14 de May de 2018

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Similar a ADR - 5TH MAY - Cpt. BHATIA (F) - 5th LECTURE(20)



  1. 1 Welcome to CMMI Masterclass on ALTERNATE DISPUTE RESOLUTION Adv. Rajiv Bhatia Master Mariner, LL.B, LL.M (UK)
  2. 2 ARBITRATION AND CONCILIATION ACT,1996 (As Amended 2015) We will be looking at Chapters IV and V. Sections – 16,17,18,19, 20, 21(R/w Sec 43), 22, 23, 24, 25, 26 and 27.
  3. 3 CHAPTER IV JURISDICTION OF ARBITRALTRIBUNALS Sec 16. Deals with the right and competence of arbitral tribunal to rule on its jurisdiction.— •Sub Sec (1) states that it •may rule on its own jurisdiction •any objections with respect to the existence or validity of the arbitration agreement, such as: •(a) an arbitration clause which is part of a contract shall be treated as an independent agreement irrespective of the other terms of the contract. •Will survive the decision that the contract is null and void.
  4. 4 Sec 16 (Contd) • 16.(2) One can raise a plea that the arbitral tribunal does not have jurisdiction but not later than the submission of the statement of defence; The right is open even if the a party has appointed or participated in the appointment of, an arbitrator. • 16.(3) In case of the arbitral tribunal exceeds the scope of its authority this shall he raised as soon as the matter alleged goes beyond the scope of its authority during the arbitral proceedings. • 16.(4)The arbitral tribunal may admit such pleas as mentioned in (2) and (3) above, even at a later date, if it considers the delay justified. • 16.(5)The arbitral tribunal shall decide on such pleas referred above and, where the plea is rejected,Tribunal will continue with the arbitral proceedings and make an arbitral award.
  5. 5 Sec 16 (Contd) • 16.(6) In any case where a party is aggrieved by such an arbitral award it has the right u/s 34 for making an application for setting aside such an arbitral award • CaseLaw: The Supreme Court (“Court”) in the case of M/s MSP Infrastructure Ltd v/s M.P. Road Development Corporation Ltd, Civil Appeal No. 10778 of 2014, held; MPRDC for some reasons wanted to stall the arbitration proceeding at a later stage and purported to bring an objection on the jurisdiction of the Tribunal. The Tribunal rejected and proceeded. This objection ultimately reached the SC. The SC held that Section 16 of the Act bestowed upon an arbitral tribunal the power to decide as to whether it had the jurisdiction to entertain the dispute referred to it by the parties and that an interpretation of the words used in Section 16 of the Act, leaves no doubt that any challenge to the jurisdiction of the tribunal being raised by a party would have to be done at any point of time before or at the time of submission of the statement of defence.
  6. 6 Sec 17. Interim measures ordered by Arbitral Tribunal (Amended in 2015) Whole Section was amended in 2015. Same Powers as Court u/s 9. A party may, during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, 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 measures of protection such as:— •(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;
  7. 7 Sec 17 (Contd) • (c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, • to authorise any competent 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 has the same power of the Court for making orders, in relation to, any proceedings before it.
  8. 8 Sec 17 (Contd) • 17.(2) Subject to any orders passed under section 37 (Appeals), any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court -- 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. • In short: A welcome amendment -- Usually, after the award the Tribunal had no powers. The arbitral tribunal shall have power to grant all kinds of interim measures which the Court is empowered to grant under section 9 of the Act. Such interim measures can be granted by the arbitral tribunal during the arbitral proceedings or at any time after making the arbitral award, but before it is enforced under section 36 of the Act. Any order issued by the arbitral tribunal for grant of interim measures shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 in the same manner as if it were an order of the Court. Aimed at Fasttrack proceedings.
  9. 9 Key Judgment on Sec.17 • In Baker Hughes Singapore Pte v Shiv-Vani Oil and Gas Exploration Services Ltd (2014 SCC Online Bom 1663), the Bombay High Court held that an arbitral tribunal indeed has the power to grant monetary interim measures to secure a claim.The court relied on Section 17 of the Act, which empowers an arbitral tribunal to award interim measures of protection, including the provision of appropriate monetary security.The court also drew an analogy from the powers of arbitral tribunals to grant money claims and ordered the respondent to deposit US$ 2 mn with the Hon, Bombay High Court as security. • Following the pro arbitration approach being adopted by Indian courts, this judgment upholds the rights of parties to make interim applications concerning monetary security to an arbitral tribunal. This avoids the need to approach an Indian Court for such relief, reduces need for interference and aids fasttrack proceedings.
