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A Brief Look at the Arbitration Process in India
On 4th December 1993, in a conference presided by the Prime Minister of India, P.V Narasimha Rao, the Government of India took into consideration international treaties like the Geneva Protocol on Arbitration Clauses, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and the United Nations Commission on International Trade Law (UNCITRAL) Model on Commercial International Arbitration, and discussed the fate of arbitration in India[1]. As a result of this conference, the Arbitration and Conciliation Act, 1996 was born.
The Arbitration and Conciliation Act, 1996 (Principal Act) is a self-contained Code which contains 86 Sections and seeks to attain the objectives of consolidating and amending existing laws relating to domestic arbitration, defining conciliation, enforcing UNCITRAL, creating a uniform system of regulation relating to arbitration and conciliation and the establishment of a unified legal framework for fair and effective settlement of disputes[2].
In 2005 and 2019 there were amendments made to the Principal Act in order to improve the arbitration process in India and make it speedy and expeditious which in turn would reduce costs and wastage of time. The amendments also solidified the impartiality and independence of an arbitrator and makes him responsible for any delay in the arbitration proceedings in an attempt to imbibe in them characteristics of self-discipline and accountability[3]. Further, with the establishment of the Arbitration Council of India (ACI) by the 2019 Amending Act, there is now an institution to ensure that uniform and professional standards are maintained during the arbitration procedure in India.
The arbitration process in India, much like the process in other countries as put forth by the Geneva Protocol on Arbitration Clauses, begins with an arbitration clause or arbitration agreement. The arbitration agreement is a clause in a contract or an agreement between parties stating that any dispute will be referred to arbitration proceedings[4] and it must contain the following information: subject matter of dispute, timing of dispute (past/present/future), number of arbitrators, qualifications of arbitrators, jurisdiction and composition of tribunal[5].
When a dispute arises and an arbitration clause is present in an agreement between the parties, the party against whom a wrong has been committed must send an arbitration notice to the other party in order to begin the process of arbitration and this is the next step[6].
Once the notice has been received, both parties will have to appoint an arbitrator/s as per the specifications mentioned in the arbitration clause or agreement. The parties to a dispute have the freedom to choose the number of arbitrators, as long as it’s not an even number, but if a number is not specified in the arbitration clause or arbitration agreement, only one arbitrator will be appointed[7]. Also, if parties choose to appoint three arbitrators but do not specify the procedure for their appointment, each party will choose one arbitrator and the two party-chosen arbitrators will choose the third arbitrator who will be on the panel. If one of the parties fails to appoint an arbitrator within the stipulated period, the other party can approach the designated Arbitral Institutions, as per the 2019 Amendment, seeking the appointment of an arbitrator[8].
Following the appointment of arbitrators, the party who was wringed must file a statement of claim which mentions the details regarding the dispute: events leading up to the dispute, reasons for the dispute, and compensation or relief claimed[9]. The other party also have the option of filing a counterclaim as a reply to the statement of claim.
Once the statement of claim and counterclaim have been filed, the arbitration tribunal will hear the parties and assess the evidence put forth to them.
After both parties have been heard and the evidence has been examined, the arbitrators will pass a decision and this decision is known as an arbitral award. An arbitral award is final and enforceable in a court of law.
The party in whose favour the award has been passed must file for the enforcement of the award if the award must be executed.
Since the arbitration process allows certain freedoms to the parties and the arbitrators, the procedure is not governed by the Civil Procedure Code and there is also limited interference by the courts. So, arbitration can definitely be a more favourable option for dispute resolution in most cases depending on the subject matter of the dispute.
[1] Editor, The Arbitration and Conciliation Act, 1996 – An Analytical Outlook, Shodhganga, (Apr. 10, 2020, 2:56 PM), https://shodhganga.inflibnet.ac.in/bitstream/10603/201576/10/10_chapter%204.pdf.
[2] The Arbitration and Conciliation Act, 1996, No. 26 Acts of Parliament, 1996 (India).
[3] R.V Prabhat, Highlights of Amendment to the Arbitration and Conciliation Act, 1996, Manupatrafast, (Apr. 12, 2020, 12:48 PM), https://www.manupatrafast.in/NewsletterArchives/listing/ILU%20RSP/2015/Dec/Highlights%20of%20Amendment%20to%20the%20Arbitration%20and%20Conciliation%20Act%201996%20via%20Arbitration%20Ordinance%202015.pdf.
[4] Supra note 1.
[5] Editor, What is the Difference Between Arbitration and Mediation?, Singapore International Arbitration Centre, (Apr. 9, 2020, 12:16 PM), https://www.siac.org.sg/71-resources/frequently-asked-questions/174-what-is-the-difference-between-arbitration-and-mediation.
[6] White & Case LLP, Arbitral Proceedings in India, Lexology, (Mar. 7, 2019, 1:21 PM), https://www.lexology.com/library/detail.aspx?g=137061bc-e438-42dd-b184-d0ab17ac68cd.
[7] Abhishek Sahoo, Process of Arbitration in India, MyAdvo, (Aug. 1, 2019, 7:17 PM), https://www.myadvo.in/blog/steps-of-arbitration-in-india/.
[8] Arbitration and Conciliation (Amendment) Act, 2019, No. 33, Acts of Parliament, 2019.
[9] ICA, ICA Arbitration Clause, Indian Council of Arbitration, (Apr. 14, 2020, 6:42 PM), http://www.icaindia.co.in/htm/clouse.htm.
- Arbitration
- Process
- Arbitration and Conciliation Act, 1996
