A PROJECT REPORT ON

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION

SUBMITTED TO: MR. VIKRAM
KUMAR

FACULTY OF A.D.R.

SUBMITTED BY:

KUMAR SAURABH BHANU ROLL NO: 227; 6TH SEMESTER ,

3RD YEAR

CHANAKYA NATIONAL LAW

ACKNOWLEDGEMENT

UNIVERSITY

As a child, you acknowledged everything you accomplished, as you grow older and more sophisticated, you acknowledge only major accomplishments but an endeavour of this magnitude would not have been possible without the invaluable help and support of Mr. Vikram sir, I express a deep sense of gratitude to him. But I still fail to understand the scarcity of this page to put in the efforts of all those people who helped me and guided me through this small part of the paper that I have completed. Anything that I do in my life is incomplete without the blessings of my God who are my parents only.

KUMAR SAURABH BHANU

METHODOLOGY OF RESEARCH

SUBJECT: A.D.R. TOPIC: UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION OBJECTIVES: 1. To understand the necessity of UNCITRAL MODEL LAW. 2. To analyze the UNCITRAL Model Law on International Commercial Arbitaration in solving dispute. RESEARCH METHODOLOGY: Keeping the objectives in mind, material was collected with the help of different books and then it was compiled to make the theoretical part of the project. Recent and important case laws are analyzed. The methodology of my research is doctrinaire method. RESEARCH TOOLS: The research of this project was carried with the help of the Internet and Library of Chanakya National Law University. FOOTNOTING STYLE: In whole of my project uniform footnoting style is adopted in conformity Chanakya National Law University, Patna footnoting style along with blue book.

TABLE OF CONTENT
1. INTRODUCTION..........................................................................................................5 2. WHY INTERNATIONAL COMMERCIAL ARBITRATION?...................................7 3. HISTORICAL EVOLUTION OF UNCITRAL MODEL LAW ON

INTERNATIONAL COMMERCIAL ARBITRATION .............................................8 4. BACKGROUND TO THE MODEL LAW..................................................................9 5. WHAT IS UNCITRAL?............................................................................................11 6. BASIC FEATURES OF INTERNATIONAL COMMERCIAL ARBITRATION ....12 7. UNCITRAL AND ITS WORKING METHODS........................................................13 8. SALIENT FEATURES OF THE MODEL LAW.......................................................14 9. INDIAN LAW.........................................................................................................17 10. CONCLUSION.......................................................................................................23 11. BIBLIOGRAPHY.....................................................................................................24

INTRODUCTION

A commercial dispute subject to arbitration and in which a significant international elements exists such as, for example, the head offices of the disputants are different countries or the performance of the underlying contract is in a foreign state. Due to the rise of globalization and the expansion of trading frontiers, international commercial transactions have significantly increased in both number and complexity1. Not surprisingly, this resulted in an increasing number of disputes2. Although national courts are the traditional venues for dispute resolution, parties are more frequently turning to arbitration as a favourable alternative.3 Increasingly, arbitration is recognised as the most effective method of solving commercial disputes, especially those of an international dimension. It can achieve equitable solutions more quickly than litigation, and at less cost; it allows parties to adopt whatever procedure they choose for the resolution of differences; it enables parties to decide where disputes shall be heard4. The Indians have long been aware of the advantages of arbitration, acknowledging its value as a method of resolving disputes, and more recently has extended tradition by the statutory adoption of the UNCITRAL Model Law for international commercial arbitration and the UNCITRAL Rules of Arbitration, with relevant modifications to fit into its institutional framework. The UNCITRAL Model Law on International Commercial Arbitration was first published in 1985 and amended in 1996. The agency for future development and promotion of the Model Law is UNCITRAL. The Model Law is a comprehensive code for arbitration with a special focus on international commercial arbitration. The goal is to have individual states adopt
1

