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PRESEN A ION

on

ARBITRATIONTo

INSTITUTE OF CHARTERED

ACCOUNTANTS OF INDIA

JANUARY 18, 2009


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It is a good and fair settlementwhen neither party likes the

outcome, but agree to it


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Outline of Topics:

Introduction into Arbitration

Benefits & drawbacks

Kinds of arbitration

Sources of arbitration

Arbitration & Conciliation Act, 1996


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Introduction

ARBITRATION

Form of Alternative Dispute Resolution

Alternative to court room litigation

Parties submit their disputes to a NEUTRAL thirdparty called the Arbitrator (s) or Arbiter (s) for

resolution Binding dispute resolution, equivalent to

litigation in the courts


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Benefits of Arbitration

Confidentiality

Limited Discovery

Speed

Expert Neutrals

Cost Savings

Preservation of Business Relationships


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Drawbacks of Arbitration

Arbitration agreements aresometimes misleading

If arbitration is not mandatoryparties waive their to access thecourts.


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Types of Arbitration

Ad-hoc Arbitration

Institutional Arbitration

Statutory Arbitration

Domestic or International Arbitration

Foreign Arbitration


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Sources of Arbitration

State regulate arbitration through a variety of laws

A number of national procedural laws may also

contain provisions relating to arbitration

Key international instrument 1958 New York

Convention on Recognition and Enforcement ofFoeign Arbitral Awards


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INTERNATIONAL INSTRUMENTS

The Geneva Protocol of 1923

The Geneva Convention of 1927

The European Convention of 1961 The Washington Convention of 1965 (governing

settlement of international investment disputes)

The UNCITRAL Model Law (providing a modelfor a national law of arbitration)

The UNCITRAL Arbitration Rules (providing a setof rules for an ad hoc arbitration)


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Arbitral Disputes

Some types of arbitral disputes are

Property

Insurance Contract (including employment contracts) Business / partnership disputes Family disputes (except divorce matters) Construction Commercial recoveries


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Non Arbitral Disputes

The following cannot be resolved by arbitration

Insolvency

Matrimony

Criminal matters

Torts etc.


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Arbitration and

Conciliation Act, 1996

An act to consolidate the law relating to

domestic arbitration international commercial arbitration and

enforcement of foreign arbitral awards

It extends to the whole of India


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ARBITRATION AGREEMENT

Formulation of the arbitration agreement

"Arbitration Agreement" means an

agreement to submit to arbitration all orcertain disputes in respect of a definedlegal relationship, whether contractual ornot

which have arisen or

which may arise between them.


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Arbitration Agreement

Contd

An arbitration agreement may be in theform of an arbitration clause in a contractor in the form of a separate agreement.

An arbitration agreement shall be inwriting.


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Contd

An arbitration agreement is in writing ifit is contained in

a) a document signed by the parties;

a) an exchange of letters, telex, telegramsor other means of telecommunicationwhich provide a record of theagreement; or


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Contd

c) an exchange of statements of claim anddefence in which the existence of theagreement is alleged by one party and not

denied by the other.


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Reference To Arbitration

A judicial authority before which an actionis brought in a matter which is the subject

of an arbitration agreement shall, refer theparties to arbitration

If the issue is pending before a judicialauthority, arbitration may be commencedor continued and an arbitral award made


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COMPOSITION OFARBITRAL TRIBUNAL

Number of arbitrators.

The parties are free to determine the

number of arbitrators, provided that suchnumber shall not be an even number.

Failing the determination referred abovethe Arbitral Tribunal shall consist of a solearbitrator.


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Appointment of arbitrators

A person of any nationality may be an arbitrator,unless otherwise agreed by the parties.

The parties are free to agree on a procedure forappointing the arbitrator or arbitrators.

An arbitration with three arbitrators, each party

appoints one arbitrator, and the two appointedarbitrators appoints the third arbitrator who shallact as the presiding arbitrator.


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Appointment of Arbitrators

contd

If the appointment procedure is notfollowed and the arbitrators notappointed then the appointment shall

be made, upon request of a party, bythe Chief Justice of the State High Courtor any person or institution designatedby him


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contd

In the case of appointment of sole orthird arbitrator in an internationalcommercial arbitration, an arbitrator of

a nationality other than the nationalitiesof the parties where the parties belongto different nationalities may beappointed


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contd

Where the dispute with regards toappointment of arbitrators arise in aninternational commercial arbitration the

reference to "Chief Justice of High Courtshall be construed as a reference to the"Chief Justice of India"


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Grounds for challenge

An arbitrator may be challenged only if

(a) circumstances exist that give rise to

justifiable doubts as to his independenceor impartiality, or

(b) he does not possess the qualificationsagreed to by the parties.


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Termination of mandate

The mandate of an arbitrator shallterminate if

he becomes de jure or defacto unable toperform his functions or for other reasonsfails to act without undue delay; and

he withdraws from his office or the partiesagree to the termination of his mandate.


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Substitution of arbitrator

Where the mandate of an arbitratorterminates, a substitute arbitrator shall beappointed according to the rules that were

applicable

Where an arbitrator is replaced, anyhearings previously held may be repeatedat the discretion of the Arbitral Tribunal


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Substitution of arbitrator

An order or ruling of the arbitral Tribunalmade prior to the replacement of anarbitrator under this section shall not be

invalid solely because there has been achange in the composition of the arbitralTribunal

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