“EVIDENCE PROCEDURE IN ARBITRAL

PROCEEDINGS”

Submitted to:

Ms. Bhagyalakshami

Assistant Professor of Law

Submitted by:

Permanika Chuckal

VIth Semester

2012075

Damodaram Sanjivayya National Law University

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ACKNOWLEDGMENT

I would like to express my special appreciation and thanks to my advisor, my Faculty , who has

been a tremendous mentor for me. I would like to thank you for encouraging my research, advice

for the research has been priceless.

I would extend my thanks to the University Authorities, for providing me with is opportunity to

submit my project. I am indebted to all those who have helped me in developing this project for

their suggestion and guidance.

Permanika Chuckal

2012075

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TABLE OF CONTENTS

Research Methodology 2

Introduction 3

Evidence in Arbitral Proceedings 4

Sections concerning Evidence in Arbitration and Conciliation Act 5

Rule of Evidence in Arbitrational Proceedings 8

Burden of Proof 9

Types of Evidence 10

Case Laws 12

Conclusion 14

Bibliography 15

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RESEARCH METHODOLOGY

Aims and Objective: 

The researcher aims to study the evidence or the rule of evidence in arbitral proceedings .

Nature of Project:

This project is descriptive as well as analytical in nature, with special emphasis having being

supplied to analysis.

Sources of Data:

The sources of data used for this project are secondary in nature. A host of leading textbooks

relating to Administrative Law will be referred to. Case reporters like Supreme Court Cases, All

India Reporter, and Criminal Law Journal etc will be used.

Scope and Limitation:

The topic of this project necessitates a detailed reference to the rule of evidence supported by the relevant

sections and case laws.

Methodology: The researcher uses both analytical and descriptive methods in presenting the

project.

Sources: Only secondary sources of data are used.

Mode of citation: A uniform mode of citation is used

Hypothesis: .

Evidence is an essential element that plays very important role in a commercial arbitration

proceeding. The applicable regulations concerning the practice and procedures to obtain

evidence in every commercial arbitration proceedings vary around the globe.

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INTRODUCTION

The arbitrators are not agents of the parties. They are bound to come together and act judicially

as arbitrators, conforming to the principles of the natural justice.1 It is well settled and also

mandatory by statutory provisions that the arbitrator is not bound by the technical rules of

procedure which the courts normally observe. This statement could be backed by Section 19 of

the Arbitration and Conciliation Act, 1996. In other words, the arbitral tribunal is not bound by

the Civil Procedure Code, 1908 or the Indian Evidence Act, 1872. The admissibility, relevance

and materiality of evidence are matters which are within the exclusive jurisdiction of the tribunal

unless otherwise agreed by the parties. Where the parties have not agreed to any specific

procedure, the arbitral tribunal has to follow the statutory procedure, it means it has to weigh the

entire evidence on record properly and come to a just conclusion within the parameters of the

dispute.2 The arbitral tribunal is bound to follow the procedure as contained under Sec. 19(4) of

the act and have the duty to determine the admissibility and weight of evidence of the documents

filed by both the parties.

 

This however does not allow the arbitrator to adopt procedure not agreeable by the parties to

arbitration. An arbitrator though free from fetters of adjective law, must nevertheless observe the

fundamental principles of natural justice. An arbitral tribunal is not bound by the technical and

strict rules of evidence but, he must not disregard the rules of evidence which are founded on the

fundamental principles of natural justice and public policy.3 A breach of the principles of natural

justice would make the award liable to be declared invalid and inoperative in the eye of law. It

would be contrary to the fundamental principles of natural justice, if a person is refused an

opportunity to adduce evidence in support of his claim and, without any enquiry, a liability of a

1 Soceite Aninmina Lucchesse Oil v Gorakhram Gokalchand AIR 1964 Mad 532

2 Hindustan Shipyard Ltd v Essar Oil Limited (2005) 1 ALT 264

3 Hindustan Shipyard Ltd v Essar Oil Limited (2005) 1 ALT 264

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large sum is imposed upon him. While adjudicating upon the disputes it is duty of the arbitrators

to give full opportunity to the parties to adduce their evidence and also allow them to be heard.

