International arbitration law and rules in India

1.1.1 The Arbitration and Conciliation Act 1996 (Indian Arbitration Act) came into force on 22 August 1996 and is deemed to have effect from 25 January 1996. 1  

1.1.2 The Indian Arbitration Act is based on the UNCITRAL Model Law 1985 and was the result of recommendations for reform, particularly concerning improving the efficiency of the arbitral process. 2

1.1.3 Prior to the Indian Arbitration Act, the law governing arbitration in India consisted of three statutes: the Arbitration (Protocol and Convention) Act 1937 (1937 Act); the Arbitration Act 1940 (1940 Act); and the Foreign Awards (Recognition and Enforcement) Act 1961 (1961 Act).

1.1.4 Historically, the 1940 Act was heavily criticised due to the intervention of the Indian courts, which was required during the arbitral proceedings when an arbitral tribunal needed a time extension when drafting the award and during the enforcement stage.

1.1.5 In addition, national institutions criticised the operation of the 1940 Act, including the Public Accounts Committee of Lok Sabha 3  and the highest court in India – the Indian Supreme Court– which observed that the law of arbitration must be “simple, less technical and more responsible to the actual reality of the situations … [and] … responsive to the canons of justice and fair play.” 4

1.1.6 As a result, the  Law Commission of India and the Indian Legislature considered revising the arbitration legislation. A proposal was mooted on 27 July 1977 by the Secretary of the Department of Legal Affairs stating that the Indian government sought to revise the 1940 Act with a view to preventing the enormous delay and disproportionate costs which were seen at the time in arbitral proceedings. This resulted in the 76th Report by the Law Commission of India which, along with the Model Law (1985) and the observations of the Supreme Court at paragraph 1.1.5 above, were the primary factors leading to the enactment of the Indian Arbitration Act.

1.1.7 The Indian Arbitration Act sought to achieve the following main objectives:

• to comprehensively cover international and domestic arbitration and conciliation;
• to make provision for an arbitral process which is fair, efficient and capable of meeting the needs of each arbitral proceeding;to ensure that the arbitral tribunal gives reasons for its award;
• to ensure that the arbitral tribunal remains within the limits of its jurisdiction;
• to minimise the supervisory role of the Indian courts in the arbitral process;
• to permit an arbitral tribunal to use mediation, conciliation or other procedures during the arbitral proceedings to encourage settlement of disputes;
• to provide that every final award is enforced in the same manner as if it were a decree of the court;
• to provide that a settlement agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an award rendered by an arbitral tribunal; and
• to provide that every award made in a country that is party to an international convention to which India is also a signatory will be enforceable as a foreign award.

1.1.8 Arbitration gained popularity as an alternate dispute resolution mechanism to litigation in the two decades after the Indian Arbitration Act came into force. However, several issues emerged including delays in process, high costs and court interference at the stage of enforcement of the award on the grounds of “public policy”. In recognition of the issues, the Law Commission of India released its 246^th report in August 2014 reviewing the provisions of the Indian Arbitration Act and identifying the inadequacies observed in the functioning of the  Act. Based on the recommendations of the Law Commission of India, an ordinance came into effect on 23 October 2015 and the Arbitration and Conciliation (Amendment) Act 2015 (2015 Amendment Act) was passed on 1 January 2016 with effect from the earlier date, 23 October 2015. The 2015 Amendment Act inter alia introduced new timelines, granted power to tribunals to grant interim reliefs, introduced a new regime of costs, introduced a fee schedule for arbitrators and minimised the scope of judicial interference. 

1.1.9 Subsequently, a high-level committee headed by Hon’ble Justice B.N. Srikrishna (Retd., Supreme Court of India) was set up in January 2017 to identify the roadblocks to the development of institutional  arbitration, to examine specific issues affecting the arbitration landscape in India and to prepare a roadmap for making India “a robust center for domestic and international arbitration”. Based on the committee’s recommendations in its report issued in July 2017, the Indian Arbitration Act was further amended by passing the Arbitration and Conciliation (Amendment) Act, 2019 (2019 Amendment Act), of which some provisions have come into force. Some of the key amendments which have come into force as a result of the 2019 Amendment Act inter alia pertain to the timelines for the completion of arbitration proceedings and the confidentiality of arbitral proceedings. These provisions (which have come into force) are discussed in further detail in this chapter. 

1.1.10 Recently, the Arbitration and Conciliation (Amendment) Act, 2021 (2021 Amendment Act) has brought about a further change in the Indian Arbitration Act, by providing for a stay on the enforcement of a domestic award pending disposal of a challenge to the award, if the court is prima facie satisfied that the agreement or the contract which forms the basis of the award or the making of the award itself was induced or affected by fraud or corruption. 

2.1.1 The Indian Arbitration Act covers both domestic and international arbitrations (i.e., where at least one party is not an Indian national), as well as mediation and conciliation.

2.1.2 The Indian Arbitration Act comprises four parts and seven schedules, as follows:

• Part I: general provisions on arbitration (General Provisions);
• Part II: enforcement of certain foreign awards (Chapter I of Part II of the Indian Arbitration Act deals with New York Convention awards and Chapter II covers awards under the 1927 Geneva Convention);
• Part III: conciliation;
• Part IV:  supplementary provisions;
• First Schedule: New York Convention; 5
• Second Schedule: 1923 Geneva Convention; 6
• Third Schedule: 1927 Geneva Convention; 7
• Fourth Schedule: fees of the Tribunal for domestic arbitrations;
• Fifth Schedule: independence of the Tribunal;
• Sixth Schedule: disclosure by the arbitrator; and
• Seventh Schedule: the arbitrator’s relationship.

2.1.3 Accordingly, the Indian Arbitration Act puts domestic awards and foreign awards in two different and distinct compartments, subject to certain overlapping provisions.

2.1.4 The Supreme Court in the case of BALCO 8  held that none of Part I of the Indian Arbitration Act would apply to arbitrations seated outside India. However, the 2015 Amendment Act has made certain provisions of Part I of the Indian Arbitration Act also applicable to international commercial arbitrations . These provisions relate to the granting of interim relief (Section 9), seeking assistance of courts for taking evidence (Section 27) and the right to appeal to the Supreme Court (Section 37 (1) (a) and 37 (3)). 9

3.1.1 The Indian Arbitration Act defines an “arbitration agreement” as an agreement by the parties to submit to arbitration all, or certain, disputes which have arisen, or which may arise, between them in respect of a defined legal relationship, whether contractual or otherwise. 10

3.2.1 The arbitration agreement must be in writing and may take the form of an arbitration clause in a contract or arise as a separate agreement. 11  A document containing an arbitration clause may also be adopted by way of reference through a written agreement of the parties. 12  The written agreement need not be signed by the parties to constitute a valid arbitration agreement. 13  Recently, the High Court of Bombay, recognizing the elements of contemporary e-business, has held an arbitration clause contained in the ‘sales terms and conditions’ available on the website of a contracting party was a binding arbitration agreement between the parties. The Court held that there was an express declaration by the contesting party in accepting such sales terms and conditions by way of its execution of an online KYC form. 14

3.2.2  An arbitration agreement is deemed to be in writing if it is contained in:

• a document signed by the parties;
• an exchange of letters, telex, telegrams or other means of telecommunication, including communication through electronic means, 15  providing a record of agreement; or
• an exchange of submissions in which the existence of the agreement is alleged by one party and not denied by the other. 16

3.2.3 The intention of the parties to enter into an arbitration agreement must be apparent from the terms of the agreement in which it is contained. If the terms of the agreement clearly indicate the parties’ intention to refer disputes between them to an arbitral tribunal for adjudication and a willingness to be bound by the decision of that arbitral tribunal on such disputes, it will constitute an arbitration agreement. 17

3.2.4 While there is no specific form for an arbitration agreement, the words used should express a discernable intention of the parties for arbitration. 18  A mere possibility of the parties agreeing to arbitrate in the future – rather than an obligation to refer future disputes to arbitration – will not constitute a valid and binding arbitration agreement. 19

3.2.5 Furthermore, even if the words “arbitration”, “arbitral tribunal” or “arbitrator” are not used in a clause relating to the settlement of disputes, it does not detract from that clause being construed as an arbitration agreement if it contains the following attributes: 20

• the agreement is in writing;
• the parties have agreed to refer any disputes between them (present or future) to the decision of a private tribunal;
• the arbitral tribunal is empowered to adjudicate upon disputes in an impartial manner, giving the parties the opportunity to put forward their respective cases before the arbitral tribunal; and
• the parties agree that the decision of the arbitral tribunal is binding. 21

