DISPUTE SETTLEMENT
N D Sharma
ARBITRATION
Arbitration:
• The settlement of a matter (disputes) at
issue by one or more arbitrators to
whom the parties agree to refer their
claims in order to obtain an equitable
decision instead of carrying it to the
established tribunal of justice; and is
intended to avoid formalities, the delay,
the expense and vexation of ordinary
litigation.
ARBITRATION
Essential Ingredients of an Arbitration:
• A written agreement
• A dispute
• A reference to arbitrate
Why to Arbitration:
Speed,
quality,
informality,
confidentiality,
cost
effectiveness
(economy) and finality; (Not always
true!!)
TYPES OF ARBITRATION
Type by Nature:
• Domestic
• International
Type by Procedure:
• Institutional
• Ad hoc (includes contractual in-built
arbitration as also provisioned under 6(2)
of the Act)
• Statutory arbitration
TYPES OF ARBITRATION
PROCEDURE
Institutional:
• Concerned institution (ICC like) will: i) determine
whether there is a prima facie agreement to
arbitrate; ii) appoint arbitrators; iii) decide
challenges against the arbitrators; iv) ensure
that arbitrators are conducting arbitration in
accordance with rules of the institution,
• NEPCA under Clause 6 of its Rules provides for
i) and II) only and advises the Parties which may
or may not be accepted
TYPES OF ARBITRATION
PROCEDURE
Ad – hoc:
• In ad hoc cases, the arbitrators
themselves
will
administer
the
arbitration, as far as this is possible.
However, should problems arise in
setting the arbitration in motion or
constitution of the panel (or possibly in
other circumstances), the parties may
have to require the assistance of a
state court.
INTERNATIONAL
INSTITUTIONS FOR
ARBITRATION
• The Permanent Court of Arbitration located
in the Peace Palace, The Hague.
• United Nations Commission on International
Trade Law (UNCITRAL)
• International Chamber of Commerce (ICC)
• International Center for Settlement of
Investment Disputes (ICSID)
• London Court of International Arbitration
(LCIA)
• American Arbitration Association (AAA)
PROVISION of ARBITRATION
ACT AND NEPCA RULES
• Number of arbitrators as in the agreement
otherwise ordinarily three, as in UNCITRAL
model law; [S.5(1)]
• NEPCA Rule 11 preference for Sole Arbitrator
• If the number of appointed arbitrators is even
number, then they must add one to make
uneven; [S. 5(2)]
• NEPCA Rule 12 (5) provides Presiding
Arbitrator as an optional arrangement only
PROVISION of ARBITRATION
ACT AND NEPCA RULES
• Time for referring to arbitration specified3 months – [S. 6(1)]
• NEPCA Rule 60 days (Rule 23)
• Appointment method as stipulated in the
arbitration agreement, otherwise each
party to nominate one and nominated
ones to appoint third who shall be chief
arbitrator; [S.6(4)]
• Appointment of arbitrator/s through
intervention of the Court [S. 7)]
PROVISION of ARBITRATION
ACT AND NEPCA RULES
• Counter claims may be filed along with
the Statement of defense; [S.14(3)]
• Failure to submit the statement of fact
within 3 months of the appointment of
arbitrators will cause termination of
arbitration, failure to submit defense
statement may cause ex-parte decision
(S.15)
PROVISION of ARBITRATION
ACT AND NEPCA RULES
• Arbitrators enabled to decide on the
challenge to the jurisdiction of the
Arbitrators (S. 16)
• Party dissatisfied with the decision of
the tribunal on jurisdiction may file an
application with the Appellate Court at
that stage although continuation of
arbitration not stopped; [S. 16(2) and
16(6)]
PROVISION of ARBITRATION
ACT AND NEPCA RULES
• Arbitration proceedings, except while
making award, to continue despite
absence of any one of the 3 or more
arbitrators; [S. 17(4)]
• Unless otherwise provided by the
arbitration agreement the Nepal law
shall be substantive law applicable to
arbitration; [S. 18]
PROVISION of ARBITRATION
ACT AND NEPCA RULES
• The Arbitrators are conferred upon power to
issue, upon request of either party, interim or
preliminary or provisions orders or
conditional decision subject to filing
application by the dissatisfied party before
the Appellate Court; [S.21(1).g and 21 (2)]
• Rule 9 has detailed out the procedure and
timeframe for such filing of application
PROVISION of ARBITRATION
ACT AND NEPCA RULES
• Time limit for pronouncing the award – within
120 days (ordinarily) from the date of receipt
of the docs under s. 14 and within 30 days
from completion of the hearing; [S.24)
• Court ( District Court) assistance may be
requested by the arbitrator to examine any
evidence concerning the dispute,
notwithstanding anything otherwise stated in
other laws in vogue; [S.23]
PROVISION of ARBITRATION
ACT/NEPCA RULES
• Majority Award, failing which the Chief
Arbitrator’s decision to prevail [S.26]
• Reasoned Award [S.27]
