7 - Arbitration

arbitration
Arbitration
METHOD OF RESOLVING DISPUTES BETWEEN TWO or MORE PARTIES
BY A THIRD PARTY
▪ Similar to village panchayats of old days
PROJECT ARCHITECT - SHOULD BE AWARE – HIS / HER ROLE AS

QUASI-ARBITRATOR WHILE HANDLING A PROJECT
Conciliation or Mediation
ALTERNATIVE METHOD OF DISPUTES REDRESSAL
Conciliator / Mediator is known to both parties tries to resolve

the disputes
Got a legal form through new act from 16th Aug 1996
Arbitration
One or more persons are appointed by parties
Such persons/person make inquiry in dispute or difference

matters. This is similar to judicial process.
Such appointed persons are known as “ARBITRATOR” and

procedure is “ARBITRATION”.
If there are more than one Arbitrators they are known as “JOINT
ARBITRATORS”. If one Arbitrator is appointed he is known as
“SOLE ARBITRATOR”.
Arbitrator hears say of both parties, similar to court of law
After completing procedure Arbitrator declares his decision

“AWARD”
Arbitration is DOMESTIC TRIBUNAL.

Arbitration
NEED FOR ARBITRATION

-Different possibility of disputes in architecture
Between Owner and Architect –
▪ Quality of professional services
▪ Lack of supervision
▪ Payment of fees, etc.
Between Owner and Contractor –
▪ Payments
▪ Extension of time
▪ Rectification of defects etc.
Advantages
Experts in profession are appointed.
Decision will be fair and refined and will not involve any element of guess
In case of a dispute concerning building construction, Arbitrator appointed is
normally architect, or engineer, having knowledge of arbitration and is fully
qualified to act as Arbitrator.
Legal procedure and formalities are cut short and time period for decision is
much short as compared to the time consumed in Court of Law.
Cost Saving
Time, date and place of meetings can be decided to suit all concerned.
Hearing is not public. No publicity is given to contents of case. Hence both

parties are safe.
Arbitrator gives final award and time required for this is short.
Appointment of Arbitrator
In case of Sole Arbitrator appointment is done by both parties

and this is done unanimously.
If both parties do not agree unanimously and Arbitrator

selected is well experienced and having knowledge then party
who has suggested name can apply to the court and
appointment is done by court.
In case of two or more arbitrators, each party will appoint one

Arbitrator from his side.
Powers and Duties of Arbitrators
Arbitrators (if more than one) have to appoint Umpire within one
month from date of entering upon the reference.
Final Award shall be declared within Four Months from the date
entering upon the reference or within the extended time.
Examine persons and witnesses on oath and hear parties
Seek opinion of Court of Law points
If parties apply for extension of time limit decided for declaring

Award, Arbitrator may extend such time limit or guide/direct
parties to apply to the Court for extending such time limit.
Powers and Duties of Arbitrators
To decide the cost (expenditure) of reference and award.
Cost of reference - Expenditure required to complete process of

arbitration i.e. Arbitrator fees cost of correspondence, cost of
stationary and typing, conveyance etc
To decide in what proportion this cost is to be borne by the

parties.
To correct clerical mistakes in the award
To decide upon measurement and valuation of the work
To decide over previous decisions taken by Architect/ Engineer
To decide upon termination of contract

Qualifications of Arbitrators
He must be expert in the field to which depute refers

e.g. If dispute is from automobiles arbitrator should be expert
and experienced in auto industry.
Must be honest, disinterested and independent of parties.

Independent means a third person, not from relation or not in
close contact of parties.
Must not be bias, shall not have ill feelings against any of the
parties
Person cannot work as Arbitrator and witness in the same case.

Umpire
Person appointed by Joint Arbitrators to decide dispute or
difference of opinion between Joint Arbitrators. Decision given
by Umpire is final and binding on both parties.
Umpire should be appointed by Arbitrators within one month

from date of entering Arbitrator Agreement.
Umpire has to declare his award within two months from the
date of entering upon reference/within extended time limit.
If Arbitrators have failed to make their award within prescribed

time limit, Umpire has right to enter into reference.
Umpire
If arbitrators have given notice to Umpire that they cannot

agree, Umpire shall immediately enter into matter.
Umpire should declare cost of Arbitration as well as Umpire’s

fees and proportion to be borne by each party.
Powers and rights of Umpire are the same as Arbitrator. Umpire

is not bound by evidence already Tender submitted before
arbitrators.
Removal of Arbitrator or Umpire by Court
Courts have powers to remove Arbitrator, Umpire in following
circumstances :
Where arbitrator/umpire exceeds his jurisdiction and
misconducts proceedings. (misconduct, deleting some
information)
When arbitrator/umpire fails to use all reasonable information

received and declares Award
Fraud
By mutual consent of the parties
If arbitrator/umpire has been removed, Court on application

from any party :
a) Appoint sole arbitrator
b) Order that agreement mode for Arbitration shall cease
(cancel)
Misconduct of Proceedings
- Any irregular action which is not in accordance with general
principles of equity and good ethics.
- If Arbitrator or Umpire is found guilty of misconduct, he can be

removed by Court and his award set aside/cancelled.
-Circumstances depicting misconducts are :
Dishonesty, fraud, conspiracy
Reasonable opportunity is not given to each party to prove his

case
Proceeds ex-part without sufficient reasons.
EX-PARTE : If one party remains absent consistently, then award

is given on the information supplied by one party, considering
that other party does not have any say over it.
Misconduct of Proceedings
Does not issue proper notice to the party
Does not allow necessary important evidence to record in

proceeding or allows inadmissible (not acceptable) evidence.
Delay in recording the reference
Delay in proceedings
Delay in finalizing award
Defecting, inconsistent, ambiguous award
Deciding matter beyond scope of reference.

