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Low Success of Institutional Arbitration in India
EXECUTION OF ARBITRAL AWARD
Section 36 of The Arbitration & Conciliation Act, 1996 talks about the execution or enforcement of Arbitral Awards. Once an award is made, the award holder has to wait for a period of 90 days to apply to the appropriate forum for its execution. In this period of 90days, the award might be challenged under Section 34 for the award to be set aside. The court has the authority to enforce an award concerning a sum of money, attachment of property, damages, specific performance, etc. it can also capable to grant an anti-suit injunction to prevent the award from being challenged in a court other than the court of the seat of Arbitration.
An award can only be enforced in the court that has jurisdiction to entrain such an application. Only the district judge has jurisdiction to entertain an enforcement application for domestic awards. In a landmark ruling by the Supreme Court Sundaram Finance v. Abdul Samad & Ors, the court stated that an award holder can initiate execution proceedings in the appropriate court of any district where the assets are located. This makes the process of execution for award holders extremely easy and accessible. For an award from an international commercial arbitration seated in India, one has to approach the Commercial bench of a High Court of the city where assets are located. For a foreign award, one has to approach the commercial Bench of the High Court of the city where assets are located.
The limitation period to enforce domestic awards, as per The Limitation Act is 12 years. If the award is a foreign award, then the same cannot be considered a decree and hence will have a limitation period of 3 years. It is compulsory to stamp a domestic award before presenting it in court for enforcement or execution. Sectio35 of The Stamps Act provides that any award that is insufficiently stamped or not stamped shall be inadmissible for enforcement. For foreign awards; the Supreme Court in the case of M/S Shriram EPC Ltd v. Rio Glass Solar SA stated that foreign awards do not need stamping and can be executed without any stamping requirements. The main reasoning of the court was that a foreign award is not covered by the term “Award” mentioned in Item 12 of Schedule I of The Indian Stamp Act, 1889.
CHALLENGES TO INSTITUTIONAL ARBITRATION IN INDIA
- Misconceptions pertaining to Institutional Arbitration
- Lack of awareness: In India, the people still have more faith in Traditional Court System over any other Dispute Resolution mechanism per se. Since Arbitration is a type of dispute resolution and Institutionalised Arbitration is altogether a new and a structured form of Arbitration which fails to bring people into confidence. Therefore, it is a big hurdle for Institutional Arbitration to cross.
- Costs: It is true that the Cost distribution for conducting institutional Arbitration seems to be costly but when we compare it with Ad-Hoc Arbitration, it's comparatively pocket friendly. Numerous arbitral institutions charge very reasonable fees and institutional arbitration helps to avoid procedural disputes and this is where Ad-Hoc Arbitration takes lead.
- Non-Flexible: Another misconception is that Institutional Arbitration is inflexible because arbitral institutions rules that take away exclusive autonomy of the parties over arbitration proceedings. However, most arbitral institutions that exist in the international scenario have made an attempt to balance institutionalization with the party autonomy. They only keep those issues that deal with the legality and integrity of proceedings out of the purview of party autonomy.
- Government Support: this is one of the reasons for a weak institutional arbitration framework in India. The general conditions of contracts used by the government and public sector undertakings often contain arbitration clauses, but these clauses usually do not expressly provide for institutional Arbitration. The recommendations made by the Law Commission of India was that trade and commerce bodies must establish chambers with their own rules
- Statutory Support: In Singapore, where the Singapore International Arbitration Centre (SIAC) is the default appointing authority for Arbitration under the International Arbitration Act, 1994 which governs International Arbitrations.
Interference of Court: It is true that The Arbitration and Conciliation Act (amended 2015) minimizes the interference of court i.e. the court can only step into the dispute when the parties ask for, no court is entitled to take Suo moto cognizance only on application by one of the parties in dispute. So Court can interfere when the dispute is related to the appointment of arbitrators (Section 11), enforcement of Arbitration Agreement/ Clause (Section 8), challenges for disqualification of an Arbitrator (Section 12), Challenges procedure (Section 13), Interim relief (Section 9), setting aside an Award(Section 34), Appeal(Section 36), Injunction to the execution of an Award (Section 36). Due to these interferences by the court Arbitration is actually increasing the burden of the Courts. Hence, defying the purpose of Arbitration in the first place.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
- Execution of Arbitral Award
- Challenges for Institutional Arbitration in India
- Interference of Court
