Arbitration Law India

Arbitrator is a technically name of a person selected with reference to an established system for friendly determination of controversy which, though not judicial, yet is regulated by law; so that the powers and duties of the arbitrator, when once he is chosen, are prescribed by law, and his doings may be judicially revised if he has exceeded his authority.  Thus, the arbitrator is a private, disinterested person, chosen by the parties to a disputed question, for the purpose of hearing their contentions, and giving judgment between them, to whose decision, called “award”, the litigants submit themselves either voluntary, or, in some cases, compulsorily, by order of court. 

The Indian arbitral system was governed by the Code of Civil Procedure 1908 until the Arbitration Act of 1940 came into force and it was later replaced by the Arbitration and Conciliation Act 1996 to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral award as also to define the law relating to conciliation. There was also the Arbitration (Protocol and Convention) Act 1937 and the Foreign Awards (Recognition and Enforcement) Act 1961. The Act is largely based on the model law of United Nations Commission for International Trade Law (UNCITRAL).  The Arbitration and Conciliation Act 1996 is largely based on the model law of United Nations Commission for International Trade Law (UNCITRAL).

The arbitration proceeding are governed by the agreement signed between the parties to the agreement and the Indian Courts have a very limited role in the arbitration proceedings.  Section 11 of the Arbitration and Conciliation Act 1996 deals with the appointment of arbitrator by the court when the other party fails to appoint the arbitrator in terms of the arbitration agreement. 

Section 9 of the Arbitration and Conciliation Act 1996 deals with the interim relief where any party to the arbitration may approach the High Court for the seeking urgent and interim relief even though the arbitration proceeding has not started.

Section 34 of the Arbitration and Conciliation Act 1996 deals with application to the Court for setting aside an award. The grounds are very limited and generally courts in India do not interfere with the award passed by the arbitrator unless there is a gross error of facts and law.

Part II of the Act deals with the enforcement of foreign award in India.  The foreign award means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India.  Any foreign award which would be enforceable under this Act shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India. 

The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court:-

a)                  The original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made.

b)                  The original agreement for arbitration or a duly certified copy.

The enforcement of a foreign award may be refused by the court on account of the following reasons:

a)                  The agreement for arbitration is not valid under the law to which parties have subjected or agreed to it and under the law of the country where the award was made.

b)                  The party against of whom the award is invoked was not given proper notice of the appointment of arbitrator or arbitral proceedings.

c)                  The award deals with a difference not contemplated by or not falling within the terms of the submissions to arbitration.

d)                  The composition of the arbitral authority or arbitral procedure was not in accordance with the agreement of the parties.

e)                  The award has not yet become binding on the parties under the law of which, the award was made.

f)                    The subject matter of the difference is not capable of settlement by arbitration under the law of India.

g)                  The enforcement of the award would be contrary to the public policy of India.

Where the court is satisfied that the foreign award is enforceable, the award shall be deemed to be a decree of that court.  The arbitration award passed by the arbitrator can be enforced through court like an order passed by the judgment of the court.