Unless there is an express bar under law and when there is an arbitration agreement either express or implied, a dispute between or amongst the parties can be referred to an Arbitrator or panel of Arbitrators as particularly agreed to. As everybody knows, Option Dispute Resolution Mechanism is mooted to reduce the burden in traditional courts and for delivering a speedy relief to the parties. Arbitration and Conciliation Act, 1940 was repealed and Arbitration and Conciliation Act, 1996 was enacted with specific modifications and improvements.
1.When there is an agreement between or amongst the parties, the agreement can contain a clause saying that the disputes between or among the parties in the course shall be referred to an Arbitrator.
2.The clause in any Arbitration agreement can be detailed with regard to the number of arbitrators, the place of arbitration, the procedure to be followed and also the price of Arbitration.
3.Even in the absence of any agreement and clause, if the parties mutually agree to refer a dispute between or amongst those to an Arbitrator, then, such a dispute between or amongst the parties can be referred to an Arbitrator.
4.In all circumstances, unless there is a certain bar, the parties or the litigants are free to have their own say in obtaining an arbitrator appointed, place of arbitration, the process to be followed by arbitrator, the reference of dispute and also expenses of Arbitration.
5.The Arbitration and Conciliation Act, 1996 governs the problem of Arbitration or dispute resolution via Arbitration and conciliation and as such the parties to the dispute and even the Arbitrator shall follow the said Act.
6.When there is an Arbitration Agreement between or among the parties and even then if a party do not co-operate in finding an Arbitrator appointed, then, the Court can interfere and appoint an Arbitrator under section 11 of Arbitration and Conciliation Act, 1996.
7. In view of the rights of the parties and the urgent situations, even before acquiring an Arbitrator appointed under section 11, a party can approach the Court under section 9 of Arbitration and Conciliation Act, 1996 looking for an interim relief. In the absence of section 9 supplying an chance to a party to approach the Court to get urgent interim orders, the litigant may become remediless at times.
8.When an Arbitrator is appointed by the Court or by the parties to the dispute themselves, then, the Arbitrator will proceed to choose the dispute before him following the procedure agreed or as he wishes. There is no compulsion on the Arbitrator to follow Civil Procedure Code, 1906, but, the Arbitrator is bound by the principles of natural justice.
9.The Arbitrator is bound to observe substantial law and substantial law can not be ignored even by the Arbitrator and he will be having no discretion in applying substantial law to the dispute just before him.
10.The order or the award passed by the Arbitrator can be appealed against under section 37 of the Arbitration and Conciliation Act, 1996.
11.On particular grounds, an aggrieved party can decide on to file an application under section 34 of Arbitration and Conciliation Act, 1996 to set-aside an order or an award.
12.The order or the award of the Arbitrator is comparable to a court order and the decree and the order or the award as the case could be, can be executed like an order of court or a decree of a civil court.
13.The Arbitration Clause in the agreement or a particular Arbitration Agreement between or the among the parties, precludes him in approaching a Civil Court and in view of the bar under section 8 of the Arbitration and Conciliation Act, 1996, the Civil Court will refer parties prior to it to Arbitration when the existence of clause or the agreement is pointed-out.
Once it was settled that a Court exercising jurisdiction under section 11 of Arbitration and Conciliation Act, 1996, discharges only an administrative function. But, the proposition was changed and now it is settled that a court under section 11 of Arbitration and Conciliation Act, 1996 exercises judicial functions and it is pursuant to the landmark judgment rendered by the Hon’ble Supreme Court.
The dispute resolution by way of Arbitration has become really pricey although we can see that there is no need of payment of court fee when a dispute is resolved via Arbitrator. In view of compulsory procedures and other inevitable difficulties, an Arbitrator too can have a lot of hearings just before a final award is passed. Like court, it is very difficult to ascertain the time to be taken for finding dispute resolved by an Arbitrator in most instances. It depends upon the complications in the case, the co-operation rendered by the parties and the advocates representing them and further proceedings in-between like preferring applications under section 34 of the Act.
