Arbitration Act. An order passed under section 37 is not appealable. However, the same does not restrict the right of a party to approach the Supreme Court of India by way of a special leave to appeal under article 136 of the Indian Constitution.
What procedures exist for enforcement of foreign and domestic awards?
A domestic arbitral award is enforceable in the same manner as if it were a decree of a civil court in India. Therefore, all modes of execution, including attachment, sale delivery of property, furnishing of security, etc, are available.
Subject to the conditions for enforcement prescribed under section 48 of the Indian Arbitration Act, a foreign arbitral award (only of the signatory countries to the New York Convention) is enforceable as a decree of an Indian court.
Can a successful party recover its costs?
Legal costs in full are often awarded in favour of the successful party. The court or the arbitral tribunal has the discretion to determine whether costs are payable by one party to another; the amount of those costs; and when those costs are to be paid.
As per section 31-A of the Indian Arbitration Act, a successful party can generally recover reasonable costs relating to:
- fees and expenses of the arbitrators, courts and witnesses;
- legal fees and expenses;
- any administration fees of the institution supervising the arbitration; and
- any other expense incurred in connection with the arbitral or the court proceeding or arbitral award.
As third-party funding of litigation and arbitration is not a common occurrence in India, the issue of whether third-party funding costs can be recovered as costs of arbitration remains undecided.
Law stated date
Give the date on which the above content is accurate.
7 April 2020