3.2.6 However, where a clause relating to the settlement of disputes specifically excludes any of the attributes stated in paragraph 3.2.5 above, or contains anything that detracts from an arbitration agreement, it will not be considered to be an arbitration agreement. For example, a clause will not be considered an arbitration agreement where it:

• permits an authority to decide a dispute without a hearing;
• requires the authority to act in the interests of only one of the parties;
• provides that the decision of the authority will not be final and binding on the parties; or
• provides that if either party is not satisfied with the decision of the authority they may file a civil suit seeking relief. 22

3.2.7 It is pertinent to note that as regards referring disputes to arbitration, the Indian Arbitration Act allows classification of certain disputes but does not permit classification of claims. The Indian Arbitration Act does not allow a provision providing for claims of one of the parties to be adjudicated by arbitration, but the claim of the other party arising in respect of the same legal relationship, to be adjudicated by any other mode. This is because the same would be contrary to public policy, which prohibits the splitting up of claims and causes of action and would result in a multiplicity of proceedings 23

3.2.8 It is important that the underlying contract containing the arbitration agreement/clause is adequately stamped for parties to be able to invoke arbitration. As recently held by the Supreme Court 24 , an arbitration agreement contained in an unstamped or deficiently stamped contract would be void and parties would not be referred to arbitration under Section 11 of the Arbitration Act,  until the deficiency in the underlying contract is cured. 

3.3.1 The Indian Arbitration Act does not specifically exclude any category of dispute as being non-arbitrable. However, an 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 laws currently in force, or if the award conflicts with Indian public policy. 25

3.3.2 Where a dispute is non-arbitrable, the court will refuse to refer the parties to arbitration, even if the parties have agreed upon arbitration as the forum for settlement of that dispute. Disputes that are non-arbitrable include:

• disputes relating to rights and liabilities which give rise to, or arise out of, criminal offences;
• matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights and child custody;
• guardianship matters;
• insolvency and winding-up matters;
• testamentary matters (grants of probate, letters of administration and succession certificates); and
• eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and where specified courts are conferred jurisdiction to grant an eviction or decide such matters.

3.3.3 The matters referred to in paragraph 3.3.2 above relate to actions in rem (i.e., actions that deal with a right exercisable against the world at large), as opposed to a right in personam (which is an interest protected solely against specific individuals). Generally, all disputes relating to rights in personam are considered to be arbitrable and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals. 26  Disputes relating to rights in rem are therefore considered unsuitable for private arbitration. There are, however, exceptions to this rule. Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable.

3.3.4 The Supreme Court has recently re-affirmed the above understanding and has set out a four-fold test to decide non-arbitrability of disputes. If the following criteria are met, then a dispute shall not be arbitrable:

1. the cause of action and subject-matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem;
2. the cause of action and subject-matter of the dispute affects third-party rights, have erga-omnes effect i.e. where rights or obligations are owed towards all, require centralized adjudication and mutual adjudication would not be appropriate and enforceable;
3. the cause of action and subject-matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable; and
4. the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s). 27

3.4.1 Under the Indian Arbitration Act, the arbitration clause is separable from the other clauses of an agreement and constitutes an agreement by itself. 28  The Supreme Court has also observed that an arbitration clause is part of a contract and that, being a collateral term, it will survive after the contract, in which it was contained, even when the contract comes to an end. 29

3.4.2 Thus, a decision by an arbitral tribunal that a contract is null and void will not result in the invalidity of the arbitration clause contained within that contract, provided that such clause constitutes a valid arbitration agreement. 30  An arbitration clause in a contract will be treated as an independent agreement between the parties and will be enforced as such. 31

3.5.1 Where, in consequence of an arbitration agreement between parties, any act is done to further the transaction or to abide by the terms of the arbitration agreement, the necessary inference is that a dispute regarding such a matter must be referred to arbitration and that the party which has carried out the act in question cannot prevent the dispute being submitted to arbitral proceedings. 32

3.5.2 It is an obligation of a judicial authority to refer the parties to arbitration if an action brought before it is covered by an arbitration agreement. 33  The obligation is conditional upon a request being made by either of the parties for the court to refer the dispute to arbitration. Such a request must be made before the first statement of defence in that dispute has been submitted to the court, notwithstanding any judgment, decree or order of any court in India, unless there is a finding that prima facie no valid arbitration agreement exists. 34  Where a party fails to make a request within the specified time frame, they will be deemed to have waived their right to invoke the arbitration agreement. The Delhi High Court has held that the limitation period applicable for the filing of the statement of defence (written statement) under the relevant procedural law of the Code of Civil Procedure (CCP) as well as that of the  Commercial Courts Act, 2015 would also be applicable to the filing of an application seeking reference of the dispute to arbitration. 35  Whether and what the court considers to be a statement of defence by a party on the substance of a dispute that results in proper jurisdiction of the court is to be determined on the basis of the facts of each case. 36

4.1.1 Chapter III of Part I of the Indian Arbitration Act relates to the composition of the arbitral tribunal. The parties to an arbitration agreement are free to determine the number of arbitrators, provided that this does not result in an even number of arbitrators. 37  In the absence of an agreement between the parties, the Indian Arbitration Act sets out the procedure to apply for appointing a sole arbitrator. 

4.1.2 A person of any nationality can be an arbitrator, unless the parties have made an agreement to the contrary. 38  The parties are also free to agree on a procedure for appointing an arbitrator, subject to the provisions set out below. 39  Where the arbitral tribunal is to consist of three arbitrators and the parties fail to agree on a procedure for their appointment, each party will nominate one arbitrator. The two party-appointed arbitrators will then appoint the third arbitrator, who will act as the presiding arbitrator (and not as an umpire). 40

4.1.3 In the event that: (i) one party fails to appoint an arbitrator within 30 days of a request to do so from the other party; or (ii) the two arbitrators fail to appoint the third arbitrator within 30 days from the date of their appointment; or (iii) the arbitral institution fails to appoint an arbitrator under a function entrusted to it under its procedure, 41  a party  can approach the High Court of the state which has  the  jurisdiction to entertain the petition (or any  person  or  institution  designated  by such Court) or,  in international commercial arbitrations, the Supreme Court (or any person or institution designated by such Court) to appoint an arbitrator. 42

4.1.4 If two arbitrators are appointed on two different dates, the 30-day period to appoint the third arbitrator runs from the date on which the later of the two arbitrators was appointed. 43  It should be noted that this does not prevent a party from appointing an arbitrator – or prevent two party-appointed arbitrators from appointing a third arbitrator – after the 30 days’ time limit has elapsed. It merely gives a right to the party to approach the relevant High Court in domestic arbitrations and the Supreme Court in international commercial arbitrations. However, once an application has been filed by a party requesting the Court to appoint an arbitrator, it is presumed that the other party has forfeited its right to appoint an arbitrator and it is only the Court who then has the authority to appoint an arbitrator. 44

4.1.5 If an alternative method for appointment is provided for in an arbitration agreement, the parties must follow this method instead of directly approaching the Supreme Court or the relevant High Court. 45

4.1.6 The 2015 Amendment Act has clarified that the Supreme Court or the relevant High Court will (notwithstanding any judgment or decree or order of any court) confine itself to the examination of the existence of an arbitration agreement in matters concerning the appointment of an arbitrator. It has further been clarified that the designation of any person or institution by the Supreme Court or the relevant High Court will not be regarded as delegation of judicial power by such court, with the effect that such person or institution cannot adjudicate on any issue, including the issue of validity of the agreement or the arbitrability of disputes. 46  However, this does not completely remove the power of the courts to examine questions of jurisdiction and arbitrability of disputes. Where the terms of the contract or the facts of the case are so clear that it leaves no doubt as to the non-arbitrability of a dispute, the courts are empowered to refuse reference to arbitration in order to weed out vexatious and frivolous claims. 47

4.1.7 The relevant court or the person or institution designated to appoint an arbitrator must also seek a disclosure in writing from the prospective arbitrator in the terms of section 12(1) 48  and as per the qualifications and disclosures required for the appointment of an independent and impartial arbitrator. 49

4.1.8 The Indian Arbitration Act also provides that the relevant court will make every effort to dispose of an application for the appointment of an arbitrator within 60 days from the date of service of notice on the opposite party. 50

