MEANING OF INTERNATIONAL COMMERCIAL ARBITRATION
International Commercial Arbitration (ICA) is nothing but a mechanism of resolving disputes between the parties of a contract that is created for dealing with people across national boundaries. It is a methodology adopted in order to escape the tedious and time taking procedures of the traditional courts. The Indian Arbitration and Conciliation Act, 1996 (hereinafter called the Act) defines ICA under section 2(1)(f) as following:-
“international commercial arbitration” means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is—
- an individual who is national of, or habitually resident in, any country other than India; or
- a body corporate which is incorporated in any country other than India; or
- an association or a body of individuals whose central management and control is exercised in any country other than India; or
- the Government of a foreign country;[1]’
The Indian Arbitration and Conciliation Act, 1996[2] deals with international commercial Arbitration with seats in India under Part 1 and with seats in the reciprocating country under Part 2.
WHEN THE SEAT OF INTERNATIONAL COMMERCIAL ARBITRATION IS IN INDIA
The laws applicable in such a situation are:-
1. Notice for Arbitration
For the commencement of arbitration as provided for under section 21 of the Act it is required that whenever a party wants to refer a dispute to arbitration, firstly, he has to send a notice to the other party expressing his intention to do so and thereby, asking for the other party’s intention for the same.
2. Referral to arbitration
According to section 8 of the Act, the judiciary is bound to accept the application of the applicant and refer the matter to arbitration, if the parties submit an application along with the original copy of the arbitration agreement on the date of submitting its first statement.
3. Interim reliefs under Arbitration
The court and the arbitral tribunal have been given the power of granting interim relief to the parties vide section 9 and section 17 respectively of the Act. It is provided so that the aggrieved party can get security for seeking relief until the final decision.
4. Appointment of arbitrators
The section 11 of the Act deals with the appointment of the arbitrators. The parties are free to appoint one arbitrator each, of any nationality unless otherwise agreed between the parties, and both these arbitrators have to appoint a third arbitrator in order to have odd number of arbitrators. However, the third arbitrator is not required if both the arbitrators give the same decision. The Indian Arbitration law also provides for the law relating to the mandate of the arbitrator.
5. Basics of proceedings
The parties are free to be flexible in terms of the procedure, place and language of the arbitration. The parties can settle the dispute via mutual consent too. After the decision, it has to be recorded with the consent of the parties and the arbitral tribunal as provided for under section 30 of the Act.
6. Setting aside an arbitral award
Similar to the system of appeal in courts, if a party is not satisfied with the decision of the tribunal, he can apply to the court vide section 34 of the Act in order to set aside the arbitral award. Also, according to section 34 (2-A), an arbitral award in the case of International Commercial Arbitration can also be set aside, if the award made is illegal in nature.
7. Appeals
An appeal can arise under following conditions:-
- Refusal of granting interim relief under section 9 and 17
- To set aside the arbitral award under section 34 of the Act.
8. Enforcement of arbitral award
The arbitral award is binding on both the parties as per section 35 of the Act as is considered the same as passed by the Court under the Code of Civil Procedure, 1908.
WHEN THE SEAT OF INTERNATIONAL COMMERCIAL ARBITRATION IS IN RECIPROCATING COUNTRY
The Supreme Court of India in the judgment of Bharat Aluminium v/s. Kaiser Aluminium Technical Services (BALCO)[3] case has made the application of the Indian Arbitration law seat-centric. It has further been clarified by the Amendment Act too that Part 1 of the Act will not have application in foreign seated arbitrations.
Laws related to arbitration in foreign seat are:-
1. Referring parties to arbitration under Part II
Section 45 of the Act authorizes a judicial authority to refer the parties to arbitration those who have entered under section 44 into an arbitration agreement.
2. Enforcement and execution of foreign awards
In the case of Vijay Karia & Ors v. Prysmian Cavi E Sistemi S. r. l. & Ors.[4] The Supreme Court of India held that the foreign awards can only be set aside only in exceptional cases of huge disregard to section 48 of the Act.
3. Appealable orders
As held in the case of Shin-Etsu Chemical Co. Ltd. V. Aksh Optifibre Ltd.[5], an appeal can only be filed once to the Supreme Court against the order passed under sections 45 and 48 of the Act. The second appeal is however barred.
CONCLUSION
The system of arbitration has carved a niche for itself in the past few years as a mechanism over traditional systems of courts. With the expansion of international businesses, transactions and dealings arbitration is considered a desirable mode of dispute resolution. Another point favouring the expansion of usage of international commercial arbitration is that the system provides quick relief to the aggrieved without having to deal with the hustle-bustle of the Courts. The Indian Arbitration and Conciliation Act, 1996 too expressly provides clear and concrete laws for the success of the arbitration system.
[1] http://legislative.gov.in/sites/default/files/A1996-26.pdf
[2] ACT No. 26 OF 1996
[3] Civil Appeal No. 7019 of 2005
[4] CIVIL Appeal No. 1544 OF 2020 (ARISING OUT OF SLP (CIVIL) NO.8304 OF 2019)
[5] Appeal (civil) 5048 of 2005
This Article is Authored by Phalguni Garg, BALLB (H) Student at Amity Law School, Noida, Amity University.
Also Read – Introducing Online Dispute Resolution to Resolve Transnational Commercial Issues: The Indo-Asian Context.
