ARBITRATION PROCESS TIMELINE - A GUIDE

Arbitration is similar to going to court, but faster, cheaper and less complex than litigation. If the case settles, an arbitration will last around one year.

Arbitration clause or arbitration agreement.

While any deal involving partnerships, insurance, civil matters, or other matters is being draughted. The parties will include an arbitration clause in the contract, which should specify that an arbitration procedure will be used to settle any future disputes between the parties. When writing an arbitration provision in a contract, the drafter must take great care to make sure the language is precise and covers every scenario in which a dispute might arise from the contract or as a result of its relationship. If the parties' contract does not contain an arbitration clause, the parties at that time can make an arbitration agreement ,but it should be with their mutual consent ,in order to solve the dispute arising out of the previous contract. South Delhi Municipal Corporation vs. Sms AamwTollways Pvt. Ltd. (2018) was decided by the Supreme Court of India. In this case the court held that it was held by the court that arbitration is to be understood as the process by which the dispute is resolved by such an arbitrator which is chosen and acceptable to both sides under the arbitration agreement.

Notice of arbitration

Section 21 of the Act specifies when arbitration proceedings can begin. Arbitration is considered to commence on the date the respondent receives a request to refer the dispute to arbitration. The parties are required to respond to the notice within the specified time frame, which starts from the date the respondent receives the legal notice and ends when the period given in the notice expires.

Appointment of arbitrators.

Section 10(1) of the Act states that the parties are free to agree on any number of arbitrators, however, the number of arbitrators should not be in the even number. Further, Section 10(2) enunciates that in case parties fail to decide arbitrators in accordance with Section 10(1), then under that circumstance the arbitral tribunal shall consist of a sole arbitrator.

IBI Consultancy India Pvt. Ltd. vs. DSC Limited (2018), The Supreme Court of India in this case held that the parties are free to agree on the number of arbitrators. However, it must be an odd number. If the circumstances are as such in which the parties are unable to agree on the procedure prescribed, or are not able to form the arbitral tribunal with their mutual satisfaction.

Statement of claim

Section 23 of the Act, states that within the time period that is fixed by the parties, the claimant must state supporting facts about his claim, the point of issue and relief.

The parties must present their statement of claim, including with all supporting documentation based on the pertinent facts and arbitration problems. It is important to remember that the claim may be modified if both parties consent to it, either during the arbitral process or until the arbitral tribunal deems the claim improper.

Hearing of parties

Steps that are involved during the process of hearing of the parties:

1. Preliminary hearing and exchange of information stage.

Once the arbitrator is appointed and confirmed, the arbitration proceedings begin with a preliminary hearing, where the parties introduce their appointed arbitrator and agree on a schedule. During this meeting, the main issues of the dispute are discussed, followed by the exchange of information between the parties. A date for the next hearing is set. At this subsequent hearing, the arbitrator will issue a written document, typically referred to as a scheduling order.

2. Stage of hearing

At this point, the parties present their case to the arbitrators. This presentation can occur in person, via telephone, or by submitting written documents, including the arbitration agreements and the relevant rules governing the case. Following the hearings, the parties are required to submit written arguments as directed by the arbitrator.

Award stage

After the hearing is completed, and the arbitrator determines that no more evidence will be presented, then in that condition the hearing is closed and a date is fixed when the award will be issued.

Arbitral award

An arbitral award is a final decision issued by the arbitrator. It can involve monetary compensation to one party or to other parties, but it may also include non-financial remedies, such as providing employment incentives or cessation of certain business practices.

Essentials of the award

• The award must be in written form and duly signed either by the majority or by all.

• The date and place of the award should be mentioned.

• The reason for the decision must be mentioned in the award, except when parties have agreed that there is no need to give that reason or when there is a mutual settlement during the proceeding which is recorded as an award.

• The arbitral award should be certain and the final award must not be vague, uncertain and ambiguous.

• There is no such need for the registration of an award, award is like a final judicial decree and must be enforced in the same way.

  
  

Types of arbitral award

1. Interim award

This is a temporary award given by the tribunal during which the proceeding is going on. An Interim award can be made by such a tribunal which has the authority to grant a final award. Interim orders are generally given for the money payment or for property’s disposition between the parties and an order to make an interim payment is on account of the costs of the arbitration.

Interim measures by the arbitral tribunal

Section 17 of arbitration and conciliation act defines the interim relief measures given by the tribunal.

"17. Interim measures ordered by arbitral tribunal.--

(1) A party may, during the arbitral proceedings, apply to the arbitral tribunal--

(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters, namely:--

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient, and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it.

(2) Subject to any orders passed in an appeal under section 37, any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were an order of the Court.]"

However, it is pertinent to note that the arbitral tribunal cannot pass such an order that might affect the rights of a third party. The courts have also been given the power to grant interim measures and the provision regarding the same is being presented under Section 9 of the Act.

2. Final Award

The final award is the order given by the arbitrator after the completion of the entire arbitration proceeding. The arbitrator must state the reason for the decisions made in the award. After the final award is made it must be signed by all the arbitrators and the parties.

Challenging the award in the court ;

To challenge the arbitral award, the party in whose favor the award has been made must wait for a period of 90 days. During this time, the aggrieved party has the right to challenge the award.

Section 34 of the Act, it states that the court can set aside the arbitral award if:

• The party was under some type of incapacity.

• The contract of arbitration wasn’t valid under the law to which the parties had been subjected. 

• The party making an application for invoking the arbitration has not given proper opportunity to the other party for the appointment of the arbitrator.

• The award deals with disputes that do not fall under the submission of the arbitration or contain any other matter which is beyond the scope of arbitration.