See KATHERINE LYNCH, THE FORCES OF ECONOMIC GLOBALIZATION: CHALLENGES TO THE REGIME OF INTERNATIONAL COMMERCIAL ARBITRATION 1-2 (2003) (explaining that technological innovations and free trade agreements led to an increase in the number of cross-border transactions, making business strategies and practices increasingly complex). 2 See William Wang, Note, International Arbitration: The Need for Uniform Interim Measures of Relief , 28 BROOK. J. INTL L. 1059, 1059 (2003) (noting that increased international trade fostered disputes between states, businesses, and individuals); see also JULIAN D. M. LEW ET AL., COMPARATIVE INTERNATIONAL COMMERCIAL ARBITRATION 1 (2003) (identifying differing commercial and legal traditions, cultural norms, geography, and politics as sources of disputes in international transactions). 3 See Thomas E. Carbonneau, The Ballad of Transborder Arbitration, 56 U. MIAMI L. REV. 773, 778 (2002) (noting the emerging primacy of international commercial arbitration as the mechanism for resolving contractual disputes); Michael Pryles, The Growth of International Arbitration , AUSTRALIAN GOVERNMENT, ATTORNEYGENERALS DEPARTMENT http://www.ag.gov.au/www/ rwpattach.nsf/viewasattachmentPersonal/0417185A03AF31B7CA256C8A000251 87/$file/GrowthINtArb.pdf (last visited Apr. 14, 2010) (analyzing available arbitration statistics from different Asian and Pacific regions and identifying an upward trend in the use of arbitration); Tatyana V. Slipachuk & Per Runeland, Kiev: From Zero to 800 Cases Per Year in Less than 10 Years, 11 AM. REV. INTL ARB. 585, 586 (2000) 4 http://www.ficci-arbitration.com/htm/arbiinindia.htm visited on 27-03-2011 at 3.19 p.m

the Model Law internally and the treaty is drafted accordingly. All major commercial and trading states have signed on to the first edition of the Model Law (1985) (Canada was one of the first to do so, in 1986, though they had been one of the last to sign onto the 1958 New York Convention - which they also signed in 1986). The most important feature of the Model Law is the aspect of the reciprocal registration and enforcement of awards rendered pursuant to it. In this way, once an arbitration award has been rendered in one country, the res judicata follows the parties anywhere in the world and it is enforceable in any state that has signed onto the Model Law - thus hindering those who wish to frustrate an award against them. But regardless as to whether their state of citizenship Or which houses the corporation, has signed onto the Model Law, many participants in international trade agreements agree in writing to be contractually bound to the provisions of the Model Law by an arbitration agreement or arbitration clause which refers to it. Section 2(f) of the Arbitration and Conciliation Act, 1996 deals International commercial arbitration means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is(i) An individual who is a national of, or habitually resident in, any country other than India; or (ii) A body corporate which is in corporate in any on n try other than India; or (iii) A company or 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;

WHY INTERNATIONAL COMMERCIAL ARBITRATION? The emergence of modern international commercial arbitration is attributable to Increasing growth in international trade, commerce and investment among states and foreign companies. It thus transcends national frontiers in scope, content and nature5. While national arbitration is governed by a single law, international commercial arbitration however operates within a framework of different laws, national and international6, including international conventions, such as the New York Convention and the International Convention for the Settlement of Investment Disputes (ICSID)

5 6

See Redfern and Hunter supra note6 at page 14 Hans Van Houtte, The Law of International Trade, chapter 11.

HISTORICAL EVOLUTION OF UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION

The UNCITRAL Model Law on International Commercial Arbitration was adopted by the United Nations Commission on International Trade Law (UNCITRAL) on 21 June 1985, at the close of the Commission's 18th annual session. The General Assembly, in its resolution 40/72 of 11 December 1985, recommended "that all States give due consideration to the Model Law on International Commercial Arbitration, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice".

The Model Law constitutes a sound and promising basis for the desired harmonisation and improvement of national laws. It covers all stages of the arbitral process from the arbitration agreement to the recognition and enforcement of the arbitral award and reflects a worldwide consensus on the principles and important issues of international arbitration practice. It is acceptable to States of all regions and the different legal or economic systems of the world.

The form of a model law was chosen as the vehicle for harmonization and improvement in view of the flexibility it gives to States in preparing new arbitration laws. It is advisable to follow the model as closely as possible since that would be the best contribution to the desired harmonisation and in the best interest of the users of international arbitration, who are primarily foreign parties and their lawyers.

