ADR - 6TH May Cpt. BHATIA (F) - 7TH LECTURE PART II

ADR - 6TH May Cpt. BHATIA (F) - 7TH LECTURE PART II

1. 1
CMMI MASTERCLASS ON
ALTERNATE DISPUTE
RESOLUTION

2. 2
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
We shall be looking at Sections 44 to 60
of the Arbitration and Conciliation Act,
1996 as Amended in 2015.

3. 3
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
Chapter I applies to NY Convention
Awards and does not apply to Geneva
Convention Awards which fall under
Chapter II

4. 4
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
CHAPTER I
NEW YORK CONVENTION AWARDS

5. 5
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 44 – What is considered a Foreign Award?
•Award made on or after 11
th
October 1960
•Out of an Arbitration Agreement in writing under the
Convention of the Recognition & Enforcement of Foreign
Arbitral Awards (NY Convention) as it applies.
•Arising out of a Legal Relationship between the parties,
whether contractual or not, but must be a commercial
relationship under Indian law.
•Central Government’s condition of reciprocability for
applicability of Convention.

6. 6
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 45
•Notwithstanding Part 1 of this Act or the Rules of CPC
1908, a Judicial authority has powers to refer the parties
to arbitration if the agreement falls under Sec 44, and is
approached by anyone under such agreement, unless the
authority finds that the said agreement is null and void,
inoperative or incapable of being performed.

7. 7
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 46 – Foreign Award is binding on all persons it is
made upon when it is enforceable under this Chapter.
•It can be relied upon by any such persons, by way of
defence,
•As a set-off
•in any domestic legal proceeding.

8. 8
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 47 (1) – Evidence needed for applying for enforcement
•-- Original Award / Authenticated Copy as required by the law of
the country of origin of award.
•-- Original Arbitration Agreement, or its duly certified copy.
•-- Evidence to show that it is a Foreign Award
•(2) – Certified Translated copy of Award into English, from
Diplomatic Office/ Consulate of the party’s nationality.
•The Amendment of 2015, inserts an explanation to clarify the meaning of
“Court” to avoid any ambiguity. Court would mean the High Court having
original jurisdiction to decide any questions, hear appeals from orders of lower
courts on the subject matter.

9. 9
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 48 – Conditions for Enforcement
•Cannot Enforce --
•(1) – It is proved that the parties, were under some incapacity
under the law that applied to them, (Eg Insolvent/Unsound mind)
•-- the agreement is invalid under the law governing the contract.
(Eg. Agreement is for shipment of sanctioned merchandise)
•-- the agreement is invalid in the country where the award is made.
(Eg. Award made is US and Agreement is between a sanctioned entity and for
sanctioned cargo)
•-- Improper procedures of arbitration followed.
•-- Rules of natural justice were ignored.

10. 10
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 48 – Conditions for Enforcement (Contd)
•-- Award deals with issues outside the scope of submissions. (For Eg.
Award decides about a third party’s liability not privy to the contract)
•-- Award has decisions on matters outside the scope of arbitration.
(For Eg. Award orders payment of some remote damages which have not been
prayed for in the submissions)
•Important: Enforceable decisions of the award can still be
enforced.
•-- Arbitration process/ procedure was not as per law of the seat of
arbitration.
•-- Award not yet binding, under appeal/challenge/review or
suspended by any competent authority or Court.

11. 11
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 48 – Conditions for Enforcement (Contd)
•-- subject matter of dispute not capable of being arbitrated under
Indian laws (Eg White Collar Crimes)
•-- Against Indian Public Policy
•Public Policy is clarified in the 2015 Amendment, that is to say that the award is –
•-- made by fraud/corruption, violation of rules u/s 75 or 81 of this act. (We see
further)
•-- Contravenes fundamental policy under Indian laws.
•-- contradicts rules of morality or justice.
•In deciding public policy issues, merits of dispute would not be
reviewed.

12. 12
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 49 – If Court is satisfied on enforceability of the foreign award,
then same is deemed as a decree of the Court.
•Sec 50 – Can appeal to the Court authorized to hear appeals (HC)
for Court’s orders refusing to:
• Refer parties to Arbitration U/s 45
• Enforce a Foreign Award U/s 48
•No second Appeal allowed, but can appeal to the Hon.SC.

