Law - Lloyd.docx

LAW ASSIGNMENT – LLOYD COLLEGE OF LAW Q1 (a.) Constitutional Basis of ADR. The Alternative Dispute Resolution mechanisms evolved to provide complete justice to the persons in conflicts and legal disputes. It is a voluntary process gaining legal recognition over a period of time. The ADR is at present a movement all over the world to find an answer to never ending litigation and never reaching solutions, which is a global phenomenon. The society, state and the party to the dispute are equally under an obligation to resolve the dispute before it disturbs the peace in the family, business community, society or ultimately the humanity as a whole. Because in a civilized society the rule of law should prevail and principles of natural justice should apply and complete justice should result. Rule of Law It is the fundamental need of democracy to secure the rule of law. La principe legalite= governance not by persons but by principles. It is the dynamic concept of supremacy of law, i.e., law rules, it imposes negative constraints on government action and also an affirmative duty of fairness, and in the context of judiciary, rule of law means independent judiciary.

Principles of Natural Justice The Rule of law and principles of natural justice are inherently related to each other.It is protection from excesses of power by the authorities or who are in a commanding position. It means fairness, equity and equality, reasonableness. It is also called natural law. Constitutional Foundation These principles do have constitutional foundation. The Article 21s and 14 of Constitution of India embody these principles of natural justice and rule of law. These Articles incorporate substantial and procedural due process. Fairness when accused is deprived of liberty Article 21. Absence of discriminatory class legislation article 14 Two BASIC PRINCIPLES The sole basis of ADR is founded in two basic principles. They are: 1. Nemo judex in causa sua= no one should be made a judge in his own cause (rule against bias) and 2. audialterum partem (hear the other side) The enemy of justice is the Bias, which is of four kinds: 1-pecuniary interest or 2.personal interest,a) by blood relation or b) marital relations, c) friendship, 3. Hostility 4. Official Bias, 5. Subject Matter Bias

Rule of fair hearing No one can be deprived of his vested right or be punished without having been given opportunity to offer an explanation. Every person has a Right to notice, a Right to present cases and evidence and a right to rebut adverse evidence, no evidence should be taken on the back of other party. Audi alteram partem The maxim in its wider import means that the Report of the enquiry to be shown to the other party, reasoned decisions or speaking orders should be given and very importantly, there should be institutional decisions, OR ONE WHO DECIDES MUST HEAR. It is a rule against dictation. The Notice must be adequate. The Art 22(5) makes every person entitled to know reasons, and to represent, which is again supported by another Art 311(2) which protects the rights of employees in government by providing procedural safeguards as an exception to doctrine of pleasure indicating the powers of the President or Executive. Procedural due process These two principles are embodied in all procedural laws like Cr.P.C. and Civil Procedure Code. The Notice, summons, exchange of information in the shape of pleadings, discovery proceedings, fixing issues, examination of witnesses, arguments and judgments are the explanations of the expanding need for giving notice to the parties to disputes. The Procedural due process is must in resolving disputes, whether in litigative or alternative methods. Problems in Litigation Then these procedural safeguards and natural principles of justice when enforced by the state resulted in severe problems in resolving the litigation. They are: 1. Inordinate delay, 2. Escalating costs, 3. Mounting arrears, 4. Pervasive corruption, 5. Inequities in system.

Dispute Resolution The Dispute Resolution is of two kinds - Litigative and non-litigative Non-litigative is the future dispute resolution mechanism. It involves collection of strategies outside usual processes of litigation Because the Perils of litigation are: litigation is expensive, open, uncertain as to time and decision, denies parties control in resolving And finally the lawsuit is dreaded beyond sickness & death Creative Dispute Resolution It can be formal or informal, whatever you can do to stay out of court

like open door policy or mass tort claim settlement protocol arbitration, negotiation and mediation grown and blended into dozens of variations early neutral evaluation, summary jury trial, minitrial, med-arb, court annexed processes such as judicially hosted settlement, judicial arbitration, temporary judging Negotiation • • • • • •

It is a communication process voluntary non-binding control over procedure and outcome wide range of possible solutions, maximise joint gains quick, inexpensive, private, less complicated

Negotiation is possible.. • where parties must cooperate to meet goals • parties can influence each other to act in ways that provide mutual benefit or avoidance of harm • parties are affected by time constraints • parties can identify and agree on issues • interests not entirely incompatible • external constraints (reputa, cost, risk of adversarial decision) encourage ADR The Negotiation works when a) The parties are willing to cooperate and communicate to meet their goals, b) The parties can mutually benefit or avoid harm by influencing each other c) The parties know that they have time constraints d) The parties realize that any other procedure will not produce desired outcome e) the parties can identify on what issues require to be sorted out f) the parties also agree that their interests are not incompatible to each other g) the parties knew that it is preferable to participate in private cooperative process rather than go through severe external constraints like loss of reputation, excessive cost, and possibility of adversarial decision

Reason For Growth of ADR. The Trend Toward ADR Over the past two decades there has been an explosion in the number of cases filed in state and federal courts across the country. This is a result not only of the growing economy of this country, but also the growing number of individuals and businesses

across the country involved in litigation. As the number of cases have grown, courts have looked for a method by which they can reduce the number of cases on their docket short of a full trial and decision on the merits. The method to accomplish this is ADR. In addition to the Court’s desire to clear their docket of cases is the interest of individuals and businesses in reducing the cost of litigation and obtaining a certainty of result. For those who have been through litigation, the cost of such litigation can be expensive. This cost includes not only attorneys’ fees, but also disbursements made to conduct litigation from the expense of depositions, to copying costs, to expert witness fees to basic lost time expense for personnel of a business. Since the discovery phase of litigation is often equal to or greater than the cost of a trial, ADR is often seen as a tool to reduce costs. As a result, the interest in ADR has exploded. Finally, ADR can be less confrontative than an actual trial. Because of this, ADR appeals to some people who wish to avoid conflict and confrontation. This desire to avoid confrontation in an every increasingly confrontational world has also encouraged the development and trend toward ADR. The two basic methods of ADR that are available are mediation and arbitration. Mediation Mediation involves a process of negotiation between two parties to a dispute facilitated by an independent mediator. The goal of mediation is to negotiate a settlement of the dispute between the parties on mutually agreeable terms. Mutually agreeable terms means terms that both parties agree to after negotiating the settlement. The most prevalent method of mediation occurs as a caucus after a lawsuit has been commenced. In caucus mediation the two parties and their counsel are separated into two (or more) different rooms. The mediator then “shuffles” back and forth between the two parties conveying offers of settlement. In the process, the mediator will discuss with the parties the strengths and weaknesses of their case, the cost of litigation and the potential of bringing closure to the process. Mediation can be conducted at any time in the litigation process, but generally will occur before the commencement of a lawsuit, before completion of discovery, after completion of discovery, but before dispositive motions, after dispositive motions are heard, and on the eve of trial. Arbitration Arbitration, as compared to mediation, is a mini trial before an arbitrator or panel of arbitrators. Arbitration can generally occur in two forms. Agreement to arbitration without litigation, or arbitration during litigation. Agreement to arbitration without litigation involves putting a matter into arbitration from the very beginning. This often occurs when a contract between two parties calls

for arbitration. The parties then proceed to a hearing before an arbitrator or panel of arbitrators with limited or no discovery. Arbitration in litigation often occurs as a result of agreement of the parties during the litigation to arbitrate the dispute. The parties may agree to such arbitration to speed up the process of reaching a decision or to reduce costs. Arbitration can also be either “binding” or “non-binding”. Binding arbitration generally means that the decision of the arbitrators is the final binding decision on the parties absent a reversal by an appellate court. Non-binding arbitration means that the decision of the arbitrators may be accepted by both parties to the arbitration or rejected by either party to the arbitration so that a trial on the merits before a court and jury may occur. No statistical data is currently available on whether arbitration actually reduces the cost of litigation. For this reason, the embracing of arbitration has been slower than the embracing of mediation. In the end, each individual case must be analyzed to determine which method, if any, of ADR is appropriate to use. Q2 (b.) Different types of ADR Mini Trials A mini-trial most resembles a mediation hearing, in that there is a presentation by each party of a summarized version of his or her case to a panel of persons for the purpose of resolving or settling the dispute. Also like mediation, the parties are generally not bound to an outcome, and may end the process at an impasse. However, there is one important difference between a mediation and a mini-trial. In mediation, the mediator is a neutral third party who does not take the side of either party, but instead tries to facilitate open communication between the parties themselves in order to achieve compromise and settlement. Even in court-ordered mediations conducted by a panel of mediators, the focus is still on the parties: the mediators merely issue a recommendation to the parties for settlement consideration. A mini-trial differs from other forms of ADR in that it is usually conducted after formal litigation has already been undertaken. Parties to a lawsuit generally stipulate to “stay” pending litigation (put a hold on further advancement of the litigation) until the mini-trial is concluded. Thus, mini-trial does not, in and of itself, represent an alternative forum for the resolution of a dispute (such as arbitration), but rather it represents a pre-trial alternate attempt to settle the matter before lengthy trial begins. The outcome of the mini-trial is generally confidential and advisory only, and the parties may proceed to trial if settlement negotiations fail.

