ALTERNATIVE DISPUTE RESOLUTION

END-TERM EXAM
Q 1. The Supreme Court will reverse the High Court decision and uphold the arbitral award.

The High Court has set aside the award on the ground that it is an error apparent on the face
of the record and thus goes against public policy. Public policy is a ground for setting aside
an arbitral award under section 34(b)(ii).

Public policy has been explained by the Supreme Court in various decisions. Public policy
basically connotes a matter which is concerned with public good and public interest. In
Renusagar Power Co. v. General Electric Co., (1994) Supp(1) SCC 644, public policy was
defined as anything contrary to fundamental policy of Indian law, the interest of India and
justice or morality. In ONGC v. Saw Pipes Ltd, (2003) 5 SCC 705, the Supreme Court added
a further ground to this definition: the award can be set aside if it is patently illegal. This
illegality must go to the root of the matter and cannot be of a trivial nature.

The explanation to section 34(b)(ii) after the 2015 amendment further clarifies the grounds
on which it can be said that the award is in conflict with public policy. It says that an arbitral
award is in conflict with public policy if the making of the award was induced or affected by
fraud or corruption or was in violation of section 75 or section 81; or it is in contravention
with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions
of morality or justice. Explanation 2 further clarifies that the test as to whether an award is in
contravention with the fundamental policy of Indian law shall not entail a review on the
merits of the dispute.

Further, recognizing the decision given in the ONGC case, section 34(2A) has also been
added which provides for the ground of patent illegality on the face of the award for setting it
aside. However, this ground is only applicable to domestic arbitrations. Also, it does not
directly fall under the public policy ground.

On a basic statutory analysis, none of the grounds with respect to public policy have been
satisfied in the present case. The award was no influenced by fraud or corruption nor was
violation of section 75 or section 81; nor is it in contravention of the fundamental policy of
Indian law; nor is it in conflict with the most basic notions of morality or justice. The High
Court’s order mentions error apparent and thus leads us towards the patent illegality ground.
However, the proviso to the sub-section says that an award shall not be set aside merely on
the ground of an erroneous application of the law or by reappreciation of evidence.
In a very recent decision, the Supreme Court in Ssangyong Engineering & Construction Co.
Ltd. v. National Highways Authority of India (2019) discussed the scope of the public policy
exception and the ground of patent illegality. The Supreme Court ruled that fundamental
policy of Indian law should not be given a wide interpretation in light of the 2019
amendment. It stated that arbitral awards cannot be reviewed on merits. It stated that the
scope of review of domestic awards is wider due to the patent illegality provision only.

The Court said that the fundamental policy of Indian law should be seen as a contravention of
a law protecting national interest, disregard of orders of superior courts in India and the
violation of the principles of natural justice, while the most basic notions of morality and
justice are in conflict with the award when the award shocks the conscience of the court.
These two scenarios are not present under the present situation.

According to the Court, an award is patently illegal when the illegality goes to the root of the
matter but but excluding erroneous application of law by an arbitral tribunal or re-
appreciation of evidence by an appellate court. It gave certain examples of patent illegality:

“(a) no reasons are given for an award, (b) the view taken by an arbitrator is an impossible
view while construing a contract, (c) an arbitrator decides questions beyond a contract or
his terms of reference, and (d) if a perverse finding is arrived at based on no evidence, or
overlooking vital evidence, or based on documents taken as evidence without notice of the
parties” [paras 26 – 30].

In the present case, the High Court has set aside the award on the ground that there is an error
in interpreting the Contract between the parties by the arbitral Tribunal. This scenario is
expressly excluded in the proviso to section 34(2A). Further, the Court in SSangyong has
stated that the award can only be overturned on the ground of patent illegality if the “view
taken by the arbitrator is an impossible view while construing a contract”. From the facts
given, it does not appear that the view taken by the arbitration tribunal is an impossible view
while construing the contract.

Therefore, the Supreme Court will reverse the High Court decision and uphold the award.

In the case of foreign arbitral awards, the defence of patent illegality does not exist.
Therefore, in that case as well, the decision will not change. However, the basis of the
decision will change as the ground itself is not available. In Ssangyong as well, the Court
recognized that scope of review for domestic awards is wider than that for foreign awards due
to the patent illegality exception.