Cost of Arbitration
Cost of reference (subject) and award is left to the discretion of

Arbitrators or Umpire.
The cost includes fees.
Arbitrator/Umpire can direct in their award the cost of

Arbitration and by whom it is to be paid, and in what manner.
Award
Decision given by arbitrators/umpire, after careful investigation
in the case submitted to them for decision. This is binding on
both parties.
Valid Award shall consist :

Award shall be made within prescribed time limit
4 Months - from the date of entering upon reference.
2 months for umpire - or within extended Time Limit.
Award must be in writing as a rule. There is no prescribed

format.
Award must be self explanatory without any ambiguity
Stamping of Award :
a) No stamp paper is necessary when arbitration is in suit
b) In case of arbitration without intervention of court, award
must be on Stamp Paper.
Notice is to be given to parties about declaration of Award.

Award
FILING AWARD IN COURT :
Award is similar to a Judgment, it is not judgment. It requires

certain legal formalities to be complied before it becomes
effective.
E.g. If award says : `A’ must pay to `B’ certain amount
`B’ cannot demand only on the strength of award, because it

has no legal stand.
When certain legal formalities are complete it becomes legal

and then only amount stated can be recovered.
Award
UNSTAMPED DOCUMENT
Documents not properly stamped cannot be admitted in

evidence before Arbitrators.
Such document will have to be got properly stamped as

prescribed under the Stamp Act.
Unstamped Document needs payment of penalty to make it

stamped.
Award
ENFORCING AWARD
Before award is enforced in terms of judgment following
conditions are to be complied :
Court must give notice to the parties regarding filing of award

by Arbitrator/s.
Court shall inform parties that award is filed by Arbitrator/s.
Time limit for setting aside : whether time limit is lapsed or over.
Whether application for extension of time limit is made.
Whether it is accepted or refused.
Award is not set aside or remitted.

Award
INTERIM AWARD
An award before making final award.
Award is to be entire and complete.
It cannot be complete unless there is agreement between

parties.
Agreement between parties authorizes arbitrator to make

several awards i.e. award on each and every point of dispute.
Without agreement between parties it will not be competent for
Arbitrator to make award peaceful.

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arbitration

▪ Similar to village panchayats of old days

PROJECT ARCHITECT - SHOULD BE AWARE – HIS / HER ROLE AS

Conciliator / Mediator is known to both parties tries to resolve

Such persons/person make inquiry in dispute or difference

Such appointed persons are known as “ARBITRATOR” and

Arbitrator hears say of both parties, similar to court of law

After completing procedure Arbitrator declares his decision

Arbitration is DOMESTIC TRIBUNAL.

NEED FOR ARBITRATION

Hearing is not public. No publicity is given to contents of case. Hence both

In case of Sole Arbitrator appointment is done by both parties

If both parties do not agree unanimously and Arbitrator

In case of two or more arbitrators, each party will appoint one

Examine persons and witnesses on oath and hear parties

Seek opinion of Court of Law points

If parties apply for extension of time limit decided for declaring

Cost of reference - Expenditure required to complete process of

To decide in what proportion this cost is to be borne by the

To correct clerical mistakes in the award

To decide upon measurement and valuation of the work

To decide over previous decisions taken by Architect/ Engineer

To decide upon termination of contract

He must be expert in the field to which depute refers

Must be honest, disinterested and independent of parties.

Person cannot work as Arbitrator and witness in the same case.

Umpire should be appointed by Arbitrators within one month

If Arbitrators have failed to make their award within prescribed

If arbitrators have given notice to Umpire that they cannot

Umpire should declare cost of Arbitration as well as Umpire’s

Powers and rights of Umpire are the same as Arbitrator. Umpire

When arbitrator/umpire fails to use all reasonable information

By mutual consent of the parties

If arbitrator/umpire has been removed, Court on application

- If Arbitrator or Umpire is found guilty of misconduct, he can be

-Circumstances depicting misconducts are :

Dishonesty, fraud, conspiracy

Reasonable opportunity is not given to each party to prove his

Proceeds ex-part without sufficient reasons.

EX-PARTE : If one party remains absent consistently, then award

Does not allow necessary important evidence to record in

Delay in recording the reference

Delay in finalizing award

Defecting, inconsistent, ambiguous award

Deciding matter beyond scope of reference.

Cost of reference (subject) and award is left to the discretion of

The cost includes fees.

Arbitrator/Umpire can direct in their award the cost of

Valid Award shall consist :

Award must be in writing as a rule. There is no prescribed

Award must be self explanatory without any ambiguity

Notice is to be given to parties about declaration of Award.

FILING AWARD IN COURT :

Award is similar to a Judgment, it is not judgment. It requires

E.g. If award says : `A’ must pay to `B’ certain amount

`B’ cannot demand only on the strength of award, because it

When certain legal formalities are complete it becomes legal

Documents not properly stamped cannot be admitted in

Such document will have to be got properly stamped as