THE RESOLUTION
OF CONTROVERSIES AMICABLY THROUGH ARBITRATION. CONCILIATION & MEDITATION
By:
MRS.
NAILA KAREEM KHILJI L.L.M.
Advocate High Court
Part Time Lecturer, BZU Gilani Law College, Multan.
The Constitution
of Pakistan, 1973 grants ambient laws to ensure the safety, freedom, fairness,
Security of person, Safeguards as to arrest and detention, Slavery, forced
labour, etc., prohibited, Protection against retrospective punishment,
Protection against double punishment and self-incrimination, inviolability of
dignity of man, etc., Freedom of movement etc., Freedom of assembly, Freedom of
association, Freedom of trade, business or profession, Freedom of speech etc.,
Freedom of profess religion and to manage religious institution, Safeguards as
to educational institution in respect of religion etc., Provision as to
property, Equality of citizens, Safeguard against discrimination in services,
Preservation of language, script and culture, Principles of Policy,
Responsibility with respect to Principles of Policy, Islamic way of life,
Promotion of local Government institutions, Parochial and other similar
prejudices to be discouraged, Full participation of women in national life,
Protection of family etc., Protection of minorities, Promotion of social
justice and eradication of social evils, Promotion of social and economic
well-being of the people, Participation of people in Armed Forces,
Strengthening bonds with Muslim world and promoting international peace.
Many times it is
seen that the peoples are not aware how to proceed when a wrong or injustice
has been done to them. There are people who wish to resort to judicial
litigation to resolve disputes and are at a loss regarding whom to approach and
what option are available to them. The entire process of suing in a Court of
law for wrongs done and the proceedings that follow seem to be much beyond
their comprehension. It could be people with landed property involved in disputes
over inheritance, ownership, possession, title or
could even be a family related dispute. The common man appears to be lost in
the maze of legal jargons because the legal parlance and term are difficult for
them to comprehend. It is heart rendering when innocent victim do not even know
that something like mediation and conciliation exists within the frame work of
the law.
Simple rural
folk who come to the Courts seeking justice for disputes related to farmland
and its parameters and confused by the legal terms and cannot even distinguish
a "plaintiff from a defendant", neither are they aware that a system
exists through which they can resolve matters amicably through creative
solutions acceptance to both the parties and that they had not go through expensive
litigation. Litigation does not always had to satisfactory results. It is
expensive in terms of time and remedy. A case won or lost in a Court of law
does not change the attitude of the litigants who continue to be adversaries go
on fighting in appeals after appeals. The laws relating to arbitration enables
the change in the approach of the parties. The alternative dispute resolution,
negotiation and mediation system is becoming more popular in throughout world.
WHAT IS ARBITRATION
Arbitration is an
alternative way to resolve dispute through Court-litigation. Arbitration is a
recognized private legal procedure used to resolve disputes between two or more
parties. Arbitration proceedings are administered and managed by a
knowledgeable, independent, and impartial third party. The parties to a dispute
present their pleadings, evidence and arguments to the Arbitrator who decides
the case and resolves the dispute.
Where two or more persons agree that a dispute or potential
dispute between them shall be decided in a legally binding way by one or more
impartial persons in a judicial manner, that is upon evidence put before him or
them, the agreement is called as Arbitration agreement or a submission to
Arbitration. When, after a dispute has arisen, it is put before such person or
persons for decision, the procedure is called as Arbitration, and the decision
when made is called award.
Arbitration is a method whereby parties can resolve their
disputes privately. It is known as an Alternative Dispute Resolution mechanism.
In this mechanism, instead of filing a case in a Court, parties can refer their
case to an arbitral tribunal, which is the forum where Arbitration proceedings
are conducted. The arbitral tribunal considers the cause of the conflict
between the parties and arrives at a decision known as 'award'. The arbitral
tribunal controls the process and outcome of dispute. Generally the hearing is
limited by rules agreed by parties and is conducted in private and strangers
cannot be present.
(Ronald
Bernstein Derek Wood in Handbook of Arbitration Practice, Second Edition, P.
9).
1. History
of the Act.
In Indo-Pakistan
the Law of Arbitration remained unknown till the advent of British Rule. So far
as Muslim Law is concerned the Holy Quran provided this forum 1400 years back
in Surah Al-Noor, Verse:35. First enactment to
regulate procedure of Civil Courts passed in 1859 contained Ss. 312 to 327
which dealt with law of Arbitration. These provisions remained repeated in the Code of Civil Procedure revised in 1882 as
Ss. 506 to 526. The above said provisions contained reference to disputes
referable to arbitration with or without intervention of the Court after they
had arisen. There was no provision for a reference to arbitration of future
disputes. A need was felt to make the law or arbitration more comprehensive
when the Code of Civil Procedure was revised in 1908, the Special Committee
headed by Sir Else Richard's observed:--
"We are of opinion that the best course would
undoubtedly be to eliminate from the Code all the clauses as to arbitration and
insert them in a new and comprehensive Arbitration Act. There are perhaps
difficulties as to this at present. We have determined, therefore, to leave the
arbitration clauses much as they are in the present Code, but we have placed
them in a Schedule in the hope that at no distant date they may be transferred
into a comprehensive Arbitration Act".