13. 13
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
CHAPTER II
GENEVA CONVENTION AWARDS
(Not Popular, almost obsolete, except date, similar to NY Convention
awards)

14. 14
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
Sec 53 – What are Geneva Convention Awards
•-- Made after 24
th
July 1924
•-- Made under arbitration agreement under protocol of Second
Schedule of the Act.
•-- under doctrine of reciprocation applying to one party and signatory
to the Convention of Execution of Arbitral Awards (Third Schedule)
and other under the some Power of the Central Government.
•-- made in one such territory which the Central Government believes
to have reciprocal provisions.
•-- and no proceedings on finality of award are pending in the country
where it is made.

15. 15
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 54 – Judicial authority has power to refer the parties to
arbitration if they fall under the scope of Sec 53, if there is an
arbitration agreement and dispute is of commercial relationship
and this is without prejudice to the competence of the judicial
authority to look into the matter if the arbitration agreement
becomes inoperative.
•Sec 55 -- – Foreign Award is binding on all persons it is made upon
when it is enforceable under this Chapter.
•It can be relied upon by any such persons, by way of defence,
•As a set-off
•in any domestic legal proceeding.

16. 16
PART II --- ENFORCEMENT OF CERTAIN FOREIGN
AWARDS
•Sec 56 – Evidence -- Same as Sec 47
•Sec 57 – Conditions for Enforcement, Same as Sec 48
•Sec 58 – Enforcement of Award, Same as Sec 49
•Sec 59 – Appealable Orders, Same as Sec 50

17. 17
PART III
CONCILIATION

18. 18
PART III --- CONCILIATION
We shall be looking at Sections 61 to 81
of the Arbitration and Conciliation Act,
1996 as Amended in 2015, which cover
the procedure and provisions for
Conciliation.

19. 19
WHAT IS CONCILIATION??
It is a very informal procedure which we
can hardly call a “proceeding”.
It is faster than arbitration.
Promotes amicability but depends on
party’s intention to be bound by the
conciliator’s findings and advice.

20. 20
SEC 61. APPLICATION AND SCOPE.
61(1) This Part applies to all kinds of disputes whether
contractual or not but arising out of a legal relationship
between the parties.
61(2) This Part shall not apply where by virtue of any law
for the time being in force certain disputes may not be
submitted to conciliation.

21. 21
SEC 62. COMMENCEMENT OF CONCILIATION
PROCEEDINGS
Procedure --
62(1) Initiating party sends and invite to the other for
conciliation, giving brief details of the dispute.
62(2) Conciliation proceedings commence only when
the other party accepts in writing the invitation to
conciliate.
62(3) If the other party rejects the invitation, there
will be no conciliation proceedings.

22. 22
SEC 62. (CONTD)
When there can be no conciliation --
62 (4) If the party initiating conciliation does not ---
receive a reply within 30 days from the date on which he
sends the invitation, or
within such other period of time as specified in the
invitation,
he may elect to treat this as a rejection of the invitation to
conciliate.
He can inform in writing to the other party accordingly.

23. 23
SEC 63. NUMBER OF CONCILIATORS
63 (1). One conciliator, OR,
If Parties agree,there shall be two or three
conciliators.
63 (2). Where there is more than one conciliator, as a
general rule, they have to act jointly.

24. 24
SEC 64. APPOINTMENT OF CONCILIATORS
(1) Can get own candidate or seek help of an ADR
Institution.
(a) If Sole Conciliator, parties can decide and agree on who
it would be;
(b) if two, then each appoints one Conciliator;
(c) If three conciliators, each party appoints one conciliator
and the parties jointly agree on the name of the third
conciliator who shall act as the presiding conciliator.

25. 25
SEC 64. (CONTD)
64 (2). Parties may seek the assistance of a suitable
institution or person for the appointment of conciliators,
and in particular,—
(a) Institution can check the matter and recommend a
name; or
(b) the parties may agree that the institution decides on the
names and appoints them.
Rules of conflict of interest, impartiality and possibility of a
neutral nationality would be taken into account by the
institution.

26. 26
SEC 65. SUBMISSION OF STATEMENTS TO
CONCILIATOR
Submissions Procedure:
65(1). Once Conciliator/s are appointed, each party to prepare a
brief written statement of the general nature of dispute and points
in issue and exchange these statements.
65(2). The conciliator/s may request for further written statements
on the facts, supportings, supplementary documentations, other
evidence as appropriate. These would also be shared with the other
party.
65(3). Conciliator/s may ask for additional information at any time.

