Arbitration – Practical Approach In India

All Disputes, which are of civil nature, may be resolved at any of the following two forums i.e. the formal system of redressal through conventional system i.e. Courts and Tribunals, or Alternate Dispute Resolution (ADR) i.e. Mediation, Conciliation and Arbitration. Keeping in view the state of the formal judicial process, it shall always be preferable to opt for ADR. India has a codified law on ADR i.e. the Arbitration & Conciliation Act, 1996[1] which conforms to Model law on International Commercial Arbitration in 1985 by the United Nations Commission on International Trade Law[2] (UNCITRAL). These Model laws and Rules make significant contribution to the establishment of a unified legal frame work for the fair and efficient settlement of disputes arising in international commercial relations. Keeping in view the above, the (Indian) Arbitration and Conciliation Act, 1996 was enacted by India wherein provisions have been made recognizing arbitration agreement, composition of arbitration tribunal, procedures for conduct of arbitration, making of awards, recourse against arbitral awards, finality of arbitral awards and their enforcement, enforcement of foreign awards etc. Both New York Conventions Awards (Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 1958[3]) and Geneva Convention Awards, 1927[4] are recognised under the Indian Act.

One of the best features of Indian Arbitration and Conciliation Act, 1996 is that parties to the arbitration agreement have no option except to go for arbitration in case of any dispute. Further, the parties can choose their own law, Indian or foreign, on the basis of which arbitration will be conducted, place and forum of arbitration, within or outside India, adopt their own procedures or the procedure of any internationally recognized arbitral forums. The essence of the above is that the parties are free to resolve their disputes in any manner, whatsoever, as may be agreed which is free from the shackles of the traditional system of justice.

It is further important to note that all awards passed by the Arbitrator are final and binding, subject to some reasonable exceptions and the same are enforceable as a final decree of the court.

The above process considerably reduces the time, which is usually taken by the conventional system of judicial redressal, and cost for resolution of dispute between the parties without adhering to the strict procedural laws. Under the Indian Arbitration & Conciliation Act, 1996, the courts are also empowered to pass orders for interim measures like preservation, interim custody or sale of any goods, securing the amount in dispute, the detention, preservation or inspection of the property. Courts are also empowered to pass any interim injunction or appoint receivers for protection of the subject matter of the dispute and enforcement of the arbitral award. 

The flexibility of the law and the procedure for arbitration in India makes it a preferred option for resolution of any dispute as it provides speedy and effective remedy. Presently, ADR is the preferred mode of dispute resolution among the Government agencies as well as private parties.

Recommendations

It is strongly recommended that Alternate Dispute Resolution (ADR) i.e. Mediation, Conciliation and Arbitration should be adopted as a mode of dispute resolution and for the said purpose care should be taken to:

• Put a specific clause providing for resolution of disputes by ADR in all agreements.
• Exclude the jurisdiction of the Courts
• Arbitration clause should provide for preferred laws applicable to the dispute.
• Preferred Forum, procedure and place of Arbitration should also be properly defined in the contract.
• In case of International commercial arbitrations, rules of international arbitral institutions like International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), the international branch of the American Arbitration Association), the London Court of International Arbitration (LCIA), the Hong Kong International Arbitration Centre, and the Singapore International Arbitration Centre (SIAC), may be made applicable.

References :

[1] http://indiacode.nic.in/fullact1.asp?tfnm=199626
[2] http://www.uncitral.org/
[3] http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention.html
[4] http://www.arbitrationindia.org/Geneva%20Convention%201961.htm