Q 2. Yes, there are various legislations that provide for mediation, like section 422 of the
Companies Act 2013, Chapter V of the Consumer Protection Act and section 12 of the
Commercial Courts Act. However, the fact that mediation is still not being widely used
suggest need for change. There is a need for an overarching legislation that would get rid of
the ambiguity in the current framework and give legal sanctity to the process.

Current Law on Mediation:

The Salem Advocates Bar Association (2005) case provided guidelines for the High Courts
to conduct mediation and each High Court has developed its own rules with respect to court-
annexed mediation.

Section 422 of the Companies Act provides for referral of disputes to mediation. Section 89
of the CPC also provides for the reference of cases to alternative dispute resolution methods
including mediation. The 2018 amendment to the Commercial Courts Act 2015 made it
mandatory for the parties to exhaust the remedy of pre-litigation mediation. The Consumer
Protection Act 2019 also provides for the procedure of mediation as per section 74(3) of the
Act. There are a host of such laws but large fragmentation has resulted in the feeling that
there is no law on mediation in India.

Provisions in the New Law:

Mandatory pre-litigation mediation – Only when mediation has failed, should the parties be
allowed to litigate. These rules should be made applicable to all proceedings.

Qualification: The new law definitely needs to provide for the qualifications and appointment
of the mediator. With respect to private mediation, parties should be allowed to make the
choice of the mediator. However, in court-annexed mediator, the panel maintained in the
mediation centres has to strictly conform to the qualification requirements.

Appointment: Upon a dispute being referred, parties should be able to make the choice from
the panel of highly qualified mediators, subject to the mediation centre’s decision that the
mediator is suitable for the matter at hand.
Disqualification: Apart from qualifications, the law should also provide for disqualification of
mediators on grounds including conviction in criminal proceedings involving moral turpitude
among others.

Procedure: The procedure to be followed for the mediation should be as per the choice of the
parties. However, the Act should provide for a default process in case the parties are not able
to agree on the procedure.

Applicability of Evidence Act, CPC: The mediator should not be bound by the provisions of
the IEA and the CPC and should be guided by the principles of fairness and justice, with
regard to the rights and obligations of the parties, the usages of the trade etc. However, this
fairness requirement should be narrowly confined to the procedure, rather than the
substantive decisions made in the mediation.

Role of Mediator: The role of the mediator should be described facilitative, rather than
evaluative. However, an exception should be provided for the settlement stage.

Time Limit for Completion: A time limit should be imposed to ensure timely completion.

Confidentiality: A strict obligation of confidentiality should be imposed on the parties as well

as the mediator. The Act should also prescribe situations in which such obligation can be
done away with, for example the Wigmore Test. Certain consequences also need to be though
of in the case of breach of this obligation – for example, requirement of contractual
determination of liquidated damages before mediation starts. The mediator also needs to
ensure confidentiality of information conveyed to him privately by one party.

Use in other proceedings: the law should specifically provide that the statements made in the
process cannot be used in judicial, quasi-judicial or arbitral proceedings.

Settlement: The settlement should ultimately be by the consent and will of the parties as
mediation is a self-determination process. The settlement should be signed by the parties and
the mediator.

Status of Decree: such settlement should be given the status of a decree, rather than a
contract.

Ethics: The code of ethics should be clearly prescribed and violation should result in
disqualification.

Other provisions for costs, fee also need to be included.

Steps to be taken:

A new comprehensive law on mediation is dearly required, as it grants sanctity to the entire
process and grants recognition in the legal system. But, apart from legal changes, there also
needs to be an attempt to increase public awareness about mediation. At the grass-root level,
especially among the legal fraternity. Better infrastructure needs to be developed for
mediation centres and high ethical standards need to be enforced. There is also a need for
specialization in mediation developing it into a full time profession. Further, mediation needs
to be incorporated into the education system.

Q 3. The government has been taking various steps to make India a hub of international
commercial arbitration, visible from the Prime Minister’s speech on strengthening arbitration
in India, which was organized by the Niti Aayog. However, at present, foreign companies
that enter into business relationships with Indian companies generally prefer a foreign city.

