Conduct of arbitral proceeding vaibhav goyal

Arbitration and conciliation have been the preferred system of resolution of disputes in India from times immemorial. Sir Henry Maine observes that, “In those parts of India, in which village community was most perfect, the authority, exercised elsewhere by the headman, was lodged with what was called the village council or the panchayat.” The prevalent system of arbitration in India made Chief Justice Marten compelled to state in the case of Chanbasappa Gurushantappa vs. Baslinagayya Gokurnaya Hiremath (1927) that “It is indeed a striking feature of ordinary Indian life. And I would go further and say that it prevails in all ranks of life to a much greater extent than is the case in England. To refer matters to a Panch is one of the natural ways of deciding many a dispute in India.” The Orissa High Court in the case of State of Orissa vs. Gangaram Chhapolia (1982), traced the sequence of the formal codification of law on arbitration starting from Bengal Regulations of 1772 and 1780 to Bengal Regulation IX of 1883 which authorised Settlement Officers to refer disputes to arbitration. The Britishers introduced various acts dealing with the law on Arbitration including the Act IX of 1840, the Specific Relief Act of 1878, the Code of Civil Procedure of 1908, the Indian Arbitration Act of 1940 and The Arbitration and Conciliation Act, 1996.

1. CONDUCT OF ARBITRAL PROCEEDING
INTRODUCTION
Arbitration and conciliation have been the preferred system of resolution of disputes in India
from times immemorial. Sir Henry Maine observes that, “In those parts of India, in which
village community was most perfect, the authority, exercised elsewhere by the headman, was
lodged with what was called the village council or the panchayat.” The prevalent system of
arbitration in India made Chief Justice Marten compelled to state in the case of Chanbasappa
Gurushantappa vs. Baslinagayya Gokurnaya Hiremath (1927) that “It is indeed a striking
feature of ordinary Indian life. And I would go further and say that it prevails in all ranks of
life to a much greater extent than is the case in England. To refer matters to a Panch is one of
the natural ways of deciding many a dispute in India.” The Orissa High Court in the case of
State of Orissa vs. Gangaram Chhapolia (1982), traced the sequence of the formal codification
of law on arbitration starting from Bengal Regulations of 1772 and 1780 to Bengal Regulation
IX of 1883 which authorised Settlement Officers to refer disputes to arbitration. The Britishers
introduced various acts dealing with the law on Arbitration including the Act IX of 1840, the
Specific Relief Act of 1878, the Code of Civil Procedure of 1908, the Indian Arbitration Act
of 1940 and The Arbitration and Conciliation Act, 1996.
CONDUCT OF ARBITRAL PROCEEDING
The Conduct of Arbitral Proceeding can be expressed in the provisions of the Arbitration and
Conciliation Act of 1996. The relevant sections dealing with the subject matter include Section
18 to Section 27 of the Act. The Sections can be explained as follows:
S.18- Equal treatment of parties
STATEMENT: The parties shall be treated with equality and each party shall be given a full
opportunity to present the case.
PRINCIPLES OF NATURAL JUSTICE: The minimum requirement of a proper hearing
should include:
 Each party must have notice of place, date and time of hearing
 Each party must have reasonable opportunity to be present throughout the hearing
 Each party must have reasonable opportunity to present statements, documents,
evidence and arguments in support of case

