A person’s life is surrounded by disputes and
conflicts. Dispute does affect life of a person weather it is personal life,
family life, political life or economical life. The peaceful life of a person
is disturbed by the presence of disputes. Since disputes arise in a person’s
life which must be resolved as early as possible and with minimum cost. So that
the concerned person may carry on his other engagements smoothly and freely for
his development.

 Right of every person to resolve his disputes
through courts and tribunals had been recognized and encouraged by him on civilization
since long ago. As a common man understands asses to justice is asses to the
court of law is a traditional concept. For a common man court is a place where
the justice is provided to him. But to get justice from court has become a
tough job. There are so many factors which come in the way of a man to get
justice through courts, these may be poverty, illiteracy, social and political
backwardness, procedural formalities, ignorance etc. The costly and complex
procedure involved in litigation hinders a person’s to get his disputes resolved
through courts1.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Due to such costly and complex
procedures of the courts the people throughout the world thought about an
alternate resolution of their disputes and arbitration is one among them. With globalization,
Liberalization and Commercialization the International trade, Investment,
transfer of technology, banking activates and the like grew up. Keeping in view
such changing scenario India has updated its arbitration law to provide a
friendly environment to both foreign and domestic entrepreneurs. The
arbitration law in India provides justice and fairness to all the parties
concerned. Increase in business all over the world increases contracting
activities.  With such increase in
contracting activities the commercial arbitration also increased. India in
recent years as part of economic reforms initiated in 1991 reform its
arbitration law to keep its arbitration law in line with International law.
India has adopted UNCITRAL model law to bring judicial reforms in the country
with a view to minimize the courts intervention in arbitration process. The
government has a focus of simplifying the law for meeting out the requirement
of a competent economy. India has made investment protection agreements with
various countries like Russian Federation, United Kingdom, Netherlands,
Denmark, Malaysia, and Germany. Each such agreement contains provisions for the
settlement of Investment disputes between each contracting parties through
arbitration, conciliation and negotiation.

Arbitration means any arbitration
whether or not administrated by permanent arbitral institutions2. but in simple terminology arbitration means a process
by which a dispute or difference between two or more parties as to their mutual
rights and liabilities is submitted to and determined judicially and with
binding effect by the application of the law by one or more person (the
arbitral tribunal) instead of by a court of law3. When
the arbitration proceedings take place in India, the subject matter of the
contract, cause of action for the disputes and the merits of the disputes all
governed by Indian law it is called a domestic arbitration.

When the arbitration proceedings in
India or outside India an either of the party to the dispute is a foreigner or
not a citizen of India or the subject matter is not falling in India and merits
of the dispute may be a the law of India or the foreign law depending on the
contract of the parties in this regard, such arbitration is called
International arbitration.

When arbitration is conducted
outside India and the award made in such arbitration shall be called a foreign
award and such arbitration is called foreign arbitration and award made in such
foreign arbitration shall be sought to be enforced as foreign award.

Adhoc Arbitration: In this type of
arbitration parties themselves arranged and agreed to the arbitration without
recourse to any institution. The arbitrators adopt the procedure and conduct
the proceedings according to the agreement and with the concurrence of the
parties. Such arbitration may be an international arbitration, domestic
arbitration or foreign arbitration. In such type of arbitral proceedings the
parties to the dispute shoulder the responsibility of setting up of arbitral tribunal;
such arbitral tribunal will try to reach at an amicable solution between the
parties. If the arbitral tribunal could not reach at an amicable solution the
parties may request a competent estate quote to intervene and settle the
dispute. In this type of arbitration the party shall make provisions relating
to fees and expenses on their own with the arbitrators.

Institutional arbitration: In this
type of arbitration an arbitration institution came into picture, such
arbitration institution provide rules for the conduct of arbitration proceeding.
In this type of arbitration parties to a dispute move to arbitration
institution for settling their disputes, and such arbitration institution
settle the disputes according to its own rules. Each arbitration institution has
its own rules and likewise the process of administration of arbitration differs
from one arbitration institution to another.

In an institutional arbitration the
institution may send a notification request to the other party asking it to
present its case on the point and on the constitution of arbitral tribunal. The
cost of arbitration shall be determined by the arbitration institution, because
it has the power to do so. The institution has also power to notify concerned
of the awards made by arbitrators. This type of arbitration may be called as
administered arbitration.