  10. 10 CHAPTERV CONDUCT OF ARBITRAL PROCEEDINGS • Sec 18. • Equal treatment of parties. • —The parties shall be treated with equality and each party shall be given a full opportunity to present his case. • This is in line with the rules of natural justice, where each party is entitled to have the opportunity of a fair hearing.
  11. 11 Sec 19. Determination of rules of procedure. (Amended, 2015) • 19. (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). • 19.(2)The parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. • 19. (3) If parties cannot agree to anything, then the arbitral tribunal has the right to lay down the procedures for conduct the proceedings in the manner it considers appropriate. • 19.(4) Arbitral tribunal has the power to determine the admissibility, relevance, materiality and weight of any evidence.
  12. 12 Caselaw on Sec.19 In a recent case of M/S. Jayaswal Neco Industries vs M/S. Goyal Mg Gases Pvt. Ltd, one party objected to the material evidence and call for documents and disclosure by the other and theTribunal took a decision.The aggrieved party appealed to the Court for relief and the Delhi High Court on 5th April 2018, upheld the Arbitrator’s decisive powers when stating that, “Moreover, this Court does not find the learned Arbitrator’s approach unreasonable. Pursuant to Section 19 of the Arbitration & Conciliation Act, the Arbitrator has the power to determine the admissibility, relevance, materiality and weight of any evidence.” •With the support of the Courts now, the trend looks positive as more autonomy is being granted in ADR and the Courts interference is seen declining.
  13. 13 Sec 20. Place of Arbitration • 20.(1)The parties are free to decide and agree on the place of arbitration. • Governing Law? Seat of Arbitration?Venue of Arbitration? • 20.(2) If the parties don’t, the place of arbitration shall be determined by the arbitral tribunal taking into account circumstances of the case, like convenience of the parties. • 20.(3) However, irrespective of the above the arbitral tribunal has the right to ask parties to agree to meet at any place it considers appropriate for consultation among its members or for hearing witnesses, taking evidence, hearing experts or the parties, or for inspection of documents, goods or other property.  A wide power given to the arbitrator to ensure that the proceedings run smoothly.
  14. 14 Sec 21. Commencement of arbitral proceedings • Parties to mutually decide the date of commencement of arbitration. • If parties don’t, then the date of commencement of the arbitration is the date on which the respondent receives the Notice of dispute being referred to arbitration. • However Sec 43 (Limitation) is linked with this important Section which makes reference to the Limitation Act, 1963. • Sec. 43(1) -- Limitation Act, 1963 applies to arbitration proceedings the same way it applies to proceedings. • Sec 43(2) provides that for purposes of calculating limitation period, the dates underlined above would be used as commencement date.
  15. 15 Sec 43 (Contd) Sec 43(3) •Contract states that arbitration for a dispute must commence within a deadline from the date of dispute, (For Eg. 1 year) but the claimant does not commence arbitration within the limitation time. •Respondent, claims a time bar. Claimant can apply to the Court. •Court will evaluate the circumstances of the delay and in interest of justice or where it finds that the claimant would suffer undue hardship if the claim is barred, may allow extension of the limitation irrespective of the time bar clause in the contract.
  16. 16 Sec 43 (Contd) • Sec 43(4) – Where the Court orders that an arbitral award be set aside, the whole period of duration of the arbitration until the date of the Court Order shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted. -- • This means that, in case parties must refer the dispute to a re-arbitration, none of the parties can raise a defence of Limitation period as the time elapsed is deemed as voided. • Important Exception: Limitation would not apply automatically, For Eg. to a Bill of Lading Contract, unless the Full CP terms including Arbitration Clause is included by reference. • Classic example of this would be a Demurrage Dispute where Owners did not commence arbitration within the Limitation Period. No relief would be expected from the Court, unless there are exceptionally convincing excuses for not initiating arbitration proceedings. These are construed strictly.
  17. 17 Sec 22. Language • 22(1)The parties are free to agree upon the language to be used in the arbitral proceedings. • 22(2) If parties don’t, then the arbitral tribunal shall determine the language to be used in the arbitral proceedings. • 22(3) Unless agreed to the contrary, same language shall apply to any written statement, any hearing, any arbitral award, decision or other communication by the arbitral tribunal. • 22(4) Any documentary evidence/statement in another language, will be sought to be translated to the agreed language of the proceedings.
