Maharashtra National Law University, Aurangabad

Project on

“Analysis of Party Autonomy in Indian Arbitration Law ”

Submitted under the guidance of

Ms. Sakshi Gupta

Assistant Professor of Law

Submitted by:

Abhishek Jha

2017/BALLB/54

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© Abhishek Jha
 Acknowledgement

This work is a product of teachings and guidance imparted by , Asst. Professor Ms. Sakshi Gupta
guiding me about the ADR laws and its importance while reading and researching about this project.
I would , through this statement of acknowledgment would like thank and acknowledge the efforts
of the non-teaching staff of the library for providing me with the necessary tools and resources , I
would also like to thank my colleagues for providing assistance when required .

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 INTRODUCTION

The modern-day society has embraced alternative dispute settlement system with both hands.
Standing out amongst all is the process of arbitration. You can ask- why this different
approach? Is it not an encumbrance to the legal system? The rationale working behind this
popularity is the flexibility of the process of arbitration. This could only be secured due to the
working principle of party autonomy. The foundation of every arbitration proceeding is the
arbitration agreement. The parties’ agreement constitutes a contract to refer disputes, which
have arisen or may arise in future between them to arbitration. The freedom of parties to
consensually execute arbitration agreement is known as the principle of party autonomy1

The party autonomy rule is based on the assumption that parties to an arbitration are
knowledgeable and informed, and that they use the rule responsibly. If the party autonomy
rule is exercised by lawyers acting on behalf of their parties, then the exercise of the rule
becomes a derived one, and its exercise becomes limited to the knowledge of the lawyers
concerned practising under various legal systems. In this connection, one should reflect upon
the historical growth and development of the party autonomy rule. This rule was developed at
a time when only a limited number of established commercial nations existed. Over the years,
of course, the practice of the older commercial nations was borrowed by the new states.2

Party autonomy is the guiding principle in determining the procedure to be followed in an

international arbitration. It is a principle that is endorsed not only in national laws, but also by
international arbitral institutions worldwide, as well as by international instruments such as
the New York Convention and the Model Law.3
1
the doctrine of party autonomy in international commercial arbitration: myth or reality? Sunday A. Fagbemi*,
African Journal of Law VOL. 6: 1: 2015 pp. 240
2
Charles Chatterjee, 'The Reality of The Party Autonomy Rule In International Arbitration', Journal of
International Arbitration, (© Kluwer Law International; Kluwer Law International 2003, Volume 20 Issue 6) pp.
539 - 560
3
Chapter 6. Conduct of the Proceedings in Nigel Blackaby, Constantine Partasides, et al., Redfern and Hunter
on International Arbitration (Sixth Edition), ((c) Kluwer Law International; Oxford University Press 2015) pp.
353-414, paragraph 6.07, Also referred in : Centrotrade Minerals and Metal Inc. vs. Hindustan Copper Ltd.
(15.12.2016 - SC) : MANU/SC/1609/2016

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As we are to go into the working of this principle, we first need to know the definition of a
party. Under Indian Arbitration and Conciliation Act, 1996– 4Section 2 (1) (h) sums up an
etymological definition of the word Party about arbitration. But most lucidly this indicates a
party to a dispute which has to be resolved through the process of arbitration is logically a
party in the arbitration.

4
Arbitration and Conciliation Act No. 26 of 1996

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 Merits of the Party Autonomy Rule

The merits of the party autonomy rule emanate from the ethos in which commercial
arbitration systems were developed and established. The purported autonomy of parties
primarily relates to the following:

1. appointment of arbitrators;
2. the choice of the forum and
3. the governing law;
4. appointment of experts;
5. the determination of the timetable, especially in respect to ad hoc arbitrations
6. the choice of the language of the arbitration, where necessary.

Although in the majority of cases the party autonomy rule is effectively exercised by the
lawyers acting on behalf of their parties, it nevertheless offers a degree of psychological
satisfaction to the parties that they may have chosen the best arbitrators, the form and forum
of arbitration, and the governing law.

The application of the party autonomy rule is certainly at its fullest when parties determine
the forum and the regime of institutional arbitrations. The party autonomy rule provides an
assurance directly or indirectly that their arbitration will proceed according to their
aspirations, but the nature of proceedings is not very different from that of court proceedings.