The biggest issue that businessmen have with India is the delays and intrusiveness associated
with the Indian judiciary. In case India is the seat of arbitration, then the Indian judiciary has
the jurisdiction to grant interim measures. The award might be challenged and might have to
be ultimately executed in Indian courts as well. Therefore, the parties do end up in the
judicial system. The general pattern in India is that awards are challenged all the way to the
Supreme Court and if the State is also a party, this is even more true. The image of the Indian
judiciary with respect to the time taken for decisions is very poor and not without reasonable
grounds. This highly discourages arbitration in India, as it makes arbitration a costly and
time-consuming process, the reverse of the intention of the parties. Perhaps, an independent
process for disputes pertaining to arbitration needs to be considered.

Even enforcement of arbitral awards in India has been an issue, largely due to the public
policy ground for setting aside the award, available under section 48(2)(b). Public policy has
been very widely construed in the past in cases like ONGC Ltd. v. Western Geco
International Ltd. However, Ssangyong Engineering & Construction Co. Ltd. v. National
Highways Authority of India (2019) in conjunction with the 2015 amendment has highly
restricted the scope of public policy.
The setting up of the New Delhi International Arbitration Centre is undoubtedly a positive
step. Proper funding for the arbitration centre needs to be ensured to maintain the highest
quality standards and qualified personnel in order to gain reputation in the arbitration circuit.

India also needs to see through the motives of established institutions such as the
International Chamber of Commerce (ICC) Paris and the London Court of International
Arbitration, as they are setting up their offices in India and thus offering their services
locally. This will harm the prospects of India as a hub of international commercial arbitration.

To ensure that the goal is achieved, the government needs to work with Indian corporates and
the highly qualified legal fraternity to set up a business-friendly arbitration process. Only
legal changes are not enough. The government needs to woo them through commercial
incentives and not on patriotic or protectionist grounds.

Q 4. The District Consumer Forum is correct in its approach and its approach is in line with
Supreme Court cases on the issue in question.

In Fair Engineers Pvt Ltd v NK Modi (1996), when one party went to the State Commission
under the Consumer Protection Act despite their being an arbitration agreement between the
parties. The Commission ruled that the parties cannot approach the arbitration tribunal for
resolving the dispute if there is an arbitration agreement between the parties. The Supreme
Court however, eventually ruled that the Consumer Protection Act is an additional remedy
and therefore the consumer forum can decide the issue at its discretion, rather than relegating
the matter to arbitration, despite there being an arbitration clause in the agreement.
Reiterating the same position in National Seeds Corporation Ltd vs Madhusudan Reddy
(2012), the Court held that the arbitration clause does not bar the parties from approaching
the consumer forum under the Consumer Protection Act.

The facts of the National Seeds Corporation case were similar to the present case. The seed
provided by the supplier were defective and the District Forum had not seen the arbitration
agreement as a bar. On the basis of the above decisions, the District Forum is correct in
admitting the complaint.

Maintainability of Writ Petition: The District Forum is a quasi-judicial body (even according
to the NDRC website – ndrc.nic.in) and therefore, the writ petitions are maintainable. It was
recently clarified by the Bombay High Court in Motilal s/o Khamdeo Rokde & Ors v
Balkrushna Baliram Lokhande & Ors (Letters Patent Appeal No 177 of 2012), that the
writ of certiorari can be issued against quasi-judicial authorities under Article 226 of the
Constitution. In doing so, the Court relied upon the larger bench judgment of the SC
in Radhey Shyam & Anr v Chhabi Nath & Ors ((2015) 5 SCC 423) as well as Shri
Jogendrasinhji Vijaysinghji v State of Gujarat & Ors (AIR 2015 SC 3623) (Jogendrasinhji).
Similarly, a writ of prohibition can also be issued to quasi-judicial bodies. The High Court
can issue writs for other purposes as well under Article 226, apart from fundamental rights.
So, a petition is maintainable. However, in view of the opinion of the Supreme Court, it is
highly likely that the petition will ultimately not be allowed.

