Rules Regarding Conduct of Arbitral Proceedings

Rules Regarding the-Conduct-of-Arbitral-Proceedings

Section 18 to 27 of the Arbitration and Conciliation Act, 1996 mentioned the rule regarding the conduct of arbitral proceedings. Before studying these rules, it shall be proper to state that the Arbitral proceedings require all parties to be treated with equality and they should be given reasonable opportunity to present their case. ( Section 18) This means that the Arbitral are bound to act independently and without bias. They are required to be not guilty of misconduct. They are also not required to act during the absence of the parties. Actually this is the basic formula of independent and impartial proceedings.

The main rules for the conduct of arbitral proceedings are following-

  1. Concept of Rules: According to section 19 of the Act, the parties are provided with the right to determine the procedure for the conduct of arbitral proceedings. Parties can decide the rule through an agreement. Arbitral Tribunal is required to follow these rules. If the parties do not determine the rule of the procedure then arbitral tribunal shall conduct the proceedings by such methods which it thinks for.The provisions of code od civil procedure, 1908amd Indian Evidence Act 1872 does not apply over the procedure of conduct of arbitral proceedings. The arbitrator is not bound to follow the Technical rules of the code of civil procedure and evidence Act. It is required merely to follow the principle of natural justice. ( Delhi Nagar Nigam Versus Jagannath Ashok Kumar, A.I.R. 1987 S.C. 2316).

    In the case of P.R. shah Shares and Stock Broker Private Limited Versus Messer B.H.H. Securities Private Limited ( A.I.R. 2012 S.C. 1866), it has been propounded by the supreme court that the Arbitral should not use his own knowledge regarding the dispute during the proceedings. He may use his technical knowledge in respect of any trade- special.

    The power of the Arbitral Tribunal including the power to determine the admissibility, relevance, materiality and weight of any evidence. The court cannot interfere in such matters. ( Food Corporation of India versus N.B.O. shipping co. 1996 park Arbitration law Report 276 Mumbai; Shankarlal Mazumder Versus State of West Bengal, A.I.R. 1994 Kolkata 55).

  1. Place of Arbitration: The first right to determine the place of Arbitration has been provided to the parties. The parties can determine the place of Arbitration. If the parties fail to do so then the Arbitral Tribunal while considering the following, the point can determine the place of Arbitration(I) convenience of parties
    (II) circumstances of the case.

    Arbitral Tribunal can organize its meeting at any of the places for the following purposes

    (a) for the consultation with the members
    (b) for hearing the witnesses, experts and parties
    (c) for inspection of the document goods or other properties etc. (Section 20).

    Whatever place is decided by the Arbitral Tribunal the notice of it is required to be given to the parties.( Uttar Pradesh Forest Corporation Versus Vishwanath Goswami, A.I.R. 1995 Allahabad 351)

    In the case of the International Airport Authority of India Versus Mohinder Singh ( A.I.R. 1996 Mumbai 167), it was stated that Arbitration can change the place of Arbitration for the convenience of parties.

  1. Commencement of Arbitral proceedings: Section 21 of the Act provides the provisions for the date of commencement of proceedings. According to it If the Arbitration Agreement does not mention the date of commencement of the arbitral proceedings, the Arbitral proceedings in respect of that dispute commence on the date on which a request for that dispute to be referred to Arbitrator is received by the respondent.In the case of Wazir Chandra Versus Union of India ( A.I.R. 1973 Guwahati 100), it has been held that the Arbitral should satisfy himself before starting arbitral proceedings that whether the reference is within the stipulated time or not.
  1. Language: The language to be adopted by the Arbitral Tribunal for Arbitral proceedings shall be that which is agreed by the parties. In the absence of such agreement, language shall be decided by the Arbitral Tribunal (section 22).Language should be such which the Arbitrator can understand. In the case of E. Rathore and Sons Versus Carlo Bedrida and Co. [(1961)1 Lyod’s Report 220], it has been stated that if any documents are in a foreign language which the Arbitrator does not understand, then such documents are required to be translated in the language in which the Arbitrator understand.
  1. Statement of Claim or Defence: Section 23 of the Act lays down that:(I) Within the period of time agreed upon by the parties or determined by the Arbitral Tribunal, the claimant shall state the fact supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particular.

    (II) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the document or other evidence they will submit.

    (III) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the Arbitral Tribunal considered inappropriate to allow the amendment or supplement having regard to the delay in making it.

    Here, it is important that the grant of permission to amend depends upon the discretion of the tribunal. Such permission could be granted in any case. (Union State Neyari Versus Lanza Veneer (1917) 2 K.B. 558)

  1. Hearing: Section 24 of the Act provided for the hearing and written proceedings. According to it, the tribunal shall decide whether to hold an oral hearing for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials.The Arbitral Tribunal shall hold a hearing, at an appropriate stage of the proceedings, on a request by a party unless the parties have agreed that no oral hearing shall be held. The parties shall be given sufficient advance notice of any hearing and of any meeting of the Arbitral Tribunal for the purpose of inspection of documents goods or other property.

    All statement, documents or other information supplied to, or application made to the Arbitral Tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the Arbitral Tribunal may rely in making its decision shall be communicated to the parties.

    In the case of Damodar Prasad Gupta Versus Saxena and Company ( A.I.R. 1959 Punjab 476), it has been held that the parties have complete right to produce their arguments before Arbitral Tribunal. They also have the right to have communication of place and time of the hearing. Of an award is made ignoring this right of parties, it shall be liable to be set- aside.

    In the case of R.S. Avtar Singh and Co. Versus N.P.C.C Ltd. ( A.I.R.1993 Delhi 230), it was stated that a party should be allowed sufficient opportunity to present their defence and explain a particular fact. Ignoring it would be misconduct.

    In the case of Union of India versus Sohan Singh Sethi [(1996)1 Arbitration law Report 504 Delhi] it has been stated to the extent that not hearing the evidence when they were promised of the hearing was a good ground to set – aside from the Award.

  1. The default of a party: It has been stipulated under section 25 that where the claimant fails to communicate his statement of claim, the Arbitral Tribunal shall terminate the proceedings.Where the respondent fails to communicate his statement of defence the Arbitral Tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant.

    Where a party fails to appear at an oral hearing or to produce documentary evidence, the Arbitral Tribunal may continue the proceedings and make the arbitral award on the evidence before it. In the case of Anil Jain Versus Madhuna Appliances Pvt Ltd. [(1997) 2 Arbitration law Report 32-5 Delhi] it has been held that if the parties do not remain present even after the notice, the Arbitrator shall have the right to have ex- part proceedings against them.

    In the case of Messer Senbow Engineering Ltd Versus State of Bihar ( A.I.R. 2004 Patna 33), it has been held by the Patna High court that the Arbitral Tribunal under section 25(a) has the right to terminate the proceedings and can re-cancel such an order on having sufficient grounds.

  1. Appointment of Experts: Section 26 provides the right to Arbitral Tribunal to appoint Experts for correct disposition of the dispute. It shall be the duty of parties to given the expert any relevant information or to produce, or to provide access to, any relevant documents goods or other property for his inspection.
  1. Court assistance in taking evidence: As per section 27 of the act, the parties of arbitral proceedings or arbitral tribunal may take help of court for assistance in giving or taking evidence. For this purpose, the Arbitral Tribunal, or a party with the approval of the Arbitral Tribunal may apply to the court for assistance in taking evidence. The following points are to mention in the application:
    • Name and address of parties and Arbitrator
    • General nature of the claim and wanted relief
    • Evidence to be obtained.


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