BACKGROUND TO THE MODEL LAW The Model Law is designed to meet concerns relating to the current state of national laws on arbitration. The need for improvement and harmonisation is based on findings that domestic laws are often inappropriate for international cases and that considerable disparity exists between them. Inadequacy of domestic laws A global survey of national laws on arbitration revealed considerable disparities not only as regards individual provisions and solutions but also in terms of development and refinement. Some laws may be regarded as outdated, sometimes going back to the nineteenth century and often equating the arbitral process with court litigation. Other laws may be said to be fragmentary in that they do not address all relevant issues. Even most of those laws which appear to be up-to-date and comprehensive were drafted with domestic arbitration primarily, if not exclusively, in mind. While this approach is understandable in view of the fact that even today the bulk of cases governed by a general arbitration law would be of a purely domestic nature, the unfortunate consequence is that traditional local concepts are imposed on international cases and the needs of modern practice are often not met.

The expectations of the parties as expressed in a chosen set of arbitration rules or a "one-off" arbitration agreement may be frustrated, especially by a mandatory provision of the applicable law. Unexpected and undesired restrictions found in national laws relate, for example, to the parties' ability effectively to submit future disputes to arbitration, to their power to select the arbitrator freely, or to their interest in having the arbitral proceedings conducted according to the agreed rules of procedure and with no more court involvement than is appropriate. Frustrations may also ensue from non-mandatory provisions which may impose undesired requirements on unwary parties who did not provide otherwise. Even the absence of non-mandatory provisions may cause difficulties by not providing answers to the many procedural issues relevant in an arbitration and not always settled in the arbitration agreement.

Disparity between national laws Problems and undesired consequences, whether emanating from mandatory or nonmandatory provisions or from a lack of pertinent provisions, are aggravated by the fact that national laws on arbitral procedure differ widely. The differences are a frequent source of concern in international arbitration, where at least one of the parties is, and often both parties
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are, confronted with foreign and unfamiliar provisions and procedures. For such a party it may be expensive, impractical or impossible to obtain a full and precise account of the law applicable to the arbitration. Uncertainty about the local law with the inherent risk of frustration may adversely affect not only the functioning of the arbitral process but already the selection of the place of arbitration. A party may well for those reasons hesitate or refuse to agree to a place which otherwise, for practical reasons, would be appropriate in the case at hand. The choice of places of arbitration would thus be widened and the smooth functioning of the arbitral proceedings would be enhanced if States were to adopt the Model Law which is easily recognisable, meets the specific needs of international commercial arbitration and provides an international standard with solutions acceptable to parties from different States and legal systems.

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WHAT IS UNCITRAL? The United Nations Commission on International Trade Law (UNCITRAL) was established by the United Nations General Assembly by its Resolution 2205 (XXI) of 17 December 1966 "to promote the progressive harmonization and unification of international trade law. The UNCITRAL Model Law provides a pattern that law-makers in national governments can adopt as part of their domestic legislation on arbitration. The Model Law is designed to assist States in reforming and modernizing their laws on arbitral procedure so as to take into account the particular features and needs of international commercial arbitration. It covers all stages of the arbitral process from the arbitration agreement, the composition and jurisdiction of the arbitral tribunal and the extent of court intervention through to the recognition and enforcement of the arbitral award. It reflects worldwide consensus on key aspects of international arbitration practice having been accepted by States of all regions and the different legal or economic systems of the world7.

http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html visited on 27-032011 at 1.11 p.m

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BASIC FEATURES OF INTERNATIONAL COMMERCIAL ARBITRATION International commercial arbitration is held in place by four basic features as follows:-

a. The Agreement to Arbitrate:-International commercial arbitration is founded on the consent of the parties to the dispute. There are two classical forms of arbitration agreements; namely the arbitration clause which refers future disputes to an arbitration. The other is the submission agreement which is usually formulated after a dispute has arisen and the parties agree to arbitrate. The non conventional form is the Standing Offer in Bilateral Investment Treaties (BITs) between states8. By invoking the standing offer in a BIT, when disputes arise; private companies are able to initiate arbitral proceedings against sovereign states. Generally, without a valid arbitration agreement, an arbitral award may not be enforced under the New York Convention.

b. The Choice of Arbitrators: - The parties have the choice in appointing their own arbitrators, who may be experts in international arbitration and or persons with requisite trade or industrial experience in the subject matter of dispute. By this, trade usages and conventions are brought to bear on the final awards delivered by such arbitral tribunals.