Arbitrability: Arbitrability refers to whether the subject matter of the dispute is capable of
arbitration. The Supreme Court analyzed this concept in detail in Booz Allen and Hamilton v
SBI Home Finance Ltd and Ors, AIR 2011 SC 2506. The matter was concerned with the
sale of mortgaged property. The Supreme Court drew a general test and stated that generally
disputes relating to rights in personam are arbitrable, disputes relating to rights in rem are not
arbitrable as they affect parties other than the parties to the arbitration as well. However, this
is not a rigid rule as disputes relating to sub-ordinate rights in personam arising from rights in
rem have always been considered to be arbitrable.

The jurisdiction of the arbitration tribunal can be excluded expressly or by necessary

implication. The three facets of arbitrability, relating to the jurisdiction of the
arbitral tribunal, are as: (i) whether the disputes are capable of adjudication and settlement by
arbitration? (ii) Whether the disputes are covered by the arbitration agreement? (iii) Whether
the parties have referred the disputes to arbitration?

The Supreme Court held that while the mortgage agreement by itself does not involve
transfer of rights in rem but sale of the mortgaged property affects other parties who have an
interest in the property as well. Therefore, the TP Act r/w Order 34 of CPC only provide
jurisdiction to the Courts in this matter to avoid to multiplicity of proceedings and to protect
the rights of all parties.

The Arbitration Act does not specifically exclude any category of disputes as being not
arbitrable. Sections 34(2)(b) and 48(2) of the Act however make it clear that an arbitral award
will be set aside if the court finds that "the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being in force."
As per Russell [22nd Edition, page 28, para 2.007), certain matters cannot be referred to
arbitration as “the type of remedy required is not one which an arbitral tribunal is
empowered to give”. As per Mustill and Boyd in Law and Practice of Commercial Arbitration
in England [2nd - 1989 Edition], “The types of remedies which the arbitrator can award are
limited by considerations of public policy and by the fact that he is appointed by the parties
and not by the state”.

The distinction between arbitrable and non-arbitrable disputes can also be brought out
through other case law. In Haryana Telecom Limited vs. Sterlite Industries India Ltd, 1999
(5) SCC 688, only matters which the arbitrator is competent and empowered to decide can be
referred to the arbitrator. A winding up petition cannot be ordered by an arbitration tribunal
and therefore it is not empowered to decide such a matter. Certain other cases such as
Olympus Superstructures Pvt Ltd v. Meena Vijay Khetan and Others, 1999 (5) SCC 651
and Chiranjilal Shrilal Goenka vs. Jasjit Singh and Ors, 1993 (2) SCC 507 discuss
arbitrability as well.

In the present case, the dispute will only affect the rights of the farmers who bring the dispute
and the rights of M/s. Excellent Seeds Corporation. While others farmers who do not bring
the dispute also might be entitled to the remedy, they are entitled only when they bring their
dispute to the arbitrational tribunal with respect to their independent contract. The dispute
only relates to rights in personam and is therefore arbitrable.

Q 5. Section 11(6) of the Arbitration and Conciliation Act, 1996 provides for the appointment
of the arbitrator by the Supreme Court or the High Court or any person or institution
designated by such Court, in the scenario where the parties are unable to act under the
procedure described by them for such appointment under the arbitration agreement. However,
before the 2015 amendment, the section provided for such appointment by the Chief Justice
or his designate. The question that arose was whether this power was judicial or
administrative.

A constitutional bench decided in Konkan Railway Corporation Ltd. v. Rani Construction

(P) Ltd; AIR 2002 SC 778 that such power is not adjudicatory. The only function or the
Chief Justice or his designate was held to be to “fill the gap” and appoint an arbitrator, so that
the arbitral tribunal is expeditiously constituted and the arbitration proceedings are
commenced. It was held that since the Chief Justice or his designate are not tribunals, such a
decision cannot be made the subject of a special leave petition under Article 136 of the
Constitution.

 However, in SBP v. M/s Patel Engineering Ltd; (2005) 8 SCC 618, a 7 judge bench
overturned the above decision and held the power under section 11 to be judicial in nature.
This decision had fa-reaching implications as it meant that the arbitrator will be appointed by
the Court only after its satisfaction that all conditions required for the initiation of the
arbitration exist: validity of the arbitration agreement, the maintainability and arbitrability of
the claim, the qualifications of the arbitrators and other jurisdictional matters.

