The Arbitration and Conciliation Act (hereinafter referred as “Arbitration Act”) was passed in the year 1996 with a view to reduce the burden on the courts and expedite speedy disposal of cases. It was passed to reduce the time spent in the lengthy process of litigation. The question that strikes the mind of litigators involved in the process of litigation is whether provisions enshrined under the Civil Procedure Code, 1908 (hereinafter referred to as “CPC”) are applicable in Arbitral Proceedings.
The answer to the aforesaid dilemma can be found under Section 19 of the Arbitration Act which explicitly prohibits the applicability of CPC provisions in the Arbitration Proceedings. Furthermore, Section 5 of the Arbitration Act restricts the judicial intervention in Arbitration proceedings, wherein it is stated that nothing contained in any other law for the time being in force, no judicial authorities shall intervene except where it is provided by the Act.
A bare perusal of the aforestated provisions state that the framers of the Arbitration and Conciliation Act, 1996 were of the opinion that CPC provisions are not applicable in strict sense, otherwise the intent of the Arbitration and Conciliation Act, 1996 would fail which is to provide quick and efficient adjudication of the disputes. There are certain provisions under the CPC which are interlinked with Arbitration proceedings, some of which are provided as below:-
Statutory Provisions :
1. Section 89 of the Civil Procedure Code, 1908 provides the Civil Court with the power to refer any dispute to arbitration or any other Alternative Disputes Resolution Mechanisms. Court while referring the said mater may evaluate whether there is a scope of any settlement between the parties and accordingly may refer the parties to any of the following forums- arbitration, negotiation, mediation or Lok Adalat. This provision helps to reduce the overburdening of the Judiciary by referring certain matters to ADR mechanism even in the absence of an Arbitration Agreement between the parties to the dispute.
2. Section 9 of the Arbitration Act, 1996, empowers a court to order interim relief pending the arbitral process. This implies that parties may approach a court for orders in respect of, say, retention of property, freezing of funds, or restraint of certain acts prior to, during, or even subsequent to the arbitral process, but prior to enforcement of the award. The court has wide discretion to grant such interim relief and is not subject to the provisions of the rules of the Civil Procedure Code.
3. Section 11 of the Arbitration Act, 1996, primarily deals with the appointment of arbitrators in arbitration proceedings. Parties are at liberty to choose their own procedure of appointment, but in the absence of such choice, the Act lays down judicial appointment procedures. In particular, where a three-arbitrator tribunal is to be appointed, each of the parties would typically appoint one arbitrator and the two so appointed arbitrators would appoint the third (chairman) arbitrator. Where there is non-appointment by one party or on mutual agreement between the two concerning the third, the court can be requested to make the appointment.
4. Section 34 of the Arbitration and Conciliation Act, 1996, further allows a party to challenge an arbitral award in court by applying to set it aside. In simple words, if any of the party is not satisfied with any award given by an Arbitral Tribunal, then an application under Section 34 of the Arbitration and Conciliation Act, 1996 can be made in order to set aside the said order or direct the Tribunal to adjudicate on the matter from beginning.
5. Section 36 of the Arbitration and Conciliation Act, 1996 provides for enforcement of the Arbitral Award. The Section states that in case the timeline for setting aside of the Award has passed under Section 34 of the Arbitration and Conciliation Act, 1996, then the provisions of the CPC may be applied for the enforcement of the award and accordingly an application for the enforcement of the Arbitral Award must be filed before the court having the competent jurisdiction.
Judicial Precedents
- Do courts have the power to modify the award in the process of setting aside of the Arbitral Award?
In the recent landmark judgment of Balasamy v. ISG Novasoft Technologies Ltd., a 5-judge bench of India’s Supreme Court reinterpreted Section 34 of the Arbitration and Conciliation Act, 1996, holding by majority (4:1) that courts possess limited powers of modification over arbitral awards, a dramatic departure from the previous position enunciated in NHAI v. M. Hakeem, where the Court had held that modification was irrelevant to the scope of Section 34. The Court in Balaswamy justified that although the Act does not explicitly grant powers of modification, such power was implicit and acceptable in limited circumstances i.e., to rectify clerical, computational, or typographical errors, and not to re-examine the merits of the award.
- In the case of I.T.I. Ltd. vs Siemens Public Communications Network, the Hon’ble Supreme Court, in deciding whether a revision petition under Section 115 of the Code is maintainable in the High Court against an order made in an appeal filed under Section 37 of the Act, ruled that, there is strong presumption that civil courts have jurisdiction to try all civil cases. Therefore, if anything by inference has to be drawn, it must be in favor of the jurisdiction of the court and not possibly directing exclusion of jurisdiction of the Court. Also, there is no express exclusion of the Code of Civil Procedure, 1908. Therefore, it cannot be inferred that since no provision is made in the Arbitration and Conciliation Act, 1996 specifying the application of the CPC, therefore the CPC is not applicable on the Arbitral Proceedings.
ANALYSIS AND FINDINGS –
After a thorough analysis of the above and after careful parallels drawn between the Arbitration and Conciliation Act, 1996 and the CPC, It can be inferred that the formal and specific requirements specified in the Code of Civil Procedure (CPC) are not applicable to arbitration proceedings. This does not imply that the arbitrator is not bound to adopt all formal procedure typical of a civil court. The underlying principles of the rules, for instance, giving equal opportunities to both parties to put forward their case, producing evidence, and following natural justice principles are still applicable. These principles ensure that the arbitration is carried out fairly and equitably. After the arbitrator makes the final ruling (the award), parties can have to resort to civil courts for:
At these levels, the civil court procedures of the CPC should usually come into play, just like in a typical court case—unless the Arbitration Act specifies otherwise. Thus, although arbitration is autonomous, civil courts do have a role to play once the arbitration process has been concluded.
Author: Himanshu Sachdeva,
Senior Associate and Prarabdh Tiwari, Assessment Intern