4.1.9 A court cannot interfere with the appointment of an arbitrator that the parties have chosen under the terms of an agreement, unless the legal misconduct, fraud or disqualification of that arbitrator has been pleaded and proven. 51  Similarly, an arbitrator that has been appointed by the parties cannot have his or her authority revoked by the parties acting of their own will without a just and sufficient cause for such revocation. 52

4.2.1 A person that has been approached to be an arbitrator is under an obligation to disclose to the parties, in writing, any circumstances that may give rise to justifiable doubts as to independence or  impartiality, and those circumstances which are likely to affect his or her ability to devote sufficient time to the arbitration and complete the entire arbitration within twelve months. 53  The determination of whether justifiable doubts as to independence or  impartiality  of an arbitrator exist is done in accordance with the grounds stated in the Fifth Schedule of the Indian Arbitration Act, which inter-alia are as follows:

• The arbitrator’s relationship with either of the parties or their counsel;
• The relationship of the arbitrator to the dispute;
• The existence of a direct or indirect interest of the arbitrator in the dispute;
• The performance of previous services by the arbitrator for one of the parties in connection with the case, or any other involvement in the case;
• The relationship between an arbitrator and another arbitrator or counsel;
• The relationship between an arbitrator and a party, or others involved in the case;
• The existence of a material shareholding by the arbitrator in one of the disputing parties or its affiliates;
• The position of the arbitrator in an arbitral institute with appointing authority; and
• The arbitrator’s position in the management of one of the affiliates of the parties in the dispute. 54

The arbitrator is required to make the above disclosures as per the format set out in the Sixth Schedule of the Indian Arbitration Act, in terms of which he also must disclose factors which may affect his ability to devote sufficient time to the arbitration or in particular his ability to complete the entire arbitration within a period of twelve months.

4.2.2 The parties are also barred from appointing an arbitrator if his or her relationship with one of the parties falls within the categories listed in the Seventh Schedule of the Indian Arbitration Act (for example, if the arbitrator has a close family relationship with a party, has a business or commercial relationship with a party, represents or advises one of the parties or its affiliates, has a significant financial interest in one of the parties or in the outcome of the arbitration). However, the parties may waive this requirement by express agreement in writing.  55

4.2.3 Section 12 has been amended with the objective of ensuring neutrality of arbitrators. The Supreme Court has observed that the amended provision is enacted to identify the ‘circumstances’ which give rise to ‘justifiable doubts’ about the independence or impartiality of the arbitrator. If any of those circumstances as mentioned in Section 12 exist, it would give rise to justifiable apprehension of bias. It has been further observed that if an arbitrator is an employee, consultant, advisor or has a past or present business relationship with a party, then that would render the arbitrator ineligible. Similarly, a person who is a manager, director or part of the management or has a single controlling influence in an affiliate of a party, is treated as unable to perform the role of arbitrator. Likewise, persons who regularly advise the appointing party or affiliate of the appointing party are also ineligible. 56  However, a former employee is not barred from being appointed as an arbitrator, provided there are no justifiable doubts as to his/her independence and impartiality. Only present employees, consultants and advisors of a party are disqualified from being appointed as an arbitrator. 57  It is pertinent to note that the appointment of an arbitrator nominated by an ineligible arbitrator would also be void. 58

4.2.4 These obligations apply when the arbitrator is appointed and throughout the arbitral proceedings. 59  The Supreme Court has held that these provisions of the Indian Arbitration Act would still be applicable even to the appointment of an arbitrator where there is a prior agreement to the contrary. 60  For example, the High Court of Patna has held that Section 12(5) overrides any prior agreement between the parties. 61

4.2.5 The appointment of an arbitrator can be challenged if there are justifiable doubts as to that arbitrator’s independence or impartiality, or if the arbitrator does not possess the qualifications agreed to by the parties. 62  However, such a challenge can be made only for reasons the party making the challenge becomes aware of after the appointment has been made. A party may challenge an arbitrator that it has appointed itself, but only for reasons which that party becomes aware of after the appointment has been made. 63

4.2.6 The parties are free to agree on a procedure to challenge the arbitrator(s). 64  Failing any agreement between the parties, the party who makes a challenge must, within 15 days after: (i) becoming aware of the constitution of the arbitral tribunal, or (ii) becoming aware of any of the circumstances referred to in paragraph 4.2.1 above, send a written statement containing the reasons for the challenge to the arbitral tribunal. 65  Unless the challenged arbitrator withdraws or the other party to the arbitration agrees to the challenge, the arbitral tribunal will decide on the success of the challenge. 66  If the challenge is not successful, the arbitral tribunal will continue with the arbitral proceedings and make an award. The party who made the unsuccessful challenge can then seek to set aside that award under Section 34 of the Indian Arbitration Act.

4.2.7 Sections 14 and 15 of the Indian Arbitration Act list the circumstances in which the mandate of an arbitrator will be terminated and the arbitrator substituted. The mandate of an arbitrator will terminate and he will be substituted if the arbitrator becomes de jure or de facto unable to perform the required functions or, for other reasons, acts with undue delay or withdraws from the office, or the parties agree to terminate the arbitrator’s mandate. 67  Unless the parties have agreed otherwise, they may also apply to the court for the termination of an arbitrator’s mandate if any controversy arises between them in relation to the aforementioned grounds. It is further pertinent to note that the 2019 Amendment Act has introduced Section 42B into the Indian Arbitration Act, which provides that no suit or other legal proceedings will lie against the arbitrator for anything which is done in good faith or intended to be done under the Indian Arbitration Act. 

4.2.8 If an arbitrator withdraws from the office, 68  or the parties agree to the termination of the arbitrator’s mandate, 69  this is not deemed to constitute grounds for challenging the validity of the arbitrator’s appointment. 

4.2.9 A substitute arbitrator must be appointed in accordance with the same procedure used to appoint the original arbitrator. 70  Provisions laid down under section 14 of the Indian Arbitration Act as mentioned above are also applicable to substitution of an arbitrator. 71

4.2.10 The Indian legislature has repeatedly emphasised the necessity of adhering to the terms of an agreement between the parties in relation to the appointment of arbitrators and the procedure to be followed for such appointments. Thus, as described above, even a substitute arbitrator is required to be appointed in accordance with the procedure used to appoint the original arbitrator(s). Further, in Section 15 of the Indian Arbitration Act, the term “rules” is not confined to statutory rules or the rules framed by a competent authority in exercise of the power delegated to it by legislation, but also includes the terms of an agreement entered into by the parties. 72

4.3.1 The Indian Arbitration Act requires that the arbitrators perform their functions honestly and impartially and adhere to the principles of natural justice by providing the parties with an equal opportunity to present their case and giving the parties proper notice of hearings. 73

4.3.2 Once an arbitrator has been appointed and arbitral proceedings have commenced, that arbitrator should not act with a particular interest towards the appointing party or act in a manner that could be construed as indicative of partiality or unfairness.

4.3.3 The arbitral tribunal must only base its conclusions upon the material submitted before it by the parties and must not act on personal knowledge. Evidence of unfairness and/or unreasonableness by the arbitrators will render any decision or award given by the arbitral tribunal questionable. 74

4.4.1 Prior to the 2015 Amendment Act, there was no regulated fee structure for arbitrators in an ad hoc arbitration.  In practice, the arbitrator’s fees were decided by the arbitrators themselves, with the consent of the parties. The fees varied from approximately INR 1,000.00 to INR 5,00,000.00 per hearing for an arbitrator, depending upon the professional standing of the arbitrator and the size of the claim. The number of hearings required, and the cost of the arbitral venue also varied widely. 

4.4.2 Section 11(14) of the Indian Arbitration Act provides that the fee must be determined as per the rules notified by the relevant High Court on considering the rates mentioned under the Fourth Schedule. 75  The model rates vary according to the sum in dispute and may include a portion of the claim amount over and above a specified ceiling. A sole arbitrator may additionally claim a 25% uplift on the fee available to him under the fee rates. Some High Courts have held that the rates in accordance with the Fourth Schedule would apply even if the arbitrator had been appointed before the 2015 Amendment Act, as long as the award has not yet been passed. 76

4.4.3 The rates mentioned in the Fourth Schedule do not apply to international commercial arbitrations or to instances where the parties have subjected themselves to the rules of an institutional arbitration body. 77  This allows institutional arbitration bodies in India, such as the Indian Council of Arbitration (ICA) or the Construction Industry Arbitration Council (CIAC), to have their own schedules of arbitrators’ fees and administrative fees, based on the amounts claimed. The ICA and CIAC also charge a nominal, non-refundable registration fee based on the claim amount.