c. The Decision of the Arbitral Tribunal: - It takes the form of an award which is final and binding. As compared to judgment of a court, arbitral awards are not subject to formal appeals, though such decisions could be challenged on stated grounds, for example that the tribunal was not established in accordance to the agreement of the parties.

d. The Enforcement of the Award: - Arbitral awards are enforceable like court judgments. Where a losing party defaults in satisfying an award, the victorious party can enforce it in the court of the country, where the losing party has its assets located. The uniqueness about arbitral awards is that it can be enforced internationally under the New York Convention, unlike a judgment of a court. This makes international commercial arbitration attractive to the international business community.

See Redfern and Hunter supra note 1 at page78.

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UNCITRAL AND ITS WORKING METHODS UNCITRAL is an organ of the United Nations, formed in 1967 with twenty-nine Member States9.It derives its authority from the United Nations, and its membership now includes sixty states. Its mandate is to harmonize and modernize the law of international trade10. It pursues these goals by preparing both legislative and non-legislative instruments for use in commercial law including, inter alia, bankruptcy, transport law, sales, and securitization11.

UNCITRAL conducts its work through:

(i) The Commission (ii) Working Groups (iii) The Secretariat

The Commission, at its annual plenary sessions, sets the agenda including future work topics, monitors the work of the Working Groups, reviews technical assistance efforts, and finalizes texts prepared by working groups. Working Groups draft the substantive instruments for specific issue areas12.UNCITRALs Working Methods have evolved in part out of the flexible and adaptive approach that UNCITRAL has taken to its procedures. UNCITRAL has no official rules of procedure13.

G.A. Res. 2205 (XXI), U.N. Doc. A/6396. (Dec. 17, 1966). UNCITRAL, GUIDE: BASIC FACTS, supra note 1, at 1. 11 See the full list of original topics including international sale of goods; international commercial arbitration; transportation; insurance; international payments; intellectual property; elimination of discrimination in laws affecting international trade; agency; and legalization of documents. Report of the United Nations Commission on International Trade Law on the Work of its First Session , 23 U.N. GAOR Supp. (No. 16), 40, 48, U.N. Doc. A/7216 (1968), reprinted in [1968 1970] 1 U.N. Commn on Intl Trade L. Y.B. 77, 7881. 12 Id. at 3941 (listing Working Groups); id. at 4548 (listing UNCITRAL texts). 13 UNCITRAL, Frances Observations on UNCITRALs Working Methods, 2, U.N. Doc. A/CN.9/635 (May 24, 2007) [hereinafter UNCITRAL, Frances Observations].
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SALIENT FEATURES OF THE MODEL LAW SPECIAL PROCEDURAL REGIME FOR INTERNATIONAL COMMERCIAL ARBITRATION The principles and individual solutions adopted in the Model Law aim at reducing or eliminating the above concerns and difficulties. As a response to the inadequacies and disparities of national laws, the Model Law presents a special legal regime geared to international commercial arbitration, without affecting any relevant treaty in force in the State adopting the Model Law. While the need for uniformity exists only in respect of international cases, the desire of updating and improving the arbitration law may be felt by a State also in respect of non-international cases and could be met by enacting modern legislation based on the Model Law for both categories of cases. Substantive and territorial scope of application The Model Law defines arbitration as international if "the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States" (article 1(3)). The vast majority of situations commonly regarded as international will fall under this criterion. In addition, an arbitration is international if the place of arbitration, the place of contract performance, or the place of the subject-matter of the dispute is situated in a State other than where the parties have their place of business, or if the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country. As regards the term "commercial", no hard and fast definition could be provided. Article 1 contains a note calling for "a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not". The footnote to article 1 then provides an illustrative list of relationships that are to be considered commercial, thus emphasizing the width of the suggested interpretation and indicating that the determinative test is not based on what the national law may regard as "commercial".

Another aspect of applicability is what one may call the territorial scope of application. According to article 1(2), the Model Law as enacted in a given State would apply only if the place of arbitration is in the territory of that State. However, there is an important and reasonable exception. Articles 8(1) and 9 which deal with recognition of arbitration agreements, including their compatibility with interim measures of protection, and articles 35 and 36 on recognition and enforcement of arbitral awards are given a global scope, i.e. they

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apply irrespective of whether the place of arbitration is in that State or in another State and, as regards articles 8 and 9, even if the place of arbitration is not yet determined.