2.  Each party must be provided by statements, documents and evidence adduced by other
side
 Each party must have reasonable opportunity to cross-examine his opponents’ witness
and reply to the arguments advanced
In case of O’Reily vs. Mackman (1983), Lord Diplock observed that, the right of a man to be
given ‘a fair opportunity of hearing what is alleged against him and of presenting his own case
is so fundamental to any civilised legal system that it is to be presumed that Parliament intended
that a failure to observe it should render null and void any decision reached in breach of this
requirement. The maxim ‘Nemo Judex in Causa Sua Potest’ is applicable when the court is
concerned with a case of actual injustice but with the appearance of injustice, or possible
injustice. In case of Maxwell vs. Deptt. Of Trade (1974), Lord Justice Lawson observed that
“Doing what is right may still result in unfairness if it is done in the wrong way”. No doubt
arbitrator is not bound by technical rules of procedure but he can’t ignore the principles of
natural justice. Thread of natural justice should run through the entire arbitration proceedings
and the principles of natural justice require that the person who is to be prejudiced by the
evidence ought to be present to hear it takes, to suggest cross-examination, or himself to cross-
examine and be able to find evidence, if he can, that shall meet and answer it; in short to deal
with it in an ordinary course of legal proceedings as had been observed by the Court in the case
of Wazir Chand Karam Chand vs. Union of India (1989).
Mustil and Boyd in the treatise also suggested some of the principles to be followed in the
arbitration which can be as:
 Each party must have a full opportunity to present his own case to the tribunal.
 Each party must be aware of his opponent’s case, and must be given a full opportunity
to test and rebut it.
 The parties must be treated alike and have the same opportunity in forwarding the case
and to test that of the opponents.
DEFECTED PROCEEDINGS: In case of Spac and Co. vs. National Building Constructing
Corporation (1989), the Court observed that if at any stage, there is any defect in the
proceedings of the arbitration or kind of mishandling by the arbitrator, the court can set aside
that so called arbitral award. An arbitrator has a very important judicial function to discharge.
Any irregularity of action which is not consonant with the general principles equity and good
conscience which ought to govern the conduct of the arbitrator amounts to misconduct has been

3. stated in case of Indian Minerals Co. vs. Northern India Line Marketing Association (1958).
Though the arbitrator is not strictly bound by the rules and procedures observed in court, it
doesn’t mean that his procedure should be opposed to principles of natural justice. An arbitrator
may proceed with the matter ex-parte if a party, despite notice, fails to take part in the arbitral
proceedings.
In the case of Union of India vs. Mehta Teja Singh (1983), where the claim for recovery of
amount from the contractor was based on the report of the technical examiner and the arbitrator
didn’t order production of such a record though specifically requested by the contractor to do
so, nor had himself seen the report, amounts to misconduct of the arbitration proceedings
resulting in the denial of natural justice. In case of Mohidin Sahib vs. Ramaswami Chetti
(1921), where an arbitrator communicated his information gained privately to the other
arbitrators in the presence of the parties and they had opportunity of checking the information
or of contradicting it, and the defendants actually admitted the information to be correct, in that
case, the arbitrator can’t be accused of misconduct. It is improper on the part of an arbitrator to
get information from one side in the absence of the other or to utilise information not accessible
to others, but consent of the parties who are sui juris will cure the defect, but a minor’s guardian
can’t waive the minor’s right to object the irregular procedure has been stated in case of
Chintalapudi Sanyasirao vs. Chintalapudi Venkatrao (1923).
S.19- Determination of rules of procedure
STATEMENT: (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure,
1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).
(2) Subject to this Part, the parties are free to agree on the procedure to be followed by the
arbitral tribunal in conducting its proceedings.
(3) Failing any agreement referred to in in sub-section (2), the arbitral tribunal may, subject to
this Part, conduct the proceedings in the manner it considers appropriate.
(4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the
admissibility, relevance, materiality and weight of any evidence.
ARBITARTOR NOT BOUND BY CPC: Section 19(1) of the Act provides for the same
provision. When a special law like the 1996 Act provides for a forum for adjudication of certain
matters, procedure like Civil Code can’t be enforced over it. It is not obligatory on the part of
the arbitrator to frame issues because he is not bound to follow the procedure laid down in Civil