The Supreme Court defined an administrative order as one which is directed to the regulation
or supervision of matters and distinguished it from a judicial order which decides the rights of
the parties or confers or refuses to confer rights to parties which are the subject of
adjudication before the court. The Court opined that the power under section 11 cannot be
called an administrative function as dragging a party to an arbitration where there is no
agreement or arbitrable dispute certainly affects the rights of the party.

This decision was problematic as it meant, and the Supreme Court conceded, that the rule of
kompetenz-kompetenz or the ability of the arbitration tribunal to decide on its own
jurisdiction will only operate when the arbitrators are appointed by the parties and not where
there is court intervention. In fact, it held that characterising an order under section 11(6) as a
judicial order avoids the situation where an arbitration tribunal can overturn the decision of
the Court. Further, since the Supreme Court could not possibly hold that judicial power is
delegated to the person or institution which is the designate of the Chief Justice, it effectively
engaged in legislation as it held that the designate can only be a judge of the Supreme Court
or any High Court.

The order under section 11(6) would be therefore be appealable under Article 136 of the
Constitution.

However, the 2015 amendment prospectively rendered the decision null and void. Apart from
changing the authority to Supreme Court and High Court and designated persons or
institutions, Section 11(6A) provides that the appointing authority shall confine itself to the
existence of the arbitration agreement. Section 11(6B) provides that delegation of power
under this provision is not delegation of judicial power. Section 11(7) states that an order
under the provision shall not be appealable. The amendment does lean towards characterizing
the power as an administrative power. The amendment thus restores the rule of kompetenz-
kompetenz and once the Supreme Court appoints the arbitrator, the arbitrator will have full
authority to rule on its own jurisdiction.

The effect of the amendment was discussed in Duro Felguera SA v Gangavaram Port Ltd,
(2017) 9 SCC 729, wherein the Court opined that the intention behind the legislation was ton
minimize the intervention of the Court in the appointment of the arbitrator and this intention
should be respected. All that the Court has to do is confirm whether the agreement provided a
clause for arbitration with respect to the disputes that have arisen between the parties. This
view of the Court has been reiterated in IBI Consultancy India Pvt Ltd v DSC Limited, AIR
2018 SC 2907.

Whether a special leave petition would be maintainable is still in doubt. Also, it remains to be
seen whether the Courts will exercise restraint in admitting writ petitions on the matter.

Note: section 3(v) of the 2019 Amendment Act states that “sub-sections (6A) and (7) shall be
omitted”. However, these provisions have not been notified. It is unclear what the position of
law will be if such provisions of law are notified.

Q6. The Arbitration Act is surely drafted in a way which promotes party autonomy. The
procedure of arbitration is geared towards such autonomy and it will be useful to start with
that.

Section 7 allows the parties to submit to arbitration all disputes which may arise between
them in respect of a defined relationship, whether contractual or not and Section 8 makes it
the duty of the judicial authority, before which a matter is brought, to refer the parties to
arbitration if a valid arbitration agreement exists.

The parties are also free to agree on the procedure to be followed by the arbitral tribunal in
conducting its proceedings under section 19(2). Under section 22, the parties may also decide
the language on which the arbitration is to be conducted. The parties can also agree on
whether to hold oral proceedings under the proviso to section 24(1). The parties also free to
adopt the fast track procedure under section 29B of the Act.

Section 20 grants the parties the liberty to determine the place of arbitration. As per section
28, with respect to international commercial arbitration, the parties have the right to decide
which substantive law should apply to the dispute. In such cases, the parties have the right to
decide both the seat as well as the venue of arbitration as well, as has been held in various
cases including in Union of India v Hardy Exploration and Production, Civil Appeal No.
4628 of 2018.

The parties can settle the matter under section 30 and also agree to having no reasons being
given in the arbitral award as per section 31(3).

Section 10 gives the parties the freedom to the parties to decide the number of arbitrators and
also decide upon the procedure of appointment of the arbitrators under section 11. Section
11(6) also restricts judicial intervention in case the procedure could not be followed to the
assessment of the existence of the arbitration agreement itself.

