ARBITRATION PROCEDURES AND PRACTICE IN INDIA

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Commercial arbitration is the process of resolving business disputes between or among transnational parties through the use of one or more arbitrators rather than through the courts. It requires the agreement of the parties, which is usually given via an arbitration clause that is inserted into the contract or business agreement. The main objective of having an arbitration proceeding is to solve the dispute as fast as possible, which also has a binding effect, without going to the Court of law and getting engaged in the long-drawn judicial procedure.

Arbitration proceedings in India are conducted under the Arbitration and Conciliation (Amendment) Act, 2015 (the Act). The Act is based on the UNCITRAL model law. This ensures that there is a certain level of uniformity in the law.

India is a party to the New York Convention. It has exercised both the reciprocity and commerciality reservations. However, notification is required in the official Gazette in relation to each specific country. Not all countries that have ratified the New York Convention have been notified in the official Gazette of Government of India.

TYPES OF ARBITRATION PROCEDURE: There are two main types of arbitration procedures. These are:

  • Ad- Hoc Arbitration
  • Institutional Arbitration

 

  1. AD-HOC ARBITRATION

Ad-Hoc Arbitration can be defined as a procedure of arbitration where a tribunal will conduct arbitration between the parties, following the rules which have been agreed by the parties beforehand or by following the rules which have been laid down by the tribunal, in case the parties do not have any agreement between them.

  1. INSTITUTIONAL ARBITRATION

In the case of Institutional Arbitration, the disputing parties submit their issue to an institution that has been designated to administer the arbitrational process. The institution then arbitrates the dispute according to the rules laid by them in front of the parties.  The institute selects a panel which administers the whole process.

All the institutes do not provide the same type of services. Some institute just provide the rules on which the procedure will be based (London Maritime Arbtration Association). Other provide a roster of arbitrators to the parties but do not appoint the arbitrators themselves (Society of Maritime Arbitrators in New York).

Certain institutions administer the whole process of arbitration i.e. (International Court of Arbitration of the International Chamber of Commerce).

CONFIDENTIALITY:  There is no provision for confidentiality of arbitrations under Indian law but an agreement on confidentiality may be included in the arbitration agreement.

HOW LONG DO ARBITRAL PROCEEDINGS USUALLY LAST?

This depends upon the arbitrators, the parties and also the complexity of the matter. The 2015 Amendment aims to reduce the time consumed in arbitral proceedings, inter-alia by specifying an upper limit of 1 year from the date of constitution of the arbitral tribunal, for completion of proceedings and making of an award. Parties can consent to extend this period by a further 6 months only, after which an application is required to be made to the Court.

ENFORCEMENT:

DOMESTIC AWARD: An arbitral award is enforceable after the time for making an application to set aside such an award has expired (90 days). However, the court may grant a stay on the operation of the arbitral award on a separate application made for that purpose. The party intending to enforce the award can file an execution petition before the Civil Court. The award is enforced in the same manner as a decree of the court under the Code of Civil Procedure, which provides the framework for the execution of arbitral awards.

FOREIGN AWARD: A foreign arbitration award is enforceable in India under Part II of the Arbitration Act, if it is passed in a jurisdiction/country governed by either the New York Convention or the Geneva Convention. The process for enforcement of a foreign award is similar to that of a domestic award.  The Arbitration Act does not provide any limitation for the enforcement of a foreign award.

 

Parul

Senior Associate

The Indian Lawyer & Allied Services

 

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