ADVANCEMENT AND ANALYSIS OF ARBITRATION IN COMMERCIAL DISPUTES

This article has been written by Parneet Kaur & Vishwas Chitwar, 4th year Students of Institute of Law Nirma University, Ahmedabad.


INTRODUCTION

The aim of alternative conflict settlement is to speed up and circumvent the legal system's slow pace and failure to provide justice in a timely manner. There is a barrier to doing business because of pending legal proceedings, and this barrier leads to a loss of income as well as the Indian economy in the long run. As a result, a number of corporations and large multinational corporations have decided to seek alternative conflict resolution strategies outside of the courtroom, in order to keep up with the rapid speed of globalisation and its changing developments.


This is one of the primary reasons for the renewed participation in and recourse of arbitration and conciliation as a result of the terms of the Arbitration and Conciliation Act of 1996 and subsequent amendments. The court's interference at some point of the arbitration proceeding as well as the parties' right to appeal the proceedings, including the fact that both parties had consented to the proceeding, were significant flaws. Finally, the award can be challenged on a variety of grounds. As a result, international parties became disinterested in the Indian arbitration process, preferring foreign awards from states that were signatories to the New York Convention on Foreign Awards.


As foreign awards are recognized in India under the Foreign Ward Act of 1961, this award will be implemented in India. However, as a result of liberalization, India's arbitration rules have been modernized, and conciliation has been recognized for the first time in the 1996 act. Due to the convenience and autonomy offered by the current process and rules of arbitration, this act's replacement has opened doors for international investors.


GROWTH OF ARBITRATION LAW IN INDIA

The Arbitration Protocol and Convention Act, 1937, the Indian Arbitration Act, 1940, and the Foreign Awards (Recognition and Enforcement) Act, 1961 regulated arbitration prior to the passage of the Arbitration and Conciliation Act, 1996. Prior to the adoption of the act of 1996, the act of 1940 was the main act that covered all arbitration proceedings involving national bodies as well as foreign parties. The Act of 1996 was passed in response to India's numerous liberalization programs and some of the Act of 1940's shortcomings.

The court's interference at some point of the arbitration proceeding, as well as the parties' right to appeal the proceedings including the fact that both parties had consented to the proceeding, were significant flaws.


Finally, the award can be challenged on a variety of grounds. As a result, international parties became disinterested in the Indian arbitration process, preferring foreign awards from states that were signatories to the New York Convention on Foreign Awards. As foreign awards are recognized in India under the Foreign Ward Act of 1961, this award will be implemented in India. However, as a result of liberalization, India's arbitration rules have been modernized, and conciliation has been recognized for the first time in the 1996 act. Due to the convenience and autonomy offered by the current process and rules of arbitration, this act's replacement has opened doors for international investors.


1. Arbitration and Conciliation Act,1996

The act of 1996, with some amendments, followed the UNCITRAL MODEL LAW OF ARBITRATION which had three parts: -

  • Part 1 deals with domestic arbitration and international commercial arbitration;

  • Part 2 deals with overseas judgments and their enforcement;

  • Part 3 deals with conciliation-related constitutional requirements.

The Act's aim was to make it easier to resolve disputes quickly. The issue that emerged as a result of this was the impediments posed by the Indian legal system in cross-border conflicts. Instead of India, the cross-border contracts were arbitrated in other countries such as Singapore, New York, or London. The first major reform was introduced in 2015 to resolve this issue and make international arbitration a feasible proceeding and solution in India.


2. Arbitration and Conciliation Amendment Act 2015

The 2015 amendment addressed a significant flaw created by the landmark BALCO decision, which prohibited India courts from providing temporary relief. As a result, the following major changes were made in 2015 to explain the act's objectives: -

  • A time limit for settling disagreements

  • Process for appointing an arbitrator Reasons for objecting to the nomination on the basis of impartiality and freedom

  • Before the start of the arbitration, provide temporary relief to international seated arbitrations by Indian courts.

  • The Act introduces the "Cost Follow Event" regime.