• Challenge to the Award may be filed
through an application before the
Appellate Court on the specified
grounds [S.30]
ARBITRATION
PROCEDURE
STATEMENT OF CLAINS AND
DEFENSE
The Statement of Claims along with the
request for Arbitration should preferably,
though not mandatory, be submitted in the
following Format, contents wise:
• Names of the Parties involved and the
Tribunal
• Contents
• Management Summary
• Narrative to include
STATEMENT OF CLAINS AND
DEFENSE
• Heads of Claims – by item
• Facts chronologically – not opinion of the
party
• Evidence – record
• Contract Conditions attracted
• Discussion
- Entitlement
- Causes and effect analysis
- Quantum
- Appendices
STATEMENT OF CLAINS AND
DEFENSE
• Defense Statement too may be in the same
format, though not mandatory here too
• Answer must however be specific on the
defense to be relied upon stating the facts
related to the defenses
• Respondent also have the right to assert
counter-claims against the Claimant
DOCUMENTATION
Written submissions:
• Written submissions come in different forms and
are given different names. They include the
Request for Arbitration and Answer, statements
of case and defense
• Consider whether written submissions to be
sequential or simultaneous. Whilst simultaneous
submissions enable both parties to present their
case but may not make things quicker also may
result in inefficiency if the parties raise different
issues in their submissions and extensive reply
submissions are required.
DOCUMENTATION
Documentary evidence
• Organization of documents from the outset of the case
,the parties should consider using a coherent system for
numbering or otherwise identifying documents
produced in the case. System can be established with the
arbitral tribunal at the time of the case-management
conference.
• Parties will normally each produce the documents upon
which they intend to rely. Each party should consider
avoiding requests for production of documents from
another party unless such production is relevant and
material to the outcome of the case.
ARBITRATION PROCESS
ARBITRATION PROCESS
Preliminary Hearing following oath taking:
To agree with the parties:
• Venue
• Language
• Time frame
• Verification of documents submitted by
parties
• Discovery of documents – including
internal memorandums
ARBITRATION PROCESS
• Share list of the prospective witnesses and
the names of the Counsels, if intended to be
represented by.
• Tentative time schedule including for site
visit, if required.
• Fix modality of future communication
Failing agreement on any above, Tribunal to
give directions
ARBITRATION PROCESS
Parties to decide on whether or not empower
Tribunal to act/fuction as:
amiable compositeur
• Permit the arbitrators to decide the dispute
according to the legal principles they believe
to be just, without being limited to any
particular national law.
ex aequo et bono:
• To decide the case on the basis of what is just
and fair under the circumstances, and not
strict rules of law (Latin for, in justice and
fairness).
ARBITRATION PROCESS
Hearings:
• Establishing the facts of the case (Draw
TOR)
• Minimizing the length and number of
hearings
• Telephone and video conferencing
• Providing submissions in good time
• Cut-off date for evidence
• Closure of Proceedings
ARBITRATION PROCESS
• No new or different claim can be submitted
without the arbitrators consent
• Arbitrators are empowered to rule on the
relevancy of the evidence and testimony
• Arbitrator’s ruling on the objections raised
• Arbitrators to consult with each other on
the above; ruling to be announced by the
presiding arbitrator
ARBITRATION PROCESS
Arbitrators to take notes:
• By themselves or through an appointed
assistant
• Tape recording of the proceeding allowed
Hearing sequence may be in the following
sequence or otherwise:
• Opening statement for the Claimant
• For the Respondent
ARBITRATION PROCESS
• Presentation by Claimant or his Counsel
claim by claim
• Production of evidences
• Witnesses from both sides, is any,
• Cross examination of witnesses sequence
wise
• Closure
ARBITRATION PROCESS
Award Requirements:
• Certain complying with the submission
• Award to be final unless Tribunal decides to
issue an interim Award
• Award must be reasoned one
• Award may be a decision as to the rights of
the parties without any involvement of
money
ARBITRATION PROCESS
Costs
• Using allocation of costs to encourage
efficient conduct of the proceedings
• The arbitral tribunal has discretion to
award costs in such a manner as it considers
appropriate.
• It may be helpful to specify at the outset of
the proceedings that in exercising its
discretion in allocating costs the arbitral
tribunal will take into account any
unreasonable behavior by a party.