While adjudicating upon the disputes it is duty of the arbitrators to give full opportunity to the

parties to adduce their evidence and also allow them to be heard.

 

The arbitrators by accepting entries in the books of accounts, which were disputed by party and

which the arbitrators examined in his absence, contravened the principles of natural justice and

were guilty of legal misconduct. The award was liable to be set aside.

 Hearing and receiving evidence from one of the parties, in the absence of the other, without

giving the affected party an opportunity to answer or counter it.

 The arbitrator had informed the parties that the case would be taken up on a different date which

would be intimated o them in due course but the arbitrator proceeded to take an ex-parte award

in the absence of the parties without affording them an opportunity of being heard.

EVIDENCE IN ARBITRAL PROCEEDINGS

The Indian Oath’s Act 1969 extends to persons who may be authorized by consent of parties to

receive evidence. This Act thus, encompasses arbitral proceedings as well.17 Section 8 of the

said Act states that every person giving evidence before any person authorized to administer oath

“shall be bound to state the truth on such subject.” Thus, witnesses appearing before an arbitral

tribunal can be duly sworn by the tribunal and be required to state the truth on oath and upon

failure to do so, commit offences punishable under the Indian Penal Code.18 However, the

arbitrators cannot force unwilling witnesses to appear before them and for this court’s assistance

is provided for vide Section 27 of the Act. Under this provision the arbitral tribunal or a party

with the approval of the tribunal may apply to the court seeking its assistance in taking evidence

(this is also provided for in the Model Law)4. However, Section 27 of the Indian Act goes

beyond the Model Law as it states that any person failing to attend in accordance with any order

of the court or making any other default or refusing to give evidence or guilty of any contempt of

the arbitral tribunal, shall be subject to like penalties and punishment as he may incur for like

offences in suits tried before the court. Further, the court may either appoint a commissioner for

4 www.lawyersclubindia.com/articles,as on 25th march 2015

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taking evidence or order that the evidence be provided directly to the arbitral tribunal. These

provisions extend to any documents to be produced or property to be inspected. Section 26

provides for appointment of experts by the arbitral tribunal for any specific issue. In such

situation a party may be required to give the expert any relevant information or produce any

relevant document, goods or property for inspection as may be required. It will be open to a party

(or to the arbitral tribunal) to require the expert after delivery of his report, to participate in an

oral hearing where the parties would have an opportunity to put questions to him.

SECTIONS CONCERNING EVIDENCE IN ARBITRATION AND CONCILIATION

ACT

Section 27- Court assistance in taking evidence.

1.   The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the

Court for assistance in taking evidence.

2.     The application shall specify-

a.     the raises and addresses of the panics and the arbitrators,

b.    the general nature of the claim and the relief sought,-

c.     the evidence to be obtained, in particular,-

           i.        the name and addresses of any person to be heard as witness or expert witness and a

statement of the subject- matter of the testimony required;

            ii.        the description of any document to be produced or property to be inspected.

3.     The Court may, within its competence and according to its rules on taking evidence,

execute the request by ordering that the evidence be provided directly to the arbitral tribunal.

4.     The Court may, while making an order under sub-section (3), issue the same processes to

witnesses as it may issue in suits tried before it.

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5.     Persons failing to attend in accordance with such process, or making any other default, or

refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the

conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and

punishments by order of the Court on the representation of 12 the arbitral tribunal as they would

for the like offences in suits tried before the Court.

6.     In this section the expression "Processes" includes summonses and commissions for the

examination of witnesses and summonses to produce documents.

Section 47- Evidence.

1.     The party applying for the enforcement of a foreign award shall, at the time of the application,

produces before the court-

a.     the original award or a copy thereof, duly authenticated in the manner required by

the law of the country in which it was made;

b.    the original agreement for arbitration or a duly certified thereof; and

c.     such evidence as may he necessary to prove that the award is a foreign award.

2.     If the award or agreement to be produced under sub-section (1) is in a foreign language, the

party seeking to enforce the award shall produce a translation into English certified as correct by

a diplomatic or consular agent of the country to which that party belongs or certified as correct in

such other manner as may be sufficient according to the law in force in India.

