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Emerging challenges in Arbitration

Emerging challenges related to arbitral institutions.

Recently various amendments have been introduced in the sphere of arbitration because to keep pace with changing times it is necessary to replace old sections which are of no or little relevance in the present times. These changes advanced the process of arbitration as well as brought new challenges with them and it is very necessary to address these challenges as to make arbitration process flow smoothly.

The main reason behind parties choosing arbitration for dispute resolution is that it gives freedom as parties have the autonomy to choose the arbitrator or number of arbitrators. In international arbitration also parties have the right to nominate the arbitrators but this advantage has lead to the problem of parties nominating private arbitrators. There is no authenticity to the ward issue by these private arbitrators. Another disadvantage coined from time to time is that arbitration in some international cases becomes a slow and costly process. Although arbitration helps in solving the issue more expediently than formal court process but in international scenario where parties from different countries are involved in the case, it tends to move on a slower pace. Enforcement of foreign award is another big challenge faced by the parties seeking to enforce the foreign award in the domestic court. Despite several amendments and judgements by Supreme Court on this issue, there is still conflicting views and opinions which makes enforcement of foreign award difficult. Sometimes the laws of the country which has issued the foreign award and the domestic county where the award is to be enforced, are so different that it becomes next to impossible to enforce foreign award inn domestic court. Also, domestic arbitration institutions do not have the skill and expertise as compared to international arbitral institutions. The arbitrators involved in the arbitration process also lack expertise which is required which can result in faulty awards.  

As far as the Arbitration and Conciliation Act, 1996 is concerned it has  also been amended several times till now and the latest amendments were done last year in 2019 but new amendments came with new issues. Main aim of the amendment was to address some issues such as option foreign seat to the parties, arbitration in special case and enforcement of foreign ward, but despite the amendment there is no clarity on these issues and conflicting judgements makes it more confusing.  It was not clear that whether two Indian Parties can choose foreign seat of arbitration, various sections were introduced to bring the  Arbitration Act in conformity with SIAC rules and make the foreign award issued under SIAC rules enforceable in the domestic court but the process introduced via amendment was too cumbersome which  in-turn makes the enforcement more difficult. For making the arbitration process more popular amongst the dispute resolution system and a preferable option to the parties over other dispute resolution options available, it is necessary to address these issue. International arbitration and enforcement of foreign award is the most disputed area of the arbitration, Arbitration Act needs to be at par with the international arbitration rules like New York Convention and SIAC rules.

  • introduction
  • challenges
  • amendment

BY : Abhilasha

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