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International Arbitration tribunal in India: Future Opportunities and Challenges

Written by - Kalpana Jaiswal

Designation - Intern, MediateGuru


Introduction:

The overwhelming judicial procedure has made scholars to think about other alternatives to resolve matters and disputes. Over the time “Alternative Dispute Resolution” evolved as a new speedy and cost-effective solution to this.

Basically, ADR includes four popular techniques:

(i) Arbitration,

(ii) Conciliation,

(iii) Mediation and

(iv) Negotiation.

Arbitration is referred as more formal alternative to the litigation than mediation and Negotiation. The course of arbitration flourished in India since the end of the nineteenth century and nowadays it’s been regulated through “Arbitration and Conciliation Act, 1996”.

The act of 1996 was based on UNCITRAL Model Law on International and Commercial Arbitration, 1985, and covered both domestic and international arbitration.



International Arbitration Tribunal in India:

An arbitration is considered to be an international commercial arbitration when it involves a dispute that is commercial in nature and involves a party who is either a foreign national or a person who habitually resides outside India, a company, body or association of individuals that is centrally managed and controlled outside India, or a foreign government. All other arbitration, by implication, is considered to be domestic arbitration.

Drafted on the basis of UNCITRAL Model Law, it is divided into four parts. Each part governs a different aspect of the arbitration and conciliation process:

Part 1 governs commercial arbitration;

Part 2 governs the enforcement of certain foreign awards;

Part 3 governs conciliation; and

Part 4 contains supplementary provisions (regarding the power of the court to make rulings, etc.)

The 2019 amendment seeks to remedy this problem of formal institutions by providing institutionalised arbitration in India. It includes the creation of the Arbitration Council of India, which has to take all such measures as could be necessary to market and encourage institutional arbitration or other non-traditional alternative dispute resolution mechanism and for that purpose to frame policies and guidelines for the establishment, maintenance, operation and formation of uniform standards. The 2019 Amendment also empowers the Supreme Court of India in a world commercial arbitration and, there. Therefore, courts in cases aside from international commercial arbitration establish such reputed arbitral institutions for appointment of arbitrators.[1]

Presently, India lacks institutions that are at par with organisations of International reputation like ICC (International Court of Arbitration), LCIA, SIAC, HKIAC, etc.


Future Opportunities and Challenges:

India is quite ambitious in its potential in the area of arbitration. A major indicator that states how India works on improving the efficiency of its arbitrary system and making it cost efficient is- the amendment of the Arbitration Act. This ensured the de-automation of the challenging arbitral awards. This amendment has impacted enhancing the quality of India’s arbitral proceedings. Following this, India had limitations in carrying court interventions in arbitral award.


Apart from this, India was constantly working on the path of implementing the technology as a norm within arbitrary proceedings. This has gained momentum especially with the onset of the Covid 19 pandemic. Section 19 of the Arbitration & Conciliation Act states:

The parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.


This authorises that India can carry out arbitrary institutions are mandatory to conduct their proceedings no matter if is through a video conference mode.

The current state of Indian institutions is lacking effectiveness. This statement is made in the light of India’s world ranking in a few spectrums of law. For example, take the case of the world bank report 2019.


Ease of doing business- Rank 77 out of 190

Enforcing contracts- Rank 163 out of 190

Average days to resolving commercial disputes- 1445 days.


These are clear indications that states that India needs to work on the betterment of its traditional court system and focus on building a more promising arbitration system.

India’s arbitration system is not inclusive of resolving every litigation. Areas that concern criminal offences, trust litigations, marital disputes, and guardianship issues are what allows for arbitrary settlements. Remember that India currently has 35 Arbitral institutions for International, Domestic, e-City- specific chambers of commerce and industry and Merchant and Trade associations.[2]

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