Role of International Commercial Arbitration In Adjudicating Disputes
Written by Vaishnavi Bandhakavi
Abstract:
Alternative dispute resolution (ADR) is a procedure in law that encourages parties to settle their disputes or differences either by mutual consensus or by mediation through a third party or person. It is an alternative to the traditional litigation system which is a common and centuries-old method of resolution. Now Arbitration or ADR is often used for the resolution of commercial disputes, particularly in the subject of international commercial transactions. The main purpose of arbitration is to settlement of disputes in a faster way. There are 4 types of ADR, i.e.; Arbitration, negotiation, conciliation and mediation recognized under the Arbitration and conciliation Act, 1996[1], the Legal Services Authority, 1987 and Civil Procedure Code, 1908.
INTRODUCTION:
Arbitration flourished in India since the end of the 19th century India. Arbitration in India was statutorily recognized as a form of dispute resolution for the first time when the Indian Arbitration Act, of 1899 was enacted, the act of 1940 was a reflection of the English Arbitration Act and was a comprehensive legislation, it had no provisions to deal with the enforcement of foreign award. Hence, the 1940 act attracted several criticisms and the Arbitration and Conciliation Act, of 1996 came into force, covered both domestic and international arbitration and repealed the act of 1940.
International Commercial Arbitration can be defined as a process in which the parties involved in a commercial contract agree to submit their disputes to the third party known as the arbitrator or panel of arbitrators, and then the arbitrators with their expertise in the particular field make a binding decision called an arbitral award. It is based on the evidence presented by the parties to the relevant laws agreed by the parties.
International Commercial arbitration includes Parties, confidentiality, neutrality and finality of the arbitral award.[2]
CONDUCT OF ARBITRATION:
- Notice of Arbitration: To commence the proceedings of arbitration, A notice of arbitration is sent to the other party when they wish to submit their dispute to arbitration for resolution under section 21 of the Arbitration Act. This is also the point of commencement of arbitration
- Court’s referring to arbitration: The court can refer to the subject matter of the case arbitration if the agreement contains an arbitration clause to settle the dispute among the parties under section 8 of the Arbitration and Conciliation Act
- Appointment of arbitrators: The parties have the preference to appoint arbitrators to resolve their disputes. If parties are not able to appoint the arbitrator mutually due to some issues, then the court allows parties to appoint each arbitrator of their choice, and these two arbitrators will appoint a third party who will be neutral.
The ability of the parties to appoint arbitrators with specialized knowledge is particularly useful in disputes involving technical matters in court proceedings. The party may find himself before the court which does not have sufficient experience in handling commercial disputes.
The Appointment of arbitrators can be challenged only on two criteria:
- Circumstances that raise suspicion about his or her independence or impartiality
- The arbitrators do not possess the quality of the parties require
- Interim Relief: Section 17 of the act provides interim measures of protection not just before the commencement of arbitral proceedings during but also after the arbitral award has been delivered.
If any party has an objection, the party can file a plea for the submission of a defence.
- Settlement of the disputes during the arbitration proceedings: The parties are allowed to settle the dispute mutually even if the arbitration proceedings are going on. If the parties arrive at the settlement amicably, the arbitration proceedings will be terminated.
- Arbitral Award: The decision given by the arbitrators in arbitration proceedings is known as an arbitral award taking the views of both parties and it should be in a written form signed by all the members of the tribunal[3]. In the arbitral award, the date and place where it is made must be mentioned. Each party should be entitled to acquire a copy of the arbitral award.
HOW DOES INTERNATIONAL COMMERCIAL ARBITRATION WORK?
- The process of international commercial arbitration typically begins with the parties involved in the disputes signing an arbitration agreement. This agreement outlines the terms and conditions of the arbitration process, including the rules of the procedure the choice of the arbitrator or arbitrators and a place of arbitration.
- Once the arbitration agreement is signed, the arbitration process can begin. The arbitrator or the panel of arbitration will hear the evidence and arguments from both sides and make a decision on the dispute, this decision is final and binding [4] and can only be challenged in limited circumstances such as if there was a serious irregularity in the arbitration process or the decision is contrary to public policy.
