Arbitration is one of the modes of alternative dispute resolution. It’s a quasi-judicial process through which dispute settlement is done between brokers, trading members, investors, exchange authorized persons, etc. When the dispute is not dissolved amicably between the conflicting parties, then they can dissolve their dispute through an arbitration procedure. National Stock Exchange (NSE) deals with all kinds of matters that arise due to transactions done on the same. The parties have the right and eligible to appeal under the arbitration mechanism established by the NSE. NSE arbitration is governed under the boundaries of rules, by-laws, regulations established as well as issued on time-to-time bases by the Exchange and Stock Exchange Board of India (SEBI).
Who can request for Arbitration and within what time?
For NSE Arbitration can be requested by filling up the forms available on the Exchange website http://www.nseindia.com/content/assist/asst_arb_forms.zip.
- Investors can request for arbitration under NSE if a dispute arises with the broker/ stock trading member in accordance with the transaction done under the same. The investor can approach NSE for filing arbitration within 3 years, as per the Limitation Act.
- Trading members can request for arbitration whosoever having conflict, claims, or any kind of difference with the investor.
Arbitration Award is a judgment passed through the arbitrator or arbitrator panel which provides the direction to the disputing parties in the context of their claims, dispute raised between them. The cost of the arbitration will be bear by the one against whom the arbitration ward is directed and the NSE give the full refund to the one in whose favor the arbitrator award is directed. If, any of the party is against the award delivered can appeal the NSE with an application along with the applicable deposit under the 30 days of the period from the date of award delivered.
If the arbitration award is delivered against a Trading member then the NSE will take the award amount from the deposits of the member and kept the same in an escrow account. If the trading member is failed in an appeal against the award within the period prescribed, then the award amount is given to the investor.
Award In Favor of Investor
- If the arbitration award is delivered in favor of the investor the Exchange will deduct the award amount from the trading member deposits and kept aside. If the trading member is unable to appeal against the award within the prescribed time limit, then the amount will be delivered to the investor.
- If the trading member able to file the appellate within 30 days after the award and then thereafter the award is again in favor of the investor then:
- The trading member will do the same as mentioned in the award and confirm it to the NSE.
- The trading member can further appeal in High Court as per Section 34 of the Arbitration and Conciliation Act, 1996. If the respected Court rejects or dismisses the appeal or doesn’t provide the direction for a stay within the time of 3 months from the date of appeal, then the arbitration award amount will be final and the amount will be given to the investor.
The Appeal to the Court
Either of the party who is unsatisfied with the delivered arbitrator award can appeal to the court as per Section 34 of the Arbitration and Conciliation Act, 1996. An appeal can be made under a competent Court near the Regional Arbitration Center. Therefore, it’s upon the court’s discretion to accept or reject the appeal filed by the appellant.