There may also be fully
administered institutional arbitration, in this type of arbitration the
institution not only receives request for arbitration to the other disputing
party but makes provisions for the constitution of arbitral tribunal, makes
provision for the advance on cost and provides for the place arbitration. When
the advance on cost is paid, the arbitral institutions forward the case to the
arbitrators and make supervision up to the making of award by the arbitrators. This
supervisory role of the arbitration institution helps the institution to
control the proceeding and see that if there is any chance of corruption or
biasedness on part of the arbitrators and to remove those biased and corrupt
arbitrators. It also directs the arbitrators to take up certain important
matters relating to the case in hand. It also take into consideration after making
the awards to parties that fees of the arbitrators have been paid. It finally
take into consideration that the rules of the arbitration in respect of
procedure and time are followed.

At present the business laws of
present countries show a great divergence and come in conflict with each other
on matters relating to business. Such conflicts and divergence come in the way
of smooth and swift flow of international business. To removes such
difficulties the UNCITRAL has come forward made enacted certain model laws or
conventions and also prepared guidelines on various subjects. The convention
are meant for reconciling the existing conflicts and diversities  between 
civil law, common law and other several other legal systems prevailing
in different parts of the world. India has also enacted its laws which attempt
to reconcile and harmonize the legal framework relating to international trade
and business. As a result of globalization, liberalization and
commercialization the government of India took up the task of harmonizing its
arbitration laws with the rest of the countries of the world.

Presently the law relating to
International commercial arbitration in India is Arbitration and Conciliation
Act 1996 which radically based on UNCITRAL Model law. Before this Act the law
relating to arbitration in India were Arbitration Act 1940, The Arbitration
(Protocol and Convention) Act 1937 and Foreign Awards (Recognition and
Enforcement) Act 1961.

The Arbitration Act 1940 dealt with
only domestic arbitration while the other two Acts dealt with the enforcement
of foreign awards. Now these three Acts have been repealed and replaced by the
Arbitration and Conciliation Act 1996, which is a consolidated and
comprehensive statute. This statute by and large adopts the UNCITRAL Model law
in its entirety.

The Arbitration and Conciliation
Act 1996 provides for minimum judicial intervention, party autonomy and fair
trial by an impartial tribunal. There are many forms of arbitrations which are
practiced in India; these are Adhoc arbitration, institutional arbitration, specialized
arbitration and statutory arbitration. In recent times there has been a gradual
trend in favour of institutional arbitration over adhoc arbitration because of
its several advantages. The term domestic arbitration and foreign arbitration
has not been defined either in the statute or decided cases. However
Arbitration and Conciliation Act 1996 defines the term International commercial
arbitration.

The Arbitration and Conciliation
Act 1996 borrowed its provisions from UNCITRAL Model law and is an improvement
over the Arbitration Act of 1940.The Arbitration Act 1940 only dealt with
domestic arbitrations but the Arbitration and Conciliation Act 1996 deals both
domestic and international commercial arbitrations and resolution of
international trade disputes. Although the Arbitration and Conciliation Act
borrowed its provision from UNCITRAL Model law and is based on it but still it
departs from Model law on various matters. For example sub section (1) of
section 10 of the Act deals with number of arbitrators in an arbitral tribunal
and provide that the number shall not be even number. The model law does not
contain any such limitation. The model law provides that where the parties fail
to determine the number of arbitrators, then in that case the number of arbitrators
shall be three. The act provides that in such a case the arbitral tribunal
shall consists of sole arbitrator. The Model law provides that if the parties
fail to reach on a contract relating to appointment of arbitrators then in that
situation they may apply to the court of law or other authority specified for
the purpose for the appointment of third arbitrator. The Chief Justice of a
High Court is empowered under section 11 of the Arbitration and Conciliation
Act 1996 to appoint an arbitrator. Chief Justice of India or any other person
designated by him is empowered to appoint an arbitrator. Chief Justice of India
or Chief Justice of a High Court as the case may be is empowered under
sub-section (10) of section 11 to make such scheme as he may deem necessary and
appropriate for dealing with such appointment.

Model law provides the procedure
for challenging an arbitrator, it provides that arbitral tribunal shall decide
on the challenge and if a challenge is not successful, the challenging party
may apply to a court or other authority to decide on the challenge, during the
pendency of such application the arbitral tribunal may proceed and continue the
arbitration proceedings and may make an award. But the Arbitration and
Conciliation Act 1996 under section 13 provides that the challenging party
cannot move to the court at that stage. But after the award is made the party
can challenge the award on the ground that the arbitrator has wrongly rejected
the challenge.

