Commercial Arbitration is presently the favoured mode of dispute resolution for complicated industrial disputes. Unfortunately, the judicial system is and has been burdened with a massive backlog of cases, and it is not always uncommon for cases to be stuck within the judicial system for more than a decade pending a decision, especially if the cases are highly sensitive. As a result, it has become a widespread exercise for parties to include arbitration clauses in all major transactions and agreements.
The Arbitration and Conciliation Act, 1996, also known as Arbitration Act, applies to arbitrations in India. Part I of the Act governs arbitrations seated in India, and Part II deals with arbitrations seated outside India. However, Part I of the Act additionally applies to arbitrations seated outside India. An important thing to note is that the Arbitration Act is primarily based on the UNCITRAL Model Law (the United Nations Commission on International Trade Law).
There was a chain of judicial decisions and legislative amendments that applied partially prospectively and partially retrospectively. For the Act to apply, the Court will rely on the date on which:
- The Arbitration was commenced.
- Court cases regarding the Arbitration (if any) have been commenced.
- The arbitration agreement was executed.
Mandatory Legislative Provisions
The Arbitration Act incorporates several obligatory provisions, including:
- Requirements for the form of the arbitration agreement.
- Mandatory reference to Arbitration through courts.
- Grounds of ineligibility presumed impartiality and independence of arbitrators.
- Time limits for finishing Arbitration.
- Grounds for setting aside an arbitral award and enforcement of an arbitral award.
A violation of the provisions mentioned above can preclude reference to Arbitration, render court cases invalid or get an award set aside through courts.
Certain statutes and rules additionally offer obligatory Arbitration for specific subject matters regarding electricity law, stock market and industrial disputes. Certain statutes additionally offer obligatory, special dispute resolution mechanisms that prevent a party from arbitrating certain kinds of disputes. For example, disputes regarding work contracts in certain states must be submitted to a specialized tribunal, and the legislation prevents parties from submitting such disputes to Arbitration. Further, consumer disputes and disputes regarding real estate projects among builders and buyers now fall inside the purview of particular statutory dispute resolution authorities, which preclude the reference of such disputes to Arbitration.
Under Indian regulation, the disputes that Arbitration cannot solve include:
- Criminal offences.
- Matrimonial disputes.
- Guardianship matters.
- Insolvency petitions.
- Testamentary suits.
- Trust disputes.
- Labour and industrial disputes.
- Tenancy and eviction subjects ruled by rent control statutes.
While there may be no definitive selection at issue, present jurisprudence shows that disputes concerning competition law issues also are now no longer arbitrable. Generally, disputes in rem (concerning a thing/property) are not resolvable through Arbitration, whilst disputes in personam (concerning a particular person) can be. The law also prohibits reference to Arbitration wherein a special forum has been established to solve distinct sorts of disputes, including consumer disputes.
There are a few uncertainties approximately the arbitrability of Intellectual Property (IP) law disputes. However, the prevailing view is that whilst disputes regarding IP rights are in themselves now no longer arbitrable, subordinate rights in personam like commercial arrangements regarding using IP rights are arbitrable.
Large industrial disputes are referred to famous international institutions, including the:
- International Chamber of Commerce
- Singapore International Arbitration Centre
- London Centre of International Arbitration
- Hong Kong International Arbitration Centre
Domestic arbitration institutions encompass the:
- Mumbai Centre for International Arbitration
- Nani Palkhivala Arbitration Centre
Some High Courts in India have additionally installed arbitration centres affiliated with such High Courts, including the:
- Delhi International Arbitration Centre
- Arbitration & Conciliation Centre – Bengaluru (Domestic & International), an initiative of the High Court of Karnataka.
- Jammu and Kashmir International Arbitration Centre, an initiative of the Jammu and Kashmir High Court.
Arbitration is an excellent method to remedy a dispute over either commercial or corporate matters. It is more useful, specifically when the subject matter of the dispute is quite technical, then arbitrators with the proper degree of expertise may be chosen. It is the most private method used if each party gives their consent to it, saves a lot of time in other court procedures, and is easily enforceable.