Early Neutral Evaluation (ENE) Early Neutral Evaluation (ENE) is when disputing parties submit their case to a neutral evaluator through a confidential "evaluation session." The neutral evaluator considers each side's position and renders an evaluation of the case. Contracting parties can

include an ENE clause in the contract, which represents their agreement to submit to ENE in good faith to resolve any contractual disputes. Sometimes the parties to a dispute have diametrically opposed perceptions about the law affecting their dispute or the weight or effect of the documentary evidence. Where the parties will be keen to find a commercial resolution, but their widely differing perceptions of the issues in the case are getting in the way, an early neutral evaluation of those issues may be a good solution. In early neutral evaluation, a neutral person with specialist knowledge and skills is invited to evaluate the case or any particular issues in it. That evaluation is not binding, but is made available to both parties to consider. An independent view of the case or issues can sometimes clear the way for more constructive negotiations to take place. ENE can be used to explore any combination of legal, evidential, factual or technical questions. ENE is usually non-binding and the process without prejudice, meaning that what is said by one party in ENE proceedings cannot be used later by the other party in any proceedings (with very limited exceptions). When to use ENE? ENE may be useful in cases where:  the parties have reached an impasse on a particular element of or issue in the case: an independent evaluator may be able to break such a deadlock by giving an unbiased opinion of what the outcome would be if the matter proceeded to a court or an arbitral tribunal;  there is a great disparity between the parties' positions: ENE can focus the minds of both parties and narrow the gap between them;  one party has an unrealistic view of the case: receiving an independent evaluation of the case may help a party to realise that their arguments are unlikely to succeed in court; and/or  confidentiality is essential: ENE is not a public process and does not produce any publically available judgment or decision. Advantages of ENE ENE can be an effective means of dispute resolution in that it can:  highlight and clarify the issues in dispute;  be faster than more traditional forms of dispute resolution;  demonstrate the limits of a party's case, any gaps in the evidence and the risks involved in pursuing litigation; and  Assist in settlement negotiations by encouraging parties to move to a more realistic negotiating position.

Disadvantages of ENE ENE can be problematic because: 

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the "winner" of the process is likely to become more entrenched in their position as a result of a positive evaluation, which may lead to them becoming more demanding in negotiations, thus hindering the settlement process; conversely, the "loser" is likely to find their negotiating position significantly undermined, thus decreasing their chances of achieving a satisfactory settlement; ENE can be disproportionately expensive and time-consuming, if it does not result in a settlement; ENE may be too short and informal to deal with complex technical or factual questions, unless they can be broken down into single issues; and if ENE is carried out by the court, the judge carrying out the evaluation will not be able to take part in subsequent proceedings, unless both parties agree. ENE may therefore be used tactically to exclude a particular judge from hearing the case.

Court-Annexed Arbitration Law and Legal Definition Court-annexed arbitration is a form of adjudicatory dispute-resolution (ADR) process in which a judge acts as an arbitrator and the arbitration follows the same procedures as followed in a regular civil case. After an expedited adversarial hearing, a panel of arbitrators will issue a non-binding judgment on the merits of a dispute. In a court-annexed arbitration, an arbitrator's decision addresses only the disputed legal issues and applies legal standards. Those unhappy with the court-annexed arbitration can reject the non-binding ruling and proceed to trial. It is a hybrid of mediation and arbitration that involves the diversion of state trial court cases into arbitration. 'Court-annexed' arbitration is technically not arbitration at all, at least under the traditional model. Rather, it is a method of resolving disputes which are already in court, but without the traditional judge or jury. When there is no agreement to use private arbitration, people with a civil dispute have to go to court. In the traditional dispute resolution model using the courts, when a lawsuit is filed in court, after several earlier stages (pleadings, motions, discovery), the case is is presented for trial to a judge, or to a judge and jury. Depending on the volume of cases filed in a court (especially the number of criminal cases, which often have priority) and the number of judges available, even getting a 'small' civil case to trial can involve high cost and long delays. Many cases do not settle until a trial is near, and preparation for trial is often, if not always, more expensive than trial itself.

Q3 (c.) ARBITRATION AGREEMENT “Arbitration agreement” 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. According to Section 7of Arbitration Conciliation Act, 1996 the features of Arbitration Agreement are: 1) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. 2) An arbitration agreement shall be in writing. 3) An arbitration agreement is in writing if it is contained in: a) a document signed by the parties; b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or c) An exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. 4) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. ESSENTIAL FEATURE IN DETAIL Agreement to be in Writing: One of the points of some formal importance emphasised by these provisions is that the reference should be by means of a written agreement. Section 7(3) most emphatically prescribes that “an arbitration agreement shall be in writing”. An oral agreement to submit a dispute to arbitration is not binding. If the agreement is in writing it will bind, even if some of its details are filled in by oral understanding. It is not necessary that the agreement should be on a formal document nor it is necessary that the agreement should be signed by both or either party. It is sufficient that the written agreement has been orally accepted by the parties or that one has signed and the other has accepted. Act recognises in Section 7(4) some three methods of arriving at a written agreement. One of them is an exchange of letters or raising a claim under an alleged arbitration agreement which is not denied by the other party. The Act provides in Section 7 (4) that an arbitration agreement is in writing if it is contained in an exchange of letters, telex, telegrams, or other means of telecommunication which provide a record of the agreement or in an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. Whatever be the form or contents of the agreement, it is necessary for the Act to apply that there should be a mandatory requirement for settlement of disputes by means of arbitration. An agreement that the parties may go in for a suit or may also go in for arbitration is not an arbitration agreement.

No prescribed form of agreement: In Rukmanibai Gupta v. Collector, Jabalpur (1980) 4 SCC 556 : AIR 1981 SC 479, the Supreme Court laid down that an arbitration clause is not required to be stated in any particular form. If the intention of the parties to refer the dispute to arbitration can be clearly ascertained from the term of the agreement, it is immaterial whether or not the expression “arbitration” or “arbitrator” has been used. Nor it is necessary that it should be contained in the same contract document. An arbitration clause may be incorporated into an existing contract by specific reference to it. Section 7 (5) clearly provides that the reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make the arbitration clause a part of the contract. Hence, the whole thing turns upon the intention of the parties. Where the party showed that the arbitration clause in the signed agreement crept in mistake, it was held that the civil court was in error in acting upon a clause which the parties did not intend to be there and appointing an arbitrator on that basis. Arbitration Agreement in different forms: a)Tenders Containing Arbitration Clauses : The acceptance of a tender or a work order which carries an arbitration clause, or the membership of an institution the constitution of which provides for arbitration or a contract which contains a provision for arbitration, is sufficient. Acceptance of such a tender by an authorised functionary of the Government would be a sufficient compliance of the formal requirements of Article 299 of the Constitution of India so as to bind the Government by the arbitration clause. b)“Arbitration Agreement” and “Reference” : The expressions “arbitration agreement” and “reference” have been separately defined. Explaining the purpose and effect of this scheme, the Supreme Court observed in Banwari Lal Kotiya v. P.C. Aggarwal, (1985) 3 SCC 255, 260 : AIR 1985 SC 1003 : 1985 Arb. LR 1003. (The term “reference” has not been defined in the new 1996 Act, but the statement continue to be valid as emphasising the distinction between an agreement for arbitration and a reference under it) “The expression (reference) obviously refers to an actual reference made jointly by the parties after disputes have arisen between them for adjudication to named arbitrator or arbitrators, while the expression “arbitration agreement” is wider as it combines two concepts, (a) a bare agreement between the parties that disputes arising between them should be decided or resolved through arbitration and (b) an actual reference of a particular dispute for adjudication to named arbitrator. The facts of Banwari Lal Case, (1985) 3 SCC 255, were that there was a dealing about shares between a Stock Exchange member and an outsider under which a sum of money had become due to the member. The parties signed the contract‐notes on a prescribed form. The transaction was subject to the rules,