5.1.1 Under the Indian Arbitration Act, an arbitral tribunal is competent to rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of arbitration agreements. 78  A decision by the arbitral tribunal that a contract is null and void will not result in the invalidity of the arbitration clause contained therein.

5.1.2 A ruling concerning the arbitral tribunal’s jurisdiction may be appealed under the procedure set out in Section 37 of the Indian Arbitration Act. Regardless of such proceedings, if the arbitral tribunal holds that it has jurisdiction then it may carry on with the arbitral proceedings and make an award which will be subject to challenge only under the procedure set out in Section 34 of the Indian Arbitration Act.

5.2.1 The arbitral tribunal may order interim measures during arbitral proceedings. 79  The 2015 Amendment Act has extended the power of the arbitral tribunal to inter alia grant orders providing for the preservation or inspection of goods, securing amounts in dispute, the detention or preservation or inspection of property, interim injunctions or any other interim measures of protection. Any order passed by the tribunal as per this section is deemed to be an order issued by a Court under the CCP. 80

5.2.2 The list of interim measures available is, by its very nature, non-exhaustive. Such measures include, for example, orders for preservation, custody, sale and protection of goods, protection of trade secrets, maintenance of machinery, works and continuation of certain works. A common characteristic of all interim measures is the restricted circumstances in which they may be granted (see paragraph 5.2.4 below).

5.2.3 A party to arbitral proceedings can appeal against an order granting or refusing an interim measure 81  and if a court upholds the order in an appeal, the judicial enforcement of that order will be ensured. 82

5.2.4 It is relevant to note that if a party approaches the courts under section 9 of the Indian Arbitration Act to obtain interim measures, it is mandatorily required to institute arbitral proceedings within 90 days from obtaining such an interim measure or within such further time as the Court may determine. 83  This is to dissuade parties from prolonging or delaying arbitral proceedings in the guise of seeking relief under Section 9. Insofar as the powers of the court under section 9 of the Indian Arbitration Act are concerned, the 2015 Amendment Act provides that the court will not entertain any application for interim relief if the arbitral tribunal has been constituted. In such cases, the court may only entertain an application if it finds that there are circumstances which may render the remedy of an interim measures order from the arbitral tribunal (under Section 17 of the Indian Arbitration Act) to be non-efficacious. 84

6.1.1 Where the arbitration agreement is silent about the date of commencement of the arbitral proceedings, the proceedings will be deemed to have commenced on the date that the respondent received the request for arbitration. 85  The request should clearly indicate that the claimant is submitting the dispute to arbitration. A request is deemed to have been received if it has been delivered to the respondent personally, or at their place of business, habitual residence or mailing address or, alternatively, the respondent’s last known place of business, habitual residence or mailing address. 86

6.1.2 Section 21 of the Indian Arbitration Act gives freedom to the parties to agree on the date of commencement of arbitral proceedings. For instance, in the case of an arbitration administered by an arbitral institution, the parties may agree to abide by the rules of that arbitral institution for determining the point of time at which the arbitral proceedings are deemed to have commenced.

6.1.3 In situations that involve a consideration of the limitation period for bringing arbitral proceedings, the relevant date for commencement of arbitral proceedings is the date that the request for arbitration is received by the proposed respondent, unless otherwise agreed by the parties. 87

6.2.1 As arbitral autonomy is one of the important features of the Indian Arbitration Act, the parties are able, through agreement, to determine the manner of – and the procedure for – conducting the arbitral proceedings. 88  This can be achieved in several ways, such as agreeing on a set of rules of procedure to use, or by using the standard rules of an arbitral institution, with or without modification.

6.2.2 If there is no agreement between the parties on the rules of procedure then the arbitral tribunal is authorised to conduct the proceedings in a manner it considers appropriate. 89  This includes having the power to determine the admissibility, relevance, materiality and weight of any evidence. 90  The expression “presentation of the evidence” covers all types of evidence, whereas the expression “oral arguments” covers arguments on both the substance of the dispute and the procedural issues.

6.2.3 In addition, the fact that the arbitral tribunal benefits from an express exemption from the provisions of the CCP and the Indian Evidence Act 1872 (IEA 1872) further demonstrates its autonomy to determine the procedure of the arbitration. 91  The Supreme Court has observed that the provisions of the CCP must not be applied in arbitral proceedings where the procedure is likely to hinder the efficiency of the arbitral proceedings but, equally, the CCP is to be used where it can aid the delivery of justice in the arbitral proceedings. 92

6.2.4 Where the arbitration is administered by an arbitral institution, the arbitral proceedings are governed by the rules of that arbitral institution. As a result, those rules become a part of the arbitration clause by implication. 93

Two Indian parties cannot derogate from the substantive laws of India, in an arbitration situated in India. 94  However, two Indian parties may elect to resolve their disputes by a  foreign seated arbitration, (as recently clarified by the Supreme Court) 95  and such an award would be enforceable in India as a foreign award under Part II of the Arbitration Act, 2015

6.3.1 Unlike purely domestic arbitrations (where both parties are Indian),  parties have the freedom to choose the laws governing an international commercial arbitration which is seated in India (where one party is a foreign national/incorporated outside India/is managed or controlled outside India) 96 . They may choose the substantive law governing the arbitration agreement as well as the procedural law governing the conduct of the arbitration. Such choice is exercised either expressly or by implication. Where there is no express choice of the law governing the contract as a whole, or the arbitration agreement in particular, there is, in the absence of any contrary indication, a presumption that the parties have intended that the proper law of the contract as well as the law governing the arbitration agreement are the same as the law of the country in which the arbitration is agreed to be held. 

6.3.2 On the other hand, where the proper law of the contract is expressly chosen by the parties, such law must, in the absence of an unmistakable intention to the contrary (such as an express choice of the seat/venue of arbitration), govern the arbitration agreement which, though collateral or ancillary to the main contract, is nevertheless a part of such contract. 97  For instance, in a recent judgment, the Supreme Court held that where the parties had agreed that the place of arbitration would be Hong Kong and disputes would be resolved by an arbitration in Hong Kong, the law of the seat (Hong Kong) and not the proper law of the contract, would govern the arbitration agreement. 98

6.3.3 Regarding the seat of arbitration, Indian Courts have held that an agreement as to the seat of an arbitration is analogous to an exclusive jurisdiction 99  clause  and that “the seat of the arbitration is thus intended to be its centre of gravity”. In fact, the mere choosing of the juridical seat of arbitration attracts the procedural law applicable to such location. In other words, it would not be necessary to specify which law would apply to the arbitration proceedings, since the law of the particular country would apply ipso jure. 100

6.3.4 This however does not take away the freedom of the parties to choose a particular place as the venue of arbitration. The arbitrators are at liberty to hold meetings at a place which is of convenience to all concerned. 101  This may become necessary as arbitrators often come from different countries. However, the parties must be careful to clearly specify their intention to have a particular place as the intended venue and not the seat of arbitration. In a recent judgment, the Supreme Court held that wherever there is an express designation of a "venue", and no designation of any alternative place as the "seat", combined with a supranational body of Rules governing the arbitration, and no other significant contrary indicia, the inexorable conclusion would be that the stated venue was actually the juridical seat of the arbitral proceeding. 102

6.3.5 The Supreme Court further elaborated that whenever there is a designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue" was really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or more individual hearing, but the arbitration proceedings as a whole, including the making of an award at that place. This language has to be contrasted with language such as "tribunals are to meet or have witnesses, experts or the parties" where only hearings are to take place in the "venue", which may lead to the conclusion, other things being equal, that the venue so stated is not the "seat" of arbitral proceedings, but only a convenient place of meeting. 