A positive judgement by the Supreme Court is Antrix Corporation Ltd-V- Devas

Multimedia Pvt Ltd, (2014) 11 SCC 560. Here, Antrix filed an application under section
11(6) to appoint the arbitrator for Devas as it believed that Devas had not appointed the
arbitrator as per proper procedure. However, the SC ruled that once an arbitrator is appointed,
an application under Sec 11 is not maintainable as there is no power left to exercise under
section 11. Appropriate remedy could be pursued under section Sec 13 of the Act, or
subsequently under section 34.

However, if the arbitrator has not been appointed yet, then the Supreme Court has exercised
wide discretion, going against party autonomy. In Union of India v. Bharath Battery Mfg.
Co. (P) Ltd, (2007) SCC 684, where it followed a three-judge bench decision in Punj Lloyd-
Petronet MHB Ltd, (2006) 10 SCC 240. It was unequivocally held that once a section 11
application is filed for the appointment of arbitrator, the opposite party would lose its right to
appointment of the arbitrator as per the terms of the contract. Why the Supreme Court cannot
stick to the procedure and other aspects agreed to by the parties is not very clear.

The Supreme Court in Voestalpine Schienen GMBH-Vs- Delhi Metro Corporation Ltd,
(2017) 4 SCC 665 confuses things even further. The DMRC had shortlisted five arbitrators
for appointment out of which three were to be appointed. The appellants claimed that the
arbitrators were biased. However, the Supreme Court said that just because the arbitrators
were government employees, they are not biased as they have no connection with DMRC.
However, still the Supreme Court went ahead to direct the DMRC to expand the shortlist to
31 arbitrators from diverse fields to remove any “misapprehension” of the bias. It is not clear
why the Supreme Court did that when there was no reasonable ground for bias in the first
place.

Further, section 4 allows the parties to waive requirements of the provisions of the Act that
are derogable and section 5 clearly provides that the Courts shall not intervene except as
provided under Part I.

A very positive judgement was given by the Supreme Court in Narayan Prasad Lohia-V-
Nikunj Kumar Lohia, (2002) 3 SCC 572 (3 judge bench). Here, the parties had agreed to
appoint only two arbitrators under the arbitration and when the dispute arose, they
accordingly appointed one arbitrator each. However, Section 10(1) says that parties are free
to determine the number of arbitrators, provided that such number shall not be an even
number. The arbitration proceedings were conducted and a unanimous award was passed.
However, later one party challenged this award in Court contending that the arbitration was
not in accordance with the mandatory provision of the Act. The SC eventually ruled that
section 10(1) is a derogable provision and the parties had waived the provision by their non-
compliance by the operation of section 4.

However, a contrary judgement has also been given in MMTC ltd-vs- Sterlite Industries Ltd,
(1996) 6 SCC 716 (2 judge bench). However, in this case, the facts were slightly different.
Here, the two arbitrators appointed by the parties were supposed to appoint the third
arbitrator which they did not do. Here, the parties had agreed to appoint three arbitrators
which did not happen. Whether the Narayan Prasad Lohia judgement amounts to rewriting
the legislation is another matter.

The Act itself is therefore completely in line with party autonomy. However, the Supreme
Court jurisprudence on the matter has been a mixed bag.

PART B

Q 7. Since the lawyer conducting his first client interview or counselling does not have a
trademark way of going about the same (unlike a senior), it is important to focus on certain
concepts.
The object behind client interviewing is to obtain all relevant information, establishing trust
and confidence of to explore the contractual understandings or basically getting the brief. It is
essentially a three stage approach:
1. Preliminary Problem Identification: The object of the lawyer in this stage is to identify
the preliminary problem so as to be able to see the facts in that perspective.

2. Chronological overview – The objective is to develop a timeline to place the facts

narrated by the client. It involves discussion on facts leading up to the event, surrounding the
event and those subsequent to the event.

3. Theory Development and verification – the lawyer develops possible explanations and
answers to the facts in question.

Listening is the most basic skill required for conducting a client interview as the client has to
be listened to and understood by the lawyer. While listening, the client needs to display
genuineness and empathy. However, the lawyer necessarily needs to have a probing attitude
and needs to ask questions to fill in the gaps in the facts narrated by the client.

Client counselling is aimed at helping the client make decisions about his/her legal and non-
legal issues by helping him/her to understand the legal and non-legal implications of the
decision.

