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Law of Arbitration: National Law University Delhi
Law of Arbitration: National Law University Delhi
Dr. Sushila
Assistant-Professor (Law)
&
Director
Centre for Study of Consumer Law and Policy
Commercial Courts
• Arbitration today is the default setting for commercial dispute resolution in India.
• Dissatisfaction caused by highly technical, time consuming, complex and expensive justice
dispensation by litigation through courts gave rise to the evolution of ADR (Alternative Dispute
Resolution) System which consists negotiation, mediation, arbitration and various other
procedures.
• The ADR system seeks to provide quick and accessible justice at a low cost by encouraging
disputant to arrive at a negotiated understanding with a minimum outside help.
• The Indian Government also recognised that increasing efficiencies in arbitration and the
enforcement process, was a mechanism to ratchet it up World Bank rankings for Doing Business.
In the ‘World Bank Report on Doing Business 2018’, India’s ranking for ‘Enforcing Contracts’,
improved several positions, i.e. from 172 in 2016, to 164 in 20171 , and 163 in 2019.
NATIONAL LAW UNIVERSITY DELHI 3
The Arbitration & Conciliation Act of 1996
The Arbitration & Conciliation Act of 1996, modelled on the UNCITRAL Model Law on
International Commercial Arbitration, consolidated the law of arbitration law in India,
repealing earlier statutes.
The Act came into force at the time of India’s economic liberalisation and intended
globalisation and was expected to be a shot in the arm for a quick and cost effective form
of alternative dispute resolution through arbitration.
It was touted as updating the law of arbitration in India to make it more responsive to
contemporary requirements and while restricting the intervention of courts.
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).
• It should also specify only the uneven/ odd number of arbitrators to be appointed and
the manner of their appointment. (unless statute provides otherwise).
• Arbitrator has to be an unbiased independent third party who resolves the disputes
between the conflict party in an impartial manner.
• Arbitration notice - In case a dispute has arisen and the party has opted to follow the
procedure of arbitration then the party against whom the default has been committed will
send an arbitration notice for invoking arbitration process steps between the parties.
• Appointment of Arbitrator- After receiving the notice by other parties both the parties will
appoint the arbitrators in the manner as specified in the arbitration agreement or arbitration
clause.
• Hearing of Parties - Arbitral tribunal will hear both the parties and their evidence.
• Award - After hearing the parties, the arbitral tribunal will pass the decision. The decision of the tribunal
is known as ‘Award’ and is binding on the parties. However, an appeal against the arbitral award can be
filed before the High Court.
• Execution of Award - Once the award has been passed by the tribunal it has to be executed. 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.
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.
• 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.