6.3.6 Further, the use of the words that the arbitral proceedings "shall be held" at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings. This coupled with there being no other significant contrary indicia that the stated venue was merely a "venue" and not the "seat" of the arbitral proceedings, would then conclusively show that such a clause designated a "seat" of the arbitral proceedings. For instance, in an international arbitration context, if a supranational body of rules is to govern the arbitration, this will further be an indication that "the venue", so stated, will be the seat of the arbitral proceedings. 103

6.3.7 The parties are also free to agree upon the language or languages to be used in the arbitral proceedings. 104  In the absence of such an agreement, the arbitral tribunal will determine the language or languages to be used. 105  The agreement of the parties or the determination by the arbitral tribunal on the language of the arbitral proceedings will, unless otherwise specified, apply to a statement of claim, written statements, hearings, the award or decision and any other communications made by the arbitral tribunal. 106  

6.3.8 The arbitral tribunal may also order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal. 107

6.4.1 A person who is not a party to an arbitration agreement cannot claim any right before the arbitral tribunal and cannot be joined as a party. 108  However, in Chloro Controls v Severn Trent,  the Supreme Court referred non-signatories to a single international arbitration since the ‘mother agreement’ (i.e., the main or umbrella agreement) among the inter-connected agreements in question contained an arbitration clause. 109

6.4.2 The amended Section 8 of the Indian Arbitration Act clearly entitles every person claiming through or under a party to the arbitration agreement to make reference to arbitration, notwithstanding any judicial precedent. The amended Section 8 of the Indian Arbitration Act was recently interpreted by the Supreme Court. 110  Consistent with the decision in Chloro Controls v Severn Trent, the Supreme Court ruled that in cases where the agreements are inter-connected, and several parties are involved in a single commercial project executed through several agreements, all the parties can be made amenable to arbitration. So, while the general rule is that a person not party to an arbitration agreement cannot be joined as a party, if the person is part of an arbitration agreement contained in either the ‘mother agreement’ or an interconnected agreement as part of a single project, the court may be amenable to joining that person as a party to avoid duplicity of proceedings. 111

6.5.1 The time frame for filing the statement of claim and defence may be agreed between the parties. Failing such an agreement, the arbitral tribunal will determine the deadline for those documents. 112

6.5.2 The parties are also free to agree on the required elements of those documents. Parties may agree to include in their statement of claim: (i) a description of the nature and circumstance of the dispute; (ii) a statement of the relief sought along with the amounts claimed; (iii) relevant agreements including the arbitration clause/agreement; and (iv) a statement as to whether any interim orders have been passed. In the event that the parties have not reached an agreement, a statement of claim is required to provide:

• all of the facts supporting the claimant’s claim;
• the points at issue; and
• the relief or remedy sought. 113

6.5.3 The respondent’s statement of defence is required to state the defence in respect of the particulars of claim and may include any counterclaim or plead a set-off. 114

6.5.4 The Indian Arbitration Act only states the core elements of the statement of claim and the respondent’s defence that are required to establish the dispute on which the arbitral tribunal is to render its award. The parties are permitted to submit relevant supporting documents with their statements or refer to relevant supporting documents and/or other evidence that they propose to submit. 115  The arbitral tribunal is also free to ask the parties to submit additional submissions. The Indian Arbitration Act does not specify that the statement of claim and the defence must be in writing, although in practice both would generally be in written form. The word “claim” also includes a “counterclaim” and likewise, the word “defence” includes “defence to a counterclaim”. Accordingly, Section 23 of the Indian Arbitration Act applies mutatis mutandis to counterclaims and defences to counterclaims. Further, the 2015 Amendment Act provides that the arbitral tribunal will adjudicate upon counterclaim or set-off pleadings, if they fall within the scope of the agreement. 116  The 2019 Amendment Act has provided that the statement of claim and defence is required to be  completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, have received notice, in writing, of their appointment. 117

6.5.5 As regards supplementing and/or amending the claim or defence, the arbitral tribunal can reject a belated amendment or supplement in cases where it is considered inappropriate. 118  The arbitral tribunal can reject a belated amendment or supplement in cases where: (i) the claims raised are time-barred; 119  (ii) the claims are new claims which have not been raised in the notice invoking arbitration or in the Section 11 application for the appointment of an arbitrator; 120  or (iii) the amendment/supplement is sought at the stage of final arguments in the arbitration. 121  In addition, the amendment or supplement cannot go beyond the terms of the arbitration agreement, as the arbitral tribunal has no discretion to allow such amendments or supplements. However, if a party fails to raise any objection to an amendment or supplement which enlarges the scope of the arbitration agreement and proceeds with the arbitral proceedings, that party is deemed to have consented to the amendment or supplement in question. 122

6.5.6 Unless there is an agreement between the parties to the contrary, the arbitral tribunal will decide the manner in which oral submissions and evidence are presented during the hearing. 123  In this respect, the parties are free to determine the method of tendering evidence and/or oral arguments, and whether oral hearings are necessary. Such agreement is binding on the arbitral tribunal. Furthermore, the parties are free to change the agreement at any stage of the arbitral proceedings.

6.5.7 In the absence of an agreement between the parties, the arbitral tribunal has the discretion to decide whether oral hearings – either for the presentation of the evidence, for oral arguments, or both –  should be permitted, or whether the arbitral proceedings should be conducted on the basis of documents and other materials only. Moreover, either party can make a request for an oral hearings at an appropriate stage of the arbitral proceedings. In these circumstances, the arbitral tribunal is bound to grant such a request, unless there is a specific agreement between the parties not to have such hearings. 124

6.5.8 The 2015 Amendment Act provides that where oral hearings are being conducted, the arbitral tribunal may conduct hearings on a day-to-day basis but may not grant adjournments without any sufficient cause. Parties seeking adjournments without sufficient cause may also have exemplary (i.e., punitive) costs  imposed upon them to act as deterrent. These provisions were brought into force in order to prevent unnecessary delays in arbitral proceedings. 125

6.5.9 The arbitral tribunal is required to provide the parties with sufficient notice of a hearing or meeting held for the purpose of inspecting documents, goods or other property. 126  The Indian Arbitration Act also requires that all statements, documents, other information supplied or applications made to the arbitral tribunal by one party to the arbitral proceedings be communicated to the other party. 127  In addition, any expert report or document on which the arbitral tribunal may rely in making its award or decision must also be communicated to the parties. 128

6.6.1 The Indian Arbitration Act addresses default by a party as follows:

• where the claimant fails, without sufficient cause, to submit a statement of claim in accordance with Section 23(1) of the Indian Arbitration Act, the proceedings will be terminated; 129
• where the respondent fails to communicate, without sufficient cause, a statement of defence, in accordance with Section 23(1) of the Indian Arbitration Act, the arbitral tribunal will continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant, but will have discretion to treat the right to present such defence as having been forfeited; 130  and
• where either of the parties fail to appear at an oral hearing or produce documentary evidence without sufficient cause, the arbitral tribunal has discretion to continue the arbitral proceedings and make the award on the evidence before it. 131

6.6.2 The arbitral tribunal has discretion to decide what constitutes a “sufficient cause” under section 25. In addition, the provisions set out above will not apply where the parties have agreed otherwise. 132  The arbitral tribunal can recall the order and re-commence the proceedings after the termination of proceedings under Section 25(a) on sufficient cause being shown by the claimant. 133

6.6.3 The Indian Arbitration Act empowers the arbitrator to proceed ex parte. He may make an ex parte award if a party fails to appear despite notice to attend or has no cogent reason for absenting himself. However, in a series of judgments, it has been observed that it is still advisable that notice be given, because the requirement of notice is not just a procedural formality but is linked with the principles of natural justice and fair play. 134  The omission in giving notice to a party before proceeding ex parte may be considered as a serious irregularity in the procedure and may amount to misconduct. 135  In the event that a notice expressing intention to proceed ex-parte is not served, in a challenge to the enforceability of an ex-parte award the award will only be upheld if it is apparent that the failure to give notice of intention to proceed ex parte has not caused any prejudice to the party against whom the ex parte award was made. 136

6.7.1 The Indian Arbitration Act is silent on the subject of party appointed experts. However, as a matter of general practice (or as per the rules of certain institutional arbitration bodies to which the parties have subjected themselves) parties to an arbitration proceeding may appoint expert(s) to testify on specific issues in an arbitration.

6.7.2 The testimony of experts is presented in the form an expert witness report before the Tribunal. This is usually followed by a rebuttal expert witness report, where the opposing expert analyses and refutes the stand taken by the party appointed expert in his expert witness report.

6.7.3 Thereafter, at the stage of oral hearing, party appointed experts are examined/questioned by the concerned party in order to elicit all material information within the knowledge of the expert that bolster the party’s case (examination in chief).

6.7.4 This is followed by cross-examination of experts, where the opposing party is given an opportunity to put questions to the opposing expert in order to  discredit the position taken by the opposing expert on the points at issue.

6.7.5 The Tribunal may also ask questions to the party appointed experts at the stage of examination and cross -examination of the experts.

6.8.1 The arbitral tribunal is empowered, although not obliged, to appoint experts to report on specific issues. 137  However, the parties can agree that the arbitral tribunal will not have the power to appoint experts.

