Bseindia

ARBITRATION BETWEEN NON MEMBERS AND MEMBERS AND VICE-VERSA

Bye-laws no. 248 to 281 of the Rules, Bye-laws and Regulations of the Exchange deal with the procedures and appellate mechanism regarding arbitration between Non Members (clients / investors) and Members of the Exchange and vice-versa.

WHAT IS ARBITRATION ?

" All claims (whether admitted or not) difference and disputes between a member and a non-member or non-members (the terms `non-member’ and `non-members’ shall include a remisier, authorised clerk, a sub-broker who is registered with SEBI as affiliated with that member or employee or any other person with whom the member shares brokerage) arising out of or in relation to dealings, transactions and contracts made subject to the Rules, Bye-laws and Regulations of the Exchange or with reference to anything incidental thereto or in pursuance thereof or relating to their construction, fulfillment or validity or in relation to the rights, obligations and liabilities of remisiers, authorised clerks, sub-brokers, constituents, employees or any other persons with whom the member shares brokerage in relation to such dealings, transactions and contracts shall be referred to and decided by arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange."

CONTRACT CONSTITUES ARBITRATION AGREEMENT.

VARIOUS FORMS FOR ARBITRATION PROCEEDINGS :

Forms 1, 2, 3, 4, 5 and 6 are meant for the cases where claim is below / upto Rs. 10,00,000/-.

Forms 1A, 2A, 3A, 4A, 5A and 6A are meant for the cases where claim is above Rs. 10,00,000/-

Form 1	-	Application form for filing an arbitration reference
Form 2	-	For proposal of three arbitrators by the applicant
Form 3	-	Covering letter through which respondent is informed regarding arbitration filed against him / her/ them
Form 4	-	Respondent’s reply form for filing the counter claim
Form 5	-	Respondent to consent to one of the three proposed arbitrators, to act as an arbitrtor in the reference
Form 6	-	For appointment of arbitrator by the Executive Director of the Exchange in the case i) if the respondent fails / refuse to consent any of the proposed arbitrators ii) authorises Stock exchange to appoint the arbitrator iii) arbitrator resigns / refuses / expires / defaults
Form 1A	-	Application form for filing an arbitration
Form 2A	-	For appointment of the arbitrator by applicant.
Form 3A	-	Covering letter through which respondent is informed regarding arbitration filed against him / her
Form 4A	-	Respondent’s reply form for filing the counter claim
Form 5A	-	For appointment of the arbitrator by the respondent
From 6A	-	For appointment of arbitrator by the Executive Director of the Exchange in the case i) appointment of third (presiding) arbitrator ii) either of the party fails to appoint the arbitrator iii) authorise stock exchange to appoint the arbitrator iv) arbitrator resigns / refuses / expires / defaults
Form 9	-	Notice of hearing sent to the parties.
From 11	-	Application for enlargement of time for award by the learned arbitrators
Form 12	-	Memorandum of appeal
Form 13	-	Notice of appeal being filed to the respondent
Form 14	-	Memorandum of appearance
Form 15	-	Notice to respondent of the day fixed for the hearing of the appeal
Form 16	-	Memorandum of Cross objection
Form 17	-	Register of Appeals
Form 18	-	Declaration made by the learned arbitrators in the arbitration matter
Form 19	-	Declaration made by the applicant and respondent regarding no objection to the appointment of the arbitrators
Form 20	-	Form of request to the Arbitration for allowing the Advocate to appear in the arbitration proceeding.
Form 21	-	Form of Intimation of decision of Arbitrator/s regarding representation through Advocates in the Arbitration proceeding.
Form 23	-	Form of Appointment of Appeal Bench.
Form 24A	-	Form of advertisement in news paper for appearana before Arbitration Secretary.
Form 24B	-	Form of advertisement in news paper for appearance before the learned Arbitrator/s & take notice of hearing.

	CONSTITUTION OF ARBITRATION COMMITTEES AND ARBITRATION PANELS : Click here to download Sebi Circular
	General Manager Secondary Market Department e-mail : pkb@sebi.gov.in SEBI/SMD/SE/Cir- 19/2003/02/06 June 02, 2003 The Managing Directors and Executive Directors Of all the Stock Exchanges Dear Sir, Sub: Constitution of Arbitration Committees and Arbitration Panels. Please refer to SEBI order dated April 20, 1993 passed under section 8 of the Securities Contract (Regulation) Act, 1956 directing the stock exchanges to amend their Rules or Articles of Association inter alia to provide for the constitution of Arbitration Committee. As per para 7 of the said order, it is provided that the Rules or Articles of Association shall provide for nomination of not more than 40% of the members of the exchange on the Arbitration Committee and the balance 60% shall be nominated from the persons other than members of the stock exchanges with the prior approval of the Board. Pursuant to the said order, the rules / bye-laws of the stock exchanges provide for the constitution of the Arbitration Committee / Arbitration Panels as per para 7 of the said order. The Joint Parliamentary Committee (JPC) in relation to Securities Market Scam has recommended in its Report, vide recommendation no.14.60, that arbitration councils for resolution of disputes between the investors and the market intermediaries should be independent of market intermediaries, particularly the brokers. Pursuant to this recommendation it has been decided that the provision of the Rules or Articles of Association, as the case may be, and bye-laws of the stock exchanges shall provide that in respect of dispute between members and non members the arbitration committees /arbitration councils / arbitration panels shall consist of persons other than members of the stock exchange who shall be nominated with prior approval of the Board. Accordingly, the Exchanges are directed to make necessary amendments to the rules or Articles of Association / Bye-laws for the implementation of the above decision within two months from the date of this circular. The Exchanges are directed to reconstitute the arbitration committees /arbitration councils/ arbitration panels/ for resolution of disputes between members and non-members, in the manner specified above, within a period of three months from the date of this circular with the approval of SEBI. This circular is being issued in exercise of powers conferred by section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. In order to ensure that there is no delay in the disposal of arbitration proceedings which have already commenced, the member arbitrators shall continue till the disposal of such proceedings. The award in such cases shall be given within a period of three months from the date of this circular. The Exchanges are directed to bring the provisions of this circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website for easy access to the investors. The Exchanges are also directed to communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item no. 13 of the Monthly Development Report for the month of June 2003. Yours faithfully, P K Bindlish Source : www.sebi.gov.in