Arbitration and Legal Issues : Conflicts and Controversies
Arbitration and Conciliation Act, 1996 contains many sections.
Arbitration and Conciliation (Amendment) Act, 2015 is deemed to have come into force on 23 October 2015 ; S.25 of said Act introduced 4th Schedule to A&C Act, 1996 ; when sum in dispute is Rs. 5 lacs to 20 lacs then fees will be Rs. 45000/- plus 3.5% of amount above Rs. 5 lacs ; when arbitrator is sole arbitrator, then fees to be paid 25% extra.
Commercial Courts Act, 2015 also affects arbitration. S.10 of CC Act, 2015 is relevant. S.10 (3) deals with situation when domestic arbitration is there ; S.10 (3) deals with all "appeals and applications" under Arbitration and Conciliation Act, 1996 which are to be decided by "Commercial Court" if such Commercial Court has been constituted. S.10 would only apply when value is above specified value and commercial dispute is there ; S.2 (i) of CC Act, 2015 defines "specified value" which is to be above Rs. 3 lacs. S.3 confers power on State Government to constitute commercial Courts at District level ; this is to be done in consultation with High Court. S.3 (3) permits Commercial Court at District Judge level and even below District Judge level. S.6 confers jurisdiction on commercial court over entire territory of the State. S. 7 deals with jurisdiction of commercial division of High Court.
According to S.2 (c) "arbitral award" includes an interim award.
S.9 can be invoked even before arbitral proceedings start. S.9 can be invoked even after the arbitral award. S. 9 (b) is for securing the amount in dispute. Power under S.9 is given to Court. S.9 requires a party to apply before Court. S.11 (4) fixes a time of 30 days and S.11 (4) gives power to HC as well. S.11 (6A) restricts the power of HC. S.11 (13) says that application is to be decided within 60 days.
S.13 (2) gives time limit of 15 days.
S.7 (3) says arbitration agreement shall be in writing.
S.16 gives jurisdiction to arbitrator. S.19 says arbitrator is not bound by Civil Procedure or IEA.
S.20 gives freedom to parties to decide on place of arbitration. S.20 (2) says convenience of parties one factor.
S.24 says that oral hearings are not necessary. S.24 also says that day to day hearing is conducted without adjournment.
S.28 (a) says Indian law for domestic arbitration.
S29A fixes time of 12 months within which award is to be passed.
S.29B provides for fast track procedure. In this, no oral hearing is done and time limit is 6 months.
S.31 (6) confers power to pass interim award.
S.31 (7)(b) is for interest rate.
S.31 (8) is for costs.
S.31A is about costs which includes legal fees, costs of arbitrators.
S.31A (2) says unsuccessful party has to pay costs.
S.34 provides for procedure to challenge arbitral award before Court. S.36 is about enforcement of arbitral award. S.37 is about appeal and S.37 (3) says no second appeal would lie.
S.40 says that arbitration agreement is not discharged by death of the parties.
For restriction on power of arbitrator, refer NTPC Ltd v. Amar India Ltd [2020] GCtR 1088 (Delhi). In that case, page 12 contained extracts of letter for appointment of arbitrator.
It was held in IRCON International Ltd v. Union of India [2023] GCtR 2492 (Delhi) that Section 2(6) of the
Arbitration and Conciliation Act, 1996 provides that parties have the freedom to
authorise any person, including an arbitral institution, to
determine the issue between them. Section 19(2) provides
that the parties are free to choose the procedure to be
followed for the conduct of arbitral proceedings. Section
11(2) provides that parties are free to decide on the
procedure for the appointment of arbitrators. "The intention
of legislature while enacting the Arbitration Act is that the parties need
not undergo the rigours of a formal litigation and may have an
expeditious disposal of their disputes. The intention is also to lessen the
burden of the Courts by introducing a mechanism which is reliable,
efficient and effective."
In case of NHAI v. Ashoka Buildcon Ltd [2023] GCtR 1544 (Delhi), the costs of arbitration proceedings and the litigation costs were imposed by arbitrator on the petitioner under S.31A of A & C Act, 1996 which were held to be justified.
In case of Pallab Ghosh v. Simplex Infrastructures [2024] GCtR 1654 (Gauhati), one party appointed arbitrator but other party did not appointed. Application under S.11 was filed. Court appointed the sole arbitrator and allowed application under S.11 of the A&C Act, 1996.
In case of DSIIDC v. Bawana Infra Developers (P) Ltd [2018] GCtR 6248 (Delhi) high costs of arbitration was noted and 4th Schedule was discussed. Rationalisation of fee structure was noted as the aim. It was noted that high costs are hampering arbitration. S.38 was held to have no application for applying fees under 4th Schedule. Arbitral Tribunal is free to fix its fees which is conducted without intervention of Court. Further, when Arbitral Tribunal is appointed under S.11, in that case also, fees under 4th Schedule is not binding when no Rules have been framed by the High Court.