Explanation.- In this section and all the following sections of this Chapter, "Court" means the

principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise

of its ordinary original civil jurisdiction, having jurisdiction over the subject-matter of the award

if the same had been the subject-matter of a suit, but does not include any civil court of a grade

inferior to such principal Civil Court, or any Court of Small Causes.

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Section 56- Evidence.

1.     The party applying for the enforcement of a foreign award shall, at the time of application

produce before the Court-

a.     the original award or a copy thereof duly authenticated. in the manner required by

the law of the country in which it was made;

b.    evidence proving that the award has become final; and

c.     such evidence as may be necessary to prove that the conditions mentioned in clauses

(a) and (c) of sub-section (1) of section 57 are satisfied.

2.     Where any document requiring to be produced under sub- section (1) is in a foreign language,

the party seeking to enforce the award shall produce a translation into English certified as correct

by a diplomatic or consular agent of the country to which that party belongs or certified as

correct in such other manner as may be sufficient according to the law in force in India.

Explanation.-In this section and all the following sections of this Chapter, "Court" means the

principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise

of its ordinary original civil jurisdiction, having jurisdiction over the subject-matter of the award

if the same had been the subject-matter of a suit, but does not include any civil court of a grade

inferior to such principal Civil Court, or any Court of Small Causes.

Section 81- Admissibility of evidence in other proceedings.

The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, whether

or not such proceedings relate to the dispute that is the subject of the conciliation proceedings,-

a.     views expressed or suggestions made by the other party in respect of a possible settlement of

the dispute;

b.    admissions made by the other party in the course-, of the conciliation proceedings;

c.     proposals made by the conciliator;

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d.    the fact that the other party had indicated his willingness to accept a proposal for settlement

made by the conciliator.

RULES OF EVIDENCE IN ARBITRATION PROCEEDING

The laws of evidence are the rules that govern the relevance, admissibility and weight of

documentary and oral evidence tendered by a party, including the preparation and presentation of

documents, witnesses of fact, expert witnesses and inspections, and the actual conduct of

evidentiary hearings, in order to support or contest a fact in issue in the course of legal

proceedings.5 Such laws of evidence vary across the countries due to the variety of legal systems

and such variety also being reflected in various international commercial arbitration rules.

Despite the differences, in almost every rules of the international commercial arbitration

institutions, the arbitral tribunal is obliged to determine the relevance, admissibility and weight

of the evidence, even if such evidence is inadmissible by law,6 in order to establish the facts as

the basis for their ruling. The issue will arise when the arbitral tribunal and the parties

participated in an arbitration proceeding come from different legal systems as there are

differences in determining the weight of the evidence between the common law and civil law

system. Perhaps the most significant difference related to the rule of evidence is that in civil law

countries, the judges will be very much relying on the written evidence such as documents rather

than the oral evidence from a witness statement in rendering their judgments. Such approach is

different with their common law colleagues’ approach who upheld justice as the main feature of

civil litigation in common law country, especially in US. Even though it is rare nowadays,

common law countries still employ jury in civil proceedings and we all know that jury does not

merely render their decision on formal truth, but also to justice. Also the emergence of civil

public interest litigation in common law countries which I would say relies its arguments on the

principle of justice rather than the possession of formal evidence. I think that is why the Judges

5 Miles and Schwarz, International Comparative Legal Guide for International Commercial Arbitration, p.2

6 The Rules of the Singapore International Arbitration Centre Art. 16.2

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from the common law countries7 rely mostly on the evidence and information obtained from the

cross-examination in rendering their judgment.

Such different approach will be detrimental to the arbitration proceeding if the parties and

arbitrators cannot bridge the difference. Therefore, it is now common, even in common law

countries, for the parties and arbitrators to depart from the application of the strict laws of

evidence relating to the relevance and admissibility of evidence. Some national laws related to

arbitration in common law jurisdictions even explicitly state that an arbitral tribunal is not bound

to apply strict common law laws of evidence in arbitration proceedings. It is also commonly

encountered that the parties will agree to apply the international rules of evidence, such at the

International Bar Association Rules for Taking Evidence in International Commercial

Arbitration (the “IBA Rules”) to govern their arbitration proceeding. Such action is resulting in

the arbitral tribunals often agree to admit most of the evidence submitted by the parties, but

provide serious consideration to the weight that is to be attached to that evidence.

