ROLE OF COURT IN ARBITRATION PROCEEDINGS

[Mr. M. GOVINDARAJAN]

The Arbitration and Conciliation Act, 1996 (‘Act’ for short) increased the powers of the Arbitrators but could not avoid the role of court. One of the main objectives of the Act is to minimize the supervisory and interventionary role of courts in arbitral process.

DEFINITION OF COURT:

The Court is defined as per Sec. 2(1) (e) of the Act, as the Principal Civil Court of original jurisdiction in a District and includes the High Court in exercise of its ordinary original civil jurisdiction.   The District Court is thePrincipal Civil Courtin a District and it is the ‘court’ in respect of arbitration.   In case of cities where High Courts are functioning, then the High Court is the ‘court’ for this purpose.   The inferior courts to the Principal District Court are not competent to intervene in arbitral proceedings.

JUDICIAL INTERVENTION:

Sec.5 of the Act provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by this part, no judicial authority shall intervene except where so provided in this part. The extent of judicial intervention of the Court provided by the Act as follows:

Power to refer parties to arbitration:

 If an action is brought before the Court despite having an arbitration agreement in existence and if a party so applies with the original arbitration agreement or a duly certified copy thereof not later than when submitting his first statement on the substance of this dispute, the court may refer the dispute to arbitration under Sec. 8 of the Act.   Unless the application is without the original arbitration agreement or duly certified copy the court shall not entertain the application.

Interim Measures by Court:

Sec. 9 of the Act enables Court to order interim measures which are temporary and provision and operative till the dispute is resolved by an award.  On an application by a party before or during arbitral proceedings or at any time after making the award but before it is enforced the court can order interim measures-

• For the appointment of a guardian for a minor or a person of unsound mind for the purpose of arbitration proceedings;
• For securing the amount, dispute in the arbitration;
• For protection of assets;
• Issuing interim injunction or the appointment of receiver;
• Such other interim measures of protection as may appear to the Court to the just and convenient.

Appointment of Arbitrators:

 The Chief Justice or any person or institution designated by him shall appoint the arbitrator in the following circumstances:

• If a party fails to appoint an arbitrator within 30 days from the receipt of the request to do so from the other party;
• If the two arbitrators, appointed by both parties, fail to appoint new third arbitrator as required by Sec.11(3) of the Act, within 30 days from the date of their appointment;
• In case of a sole arbitrator, if the parties fail to agree on the appointment of an arbitrator within 30 days from the receipt of a request by one party from the other party;
• When the procedure agreed by the parties is not act upon in time.

The Chief Justice is the Chief Justice of High Court within whose local limits thePrincipal Civil Courtis situate and where the High Court itself is the Court referred to, then he is the Chief Justice of the High Court.

 Where more than one request has been made to the Chief Justice of different High Courts or their designates, the Chief Justice or his designate to whom the request has been first made shall alone be competent to decide on the requests.

The decision of the Chief Justice or any person or institution designated by him on the appointment or the arbitrator is final.  The Chief Justice or any person or institution designated by him would have due regard to qualifications of arbitrators agreed between the parties, and considerations likely to secure an independent and impartial arbitrator.   The Chief Justice may make such scheme as he may deem appropriate for dealing with the matters entrusted to him.

Termination of mandate of an Arbitrator:

  The mandate of an arbitrator shall terminate if he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay.   If a controversy remains regarding the above, a party may, unless otherwise agreed by the parties, apply to court to decide on the termination of the mandate.

Court assistance in taking evidence:

 The Arbitral Tribunal, or a party with the approval of the Arbitral Tribunal, may apply to the court for assistance in taking evidence.   The application shall specify the names and addresses of the parties and the arbitrators, the general nature of the claim and the relief sought, the evidence to be obtained, in particular:

• The names and address of any person to be heard as witness or expert witness and a statement of the subject matter of the testimony required;
• The description of any document to be produced or property to be inspected.

The Court may execute the request by ordering that the evidence be provided directly to be Arbitral Tribunal.  Persons failing to attend, or making any other default, or refusing to give the evidence or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the court.

Setting aside the arbitral award:

 The arbitral award may be set aside by the court only if-

(a)   the party making an application furnishes the proof that-

(i)    the party was under some incapacity; or

(ii)   the arbitration agreement is not valid under the law to which the parties have subjected it, or failing any indication thereon, under the law for the time being in force, or

(iii)  the party making the application was not given proper notice on the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitrators, or it contains decisions on matters beyond the scope of the submission to arbitration;

(v)   the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties.

(b)   the court finds that-

(i)   the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or

(ii)  the arbitral award is in conflict with the public policy inIndia.

The application for setting aside of the arbitral award cannot be made after 3 months have elapsed from the date on which the party making that application had received the arbitral award or if a request had been under Se. 33 from the date on which that request had been disposed of by the arbitral tribunal.

If the court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of 3 months it may entertain the application within a further period of 30 days, but not thereafter.

The Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award.

Enforcement of the Award:

  The arbitral award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court.

APPEALABLE ORDERS:

 An appeal shall lie from the following orders (and from no others) to the Court authorized by law to hear appeals from original decree of the Court passing the order namely:

(a)    granting or refusing to grant any measure under Sec. 9;

(b)   Setting aside or refusing to set aside an arbitral award under Sec. 34.

An appeal shall lie to court from an order of the Arbitral Tribunal-

(a)    accepting the plea referred to Sec. 16(2) – Tribunal not having jurisdiction; or Sec. 16(3) – Tribunal is exceeding the scope of the authority - ; or

(b)   Granting or refusing to grant an interim measure.

No second appeal shall lie from an order passed in appeal.   But nothing shall affect or take away any right to appeal to the Supreme Court.