Part 1 - Arbitration MCQ Quiz - Objective Question with Answer for Part 1 - Arbitration - Download Free PDF

The correct answer is 'OPTION 4.'

Key Points

• Section 9 of the Arbitration and Conciliation Act:
  • Section 9 of the Arbitration and Conciliation Act, 1996, allows a party to apply to the Court for interim measures of protection before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced.
  • Interim measures can include orders for the preservation of goods, securing the amount in dispute, or any other necessary measures for protecting the interests of the parties involved in arbitration.
  • This provision is crucial for ensuring that the subject matter of the arbitration is preserved and that the parties’ rights are protected while the arbitration process is ongoing.

Additional Information

• Section 8:
  • Section 8 deals with the power of the judicial authority to refer parties to arbitration when an action is brought before it in a matter which is the subject of an arbitration agreement. It does not concern interim measures.
• Section 7:
  • Section 7 defines what constitutes an arbitration agreement and the requirements for such an agreement. It does not provide for interim measures.
• Section 12:
  • Section 12 addresses the grounds for challenging the appointment of an arbitrator, particularly regarding their independence and impartiality. It is unrelated to interim measures.

The correct answer is option 3

Key Points As per Section 34(3) of the Arbitration and Conciliation Act, 1996, an application for setting aside an arbitral award must be made within three months from:

• The date on which the party receives the arbitral award, OR
• If a request under Section 33 (for correction/interpretation of the award) has been made, then from the date on which that request is disposed of by the arbitral tribunal.
• Additionally, the court may extend this period by a maximum of 30 days if the applicant can show sufficient cause for the delay.

Correct answer is option 2

Key Points

• A party seeking to refer a matter to arbitration must make their application to the judicial authority no later than the date of submitting their first statement on the substance of the dispute. This ensures that the request for arbitration is made at an early stage.

• The application must be accompanied by the original arbitration agreement or a duly certified copy of it. If the original or certified copy is held by the other party, the applicant can submit a copy of the agreement along with a petition requesting the court to compel the other party to produce the original or certified copy.

• Even if an application for referral to arbitration is pending before the judicial authority, the arbitration process can commence, continue, and an arbitral award can be made. This provision ensures that the arbitration process is not unduly delayed by the court proceedings

Correct answer is option 2

 Key Points

Option 2 accurately reflects the provisions related to the time limits for making an arbitral award, the termination of the arbitrator’s mandate, and the potential reduction in fees due to delay. 

• The arbitral award must be made within twelve months from the date the arbitral tribunal enters upon the reference. This date is considered to be the date on which the arbitrator(s) receive notice of their appointment.

• If the award is made within six months from the date the tribunal enters upon the reference, the tribunal may be entitled to additional fees as agreed by the parties.

• The parties can extend the initial twelve-month period for making the award for an additional period not exceeding six months by mutual consent.

• If the award is not made within the specified period or any extended period, the mandate of the arbitrator(s) will terminate unless the Court extends the period. The Court may also reduce the fees of the arbitrator(s) by up to five percent for each month of delay attributable to the tribunal.
• Extensions may be granted by the Court only for sufficient cause and on terms and conditions it deems appropriate.

• The Court has the authority to substitute one or all of the arbitrators during the extension period. The proceedings will continue from the stage already reached, based on the existing evidence and material. The reconstituted tribunal is considered to be a continuation of the original tribunal.

• The Court can impose actual or exemplary costs upon any party. Applications for extension of time should be disposed of as expeditiously as possible, ideally within sixty days from the date of notice to the opposing party.

Correct  answer is option 1

Key Points Option 1 is correct because it accurately reflects that the proceedings can be terminated if the claimant withdraws the claim, provided that the respondent does not object or has no legitimate interest in continuing the dispute.

• Arbitral proceedings are terminated either by a final arbitral award or by an order of the arbitral tribunal under certain conditions specified in Sub-section (2).

• Withdrawal of Claim (Sub-section 2(a)): The proceedings may be terminated if the claimant withdraws their claim, unless the respondent objects and demonstrates a legitimate interest in obtaining a final settlement of the dispute.

• The parties may agree to terminate the proceedings.

• The arbitral tribunal can terminate the proceedings if it finds that continuing the arbitration has become unnecessary or impossible for any other reason.

• The mandate of the arbitral tribunal ends with the termination of the arbitral proceedings, subject to provisions under Section 33 and sub-section (4) of Section 34.

the correct answer is Twenty-five percent 

Key Points

 

Sum in Dispute	Model Fees
Upto Rs. 5,00,000	Rs. 45,000
Above Rs. 5,00,000 and upto Rs. 20,00,000	Rs. 45,000 plus 3.5 percent of the claim amount over and above Rs. 5,00,000
Above Rs. 20,00,000 and upto Rs.1,00,00,000	Rs. 97,500 plus 3 percent of the claim amount over and above Rs. 20,00,000
Above Rs. 1,00,00,000 and upto Rs.10,00,00,000	Rs. 3,37,500 plus 1 percent of the claim amount over and above Rs. 1,00,00,000
Above Rs. 10,00,00,000 and upto Rs.20,00,00,000	Rs. 12,37,500 plus 0.75 percent of the claim amount over and above Rs. 10,00,00,000
Above Rs. 20,00,00,000	Rs. 19,87,500 plus 0.5 percent of the claim amount over and above Rs. 20,00,00,000 with a ceiling of Rs. 30,00,000

The Arbitration Act provides that an arbitral award will be enforced “in accordance with the provisions of the Code of Civil Procedure, 1908, (“CPC”) in the same manner as if it were a decree of the Court”. Section 36 of the Arbitration and Conciliation Act lays that Enforcement of an arbitral award in a Domestic Arbitration is to be carried out in the same manner as done in a decree passed by the court. 