- International Commercial arbitration is governed by various international conventions and national laws including the United Nations Commission on International Trade Law UNCITRAL model law on international commercial arbitration and this model law provides a comprehensive framework for the conduct of international commercial arbitration proceedings.
WHY CHOOSE AN ARBITRATION INSTEAD OF LITIGATION:
Arbitration is often faster and efficient than traditional litigation, this is because arbitration proceedings are usually less formal and more flexible than court proceedings which can be time-consuming and costly.
Arbitration allows parties involved in the dispute to choose their own arbitrator or panel of arbitrators. This means that the parties can select arbitrators who have expertise in the subject matter of the dispute, leading to more information.
Arbitration is more confidential than traditional litigation court. Proceedings are usually public when it comes to court proceedings which means that the sensitive information about the parties involved in the dispute can be made public, when it comes to arbitration proceedings, they are usually private and the details of the dispute will be confidential.[5]
Arbitration awards are easier to enforce across borders because most countries have signed the New York Convention on the recognition and enforcement of foreign arbitral awards, which provides a framework for the recognition and enforcement of arbitration awards in different countries.
- To avoid the risk of litigation/ trail
- The main attraction of arbitration is that it can typically be enforced in most countries worldwide without re-hearing the issue.
VARIOUS INTERNATIONAL INSTITUTIONS OF ARBITRATION:
Singapore International Arbitration Center SIAC:
The Singapore International Arbitration Center has gained prominence as a leading arbitration institution in Asia. It offers a robust and efficient arbitration framework guided by the SIAC arbitration Rules. The SIAC is known for its pro-arbitration approach and commitment approach.
International Chamber of Commerce:
ICC –the International Chamber of Commerce is one of the most well-known and respected international arbitration institutions, it offers a comprehensive set of arbitration rules known as the ICC rules which provides a framework for the conduct of arbitration proceedings. The ICC provides administrative support appointment of arbitrators and ensures the smooth administration of arbitration cases ensuring qualified and experienced individuals adjudicate disputes.
Other international arbitration centres/institutions contribute to the effective resolution of cross-border disputes. These include the Stockholm Chamber of Commerce Hong Kong International Arbitration Center HKIAC and many more institutions and each institution has its unique set of rules and procedures which provide to the specific needs of parties involved in international arbitration.
CONCLUSION:
The twenty-first century has witnessed a growth in international commercial arbitration, particularly in Asia and the Middle East. The international commercial courts have been established for the resolution of International commercial disputes.
We can tell that ADR is rapidly developing at the national and international levels for a simpler way of resolving disputes. This concept should be fixed in the mind of the litigants, lawyers and judges to ensure that ADR methods are frequently adopted, which are less time-consuming [6]and although ADR techniques are supposed to be cheaper than the cost of litigation, international commercial arbitration can often prove to be more expensive than litigation, especially in complex international cases where both the parties appoint distinguishing lawyers.
Awareness needs to be created among the people about the utility of the ADR and simultaneous steps need to be taken to develop personnel who would be able to use the methods effectively, and with integrity by using these methods informally without going through formal court trails.
References:
https://primelegal.in/2022/09/24/international-commercial-arbitration-an-overview/
https://law.pepperdine.edu/blog/posts/what-is-international-commercial-arbitration.htm
[1] by Anagha K Bharadwaj , International Commercial Arbitration: An Overview, Prime Legal (24 sep )
https://primelegal.in/2022/09/24/international-commercial-arbitration-an-overview/
[2] Keyur Tripathi, The Significance of International Commercial Arbitration in Resolving Disputes, The Law Communicants, May 11, 2023,
[3] Pepperdine Caruso Law Blog, https://law.pepperdine.edu/blog/posts/what-is-international-commercial-arbitration.htm May 09, 2023
[5] Stewarts law, ARBITRATION PROCESS
[6] Gunjan Chhabra, Applicability of the Law of Limitation to Arbitration Proceedings, SCC Blog, January 16, 2021
