This article has been written by Ms. Tashveen Kaur , a 1st year BA LLB student from Army Institute of Law ,Mohali.
Introduction
Arbitration is a form of alternative dispute resolution that has gained widespread acceptance in India as an effective way to resolve commercial disputes. The use of arbitration in India dates back to ancient times when disputes were resolved by neutral third parties. However, the modern framework for arbitration in India has evolved over the past few centuries, reflecting the influence of British law and India’s own legal and economic development.
Early History
Arbitration has a long history in India, dating back to ancient times when village elders would resolve disputes among members of the community. The ancient Indian legal system was based on the concept of Dharma, which emphasized the importance of justice and fairness in resolving disputes. In fact, the Atharva Veda, one of the four Vedas, has references to arbitration as a means of resolving disputes.
During the Mughal era, the practice of arbitration continued to evolve, with the Mughal Emperor Akbar being known for his use of arbitration to resolve disputes among his subjects. Akbar’s court had a Diwan-e-Aam or public court that heard disputes between common people and a Diwan-e-Khas or private court that heard disputes between high ranking officials. The Diwan-e-Aam had a system of arbitrators called panchayats, which were composed of five members from the local community who would hear and resolve disputes. The Mughal era also saw the development of the Panchayat system, which was used to resolve disputes at the village level.
British Influence
With the arrival of the British in India in the 18th century, the legal system underwent significant changes. The British introduced their own legal system, which was based on the common law system of England. The first codified law in India was the Indian Contract Act, 1872, which recognized the validity of arbitration agreements and provided for the enforcement of arbitration awards.
The Indian Arbitration Act, 1899, was the first legislation in India that specifically dealt with arbitration. The Act was based on the English Arbitration Act, 1889, and provided a framework for the conduct of arbitration proceedings in India. The Act was amended in 1937 to provide for the appointment of an umpire in cases where the arbitrators could not reach a decision.
Post-Independence Era
After India gained independence in 1947, the Indian legal system underwent significant changes. The Constitution of India was adopted in 1950, which provided for the separation of powers between the executive, legislative, and judicial branches of government. The Constitution also provided for the establishment of an independent judiciary and the protection of fundamental rights.
The Arbitration Act, 1940, which had replaced the Indian Arbitration Act, 1899, was repealed and replaced by the Arbitration and Conciliation Act, 1996. The new Act was based on the UNCITRAL Model Law on International Commercial Arbitration and provided a modern framework for the conduct of arbitration proceedings in India.
The 1996 Act provided for the appointment of arbitrators, the conduct of arbitration proceedings, and the enforcement of arbitration awards. The Act also provided for the establishment of an arbitration council to promote the use of arbitration as a means of resolving disputes.
Recent Developments
India has recently made significant developments in its arbitration law. Some of the key developments are:
Amendment to the Arbitration and Conciliation Act, 1996: The Arbitration and Conciliation Act, 1996 was amended in 2015 to make it more arbitration-friendly. The amendments brought in provisions such as the appointment of an arbitrator within a time-bound manner, the introduction of a fast-track procedure for small claims, and the reduction of the time period for completing an arbitration proceeding.
Establishment of the New Delhi International Arbitration Centre (NDIAC): In 2019, the Indian government established the NDIAC, a world-class arbitration center in New Delhi. The NDIAC aims to provide a world-class facility for conducting international commercial arbitrations, mediations, and other forms of alternative dispute resolution.
Decriminalization of the Arbitration and Conciliation Act, 1996: In 2021, the Indian government decriminalized several provisions of the Arbitration and Conciliation Act, 1996, such as non-payment of arbitral award, non-compliance with arbitral orders, and making false statements before an arbitral tribunal. This move is expected to reduce the burden on the courts and expedite the resolution of disputes through arbitration.
Introduction of the Arbitration and Conciliation (Amendment) Bill, 2021: The Indian government introduced the Arbitration and Conciliation (Amendment) Bill, 2021, in the Lok Sabha (the lower house of the Indian parliament) in February 2021. The Bill seeks to amend the Arbitration and Conciliation Act, 1996, to make it more arbitration-friendly and to promote institutional arbitration in India.
Emphasis on the enforcement of arbitral awards: The Indian courts have been actively emphasizing the enforcement of arbitral awards. In several recent cases, the courts have refused to interfere with the arbitral award, stating that the court’s role is limited to ensuring that the arbitration process was fair and that the award is not against public policy.
Case laws:
Russel v. Russel: This landmark case in 1880 established that arbitration agreements were enforceable under Indian law. The court held that an agreement to refer a dispute to arbitration was valid and binding, and that courts had the power to enforce such agreements.
Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak: In this case, the Indian Supreme Court held that a clause in an agreement that provided for arbitration was not in itself an arbitration agreement. The clause had to be read in conjunction with the rest of the agreement to determine whether it constituted an arbitration agreement.
Conclusion
In conclusion, India has made significant developments in its arbitration law in recent years, and the government’s efforts to promote arbitration as a means of dispute resolution are expected to make India a more arbitration-friendly jurisdiction. These developments are likely to encourage more international parties to choose India as their seat of arbitration.
References
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