BURDEN OF PROOF

The aforementioned elaboration perhaps has been providing us the insight of the importance of

evidence for arbitrators in rendering their judgment. Despite its importance, it is interesting that

in international commercial arbitration proceedings, the burden of proof between the parties is

not explicitly defined. Nevertheless, in common practice, the degree or level of proof that must

be achieved in practice in an international arbitration may be safely assumed is close to the

balance of probabilities. None of the international arbitration rules contain a provision

concerning burden of proof, except for the American Arbitration Association (“AAA”)

International Arbitration Rules and the United Nations Commission on International Trade Law

(“UNCITRAL”) Rules. Those regulations stipulate that each party has the burden of proving the

facts relied on to support its claim or defense,8 with the only exception related to the propositions

that are so obvious, or notorious, that proof is not required9.In general, it can be distinguished

that there are three basic standards of proof applied in international arbitrations, i.e. a general,

7 See Hein Kontz, Civil Justice Systems in Europe and the United States, Center for International & Comparative Law Occasional Papers (CiCLOPs), vo. 1 June 2009.

8 Article 19 of the AAA International Rules and Article 24(1) of the UNCITRAL Rules

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underlying standard, an elevated burden of proof, and a very low standard or insufficient

explanation of the reasoning.

TYPES OF EVIDENCE

Now there could be three kinds of evidence that would have to be dealt with:

 1. Extrinsic Evidence

It can be admitted by the court or the arbitral tribunal to determine the issue of excess of

jurisdiction. This kind of evidence is admissible in such cases because the dispute is not

something which arises under, or in relation to the contract, or dependent on the construction of

the contract, or to be determined within the award by the court.10 The court can resolve

ambiguity by admitting extrinsic evidence. The rationale of this rule is that the nature of the

dispute is something which has to be determined outside and independent of what appears in the

award. Such jurisdictional error needs to be proved by evidence extrinsic to the award.

2. Fresh Evidence

The test of reference to which fresh evidence may be introduced in the court of appeal as laid

down in Ladd v Marshall11

“To justify the recipients of fresh evidence or a new trial, three conditions must be fulfilled: first,

it must be shown that the evidence could not have been obtained with reasonable diligence for

use at the trial; secondly, the evidence must be such that, if given, it would probably have an

important influence on the result of the case, though it need not be decisive; thirdly, the evidence

must be such as is presumably to be believed, or in other words, it must be such as is presumably

9 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, June 10, 1958, art.V(1)(b), 330 U.N.T.S. 38

10  Jivarajbhai Ujamshi Sheth v Chintamanrao Balaj AIR 1965 SC 214

11  (1954) 1 WLR 1489

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to be believed, or in other words, it must be apparently credible, though it need not be

incontrovertible.”

3. Expert Evidence

In order to establish whether an appointed expert12 has made a manifest error in determination,

the arbitrator is permitted to look at further correspondence between the parties and the expert,

the supporting documentation as well as the determination itself. The finality of the

determination must not be challenged because another view could, in the light of further

argument, properly be taken of the matters dealt with during the determination.13 If opportunity

to rebut expert’s opinion, tendered by one party in evidence before the arbitrator, is not given to

the opposite party it would amount to violation of the principles of natural justice. Girdhari Lal v

Kameshwar Prasad14 . It was stated by the court that even though the provisions of Sec. 45 of the

Evidence Act may not be applicable in the literal sense in an arbitral proceeding but the pith and

substance of the principles contained therein about obtaining the opinion of the persons

especially skilled in science or art are the relevant factors. Normally the expert has to give his

opinion before the arbitrator or the court and he must be examined and cross-examined by the

respective parties.

