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The Evidence Act, 1872 is one of the most important statutes which governs the rules and procedure regarding the relevancy, admissibility, appreciation and rejection of evidence. Evidence includes both Oral as well as documentary evidence. The applicability and importance of this Act upon court proceedings or litigation is widely discussed but it's applicability on Arbitration proceedings involves multiple nuances. The Article aims to present a simplified approach to this subject by analyzing certain provisions of the Evidence Act, 1872 as well as the Arbitration and Conciliation Act, 1996.

Keywords: Arbitration, Evidence, Arbitral Tribunal, Procedure. 

Introduction

One of the growing methods of alternative dispute resolution is Arbitration. This method is gaining popularity, more specifically in the Commercial space due to multiple advantages associated with it. To list some, it is faster, flexible and can be customized according to the needs of the parties involved. However it is important to consider that the entire proceedings conducted before an arbitrator is not very different from litigation. The presentation, appreciation, shifting and rejection of evidence also plays an important role, and it allows an arbitrator to reach a decision. As the Bhartiya Sakshya Adhiniyam, 2023 is at a very nascent stage, this article will focus on and refer to the provisions of its predecessor i.e., Evidence Act, 1872 for analyzing the pith and substance of the topic. This article examines the applicability and impact of the Evidence Act, 1872 in arbitration proceedings within the Indian context.

Understanding the Indian Evidence Act, 1872

It is important to understand that the Evidence Act, 1872 is the backbone of any form of dispute resolution, where both the parties are presenting their contentions before the authority (judge/magistrate/arbitrator). Section 1 of Evidence Act, 1872 provides that the provisions of the mentioned act do not inter alia apply to proceedings before an arbitrator. This does not mean the application of the act is prohibited, rather the discretion is left on the parties and the arbitrator to decide. 

Applicability of the Indian Evidence Act, 1872 in Arbitration

Considering the primary purpose of arbitration as a method of alternative dispute resolution, the parties are at liberty to choose -

1. Rules of Arbitration,

2. Forum of Arbitration,

3. Arbitrators,

4. Lex Fori and Lex Loci. 

Only if the parties agree that their arbitration proceeding will be governed by the provisions of the Evidence Act, 1872, then only the mentioned statute will apply.

Evidentiary Principles in Arbitration

The Evidence Act, 1872 prescribes rules which governs the admissibility and relevancy of evidence. The statute also provides procedures for cross-examination, examination-in-chief, and re-examination. In arbitration, these principles can be adopted or customized to suit the needs of the parties involved. While parties and arbitrators enjoy flexibility in setting evidence presentation procedures, the fundamental principles of fairness and due process remain integral.

In the case of Union of India vs. D. Bose1 the Hon’ble Calcutta High Court held that - “an arbitrator must decide upon the evidence put before him by the parties and that in admitting such evidence he must observe the principles of natural justice”.

Admissibility and Relevancy of Evidence

The Evidence Act, 1872 establishes criteria for determining the admissibility and relevancy of evidence. While arbitration allows for a more flexible approach to evidence presentation, parties and arbitrators often consider the Act's guidelines to ensure the evidence is pertinent to the dispute at hand. The Act's rules on hearsay, opinions of experts, and documentary evidence serve as valuable references in arbitration proceedings. It is unclear how an arbitral tribunal will decide whether any evidence is admissible in the absence of the Evidence Act. Section 19 of the 1996 Act, subsections (2) to (4), provide the solution. The parties to the arbitration agreement are free to decide how the Arbitral Tribunal would conduct its proceedings in accordance with sub-section (2) of section 19. In the absence of such an agreement, the Arbitral Tribunal is free to conduct proceedings as it sees fit, according to section 19's sub-section (3). According to subsection (4) of section 19, the Arbitral Tribunal has the authority to decide whether any evidence is admissible, relevant, significant, or weighty in order to conduct its procedures in a way that it deems suitable.

In the case of Delhi Development Authority v. Alkaram2, the Hon’ble Delhi High Court held that if there is no evidence before an arbitrator or award is based on no evidence, the Court can set aside such an award under Section 34 of the Arbitration and Conciliation Act, 1996.

Burden of Proof and Presumptions

The Act specifies provisions governing burden of proof. This includes Onus of proof, when the burden shifts, concepts of proving guilt beyond reasonable doubt and preponderance of probabilities. When parties to an arbitration agreement agree to follow the act, they are bound by these provisions to assert their claims and defenses. The presentation, evaluation and acceptance of relevant evidence is, in such cases, governed by the provisions of the aforementioned act.

Expert Opinion and Documentary Evidence

The Evidence Act, 1872 also deals with provisions relating to Expert opinion and when it is considered relevant. These provisions can guide an arbitration proceeding, as it often involves questions which are teaching or subject matter specific in nature. The use of documentary evidence allows parties to substantiate their claims and move towards securing a favorable award.

Confidentiality and Public Policy Considerations

Arbitration is the process of settling disputes in a private, confidential, and binding manner which is different from court litigation because it is done in private and is a very fast and easy process. But the Evidence Act, 1872, particularly Section 126, imposes certain restraints on the disclosure of confidential communications between the legal advisors and clients because of attorney-client. The law not to disclose this information is derived from Section 126 of the Evidence Act, 1872. While not only arbitration may put confidentiality on the frontline, one should take due care of the Act, the parties and arbitrators, and consider all the factors which may potentially impact the proceedings.

Conclusion

The Evidence Act, 1872, is quite an ancient piece of legislation in the legal proceedings, which has its deep influence on the evidentiary process of arbitration proceedings within the Indian context. Much as the freedom to modulate party-driven procedures exists in arbitration, principles enshrined under this Act have given invaluable guidance on presenting evidence, examining witnesses, and establishing facts. The Evidence Act, 1872 ensures that a proper balance is maintained between the fundamentals of dispute resolution and the customizable nature of an arbitration proceedings. This is important to ensure that principles of due process of law, fairness and equity are followed even in an informal adjudication set up.

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WRITTEN BY: ANURAG DAS

GUIDED BY: ADVOCATE ANIK