An arbitration agreement is a contractual agreement between the parties to resolve their disputes by arbitration. While arbitration agreements come in many forms, care must be taken with their drafting to ensure their validity and enforceability.
For a careful drafting of the arbitration agreement The Law Codes have a dedicated team of arbitration lawyers in Chandigarh who look into the minute details and finer nuances of the contract to avoid any unnecessary dispute in future.
ESSENTIAL MATTERS TO INCLUDE IN AN ARBITRATION CLAUSE
In an arbitration clause, the parties should always:
- Select a seat;
- Consider whether they wish to select the rules of an arbitration institution or have an ad hoc arbitration;
- Consider the number of arbitrators and their appointment method;
- Choose the language of the arbitration;
- Include provisions on governing law.
Our expert team of arbitration lawyers in Chandigarh make sure that all the essential requirements of the arbitration clause are duly complied with, and are drafted in a crystal clear manner to avoid any ambiguity.
SELECTING THE TRIBUNAL OR ARBITRATOR
Choosing an arbitrator is one of the most important steps in the arbitration process. In addition to choosing an arbitrator that they trust, in whom they have confidence and who will run the arbitration properly, the parties should bear in mind the following consideration when selecting an arbitrator:
- Independence and no conflict of interest
- No partiality and bias
- Pre-disposition towards the dispute
- Nationality and language
- Formal Qualifications
We at The Law Codes appoint our most experienced and reputed arbitration lawyers in Chandigarh to act as Arbitrators for various companies, firms, corporations etc.
THE NEW YORK CONVENTION OF 1958
International enforceability of arbitral judgments is a critical component in arbitration’s growing popularity as a method of resolving business disputes, at least on an international level. Over 140 nations have joined the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Judgments (the New York Convention), which commits party states to recognizing and enforcing arbitral awards rendered in other party states throughout the world.
The New York Convention provides for the effective implementation of arbitral awards around the world. It so lays the groundwork for international arbitration to become a globally recognized means of resolving disputes, all the more so given the Convention’s limited grounds for refusing acceptance and enforcement. Without it, arbitration would not be as widely used as it is today.
By contrast, the absence of an equivalent recognized and multilateral international mechanism for enforcing a foreign court judgment remains a concern in the majority of the world’s jurisdictions. While foreign court judgments may be implemented under regional regimes and between governments that have engaged into reciprocal enforcement treaties, regional or mutual regimes have a far smaller scope of application than the New York Convention.
At the national level, national courts confer legal authority to arbitrations and awards. That state’s legislation governs arbitrations held within its borders. Each state has its own Legislation regulating the relationship between arbitrations and awards and the courts. Legislation varies according to state, while it is increasingly determined by a model or template law- The United Nations Commission on International Trade Law ( UNCITRAL) Model Law.
By and large, states have shifted their preference toward arbitration and have grown less likely (or willing) to intervene with awards. In theory, an award made somewhere in the world should be enforceable everywhere, without the need for a court to review the arbitrators’ decision). Naturally, there are qualifications to this. However, the independence of awards from judicial review is another significant element in the increasing number of parties electing to arbitrate their conflicts.
THE MODEL LAW AND THE CONCILIATION RULES
The 1996 Act, with some modifications, adopts the UNCITRAL Model Law in entirety. It also adopts and legislates the UNCITRAL Conciliation Rules with necessary modifications for defining the law relating to Conciliation, and for matters connected therewith or incidental thereto. This legislation marks a radical departure from the 1940 Act. Its provisions, therefore, have to be interpreted and construed independently, uninfluenced by the principles underlying the 1940 Act.
THE ARBITRATION AND CONCILIATION ACT, 1996.
It is intended to provide a unitary non-interventionist for domestic and international commercial arbitrations in India. The 1996 Act is designed to create an entirely new landscape of the arbitration regime as it leaves the substance of the previous law developed over near half a century unimpaired.
The 1996 Act Is a Self-Contained Code
The 1996 Act is a self-contained code and a complete answer for all matters relation to arbitration. For an act to be a self-contained code, it must be shown that the special statute is a complete legislation for the purpose for which it was enacted, or under which the applicability of any other statute is barred by specific language, or by necessary implication. The 1996 Act excludes the applicability of general law procedure, and complete code for designing, consolidating and amending the law relating to domess arbitration, international commercial arbitration and enforcement of foreign arbitral awards,
In P.S. Sathappan & Andhra Bank Ltd., the Supreme Court held that the provisions of the 1940 Act did not save the jurisdiction of the courts under any other law in force. Subsequently, in Fuerst Day Lauson Ltd. v Jindal Exports Ltd., the Supreme Court held that where a special Act sets out a self-contained code, the applicability of the general law procedure would be impliedly excluded. Since the 1940 Act was held to be a self contained code from its inception till 2004, the 1996 Act, which aimed at consolidating amending, and designing the law relating to arbitration, must be held to be more so. The 1996 Act carries with it, negative import that only such acts as are mentioned in the Act are permissible to be done, and acts or things not mentioned therein are not permissible to be done”.
