NAME: RUSHABH RAMESH JAIN

CLASS: 5TH YR BLS

ROLL NO: 5512
SUBJECT: ALTERNATE DISPUTE RESOLUTION
TOPIC: ARBITRATION AND INDIAN SCENARIO
 ARBITRATION AND INDIAN SCENARIO

 INTRODUCTION
Over the years, there have been many developments in the legal field when it comes to resolution of disputes
between different parties. In India there are many methods used for resolving disputes like negotiation,
arbitration, conciliation, litigation(law suits) etc. One of the most commonly used and most effective method
is arbitration.

Arbitration is an alternative dispute resolution (ADR) mechanism that provides parties with a private,
efficient, and binding method to resolve disputes outside traditional court litigation. It is particularly relevant
in commercial disputes, where time and cost efficiency are crucial. In India, arbitration has gained
significant prominence, especially after economic liberalization and the introduction of the Arbitration and
Conciliation Act, 1996. The Indian judiciary has also played a crucial role in shaping arbitration law,
reinforcing India's status as an arbitration-friendly jurisdiction. We are now fully aware of the pending cases
before the Indian courts. This pendency not only burden the courts but also highlights how tiring the
traditional judicial process a litigant can get. And this is exactly what gave rise to the need for
implementation of ADR practices in India.

 DEFINITION

Arbitration is a process where disputing parties refer their conflict to an impartial third party (the arbitrator),
whose decision (the arbitral award) is binding. According to Section 2(1)(a) of Arbitration and
Conciliation Act, 1996 “arbitration” means any arbitration whether or not administered by
permanent arbitral institution.

 WHAT IS ARBITRATION ?

Before discussing anything further we must firstly understand what exactly is the concept of arbitration.
Arbitration is a private, binding process for resolving disputes outside of court. It's an alternative to litigation
and is often used in commercial disputes.
How Arbitration works In India: When there is a conflict between two parties, arbitration comes into
action. The contract between the parties must have an arbitration clause to start an arbitration procedure. The
process is carried out in the following manner:

 Arbitration clause: A contract or an agreement signed by both parties must contain an arbitration
clause to resolve the dispute through arbitration. Arbitration clauses can be in the form of a separate
arrangement or a contract in arbitration. The party should also mention the venue for the proceeding
of the arbitration clause

 Statement of claim and defence: This provision is under section 23 of the act. An arbitrator is
appointed after both parties agree to an arbitration procedure. The claimant drafts a statement of
claims containing all the information and documents they think are relevant to the case and evidence
proving their statements. The respondent must also file written statement.

 Hearing and written procedures: The arbitrators and arbitral tribunal hear about the conflicts
between the parties and examine the evidence. Then the tribunals decide whether the information or
the evidence provided by the claimants and respondents is valid or not and proceed with the case.
This lies under Section 24

 Arbitral award: After the hearing and examination, the arbitrator gives a final award. This is
binding and final to both parties. They cannot file an appeal before the arbitrage tribunals, but the
parties can appeal in the court against the arbitral. This provision is under section 31

 Enforcement of arbitral award: After the arbitral passes the award, it has to be executed. This
provision is under sections 35 and 36, respectively

 ARBITRATION TRIBUNAL

A dispute is tendered to the arbitral tribunal instead of a regular civil court. The arbitral tribunal must then
decide on the matter. The decision is given in the form of an arbitral award, which is binding on all parties
involved.

 CHARACTERSTICS OF ARBITRATION

 Consensual: Both parties agree to arbitration before or after a dispute arises. If there is no mutual
consent then arbitration cannot take place.

 Private and Confidential: Unlike court proceedings, arbitration is not public. Any third party
that is not part of the arbitration agreement is not allowed to attend or play a part in arbitration
proceedings.
  Neutrality: Arbitrators are impartial, and the location of arbitration can be neutral.
 Finality: The arbitral award is generally final and enforceable.
 Flexibility: Parties can choose procedural rules and arbitrators based on expertise. They can also
choose any number of arbitrators but the number should be odd.

 TYPES OF ARBITRATION

The following are the types of arbitration are as follows:

Domestic Arbitration: When there is a dispute among two parties sharing a legal relationship whereby
both of them are residing or located in India, such a resolution of dispute through arbitration is termed as
domestic arbitration. In such cases, there is least confusion regarding applicable laws for deciding the
matters.