HISTORICAL
DEVELOPMENT OF ARBITRATION IN INDIA

The process of arbitration is not
new to India as the history has witnessed the adaptation of arbitration from
time immemorial although with a different nomenclature. In ancient times the
laws were not in a codified form but there was an oral agreement and oral
awards4. The
disputes were settled between the parties by the tribunal, those tribunals were
chosen by the parties themselves. Hindu civilization has recognized and
encouraged this system of settlement of disputes. The tribunal was treated as
the final authority and their decisions were accepted as final and conclusive.
The ancient texts and digests of Hindu law also recognized some tribunals which
are in addition to the tribunals established by king; those tribunals were like
Puga or Gana, Sreni and Kula. We find the evidence of the presence of these
courts in Smritis which talked about the authority of these agencies.
Yagnavalka and Narada say that these courts were particularly the arbitration
tribunals.

If we go through the history of
medieval India we find that there was a concept of Panchayat system. Panchayat
was a reliable agency of justice delivery. The Panchayat played a great role in
settling of dispute among people. Panchayat consisted of panches. Those panches
had a great and heroic role in settling of dispute between the parties. Panches
were chosen by the elders by virtue of their qualities of being fair-minded
unbiased and knowledgeable. Any dispute irrespective of its nature could be
resolved by the Panchayat. The panches were held in great respect. They were
considered to be the messenger of God as said by the Indian writer Munshi Prem
Chand in “Panch Parmeshwar”.

Sir Henery Maine, a jurist of
historical school of jurisprudence, said that Panchayat was always considered
as a representative body which was consisted of five persons. As we see that in
India method of settling of disputes by the Panchayat is still found in certain
communities. Arbitration was governed by social sanctions. But this system of
settlement of dispute through Panchayat though useful was ineffective in order
to cater the needs arising out of advancement in social and economic spheres.

ARBITRATION ACT 1940:

In the year 1940 an important piece
of legislation was enacted by the British Parliament, that enactment was
Arbitration Act 1940. This Act consolidated and amended earlier enactments
relating to arbitration in India. These earlier enactments were Indian
Arbitration Act 1899 and the second schedule to the code of civil procedure
1908. This Act 1940 came into force on Ist July 1940 and was largely based on
English Arbitration Act of 1934. This Act provides Arbitration without
intervention of a court. It applied to all arbitration including statutory
Arbitration. This Act dealt only with domestic arbitration i.e which is
conducted in India.

Arbitration means any arbitration
whether or not administrated by permanent arbitral institutions5. but in simple terminology arbitration means a process
by which a dispute or difference between two or more parties as to their mutual
rights and liabilities is submitted to and determined judicially and with
binding effect by the application of the law by one or more person (the
arbitral tribunal) instead of by a court of law6.
When the arbitration proceedings take place in India, the subject matter of the
contract, cause of action for the disputes and the merits of the disputes all
governed by Indian law it is called a domestic arbitration.

When the arbitration proceedings in
India or outside India an either of the party to the dispute is a foreigner or
not a citizen of India or the subject matter is not falling in India and merits
of the dispute may be a the law of India or the foreign law depending on the
contract of the parties in this regard, such arbitration is called
International arbitration.

There exist a number of
International Arbitration Institutions such as International Court of
Arbitration of the International Chamber of Commerce, International Center for
Settlement of Investment Disputes (ICSID), China International and Economic and
Trade Arbitration Commission (CIETAC), International Center for Dispute
Resolution of the American Arbitration Association, Arbitration Institute of
the Stockholm Chamber of Commerce, London Court of International Arbitration,
Kuala Lumpur Regional Centre for Arbitration, etc which render their services
in resolving the commercial disputes.

 

STATEMENT OF PROBLEM:

When the international trade and investment
grew up the cross border commercial disputes has arisen. It becomes necessary
to settle such disputes for the smooth and swift flow of international
business. International commercial Arbitration came to be the preferred option
for resolution of such commercial disputes and for preserving business
relationships. With the growth of globalization, commercialization and
liberalization international commercial disputes are rising. This made India a
focal point by the international community on India’s stand on international
regime.

Indian judiciary has been
criticized for its controversial decisions in the recent past, particularly in
cases where a foreign party is involved. It has also been criticized for its
interference in international arbitrations and extra territorial application of
its domestic laws. The international community has kept close watch in the India’s
development of arbitration laws.

There
is shift in the international commercial arbitral proceedings from India to
outside. The reason for the same seems to be that the individuals and
associations do not consider the legal regime in India compatible for quick
decision making.

