ARBITRATION LAW: Adv Nikhil

ARBITRATION LAW

ABSTRACT

significant increase in the economic development of nations over the last few decades has been accompanied by a considerable increase in the number of commercial disputes as well. As a result, alternative dispute resolution mechanisms including arbitration have become more crucial for businesses operating in India as well as those during businesses with Indian firms. Keeping in mind the broader exploration between the quality of legal performance and economic growth, this paper is an attempt to critically evaluate arbitration in India as a legal institution. In this paper, the prime position in dispute resolution is discussed. This paper examines and evaluates the International Arbitration Regime in India under 1940 and 1996 Acts, and also discusses the main concepts like arbitrator, arbitration agreement, arbitral awards, foreign awards, public policy etc. This paper also deals with recognition and enforcement of the award and identifies the Indian regime governing the domestic, and International Commercial Arbitration. In International commercial arbitration contracts are frequently applied ADR techniques, especially arbitration is seen as a way out arbitration as a private, independent, and neutral system, time and cost benefits that are felt to be the hallmarks of the arbitration. Arbitration is increasingly becoming popular within the parties to settle their international as well as domestic commercial disputes. Keywords: Arbitration and Conciliation, Arbitral Award, Foreign Award, Domestic Arbitration, International Commercial Arbitration. INTRODUCTION This paper discusses the Indian statue of arbitration and conciliation i.e., the Arbitration and Conciliation Act. The aim of arbitration and conciliation act, 1996 is to produce quick decision redressal of commercial dispute by private arbitration. The law of arbitration is mentioned within the arbitration and conciliation act, 1996. It came into force on the 25th January, 1996 and entered into effect from 22nd August 1996. This Act includes the domestic, International commercial arbitration and also the enforcement of foreign arbitral awards. Many people consider arbitration to be cheaper than visiting court because generally there are fewer costs. Another benefit of Arbitration is that the parties can choose someone who has the knowledge about the topic matter of the dispute. Mainly there are two styles of Arbitration mentioned as an ad hoc arbitration and an arbitration organized in permanent institutions. Ad Hoc arbitration is administered independently i.e., in line with the chosen rules by the parties. During this process, the arbitrators are appointed by the parties. In line with the arbitration organized in permanent institutions follows the rules and service of the said institutions and appoints the arbitrators for the resolve the dispute. The International Chamber of Commerce (ICC) is one among the examples for this kind of institution.1 The word arbitration in its clear sense is nothing but a settlement. Adjudication, adjustment, compromise are the synonyms of the word “arbitration”. On Arbitration and Conciliation Act, 1996 Arbitration2 is or not administered by the permanent arbitral institution3. This definition, therefore, was drafted by a permanent body of arbitration or otherwise4. This definition, therefore, was drafted with the object of covering institutional as well as ad hoc arbitration. It indicates that the arbitration may be a dispute settlement mechanism outside the court system5. Domestic Arbitration is an noteworthy choice for the settlement of domestic disputes. In India, the Arbitration and Conciliation Act, 1996 relates to both domestic and also the international arbitration. In 1996 Act, there was no proper definition as to the term “domestic” and “International Commercial Arbitration” and on careful consideration of the difficulty, basing on difference of opinions expressed by different High Courts in India, the Law Commission6 of India in its 176th Report on Indian Arbitration and Conciliation (Amendment) Bill 2003, recommended the following definition of the word domestic arbitration “ It means an arbitration relating to a dispute arising out of legal relationship whether contractual or not, where none of the parties is: 1. An individual who is a nationality of, or habitually resident in, any country other than India, or 2. A body corporate which is incorporated in any country other than India, or 3. An association or a body of individuals whose central management and control is exercised in any country other than India, or 4. The government of an overseas country. Where the place of arbitration takes place in India and shall be deemed to include international commercial arbitration”7 International Commercial Arbitration Section 2(1) (f) of the Arbitration and Conciliation Act,1996 defines “international commercial arbitration” as “ arbitration relating to disputes out of legal relationships, whether contractual or not, considered as a billboard under the law in force in India and where a minimum of one among the parties is: 1. An individual who is a national of, or habitually resident in or any country other than Indi; 2. A company body which is incorporated in any country other than India; 3. A company or any association or body of individuals whose central management and control is exercised in any country other than India; 4. The government of the foreign country.8 In Gas Authority of India v. Spie Capag9 case the Delhi High Court while considering the circumstances in which the nature of a commercial arbitration agreement has an international in character was that a) if one of the parties has business located abroad; or b) the agreement has to be performed abroad; or c) the topic matter of the agreement is located abroad; or d) one of the parties to the agreement is a foreign national. According to the above, three factors i.e. a) the parties b) the topic matter and c) the place of arbitration and, which determines the international character of the commercial arbitration. The preamble of the ACT specifically spell out that this is an Act which is more important: 1. To cover international commercial arbitration and also domestic arbitration and conciliation. 2. To provide that the Arbitral Tribunal justify the award passed by it by giving reasons. 3. The Act ensures that the arbitral tribunal would remain within the limit of its jurisdiction. 4. To make a just and fair arbitral procedure is ready to fulfil the wants of the precise arbitration. 