Similar to conventional Civil Court litigation where Pleadings of Parties ie. Plaint and Writter Statement and occasional Replication, the Statement of Claim and the Statement of Defence are the primary pleadings in the arbitration proceedings.
The Claimant side in an Arbitration submits a ‘Statement of Claims’ (SoC) before the tribunal wherein the Claimant is given an opportunity to provide the facts supporting the claims, the points of issues, and the reliefs sought.
The Respondent or Respondents are allowed to submit a responce to SoC by way of a ‘Statement of Defence’ (SoD) before the arbitral tribunal wherein they provide facts constituting the defence and other relevant information to rebut the claim raised by the Claimant.
Section 23 of the Arbitration and Conciliation Act, 1996 provides that Statement Claim and Defence must provide all facts, relevant reliefs, and documentary evidence.
Section 23. Statements of claim and defence - (1) Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements.
(2) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.
[(2A) The respondent, in support of his case, may also submit a counterclaim or plead a set-off, which shall be adjudicated upon by the arbitral tribunal, if such counterclaim or set-off falls within the scope of the arbitration agreement.]
(3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it.
[(4) The statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing, of their appointment.]
Section 24. Hearings and written proceedings - (1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials:
Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held.
[Provided further that the arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.]
(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property.
(3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.
Section 25. Default of a party - Unless otherwise agreed by the parties, where, without showing sufficient cause,
(a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant [and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited];
(c) a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it.
Relevance and criticality of the SoC and SoD is provided by legislature in Section 25 of the Arbitration and Conciliation Act, 1996.
It is provided that in case the claimant side fails to submit its SoC before the arbitral tribunal, it can very well terminate the entire arbitration proceedings. Section 25(2) empowers the arbitral tribunals to continue with the proceedings even if the respondent side fails to submit its SoD. This statute also provides the tribunal the power to consider the failure of the respondent to furnish the SoD as a forfeiture or waiver of their right. Consequently the faliure on the part of parties to submit their Statement of Claim (SoC) or Defence (SoD) it would have an negative impact on their case before the arbitral tribunal.
The content of the SoC and SoD submitted by both sides form the basis of the final arguments advanced by them at the time of adjudication of the dispute. Therefore, drafting of the SoC and SoD is of great value.