CASE LAWS

12 Under Sec. 26 of the Arbitration and Conciliation Act, 1996

13 Invensys Plc v Automotive Sealing Systems Ltd (2002) 1 All ER (Comm) 222

14 AIR 1989 All 210

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Vinayak Vishnu Sahasrabhudhe v B.G. Gadre and others15

It was held that the arbitrators by accepting entries in the books of accounts, which were disputed

by party and which the arbitrators examined in his absence, contravened the principles of natural

justice and were guilty of legal misconduct. The award was liable to be set aside.

Prem Nath v Om Prakash16

It was held that the arbitrator had informed the parties that the case would be taken up on a

different date which would be intimated o them in due course but the arbitrator proceeded to take

an ex-parte award in the absence of the parties without affording them an opportunity of being

heard.

Sulaikha Clay Mines v Alpha Clays17

It was held that no notice of hearing was given to the other party when the arbitrator decided to

hear the opposite party in the residence or office of the respondent. In addition, the rejoinder or

he evidence collected from one party was not communicated to the other party.

West Bengal Industrial Infra-Strictire Development Corporation v Star Engineering18

An award made by an arbitral tribunal without considering the evidence on record is liable to be

set aside. A complete absence of evidence, or arbitrator’s failure to take into consideration a very

material document on record, or admission of the parties in arriving at the finding, are good

grounds for challenging the proceeding.

Union of India v M/s Ajit Mehta and Associates19

15 AIR 1959 Bom 39 16 AIR 1956 Punjab 18717 (2005) 1 Arb LR 237 (Kerala)

18 AIR 1987 Cal 126 19 AIR 1990 Bom 45

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The case of insufficiency of evidence before the arbitrator must be distinguished from where

there is no evidence. In the absence of the primary documents which were the foundation of the

disputes, the awards given by the arbitrator would be one with no evidence at all or at best can be

said to be based on speculation and therefore, prima facie illegal and improperly procured.

Poulose v State of Kerala20

The court can set aside an award if a document within the control of the parties and forming the

foundation of their rights and liabilities was not submitted before the arbitrator and the award

was passed without perusing such document.

Delhi Jal Board v Esskay Kohli21

Often the award of the arbitrator is challenged on the ground that there has been violation of the

principles of natural justice, either because the arbitrator omitted to consider the relevant

evidence while making the award, or arriving at his conclusions, or that the award passed is

based on no evidence at all.

Basheshar Nath & Co v Union of India22

The finding of facts by the arbitrator must be based either on evidence or on admission. They

cannot be found to exist form a mere contention from one side especially when they are denied

by the other. An award based on no evidence is liable to be set aside.

CONCLUSION

20 AIR 1975 SC 1259 21 (2007) 3 Arb LR 314 (Del) 22 (1978) Rajdhani LR 65

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The underlying importance of gathering of all possible evidence is to find and prove the material

fact. Such aim could be achieved by requiring the parties to present and show all of the evidence

to support and strengthen their arguments. Each party’s argument will be judged based on the

presented evidence by the arbitrator and subsequently the award will be rendered. The principle

of fairness becomes the key in the mechanism of evidence in arbitration and the effort to balance

the process of evidence, i.e. on the one side by observing written evidence, but on the other side

by also observing the witness testimony, is something that should be implemented

comprehensively. The active role of the arbitrator is required to explore the evidence and

testimony to find out the material fact of the case which will eventually lead to the issuance of a

just and impartial award. The process of discovery of documentary evidence should be

implemented comprehensively in all forums of arbitration, with still respecting the applicable

legal system in the lex loci arbitri.

BIBLIOGRAPHY

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Articles referred

Article 19 of the AAA International Rules and Article 24(1) of the UNCITRAL Rules

Hein Kontz, Civil Justice Systems in Europe and the United States, Center for International & Comparative Law Occasional Papers (CiCLOPs), vo. 1 June 2009.

Miles and Schwarz, International Comparative Legal Guide for International Commercial Arbitration, p.2

Websites referred

www.lawyersclubindia.com ,as on 24th march 2015

www.answers.com ,as on 25th march 2015

www.lawyersclubindia.com/articles,as on 25th march 2015

http://www.legal500.com,as on 24th march 2015

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