regulations and bye‐laws of the Stock Exchange one of which provided for arbitration in such matters. The member appointed his arbitrator. The other refused to reciprocate. In such cases, the rules provided for appointment by the Exchange. The latter accordingly appointed one. The other party participated in the proceedings under protest that he had not given his consent and, therefore, the award would not be binding on him. The Supreme Court came to the conclusion that a fresh consent was necessary on his part. He had consented to the rules and regulation which contained an elaborate machinery for submission. No fresh consent was necessary. c) Clauses having the effect of “arbitration agreement” : Whether a clause in a contract amounts to an agreement of arbitration depends upon its scope. In State of U.P. v. Tipper Chand, (1980) 2 SCC 341 : AIR 1980 SC 1522 : 1980 All LJ 749, before the Supreme Court a clause in a Government contract provided that the decision of the superintending engineer upon all questions relating to the contract shall be final and binding. An application was made under Section 20 of 1940 Act (now Section 8) to refer a dispute to arbitration on the basis that the above clause amounted to an agreement of arbitration. The Supreme Court rejected the contention. FAZAL ALI, J., observed : “Admittedly the clause does not contain any express arbitration agreement. Nor can such an agreement be spelled out from its terms by implication, there being no mention in it of any disputes much less of a reference thereof. The purpose of the clause clearly appears to be to vest the superintending engineer with supervision of the execution of the work and administrative control over it from time to time.” The court distinguished the case from some earlier rulings in which the clause in question provided that “in any dispute between the contractor and the department the decision of the chief engineer shall be final”. The court said that this clause was correctly interpreted as amounting to an arbitration agreement. In another case i.e., Rukmani Gupta v. Collector, Jabalpur (1980) 4 SCC 556, a mining lease granted by the State carried a clause that disputes, if any, shall be decided by the lessor (in this case the Governor in whose name the lease was executed) and his decision shall be final. The Supreme Court held that this amounted to an arbitration agreement. DESAI. J., said : “Arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise they would be referred to arbitration, then such an arrangement would spell out an arbitration agreement.” d) Reference of time‐barred claim : An arbitration agreement may even contemplate reference of a time‐barred claim. A policy of insurance required the assured to refer the matter to arbitration within twelve months of the company’s disclaimer. The assured referred it after twelve months and yet the reference was held to be binding. (Ruby General Insurance Co. Ltd. v. Peare Lal Kumar, AIR 1951 Punjab 440)

The significance of Section 25(3) of the Indian Contract Act, 1872 has also to be kept in view. A time‐ barred claim can, therefore, validly form the subject‐matter of reference. A distinction, however, is to be made between an arbitration agreement entered into about a time‐barred claim and a reference made on the basis of an arbitration clause after the expiry of the period of limitation. In the latter case no reference can be made as the right to claim ceases to subsist and the relief with respect to the dispute has become time‐barred. Adoption of arbitration clause from main contract by sub‐contract : Where an arbitration clause contained in the main contract is adopted in a sub‐ contract also by a clause declaring that this sub‐ contract is being granted on the terms and conditions applicable to the main contract, it will not necessarily follow that the parties to the sub‐contract would also be bound by the arbitration clause. For one thing, the parties are different and for another, the purpose of the contract being different, different kinds of disputes are likely to arise than those contemplated by the main contract. Position of Non‐Parties: An arbitration is a private procedure. It is an implied term that stingers to the agreement are excluded from hearing and conduct of proceedings. Accordingly, an arbitrator cannot, unless all parties consent, order that the arbitration of a dispute between a ship owner and a charterer arising out of a charter party and the arbitration of a separate but closely‐related dispute between the charterer and a sub‐charterer arising out of a sub‐charterer be heard together even though the two disputes are closely related and a consolidated hearing would be convenient. Validity of Arbitration Agreement Reference without agreement or under void agreement: The court may stay arbitration proceedings where the parties have not agreed to refer the particular dispute to arbitration or where the contract which carried the arbitration clause is itself void. The proceedings remain stayed till the matter as to the validity of the reference is decided. A situation of this kind came before the Court of Appeal in England in Ben & Co. Ltd. v. Pakistan Edible Oils Corporation Ltd. (1979). There was a contract to purchase palm‐oil by a Karachi firm from a Singapore seller. The contract included a London arbitration clause. The Karachi firm contended that the agent who purported to contract on their behalf had no actual or apparent authority to do so. The seller commenced arbitration proceedings in London. The Karachi party‐applied for a stay. In K.K. Modi v. K.N. Modi, (1998) 3 SCC 573 : AIR 1998 SC 1297, in a family matter before the Supreme Court, a memorandum of understanding was signed

between the two branches of the family for bringing about division of property between them. Experts were appointed for valuation and preparation of scheme for division between the two groups the corporate undertakings of the family. The agreement also provided that any dispute, clarification, etc. in the matters of implementation would be referred to the Chairman of the Industrial Finance Corporation of India. It was held that this did not constitute an arbitration agreement. It only amounted to a reference of issues to an expert for decision. Q4. (d) International commercial contracts are sale transaction agreements made between parties from different countries.[4] The methods of entering the foreign market,[5] with choice made balancing costs, control and risk, include:[6] 1. 2. 3. 4.

Export directly. Use of foreign agent to sell and distribute.[7] Use of foreign distributor to on-sell to local customers. Manufacture products in the foreign country by either setting up business or by acquiring a foreign subsidiary.[8] 5. Licence to a local producer. 6. Enter into a joint venture with a foreign entity. 7. Appoint a franchisee in the foreign country. Commercial Terms In some cases, international distribution contracts focus on termination and relationship issues to such an extent that basic commercial terms are not given the focus they deserve. While most of the issues related to commercial terms in the international context are not substantially different from those in the domestic context, it is prudent to address important points in sufficient detail, because application of default Universal Commercial Code (UCC) rules is not assured even when the contract states that it is governed by the laws of a US state, and thus the UCC. Sales agent agreements involve fewer commercial terms than distribution agreements simply because the sales agent at no point takes title to the products. Some areas of note with respect to commercial terms include the terms and conditions of sale, service responsibilities and warranties, and trade names and trademarks. Terms and Conditions of Sale. Application or exclusion of the standard terms and conditions of sale of each party should be specifically addressed. Certain of these terms and conditions may require review or restatement in the contract because they rely on UCC terminology that might be understood or interpreted less clearly in a dispute with a foreign party. Specific provisions on pricing, payment methods, required inventory levels, risk of loss, freight, insurance, and taxes may also be useful. Depending on the

governing law of the contract, International Commercial Terms (INCOTERMS) might be used to define risk of loss concepts rather than UCC terminology. Service Responsibilities and Warranties. Depending on the nature of the product, it may be important to spell out the parties’ respective service responsibilities for products sold in the territory of the distributor. If the local distributor is to be the primary warranty service provider, it is advisable to define the warranty service obligations as well as the tools, facilities, and personnel that should be utilized in servicing the products. The warranty for the products—and all of its qualifications, reservations, or limitations— should be clearly defined or referenced. Trade Names and Trademarks. As with any US distributor, it is important to clarify which names, marks, and copyrighted materials of the US company will be available for use by the distributor, parameters for that use, and obligations to cease use at the end of the distribution relationship. Website addresses are of particular note in the international context. Distributors may wish to establish websites that include the name of the US company. Consideration should be given to the practical ways for the US company to maintain ultimate control over any website URL including its name, while also, to the extent desired, permitting the distributor to administer the site in a manner that enhances sales for both parties. Landmark judgment delivered from the Indian Supreme Court in Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc Introduction The long-awaited decision of the Indian Supreme Court in Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc was delivered on Thursday 6 September 2012. This landmark judgment, delivered by a five-judge constitutional bench, restricts the ability of local courts to interfere in international arbitrations seated outside India and overrules the controversial decision of Bhatia International v Bulk Trading S.A1. However, whilst the decision is likely to be largely welcomed by the international arbitration community, it is notable that the judgment only has prospective applicability and, as such, there is no doubt for the foreseeable future that Bhatia will continue to have an impact in commercial arbitrations where arbitration agreements have already been entered into. A brief history In Bhatia, the Supreme Court considered a request for interim relief under Part I of the Indian Arbitration and Conciliation Act 1996 (the “Act”). Part I confers significant powers on Indian courts, including the ability to order interim measures and set aside awards. Even though Part I seemingly only applied to domestic arbitrations, the

