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Section 28, Arbitration & Conciliation Act 1996: Rules Applicable To Substance Of Dispute

Section 28 (Rules applicable to substance of dispute) is under Chapter VI (Making of arbitral award and termination of proceedings) of the Part I (Arbitration) of the Arbitration and Conciliation Act, 1996.

The contents of the section  is reproduced hereunder:—

“(1) Where the place of arbitration is situate in India,—

 (a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;

(b) in international commercial arbitration,—
   (i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute;
   (ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules;
   (iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.

(2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it to do so.

(3) While deciding and making an award, the arbitral tribunal shall, in all cases, take into account the terms of the contract and trade usages applicable to the transaction.”

Extra Notes for Readers

(1) Section 28 was amended by the Arbitration and Conciliation (Amendment) Act, 2015 (w.e.f. 23 Oct 2015), as follows:

 i. Sub-section (3) was substituted;

(2) The meaning of the following Latin phrases (used in section 28) are as under:

"Ex aequo et bono" - "what is just and fair" or "according to the right and good" or "from equity and conscience".

"Amiable compositeur" - "an unbiased third party".
"An arbitrator who decides a case by reference to general notions of fairness and equity, rather than in accordance with a strict application of legal rules, is generally referred to as an amiable compositeur."

This page was last updated on 31st December, 2017.

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