6.8.2 The Indian Arbitration Act does not restrict or specify the areas in which the arbitral tribunal may seek the assistance of experts. 138  Tribunal-appointed experts may only advise the arbitral tribunal on specific issues. The arbitral tribunal is authorised to ask the parties to provide a tribunal-appointed expert with relevant information, or to grant tribunal-appointed experts access to relevant documents, goods, or other property for the inspection of the arbitral tribunal. 139  The tribunal- appointed expert’s fees and expenses form part of the arbitral tribunal’s award on costs.

6.8.3 Unless otherwise agreed by the parties, a tribunal-appointed expert may, at either an arbitral tribunal or a party’s request , participate in an oral hearing. 140  In such an oral hearing, the parties will have the opportunity to put questions to the tribunal-appointed expert and also produce their expert witnesses to testify on the points at issue. 141

6.8.4 Subject to an agreement stating otherwise, the parties may request an opportunity to examine the documents, goods or other property relied upon by a tribunal-appointed expert in any report. 142  This is based on the principle that an expert can only effectively arrive at a finding on the basis of material that has been disclosed to the parties.

6.8.5 The arbitral tribunal must reach its own decision and cannot delegate this responsibility to an expert, legal adviser or technical assessor which it has instructed.

6.9.1 Section 42A was inserted into the Indian Arbitration Act by way of the 2019 Amendment Act and provides that the arbitrator, the arbitral institution and the parties to the arbitration agreement are required to maintain confidentiality of all arbitral proceedings except the award, where disclosure of it is necessary for its implementation and enforcement.

6.10.1 Under Section 19 of the Indian Arbitration Act, the arbitral tribunal is not bound by or empowered by the CCP or the IEA 1872. Therefore, the arbitral tribunal does not have the power to issue any witness summons itself or to compel a party to produce any documents under the provisions of the Indian Arbitration Act. If the arbitral tribunal is satisfied on an application made that certain witness or documents need to be produced, then the arbitral tribunal can grant permission to such a party to seek the assistance of a court under Section 27 of the Indian Arbitration Act.

6.10.2 Section 27 of the Indian Arbitration Act contains a procedure for seeking court assistance in the taking of evidence. Assistance may be sought either by the arbitral tribunal itself, or by one of the parties with the prior approval of the arbitral tribunal. However, the Court cannot examine the validity or correctness of the  order of an arbitral tribunal under Section 27 of the Indian Arbitration Act. 143

6.10.3 The power to request the court to assist the arbitral tribunal in the taking of evidence is a discretionary one. The court may, exercising its own discretion, execute the request for evidence by ordering a witness or expert to provide evidence to the arbitral tribunal directly. 144

7.1.1 In respect of international commercial arbitrations, the award should be made as promptly as possible and if possible, within a period of twelve months from the date of completion of pleadings. 145

7.1.2 The 2019 Amendment Act provides that the award in matters other than international commercial arbitrations is similarly required to be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings. 146  This time period may be extended with the consent of the parties for another six months. 147  If the award is not rendered within this period, the mandate of the arbitrators will terminate unless the Court grants an extension. 148  Such an extension may only be granted if the Court finds that there has been a reasonable cause of delay. 149  However, where such an application seeking an extension of time has been made by the parties, the mandate of the arbitrators will continue until the disposal of such application. 150  In practice, it is unusual for courts in India to terminate proceedings and an extension will usually be granted if the delay is attributable to the tribunal. 

7.1.3 The Indian Arbitration Act provides for several incentives and disincentives to ensure timely completion of arbitral proceedings. . For instance, if in a Court-granted extension, it is found that the delay is attributable to the arbitrators, the Court may order a 5 per cent reduction in their fees for each month. The arbitrators are required to be given an opportunity to be heard before their fees are reduced. 151  It is open to the Court, while granting an extension, to substitute one or more arbitrators. The Court may also impose exemplary costs on the parties for causing delays. On the other hand, if the tribunal delivers its award within six months, it is entitled to claim additional fees as agreed upon by the parties. 152

7.1.4 The 2015 Amendment Act provides an option to the parties to choose a fast-track proceeding under Section 29B of the Indian Arbitration Act. In a fast-track proceeding, the matter is decided by a sole arbitrator solely on the basis of written pleadings and any clarifications called for by the arbitrator. Oral hearings are only held at the request of both parties, or if the arbitrator wishes to clarify certain issues. The time limit for deciding a fast-track proceeding is six months, failing which the provisions for extension of timelines under  Section 29A of the Indian Arbitration Act would apply. 

7.1.5 An award must be in writing and signed by the members of the arbitral tribunal. 153  Where the arbitral tribunal consists of more than one arbitrator, the signatures of the majority of the arbitral tribunal will suffice, provided that valid reasons for the omitted signature(s) are made clear. 154  Valid reasons for such an omission may include, among others: the death of an arbitrator, the physical inability of an arbitrator to sign 155 , and an arbitrator’s refusal to sign based on a dissenting position 156 . 157   Although the signatures of the majority of the arbitral tribunal afford finality to the award, non-signature is a formal curable defect. 158

7.1.6 Under the Indian Arbitration Act, the arbitral tribunal must provide a reasoned award, except where the parties have agreed otherwise or the award is on agreed terms. 159  However, this provision is flexible; it seeks to provide transparency in the decision-making process and accommodate party autonomy. The reasons given by the arbitral tribunal are not required to be as detailed as in a court judgment but should at least indicate the arbitral tribunal’s thought process. 160

7.1.7 The award should state the location where the arbitration took place and the date on which the arbitral proceedings concluded. 161  The award will be deemed to have been signed at the seat of the arbitration, even if the arbitrators signed at different places and on different dates. 162  The date stated in the award is considered to be the date of the award. The date of the award is relevant, among other things, in connection with the nature and payment of interest under Section 31(7) of the Indian Arbitration Act and the correction of any errors in the award under Section 33 of the Indian Arbitration Act.161

7.1.8  Signed copies of the award should be delivered to each of the parties. 163  The date of receipt of the award has relevance, inter alia, in connection with:

• the correction and interpretation of the award;
• making an additional award under Section 33 of the Indian Arbitration Act;
• filing an application for setting aside the award under Section 34(2) of the Indian Arbitration Act; and
• enforcing the award under Section 36 of the Indian Arbitration Act.

7.1.9 The Indian Arbitration Act does not use the expression "partial award" and instead uses the terms “interim award” and “final award”. However, in practice, by and large, the terms “interim” and “partial” are used interchangeably. 

7.1.10 An award is defined under Section 2(c) to include an interim award and sub-section (6) of Section 31 contemplates an interim award. An interim award can be made in the determination of preliminary issues, such as the jurisdiction of the arbitral tribunal. 

7.1.11 While an interim award is made at an interim stage, it may still have the force of a final award. 164  The Supreme Court has considered that whether or not an interim award is final will depend upon the form of the award. 165  If the interim award is intended to finally determine the rights of the parties, it will have the force of a final award and will therefore be in force even after the final award is delivered.

7.1.12 The Supreme Court has held the following:

• there is a legal presumption in favour of the award being valid (which can be displaced on the grounds set out in paragraphs 7.5.4 and 7.5.5 below); 166
• a court will presume that the award finally disposes of all the matters in dispute; 167  and
• where an award is made “de praemissis” (that is, of and concerning all matters in dispute referred to the arbitrator), the presumption is that the arbitral tribunal intended to dispose finally of all the matters in dispute and its award will be final. 168

7.2.1 Section 30 of the Indian Arbitration Act provides  means of settlement of arbitral proceedings. Even if the arbitration agreement does not expressly authorise the arbitral tribunal to do so, the arbitral tribunal is required to encourage the parties to settle the dispute and, if so authorised by the parties, to use alternative methods of dispute resolution during the arbitral proceedings, such as mediation and conciliation. 169

7.2.2 Upon settlement, the arbitral tribunal is required to terminate the arbitral proceedings. 170  If requested by the parties, the arbitral tribunal is authorised to record the settlement in the form of an award on agreed terms. 171

7.2.3 The arbitral tribunal has a discretion to decide whether or not to record the settlement. Typically, the arbitral tribunal does record the settlement, but in certain circumstances, such as fraud, unfairness or violation of public policy, the arbitral tribunal may not agree to do so. Any settlement request to the arbitral tribunal must be made by both of the parties. While the parties do not have to make the request simultaneously, it is critical that there is a common will of the parties to settle and have that recorded by the arbitral tribunal.