Supreme Court interpreted the Act in a manner that allowed Part I to be applied to foreign seated arbitrations, unless the parties opted out of this arrangement. Later decisions entrenched the precedent set by Bhatia. For example, in Venture Global v Satyam Computer Services2, the Supreme Court held that foreign awards could be set aside by Indian courts under section 34 of the Act (which falls under Part I) for violating Indian statutory provisions and being contrary to Indian public policy. It therefore set aside an LCIA award rendered by a tribunal seated in London. Furthermore, in Indtel Technical Services v W.S. Atkins Plc3, the Supreme Court held that Indian courts could appoint arbitrators in arbitrations seated outside India. Decisions such as these have since been heavily criticised. Each gave further weight to the possibility of increased interference from Indian courts in foreign seated arbitrations, and were dispiriting for the international arbitration community, including Indian and foreign investors alike. It is perhaps in light of such public criticism that there has been a growing trend amongst the Indian judiciary to restrict the applicability of Part I of the Act. Cases such as Videocon Industries v Union of India and Yograj Infrastructure v Ssang Yong Engineering have demonstrated the courts’ willingness to find an implied exclusion of Part I where a foreign seat and foreign governing law have been chosen. As such, there has been a distinct move away from Bhatia and Indian court interference in recent years, paving the way for Bharat Aluminium and its final clarification on the issue.4 Key implications of the Judgment Thursday’s Supreme Court ruling in the Bharat Aluminium case means that Indian courts will no longer be able to set aside awards or issue interim measures in respect of arbitrations seated abroad. This ends years of uncertainty for the international arbitration community and allows arbitration to be seen as a much more viable method for dispute resolution in India. The key favourable implications of the judgement are as follows: 

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The Supreme Court has confirmed that there can be no “overlapping or intermingling” of the provisions contained in Part I of the Act with the provisions contained in Part II (which relates to the enforcement of foreign awards). Part I of the Act will have no application to international commercial arbitrations, seated outside India. The seat or legal place of the arbitration is the “centre of gravity” in an international arbitration.

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Awards rendered in commercial arbitrations seated outside India will only be subject to the jurisdiction of the Indian courts when they are sought to be enforced in India in accordance with the provisions contained in Part II of the Act. The Indian courts cannot order interim relief under Section 9 or any other provision of the Act in support of foreign seated arbitrations. Parties will therefore need to rely on the relief afforded by the courts of the jurisdiction in which the arbitration is seated. As the choice of seat can have significant implications for the way an arbitration is conducted, parties should carefully consider their choice at the drafting stage. However, rather disappointingly, the decision of Bharat Aluminium only applies to arbitration agreements entered into after 6 September 2012. It is not completely clear why this decision has been taken, as the judgment provides very little explanation, other than to say that it is to ensure “complete justice”. Looking ahead The judgment is likely to be welcomed by the international arbitration community. It seems to restore the original intention of the Act and provides much needed certainty for those involved in Indian- related commercial contracts where arbitration is provided as the method of dispute resolution. It should also have a positive impact on the way in which India is viewed from an international arbitration perspective; providing parties with a greater incentive to arbitrate rather than being forced to resort to the protracted litigation in Indian courts. However, the fact that the judgment has only prospective applicability is likely to cause some concern for those who have already entered into arbitration agreements involving business or transactions in India. Since the earlier decision, experienced practitioners have been drafting arbitration clauses to exclude Part I of the Act. Where this has not been dealt with in clauses drafted before 6 September 2012 some uncertainty will remain. Overall this is a positive development which should strengthen the Indian arbitration regime and put India on the map of arbitration friendly nations.

Q5. (e.) The following are the grounds on which the award may be challenged before the Court: 

Incapacity of the party;

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Invalidity of arbitration agreements; Party applying was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; Award not in accordance with the terms of submissions to arbitration in regard to the dispute; Arbitral Tribunal not properly constituted or the arbitral procedure was not in accordance with the agreement of the parties; Subject matter of the dispute not capable of settlement by arbitration under the law for the time being in force; Award being in conflict with the public policy of India.

Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “1996 Act”) stipulates grounds to challenge the arbitral award made under Section 31. However, the challenge to the award can only be made within limitation period of three months from the date of receipt of the award. This period of limitation can be further extended by 30 days in cases where the applicant is able to show sufficient cause for delay in filing petition under Section 34. It is pertinent to note that Section 34 provides for calculation of limitation period from the date of receipt of the award. In contrast, Section 31(5) of the 1996 Act provides only for the delivery of the award to the parties which is followed by termination of arbitration proceedings. The term receipt is not used under Section 31(5) of the Act. The gap between “delivery” and “receipt” is further highlighted by reading of Section 3 of the 1996 Act which stipulates that a communication is “deemed receipt” on the date of delivery. Does this entail that delivery of the award amounts to receipt and the period of limitation is to be calculated from the date of delivery of award. This is a question which this article tries to answer. The aim of this article is to highlight this dichotomy. Limitation of Time under Section 34: Section 34(3) provides that an application for setting aside an award shall not be entertained by the Court if it is made after three months have elapsed from the date on which the applicant had received the arbitral award. The proviso to this Section further provides that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the prescribed time; it may entertain the application within a further period of 30 days but not thereafter. The importance of period fixed under Section 34 is highlighted under the 1996 Act by Section 36 which stipulates that where the time for making an application to set aside the arbitral award under Section 34 has expired, the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as it was a decree of the Court. In catena of cases, the Supreme Court has held that the period mentioned under Section 34(3) cannot be extended. It is pertinent to note that Section 34(3) places emphasis on the “receipt” of the award. Contradiction between Delivery and Receipt: Section 31(5) of the 1996 Act stipulates that a signed copy of the award shall be delivered to each party. The delivery of the copy of the award has the effect of conferring rights on one party and the said entitlement to exercise those rights ends with

the expiry of the prescribed period of limitation which would be computed from that date. Hence, the delivery of the award is imperative in the arbitral proceedings. Section 3 of the Act stipulates that communication is “deemed receipt” on the date of delivery. Therefore, it becomes important to analyze whether the date of delivery is to be taken as the date of receipt of the award under Section 34(3) of the Act. Mere Delivery of Award Does Not Amount to “Deemed receipt”: The gap between combined reading of Section 31(5) and Section 3 on one hand and Section 34(3) on the other hand was diluted by the Supreme Court in India in the case of Union of India v. Tecco Trichy Engineers and Contractors1 wherein a three judge bench of the Supreme Court, with respect to the issue of limitation for filing objections under Section 34 for setting aside the arbitral award, held that the period of limitation would commence only after a valid delivery of an arbitral award takes place under Section 31(5) of the Act. The Court held that this is not a matter of mere formality. It is a matter of substance. The delivery of the arbitral award to the party, to be effective, has to be received by the party. This delivery by the arbitral tribunal, and receipt by the party, sets in motion the period of limitation. In State of Maharashtra & Ors v. Ark Builders Pvt. Ltd.2, while following the judgment in Union of India vs. Techno Trichy Engineers and Contractors, the Supreme Court held that the expression “party making the application has received the arbitral award” cannot be read in isolation, and it must be understood that Section 31(5) requires a signed copy of the award to be delivered to each party. Further, in the case of State of Himachal Pradesh vs. Himachal Techno Engineers3, the Supreme Court held that when the award is delivered or deposited or left in the office of a party on a non-working day, the date of such physical delivery is not the date of “receipt” of the award by that party. Delivery, thus, has to be effective so as to be called as receipt by the party.