The delay of 105 days beyond the prescribed time in applying for setting aside of the Arbitral Award pursuant to an Arbitration Agreement dated 1st November, 2017 is not condonable. 

Unless otherwise agreed by the parties, arbitration proceedings are deemed to have commenced on the date on which the respondent receives such notice from the claimant

The arbitration agreement contained in an unregistered and unduly stamped Lease Deed will be invalid and unenforceable prior to payment of deficit duty and penalty as per Stamp Act.

The current position of law appears to be that if seat is mentioned in the contract and the contract has a clause that requires the amendment of the contract to be in writing, then any change in the contract would have to be in writing as per the relevant terms of the contract. In such a situation, the parties would only be able to change the seat of arbitration by following the procedure laid down in the contract.

The correct answer is Option 3.

Key Points

• Under the provisions of clause (c) of section 25, if either party without sufficient cause fails to appear at an oral hearing or to produce documentary evidence, after the pleadings have been filed before the arbitral tribunal, then unless otherwise agreed by the parties, the arbitral tribunal may continue the proceedings and make the arbitral award on the basis of the evidence before it.
• In the case of Mordue vs. Parmer (1871), it was held that an arbitrator having signed his award is functus officio and cannot alter his award and cannot alter the slightest error in it, even though such error has arisen from the mistake of a clerk in copying the draft. The proper course in such was to obtain an order to refer the award back to the arbitrator.

The correct answer is Option 2.

Key Points

• Section 21 of the Act deals with the commencement of arbitral proceedings. The section provides that the arbitral proceedings commence from the date the request to refer the dispute to arbitration has been received by the respondent unless the parties themselves have agreed upon a particular date.
• This means that informing the respondent through a legal notice regarding referring the dispute to arbitration is one of its essential ingredients. This also implies that the process of arbitration is based on the consent of both  parties.

In the case of M/S D.P. Construction v. M/S Vishvaraj Environment Pvt. Ltd. (2021), the court referred to various judicial precedents with respect to Section 21 of the Act and requirement of notice before commencing the procedure and held that:

• The notice which is given under Section 21 of the Act must be clear and reflect the intention of the party to refer a dispute to arbitration by calling and informing the other party and further proceeding with the appointment of arbitrators. 
• Another important thing to note and unless a request is made by one party to a dispute to refer a dispute to arbitration, mere setting out the claims and issues would not be enough and cannot be used to refer a dispute to arbitration. 
• The question of failure does not arise if the parties failed to adhere to the agreed procedure mentioned in the arbitration clause for referring a dispute to arbitration. This only means that the pre-condition for invoking the jurisdiction under Section 11 of the Act is not fulfilled and thus, invokes the jurisdiction of the court to look into the matter. 
• The court also observed that it has been mentioned in various judicial precedents that once a notice is issued according to Section 21 of the Act, there are legal consequences which also include computation of limitation period. 

Additional InformationThe following particular must be mentioned in the notice issued under Section 21 of the Act:

1. Names of both the parties. 
2. Address of parties.
3. Relationship and commercial interactions existing between the parties.
4. Facts of the case.
5. Issues pertaining to the dispute.
6. Responsibilities to be performed by the opposite party.
7. Mention the arbitration clause which was used to refer the dispute to arbitration.
8. Provide a time period within which the opposite party has to send the reply. 
9. In case the arbitral tribunal is to be established, ask the opposite party to nominate arbitrator or arbitrators. 

The correct answer is Option 4

Key Points

Section 15: Termination of Mandate and Substitution of Arbitrator
1. Termination of Arbitrator's Mandate:

In addition to the circumstances outlined in Sections 13 and 14, the mandate of an arbitrator will terminate in the following cases:
(a) If the arbitrator voluntarily withdraws from office for any reason.
(b) If the parties mutually agree to terminate the arbitrator's mandate.
2. Appointment of Substitute Arbitrator:

When the mandate of an arbitrator is terminated, a substitute arbitrator must be appointed following the same rules that applied to the appointment of the original arbitrator.
3. Repetition of Hearings:

Unless the parties agree otherwise, if an arbitrator is replaced, any hearings already conducted may be repeated at the discretion of the arbitral tribunal.
4. Validity of Previous Rulings:

Unless otherwise agreed by the parties, any orders or rulings made by the arbitral tribunal before the replacement of an arbitrator will remain valid and are not affected solely due to the change in the tribunal's composition.

The correct answer is Option 4

Key Points

• Presiding Arbitrator replaces the Umpire of the old Act:
• Under the Arbitration and Conciliation Act, 1996, the term "Presiding Arbitrator" replaces the concept of the "Umpire" from the Arbitration Act of 1940. The Presiding Arbitrator is appointed when there is a panel of arbitrators to oversee and coordinate the proceedings, a role previously filled by the Umpire.
• Presiding Arbitrator is a part and parcel of the Arbitral Tribunal, while Umpire under the old Act was a third person:
• The Presiding Arbitrator is one of the arbitrators in the panel and works as part of the tribunal. Under the old Act, the Umpire was a separate entity who only stepped in when the arbitrators failed to reach an agreement. The Umpire acted independently of the tribunal.
• Presiding Arbitrator makes the award along with the panel of arbitrators, while Umpire could make the award single-handedly when the appointed arbitrators had failed to arrive at a consensus:
• In the 1996 Act, the Presiding Arbitrator collaborates with the other arbitrators to make a decision or award. Under the previous 1940 Act, if the arbitrators could not reach a unanimous decision, the Umpire could make an award independently, acting alone.

Thus, all the statements are correct, and the answer is Option 4.