DOMESTIC AND INTERNATIONAL COMMERCIAL ARBITRATIONS
Domestic Arbitration – The expression ‘domestic arbitration has not been defined in the Act, though it finds place in the long title of the Act. Section 2(2) provides that Part I shall apply where place of arbitration is in India’, while Section 2(7) further provides that an arbitral award made under this Part shall be considered as a ‘domestic award’. From a conjunction of these two provisions, it is evident that an arbitration held in India, the outcome of which is a domestic award under Part I of this Act, is a domestic arbitration. It would, therefore, comprehend an arbitration to a dispute which has arisen or may arise, between the parties, in respect of a defined legal relationship, whether contractual or not. Thus, an arbitration is a domestic arbitration if it is held under the provisions of Part 1 of this Act, at a place in India. Conversely, an arbitration, which is either not held under Part I of this Act, though held in India, is not a domestic arbitration under Part I of this Act.
International Commercial Arbitration has been defined in Section 2(f) of this Act according to which it means:
(1) an arbitration relating to disputes arising out of legal relationships;
(2) whether contractual or not;
(3) considered as commercial under the law in force in India; and
(4) Where at least one of the parties is
(i) An individual who is a national of, or habitual resident in, any country other than India;
(ii) A body-corporate which is incorporated in any country other than India:or
(iii) A company, an association or a body of individuals whose central management and control is exercised in any country other than India; or
(iv) The government of a foreign country. Such international commercial arbitration may be a domestic arbitration if it is held under the provisions of Part 1 of this Act at a place in India. In other words, if an international commercial arbitration is not held under provisions of Part I of this Act or is held at a place outside India, it will not be governed by the provisions of Part I of this Act.
CONSTITUTIONAL VALIDITY OF THE ACT
The constitutional validity of the 1996 Act has been upheld by the Supreme Court in Babar Ali vs. Union of India, (2000) 2 SCC 178. In view of the judicial review being available for challenging the award in accordance with the procedure laid down in the Act, the court held that there is no question of the Act being unconstitutional. The mere fact that the question of jurisdiction of the arbitrator is required to be considered after the award is passed and not at an earlier stage is no ground to say that the order appointing the arbitrator is not subject to any judicial scrutiny. The Parliament can legitimately prescribe the time, manner and extent of judicial scrutiny in the Act. Therefore, the challenge to the vires of the Act is not sustainable.
ARBITRATION COUNCIL OF INDIA
Part IA of the 1996 Act was inserted by the Arbitration and Conciliation (Amendment) Act, 2019 with 13 sections. It makes provisions for the constitution, functions and duties of a council known as Arbitration Council of India (ACI) to perform the duties, and discharge the functions under the 1996 Act. The ACI will be a body corporate, having perpetual succession and will comprise of members having substantial experience in arbitration law and practice.
ACI is required to take all such measures to promote and encourage arbitration, mediation, conciliation and other alternative mechanisms and for that purpose to frame policy and guidelines for establishment, operation asnd maintenance of uniform professional standards with respect to matters relating to arbitration. The ACI is also vested with the function of grading arbitration institutions and arbitrators on the basis of criteria set out in the Act.
International arbitration is becoming more and more popular as a means of settling international conflicts. As worldwide commerce and trade expand, so does the need for international arbitration to enforce agreements and protect rights on a global scale. International trade disputes, finance disputes, infrastructure and project disputes, and oil and gas disputes are all increasingly addressed in this manner. This association between increased international business and increased international arbitration is not coincidental. It is the result, in large part, of the combination of one significant multilateral international development and one deeply human concern: the establishment of and worldwide subscription to the 1958 New York Convention, as well as a reluctance on the part of many parties to litigate their disputes in less developed country courts.
Thus, international arbitration might be viewed broadly as an agreement:
- Between two parties to resolve a dispute through the use of an arbitrator (or arbitrators) whose decision is final and binding;
- The judgment is conclusive: it is not amenable to judicial review; and
- That is globally enforceable.
Our distinguished panel of arbitration lawyers in Chandigarh are renowned for handling complex arbitration matters across multiple jurisdictions, for an effective and favorable outcome for our International Clients.
WHY CHOOSE INTERNATIONAL ARBITRATION?
There are numerous reasons why parties to a commercial agreement may choose international arbitration instead of litigation before a national court. The flexibility of arbitration and enhanced international enforceability of arbitral awards are few important considerations. Apart from these there are many factors that the parties to a dispute should consider when referring a dispute for arbitration. Some of the advantages of international arbitration are:
- International enforceability
- Party autonomy and procedural flexibility
- Neutrality of forum
- Expertise of Tribunal Members
- Finality of decision
- Privacy and confidentiality
- Cost and speed
TYPES OF INTERNATIONAL ARBITRATION
- Institutional Arbitration
- Ad-hoc Arbitration
The award records the tribunal’s or sole arbitrator’s decision on the substantive issues raised. As such, it differs from a procedural ruling, which will generally deal with case management issues. Awards, in contrast, cannot be appealed to the tribunal. Subject to the limited grounds of challenge, an award is final and binding between the parties. As a consequence, a claimant cannot bring the same claims in a different arbitration or court proceedings.