Setting Aside an Arbitral Award Like other ways of dispute settlement, the process of arbitration, to work effectively needs the support of the system of law. Earlier, the provisions on arbitration were laid down in three different enactments, namely, The Arbitration Act, 1940, which dealt with the domestic awards, The Arbitration (Protocol And Convention) Act, 1937 and The Foreign Awards (Recognition and Enforcement) Act, 1961, which basically dealt with foreign awards. The Arbitration Act, 1940 and also the Acts of 1937 and 1961 were then repealed by The Arbitration and Conciliation Act, 1996. This modern law seeks to provide for an effective mode of settlement of disputes between the parties, both for domestic and also for international commercial arbitration.

It is clear an evident that an arbitral award will be binding on the parties. However under section 34 read with section 37 of the Act it is provided that an arbitral award can be appealed against on limited question of fact and law. Section 34 lays down the grounds on which an award passed by the arbitral tribunal can be set aside, and at the same time section 37 enumerates when an award can be appealed against. These include capacity of a party, invalidity of arbitration agreement, violation of principles of natural justice and the exceeding of terms of reference by arbitrator. The only residuary ground on which the Court can go into the merits of the award is the public policy, which is always subject to circumstances and interpretation. During the course of this paper, the researcher intends to delve into the provisions of the Arbitration and Conciliation Act, 1996 so as to discover the grounds for setting aside and appeal against an arbitral award and whether it is sufficient to provide recourse to the aggrieved party. Award Amount An award, according to The Arbitration Act, 1996 will be considered valid if it satisfies two conditions, which are: it must be certain, and it must contain the decision. The award should not leave any matters to be discussed subsequently and it should clearly mention and define the duties and liabilities imposed on the parties. It must be clear and unambiguous and final in relation to the issues and claims with which it deals. In Union of India Vs Punjab Communications Ltd, the amount which was payable by the objector to the respondent was not specified in the award and the claim for the amount which has been denied by it was incomplete, ambiguous and incapable of being implemented or enforced, therefore the award was liable to be set aside. Interference of The Court The grounds for objecting an award under section34 and section 37 are now made common to purely domestic awards as well as international arbitration awards. The principle of least court interference seems fine when it is applied to international arbitration awards. The same, though, cannot be said with respect to domestic awards as many a times the awards passed in India are passed by lay men who are not very well

acquainted with law. Thus, unlike with international awards, interference with awards given in domestic matter should not be restricted. “Amongst states which have a developed arbitration law, it is generally recognized that more freedom may be allowed in an international arbitration than is commonly allowed in a domestic arbitration. The reason is evident. Domestic arbitration usually takes place between the citizens or residents of the same state, as an alternative to proceedings before the courts of law of that state…it is natural that a State should wish (and even need) to exercise firmer control over such arbitrations, involving its own residents or citizens than it would wish (or need) to exercise in relation to international arbitrations which may only take place within the state’s territory because of geographical convenience.” The above passage supports the view that in the matter of purely domestic arbitrations between Indian nationals, the State can desire that its courts should have greater or firmer control on the arbitrations. Q6. (f.) Conduct of arbitral proceedings Equal treatment of parties— The parties shall be treated with equality and each party shall be given a full opportunity to present his case. Determination of rules of procedure— 1. The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872). 2. Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. 3. Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate. 4. The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence. Place of arbitration— 5. The parties are free to agree on the place of arbitration. 6. 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.

7. Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property. Commencement of arbitral proceedings— Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. Language— 8. The parties are free to agree upon the language or languages to be used in the arbitral proceedings. 9. Failing any agreement referred to in sub-section (1), the arbitral tribunal shall determine the language or languages to be used in the arbitral proceedings. 10.The agreement or determination, unless otherwise specified, shall apply to any written statement by a party, any hearing and any arbitral award, decision or other communication by the arbitral tribunal. 11.The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal. Statements of claim and defence— 12.Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements. 13.The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit. 14.Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it. Hearings and written proceedings—

15.Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials: Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held. 16.The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property. 17.All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties. Default of a party— unless otherwise agreed by the parties, where, without showing sufficient cause,— 18.the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings; 19.the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant; 20.a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it. Expert appointment by arbitral tribunal— 21.Unless otherwise agreed by the parties, the arbitral tribunal may— a. appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal, and b. require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection. 22.Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of

his written or oral report, participate in an oral hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue. 23.Unless otherwise agreed by the parties, the expert shall, on the request of a party, make available to that party for examination all documents, goods or other property in the possession of the expert with which he was provided in order to prepare his report. Court assistance in taking evidence— 24.The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the court for assistance in taking evidence. 25.The application shall specify— a. the names and addresses of the parties and the arbitrators; b. the general nature of the claim and the relief sought; c. the evidence to be obtained, in particular,— i.

the name and address of any person to be heard as witness or expert witness and a statement of the subject-matter of the testimony required; ii. the description of any document to be produced or property to be inspected. 26.The court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the arbitral tribunal. 27.The court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it. 28.Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the court. 29.In this section the expression “Processes” includes summonses and commissions for the examination of witnesses and summonses to produce documents. ARBITRAL AWARD: 1. The arbitral award shall be in writing. An oral decision is not an award under the Arbitration and Conciliation Act, 1996; 2. The award shall be signed by the members of the arbitral tribunal;

3. In arbitral proceedings with more than one arbitrator the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated; 4. Date and place are to be mentioned in the award in accordance with Section 20 of the Act and the award should be deemed to have been made at that place; 5. The arbitral award shall state the reasons upon which it is made; 6. If the agreement indicates that no reasons to be given then it is not required to state the reasons; 7. If the award is made on the basis of the settlement on the agreement between the parties to the dispute, then no reasons are to be given; 8. Recording of reasons involves analysis of the dispute to reach a logical conclusions; 9. Award can be divided into four parts, which are preamble, findings of the facts, submission of the parties and conclusion of the tribunala) The preamble of the award may contain reference to the arbitration, constitution of the Tribunal, procedures adopted by the Tribunal etc.,; b) The second part may contain points at issue which may be divided into two, issue of fact and issue for law; c) The third part may contain argument for the claimant, argument for the respondents and the findings of the tribunal; d)

Conclusions of the Tribunal, i.e., award of the Tribunal is the fourth part. 10.The Arbitral Tribunal may award interest at such rate as it deems reasonable on the whole or any part of the money for the whole or any part of the period between the date on which the cause of action arose and on the date on which the award is made; 11.Unless the award otherwise directs the sum directed to be paid carry interest @ 18% per annum from the date of award to the date of payment; 12.Unless otherwise agreed to by the parties the cost of arbitration shall be fixed by the Tribunal. The Tribunal shall specify the party entitled to costs, the party who shall pay the costs, the amount of costs or method of determining the award and the manner in which the costs shall be paid; 13.The costs include the fees and expenses of the arbitrators and witnesses, legal fees and expenses, any administration fees of the institution supervising the arbitration and any other expenses incurred in connection with the arbitral proceedings and the arbitral award; 14.The arbitral award is required to be on stamp paper of prescribed value as applicable at the place of making the award;

15.After making the award, a signed copy should be delivered to each party for appropriate action like implementation of the award or recourse against the arbitral Tribunal. FINALITY OF THE AWARD: The award shall be final and binding on the parties and persons claiming under it subject to the time limit prescribed under Sec. 33 and 34 of the Act. The time limits are as follows: 1. Correction and interpretation of the award – 30 days from the receipt of the award; 2. Tribunal making a correction or giving an interpretation on an receipt of application for correction/interpretations – 30 days of the receipt of the request (this period may be extended by the Tribunal); 3. Tribunal making a correction on its own – 30 days from the date of award (This time cannot be extended by the Tribunal); 4. Party applying for an additional award against the claim omitted in the award – 30 days from the date of receipt of the award; 5. Tribunal making the additional award – 60 days of the receipt of the request (This period may be extended by the Tribunal). The additional award should have the aspects of the award as mentioned above. 6. Application for setting aside the award – 3 months from the date of receipt of award or the date of disposal of the application in the above categories (The court can extend to a maximum of 30 days).

