Arbitration is a legal technique for the redressal/ resolution of disputes outside the court wherein parties to the dispute refer their dispute to one or more persons (arbitrators, arbitral tribunal) which renders the arbitration award. Such an award has a binding effect upon the parties.

Introduction

Arbitration was formally recognize under the Indian Arbitration Act, 1940. It was more of a general law based largely upon the English Arbitration Act, 1934. The Act was replace by Indian Arbitration and Conciliation Act, 1996. It is to comply with the UNCITRAL Model Law on International Commercial Arbitration (hereinafter “Model Law”). They adopted by the United Nations Commission on International Trade Law in 1985.

Arbitral proceedings under the Act call for ad hoc arbitration, Institutional Arbitration, Statutory Arbitration, and International Arbitration. Ad-hoc Arbitration commences with the arbitration agreement. Institutional Arbitration involves streamline procedures as arbitral proceedings are undertake by Institutions of Arbitration. Statutory arbitration is provided and sanctioned by law and International Arbitration involves dispute resolution. Between nations or parties located in different jurisdictions or countries. These four kinds of arbitration are recognize under the Act.

Owing to international relevance of arbitration, India is a party to the Geneva Protocol on Arbitration Clauses of 1923 (hereinafter “1923 Geneva Protocol”). Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 (hereinafter “1927 Geneva Convention”). The New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter “New York Convention”).

The Arbitration and Conciliation Act, 1996 consists of Part I and II holding wider principles of Model Law. Part I encompasses provisions for structure of arbitral tribunal and non-intercession by courts. Part II is largely based on New York Convention and 1927 Geneva Convention. It is not a comprehensive code and is limit to the implementation of remote recompenses legislate in these two conventions. Section 9 of the Act allows parties to request the court for interim measure at any time. Before or during the arbitral proceedings. It is not incompatible with an arbitration agreement. Between the parties and is corroborate by Article 9 of the UNCITRAL Model Law. This right is available at all times and is not dependent upon parties’ issuing notice for invoking the arbitration clause.

The Arbitration And Conciliation (Amendment) Act, 2015

The Indian courts have consistently practice greater involvement  in commercial arbitrations. It held outside India especially after the Supreme Court’s decision in Bhatia International v Bulk Trading S.A. and Another. For that matter, the court in Venture Global Engineering v Satyam Computer Services Ltd. and Another went to the extent of assuming jurisdiction for hearings in cases challenging foreign awards.

 This being detrimental to India’s global image, the apex court took a stronger stance in Bharat Aluminum Ltd. Co. v Kaiser Aluminum Technical Service Inc. (hereinafter “BALCO”) by holding that Part I and Part II of the Act are mutually exclusive and that Part I will not apply in cases; where the seat of arbitration is chosen outside India. The Supreme Court went on to paralyze Indian courts; for their interference with foreign awards in any manner except for enforcement.

Enormity of difficulties ensue post this decision as the interim relief was no longer made available to the parties in India. Even if sanctioned by the foreign arbitral tribunal. The relief became unenforceable in India since it ceased to be qualified as a “foreign award” under Part II of the Act. Therefore, the Act was amended in 2015 to restore the power of Indian courts. It grant interim relief unless the parties themselves chose to opt-out of this provision. The amendment did not clarify if the arbitration agreement should expressly exclude the jurisdiction of Indian courts leading to confusion. If the jurisdiction is impliedly exclude, it would have defeated the purpose of the amendment. Moreover, if two Indian parties are involve in arbitration which is foreign seat. It remains blur if at all any interim reliefs will be made available to them by the Indian courts.

The 2015 amendment adds more strength to the order of arbitral tribunal by alleviating it to the order of a civil court. Even for interim relief, the parties can no longer approach the civil court unless the tribunal fails. Much of the interventions by the judiciary were at the pre-litigation stage comprising of application to the court for seeking reference to arbitration in a proceeding pending under section 8 or for the appointment of arbitrators in the event of a deadlock between the Parties under section 11 of the Act. Under both of these sections, the ultimate word of the court determined the validity and jurisdiction of the arbitration agreement and thus, ousted the jurisdiction of arbitral tribunals.

The courts are now empower to only determine the existence of the agreement to conclude validity. They can no longer tread on any other issues relating to the arbitration agreement. While a third party is also allow to make a reference under section 8, it amends the existing position taken in Sukanya Holdings Pvt. Ltd v Jayesh H. Pandya & Another. In this case, non-signatories to the arbitration agreement were not allow to refer the dispute to arbitration. The Supreme Court’s judgment in N. Radhakrishnan v Maestro Engineers & Others also stands clear as now the courts will have to direct the parties to arbitration where the arbitration agreement exists even in cases of fraud. However, the extent of judicial intervention went to the extreme before 2015 especially where the award was challenge on the grounds of public policy.

Conclusion

With the amendment, stricter timelines for quick disposal of arbitration proceedings are provided for along with the schedule of fees to be charged by arbitrators. The High court now has the power to make rules for the fixation of fees or arbitrators. Moreover, to ensure impartiality of Arbitrators, section 12(1) along with the fifth schedule of the Act requires the arbitrator to disclose circumstances which may lead to doubts regarding his credibility. This is keeping in tune with the IBA Guidelines on Conflict of Interest in International Arbitration. Also, for the purpose of boosting institutional arbitration, various international arbitration institutions have been set up in India making it a more conducive center for conducting international commercial arbitrations.