International Arbitration: International arbitration is a method of resolving disputes between parties

from different countries by submitting the issue to a neutral arbitrator or panel, who then makes a binding
decision instead of going through a traditional court system; essentially, it's a private, consensual process
where parties choose an expert to decide their cross-border dispute, allowing for greater neutrality and
flexibility compared to national courts.

Ad-Hoc Arbitration: When there is no contractual compulsion and parties agree for deciding matters
via arbitration through mutual consent, it is termed as ad-hoc arbitration. It is one of the most common types
of arbitration in India. In such cases, parties to dispute may mutually decide the process to be followed
during arbitration.

Fast Track Arbitration: Section 29B of Arbitration and Conciliation Act, 1996 provides for fast track
procedure of arbitration. Among the other kinds of arbitration, this is the most efficient way of dispute
resolution through arbitration. Things are usually summed up in documents to speed up things. Only Sole
arbitrator can be appointed by consent of parties. In this only written submissions are given and there is no
oral hearings conducted unless necessary.

Institutional Arbitration: This type of arbitration include when there is a particular institution selected
by the parties to contract in the arbitration clause, such an institution is responsible for dispute resolution
through arbitration. In such cases, parties may not be required to go through the hassle of selecting the
arbitrator while the institution takes charge for such tasks.
  LEGAL FRAMEWORK OF ARBITRATION IN INDIA

India's arbitration law is governed by the Arbitration and Conciliation Act, 1996, which is based on the
UNCITRAL Model Law on International Commercial Arbitration (1985). The Act applies to both
domestic and international arbitration and was amended in 2015, 2019, and 2021 to improve efficiency.

 Key Provisions of the Act

1. Scope and Applicability (Section 2) – Covers both domestic and international arbitration and conciliation
in India.

2. Arbitration Agreement (Section 7) – Must be in writing and agreed upon by both parties.

3. Appointment of Arbitrators (Section 11) – Parties can appoint arbitrators; in case of disagreement,
courts can intervene.

4. Interim Measures (Sections 9 & 17) – Courts and arbitral tribunals can grant temporary relief before the
final award.

5. Conduct of Arbitral Proceedings (Sections 18-27) – Arbitration must be fair, impartial, and efficient,
allowing both parties to present their case.

6. Arbitral Award (Sections 28-33) – The decision of the arbitrator(s) is binding and enforceable.

7. Setting Aside an Award (Section 34) – Limited grounds to challenge an award, such as fraud, bias, or
violation of public policy.

8. Enforcement of Awards (Sections 36-37) – Awards are treated like court decrees and enforced
accordingly.

9. Foreign Awards (Sections 44-52 & 53-60) – Recognizes and enforces foreign awards under the New
York and Geneva Conventions.

10. Amendments

2015: Reduced court interference and set a 12-month time limit for arbitration.

2019: Established the Arbitration Council of India (ACI) for regulation.

2021: Allowed courts to stay awards in case of fraud or corruption.

  EVOLUTION OF ARBITRATION IN INDIA

1.Ancient and Pre-Colonial Era: Arbitration has existed in India since ancient times. Disputes were
often resolved by village elders, panchayats.

2.British Colonial Period: The first formal arbitration law was introduced under the Regulation Act of
1772, allowing courts to refer disputes to arbitration. The Indian Arbitration Act, 1899 was enacted, applying
only to Presidency towns (Calcutta, Bombay, Madras). Arbitration Act, 1940 replaced earlier laws.

3.Post-Independence Era (1947-1990s): The Arbitration Act, 1940, remained in force but was
ineffective due to delays and excessive court intervention.

4.Modern Arbitration: Arbitration and Conciliation Act, 1996: Based on the UNCITRAL
Model Law (1985), it aimed to make arbitration in India more efficient.

 KEY ASPECTS OF GROWTH OF ARBITRATION IN INDIA

1.Legislative Reforms: The Arbitration and Conciliation Act, 1996 aligned India with international
arbitration standards. Amendments in 2015, 2019, and 2021 improved efficiency, reduced judicial
interference

2.Rise of Institutional Arbitration: Establishment of institutions like MCIA (Mumbai Centre for
International Arbitration), ICA (Indian Council of Arbitration). Companies are increasingly choosing
institutional arbitration over ad hoc arbitration.