In every arbitral proceeding, an arbitrator has to be appointed who finally makes an award which is called the arbitral award. The contents of the award have to be written and signed by the arbitrator and the reasons for the award have to be stated unless stated otherwise. As mentioned above, section 34 provides for provision on the basis of which an arbitral award can be set aside, and if an award is declared to be void then the whole purpose and object of the act gets nullified. Thus, the arbitrator has to take extra care while making an award, but how much care should be taken is the question without the answer. An appeal to set aside an award has to be strictly made by the aggrieved party within 3 months from the date the award was received by it. A request can also be made under section 33, provided that the court is satisfied that there was a sufficient cause for the delay, thereby allowing the appeal to set aside an award to be made within 30 days after

the 3 month period. Hence the award should be challenged timely as per the provision of section 34(3) of the Act. According to section 34(2), an award maybe set aside on the application of an aggrieved party. Under certain circumstances, the court can set aside the award made by the arbitral tribunal even without an application made by the party. The grounds, mentioned in section 34(2) under which a party can make an application to the court to set aside an award are as follows: When the party making the application was incapacitated to enter the agreement. The arbitration agreement, to which the parties are subjected, is not valid under the law. A proper notice of appointment of arbitrators, or of the arbitral tribunal was not given to the party making the application. Arbitral award deals with a dispute not contemplated by the parties or beyond the term of submission. Composition of the Arbitral Award was not in accordance with the agreement of the parties. Subject-matter of dispute is not capable of settlement by arbitration under the law for the time being in force. The arbitral award is in conflict with the public policy of the country. Once an application of setting aside the arbitral award is preferred under section 34, the executing court has no jurisdiction to enforce the award, until and unless the application under section 34 is dismissed or refused. This is a marked departure from even the normal rule under the Code of Civil Procedure, 1908 where an executing court can execute the decree if there exists no stay by the appellate court. In the opinion of the author, this ought not to have been the position under the new Act. Enforcement of the award should be permitted unless there is a stay by the court hearing an application under section 34. Constitutional Validity Of Section 34 In TPI Ltd Vs Union of India, in a writ petition, it was contended by the petitioner that a right to challenge an arbitral award on merits should be present, and in the absence of the same, section 34 would be unconstitutional. The court dismissed the write petition and stated that the matter in question was not related to judicial review of a tribunal decision

created under any statute or any administrative action. The arbitration is an alternate forum for redressal of disputes, and is selected by the parties of their own free will and they agree to the arbitrator’s decision by means of a mutual agreement or contract, which gives a go by to the normal judicial forum otherwise available to the parties. There is no compulsion or imposition by any statute compelling the parties to resort to arbitration if a dispute arises. When the parties have chosen the forum of arbitration and the arbitrator of their choice, it is not necessary to make a provision for appeal against the award rendered by the arbitrator. The legislature has the power to specify the grounds on which an award can be challenged and it would be permissible for the party to challenge the award only on those grounds. If it were permissible for the court to re-examine the correctness of the award, the entire proceedings would amount to a futile exercise. Interpretation Of The Term ‘Public Policy’ It is not possible to precisely define “Public Policy’. Keeping that in mind, the term “Public Policy” has been interpreted quite liberally by the Indian Courts. Whatever tends to injustice of operation, restraint of liberty, commerce, natural or legal rights, whatever tends to the obstruction of justice or to the violation of a statute and whatever is against good moral when made the object of contract is against ‘public policy’, and, therefore, void and not susceptible to enforcement. The researcher would like to further elaborate the same point with the help of a few Indian cases where the courts have had an opportunity to interpret public policy. In Renusagar Power Co. v. General Electric Co. the hon’ble Supreme Court held that “the expression ‘public policy’ refers to the public policy India and the recognition and enforcement of the award of the arbitral tribunal in India cannot be questioned on the ground that it is contrary to the public policy of any other country”. It has been held in various cases that it is against public policy if the arbitrator is partial or biased towards a party. Thus the arbitrator is bound: 

by the contract between the parties and decide the case in the light of the contractual provision, and to give proper opportunity to the parties;

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to pass the award in accordance with the law so as not to be guilty of misconduct and

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to apply mind to crucial questions as non-application amounts to legal misconduct.

The judgment given by the Supreme Court in Oil and Natural Gas Corpn. Ltd. V. Saw Pipes ltd, further interprets public policy. The court stated that if any award given by the arbitral tribunal violates any provision of The Arbitration Act, 1996 or is “patently illegal”, then in that case the award could be set aside under section 34 of the said Act. Thus the court has expressly stated that “an award which is, on the face of it, patently in violation of any statutory provisions cannot be said to be in public interest”. Q7 (g.) Under the Arbitration and Conciliation (Amendment) Act, 2015. There are two avenues available for the enforcement of foreign awards in India, viz., the New York Convention and the Geneva Convention, as the case may be. Enforcement under the New York Convention Sections 44 to 52 of the Arbitration and Conciliation (Amendment) Act, 2015 deals with foreign awards passed under the New York Convention. The New York Convention defines "foreign award" as an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960- a. In pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and b. In one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies. From the above mentioned conditions, it is clear that there are two pre-requisites for enforcement of foreign awards under the New York Convention. These are: a. The country must be a signatory to the New York Convention. b. The award shall be made in the territory of another contracting state which is a reciprocating territory and notified as such by the Central Government. Section 47 provides that the party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court (a) original award or a duly authenticated copy thereof; (b) original arbitration agreement or a duly certified copy thereof; and (c) any evidence required to establish that the award is a foreign award. As per the new Act, the application for enforcement of a foreign award will now only lie to High Court. Once an application for enforcement of a foreign award is made, the other party has the opportunity to file an objection against enforcement on the grounds recognized under Section 48 of the Act. These grounds include:

a. the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or b. the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or c. the award deals with a difference 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: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or d. the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or e. the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. f. the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or g. the enforcement of the award would be contrary to the public policy of India.

The Amendment Act has restricted the ambit of violation of public policy for international commercial arbitration to only include those awards that are: (i) affected by fraud or corruption, (ii) in contravention with the fundamental policy of Indian law, or (iii) conflict with the notions of morality or justice. It is further provided that if an application for the setting aside or suspension of the award has been made to a competent authority, the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security. Section 49 provides that where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court.

B. Enforcement under the Geneva Convention Sections 53-60 of the Arbitration and Conciliation (Amendment) Act, 2015 contains provisions relating to foreign awards passed under the Geneva Convention. As per the Geneva Convention, "foreign award" means an arbitral award on differences relating to matters considered as commercial under the law in force in India made after the 28th day of July, 1924,a. in pursuance of an agreement for arbitration to which the Protocol set forth in the Second Schedule applies, and b. between persons of whom one is subject to the jurisdiction of some one of such Powers as the Central Government, being satisfied that reciprocal provisions have been made, may, by notification in the Official Gazette, declare to be parties to the Convention set forth in the Third Schedule, and of whom the other is subject to the jurisdiction of some other of the Powers aforesaid, and c. in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made, by like notification, declare to be territories to which the said Convention applies, and for the purposes of this Chapter, an award shall not be deemed to be final if any d. proceedings for the purpose of contesting the validity of the award are pending in any country in which it was made.

Section 56 provides that the party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court (a) original award or a duly authenticated copy thereof; (b) evidence proving that the award has become final and (c) evidence to prove that the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto and that the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure. As per the new Act, the application for enforcement of a foreign award will now only lie to High Court. The conditions for enforcement of foreign awards under the Geneva Convention are provided under Section 57 of the Arbitration and Conciliation Act, 1996. These are as follows: a. the award has been made in pursuance of a submission to arbitration which is valid under the law applicable thereto; b. the subject-matter of the award is capable of settlement by arbitration under the law of India;

c. the award has been made by the arbitral tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure; d. the award has become final in the country in which it has been made, in the sense that it will not be considered as such if it is open to opposition or appeal or if it is proved that any proceedings for the purpose of contesting the validity of the award are pending; e. the enforcement of the award is not contrary to the public policy or the law of India. The Amendment Act has restricted the ambit of violation of public policy for international commercial arbitration to only include those awards that are: (i) affected by fraud or corruption, (ii) in contravention with the fundamental policy of Indian law, or (iii) conflict with the notions of morality or justice. However, the said section lays down that even if the aforesaid conditions are fulfilled, enforcement of the award shall be refused if the Court is satisfied that a. the award has been annulled in the country in which it was made; b. the party against whom it is sought to use the award was not given notice of the arbitration proceedings in sufficient time to enable him to present his case; or that, being under a legal incapacity, he was not properly represented; c. the award does not deal with the differences contemplated by or falling within the terms of the submission to arbitration or that it contains decisions on matters beyond the scope of the submission to arbitration: Provided that if the award has not covered all the differences submitted to the arbitral tribunal, the Court may, if it thinks fit, postpone such enforcement or grant it subject to such guarantee as the Court may decide.

