1. ARBITRATION

2. | Page 2 Contents Brief Background leading to the present appointment What areas will be dealt with Typical Dealership Agreement Clause Role of an Arbitrator Areas which you cannot deal with The Arbitration & Conciliation Act, 1996 The conduct of arbitration proceedings Open Forum

3. | Page 3 Brief Background Arbitration clause stipulates 6 months time for completion of proceedings Arbitration clause provides for the Managing Director himself to act as arbitrator or appoint an officer of the Corporation to be the arbitrator Parties are bound by the agreement Officers are tied up with their existing work leading to delays

4. | Page 4 Brief Background (2) Need felt for expediting arbitrations – representations from aggrieved parties Two sets of arbitrations – dealers/ distributors with agreements and construction contractors on the other CFD got seized of the matter and decided that we ought to have dedicated arbitrators for dealer/ distributor cases (and retired officers for construction contractors)

5. | Page 5 Areas which will be dealt with Dedicated officers will deal with disputes with MS/HSD and LPG dealers – whether initiated by the dealer or by Corp – as new arbitrators Existing officers who are arbitrators – unless they are nearing completion of the proceedings will give up their mandate to the Appointing Authority (MD), who in turn will reappoint the new arbitrators

6. | Page 6 Typical Arbitration Clause Type of Disputes Any dispute or difference of any nature whatsoever Or regarding any right, liability, act, omission or account of any of the parties Arising out of or in relation to the agreement To whom to be referred Shall be referred to the sole arbitration of the MD of the Corporation or some officer of Corp. Dealer not entitled to raise objection that he is an officer of corp or that he had expressed views on any or all of the matters in dispute or difference Other provisions In the event of the arbitrator being transferred or vacating his officer or being unable to act for any reason, MD shall designate another person to act as arbitrator Award to be final, conclusive and binding on the parties subject to any law Award shall be made in writing within 6 months or additional 4 months (if the sole arbitrator by his writing decides for the additional time)

7. | Page 7 Role of an Arbitrator Arbitrator is more than an enquiry officer Has to ascertain facts, apply the law, give his award (decision) He is not a Conciliator Must follow natural justice principles: o Right to a fair hearing (no person condemned unheard) o Equality of opportunity o No bias towards any one party

8. | Page 8 Areas which you cannot deal with Criminal matters Determination of insolvency or unsoundness of mind of a person Genuineness or otherwise of a will If there is an illegal contract Regarding a guardian to a minor Outside the terms of reference or claims/ counter claims of parties

9. | Page 9 Arbitration & Conciliation Act, 1996 Act has 3 parts – 1 is on arbitration, 2 is on enforcement of foreign awards and 3 is on conciliation Our Arbitration is under part 1 There must be an agreement to refer all or certain disputes to arbitration, regarding defined legal relationship. Must be in writing. Can be a clause in an agreement or a separate agreement. Can be in exchange of letters/ telex…etc.(S7)

10. | Page 10 A & C Act, 1996 (2) Info. – If there is an arbitration clause and yet one party goes to court, the other party can have the matter referred to arbitration.(S8) At any time before an award is enforced, a party may seek an interim measure/ order from a Court (S9) Parties can agree on any number of arbitrators (no even number). Failure to appoint an arbitrator gives rise to a right to Court to appoint an Arbitrator

11. | Page 11 A & C Act, 1996 (3) Arbitrator must disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality – when approached for appointment and till the proceedings come to an end. If he does not, it can be challenged upon a party coming to know about such circumstances.

12. | Page 12 A & C Act, 1996 (4) Challenge must be made within 15 days of the appointment or of becoming aware of the circumstances. Unless the arbitrator withdraws he has to decide on the challenge. A challenge can also be made on the arbitrator’s jurisdiction or scope of authority. This must be as soon as possible but arbitrator can condone delay if it is justified.

13. | Page 13 A & C Act, 1996 (5) Arbitrator must decide on such challenge. (S16) If Arbitrator rejects challenge, aggrieved party has to wait and only challenge it after award is passed. If arbitrator does not act without undue delay or withdraws or become de jure or de facto unable to act, his mandate terminates.(S 14+15)

14. | Page 14 A & C Act, 1996 (6) Arbitrator can order an interim measure. Arbitrator shall treat parties with equality and each party shall be give full opportunity to present his case. Arbitrator not bound by CPC or Evidence Act. Parties free to agree on procedure for conduct of proceedings. Failing an agreement, arbitrator can decide on procedure.

