Conduct of Arbitral Proceeding: Section 19 of Arbitration and Conciliation Act

Section 19 of Arbitration and Conciliation Act: Determination of rules of procedure

STATEMENT: (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).

(2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.

(3) Failing any agreement referred to in in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.

(4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

Arbitrator Not Bound by Civil Procedure Code

Section 19(1) of the Act provides for the same provision. When a special law like the 1996 Act provides for a forum for adjudication of certain matters, procedure like Civil Code can’t be enforced over it. It is not obligatory on the part of the arbitrator to frame issues because he is not bound to follow the procedure laid down in Civil Code. Technicalities of settling issues as required under Order 14, Rule 1 of the CPC need not be followed by the arbitrator has been stated in case of Ashok Kumar Singh vs. Shanti Devi (2011). The arbitrator is not bound to deal with each claim or dispute separately nor need an award formally express the decision of the arbitrator on each matter of difference.

Arbitration Not Governed by Evidence Act

In case of J. Kaikobad vs. F. Khambatta (1930), it was stated by court that an arbitrator is not bound to follow the technical provisions of the Evidence Act, and his decision can’t be challenged on ground that he relied upon document not admissible under the Act. The only limitations on the powers of an arbitrator are that he should not violate the principles of natural justice, he should give a hearing to the parties, and should give a reasonable time and opportunity to them to substantiate their respective claims. In case of I.O.C. Ltd. vs. Devi Const. Engg. Contractors (2008), it was stated that the act of an arbitrator in not making a document as inadmissible can’t be a ground for setting aside the award since strict rules of evidence are not applicable to arbitration proceedings.

Inexpensive Arbitration

In the case of Union of India vs. Singh Builders Syndicate (2009), the Supreme Court stated that when an arbitrator is appointed by a court without indicating fees, either both parties or at least one party is at a disadvantage. Firstly, the parties feel constrained to agree to whatever fees is suggested by the arbitrator, even if it is high or beyond their capacity. Secondly, if a high fees is claimed by the arbitrator and one party agrees to pay such fees, the other party, which is unable to afford such fees or reluctant to pay such high fees, is put to an embarrassing position. He will not be in a position to express his reservation owing to an apprehension that refusal by him to agree to the fees may prejudice his case or create s bias in favour of the other party who readily agreed to pay the high fees. The tribunal’s duties in respect of the proper conduct of the proceedings include disposal of the matter with reasonable dispatch, attending hearings and participating in deliberations following the agreed procedure and dealing with all the issues.

Arbitrator to Appreciate Evidence

The evidence relied upon by the arbitral tribunal should be one which should accord with the principles of natural justice. Lord Denning in the case of G.K.N. Centrax Gears Ltd. vs. Matbro Ltd. (1976), stated that, “the weight of evidence and the inferences from it are essentially matters for the arbitrator. I don’t think that the award of the arbitrator should be challenged or upset on the ground that there was not sufficient evidence or that it was too tenuous or the like. One of the very reasons for going to arbitration is to get rid of technical risks of evidence and so forth. Questions of evidence are essentially matters for the arbitrator and not matters for the court.”

Whether a particular document is material or not and whether it should be produced before the arbitrator, is essentially a matter for the arbitrator to decide and whatever decision is taken by the arbitrator, it is binding on the parties. The matter of proof of document is a matter for the arbitrator and this can’t be a ground for interference with the award.

Conclusion with Consent

In the case of Spettigue vs. Carpenter (1735 PW), where the party desired the arbitrator to defer making his award until he should satisfy him as to some things which the arbitrator took to be against him, and as this was within two or three days before the time for making the award was out, the arbitrator refused his request, and made his award, and it seemed that there was a ground for the plaintiff’s desire to be heard, though it didn’t appear that he was ready to be heard within the time, the court set aside the award.

If though there has been some needless delay, an arbitrator doesn’t give the party who has caused it proper opportunity to go inti his case, but makes his award too hastily, without giving due notice of his intention to do so, the court will set aside the award.

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Author Details: Vaibhav Goyal (BA LLB Student, Panjab University)

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