The strict territorial criterion, governing the bulk of the provisions of the Model Law, was adopted for the sake of certainty and in view of the following facts. The place of arbitration is used as the exclusive criterion by the great majority of national laws and, where national laws allow parties to choose the procedural law of a State other than that where the arbitration takes place, experience shows that parties in practice rarely make use of that facility. The Model Law, by its liberal contents, further reduces the need for such choice of a "foreign" law in lieu of the (Model) Law of the place of arbitration, not the least because it grants parties wide freedom in shaping the rules of the arbitral proceedings. This includes the possibility of incorporating into the arbitration agreement procedural provisions of a
"foreign"

law, provided there is no conflict with the few mandatory provisions of the Model

Law. Furthermore, the strict territorital criterion is of considerable practical benefit in respect of articles 11, 13, 14, 16, 27 and 34, which entrust the courts of the respective State with functions of arbitration assistance and supervision. Delimitation of court assistance and supervision

As evidenced by recent amendments to arbitration laws, there exists a trend in favour of limiting court involvement in international commercial arbitration. This seems justified in view of the fact that the parties to an arbitration agreement make a conscious decision to exclude court jurisdiction and, in particular in commercial cases, prefer expediency and finality to protracted battles in court. In this spirit, the Model Law envisages court involvement in the following instances. A first group comprises appointment, challenge and termination of the mandate of an arbitrator (articles 11, 13 and 14), jurisdiction of the arbitral tribunal (article 16) and setting aside of the arbitral award (article 34). These instances are listed in article 6 as functions which should be entrusted, for the sake of centralization, specialization and acceleration, to a specially designated court or, as regards articles 11, 13 and 14, possibly to another authority (e.g. arbitral institution, chamber of commerce). A second group comprises court assistance in taking evidence (article 27), recognition of the arbitration agreement, including its compatibility with court-ordered interim measures of protection (articles 8 and 9), and recognition and enforcement of arbitral awards (articles 35 and 36).

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Beyond the instances in these two groups, "no court shall intervene, in matters governed by this Law". This is stated in the innovative article 5, which by itself does not take a stand on what is the appropriate role of the courts but guarantees the reader and user that he will find all instances of possible court intervention in this Law, except for matters not regulated by it (e.g., consolidation of arbitral proceedings, contractual relationship between arbitrators and parties or arbitral institutions, or fixing of costs and fees, including deposits). Especially foreign readers and users, who constitute the majority of potential users and may be viewed as the primary addressees of any special law on international commercial arbitration, will appreciate that they do not have to search outside this Law.

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INDIAN LAW Arbitration and Conciliation Act, 1996 is an Act to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto. The Indian Arbitration and Conciliation Act, 1996 is based on the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 198514. The word commercial as such has not been defined anywhere in the Arbitration and Conciliation. References have been made to international commercial arbitration and has been dealt specifically under s.2 (1)(f) of the Act. s.2 (1) (f) runs as follows: International commercial arbitration means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is(i) An individual who is a national of, or habitually resident in, any country other than India; or (ii) A body corporate which is in corporate in any on n try other than India; or (iii) A company or 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; In Blacks Law Dictionary, commercial is defined as: is occupied with business commerce. The term commercial should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not.

s.2(1)(f) of Indian Arbitration and Conciliation Act, 1996 deals with international commercial arbitration. The definition of international commercial arbitration in s.2 (1)(f) has two elements, one physical and the other conceptual. The physical element is that one party
14

http://legalservicesindia.com/article/article/commercial-matter-under-indian-arbitration-&-conciliation-act1996-376-1.html visited on 27-03-2011 at 2.44 p.m.