27. 27
SEC 66. CONCILIATOR NOT BOUND BY CERTAIN
ENACTMENTS
A very informal proceeding as the conciliator is not bound
by the Code of Civil Procedure, 1908 (5 of 1908) or the
Indian Evidence Act, 1872 (1 of 1872).
Conciliator is free to make his own procedure to best suit
the dispute.

28. 28
SEC 67. ROLE OF CONCILIATOR
67(1). The conciliator assists the parties as an independent,
neutral and impartial person to amicably resolve the
dispute.
67 (2). The conciliator shall be guided by principles of
objectivity, fairness and justice, the rights and obligations
of the parties, trade practices and the circumstances
surrounding the dispute, including any previous business
practices between the parties. – A very commercial approach.
Therefore, selecting the right Conciliator is very important.

29. 29
SEC 67. (CONTD)
67(3). The conciliator is free to decide the procedure and
conduct of proceedings, including oral hearings, in the light
of the need for a fair and speedy settlement of the dispute.
67(4). The conciliator can at any stage, make a proposal for
settlement, very informally, could be orally.

30. 30
SEC 68. ADMINISTRATIVE ASSISTANCE
In order to facilitate the conduct of the conciliation
proceedings, the parties, or the conciliator with the consent of
the parties, may arrange for administrative assistance by a
suitable institution or person. – The venue plays an important role
as sometimes the conciliator may need to speak to a party alone. Some
institutions (like the Indian Merchant Chambers) offer their premises
designed for conciliation at a fee and also have support staff like stenos, IT
personnel etc.

31. 31
SEC 69. COMMUNICATION BETWEEN
CONCILIATOR AND PARTIES
69(1). The conciliator may meet parties or may
communicate with them orally or in writing. He may meet the
parties together or with each of them separately.
69(2). Conciliator or parties can mutually agree to a
conciliation venue depending on everyone’s convenience.

32. 32
SEC 70. DISCLOSURE OF INFORMATION
This follows the rules of natural justice and fairness. The Conciliator is
bound to share all information concerning the dispute as received with both
parties to afford either one an opportunity to present any explanation.
Information will be shared unless any party providing the information
considers it sensitive and lays a condition that the conciliator will deem it as
confidential and not share it, in which case it would not. For Eg., -- List of
Creditors, Bank Accounts, Clientele list….

33. 33
SEC 71. CO-OPERATION OF PARTIES WITH
CONCILIATOR
The parties shall in good faith co-operate with the
conciliator and, in particular, shall endeavour to comply with
requests by the conciliator to submit written materials,
provide evidence and attend meetings.
Without co-operation any conciliation would not progress and fail.

34. 34
SEC 72. SUGGESTIONS BY PARTIES FOR SETTLEMENT
OF DISPUTE.
Each party may, on his own initiative or at the invitation of
the conciliator, submit to the conciliator suggestions for the
settlement of the dispute

35. 35
SEC 73. SETTLEMENT AGREEMENT.
73 (1). There is scope for early settlement as Conciliator at
any stage may feel that a settlement may be possible he
may draw up a settlement plan/ proposal with reasons and
place before the parties for their comments.
73 (2). If agreeable, parties may seek the help of the
Conciliator to draw up a settlement agreement for them.
73 (3). If the parties sign the agreement, then it would be
final and binding on them.
74(4). Conciliator shall authenticate the signed agreement
with his own signature and give each one a copy.

36. 36
SEC 74. STATUS AND EFFECT OF SETTLEMENT
AGREEMENT.
The settlement agreement shall have the same status and
effect as if it is an arbitral award on agreed terms on the
substance of the dispute rendered by an arbitral tribunal
under section 30.

37. 37
SEC 75. CONFIDENTIALITY
Rules of confidentiality apply to conciliation, just the same way as in
arbitration proceedings. Conciliator is bound to keep all information
related to the conciliation proceedings confidential, which includes the
settlement agreement, except where it comes under the operation of
law, in cases of enforcement and implementation of the agreement.

38. 38
SEC 76. TERMINATION OF CONCILIATION
PROCEEDINGS
Conciliation proceedings come to an end on the date when:
(a) The Settlement Agreement is signed by the parties ; or
(b) When the conciliator declares in writing, with both
parties’ wishes that the conciliation is not working and no
more efforts are justified.
(c) Both parties make a written declaration to the conciliator
that the conciliation is terminated.
(d) One party opts out, writes to the other (and the
conciliator) that the conciliation stands terminated.