Moreover
for the enforcement of foreign awards, the award must be in tune with New York
and Geneva conventions or there must be existence of reciprocating agreements,
which is hampering the growth of international trade and hence affecting
international commercial arbitration. On account of these reasons the
researcher has opted for the problem titled, “International Commercial
Arbitration: A study of issues and perspective in India”.

 

OBJECTIVES

1.     To
understand the concept of International Commercial Arbitration.

2.     To
analyse the International conventions governing International Commercial
Arbitration.

3.     To
analyse the efficacy of Arbitration and Conciliation Act 1996 in regulating the
International Commercial Arbitration.

4.     To
examine the judicial response to International Commercial Arbitration.

5.     To
identify the grey areas concerning International Commercial Arbitration and
their resolution.

 

METHODOLOGY:

The researcher shall use the
doctrinal research methodology. The doctrinal research methodology is concerned
with legal propositions and doctrines. It involves analysis of case laws,
arranging, ordering and systematizing legal reasoning or rational deduction.  Ascertaining a legal rule for the purpose of
solving problems is one of purposes of traditional legal research. This has
been achieved by the original sources of law like the Act passed by the
parliament and legislatures. The case laws decided by Supreme Court and High
Courts which are binding on the lower courts fall under the category of precedents.

 

REVIEW OF LITERATURE

The researcher has gone through several
books, articles, regulation, legislature, Acts and generals etc by using law
library of faculty of law, University of Jammu, Jammu.

P. Gilies and G. Moens book “International
Trade Law and Business Law, Policy and Ethics” has been consulted for use of
arbitration law to resolve the dispute concerning international trade law and
business requirement of arbitration law to deal with disputes.

The researcher has gone through, “Law of
Arbitration in India” by Durga Charan Banerjee from which the researcher has
studied regarding the growth of arbitration law in India.

The researcher has further consulted
“Evidence and Procedure in Arbitration” by H. Gill William to consult what
evidence and procedure is adopted in arbitration.

 

The researcher has gone through “The Law
of International Commercial Arbitration” by A.K Bansal form which the concept
of international commercial arbitration is consulted.

Further the researcher has gone through “Arbitration
Act” by Rameshwar Dayal from which the various aspects of Arbitration are
consulted.

The researcher has further gone through
“The Arbitration and Conciliation Act, 1996 and Alternate Dispute Resolution
System” by Dr. Tripathi from which arbitration as alternative dispute
resolution system has been consulted.

“International Commercial Arbitration” by
H. Martin and A. Redfern has been consulted for implementation of international
commercial arbitration in India.

“Law of Arbitration ADR and Contract D.P
Mittal has been consulted to see the use of arbitration in India.

“Concise Law dictionary” has been used to
see the meaning of various legal terms.

“International Economics and Trade Law” by
Schimithoff and Simond has been consulted to see the impact of globalization to
enact the new law for dispute resolution.”Law of Arbitration” by S.D Singh is
consulted for law of arbitration and various dimensions.”Arbitration Act” by
J.P Singhal is consulted for looking into various aspects of arbitration law.”Law
of Arbitration and Conciliation Act” by K.K Veenugopal, B.K Singh Bachawat,
Mohinder Singh has been consulted to see the various dimensions of arbitration
law.

“Commentary on Arbitration and
Conciliation Act by P. Chandershekhar Rao has been consulted regarding the
working of arbitration law in India. However there are  research gaps which need to be addressed.

 

TENTATIVE CHAPTERISATION

Chapter 1: Introduction.

Chapter
2: Historical Development of
arbitration law in India.

Chapter 3: Arbitration Commercial Arbitration:
International and national Regime.

Chapter 4: International Commercial Arbitration and
Judicial Response.

Chapter 5: Concluding Observations.

1  Law
Commission of India, 222 Report on Need for Justice-dispensation through
Alternative Dispute Resolution etc., 2009 (April, 2009)

 

2  Arbitration and conciliation Act, 1996, S.2(1)(a).

3
Halsbury’s Laws of England,
IV Ed., Vol. II, 1991 pp. 332-333.

4  Ministry of law and justice, Government of India.”Proposed
amendments to the arbitration and conciliation Act 1996- A consultation Paper”
(2011).

 

5  Arbitration and conciliation Act, 1996, S.2(1)(a).

6
Halsbury’s Laws of England,
IV Ed., Vol. II, 1991 pp. 332-333.