Arbitration and Conciliation Laws in India — Complete Guide

An arbitration agreement is the foundation of arbitration. It must be in writing (Section 7 of the Act). It can be: an arbitration clause in a contract (e.g., 'All disputes arising out of this contract shall be referred to arbitration'); or a separate arbitration agreement signed by both parties. Essential elements: clear intention to refer disputes to arbitration; scope of disputes covered; number of arbitrators (one or three); procedure for appointment of arbitrators; seat and venue of arbitration; language of arbitration; governing law. The arbitration agreement must be valid under the Contract Act 1872. If the arbitration agreement is invalid, the court can decide the dispute. Our lawyers draft arbitration agreements for commercial contracts and review existing clauses.

The process of appointing arbitrators is critical. Number: The parties can agree on one or more arbitrators. If they cannot agree, the default is one arbitrator. If an even number is agreed, the Act requires that an additional arbitrator be appointed as presiding arbitrator. Appointment: The parties can agree on a specific person or a method of appointment. Common methods: each party appoints one arbitrator, and the two appointed arbitrators choose the presiding arbitrator; or the parties agree on a sole arbitrator. If parties cannot agree, they can apply to the court (Section 11) for appointment. Qualifications: The arbitrator must be independent and impartial. The arbitrator must disclose any circumstances that may give rise to justifiable doubts about independence. Grounds for challenge: if circumstances exist that give rise to justifiable doubts, or if the arbitrator does not possess qualifications agreed by the parties.

Once the arbitral tribunal is constituted, proceedings begin. Preliminary Meeting: The tribunal holds a preliminary meeting to set timelines, procedure, and rules of evidence. Statement of Claim and Defense: The claimant files a statement of claim with facts, legal arguments, and relief sought. The respondent files a statement of defense. Hearing: The tribunal holds hearings for oral arguments and evidence. Hearings are less formal than court proceedings. Evidence: The tribunal decides on the admissibility, relevance, and weight of evidence. Strict rules of evidence under the Evidence Act do not apply. Interim Measures: The tribunal can order interim measures — injunctions, preservation of property, security for costs, appointment of receiver. Court Assistance: The court can assist in taking evidence, issuing interim measures, or enforcing the tribunal's orders. The tribunal must conclude proceedings as expeditiously as possible.

The arbitral award is the final decision of the tribunal. Types of Awards: Final Award — decides all issues; Interim Award — decides specific issues before the final award; Consent Award — based on parties' settlement; Default Award — if respondent fails to participate. Form of Award: Must be in writing and signed by the arbitrator(s); must state reasons (unless parties agree otherwise); must state date and place of arbitration; a copy signed by arbitrators is given to each party. Remedies: The tribunal can order payment of money, specific performance, injunction, declaration, or costs. Interest: The tribunal can award interest. Costs: The tribunal decides the costs of arbitration. The award is final and binding on the parties. No appeal on merits — only limited grounds for challenge.

The Act provides limited grounds for challenging an arbitral award. Grounds for Setting Aside (Section 34): Party was under incapacity; arbitration agreement invalid under governing law; party not given proper notice of appointment or proceedings; award deals with dispute beyond scope of arbitration; composition of tribunal not as per parties' agreement; subject matter not arbitrable under Indian law; award conflicts with public policy of India (includes fraud, corruption, violation of natural justice); award induced by fraud or corruption. Time Limit: Challenge must be made within 3 months from receipt of award (extendable by 30 days). Enforcement: A domestic award is enforced as a decree of the court. Foreign awards are enforced under Sections 44-52 (Geneva Convention) or 53-60 (New York Convention). India is a signatory to the New York Convention for enforcement of foreign awards.

The Act applies to international commercial arbitration with certain modifications. Definition: Arbitration relating to disputes arising out of legal relationships considered commercial under Indian law, where at least one party is a foreign national, resident, or body corporate. Key Differences: Parties have greater freedom to choose the law governing the arbitration; appointment of arbitrators may involve the Chief Justice or designated judge; Part I (domestic) applies unless parties exclude it; interim measures by court are available; the arbitral tribunal consists of an odd number of arbitrators (usually three). India's pro-arbitration approach has made it an attractive venue for international arbitration. The Act also provides for conciliation (Part III), a non-binding process where a conciliator assists parties in reaching a settlement.

At Advocate in Asansol, we provide comprehensive arbitration services: drafting and reviewing arbitration clauses for commercial contracts; advice on whether to arbitrate or litigate; representation in domestic and international arbitration proceedings; appointment of arbitrators — applications under Section 11; interim relief from courts and tribunals; drafting statements of claim and defense; evidence gathering and presentation; challenge of arbitral awards under Section 34; execution of domestic and foreign awards; and appeals in arbitration matters. Whether you are a business owner, contractor, or service provider, we protect your interests in arbitration. Call +91 7001486154.