15. | Page 15 A & C Act, 1996 (7) Parties free to decide place of arbitration, but on failure Arbitrator can decide but he must keep the circumstance in mind and convenience of parties in mind. (S20) Proceedings commence when request for reference of disputes to arbitration is received by one party from another. Parties free to agree on language. Failing this, arbitrator can decide. He can ask for translation of documents to that language.

16. | Page 16 A & C Act, 1996 (8) Within the agreed time or directed by arbitrator, parties must file their claim, response and supporting documents with relief sought. This can however be amended or supplemented later by parties during proceedings, but if it is very much delayed, then arbitrator has power to refuse to allow it. Arbitrator to decide whether to have oral hearings or not i.e base it on documents alone and no witnesses. However if one party requests for oral hearing, he must have one.

17. | Page 17 A & C Act, 1996 (9) Communications must be addressed to both parties – no communicating with only one party. Each party shall also, when communicating to arbitrator, simultaneously give copy to the other party. If without sufficient reasons - a party does not file claim, the proceedings can be terminated; if no defence is filed, then claim is deemed as admitted; if no evidence is produced, then he should proceed to decide on available material.

18. | Page 18 A & C Act, 1996 (10) Rules –  Arbitrator shall decide in accordance with the law in force in India  Only if authorized by parties to do so, he can act or decide to bring about a compromise  In all cases, shall decides in accordance with the terms of the contract (and shall take into account the usages of the trade applicable)

19. | Page 19 A & C Act, 1996 (11) If parties settle, the signed settlement can be taken on record and an award made on that basis. Award shall be in Writing and Signed by the Arbitrator. Award shall contain reasons on which it is based. Award shall state date of award and place of arbitration. A signed copy must be given to each party. Interest can be awarded at a reasonable rate. If silent, from date of award law provides for giving 18% p.a. Can award costs/expenses.

20. | Page 20 A & C Act, 1996 (12) Proceedings terminate with passing of award. A party may request for correction of clerical/ typographical errors or computational errors and arbitrator has to correct within 30 days. A party can seek additional award within 30 days of award on claims omitted to be dealt with and additional award has to be given within 60 days of receipt of such request.

21. | Page 21 The proceedings Accepting the appointment. Giving notice to parties – 2 options (have a preliminary hearing or call for claims, reply+counter claims, etc. with documents) Holding hearing – making minutes. Deciding on a challenge Conducting the proceedings. Making the award

22. 22 Arbitration and Conciliation Act, 1996

23. | Page 23 23 Arbitration & Conciliation Act, 1996 Various Agreements of our Corporation which contains Arbitration clause Dealership Agreement (Both Retail /LPG) Lube Distributorship Agreement Transport Contract Purchase Order Lease Deed

24. | Page 24 24 Arbitration & Conciliation Act, 1996 As per Arbitration Clause, dispute and difference would be referred to Sole Arbitrator appointed by C&MD or Director – Marketing of HPCL.

25. | Page 25 25 Arbitration & Conciliation Act, 1996 Claimant : Who invokes the Arbitration. Respondent : Against whom the Arbitration is invoked Statement : Files by Claimant of Claim Reply : Files by Respondent Rejoinder : Claimant is having option to file Counter to Reply of Respondent. Sur-Rejoinder:Respondent may file Sur – Rejoinder against Rejoinder.

26. | Page 26 26 Arbitration & Conciliation Act, 1996 Strict principles of Civil Procedures Code, 1908 and Indian Evidence Act are not followed.

27. | Page 27 27 Arbitration & Conciliation Act, 1996 Section 2 (e) Court means “High Court and District Court” and does not include Civil Court inferior to District Court or any Small Causes Court or Munsiff Court

28. | Page 28 28 Arbitration & Conciliation Act, 1996 Section 8 Before submitting first statement on the substance of the dispute, file Section 8 Application to refer the matter for Arbitration – Certified copy of the Agreement to be filed with the Application.

29. | Page 29 29 Arbitration & Conciliation Act, 1996 Section 9 Powers of the Court to pass interim orders: - i. Before or during Arbitral Proceedings ii. At any time after making the Award but before it is enforced in accordance with Section 36 Section 36 – specify that When the time for filing Application to set aside the Arbitration Award under Section 34 expires (3 months from receipt of the Award) or abovesaid Application filed before the Court is rejected, the Award will become final.

30. | Page 30 30 Setting aside of Award (Sec.34) Award may be set aside if: - a) Party making the Application furnish proof that a party was under some incapacity. b) Arbitration Agreement is not valid. c) Proper Notice was not provided regarding appointment of an Arbitrator or Arbitral proceedings or was unable to present his case. d) Award deals with a dispute not contemplated within the purview of Arbitration. e) Subject matter of the dispute is not capable of settlement by Arbitration. f) Arbitral Award is in conflict with Public Policy of India.

