In India, arbitration is
regulated by the Arbitration and Conciliation Act, 1996. The present date
arbitration law is a development of several endorsements and ordinances passed
by the government of India to meet the economic reforms taking place in the
country from time to time. Arbitration Law in India, is initially contained in
the Act of 1996. An Act that was approved to amalgamate the laws relating to
domestic, international arbitration and its enforcement. In an effort to make
arbitration an ideal mode of settlement of commercial disputes and making India
a hub of international commercial arbitration some major amendments were
introduced in the year to 2015 and 2019. Arbitration is the buzzword in the present day business.
The law grants a choice upon the parties to enter into commercial transactions
knowing well that in case of a dispute, they will refer their dispute to this
modest, quick, convenient and cost effective process saving them from tedious
and knotty procedures of a court. The Act covers both Domestic and
International Arbitration. The current law is a symphony of several such
amendments with the latest amendments being introduced in 2019. After this amendment
new provisions were added, international jurisdictions were included,
alteration of powers to the arbitrator were made etc. After the 2015 amendment-
- The applicability of interim orders by the court, arbitral tribunal, appealable orders was applicable to international commercial arbitration even if the place of arbitration is outside India. Whereas earlier it was only applied to matters where the place of arbitration was India.
- Court now has the power to refer to parties to arbitration unless it thinks that a valid arbitration agreement cannot exist. Earlier courts referred only those cases to arbitration where the subject matter of arbitration was mentioned in the case.
- Court has confined itself to the examination of the existence of a valid arbitration agreement. Whereas before these parties were to appoint arbitrators on their own and if unable to do so, the matter was referred to the court to make appointments for the same.
- The arbitral tribunals are required to make its award within a time period of 12 months. If it is delayed beyond the specified time period, the fees of the arbitrator will be reduced up to 5% for each month of delay. No such provisions were made earlier regarding the time period for arbitral awards.
- The time period for disposal of a case is up to one year. Award that is made before a court, must be positioned within a year.
- This amendment also permits the parties to choose to conduct arbitration proceedings in a fast track manner. The case to be disposed of within six months.
The 2015
amendments tried to safeguard quick enforcement of contracts, easy recovery of
monetary claims, cut the pendency of cases in courts and accelerate the process
of dispute resolution through arbitration, so as to urge foreign investment by
projecting India as an investor friendly country having a sound legal framework
and ease of doing business in India. The two kinds of arbitration practiced
today are ad-hoc arbitration and institutional arbitration. Ad-hoc Arbitration
can be defined as a system of arbitration where a tribunal will conduct
arbitration between the
parties, following the rules which have been fixed by the parties
beforehand or by following the rules which have been rested down by the
tribunal, in case the parties do not have any agreement amongst them. The few
negatives of ad-hoc arbitration are it tends to be protracted and costly in
some cases in the absence of monitoring, it is only effective when both parties
are ready to cooperate with one another. The second type of arbitration is
institutional arbitration which refers to the administration of arbitration by
an institution in accordance with its rules of procedure. The institution
offers appointment of arbitrators, case management services incorporating
oversight of the arbitral process, venues for holding hearings, etc. Currently there are over 35 arbitral
institutions in India, which are domestic, international arbitral institutions,
arbitration services by PSUs, trade and merchant associations, and
city-specific chambers of commerce and industry. Indian institutions that
govern arbitrations have a mounting popularity but insufficient workload. Many
arbitrations involving Indian parties are governed by the international
arbitral institutions such as the Court of Arbitration of the International
Chamber of Commerce, the Singapore International Arbitration Centre and the
London Court of International Arbitration. Institutional arbitration has a
clear set of arbitration rules, a specified timeline for the conduct of
arbitration, a panel of arbitrators to choose from. But it also has some
drawbacks which include lack of credible arbitral institutions, lack of
government support for institutional arbitration and legislative support, the
rules followed are often inadequate, delayed proceedings. Over the past few decades, the
courts have enlarged the scope of arbitration, reduced the ability of
individuals to sidestep arbitrating their disputes, and narrowed the
possibility of obtaining judicial review. They have implemented such extensive
pro-arbitration doctrines that arbitration clauses are almost always upheld
when challenged in the courts.
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