7.2.4 An award containing terms agreed by the parties must be made in accordance with Section 31 of the Indian Arbitration Act. 172  Awards on agreed terms or otherwise are no different to each other, except that the award on agreed terms need not be a reasoned one. 173

7.2.5 An award on agreed terms has the same status and effect as any other award. 174  An award on agreed terms stops the parties from continuing with the arbitral proceedings.

7.2.6 A settlement that has been reached between the parties cannot be challenged on the ground of mistake. If the dispute is settled only in part, the arbitral tribunal has jurisdiction to decide the remaining dispute on the merits and make an award in respect of matters not yet settled. 175

7.3.1 In an international commercial arbitration, in the absence of an agreement between the parties on interest, the rate of interest awarded will be governed by the law of the seat of arbitration. The rate of interest awarded must correspond to the currency in which the award is given and must conform with the laws in force in the lex fori. 176

7.3.2 Where India is the seat and the lex fori is Indian, the discretion of the arbitral tribunal  to award interest must be exercised reasonably. An arbitral tribunal making an award for interest must take into consideration a host of factors, 177  some of which are:

1. the ‘loss of use’ of the principal sum;
2. the types of sums to which the interest must apply;
3. the time period over which interest should be awarded;
4. the internationally prevailing rates of interest;
5. whether a simple or compound rate of interest is to be applied;
6. whether the rate of interest awarded is commercially prudent from an economic standpoint;
7. the rates of inflation;
8. the proportionality of the amount awarded as interest to the principal sums awarded.

7.3.3 Further, the rate of interest must be compensatory as it is a form of reparation granted to the award holder; it must not be punitive, unconscionable or usurious in nature. 178

7.3.4 Unless otherwise specified in the award, the awarded sum will carry interest at a rate of two percent higher than the current rate of interest 179  prevalent on the date of the award, from the date of the award until it is paid (subject to agreement between the parties). 180  This provision seeks to discourage litigants from employing delaying tactics in relation to enforcement of the award. However, no interest can be granted by the arbitral tribunal if the parties have expressly prohibited the grant of interest in the contract between them. This is so because the arbitral tribunal is a creature of the contract and has no power to grant interest contrary to the terms of the agreement or contract between the parties. 181

7.3.5 The parties are to pay costs in accordance with the decision of the arbitral tribunal or the Court. The word “costs”, as interpreted within the meaning of the Indian Arbitration  Act,  means  reasonable costs relating to the fees and expenses of the arbitrators and witnesses, legal fees and expenses, administration fees of the institution supervising the arbitration and any other expenses incurred in connection with the arbitral proceedings and the award. 182  The arbitral tribunal has discretion to determine whether costs are payable by one party to another, the amount of such costs, and when such costs are to be paid. Costs, if imposed, are generally payable by the unsuccessful party to the successful party, but the tribunal may make a different order for reasons recorded in writing. 183  The arbitral tribunal must consider the following circumstances in awarding costs: 184

• the conduct of all the parties;
• whether a party has partly succeeded in a case;
• whether a party has delayed the arbitral proceedings by means of a frivolous counter-claim; and
• whether any reasonable offer to settle has been made by one party and refused by the other party.

The arbitral tribunal or the Court (where there are court proceedings relating to the arbitration) may state the extent to which the costs are payable in accordance with Section 31A (4) of the Indian Arbitration Act. If the parties have previously agreed that a party shall pay the whole or part of the costs of the arbitration, the tribunal will only uphold the agreement if it has been made after the dispute in question had arisen.

7.4.1 Section 32 is a mandatory provision of the Indian Arbitration Act dealing with the termination of arbitral proceedings. Section 32 has several purposes, including determining the starting point of the limitation period for instituting court proceedings to challenge an arbitral award.

7.4.2 Arbitral proceedings are terminated by a final award or by way of an order of the arbitral tribunal. 185  The situations in which the arbitral tribunal may order a termination of the arbitral proceedings  include:

• withdrawal of the claim by the claimant;
• agreement by the parties to terminate the proceedings; and
• where the arbitral tribunal finds that, for any reason, the continuation of the proceedings becomes unnecessary or impossible. 186

7.4.3 The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings. 187  This is subject to certain, non-exhaustive circumstances where the arbitral tribunal can resume proceedings, including where:

• the arbitral tribunal extends the arbitral proceedings for the purposes of correcting, interpreting or making an additional award in accordance with Section 33 of the Indian Arbitration Act; or
• a party has applied for the setting aside of an award under Section 34(1), in which case the court may, in appropriate cases, adjourn its proceedings and give the arbitral tribunal an opportunity to resume the arbitral proceedings or take such other action which, in the view of the arbitral tribunal, will eliminate the grounds for setting aside the award. 188

7.4.4 Furthermore, the arbitral tribunal is also required to terminate the arbitral proceedings in the following situations:

• where the claimant fails to communicate its statement of claim in accordance with Section 23(1) of the Indian Arbitration Act; 189
• where the parties settle the dispute and the arbitral tribunal records the settlement in the form of an award on agreed terms (if this is requested by the parties and the arbitral tribunal does not object); 190  and
• where a party does not pay its share (or share of the other party in the event of the failure of the other party to pay its share) of the arbitrators’ deposit in respect of a claim or counterclaim that is the subject of the arbitral proceedings. 191

7.4.5 The terms “order” and “award” are distinct. An “order” signifies the termination of arbitral proceedings without deciding the merits of the dispute, whereas an “award” is a termination on the merits 192 . A fresh arbitration may be initiated upon an order of termination, but no second arbitration can be initiated after the passing of an award, which brings a finality to the rights and obligations of the parties in relation to the claims that form the subject matter of an award. In addition, a decision given under Section 25(a) of the Indian Arbitration Act (see paragraph 7.4.4 above) is an order terminating the arbitral proceedings and does not amount to a final award. 193

7.5.1 Under the Indian Arbitration Act, an award – including a foreign award – has the status of a decree of an Indian court. Accordingly, the award can be enforced as such.

7.5.2 Section 35 of the Indian Arbitration Act deals with the finality of awards. Under Section 35 of the Indian Arbitration Act, if an award remains unchallenged during the time-period stipulated in Section 34(3) of the Indian Arbitration Act, it then becomes final and binding on the parties. Section 34(3) of the Indian Arbitration Act provides that an application for setting aside the award is made within three months from the date on which the party making the application received the award. Where the time for making an application under Section 34 of the Indian Arbitration Act has expired, or such an application has been refused, the award can then be enforced under the CCP in the same manner, as if it were a decree of the court. 194

7.5.3 Where there is a Section 34(2) application, the court must either set aside the award or reject the application to challenge it. The court does not have the power to modify the award. 195

7.5.4 A domestic award may be set aside by the court under Section 34(2) of the Indian Arbitration Act if the arbitral records (pleadings, documents, evidence and written submissions filed by parties before the arbitral tribunal and/or arbitral orders) can establish that:

• the party was under some incapacity;
• the arbitration agreement is not valid under the law chosen by the parties or, in its absence not valid under the law in force at the relevant time;
• the applicant was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his or her case;
• the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; or
• the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or failing any such agreement, was not in accordance with Part I of the Indian Arbitration Act.

7.5.5 An arbitral award may also be set aside if the court finds that (i) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force or (ii) the arbitral award is in conflict with the public policy of India. In addition to the above, an arbitral award arising out of arbitrations other than international commercial arbitrations may be set aside by the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award.

7.5.6 A court’s decision on a challenge under Section 34 is subject to appeal. 196  However, it is relevant to note that  when deciding a Section 34 petition, the court has no jurisdiction to remand the matter to the arbitrator for a fresh decision on an issue. 197 Neither can the court remand the matter once the award has been set aside. 198

7.5.7 After the award is made by the arbitral tribunal, it is not permissible to initiate an action on the basis of  claim(s) that form the subject of that award. All of the rights and liabilities of the parties in respect of the claims which are the subject matter of the arbitral proceedings can only be determined on the basis of the award. 199

7.6.1 Under Section 33 of the Indian Arbitration Act, an arbitral tribunal may:

• correct any computation, clerical, typographical or similar error;
• provide its interpretation of a specific point or part of an award; and
• make an additional award as to claims omitted from the original award. 200

7.6.2 All of the arbitral tribunal’s powers outlined above can also be exercised by the arbitral tribunal at the request of one or both of the parties. 201

7.6.3 A request for the correction and interpretation of an award can be made to the arbitral tribunal, with notice being given to the other party, within a period of 30 days from the receipt of the award or any other period as agreed by the parties. 202

7.6.4 If the arbitral tribunal considers a request to correct or interpret an award to be justified, it is required to carry out the correction or give its interpretation within 30 days from the receipt of the request. 203  In addition, an interpretation of an award by an arbitral tribunal subsequently forms part of that award. 204

7.6.5 In addition to a request made by one or both of the parties, an arbitral tribunal may, on its own initiative, correct errors in an award within 30 days of the date the award was issued. 205  However, the arbitral tribunal does not have the authority to correct errors of substance or content. 206

7.6.6 Unless otherwise agreed, either party can make a request for an additional award concerning claims presented in the arbitral proceedings but omitted from the final award. 207  Such a request must be made within 30 days from the receipt of the award. The party making the request must also give notice to the other parties.