39. 39
SEC 77. RESORT TO ARBITRAL OR JUDICIAL
PROCEEDINGS
Except in cases where necessary to preserve rights, there is
a bar on either party to initiate arbitration or judicial
proceedings against the other, during the pendency of the
conciliation proceedings.

40. 40
SEC 78. COSTS
78(1). Upon termination of the conciliation proceedings,
the conciliator notifies the parties of the costs involved.
78(2). For the purpose of sub-section (1), “costs” means
reasonable costs relating to and includes —
Conciliator Fees, Witness Expenses, Expert’s Fees,
Institution’s Administrative Costs (Venue, Refreshments),
Assistance Costs (Steno, attendant etc)
78(3). Costs to be shared equally or as per apportionment
in the settlement agreement.

41. 41
SEC 79. DEPOSITS
The conciliator has the right to seek security for costs and
he can:
79(1). Direct each party to deposit an equal amount as an
advance for the estimated or expected costs.
79(2). During the course of the conciliation proceedings,
seek that each party deposits supplementary costs.
79(3). Has power to suspend or terminate the proceedings
if deposits not made in full within 30 days.
79(4). Duty to keep accounts and return surplus to
respective parties.

42. 42
SEC 80. ROLE OF CONCILIATOR IN OTHER
PROCEEDINGS
Unless parties want it,—
(a) the conciliator cannot act as an arbitrator
Or represent
Or act as counsel of a party in any arbitral or judicial
proceeding for the dispute he was conciliator for,
(b) Conciliator, cannot act as a witness in any arbitral or
judicial proceedings related to the dispute.

43. 43
SEC 81. ADMISSIBILITY OF EVIDENCE IN OTHER
PROCEEDINGS.
•Sanctity of Conciliation:
The parties shall not rely on or introduce as evidence in
arbitral or judicial proceedings, whether or not such
proceedings relate to the dispute that is the subject of the
conciliation proceedings,--
(a) views expressed or suggestions made by the other party
in respect of a possible settlement of the dispute;
(b) admissions made by the other party in the course of the
conciliation proceedings;
(c) Proposals made by Conciliator
(d) Acceptance of Conciliator’s Settlement proposal.

44. 44
PROPOSED
ARBITRATION AND CONCILIATION
AMENDMENT BILL, 2018

45. 45
ARBITRATION AND CONCILIATION AMENDMENT
BILL, 2018
Basis the J. Srikrishna High Level Committee report proposed changes:
•1) Formation of the Arbitration Council of India –
•The Good - This avoids the work of Hon. SC and HC to appoint arbitrators.
Provides for Institution based Arbitration in India which are recognized by the Hon.
SC and HC. Section 11 would be amended accordingly. Provision for electronic
record of all awards which is necessary.
•The Bad: It is felt that the 2015 Amendment had wider scope including to examine
the validity of the arbitration agreement under Sec.11(6A) and Courts could check
whether the disputes could be referred to arbitration.

46. 46
ARBITRATION AND CONCILIATION AMENDMENT
BILL, 2018
•2. Sec 29A, of the 2015 Amendment states that the proceedings must
complete within 12 months (extendable to 18 months by consent) from
the date of the arbitrator’s entering upon reference of the dispute, failing
which the mandate would terminate.
•This was criticized because in complex international arbitrations it was
an ambitious target and unrealistic.
•The 2018 Amendment sensibly proposes that 12 months must be from
the date of closure of the pleadings.

47. 47
ARBITRATION AND CONCILIATION AMENDMENT
BILL, 2018
•The Good: We have a flexibility of timelines to look into complex and
complicated international arbitrations.
•The Bad: The proposal is to exclude international arbitrations from the scope of
Sec 29A. If this happens then we may have a timeline issue with complicated
domestic arbitrations and seems discriminatory in nature.
•3). Proposal to insert Sec 42A on Confidentiality of the proceedings but not the
award.
•The Good: Preserves the purpose and spirit of arbitration.
•The Bad: Drafting of Clause is difficult because it may contradict Sec 17 on
challenge of orders under Sec 17.

48. 48
ARBITRATION AND CONCILIATION AMENDMENT
BILL, 2018
•4). Immunity of Arbitrators:
•The Good: Amendments suggest arbitrator immunity, protects an
arbitrator from any legal proceedings for acts and omissions during the
course of the proceedings. Ensures that the arbitrator is able to exercise
her function without any fear of proceedings ensuing therefrom.
•Arbitrator immunity provisions are present in many foreign statutes and
international institutional rules, and MCIA Rules.

49. 49
Q & A ??
END