Q 8. (h.) Commencement of conciliation proceedings 1. The party initiating conciliation sends to the other party a written invitation to conciliate under these Rules, briefly identifying the subject of the dispute. 2. Conciliation proceedings commence when the other party accepts the invitation to conciliate. If the acceptance is made orally, it is advisable that it he confirmed in writing. 3. If the other party rejects the invitation, there will be no conciliation proceedings. 4. If the party initiating conciliation does not receive a reply within thirty days from the date on which he sends the invitation, or within such other period of time as

specified in the invitation, he may elect to treat this as a rejection of the invitation to conciliate. If he so elects, he informs the other party accordingly. Role of conciliator 1. The conciliator assists the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute. 2. The conciliator will be guided by principles of objectivity, fairness and justice, giving consideration to, among other things, the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties. 3. The conciliator may conduct the conciliation proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, the wishes the parties may express, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute. 4. The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons therefor.

Q9. (i.) In mediation, two or more people come together to try to work out a solution to their problem. A neutral third person, called the mediator, is there to help them along. Most mediators have some training in conflict resolution, although the extent of their training varies greatly. Unlike a judge or an arbitrator, the mediator does not take sides or make decisions. The mediator's job is to help the disputants evaluate their goals and options and find their own mutually satisfactory solution. Mediation is forward-looking; the goal is for all parties to work out a solution they can live with and trust. It focuses on solving problems, not uncovering the truth or imposing legal rules. This, of course, is a far different approach than courts take. In court, a judge or jury looks back to determine who was right and who was wrong, then imposes a penalty or award based on its decision. Because the mediator has no authority to impose a decision, nothing will be decided unless both parties agree to it. Knowing that no result can be imposed from above greatly reduces the tension of all parties -- and it also reduces the likelihood that someone will cling to an extreme position. Also, if mediation does not produce an agreement, either side is free to sue. Typically, neighbor-to-neighbor or other personal issues are resolved in a few hours. Negotiations between divorcing couples or small businesses often involve several halfday sessions, spread out over a month or two.

Many people think that mediation is an informal process, in which a friendly mediator chats with the disputants until they suddenly drop their hostilities and work together for the common good. In fact, mediation is a multi-stage process designed to get results. It is less formal than a trial or arbitration, but there are distinct stages to the mediation process. Most mediations proceed as follows: Stage 1: Mediator's Opening Statement. After the disputants are seated at a table, the mediator introduces everyone, explains the goals and rules of the mediation, and encourages each side to work cooperatively toward a settlement. Stage 2: Disputants' Opening Statements. Each party is invited to describe, in his or her own words, what the dispute is about and how he or she has been affected by it, and to present some general ideas about resolving it. While one person is speaking, the other is not allowed to interrupt. Stage 3: Joint Discussion. The mediator may try to get the parties talking directly about what was said in the opening statements. This is the time to determine what issues need to be addressed. Stage 4: Private Caucuses. The private caucus is a chance for each party to meet privately with the mediator (usually in a nearby room) to discuss the strengths and weaknesses of his or her position and new ideas for settlement. The mediator may caucus with each side just once, or several times, as needed. These private meetings are considered the guts of mediation. Stage 5: Joint Negotiation. After caucuses, the mediator may bring the parties back together to negotiate directly. Stage 6: Closure. This is the end of the mediation. If an agreement has been reached, the mediator may put its main provisions in writing as the parties listen. The mediator may ask each side to sign the written summary of agreement or suggest they take it to lawyers for review. If the parties want to, they can write up and sign a legally binding contract. If no agreement was reached, the mediator will review whatever progress has been made and advise everyone of their options, such as meeting again later, going to arbitration, or going to court. The basic difference between mediation and conciliation is based on the role played by the third party who is selected by the parties seeking a settlement, in consensus. In mediation, the mediator acts as a facilitator who helps the parties in agreeing. Conversely, in conciliation, the conciliator is more like an interventionist who provides probable solutions to the parties concerned, to settle disputes. Alternate Dispute Resolution (ADR) is a dispute resolution method that employs nonadversarial (i.e. out of court) ways to adjudicate legal controversies. ADR methods are informal, cheaper and faster, in comparison to the traditional litigation process. It includes arbitration, conciliation, mediation and negotiation.

Many think that conciliation and mediation are one and the same thing, but they are different, as they are governed by different acts. Comparison Chart BASIS FOR COMPARISON

MEDIATION

CONCILIATION

Meaning

Mediation is a process of resolving issues between parties wherein a third party assist them in arriving at an agreement.

Conciliation is a alternate dispute resolution method in which an expert is appointed to settle the dispute by persuading parties to reach agreement.

Regulated by

Code of Civil Procedure, 1908

Arbitration and Conciliation Act, 1996

Basic element

Confidentiality, that depends on trust.

Confidentiality, whose extent is fixed by law.

Third Party

Acts as facilitator.

Acts as facilitator, evaluator and intervener.

Result

Agreement between parties

Settlement agreement

Agreement

It is enforceable by law.

It is executable as decree of civil court.

Q10. (j.) Lok Adalat is one of the alternative dispute redressal mechanisms, it is a forum where disputes/cases pending in the court of law or at pre-litigation stage are settled/ compromised amicably. Lok Adalats have been given statutory status under the Legal Services Authorities Act, 1987. Under the said Act, the award (decision) made by the Lok Adalats is deemed to be a decree of a civil court and is final and binding on all parties and no appeal against such an award lies before any court of law. If the parties are not satisfied with the award of the Lok Adalat though there is no provision for an appeal against such an award, but they are free to initiate litigation by

approaching the court of appropriate jurisdiction by filing a case by following the required procedure, in exercise of their right to litigate. There is no court fee payable when a matter is filed in a Lok Adalat. If a matter pending in the court of law is referred to the Lok Adalat and is settled subsequently, the court fee originally paid in the court on the complaints/petition is also refunded back to the parties. The persons deciding the cases in the Lok Adalats are called the Members of the Lok Adalats, they have the role of statutory conciliators only and do not have any judicial role; therefore they can only persuade the parties to come to a conclusion for settling the dispute outside the court in the Lok Adalat and shall not pressurize or coerce any of the parties to compromise or settle cases or matters either directly or indirectly. The Lok Adalat shall not decide the matter so referred at its own instance, instead the same would be decided on the basis of the compromise or settlement between the parties. The members shall assist the parties in an independent and impartial manner in their attempt to reach amicable settlement of their dispute. Nature of Cases to be Referred to Lok Adalat 1. Any case pending before any court. 2. Any dispute which has not been brought before any court and is likely to be filed before the court. Provided that any matter relating to an offence not compoundable under the law shall not be settled in Lok Adalat. Which Lok Adalat to be Approached As per section 18(1) of the Act, a Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of (1) Any case pending before; or (2) Any matter which is falling within the jurisdiction of, and is not brought before, any court for which the Lok Adalat is organised. Provided that the Lok Adalat shall have no jurisdiction in respect of matters relating to divorce or matters relating to an offence not compoundable under any law. How to Get the Case Referred to the Lok Adalat for Settlement (A) Case pending before the court. (B) Any dispute at pre-litigative stage. The State Legal Services Authority or District Legal Services Authority as the case may be on receipt of an application from any one of the parties at a pre-litigation stage may refer such matter to the Lok Adalat for amicable settlement of the dispute for which notice would then be issued to the other party. Levels and Composition of Lok Adalats: At the State Authority Level The Member Secretary of the State Legal Services Authority organizing the Lok Adalat would constitute benches of the Lok Adalat, each bench comprising of a sitting or

