SUBJECT: ALTERNATIVE DISPUTE RESOLUTION

TOPIC: QUESTIONS AND ANSWERS ON

COMMERCIAL ARBITRATION

DATE: 01.11.2022

SUBMITTED BY:

SHEPHALI JHA,

BA LLB,

5TH YEAR,

DIVISION A,

2018-B-10082000.

SUBMITTED TO:

DR. SHAISTA PEERZADA,

ASSOCIATE PROFESSOR,

SCHOOL OF LAW,

AJEENKYA D Y PATIL UNIVERSITY, PUNE.

1
Question:

State different of four Indian judgments of Supreme Court, High Court, or any Tribunal, and
in a statement in your own words of the principle laid down for each.

Answer:

1. Principle: Disputes that are non-arbitrable and cannot be settled through Arbitration
under Arbitration and Conciliation Act, 1996.

In the case of Booz Allen Hamilton v. SBI Home Finance (2011) 5 SCC 532, the Supreme Court
held that the subject matter of dispute is not capable of settlement by arbitration under the law
for the time being in force such award is liable to be set aside. The subject matter are as follows:

i. Criminal Offence
ii. Matrimonial Disputes
iii. Guardianship Matters
iv. Insolvency and winding up matters
v. Testamentary matters
vi. Intellectual Property Rights
vii. Eviction or tenancy matters
viii. Suit for enforcement of mortgage by sale of property

Supreme Court held that such action would be an action in rem and not in personam and thus
not arbitrable even if parties agreed to refer such dispute by consent.

2. Principle: Power of the Arbitrator to award interest on damages and its exception

In the case of Haresh Advani v. Suraj Jagtiani1, the Bombay High Court held that the power
of the arbitrator under section 31(7) is not restricted to award interest on principle only and
also has the power to award interest on damages prior to the date of the award even if no notice
under section 3(b) of the Interest Act, 1978 is issued by the claimant. The exception of the same
was given in Jaiprakash Associates Ltd. v. Tehri Hydro Development Corporation Indian
Ltd.2 where it was held that Arbitral Tribunal cannot award interest if such claim is prohibited
under the terms of the contract entered into between parties.

1
(2015) 7 Bom CR 887
2
2019 SCC online SC 143

2
 3. Principle: Application of Civil Procedure Court, 1908 and Arbitration and Conciliation
Act, 1996

Supreme Court of India in Pam Developments Private Ltd. v. State of West Bengal,3 has
construed Section 36 of the Arbitration Act and Order XXVII Rule 8A of Civil Procedure
Code, 1908 and has held that the Arbitration Act is a self-contained Act. The provision of CPC
will apply only insofar as the same are not inconsistent with the spirit and provisions of the
Arbitration Act. Mere reference to CPC in Section 36 cannot be construed in such a manner
that it takes away the power conferred in the Arbitration Act itself. The general guidelines
(CPC) cannot make that Arbitration act inapplicable which essentially has to be applied first.
Provisions of CPC are to be taken into consideration when an application under section 36 is
filed for stay of money decree however they are not mandatory but in essence directory.

4. Principle: Initiation of Arbitration Proceedings

The Supreme Court has held in the case of Andhra Pradesh Power Coordination Committee
& Ors. V. Lanco Kondapalli Power Ltd, & Ors.4 that the notice of arbitration amounted to
initiation of arbitral proceedings as contemplated under Section 21 of the Arbitration and
Conciliation Act, 1996

Question:

State two Commercial Arbitration of any Company/Industry, in a statement in your own words
about it.

Answer:

1. “Commercial arbitration” is simply arbitration arising out of or relating to a commercial

transaction. Commercial Arbitration is the submission of a dispute by agreement of
business parties to a neutral third person, whom the parties have chosen to rule on their
dispute. The disputing parties agreed in advance to comply with that person’s decision.
2. The most common type of commercial arbitration disputes are the ones arising from
Vendor Agreements or Investment Agreements. Therefore, below are two landmark
judgements.
3. National Highways Authority of India v. Sayedabad Tea Estate5

3
2019 SCC online SC 852
4
(2016) 3 SCC 468
5
Judgment dated 27 August 2019 in Civil Appeal No. 6958-5959 of 2009.