The Chief Justice Committee
presided over by Mr. J. Rankin to examine this branch of law in 1925
observed:--
"This hope has not been fulfilled although
sixteen years have elapsed, is certainly a pity, but it is important to observe
that what is required is not so much that the whole of the law, on this subject
should be put into one Act, as that the law should be made more workable".
It was in the year 1940 that a
comprehensive and uniform law on the subject of arbitration was adorned on the
Statute Book for the whole of the Sub-Continent to cater for the needs of all
arbitrations. The Arbitration Act, 1940 repealed the Indian Arbitration Act,
1899 and the Second Schedule of the Code of Civil Procedure, 1908. The present
Act is self contained, comprehensive and uniform law on the subject of
arbitration. It is complete Code and covers not only the procedure, passing of
award, remittance and modification of the same but also the method and manner
to impeach the same, to probe misconduct of the arbitrator as well as in the
proceedings, to provide forum of appeal and jurisdiction. So is mentioned in
the preamble, it amends and consolidates the law relating to arbitration in the
Sub-Continent.
2. Preamble.
The preamble of
a statute is a preparatory statement at its beginning, following the title and
preceding the enacting clause, explaining or declaring the policy and purpose,
the reasons and motives for, and the objects sought to be accomplished by the
enactment of the statute. (AIR 1958 SC 956). The
purpose of a preamble, is that in case of any doubt as
to the intention of the Law Makers it may be looked at in order to ascertain a
true meaning of a particular provision but cannot control the substantive
provisions of the enactment. (PLD 1973 SC 49).
Preamble is a good means to find minds of the makers of the Act and the
mischief which they intend to redress. (AIR 1956 SC 246).
It has been considered as a key to the statute affording a clue to the scope of
the statute. A preamble cannot override the specific provisions made in the statute, however, it can be used to remove any ambiguity in
the statute keeping in view the aims and objects of the same and the interest
of justice. Arbitration Act, 1940 is to save the parties from the cumbersome
and tiring proceedings of the civil litigation and to resolve their disputes
through arbitration as early as possible. (1999 CLC 1005).
The sole purpose of the Arbitration Act, 1940 is to curtail litigation in
Courts and to promote the settlement of the dispute amicably through persons in
whom both the parties repose their trust. Therefore, the course that the Courts
should generally follow is to encourage the settlement of disputes by this
method wherever the parties have themselves agreed to do so. To allow one side
to evade and wriggle out from the agreement merely by making allegations of
fraud, even though the same may not ultimately be proved or even pressed, would
amount to giving a handle to that party to circumvent the arbitration clause.
(1981 SCMR 129) Role of Courts in the scheme of Arbitration Act, 1940 is of
supervisory character. (PLD 2003 Kar. 180).
3. Scheme
of Arbitration Act, 1940.
Arbitration is a
judicial determination of differences between the parties. Necessary ingredient
being that there must be a controversy, presentation of case from both sides,
if necessary, evidence be brought on record and application of mind by the
arbitrator and a reasoned award must follow. (1999 YLR 978).
Scheme of the Arbitration Act, 1940 is that the dispute between the parties,
who entered into an agreement of arbitration, should be decided by one or more
persons, who are called to be Judges in the said dispute, and not by a regular
or ordinary Court of law. Scheme further envisages that the decision of the
said arbitrators is binding upon the parties whether they agree to the decision
either upon law or fact, if the award is good on the face of it. Arbitration in
substance ousts jurisdiction of Court except for purpose of controlling
arbitrator and preventing misconduct and for regulating procedure after award.
Perusal of Arbitration Act, 1940, reveals that there are three modes of
arbitration: Arbitration without intervention of Court; arbitration with
intervention of Court where there is no suit pending and arbitration in a suit
pending before Court. First category of arbitration is provided under Chapter
II of the Act, which contains Ss. 3 to 19, Second category of arbitration is
available in Chapter III of the Act which contains only one section, that is,
S.20 and Chapter IV of the Arbitration Act deals with the third category of
arbitration which contains Ss.21 to 25. (2005 YLR 2709) Whole scheme of Arbitration
Act, 1940 is to curtail litigation in regular Courts to get disputes settled by
avoiding all type of technicalities of procedural law but within the four
corners of substantive law and to provide a domestic forum for speedy disposal
of disputes. (PLD 1995 Kar. 286).
4. Principle
of natural justice.
