Dear Deepak,
Could you help us with something on basics of Arbitration laws in India along with existing International Arbitration procedures and authorities.
Best regards,
Devender
Dear Devender
The following is a brief note on the arbitration law and process applicable in India. Please bear in mind that, the following note is only meant for information purposes, as each legal query requires interpretation of law from different angle. The source of this note is general google search and my own view over the subject.
Note on Arbitration in India
The Arbitration process in India is based on the UNCITRAL Model Law on International Commercial Arbitration. Indian law is largely based on English common law because of the long period of British colonial influence during the British Raj.
The Applicable Arbitration Law
The Indian Arbitration and Conciliation Act, 1996 is the governing arbitration statute in India. It is based on the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985.
Previous statutory provisions on arbitration were contained in three different enactments, namely, the Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. The Arbitration and Conciliation Act, 1996 has repealed the Arbitration Act, 1940 and also the Acts of 1937 and 1961.
The Types of Arbitrations
The Indian Arbitration and Conciliation Act, 1996 applies to both domestic arbitration in India and to international arbitration. Section 2(1)(f) of the Act defines "International Commercial Arbitration" as arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India where at least one of the parties is:
• an individual who is a national of, or habitually resident in any country other than India; or
• a body corporate which is incorporated in any country other than India; or
• a company or an association or a body of individuals whose central management and control is exercised in any country other than India; or
• the Government of a foreign country.
Requirements of an Arbitration Agreement
• Section 7(3) of the Act requires that the arbitration agreement must be in writing.
• Section 7(2) provides that it may be in the form of an arbitration clause in a contract or it may be in the form of a separate agreement.
• Under Section 7(4), an arbitration agreement is in writing, if it is contained in: (a) a document signed by the parties, (b) an exchange of letters, telex, telegrams or other means of telecommunication, providing a record of agreement, (c) or an exchange of claims and defense in which the existence of the agreement is alleged by one party and not denied by the other.
• In section 7(5), it is provided that a document containing an arbitration clause may be adopted by "reference", by a contract in writing.
Validity of an Arbitration Agreement
Section 16 of the Act empowers the arbitral tribunal to rule on its jurisdiction:
Under the Act, the arbitration tribunal can rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for this purpose:
• an arbitration clause which forms part of a contract will be treated as an agreement independent of the other terms of the contract; and
• a decision by the arbitral tribunal that the contract is null and void will not entail, ipso jure, the invalidity of the arbitration clause.
A plea that the arbitral tribunal does not have jurisdiction will, however, have to be raised not later than the submission of the statement of defense. However, a party shall not be precluded from raising such a plea merely because he has appointed, or participated in the appointment of an arbitrator.
A plea that the arbitral tribunal is exceeding the scope of its authority has to be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
The arbitral tribunal may, in either of the cases referred to above, admit later a plea if it considers the delay justified.
The arbitral tribunal has to decide on a plea about lack of jurisdiction or about the tribunal exceeding the scope of its authority and where the arbitral tribunal takes a decision rejecting the plea, it shall continue with the arbitral proceedings and make the arbitral award.
A party aggrieved by such an arbitral award is free to make an application for setting aside the award under section 34 of the Act. Section 34(2)(a) inter alia permits a challenge to an award on the above grounds.
In limited time, this is what I could share.
Regards
Deepak