This process requires creativity and foresight from the lawyer to understand such future
implications. The lawyer needs to analyse the issues in front of him and advise the client on
the best course of action. He or she needs to keep explaining these issues and analysis to the
client who may not have a legal background and therefore, cooperate with the client.

Q 8. Section 18 of the Act is a non-derogable provision. The parties cannot agree to deviate
from the principle of equality enshrined therein. Each party has to be mandatorily given a full
opportunity to present his case. A minimum principle of natural justice that has to be
followed is definitely the right to be heard (audi alteram partem).

The right to hearing does not necessarily necessitate a right to oral hearing, as section 24(1)
clearly indicates that the parties can do away with the requirement through the agreement.
The right to present their case is granted to the parties by section 18 itself. This would
contemplate a notice requirement as well. In Sachin Gupta v. K.S. Forge Metal Pvt Ltd,
2013 (3) SCALE 250, The Supreme Court set aside the arbitral award as the award had been
given without issuance of any notice, and without even granting a hearing to the respondent.
Such an award was liable to be set under Sec. 34(2)(a)(iii).

The right to a speaking order is not a minimum requirement as the parties can agree to do
away with the reasoning in the arbitral award as per section 31(3)(a). However, if the parties
have not made any such agreement, a speaking order also becomes a minimum requirement.

Further, despite the need for speedy completion of arbitration proceedings, the parties have a
right to legal representation in the arbitration proceedings. In Faze Three Exports Ltd v.
Pankaj Trading Co; 2004 (2) Arb LR 163, the Bombay High Court held that since arbitral
proceedings are quasi-judicial in nature, the right of hearing includes the right to be
represented by a legal practitioner. In doing so, it set aside the award of the tribunal which
had not allowed such legal representation in the arbitral proceedings to avoid delay and
protraction of the proceedings.

Further, the arbitrator should not be biased against any party to address which, section 12
and 13 provide a challenge procedure. However, in that respect, the Act does violate the
principle the principle of nemo judex in causa sua (no-one should be a judge in his own
cause) as the arbitrator decides the question of his own competency. However, as per Bharat
Heavy Electricals ltd-vs-C. N. Garg, 2000 (3) Arb LR 674, the Delhi HC held that the
challenge under section 13(5) will have to be read into section 34 and hence the award can be
challenged in front of judicial authority as well on the grounds of bias and impartiality.

Q 9. Arbitration and conciliation, being alternative dispute resolution techniques, do focus on

confidentiality.

In the case of conciliation, confidentiality is provided for section 75 of the Arbitration and
Conciliation Act, 1996 which says that the conciliator and the parties shall keep confidential
all matters relating to the conciliation proceedings confidential. This confidentiality also
extends to the settlement agreement, except where its disclosure is necessary for purposes of
implementation and enforcement. However, no consequence of breach is provided under law.
The Act also provides for inter-party confidentiality under section 70 by requiring the
conciliator to not information obtained in private caucus to the other party, if the party so
desires.
Section 42A, inserted by the 2019 amendment to the Act provides for maintenance of
confidentiality of all arbitral proceedings, except the award by the arbitrator, the arbitral
institution and the parties to the arbitration agreement. The only exception is a situation
where its disclosure is necessary for the purpose of implementation and enforcement of
award. Again no remedy is provided in law for the breach of confidentiality. The parties can
also agree that no reasons should be given in the award as per section 31. However, in
institutional arbitration, many arbitral institutions have an experienced committee to
scrutinize the arbitral awards before it is finalized and given to the parties, thus lowering
intra-institutional confidentiality, even though the object is to lower judicial interference and
ensure correct decisions.

Due to lack of remedy in the law, the parties may provide for liquidated damages
contractually. The parties and the conciliator, or the arbitrator (as the case may be) can enter
into a tripartite contract enforcing duties on all parties present, even the lawyers. If a party
breaches the contract, the party can be taken to court. However, you cannot really ensure that
there is no breach of the confidence reposed. In ad hoc arbitration, someone well respected in
the business world itself may be acting as the arbitrator and if he commits a breach, then the
consequence is not only liquidated damages but a great loss of reputation as well. So, that
may be an additional deterrent.