4. Code. Technicalities of settling issues as required under Order 14, Rule 1 of the CPC need not
be followed by the arbitrator has been stated in case of Ashok Kumar Singh vs. Shanti Devi
(2011). The arbitrator is not bound to deal with each claim or dispute separately nor need an
award formally express the decision of the arbitrator on each matter of difference.
ARBITARTION NOT GOVERNED BY EVIDENCE ACT: In case of J. Kaikobad vs. F.
Khambatta (1930), it was stated by court that an arbitrator is not bound to follow the technical
provisions of the Evidence Act, and his decision can’t be challenged on ground that he relied
upon document not admissible under the Act. The only limitations on the powers of an
arbitrator are that he should not violate the principles of natural justice, he should give a hearing
to the parties, and should give a reasonable time and opportunity to them to substantiate their
respective claims. In case of I.O.C. Ltd. vs. Devi Const. Engg. Contractors (2008), it was stated
that the act of an arbitrator in not making a document as inadmissible can’t be a ground for
setting aside the award since strict rules of evidence are not applicable to arbitration
proceedings.
INEXPENSIVE ARBITARTION: In the case of Union of India vs. Singh Builders Syndicate
(2009), the Supreme Court stated that when an arbitrator is appointed by a court without
indicating fees, either both parties or at least one party is at a disadvantage. Firstly, the parties
feel constrained to agree to whatever fees is suggested by the arbitrator, even if it is high or
beyond their capacity. Secondly, if a high fees is claimed by the arbitrator and one party agrees
to pay such fees, the other party, which is unable to afford such fees or reluctant to pay such
high fees, is put to an embarrassing position. He will not be in a position to express his
reservation owing to an apprehension that refusal by him to agree to the fees may prejudice his
case or create s bias in favour of the other party who readily agreed to pay the high fees. The
tribunal’s duties in respect of the proper conduct of the proceedings include disposal of the
matter with reasonable dispatch, attending hearings and participating in deliberations following
the agreed procedure and dealing with all the issues.
ARBITARTOR TO APPRECIATE EVIDENCE: The evidence relied upon by the arbitral
tribunal should be one which should accord with the principles of natural justice. Lord Denning
in the case of G.K.N. Centrax Gears Ltd. vs. Matbro Ltd. (1976), stated that, “the weight of
evidence and the inferences from it are essentially matters for the arbitrator. I don’t think that
the award of the arbitrator should be challenged or upset on the ground that there was not
sufficient evidence or that it was too tenuous or the like. One of the very reasons for going to

5. arbitration is to get rid of technical risks of evidence and so forth. Questions of evidence are
essentially matters for the arbitrator and not matters for the court.”
Whether a particular document is material or not and whether it should be produced before the
arbitrator, is essentially a matter for the arbitrator to decide and whatever decision is taken by
the arbitrator, it is binding on the parties. The matter of proof of document is a matter for the
arbitrator and this can’t be a ground for interference with the award.
CONCLUSION WITH CONSENT: In the case of Spettigue vs. Carpenter (1735 PW), where
the party desired the arbitrator to defer making his award until he should satisfy him as to some
things which the arbitrator took to be against him, and as this was within two or three days
before the time for making the award was out, the arbitrator refused his request, and made his
award, and it seemed that there was a ground for the plaintiff’s desire to be heard, though it
didn’t appear that he was ready to be heard within the time, the court set aside the award.
If though there has been some needless delay, an arbitrator doesn’t give the party who has
caused it proper opportunity to go inti his case, but makes his award too hastily, without giving
due notice of his intention to do so, the court will set aside the award.
S.20- Place of arbitration
STATEMENT: (1) The parties are free to agree on the place of arbitration.
(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be
determined by the arbitral tribunal having regard to the circumstances of the case, including
the convenience of the parties.
(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless
otherwise agreed by the parties, meet at any place it considers appropriate for consultation
among its members, for hearing witnesses, experts or the parties, or for inspection of
documents, goods or other property.
CONVENIENT VENUE: It is not open to the arbitrator to fix the venue of arbitration of his
choice regardless of the convenience of the parties. When there is no condition in the arbitration
agreement empowering the arbitrator to fix the venue of arbitration as he thought fit, the
arbitrator in fixing the venue of the meeting must take into account all material circumstances
including the residence of the parties and their witnesses, the subject matter of the reference