So far as the Arbitration Act 1996 is concerned, in respect to a large number of provisions the
party autonomy rule has been maintained, and the specific matters in which this is the case
have also been identified. The party autonomy rule allows the parties to be in control of the
arbitration, particularly in regard to the procedural aspects of the arbitration. The party
autonomy rule is certainly most in evidence when an arbitration is settled by “documents”

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only and also when an arbitration is not concerned with legal issues, that is, when the matter
in issue is virtually to be decided by experts without the intervention of any lawyer.5

The party autonomy rule offers the parties confidence that it is their arbitration and that it

will be conducted according to their plans, although there are limits to this expectation. This
rule also allows a party to abandon an arbitration at any stage, whether because of a challenge
to the arbitrator as a result of contesting the arbitral proceedings or because of a compromise
reached by the parties.6

5
Charles Chatterjee, 'The Reality of The Party Autonomy Rule In International Arbitration', Journal of
International Arbitration, (© Kluwer Law International; Kluwer Law International 2003, Volume 20 Issue 6) ¶
539 - 560
6
'Chapter 1: Overview of International Commercial Arbitration', in Gary B. Born ,
International Commercial Arbitration (Second Edition), 2nd edition (© Kluwer Law International; Kluwer Law
International 2014) ¶ 456

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 Party Autonomy Rule under the 1985 UNCITRAL Model Law on International
Commercial Arbitration7

The first indication of the party autonomy rule under the UNCITRAL Model Law is evident
in Article 3 (receipt of written communications) which includes the phrase “Unless otherwise
agreed by the parties”. This provision does not apply to communications of court
proceedings. 8The party autonomy rule under the Model Law is certainly most explicit in
Article 5 (extent of court intervention) which provides that: “In matters governed by this
Law, no court shall intervene except where so provided in this Law”.
Article 9 provides, however, that: “It is not incompatible with an arbitration agreement for a
party to request, before or during arbitral proceedings, from a court an interim measure of
protection and for a court to grant such measure”. Whereas Article 5 refers to the prohibition
of intervention by courts, under Article 9 parties are allowed the discretion to seek interim
measures of protection from a court, which is another aspect of the party autonomy rule. It is
for the parties to determine the number of arbitrators, as they are free to agree on a procedure
of appointing the arbitrator(s).9

The parties are allowed to agree on a procedure for challenging an arbitrator. The parties have
the right to agree on the termination of a mandate “if an arbitrator becomes de jure or de
facto unable to perform his functions or for other reasons fails to act without undue delay”.
The power of an arbitral tribunal to order interim measures is also subject to the caveat
“unless otherwise agreed by the parties”. As to the determination of rules of procedure, the
parties have the first right to do so, as they have the right to agree on the place of arbitration.
Under the UNCITRAL Model Law, arbitral proceedings commence on the date on which a
request for arbitration is received by the respondent, but this is also subject to the caveat,
“unless otherwise agreed by the parties”. Of course, parties will have the prerogative to
choose the language(s) to be used in their arbitral proceedings. In respect to submission of
further facts in support of his claim, the defence, the claimant and the respondent may agree
on the time limit and the required elements of such statements, as parties may also have to
decide on whether and by what period of time amendments, if any, to the claim and defence
7
See Explanatory Note of the UNCITRAL Secretariat on the Model Law on International
Commercial Arbitration, available at <www.uncitral.org/english/texts/arbitration/mb-arb.htm>; see also U.N.
Doc. A/CN.9/264 (March 25, 1985) (reproduced in 16 UNCITRAL Y.B. (1985)).
8
U.N. Doc. A/40/17, Annex I, adopted by the United Nations Commission on International Trade Law on June
21, 1985 [hereinafter UNCITRAL Model Law].
9
Article 11 (1)

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may be made. The parties may agree on whether their arbitration may be conducted through
oral hearings or on the basis of documents and other materials. Default of a party in
communicating his statement of claim or statement of defence, as the case may be, may also
be condoned or considered by the parties. The parties may also agree on forms of
appointment of expert(s). All statements, information and documents submitted to a tribunal
by one party shall be communicated to the other party. Of course, the parties have the right to
choose the governing law of their arbitration, and are allowed to agree on the mode of
decision-making too. The parties have the right to request the arbitral tribunal to give an
interpretation of a specific point or part of the award.10

Analysis of Party Autonomy

10
Treaty of Washington, Art. I (1871), reprinted in C. Bevans, XII Treaties and Other
International Agreements of the United States of America 1776-1949 170 (1968).