31. | Page 31 Arbitration Agreement – - means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or may arise between them in respect of a defined legal relationship. - may be in the form of arbitration clause in contract or in the form of separate agreement. - shall be in writing. - is in writing if it is contained in – (a) a document signed by the parties; (b) an exchange of letters, telex, telegram or other means of telecommunication which provide a record of the agreement. (c) an exchange of statement of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

32. | Page 32 Arbitration Clause in:  Dealership Agreements  Transport Contracts  Civil & Structural Contracts  Lease Agreements etc. Named Arbitrator  C & MD or an Officer of the Corporation  Director (Mkt.) or an Officer of the Corporation  C&MD or Retired Officer of the Corporation.

33. | Page 33 Conduct of Arbitral Proceedings Preliminary Hearing OR Notice containing directions Disclose in writing independence or impartiality (S. 12)  Bias – Merely being from the same organisation does not constitute bias. -- Apprehension of bias must be judged from a healthy, reasonable and average point of view. Personal /oral Hearing (S. 24)  Admission / denial of documents by parties  Framing of Issues or treating Claims and Counter Claim as Issues  Evidence Act and Civil Procedure Code not applicable in strict sense

34. | Page 34 Conduct of Arbitral Proceedings  Affidavit (s) of witness(es) in lieu of examination-in-Chief  Cross Examination  Re-Examination  Oral Arguments  Written Arguments (Mutual understanding of Parties and Arbitrator)  Award including Interim award (S. 31 and 31(6))

35. | Page 35 Conduct of Arbitral Proceedings Equal Treatment of Parties (S. 18) Parties are free to agree on the place of arbitration (S. 20) -No Agreement between Parties, Arbitrator to decide place Commencement of Arb. Proceedings – date on which request received. Parties can decide the language; if not arbitrator can decide. Arbitrator may appoint expert(s) on specific issues to be determined. Court assistance in taking evidence (S. 27)

36. | Page 36 Award (S. 31)  In writing and signed.  Reasons  Date, Place  Signed copy of award to Parties  Interest at reasonable rate – cause of action to date of award  Interest @ 18% p.a. from date of award to date of payment.

37. | Page 37 Settlement  Arbitrator can encourage settlement of disputes (S. 32). Termination of Proceedings (S. 32)  With Final Award.  Arbitrator issuing order for termination where 1) Claimant withdraws claim subject to objection by the Respondent 2) Parties agree to termination 3) Continuation of Proceedings become un- necessary or impossible

38. | Page 38 Correction & Interpretation of Award / Additional Award (S. 33) Computation errors Clerical or typographical errors Interpretation of a specific point or part of award Additional Award

39. | Page 39 Correction & Interpretation of Award / Additional Award (S. 33) Correction on its own (Arbitrator) - within 30 days from date of award Request of one party with notice to others within 30 days from receipt of award. Within 60 days from request for additional award Arbitrator may extend the time, if necessary.

40. | Page 40 Competence of Arbitral Tribunal to rule on its jurisdiction (S. 16) Arbitrator may rule on its own jurisdiction including  Existence of Arbitration Agreement  validity of Arbitration Agreement Arbitration Clause separate and independent even though part of contract Even if contract is null & void, it shall not invalidate arbitration clause Objection on jurisdiction shall not be raised after submission of Statement of Defence Objection on Scope of Authority – As Soon as it is alleged. Delay can be condoned by Arbitrator If objection (s) rejected, Arbitrator can continue with the arbitral proceedings and make award.

41. | Page 41 Appointment of Arbitrator by Chief Justice or any person or Institution designated by him (S. 11 (6)) Following are circumstances: 1) Corporation fails to appoint Arbitrator within limitation (30 days). 2)If parties or the two appointed arbitrators fail to reach on agreement under the procedure. 3)A person, including an institution, fails to perform any function entrusted to him or it under that procedure.

42. | Page 42 Setting aside Arbitration Award (S. 34) No proper notice of arbitral proceedings If award deals with issues/disputes beyond the scope of reference Award is in conflict with the public policy of India  Fundamental Policy of Indian Law  Interest of India  Justice or morality  If the award is patently illegal  Fraud  Corruption  Confidentiality  Conciliation

43. | Page 43 Arbitration Agreement not to be discharged by death of party (S. 40) Arbitration agreement survives even after death of the party (ies) Enforced by or against legal representative Mandate of arbitrator shall not be terminated by death of party

44. Thanks to all of you – the Forum is open for questions