6. and the balance of convenience. Where the parties have constituted an arbitral tribunal, but
have not designated the seat of the tribunal, the arbitral tribunal may itself designate the seat.
PARTIES CHOICE FOR VENUE: The section gives the choice to the concerned parties to
choose the venue of their choice and the same is not available with the arbitral tribunal.
However, if the parties fail to reach an agreement on the choice of venue, then and only then
the matter goes to the arbitral tribunal for determining the place for holding arbitration meetings
and that too not arbitrarily but having regard to the circumstances of the case, including the
convenience of the parties. Notwithstanding an agreement between the parties with regard to
the choice of the venue, the arbitral tribunal has been given a wide discretion to decide when
and where part of the proceedings shall take place, subject to an agreement in writing between
the parties for holding discussions amongst themselves or for hearing witnesses, experts or the
parties or for inspection of documents, goods or other property. This discretion has been given
to the arbitral tribunal subject to the condition that there is no bar placed on the arbitral tribunal
not to meet at a place other than the one fixed by them.
INTERIM AWARD AT VENUE: Section 2 (6) and 20 leads to the conclusions that in the
event the parties don’t agree with regard to the place of arbitration, though they were free to
determine the same then they had the right to authorise any person including an institution and
if the Joint Committee is such an institution for deciding the venue of arbitration and such
decision of the committee shall not partake the character of adjudication of a dispute arising
out of the agreement, so as clothe it the character of an award. The Supreme Court in the case
of Sunshin Chemicals Industry vs. Oriental Carbons and Chemicals Ltd. (2001), held that, the
decision of the Committee on the question of the venue under the arbitration clause is not a
decision, deciding legal rights of the parties under the contract. There is no mutuality and the
said Committee is merely a machinery for deciding the question of venue. Such a decision
doesn’t have the characteristics of an arbitration award nor even can it be held an interim award.
VENUE ACCORDING TO LAW: Arbitration Act, 1996 makes the seat of arbitration as the
centre of gravity of arbitration. The courts where the arbitration takes place would be required
to exercise supervisory control over the arbitration process. If the arbitration is held in Delhi,
where neither of the parties are from Delhi and the tribunal siting in Delhi passes an interim
order under section 17, the appeal against such order would lie in the courts at Delhi.
S.21- Commencement of arbitral proceedings

7. STATEMENT: Unless otherwise agreed by the parties, the arbitral proceedings in respect of a
particular dispute commence on the date on which a request for that dispute to be referred to
arbitration is received by the respondents.
NOTICE: A perusal of section 21 would make it abundantly clear that it is not necessary that
the request should be made expressly in writing. Request could be made by conduct of the
parties and it has to be understood in that manner. If the notice of invocation is not received by
the respondent, arbitration proceedings cannot commence. In Nea Agrex SA vs. Baltic Shipping
Co. Ltd. (1976), it had been held that the purpose of notice was to require the other party to do
something in order for it to be sufficient or at least should be one from which it can be inferred
that there is an implied request. Notice for the purposes of this section will be the first ever
notice sent demanding arbitration. The fact that a request is repeated in a subsequent letter
cannot wipe out the first demand made.
COMMENCEMENT OF PROCEEDINGS: The Supreme Court in the case of Milkfood Ltd.
vs. GMC Ice Cream (P) Ltd. (2004), observed that a notice of arbitration or the commencement
of an arbitration may not bear the same meaning, as different dates may be specified for
commencement of arbitration for different purposes. What matters is the context in which the
expressions are used. Having in regard for purpose of Section 21, the commencement is for
certain purpose starts with notice and is required to be interpreted which would be
determinative as regards the procedure under the Act or the other required to be followed. In
case of Delhi Transport Corp. Ltd. vs. Rose Advertising (2003), request for appointment of
arbitrator was made by a party to the agreement prior to 25
th
January 1996 when the new act
came into being. However, the arbitrator was appointed when the new Act had come into force.
The arbitration agreement clearly stipulated that the parties shall be governed by the law as in
force at the relevant time. The parties, by their conduct, acted under the 1996 Act inasmuch as
even the arbitrator proceeded on that basis and gave his award in pursuance of 1996 Act. Held
that the Award would be governed by 1996 Act.
The new Act came into force on January 25, 1996 and it is this date which would determine in
each case whether the arbitration matter would be governed by the new Act or the old Act. For
resolving the controversy, reference may be made to this section which lays down that unless
otherwise agreed to between the parties, the arbitration suit in respect of arbitration dispute
commenced on the date on which the request for referring the disputes for arbitration were
moved for consideration of the respondent on and after 26
th
January 1996 or prior thereto. If