3
 - The Supreme Court held that an application under Section 11 of the Arbitration &
Conciliation Act, 1996 (Arbitration Act) shall not be maintainable on account of
the provision laid down in Section 3G(5) of the National Highways Act, 1956 (NH
Act), which provides for appointment of arbitrator by central government.
- The Supreme Court observed that the usage of the term 'subject to' in Section 3G(5)
of the NH Act clearly indicates that the provisions of the NH Act will have an
overriding effect vis-à-vis the Arbitration Act in relation to land compensation
matters arising under the NH Act.
- It held that in view of the power being vested exclusively with the central
government to appoint an arbitrator under Section 3G(5) of the NH Act, being a
special enactment, the application filed under Section 11(6) of the Arbitration Act
for appointment of an arbitrator was not maintainable and the provisions of the
Arbitration Act could not be invoked for the purpose
4. The Oriental Insurance Co. Ltd. and Ors. Vs. Dicitex Furnishing Ltd.6
- The Supreme Court held that an arbitration clause can be invoked by an aggrieved
party pursuant to execution of no objection certificates or discharge vouchers.
- The Supreme Court while upholding the concept of economic duress dealt in the
case of Associated Construction Vs. Pawanhans Helicopters Ltd and National
Insurance Co. Ltd. Vs. Boghara Polyfab Pvt. Ltd. observed that a court which is
required to ensure that an arbitrable dispute exists, has to be prima facie convinced
about the genuineness or credibility of the plea of coercion; it cannot be too
particular about the nature of the plea, which necessarily has to be made and
established in the substantive proceeding.
- If the court were to take a contrary approach and minutely examine the plea and
judge its credibility or reasonableness, there would be a danger of it denying a forum
to the applicant altogether, because rejection of the application would render the
finding (about the finality of the discharge and its effect as satisfaction) final, thus,
precluding the applicant of its right event to approach a civil court.

Question:

State one International Commercial Arbitration that you might refer to, with the applicable
laws.

6
Judgment dated 13 November 2019 in Civil Appeal No. 8550 of 2019.

4
Answer:

1. The one International Commercial Arbitration that I would prefer in case of any dispute
would be Institutional Arbitration.
2. The seven most famous International Commercial Arbitration Institutions are:
• The International Court of Arbitration
• The Permanent Court of Arbitration
• The London Court of International Arbitration
• The Hong Kong International Arbitration Center
• The American Arbitration Association
• The International Center for Settlement of Investment Disputes
• The Chartered Institute of Arbitrators
3. The International Court of Arbitration has established ICC rules for arbitration sed all
around the world to resolve disputes. They assure parties of a neutral framework for the
resolution of cross-border disputes.
4. The rules/applicable laws are divided into 14 parts:
i. Introductory Provisions
- International Court of Arbitration
- Definitions
- Written Notifications or Communications; Time Limits
ii. Commencing the Arbitration
- Request for Arbitration
- Answer to the Request; Counterclaims
- Effect of the Arbitration Agreement
iii. Multiple parties, multiple contracts, and consolidation
- Joinder of Additional Parties
- Claims Between Multiple Parties
- Multiple Contracts
- Consolidation of Arbitrations
iv. Arbitral Tribunal
- General Provisions
- Constitution of the Arbitral Tribunal
- Appointment and Confirmation of the Arbitrators
- Challenge of Arbitrators

