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ARBITRATION ACT & ITS RISE IN INDIA
ARBITRATION ACT & ITS RISE IN INDIA:
Arbitration Act 1940 – Unveiling Controversies:
Under the British Regime a more specific arbitration act was enacted on 11th March 1940, which came into force on 1st July 1940. termed as 'The Arbitration Act, 1940'. It was applied to the whole of India (including Pakistan, Baluchistan)8. The same was modified vide an ordinance, post Independence.
The Act of 1940, was referred to many disputes but the same was also under many criticisms. In some of the cases, it was observed that the Arbitration Act, 1940, distinguishes between an application for setting aside an award and one for a decision that the award is a nullity. This implies that it does not legally exist and contemplates that an application for setting aside an award may be made under Section 30 and an application of that award is a nullity under Section 33. Further, it was also observed that the said act fails in recognizing that the arbitration will fail in-case of non-existence and invalidity of an arbitration agreement9.
The Act was silent about the shortcomings inherent in individual private contracts. The rules providing for filing awards differed from one High Court to another. The lack of provisions prohibiting an arbitrator or umpire from resigning at any time in the course of the arbitration proceedings, exposed the parties to heavy losses particularly where the arbitrators or umpire acted mala fide. It was also seen that if an arbitrator appointed by the Court dies during the arbitration proceedings, there was no other provision in the said act for appointment of a new arbitrator, which was also seen as a major flaw in the 1940 Act10. Another concern in the act was that the Marginal Notes were not regarded as part of an Act11.
Enforcement of the Arbitration Act, 1996:
The Arbitration Act of 1940 had been facing a lot of criticisms and lacked in quite a lot of areas when it came to implementation in the real sense. Although it brought uniformity in law across the nation, it needed to be replaced by The Arbitration and Conciliation Act 1996, which came into force from 22nd August 1996. The basic intent of the legislation was to provide for a speedy solution to disputes between the parties and also to limit the judicial intervention. The main intention of the Legislation was primarily to cover the international and domestic commercial arbitration and conciliation. It was also to make the arbitral tribunal fail, provide them reasons to pass awards, minimize the role of courts, enforce the arbitral award as the decree of the court.
In certain cases, there arose a dispute between the parties and applications were filed before the enactment of the 1996 Act but the arbitrators were appointed after the enactment. In such a given scenario, the arbitrators and the parties also agreed that the proceedings for the said dispute will be governed by the New Law.
The Act of 1996 consolidated and amended laws relating to Arbitration, International Commercial Arbitration and also for enforcement of the Foreign Arbitral Awards. Initially, in the Act of 1996, it was held that the Court can pass interim orders under Section 9 of the Act, where Section 9 contemplates two stages, firstly, court can pass order during arbitral proceedings and secondly, that court can pass order before commencement of arbitral proceedings.
Focus on the 'Public Policy of India':
The interpretation of the word "Public Policy of India" was sought to be narrowed by the said Amendment with the intention to give importance to the award of the arbitral tribunal and accord finality to the same, which was avowed intention of the 1996 Act. It was also recommended and accepted that the arbitration proceedings have to start within a period of maximum 90 days by the party obtaining any interim order from the court. The amendment also restricted the courts' interference in any arbitration proceedings. By virtue of the said amendments, no application was allowed or would be entertained by any court in a matter where arbitration proceedings had already commenced.
The amendment also confirmed that any interim orders passed by the arbitral tribunal are enforced effectively, as the said interim orders which were passed at the time of 1996 Act were not effectively enforced since the provisions of Civil Procedure Code were not made specifically applicable to them.
- Arbitration Act 1940 – Unveiling Controversies
- Enforcement of the Arbitration Act, 1996
- Focus on the 'Public Policy of India'