8. such a request was made prior to that date, then on conjoint reading of section 21 and 85(2)(a)
of the 1996 Act, it must be held that the proceedings will be governed by the 1940 Act as also
reaffirmed by the Supreme Court in the case of Shetty’s Const. Co. Pvt. Ltd. vs. Konkan
Railway Const. (1998).
TIME LIMIT: If there is no agreement between the parties as to the date of commencement of
arbitral proceedings, the arbitral proceedings shall commence on the date on which a request
for that dispute to be referred to arbitration is received by the respondent. The parties have been
given total freedom to agree between themselves as to the date from which the proceedings
shall be deemed to have commenced. It is stated that determination of the date of
commencement is of critical importance to the parties in view of the applicability of the Law
of Limitation. Once the date of commencement of arbitration proceedings is determined, time
stops running and thus there can be no question of the time limit subsequently expiring as
regards cause of action included in the reference. In the case of W.J. Alan and Co. Ltd. vs. El
Nasr Export and Import Co. (1971), arbitrators found that the request for arbitrators found that
a request for arbitration by sellers was made outside the conceptual time limit. The sellers
challenged the award. The time bar clause plainly dealt with the buyers’ complaints. It was
held that the time bar clause was limited to the claims made by the buyers and there was no
time limit of the sellers’ request for arbitration.
S. 22- Language
STATEMENT: (1) The parties are free to agree upon the language or languages to be used in
the arbitral proceedings.
(2) Failing any agreement referred to in sub-section (1), the arbitral tribunal shall determine
the language or languages to be used in the arbitral proceedings
(3) The agreement or determination, unless otherwise specified, shall apply to any written
statement by a party, any hearing and any arbitral award, decision or other communication by
the arbitral tribunal.
(4) The arbitral tribunal may order that any documentary evidence shall be accomplished by a
translation into the language or languages agreed upon by the parties or determined by the
arbitral tribunal.
PARTIES TO DECIDE: The choice of deciding the venue should be left upon the parties to
determine the language in which proceedings should be undertaken. The need and necessity

9. for the provision seems to have arisen because of the parties hailing from different languages
are spoken, as also because of the members constituting proceedings belong to different parts
of the country.
The choice of the language or the languages in which the arbitral proceedings shall be
conducted having been decided by the agreement between the parties, failing which by the
arbitral tribunal shall, for all intents and purposes, be the language or languages in which the
written statement shall be filed by a party. Any communication which may be sought to be
placed on record of the arbitral tribunal, in the language or the languages other than those for
which the decision had already been taken, may not succeed.
REFERENCES:
1. Markanda, P.C., Law relating to Arbitration and Concilation,8
th
Ed.(2012),Lexis Nexis,
Butterworths & Wadhwa, Nagpur
2. B.P. Saraf and M. Jhunjhunwala, Law of Arbitration and Conciliation (2000), Snow
White, Mumbai
3. Basu N.D., Law of Arbitration and Conciliation Law of India (2014),Universal Law
Publishers, Delhi