There can be no
cavil against the proposition of law that an arbitration
has to adhere to the principles of natural justice in spite of the latitude in
the matter of procedure allowed to him at the hearing. The basic norms of fair
adjudication contained in the rule of natural justice are inherent on the
adjudication of a dispute by any domestic tribunal. Accordingly, if the Court
finds that at no stage in the history of the dispute and its eventual adjudication
by the arbitrator, the adverse party is informed about the claim of the party
seeking decision of the dispute, the award must necessarily be struck down. (PLD 1977 Kar. 37). However, principle of natural justice
cannot be stretched so as to make it incumbent for a domestic tribunal to do
more then to give notice of proceedings to party. (PLD 1977
Kar. 37).
5. Application
of C.P.C.
Generally rule
of Code of Civil Procedure though applicable to all proceeding of civil nature
but scheme of Arbitration Act, 1940 is to curtail litigation in regular Court
to get disputes settled by avoiding all types of procedural law. Technical
rules of procedure contained in the Code of Civil Procedure are not extended to
arbitration proceedings. Provisions of the Code are made available to all
proceedings before the Court and not before arbitrator. (2006
CLC 1678, 2000 YLR 758). However, arbitrator at the time of recording
evidence is to see whether questions put to the witnesses are relevant to the
dispute in the matter or not, but request to call a witness except in
exceptional circumstances cannot be denied. (2006 CLC 1678).
Where order passed is not an order under Arbitration Act but is under the
provision of Code of Civil Procedure provision of Arbitration Act would not
apply. (PLD 1999 Kar. 235) Section 41 of the Arbitration Act itself says:--
(a) The provisions of
the Code of the Civil Procedure, 1908, shall apply to all proceedings before
the Court and to all appeals, under this Act".
Therefore, the
reference and the award could only be interfered within the manner laid down by
Sections 30, 31, 32 and 33 and to that extent the provisions of the Code of
Civil Procedure are expressly excluded and no Court other than that mentioned
therein could deal with the matter. The statutory bar created by Sections 30,
31, 32 and 33 of the Act was affirmed in Prafulla
Chandara Karmakar Vs. Panchanan Karmakar (AIR 1946 Calcutta 427) in the
following words:--
"In the first place, the operative part of S. 41
is prefaced by the words "subject to the provisions of the Act" and
therefore the Civil Procedure Code can apply only subject to the provisions of
Ss. 23(2) and 32. Since those provisions forbid interference with the reference
and the award except as provision for in the Act, to that extent the Civil
Procedure Code is excluded. Indeed, it seems to me that the scope of S.41, is limited to attracting the procedural rules of the
Code to proceedings before the Court under the Arbitration Act."
This case was followed in
Indian Minerals Co. Vs. N.I.L.M. Association (AIR 1958 Allahabad 692), and it
was held that the words "subject to the provisions of this Act" in Section
41 of the Arbitration Act mean that the Code of Civil Procedure is applicable
only subject to the provisions of Section 23(2) and Section 32 of the Act.
These provision forbid interfere with the references
and awards save as provided for in the Act, and to that extent only the Code of
Civil Procedure is excluded.
An objection to
the existence of a valid contract containing the arbitration clause, when the
award is filed in Court, if affirmed, automatically results in the setting
aside of the award and the matter, therefore, falls under Section 30 clause (c)
of the Act as that will be covered by the express provision "otherwise
invalid". (See Messrs Badri Narayan Agarwala Versus Messrs Pak Jute Balers
Ltd., (PLD 1970 SC 43). Such an order is appealable under Section 39 (vi) of the Act and so also an order refusing to set aside an
award. In the circumstances, this power had to be exercised, in the first
instance, by the Court mentioned in Clause 2(c) of the Act. The High Court in
the exercise of its revisional jurisdiction examined the validity of the
contract containing the arbitration clause and held that one of the documents containing
it should have been stamped so as to make the agreement valid. This controversy
could only be examined by the Court referred to in Sections 31, 32 and 33 of
the Act if the award had been filed in the Court as the objection to the
legality of the arbitration clause would have eventually affected the making of
the award. The premature exercise of the revisional jurisdiction, therefore,
resulted in rendering the award null and void. It cannot be disputed that the
High Court can exercise revisional jurisdiction to correct an order under Section
8 of the Arbitration Act which suffers from jurisdictional error or procedural
irregularity as no appeal lies against such an order under Section 39 of the
Act. However, the exercise of this power is limited by the provisions of the
Act when an award has been made on the grounds mentioned in Section 30 of the
Act. (See sections 31(2) and 41 (a) of the Act).
Therefore, there has to be an order by the Court against which an appeal does
not lie to the High Court. It is only then that the revisional jurisdiction can
be exercised. Here as adverted earlier the revision was filed after the award
was made but not filed in Court, and, therefore, the exercise of revisional
power was circumstances.
World
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(vi) The Regional Centre for Arbitration Kaula Lampur
No. 12,
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(ix) The
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