5. To reduce and minimize the supervisory role of courts in the process of arbitral ● THE ARBITRATION ACT,1940 The Arbitration Act, 1940 was enacted in British India which consolidated and amended the law relating to arbitration as contained in the India Arbitration Act, 1899 and the second schedule of the Code of Civil Procedure 1908. The aim of the Act was for fast disposal of the disputes through the forum selected by the affected parties. The Arbitration Act, 1940 treated only domestic arbitration. As far as international arbitration was concerned, there was no substantive law on the subject. Under the 1940 Act, intervention of the court was required in all three stages of arbitration, i.e. prior to the reference of the dispute to the arbitral tribunal, in the duration of the proceedings before the arbitral tribunal, and after the award was passed by the arbitral tribunal. During the course of the proceedings, the intervention of the court was necessary for the extension of time for making an award. Finally, before the award can be enforced, it absolutely was required to be made the rule of the court. While the 1940 Act was seemed to be a honest pieces of legislation, but in its actual operation and implementation by all concerned-the parties , arbitrator, lawyers, and the courts, it proved to be ineffective and was widely felt to have become outdated18 and no longer responsive to the contemporary economic reforms and globalisation of Indian economy. In M/s Guru Nanak Foundation’s v. M/S Rattan Singh and Son’s19, the Hon’ble Supreme Court observed while referring to the Act of 1940 noticed, “The way in which the proceedings under the Act are conducted and without any exception challenged in courts, has made lawyers laugh and legal philosophers weep. Experience shows and law reports carry ample testimony that the proceedings under this Act have become highly technical accompanied by unending prolixity, at every stage providing a legal trap to the unwary. Informal forum selected by the parties for expeditious disposal of their disputes has b y the decisions of the courts been clothed with ‘legalese’ of unforeseeable complexity” CONCILIATION A conciliation is a form of alternative dispute resolution (ADR) in which a person or panel of persons assist the parties must act in an independently and in an impartially for an harmonious dispute resolution70. Accordingly, a party may terminate conciliation proceedings at any time it considers they’re not useful, whereas in arbitration a party cannot unilaterally terminate the proceedings, but are also bound to continue until the decision of the arbitrator unless the other party agrees or terminates. Moreover, the parties may establish a link with conciliation in the arbitration clause before resorting to arbitration they should first make a serious attempt to settle the dispute amicably through conciliation. The UNCITRAL Rules of Conciliation 1980 acknowledged “the value of conciliation as a method of amicably setting dispute arise in the context or subject of international commercial relations” and that adoption of conciliation rules by countries the difference in legal, social and economic systems give for the development of amicable economic relations in international level. Accordingly, these rules were followed by the Indian legislators to formulate conciliation rules under Part III of the Act CONCLUSION AND SUGGESTIONS As the traditional court system is crammed with procedural trap lags and burdened with huge pending litigations resulting in abnormal delay, and as such no product businessmen can afford to await and proceed with a dispute for such a long time moving head with a snail pace. Arbitration as a private, independent and neutral system, time and cost benefits that are felt to be the hallmarks of the arbitration, the party autonomy and amicable resolution of the dispute is a huge plus especially. The 1996 Act was enacted to realize the aim of quick and costeffective dispute resolution. Arbitration occupies a main position in commercial dispute resolution in India. An examination of the working of arbitration in India reveals that arbitration as an institution is still evolving, and has not yet reached the stage to effectively fulfil the needs accentuated with commercial growth. With the emergence of a global system of international commercial arbitration has been accompanied by the development of international arbitration. Arbitration must develop to settle disputes in an effective and specialized manner, as an alternative to litigation. Arbitration is a good method of settling commercial disputes, often in a tailored way, and its utility during this respect are preserved and enhanced. The study established that the existing Act i.e. The Arbitration and Conciliation Act 1996 applies to arbitration and conciliation in India. The provisions in this Act were supported by the United Nation Commission on International Trade Law and are broadly compatible with “Rule of Arbitration of the International Chamber of commerce (ICC)”. It is a half-hearted attempt to copy the model of the UNCITRAL. This Act fails to touch the reality of grounds incorporated in this Act. The most purpose of this Act is to supply quick redressal of disputes but it has not adequately developed as a quick and cost-effective mechanism for settlement of commercial disputes SUGGESTIONS 1. Lawyers still as litigants should be made to realise the importance of arbitration method for speedy resolution of the commercial disputes, and encourage the parties also for the settlement of the dispute through arbitration. All the stakeholders-arbitrators, judges and lawyers should make an effort to change the attitude towards the arbitration. Despite the 1996 Act’s prohibition of judicial intervention, (i.e “no judicial authority shall intervene except where so provided in that part”) courts continue to intervene in direct defiance of the agreement of the parties. Therefore, it’s necessary for the arbitrators, judges and lawyers to know and understand the law. 2. The Arbitration Act 1996 has to provide the definition of commercial arbitration and to get rid of ambiguity within the definition of public policy which is an important term for enforcing the awards. 3. Separate Act for recognition and enforcement of the arbitral award should be enacted by the Indian government in specific legislation. 4. There is a necessity to travel for settlement of business disputes by institutional arbitrational, provided such institutions maintain quality standards in conducting proceedings. SUBMITTED BY NIKHIL PRATAP SINGH LUCKNOW UNIVERSITY?