Conduct of Arbitral Proceeding: Section 19 of Arbitration and Conciliation Act | Law Optional Notes for UPSC PDF Download

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

Statement:

• The arbitral tribunal is not bound by the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872.
• Parties can agree on the procedure for the arbitral tribunal's proceedings.
• In the absence of an agreement, the arbitral tribunal can conduct proceedings as it deems appropriate.
• The tribunal has the power to decide on the admissibility, relevance, materiality, and weight of evidence.

In simpler terms, the arbitral tribunal in arbitration cases has flexibility in setting its procedural rules and is not strictly bound by specific legal codes. Parties involved can mutually decide on the procedures to be followed. If there is no agreement, the tribunal can proceed as it sees fit. Additionally, the tribunal has the authority to make decisions regarding which evidence is admissible, relevant, and significant in the case.

Arbitrator's Independence from Civil Procedure Code

• Arbitration under the 1996 Act is not subject to the Civil Procedure Code, as highlighted in Section 19(1) of the Act.
• Arbitrators are not obligated to adhere to the procedural formalities outlined in the Civil Procedure Code, distinguishing them from conventional judicial proceedings.
• Unlike courts following the Civil Procedure Code, arbitrators are not required to frame specific issues before rendering a decision.
• For instance, in the case of Ashok Kumar Singh vs. Shanti Devi (2011), it was established that arbitrators are not constrained by the procedural intricacies mandated by the Civil Procedure Code.
• Arbitrators possess the autonomy to address multiple claims or disputes collectively, deviating from the meticulous scrutiny of individual issues stipulated under Order 14, Rule 1 of the CPC.
• An arbitral award is not mandated to explicitly resolve every matter of contention in a separate and formal manner.

Arbitration Not Governed by Evidence Act

• An arbitrator is not required to adhere strictly to the Evidence Act, as established in the case of J. Kaikobad vs. F. Khambatta (1930). The arbitrator's decision cannot be contested on the basis of using documents that may not be admissible under the Act.
• The constraints on an arbitrator's authority include upholding the principles of natural justice, providing both parties with a fair hearing, and allowing them adequate time and opportunity to support their claims.
• In the case of I.O.C. Ltd. vs. Devi Const. Engg. Contractors (2008), it was emphasized that an arbitrator's decision to not exclude a document as inadmissible does not warrant overturning the award. Arbitration processes do not rigidly apply the strict rules of evidence.

Inexpensive Arbitration

• When a court appoints an arbitrator without specifying fees, it can lead to disadvantages for the parties involved.
• Parties may feel pressured to agree to any fees proposed by the arbitrator, even if the fees are high or beyond their financial means.
• If one party agrees to pay high fees suggested by the arbitrator, the other party may be unable to afford or reluctant to pay such fees, putting them in a difficult position.
• This situation can create bias or prejudice, as one party's agreement to high fees may influence the outcome of the arbitration.
• The duties of the tribunal include conducting proceedings promptly, attending hearings, following the agreed procedure, and addressing all relevant issues.

Arbitrator to Appreciate Evidence

• The arbitrator must base decisions on evidence following principles of natural justice.
• According to Lord Denning in G.K.N. Centrax Gears Ltd. vs. Matbro Ltd. (1976), the arbitrator holds the authority to weigh evidence and draw inferences. Arbitration exists to mitigate technical risks in evidence assessment, making the arbitrator's decisions final.
• Determining the relevance and necessity of presenting a document lies within the arbitrator's discretion. Parties are bound by the arbitrator's decision, and challenging it based on document proof is not valid.

Understanding Conclusion with Consent

• In the legal case of Spettigue vs. Carpenter (1735 PW), a crucial aspect emerged where a party requested the arbitrator to delay the award until certain concerns were addressed. Despite the proximity to the award deadline, the arbitrator proceeded without granting the request. 
• The court intervened, noting the plaintiff's valid reasons for seeking a hearing, although readiness within the timeline was not established, leading to the award being set aside.
• If an arbitrator rushes the award process, failing to provide adequate opportunity for a party responsible for delays to present their case, and neglects to give notice of the imminent award, the court may invalidate the award.