It was held in Duro Felguera, S A v. Gangavaram Port Ltd [2017] GCtR 4775 (SC) that from a reading of Section 11(6A) of Arbitration and Conciliation Act, 1996, the intention of the
legislature is crystal clear i.e. the Court should and need only look
into one aspect - the existence of an arbitration agreement. The issues (third category) which the Chief
Justice/his designate should leave exclusively to the
Arbitral Tribunal are: (a) Whether a claim made falls within the arbitration clause (as for
example, a matter which is reserved
for final decision of a departmental
authority and excepted or excluded
from arbitration) ; (b) Merits or any claim involved in the
arbitration.” After the
amendment, all that the Courts need to see is whether an
arbitration agreement exists - nothing more, nothing less. The
legislative policy and purpose is essentially to minimize the
Court’s intervention at the stage of appointing the arbitrator and
this intention as incorporated in Section 11 (6A) ought to be
respected.
In case of NHAI v. Gammon Engineers and Contractor Pvt Ltd [2018] GCtR 6249 (Delhi), the application under S.14 of A&C Act, 1996 to terminate the mandate of the arbitrator was filed. The fixation of fees done by Arbitrator in accordance with 4th Schedule of A&C Act, 1996 was higher than the one fixed by the party. It was held that the Fourth Schedule to the A&C Act, 1996 however, is not mandatory. Arbitrator's mandate was directed to be terminated.
In case of Jaycee Housing Ltd v. Registrar, Orissa High Court [2022] GCtR 1988 (SC), it was noted that the Commercial Courts Act, 2015 has
been amended in the year 2018 which has come into force
with effect from 03.05.2018, by which Sections 3(1A) & 3A of CC Act, 2015 have been inserted enabling the State Governments to
designate such number of commercial Appellate Courts at
District level to exercise appellate jurisdiction over the
commercial courts below the District Judge level. Thus, a
commercial Court can be set up under Section 3 of the CC Act,
2015 and a commercial appellate Court can be set up
under Section 3A of the CC Act, 2015. Thus, the Objects and Reasons of Commercial Courts Act,
2015 is to provide for speedy disposal of the commercial
disputes which includes the arbitration proceedings. To
achieve the said Objects, the legislature in its wisdom has
specifically conferred the jurisdiction in respect of
arbitration matters as per Section 10 of the CC Act, 2015. It is also required to
be noted that even as per Section 15 of the CC Act, 2015, all
suits and applications including applications under the
A & C Act, 1996, relating to a commercial dispute of specified
value shall have to be transferred to the Commercial
Court. All
applications or appeals arising out of arbitration under the
provisions of Arbitration and Conciliation Act, 1996, other than international
commercial arbitration, shall be filed in and heard and
disposed of by the Commercial Courts, exercising the
territorial jurisdiction over such arbitration where such
commercial courts have been constituted.
In case of Nes Digboi Bogapani v. BPCL [2025] GCtR 1305 (Gauhati), the appeal filed under Commercial Courts Act, 2015 before High Court was held to be not maintainable. The case arose out of a matter which contained arbitration agreement.
In case of GE Capital Services India v. Deccan Chronicles Holding Pvt Ltd [2013] GCtR 6250 (Delhi) the power of Court under S.9 of A&C Act, 1996 was highlighted. Possession of equipments was directed and assistance from police officer was also directed.
In the case of AMKV -Tecpro v. GAIL (I) Ltd [2015] GCtR 6251 (Delhi) the power of Court under S.9 of Arbitration and Conciliation Act, 1996 to grant interim reliefs was shown. It was held that the interim Order once granted by Court under S.9 will continue till the arbitral proceedings conclude.
S.9 (3) was added to Arbitration and Conciliation Act, 1996 through Arbitration and Conciliation (Amendment) Act, 2015. S.9 (3) restricts the power of Court when Arbitral Tribunal has been constituted. In case of Manbhupinder Singh Atwal v. Neeraj Kumarpal Shah [2019] GCtR 6253 (Gujarat) the aspects of S.9 of A & C Act, 1996 were discussed and it clearly emerges from page 28 that Court can grant interim measures under S.9 even before the commencement of the arbitral proceedings.
In case of Trammo DMCC v. Nagarjuna Fertilizers and Chemicals Ltd [2017] GCtR 6254 (Bombay), provisions of S.9 of Arbitration and Conciliation Act, 1996 were interpreted. The proviso to Section 2(2) of Arbitration and Conciliation Act, 1996 as inserted by the 2015
amendment Act, interalia makes applicable the provisions of Section 9 to
international commercial arbitration even if the place of arbitration is
outside India, and the arbitral award made or to be made in such place is
enforceable and recognized under the provisions of Part II of the A & C Act, 1996. The
genesis for the legislature to bring about the said amendment is the
recommendations of the Law Commission in its 246th Report. It is evident from the legislative background that
the intent of the 2015 Amendment Act and the legislative concern in
incorporating the proviso to Sec. 2(2) to A&C Act, 1996 and amending the definition of
“court” as falling under section 2(1)(e) of A&C Act, 1996 was to enable the Indian Courts to
exercise jurisdiction interalia under Section 9 of the Arbitration and Conciliation Act, 1996 even where seat of
the international commercial arbitration was outside India, even when
such High Court does not exercise ordinary original civil jurisdiction.
It has been held at page no. 20 of Benara Bearings & Pistons Ltd v. Mahle Engine Components India Pvt Ltd [2017] GCtR 6255 (Delhi) that "all the powers of the Court to grant interim measures
before, during the arbitral proceedings or at any time after the making of
the arbitral award but prior to its enforcement in accordance with Section
36 are intact (and, have not been altered by the amendment) as contained in
Section 9(1) of the Arbitration and Conciliation Act, 1996".