3.Online Dispute Resolution (ODR): After COVID -19, growth of digital arbitration platforms has
improved accessibility and efficiency.

 CHALLENGES IN INDIAN ARBITRATION

1.Delay and Inefficiency: Despite arbitration being faster than litigation, delays occur due to excessive
court intervention, complex procedural requirements, and lack of skilled arbitrators.

2. Costs: Arbitration can be expensive, especially in high-stake disputes requiring expert arbitrators and
legal counsel.
3. Lack of Awareness and Institutional Support: Many businesses still rely on litigation due to a
lack of awareness about arbitration benefits. Additionally, institutional arbitration in India is not as
developed as in Singapore or London.

4.Enforcement Issues: Although arbitration awards are binding, their enforcement can be delayed due
to judicial intervention.

 LANDMARK CASES
 Bhatia International V/S Bulk Trading S.A

Bhatia International and Bulk Trading S.A. had entered into a contract for the sale and purchase of goods.
The contract contained an arbitration clause that specified that disputes would be resolved by arbitration in
accordance with the rules of the International Chamber of Commerce (ICC) in Paris.
The dispute arose between the parties, and Bhatia International initiated arbitration proceedings under the
A&C Act. The respondent, Bulk Trading S.A., objected to the jurisdiction of the Indian courts to entertain
the arbitration proceedings. The main issue was Whether Part I of the A&C Act which deals with the
domestic arbitration process, would apply to international arbitrations seated in India?. The Supreme
court held that the Court held that Part I of the A&C Act, would apply to international
arbitrations conducted in India unless the parties explicitly excluded its application. The court further said
that the provisions related to domestic arbitration, including those dealing with interim relief and appeal
procedures, could be invoked in international arbitrations unless the parties had specifically chosen not to
apply them. The SC clearly allowed parties to international arbitrations seated in India to seek interim
relief from Indian courts under Part I of the act.

 Bharat Aluminium Co. V/S Kaiser Aluminium Technical Service, Inc

On 22nd April, 1993 an agreement was signed between Bharat Aluminum Company (BALCO) and Kaiser
Aluminium Technical Services for the supply and installation of a computer system at the premises of
BALCO. The agreement contained an arbitration clause specifying that disputes would be resolved under
English Arbitration Law with London as the place for arbitration. The arbitration proceedings were to be
conducted according to English law but the governing law of the agreement was Indian law. Disputes arose
between the parties and accordingly the matter was referred to arbitration in England where the arbitral
tribunal issued two awards. BALCO sought to challenge these awards in India under Section 34 of the
Arbitration and Conciliation Act, 1996. The District Court, Bilaspur and the High Court of Chhattisgarh
rejected the appeals filed by the BALCO. Aggrieved by the decisions of the lower courts, BALCO filed an
appeal in the Supreme Court of India. The main issues were does Part I of the Arbitration and Conciliation Act,
1996, apply to arbitrations conducted outside of India? The Supreme Court held that the purpose of section 2(7)
of the Act is to clearly differentiate between Parts I and II, with sections that apply to completely different
domains with no overlap, and the domestic award (Part I of the Act) and the “foreign award” (Part II of the
Act). Additionally, the Court distinguished between a “seat” and a “location,” which is crucial if the
arbitration agreement designates a foreign country as the arbitration’s “seat” and selects the Act as the curial
law governing the proceedings. The Court continued by stating that choosing a different country as the
arbitration’s seat always means that the rules governing that country’s arbitration oversight and behaviour
will apply to the proceedings.

 CONCLUSION

Arbitration in India has come a long way, evolving into a more efficient and globally competitive dispute
resolution mechanism. However, challenges like judicial interference, delays in proceedings, high costs, and
enforcement uncertainties still hinder India's arbitration landscape. To fully establish India as an arbitration
hub, stakeholders—including the government, judiciary, and arbitration institutions—must work together to
promote institutional arbitration, build skilled arbitrators, and leverage technology for seamless proceedings.
With sustained efforts, India has the potential to become a preferred destination for both domestic and
international arbitration.