The Chief Justice of India D Y Chandrachud at a conference on international arbitration and the rule of law spoke about the need for India to take lead in fostering a culture of international arbitration.

About Arbitration

• Arbitration is a private Alternate dispute resolution process whereby a neutral third party, called an arbitrator, hears and decides a dispute between two conflicting parties instead of going for litigation.
• Arbitration is a consensual process, meaning the parties must agree to submit their dispute to arbitration.

About International Arbitration

• International Arbitration is a mechanism where the  parties belong to different countries and the subject of the dispute are governed by the laws of  either country

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• Types of Arbitration:
  • Ad hoc Arbitration: Parties opting the Ad- hoc arrangement are free to agree to existing ad hoc rules (e.g. the UNCITRAL Arbitration Rules) or establish their own rules of procedure and to tailor the procedure to their needs.
  • Institutional Arbitration: Each institutions has their own model form of arbitration clause that may be incorporated into the main contract with the institution also with its own set of arbitral rules that will apply to the arbitrations it administers. 
    • Example: The International Chamber of Commerce (ICC); The International Centre for Dispute Resolution (ICDR); Singapore International Arbitration Centre (SIAC); London Court of International Arbitration (LCIA); Permanent Court of Arbitration (PCA)
• Features: 
  • Enforceable:
    • Over 170 countries have ratified the New York Convention (Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958) including India, enabling them to recognize and enforce international arbitration awards 
      • The Government of India is a signatory to the New York Convention as well as signed agreements for mutual cooperation in arbitration with various countries enabling cross-border resolution of disputes.
  • Neutrality:
    • International arbitration provides a neutral forum for resolving cross-border disputes as the domestic judicial system may be unfamiliar, complex and a challenge to navigate for the parties. 
  • Privacy and Confidentiality:
    • The submissions, rulings, and orders of the international arbitral tribunal  are communicated only to the parties and generally not made public. The parties can also put on a confidential clause in the arbitration agreement
  • Choice of Arbitrators: 
    • Parties can specify any qualifications for arbitrators in their arbitration clause, such as experience in a certain area of the law, industry, subject area etc.
  • Finality:
    • An arbitration award mostly is final and binding and there is generally no right of appeal.  
  • Autonomy:
    • International arbitration is less formal than judicial proceedings and allows the parties a degree of flexibility and autonomy to agree on things like how the arbitration will be conducted, the procedural rules, and where the arbitration hearing will be held. 
• Advantages over Litigation: 
  • Speedy Resolution: The disputes are resolved more swiftly than traditional court litigation since there are only limited appeals from arbitration awards.
  • Quality Judgement: International Arbitration employees specialised arbitrators for having experience in the required field thus a better chance in providing better-quality justice
  • Participation by Parties: Clients can play an active role in selecting an arbitrator who is an industry expert in International Arbitration, rather than a generalist like many domestic court judges.
  • Flexibility: International Arbitration is flexible as the individual parties to a dispute have a say in determining the rules and procedures of the agreement.
  • Neutrality: This is very important for cross-border transactions, since it avoids the possibility of a “home court” advantage for one party.
• Global Frameworks on Arbitration:
  • UNCITRAL Model Law on International Commercial Arbitration: This model law was adopted in 1985 to create uniformity in arbitration laws across participating nations.
  • International Chamber of Commerce (ICC): The ICC provides a system of rules for arbitration and conciliation, including arbitration rules for international commercial disputes. 
  • Arbitration (Protocol and Convention) Act, 1937:  This act dealt with the enforcement of foreign awards for Geneva Convention Awards. 
  • Foreign Awards (Recognition and Enforcement) Act, 1961: This act dealt with the enforcement of foreign awards for New York Convention Awards.

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India and International Arbitration

• Domestic Arbitration: It is a process where  the arbitration proceedings, the subject matter of the contract and the merits of the dispute is all governed by Indian Law
  • Here the parties are wholly subject to Indian jurisdiction and the cause of action for the dispute arises entirely  in India.
  • Prevalence: Domestic arbitration is mainly employed in contract disputes, construction conflicts, in Industries such as finance, construction, technology, and healthcare frequently utilize domestic arbitration to resolve conflicts.
  • Institutions of Arbritation: India possess about 35 different arbitration centers at present such as 
    • The International Arbitration and Mediation Centre, Hyderabad (IAMC),  Mumbai Centre for International Arbitration (MCIA), the Delhi International Arbitration Centre (DIAC), and the very newly established India International Arbitration Centre (IIAC). 
• Legal Framework Governing Arbitration Law:
  • The Arbitration and Conciliation Act, 1996 (as amended in 2021): The Act is closely modeled on the 1985 UNCITRAL Model Law. 
    • Part I: It governs arbitral proceedings seated in India 
    • Part II: It governs the recognition and enforcement of foreign-seated arbitral awards.
  • Provisions: The Act provides for the appointment of arbitrators, the conduct of arbitral proceedings, recognition, and enforcement of arbitral awards, and sets out the grounds for challenging arbitral awards. 
• International Commercial Arbitration: The 1996 Act in its Clause(f) of sub-section (1) of section 2 defines International Commercial Arbitration, 
  • Arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is:
    • An individual who is a national of any country other than India
    • A corporate body which is incorporated in any country other than India
    • A company or an association or a body of individuals whose central management and control is exercised in any country other than India
    • The government of the foreign country.
• Bar Council of India has notified the Bar Council of India Rules for Registration and Regulation of Foreign Lawyers or Foreign Law Firms in India, 2022. It will allow foreign lawyers and law firms to practise in India encouraging the preactise of Arbitration in India by MNCs and governments.

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