Resolving disputes outside court — arbitration agreements, appointing arbitrators, interim relief, and the narrow grounds on which an award can be set aside. A curated selection; not the complete text.
Provided for study purposes. Cross-check against the official source (India Code / the relevant government gazette) before citing or relying on this text — amendments and corrections may not be reflected here.
An arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. It may be in the form of an arbitration clause in a contract or in the form of a separate agreement, and must be in writing. An agreement is in writing if contained in a document signed by the parties, in an exchange of letters or other means of telecommunication including electronic means which provide a record, or in an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party applies not later than the date of submitting their first statement on the substance of the dispute, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. Notwithstanding that an application has been made and the issue is pending, arbitration may be commenced or continued and an award made.
A party may, before or during arbitral proceedings or at any time after the making of the award but before it is enforced, apply to a court for the appointment of a guardian for a minor or person of unsound mind, or for an interim measure of protection in respect of the preservation or interim custody or sale of goods, securing the amount in dispute, the detention or preservation of any property, interim injunctions or the appointment of a receiver. Where the court passes such an order before the commencement of arbitral proceedings, the proceedings shall commence within ninety days.
A party may, during the arbitral proceedings, apply to the arbitral tribunal for the same interim measures of protection as a court may grant under Section 9, and the tribunal shall have the same power for making orders as the court. Any order issued by the arbitral tribunal is deemed to be an order of the court for all purposes and is enforceable as if it were an order of the court.
A person of any nationality may be an arbitrator unless otherwise agreed by the parties. The parties are free to agree on a procedure for appointing the arbitrator or arbitrators, and where they fail to do so or the agreed procedure fails, the appointment shall be made, on an application of the party, by the Supreme Court or the High Court, or by any person or institution designated by that court, as the case may be. The court shall confine itself to the examination of the existence of an arbitration agreement.
When a person is approached in connection with a possible appointment as an arbitrator, they shall disclose in writing any circumstances likely to give rise to justifiable doubts as to their independence or impartiality, and any circumstances likely to affect their ability to devote sufficient time to the arbitration. An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to their independence or impartiality, or if they do not possess the qualifications agreed to by the parties. The Fifth and Seventh Schedules set out the categories of relationship which attract these consequences.
The arbitral tribunal may rule on its own jurisdiction, including on any objections with respect to the existence or validity of the arbitration agreement. For that purpose an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract, and a decision by the tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
The award in matters other than international commercial arbitration shall be made within a period of twelve months from the date of completion of pleadings. The parties may, by consent, extend that period for a further six months. Where the award is not made within that period, the mandate of the arbitrator terminates unless the court extends the period, and the court may, while extending it, order a reduction of the arbitrator's fees where the delay is attributable to the tribunal.
An arbitral award shall be made in writing and signed by the members of the arbitral tribunal, and shall state the reasons upon which it is based unless the parties have agreed that no reasons are to be given or the award is on agreed terms. It shall state its date and the place of arbitration, and a signed copy shall be delivered to each party.
Recourse to a court against an arbitral award may be made only by an application for setting it aside, on the grounds that a party was under some incapacity, that the arbitration agreement is not valid, that the party was not given proper notice of the appointment of an arbitrator or of the proceedings or was otherwise unable to present their case, that the award deals with a dispute not contemplated by or falling within the terms of the submission, or that the composition of the tribunal or the procedure was not in accordance with the agreement of the parties. A court may also set aside an award if the subject-matter is not capable of settlement by arbitration or the award is in conflict with the public policy of India. The application must be made within three months of receipt of the award, extendable by thirty days on sufficient cause.
Where the time for making an application to set aside the arbitral award has expired, the award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the court. The filing of an application to set aside an award does not by itself render the award unenforceable unless the court grants a separate stay of its operation on a separate application made for that purpose.
An appeal lies from an order refusing to refer the parties to arbitration under Section 8, granting or refusing to grant any measure under Section 9, and setting aside or refusing to set aside an arbitral award under Section 34. An appeal also lies from an order of the arbitral tribunal accepting a plea that it has no jurisdiction, or granting or refusing an interim measure under Section 17. No second appeal lies from an order passed in appeal under this section, but nothing takes away the right to appeal to the Supreme Court.
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