7.6.7 If requested by one of the parties and if it is satisfied that the request is justified, the arbitral tribunal must make an additional award. 208  An additional award must be made by the arbitral tribunal within 60 days from the date that it is requested. A longer period is provided for the making of an additional award so that the arbitral tribunal may hear the parties and take evidence on the omitted claims where necessary.

7.6.8 The arbitral tribunal is empowered, if necessary, to extend the time limit for making its correction, providing its interpretation or making an additional award. 209  In addition, the provisions regarding the form and content of an award 210  also apply when the arbitral tribunal corrects or interprets an award or an additional award. 211

7.6.9 When an arbitral tribunal corrects or interprets an award, or makes an additional award, it is required to ensure that each party is given a full opportunity to present its case in respect of the proposed correction or interpretation of the award or the proposed additional award. 212

8.1.1 Courts in India are increasingly adopting a non-interventionist approach, to ensure speedy, and time-bound resolution of disputes through arbitration. The amendments brought about by the 2015 and 2019 Amendment Acts clearly reflect this pro-arbitration intent of the legislature.  Section 5 of the Indian Arbitration Act prohibits the interference of Indian courts except under the limited circumstances set out in Part I of the Indian Arbitration Act which provides for judicial interference in the following instances:

• referring parties to arbitration in a pending suit; 213
• passing interim orders; 214
• appointment of arbitrators; 215
• terminating the mandate of an arbitrator; 216
• extending the time limit for making an arbitral award 217 ;
• court assistance in the taking of evidence; 218
• setting aside an award; 219
• enforcement of an award by way of decree; 220
• entertaining appeals against certain orders; 221
• directing the delivery of an award subject to payment of costs; 222  and
• reference of a dispute to arbitration in insolvency proceedings. 223

9.1.1 India is one of the original signatories of the New York Convention (Convention), having ratified it on 13 July 1960. However, there are several reservations to its applicability, as per Section 44 of the Indian Arbitration Act. India enforces an award as per the Convention only if it is  made in the territory of another contracting state. Section 44 of the Arbitration Act states the names of 48 countries 224  to which the Convention will apply, which are states that have made reciprocal provisions for the recognition and enforcement of awards made in India.. Further, India will apply the Convention only to differences arising out of legal relationships, whether contractual or not, that are considered ‘commercial’ under Indian law. 225

9.1.2 In the case of a foreign seated award, the  relevant High Court having original jurisdiction (i.e., jurisdiction to hear the case for the first time) to decide the questions forming the subject matter of the arbitral award will have jurisdiction over an application for enforcement pursuant to Section 47, read alongside Section 49, of the Indian Arbitration Act.

9.1.3 In the case of a domestic award, the principal civil court of original jurisdiction in a district or the High Court (in cases where the High Court exercises ordinary original civil jurisdiction) would have jurisdiction to hear an application for enforcement of the award under Section 36, read alongside Section 2(1)(e)(i), of the Indian Arbitration Act.

9.1.4 In accordance with Section 10 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015, in the case of an international commercial arbitration (i.e., where one party is a foreign party), all applications or appeals arising out of the arbitration are to be heard and disposed of by the Commercial Division of the High Court (where a Commercial Division has been constituted in the competent High Court). In the case of an arbitration other than an international commercial arbitration, if the principal court of original jurisdiction is a district court, all applications or appeals arising out of the arbitration are to be heard and disposed of by the commercial court, where constituted. Further, if the High Court has original pecuniary jurisdiction to entertain disputes regarding a particular pecuniary threshold, all applications or appeals arising out of the arbitration are to be heard and disposed of by the Commercial Division (where a Commercial Division has been constituted in the competent High Court). The Commercial Division of the High Court and the Commercial Court in the District Court consist of judges who have experience in dealing with commercial disputes.

9.1.5 In the case of a foreign award, Section 47(1) of the Indian Arbitration Act provides that a party applying for the enforcement of an award shall, at the time of the application, produce before the court the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made; the original agreement for arbitration or a duly certified copy thereof; and  such evidence as may be necessary to prove that the award is a foreign award.

9.1.6 As to a domestic award, the original of the award must be filed in court. Indian courts have held that in the case of a domestic award, if the original award is not filed in court, a certified copy may be filed with an endorsement regarding whether the original award is duly stamped (and stating the value of the stamp duty paid) and specifying whether the original award is duly registered. 226

10.1.1 The first recourse available to a party against a domestic arbitral award would be to file an application for setting aside the award under Section 34 of the Indian Arbitration Act. The grounds for setting aside a domestic award are those set out in paragraphs 7.5.4 and 7.5.5 above.

10.1.2 Thereafter, an appeal may lie under Section 37 of the Indian Arbitration Act from an order setting aside or refusing to set aside an arbitral award under Section 34. Significantly, no second appeal lies from an order passed in appeal under Section 37; however, nothing prevents a party from approaching the Supreme Court by way of a Special Leave Petition under Article 136 of the Constitution of India challenging the order passed in appeal under Section 37.

10.1.3 The grounds on which a foreign award may be refused recognition under the Indian Arbitration Act are similar to those provided under Article V of the Convention and to those set out in section 34(2) of the Indian Arbitration Act in relation to domestic awards. A court may refuse to enforce an award under the terms of Section 48 of the Indian Arbitration Act, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that:

• the parties to the agreement were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;
• the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his or her case;
• the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration (although Section 48 clarifies that if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced);
• the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, absent any such agreement, was not in accordance with the law of the country where the arbitration took place; or
• the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made. 

10.1.4 The ground of challenging a domestic award (arising out of arbitrations other than international commercial arbitrations) if the award is vitiated by patent illegality (Section 34(2A) of the Indian Arbitration Act) does not apply to foreign awards.

10.1.5 Furthermore, the enforcement of a foreign-seated arbitral award may also be refused if the court finds that the subject matter of the dispute is not capable of settlement by arbitration under the law of India, or enforcement of the award would be contrary to the public policy of India. Similarly, to Section 34, Section 48 of the Indian Arbitration Act clarifies that an award is in conflict with the public policy of India only if, inter alia, (i) the making of the award was induced or affected by fraud or corruption, or (ii) 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. Section 48 further clarifies that the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.

10.1.6 Under Section 48 of the Indian Arbitration Act, the Court may not  enforce an award that is not binding on the parties. Indian courts have held that an award becomes binding between the parties if it has not been challenged by the award debtor in the country where the award was given and hence has become executable. Thus, if the award has been fully or partly set aside at the seat of arbitration, the award will not be binding on the parties to the extent of the same having been set aside and consequently may  be unenforceable. Further, in light of Section 48(3) of the Indian Arbitration Act, Indian courts are likely to await the outcome of proceedings in which an award has been challenged before the courts of the seat of arbitration and proceed with enforcement only thereafter. However, the enforcement court is not bound by the decision of the seat court and decides the question of enforcement independently based on the grounds available under Section 48 of the Indian Arbitration Act. 227

10.1.7 Under Section 50 of the Indian Arbitration Act, an appeal lies against a decision refusing to recognise or enforce a foreign award to the High Court concerned. No second appeal lies from an order passed under Section 50 of the Indian Arbitration Act. The aforementioned provision does not take away the right of the parties to prefer a Special Leave Petition to the Supreme Court under Article 136 of the Constitution of India and the same would be maintainable. Once the executing court is satisfied that an award is recognizable or enforceable, or both, the award is deemed to be a decree of that court as per the provisions of Section 36 (domestic award) and Section 49 of the Indian Arbitration Act (foreign award). It may then be enforced under the relevant provisions of the CCP relating to the execution of a decree.