5
 - Replacement of Arbitrators
v. Arbitral Proceedings
- Transmission of the File to the Arbitral Tribunal
- Party Representation
- Place of the Arbitration
- Rules Governing the Proceedings
- Language of the Arbitration
- Applicable Rules of Law
- Conduct of the Arbitration
- Terms of Reference
- Case Management Conference and Procedural Timetable
- Establishing the Facts of the Case
- Hearings
- Closing of the Proceedings and Date for Submission of Draft Awards
- Conservatory and Interim Measures
- Emergency Arbitrator
- Expedited Procedure
vi. Awards
- Time Limit for the Final Award
- Making of the Award
- Award by Consent
- Scrutiny of the Award by the Court
- Notification, Deposit and Enforceability of the Award
- Correction and Interpretation of the Award; Additional Award; Remission of
Awards
vii. Costs
- Advance to Cover the Costs of the Arbitration
- Decision as to the Costs of the Arbitration
viii. Miscellaneous
- Modified Time Limits
- Waiver
- Limitation of Liability
- General Rule
- Governing law and settlement of disputes
6
 ix. Appendix I – Statutes of the International Court of Arbitration
x. Appendix II – Internal Rules of the International Court of Arbitration
xi. Appendix III – Arbitration Costs and Fees
xii. Appendix IV – Case Management Techniques
xiii. Appendix V – Emergency Arbitrator Rules
xiv. Appendix VI – Expedited Procedure Rules

Question:

State two Commercial Arbitration, and in your own words about when and to what extent can
the national courts interfere with the arbitral proceeding? Which impacts does it have on
comparative (dis)advantages that arbitrations hold over litigations?

Answer:

1. There are five kinds of commercial arbitration:

- Domestic Arbitration
- International Commercial Arbitration
- Ad-hoc Arbitration
- Fast track Arbitration
- Institutional Arbitration
2. Institutional and Ad-hoc are the two commercial arbitration mediums used majorly
around the world.
3. Institutional Arbitration is administered by an arbitral institution mutually agreed upon
by the parties and conducted in accordance with the applicable rules by the chosen
institution.
4. Ad hoc arbitration is where the parties agree on on-institutional rules to govern over the
dispute without any supervision and decide the procedure on its own.
5. The interference and appeal to courts is prevalent in ad hoc arbitration. Lack of structure
and too much flexibility often creates more chaos resulting in approach the courts for
solutions.
6. There is no definite time but disagreements can prevail from notice of arbitration too
and any of the parties can file an application seeking relief at any point of time during
the arbitral proceedings. This leads to ad hoc arbitration being more expensive when
recourses to litigation is allowed.

7
7. Decisions in ad hoc arbitrations may suffer questioning the expertise of arbitrators
alarming the reputation of the Arbitral award.
8. Unnecessary delays by approaching the courts and ineffective or unsuitable drafting of
arbitration rules can take away the sole purpose of arbitration when its ad hoc.
9. Institutional arbitrations have pre-established rules, proper conduct of proceedings,
administrative assistance, list of qualified arbitrators, established format for
submissions and proven track record. Therefore, involvement of courts is little to
nothing.
10. Disadvantages of arbitration over litigation
Arbitration Litigation
Evidence An arbitrator has considerable When in court, judge’s decisions
flexibility to consider any evidence are constrained by statutory and
he/she deems relevant and may case law and the conduct of the
issue an award based upon trial is governed by established
perceptions of fairness or equity rules of evidence.
and not necessarily on the
evidence or rules of law.
Joinder of Parties may be compelled to In contrast, in court proceedings,
all persons and entities involved
Parties participate in arbitration
in a dispute typically can be
proceedings only by agreement. joined as parties.
Thus, if any additional parties are
necessary for complete relief,
those other parties either must
have agreements requiring such
participation or otherwise must
consent to their joinder in the
proceedings.
Appeal An arbitration award is final and Trial court verdicts are not easily
Rights binding and, in many jurisdictions, reversed, judges sometime make
there is a limited right of appeal, mistakes and the ability to request
even if the arbitrator makes a a review of a decision by an
mistake of fact or law. appellate panel is an important
procedural safeguard.

8
9