For each hearing prior to an Arbitrator, the parties to the dispute should bear the costs like sitting fee of an Arbitrator, the cost of place of Arbitration and other incidental expenses apart from skilled fee to be paid to the legal professionals or professionals. In a lot of cases, it is proved that dispute resolution by way of Arbitration is really pricey and even the Hon’ble Apex Court has rendered judgments on the aspect.
In view of the expenses involved and other issues which are on logical footing, the Hon’ble Apex Court has said that the Court even though exercising jurisdiction under section 11 of Arbitration and Conciliation Act, 1996, can look into the problems as to no matter whether there exist any arbitration agreement, no matter whether there is any live claim, whether the dispute is capable of being arbitrated upon etc.
Earlier, there was an argument that all issues or challenges can be made to the Arbitrator under section 16 of Arbitration and Conciliation Act, 1996 and as such there was no need to have of seeking into the arguments of the parties even just before the Arbitrator is appointed. But, in view of the expenses involved and the unnecessary risk to be taken by the parties, the proposition is now set that the Chief Justice exercising functions under section 11 of Arbitration and Conciliation Act, 1996 discharges judicial functions and can look into certain critical issues even prior to the Arbitrator is appointed.
As such, the court exercising jurisdiction under section 11 of Arbitration and Conciliation Act, 1996 discharges judicial functions now and appointment of arbitrator is no more automatic on showing the clause in the agreement etc.
A corporate dispute can not be observed at par with other civil disputes. There will be lot of urgency in finding a corporate dispute resolved and the stakes will be a lot more in several situations. If we don’t contemplate the proposed companies bill, at present, a corporate dispute can be adjudicated by the competent Civil Court at times, the Organization Law Board and the Corporation Court. In spite of finding a special tribunal like Organization Law Board constituted, there tend to be some delay in disposal of disputes and it could not be solely attributed to the functioning of the Organization Law Board and even the Tribunal in future.
Once again, there is a proposition that an arbitration clause or agreement can not oust the jurisdiction of Organization Law Board and the Corporation Court. The proposition laid down by the Courts and followed is on logical footing. For example, there can not be any alternative to an application under section 397/398 of the Businesses Act, 1956 and a petition to the Business Court seeing to wind-up the Business. Even so, if there is dispute solely based on a share-acquire agreement, then, such a dispute can certainly be resolved through arbitration. Giving clarity on the problem as to which all the corporate disputes can be resolved by means of Arbitration is a complex exercise.
Generally, as everyone knows, Arbitration proceedings are so expensive and it is extremely costly when the dispute to be resolved is a corporate dispute. In corporate disputes, usually, an expert corporate lawyer or a judge having experience of deciding corporate disputes is appointed or selected as an Arbitrator or Arbitrators. In view of several other consequential things, a corporate dispute resolution via Arbitration is more costly. Nonetheless, the businesses or the corporates will be willing to bear the costs as corporates value time rather money.
Even if the dispute to be resolved is a corporate dispute, there tend to be delay if the parties or the professional representing parties do not co-operate for a speedy disposal of dispute. But, when the parties to a corporate dispute are keen in finding their dispute resolved, then, Arbitration Mechanism is undoubtedly useful for them.
Not all corporate disputes be referred to an Arbitrator and in certain cases even the express arbitration clause, can not oust the jurisdiction of a Organization Law Board or a Company Court.
A corporate dispute resolution through Arbitration is certainly costly.
The general rules applicable to appointment of Arbitrator via court, are applicable to the appointment of Arbitrator by court under section 11 even if the dispute to be referred is a corporate dispute or business litigation.
The speedy disposal of a corporate dispute depends upon the complications in the case, the bonafides on the part of the parties in finding the dispute resolved early and the co-operation rendered by the experts representing parties prior to the Arbitrator.
I have focused on the substance of a tiny region under Arbitration and Conciliation Act, 1996 and its usefulness in obtaining the corporate disputes resolved. The particular wording in the Act, the sections and the case law is not referred.