ARBITRATION IN SUITS

Arbitration is considered as an alternate dispute resolution procedure under which mediation and conciliation are enclosed. It is considered as International commercial arbitration wherever two parties from two completely different countries approach an international arbitrator either by their mutual consent or through an arbitration institution and dissolve their dispute consequently.

The alternative dispute resolution procedure has gained importance within the previous couple of years because of the increase in commercial market dispute and conjointly it’s a speedy, cost-effective and efficient way of settlement. The UN have given due recognition to Model Law of International Commercial Arbitration and Conciliation rules given by the UN Commission on trade and law ( UNCITRAL).

Based on UNCITRAL model law India enacted the Arbitration and Conciliation Act, 1996 more amended in 2015 that deals with domestic and international commercial arbitration in India. The amended Act particularly emphasizes minimizing the role of judiciary court in arbitration proceedings and more to contemplate each arbitration order or award as a decree because it is been considered in civil procedure code. The Act is categorized in two, Part I deals with vital provisions that subsume domestic and International commercial arbitration procedure to be conducted in India no matter status of nationality and Part II talks regarding enforcement of foreign arbitration award.

In spite of the necessity for arbitration, there are some disadvantages wherever arbitration can not be used as an efficient mode of settlement, as:

• Arbitration lacks in granting authoritative remedies such as permanent injunction and specific performance order.
• In certain cases, the arbitrators do not have jurisdiction and squire measures excluded to undertake the case.
• The cost may be a serious issue as, if the arbitration continuing is delayed, the cost keeps on increasing and particularly, within the cases wherever three arbitrators are appointed by the parties.
• No appeal can be created for an arbitration order granted by the arbitrator.
• Lack of interrogatory as the process depends on prof and not on witnesses.

Arbitration agreement

Defined under Section 2(b) read with Section 7 of the Act.

It may be outlined as a written statement or exchange of communication between the parties or any statement created through suggests that of telecommunication. It’s not mandatory for the parties to sign or unsign it. Though if an arbitration clause is present within the agreement it might be considered as an arbitration agreement.

Rickners Verwaltung Gmbh vs. Indian Oil Corporation, 1998 revealed that the intention of the party in arbitration gathers information within the style of expression and the meaning it reveals. An arbitration agreement would be a statement created by one party concerning the claim in dispute and not denied by the other party.

Non Intervention of Court in the Arbitration process

As per Section 5 of the Arbitration and Conciliation Act, 1996 the court cannot interfere within the arbitration continuing except whereby provided by the act within the following situations:

Where an arbitrator must be appointed once the parties cannot appoint a mutually independent arbitrator. In cases of taking the shreds of proof. Where the court is ruling within the cases because the arbitrator is terminated due to incapacity or alternative sufficient reasons mentioned under the Act.

Section 8 could be a companion section that says “where a party has approached the judicial court to dissolve a dispute and it’s completely to be trialled by the arbitrator, then the court should direct the person to begin the arbitration proceeding without any delay and should return to the court once arbitration award has been created.”

Arbitration in suits is covered under Sec. 21–25 of The Arbitration Act 1940:

Section 21 of The Arbitration Act is Parties to suit could apply for order of reference i.e. Where in any suit all the parties interested agree which will matter in distinction between them within the suit shall be brought up arbitration, they will at any time before judgment is decided apply in writing to the Court for an order of reference/ allusion.

Section 22 Appointment of arbitrator (intimidator) of The Arbitration Act means that the arbitrator shall be appointed in such manner as also be agreed upon between the parties.

Section 23 of The Arbitration Act i.e. Order of reference

(1) The Court shall, by order, seek advice from the intimidator the matter in difference which he is needed to determine, and shall within the order specify such time because it thinks reasonable for the creating of the award.

(2) Wherever a matter is brought up arbitration, the Court shall not, save within the manner and to the extent provided during this Act, subsume such matter within the suit.

Section 24 of The Arbitration Act is Respect to arbitration by some of the parties i.e. Where some solely of the parties to a suit apply to own the matters in distinction between them brought up arbitration in accordance with, and within the manner provided by Sec.21, the Court could, if it thinks work, therefore refer such matters to arbitration (provided that the similar may be separated from the reminder of the subject-matter of the suit) within the manner provided therein section however the suit shall continue thus far because it relates to the parties that haven’t joined within the aforementioned application and to matters not contained in the declared reference as if no such application had been created, and an bequest made in pursuance of such a reference shall be binding solely on the parties who have joined within the application.

Section 25 of the The Arbitration Act is Provisions applicable to arbitrations under this chapter i.e. the provisions of the other Chapters shall, thus far as they will be created applicable; apply to arbitrations under this Chapter:

Provided that the Court could, in any of the circumstances mentioned in Secs. 8, 10, 11 and 12 rather than filling up the vacancies or creating the appointments, make an order superseding the arbitration and proceed with the suit, and wherever the Court held an order superseding the arbitration under Sec. 19, it shall move with the suit.

ARBITRATION AWARDS:

Although arbitration awards are characteristically an award of damages against a party, in several jurisdictions tribunals have a range of remedies which will form a part of the award. These may include:

1. payment of a sum of money/cash (conventional damages)
2. the making of a “declaration” on any matter to be determined within the proceedings
3. in some jurisdictions, the judicature might have similar power as a court to:
4. order a party to try to or refrain from doing one thing (“injunctive relief”)
5. to order general performance of a contract
6. to order the rectification, setting aside or cancellation of a deed or alternative document.
7. In alternative jurisdictions, however, unless the parties have expressly granted the arbitrators the right to make your mind up such matters, the tribunal’s powers is also restricted to deciding whether a party is entitled to damages. It should not have the legal authority to order injunctive relief, issue a declaration, or rectify a contract, such powers being reserved to the exclusive jurisdiction of the courts.

CONCLUSION:

Chapter IV of The Arbitration Act 1940 deals with The Arbitration in suits that is when there is no arbitration agreement and one of the parties had filed a suit against the opposite party and during the proceedings the parties agreed to have a subject matter of the dispute referred to arbitration. When arbitration had been begun without help of court, it didn’t mean that arbitration was conducted without involvement of the court or that the court had no authority to interfere at any stage throughout the arbitration proceedings. Arbitration is also initiated and the award is also created and complied with, without the help or interference of the court. However, if it became necessary throughout the course of arbitration proceedings to seek the assistance of the court, any party might do so.