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Here in India, the autonomy of parties has been incorporated in the central legislature itself.
To go into the depths of this principle, we’ll excerpt parts of the arbitration process and
analyze the party autonomy indicated through it.

Arbitration Agreement (Section 7-9): The arbitration agreement is core element which

reflects the autonomy of the parties. Essentially, the parties skip jurisdiction of the court by
an arbitration agreement. Furthermore, the conduct of the arbitration process is decided using
this agreement. Therefore, an arbitration agreement, either in the form of an arbitration clause
or the form of a submission agreement, reflects the will and intention of the parties in all
stages of arbitration.11

In the case of Centrotrade Minerals and Metal Inc. vs. Hindustan Copper Ltd 12 , where the
Supreme Court dealt with a question whether a settlement of disputes or differences through a
two-tier arbitration procedure as provided for in the contract between the parties was
permissible under the laws of India, the court stated, “ Be that as it may, the legal position as
we understand it is that the parties to an arbitration agreement have the autonomy to decide
not only on the procedural law to be followed but also the substantive law.”

Arbitration Tribunal (Section 10-15): Party autonomy can be an exercised in the

appointment and organization of arbitral tribunal. The principle enables the parties to
determine any people who have relevant expertise as arbitrators. The will of the parties is
envisaged in the form of an agreement which further agrees on the number and appointment
procedure of the arbitrators. Moreover, the powers and duties of the arbitrators are attributed
from the principles of party autonomy in arbitration.13

Place Of Arbitration (Section 20): Parties to an arbitration are free to choose the place of
arbitration. There is intervention by the courts, hearings and interim measures which affect an
arbitration process. Thus parties are free to choose a neutral place to minimize interference.
For example, Indian courts cannot offer interim relief in an arbitration seated outside India.

11
Ibid (S. 7-9)
12
Centrotrade Minerals and Metal Inc. vs. Hindustan Copper Ltd. (15.12.2016 - SC) : MANU/SC/1609/2016
13
The Arbitration and Conciliation Act 1996 , S. 10-15

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Furthermore in similar instances, the Part I of the Indian Arbitration and Conciliation Act,
1996 will not apply even if, the hearing was held in India for convenience.

However, the extent of party autonomy can be visualized in regards of lex arbitri (i.e., law of
the place of arbitration). The Party autonomy works here indirectly. Parties choose the lex
arbitri by choosing the place of arbitration.14

It’s just impossible to go into every single detail of the principle of party autonomy hovering
over different sections of the Arbitration and Conciliation Act, 1996. A rightful claim is that
the essence of the principle is integrated into each and every section of the legislature with
some minor restrictions.

Despite the essence, the working of this principle is far from estimation. India has witnessed
heavy confusion in dealing with cases and failed to establish this globally accepted principle.
Thus consequentially, India is not at par with the global standards of arbitration as a
discipline. Must work regions in this sector are put forward in recent times, and a precise
framework with clarification is expected in near future.

CONCLUSION

14
Bharat Aluminium Co. v. Kaiser Aluminium Technical (2012) 9 SCC 552

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The concept of party autonomy was enunciated in the central legislature itself.

It’s just impossible to go into every single detail of the principle of party autonomy hovering
over different sections of the Arbitration and Conciliation Act, 1996. A rightful claim is that
the essence of the principle is integrated into each and every section of the legislature with
some minor restrictions.

However, this was subject to specific restrictions like public policy. However, the public
policy exception does not directly affect the party autonomy as it is a ground for setting aside
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an award.  In the case of Centrotrade minerals and Metal Inc v Hindustan Copper ltd the
apex court while deciding the interplay between party autonomy and public policy interpreted
public policy in a liberal manner allowing parties to opt for two tier arbitration. The
Supreme Court itself has acknowledged that the Indian Arbitration Act, 1996 envisages
party autonomy16. There is a dearth of Indian Case Laws dealing with this issue17.

15
Centrotrade Minerals and Metal Inc. vs. Hindustan Copper Ltd. (15.12.2016 - SC) : MANU/SC/1609/2016
16
IBID ¶ 113
17
Brahmani River Pellets Limited v Kamachi Industries Limited AIR 2019 SC 3658

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