  18. 18 Sec 23. Statements of Claim and Defence • 23 (1) As per agreed schedule and procedures, the claimant shall make his Claims Submissions with all facts, supportings, the points at issue, and the relief sought, and the respondent shall state his defence in respect of these claims in form of Defence Submissions. • 23 (2)The parties are free to submit with their statements all documents they consider to be relevant/necessary or may add a reference to the documents or other evidence they will submit. • 23 (2A)The respondent, is now allowed to submit a counterclaim or plead a set-off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set-off falls within the scope of the arbitration agreement. --- Amendment added in 2015.
  19. 19 Sec 23(Contd) • 23 (3) If agreed and permitted by theTribunal, either party is allowed to amend or supplement his claim or defence during the course of the arbitral proceedings, but not if the arbitral tribunal considers it inappropriate or unjustified to allow the amendment or supplement having regard to the agreed timelines and any delaying intentions by any party.
  20. 20 Sec 24 Hearings and written proceedings • 24 (1) Parties can decide or the arbitral tribunal shall decide, -- hold oral hearings for taking evidence or for oral argument, or whether this can be on the basis of ‘documents – alone’ • 24 (2)TheTribunal can decide at which stage to hold oral hearings, unless the parties have agreed that no oral hearing shall be held: • [Provided further that the arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.] – Amendment added in 2015 to avoid undue delays in proceedings.
  21. 21 Sec 24 (Contd) • 24 (2) Sufficient Advance Notice is required for any hearing, meeting of the Tribunal for the purposes of inspection of documents, goods or other property. – Again to avoid any excuses and adjournments. • 24 (3) All statements, documents, expert reports, extra evidence or other information supplied to, or applications made to, the arbitral tribunal by one party shall be communicated to the other party.
  22. 22 Sec 25 Default of a party • Where without justified reasons/cause/ waiver there is a high penalty — • 25 (a) the claimant fails to communicate his Claims Submissions within the agreed timelines, the arbitral tribunal shall terminate the proceedings; • 25 (b) the respondent fails to communicate his statement of defence within agreed timelines, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant [and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited]; -- Amendment Added in 2015. • 25 (c) Any party remains absent for oral hearing/ producing evidence, the tribunal may continue the proceedings, basis the submitted evidence and make the arbitral award.
  23. 23 Sec 26. Expert appointed by arbitral tribunal • 26(1) Parties may mutually agree orTribunal can: • (a) appoint one or more experts for looking into any specific issue and report, • (b) Order any party to give the expert disclosures of information or provide access to, any relevant documents, goods or other property for his inspection. • For Example: Cargo Claim disputes, To ascertain the measure of Damages in a non- performance claim under a Charterparty/ Supply Contract/ COA/ Maritime Claims such as Hull Damage, etc.,
  24. 24 Sec 26 (Contd) • 26 (2) Expert’s report is communicated to all. • Tribunal may make expert available for oral hearing to testify his report/ findings/ be cross examined by theTribunal/ parties representatives on his report. • 26 (3) Expert could be directed to make available to all concerned parties in the hearing and disclose all the documents/evidence materials etc in his custody basis which he made the report.
  25. 25 Sec 27. Court assistance in taking evidence • 27 (1) If necessary,Tribunal itself orTribunal may permit any party to seek the Court’s assistance to gather any evidence. • 27 (2)The application must be in a particular form and with full details of the parties, their addresses, the arbitrators, the nature of the dispute and relief, type and full particulars of the evidence or the assistance sought with a proper description – • 27(3),(4) Court will assist with orders directing the evidence to the tribunal in the same manner as done in suits. • 27(5) Penalties for refusal of Court orders, similar as those of contempt of Court and other punishments would be imposed on those disobeying.
  26. 26 Sec 27 (Contd) • 27 (6) In this section the expression “Processes” includes summonses and commissions for the examination of witnesses and summonses to produce documents. Same as Court proceedings. • Judgment on Sec 27: The Bombay High Court ("Court"), in Montana Developers Pvt. Ltd vs Aditya Developers Arbitration Petition of 2016, the petitioners applied for production of further documents and examination of witnesses. Court held that courts are not empowered to adjudicate upon the validity of an order passed by an arbitral tribunal under Section 27 of the Arbitration and Conciliation Act, 1996. Further, the Court held that when an arbitral tribunal or a party to the arbitral proceedings files an application seeking assistance under Section 27 in pursuance of an order passed by an arbitral tribunal, the Court cannot go into the merits of such an application and/or the order itself. Once an order is passed under Section 27 by the court, any deviance from the same during the arbitral proceedings will be held to be as contempt of court and the penalties relating to contempt will be applicable to the defaulting party. The scope and ambit of a court's power under this section forms the point of consideration in the present case.
  27. 27 Q & A?? END