retired judge of the High Court or a sitting or retired judicial officer and any one or both of- a member from the legal profession; a social worker engaged in the upliftment of the weaker sections and interested in the implementation of legal services schemes or programmes. At High Court Level The Secretary of the High Court Legal Services Committee would constitute benches of the Lok Adalat, each bench comprising of a sitting or retired judge of the High Court and any one or both of- a member from the legal profession; a social worker engaged in the upliftment of the weaker sections and interested in the implementation of legal services schemes or programmes. At District Level The Secretary of the District Legal Services Authority organizing the Lok Adalat would constitute benches of the Lok Adalat, each bench comprising of a sitting or retired judicial officer and any one or both of either a member from the legal profession; and/or a social worker engaged in the upliftment of the weaker sections and interested in the implementation of legal services schemes or programmes or a person engaged in para-legal activities of the area, preferably a woman. At Taluk Level The Secretary of the Taluk Legal Services Committee organizing the Lok Adalat would constitute benches of the Lok Adalat, each bench comprising of a sitting or retired judicial officer and any one or both of either a member from the legal profession; and/or a social worker engaged in the upliftment of the weaker sections and interested in the implementation of legal services schemes or programmes or a person engaged in para-legal activities of the area, preferably a woman. National Lok Adalat National Level Lok Adalats are held for at regular intervals where on a single day Lok Adalats are held throughout the country, in all the courts right from the Supreme Court till the Taluk Levels wherein cases are disposed off in huge numbers. From February 2015, National Lok Adalats are being held on a specific subject matter every month. Permanent Lok Adalat The other type of Lok Adalat is the Permanent Lok Adalat, organized under Section 22B of The Legal Services Authorities Act, 1987. Permanent Lok Adalats have been set up as permanent bodies with a Chairman and two members for providing compulsory pre-litigative mechanism for conciliation and settlement of cases relating to Public Utility Services like transport, postal, telegraph etc. Here, even if the parties fail to reach to a settlement, the Permanent Lok Adalat gets jurisdiction to decide the dispute, provided, the dispute does not relate to any offence. Further, the Award of the Permanent Lok Adalat is final and binding on all the parties. The jurisdiction of the Permanent Lok Adalats is upto Rs. Ten Lakhs. Here if the parties fail to reach to a

settlement, the Permanent Lok Adalat has the jurisdiction to decide the case. The award of the Permanent Lok Adalat is final and binding upon the parties. The Lok Adalat may conduct the proceedings in such a manner as it considers appropriate, taking into account the circumstances of the case, wishes of the parties like requests to hear oral statements, speedy settlement of dispute etc. Mobile Lok Adalats are also organized in various parts of the country which travel from one location to another to resolve disputes in order to facilitate the resolution of disputes through this mechanism. As on 30.09.2015, more than 15.14 lakhs Lok Adalats have been organized in the country since its inception. More than 8.25 crore cases have been settled by this mechanism so far.

FIELD VISIT REPORT

National Lok Adalat Court Visited: Saket Courts Complex, New Delhi. Date of Visit: 12 -Nov- 2016.

Submitted by: Ayush Ghai Class Roll No: 432 Course/Term: LL.B / V Term College: Law Center – II, University of Delhi

INDEX

Sl.

Topic

Page

No.

No.

1

Introduction

2.

Field visit report of Court Room No. 208, Court of

I

02 03

Ms. Bhavna Kalia, Ld. Metropolitan Magistrate (South District).

3.

Field visit report of Court Room No. 210, Court of Sh. Sushant Changotra, Ld. Metropolitan Magistrate (South District).

04

a. Sh. Jaswant Singh versus Allahabad Bank

b. Sh. Nafe Singh versus State Bank of India

01

05

INTRODUCTION

Types of cases referred to LOK ADALAT 

Motor accident compensation claims cases



Partition Claims· Damages Cases



Matrimonial and family disputes



Mutation of lands case



Land Patta cases· Bonded Labour cases



Land acquisition disputes



Bank’s unpaid loan cases



Arrears of retirement benefits cases



Family Court cases ( Not Sub Judice)

Advantages of Lok Adalat

02



Speedy Justice and Saving from the legendary court procedures



Solving problems of Backlog Cases



Faster and inexpensive remedy with legal status



There is no strict application of the procedural laws and the EvidenceAct while assessing the merits of the claim by the Lok Adalat.



Disputes can be brought before the LokAdalat directly instead of going to a regular court first and then to the LokAdalat.

Court of : Ms. Bhavna Kalia, Ld. Metropolitan Magistrate (South District).

Type of Cases Heard by Ld. Presiding Officer : Violation of Traffic Rules.

Report

a) There were many people present in the court room with traffic challans issued in their names for the violation of Traffic Rules.

b) As it was a National Lok Adalat, Ld. Presiding Officer settled the challans with low amount compared to the actual liability of the offence to expedite the process and curtail the pendency of challan courts.

c) The challans for driving the commercial vehicles without permit were settled to a minimum amount of Rupees two thousand and for driving without seat belt, helmet and red light jump etc. were settled in Rupees twenty only.

d) Many Challans were settled in a very speedy manner and the Ld. Presiding officer seem to be fast in decision making and made hassle free settlements.

03

Court of: Sh. Sushant Changotra, Ld. Metropolitan Magistrate, South District. Type of Cases Heard by Ld. Presiding Office: Failure/Default in repayment of Banks'Loan.

Case – I Jaswant Singh versus Allahabad Bank

Facts :   

Recovery of a sum of Rs. 195539/ by Allahabad Bank from Sh. Jaswant Singh in lieu of personal loan taken by him from the bank. Salary of Sh. Jaswant Singh made stopped by his department. Sh. Jaswant Singh submitted that the EMI (Easy Monthly Installments) towards aforesaid loan has regularly been deducted from his salaried bank account

Issue  Whether the instalments towards personal loan are being deducted from the salaried saving account of Mr Jaswant Singh 

If the EMI’s are being deducted from the saving account of Mr Jaswant Singh, whether they are credited to the account of Allahbad Bank.

Report : 

At prelitigative stage Ld. Presiding Officer asked to both the parties to produce the relevant documents i.e. bank statements etc. to adduce their claim but both the parties i.e. Sh. Jaswant Singh and Allahabad Bank failed to produce the same.



It is, therefore, Ld. Presiding Officer asked to both the parties to come again with relevant documents in support of their submissions.

04

Case – II Nafe Singh versus State Bank of India Facts : ●

Recovery of a sum of Rs. 3,59,900/ by State Bank of India from the legal heirs of deceased loanee (who took the loan from the Bank).

●

Deceased took a Car loan of around Rs. 5 lakh from the State Bank of India.

●

Sh. Nafe Singh, father of deceased were looking for some waive in the payment of outstanding and was ready for “one time settlement” with reduced amount of loan.

Issue : ●

Can a bank waive off a loan amount upto some limit and the issue by way of “one time settlement”.

Report : ●

Ld. Presiding Officer talked to both the parties simultaneously and separately too.

●

Ld. Presiding Officer tried to convince the bank representative to reduce the balance loan amount.

●

Ld. Presiding Officer also tried to make Sh. Nafe Singh understand that if he make the full & final payment of the balance loan amount then he can make himself safe from the agony, wastage of time, energy and money which will be involved in the litigation process.

●

Bank representative said that he would have to pay the same amount to the State Bank and refused to waive/settle the amount

●

05

Matter was not settled at that stage as both the parties were adamant to their demands.

CONCLUSION Lok Adalats can be functional at larger levels only if people are willing and aware of its advantages and if the drawbacks are done away with. More provisions and amendments that could empower permanent lok adalats is needed if they are to be made supplementary form of litigation for people who cannot or should not resort to courts.

As PM has suggested involvement of law students and research on this system could go a long way in encouraging people to get justice the easier and faster way without having to spend any money. However, we must also keep the drawbacks in mind and people must be informed that when the situation calls for an appeal in court to get the culprit punished, people must not hesitate and settle for compensations.