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should be foreigner, namely either a foreign national or resident, or a foreign body corporate, or a company, an association or body of individuals whose central management or control is in foreign hands or a government of some foreign country. The conceptual element is that the legal relationship between parties, contractual or otherwise, must be such as is considered commercial under Indian laws. Commercial arbitration The position and duties of an arbitrator in commercial arbitration have undergone significant changes. Courts have gone very far in ignoring the technicalities and irregularities on the part of such arbitrators unless there is some substantial error behind them. Mere technical objections based on irregularities and defects in form and procedure are not encouraged.[1] But this does not mean that commercial men are entitled to ignore the fundamental principles of justice and fair play. In commercial arbitrations the arbitrators are bound to decide the questions if raised under the arbitration clause as to frustration, limitation and other defences. The arbitrators are also competent to decide questions of law, existence of customs or usage in particular trade which is not contrary to public policy or contrary to the terms of the contract. In commercial arbitrations which are conducted under the rules of the tribunal or arbitration framed by various trade associations-a two-tier system of arbitration is usually provided under which an appeal lies from the award of the arbitrator or the umpire to an Appeal Board constituted to the rules of the associations. In such cases the award of the Appeal Board is final award according to the agreement of the parties which incorporates the rules of the trade associations.

As far as our Indian practice is concerned, an appeal shall lie firstly before the same Arbitral Tribunal as per Code of Arbitral Practice and Procedures of the Disputes Settlement Trust and after that only an appeal shall lie before any court for (a) Granting or refusing to grant any interim measure under Sec 9 and Sec 17 (b) setting aside or refusing to set aside an arbitral award under Sec 34. No second appeal shall lie before any court except the Supreme Court, from an order passed in appeal under Sec 37.

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Commercial under Indian Law: There is no definition as such for the term commercial under the Arbitration and Conciliation Act, 1996. Moreover the Preamble itself shows that the entire Act 1996 is based on the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985. S.28 of the Act deals with the rules applicable to substance of disputes and it reads as follows: (1) Where the place of arbitration is situate in India, (a) In an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; (b) In international commercial arbitration, (i) The arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substances of the dispute; (ii) Any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules; (iii) Failing any designation of the law under clause (a) by the parties, the arbitrat tribunal shall apply the rules of law it considers to be appropriate, given all the circumstances surrounding the dispute. The expression commercial should be construed broadly having regard to the manifold activities which are integral part of international trade to-day. As pointed out by the Supreme Court in Koch Navigation Inc. v. Hindustan Petroleum Co. Ltd(1989)., liberal construction is to be given to any expression or phrase used in the Act which, however, must be consistent with its literal and grammatical sense, since the Act is calculated and designed to subserve the cause of facilitating international trade and promotion thereof by providing for speedy settlement of disputes arising in such trade through arbitration.

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In Fatechand Himmatlal v. State of Maharashtra(1977), Supreme Court observed that any service or activity which in the modern complexities of business would be considered to be a lubricant for the wheels of commerce is commercial. In Kamani Engg. Corp. Ltd v. Societe De Traction Et. DElectricity Sociate Anonyme, it was observed: it is difficult to find the exact meaning of the phrase matters considered as commercial under the law in force in India. Neither side has been able to point out any particular law wherein the phrases commercial or matters commercial have been defined. The intent of the Legislature while using the above phrase was that in matters of commercial contracts foreign arbitrations and awards should be recognised and enforced. Having regard to the purpose of the Act, widest meaning must be given to the word commercial.

The division bench of the Bombay High Court in European Crain and Shipping Ltd. v. Bombay extractions(P) Ltd., where it was held that mere use of the word under preceding the words the law in force in India would not necessarily mean that one has to find a statutory provision or a provision of law which specifically deals with the subject of particular legal relationship being commercial in nature. The division bench held that it was not necessary that there should be a statutory provision enumerating such legal relationship for determining whether the relationship is commercial or not. The Supreme Court in R.M.Investments & trading Co.P.Ltd v. Boeing C15 observed that while construing the expression of commercial relationship, guidance can also be taken from UNCITRAL Model law: the term commercial should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of commercial nature include, but are not limited to the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business co-operation; carriage of goods or passengers by air, sea, rail or road. The Supreme Court in Sudaram Finance Ltd. Vs. NEPC India Ltd.16, has observed that the provisions of the 1996 Act have to be interpreted being uninfluenced by the principles
15 16

AIR 1994 SCN 1136 [(1999) 2 SCC 479

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underlying the 1940 Act and in order to get help in construing the provisions of the said Act, it is more relevant to refer to the UNCITRAL Model Law rather than the 1940 Act. 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 conciliation17. The Arbitration and Conciliation Act 1996 is largely based on the model law of United Nations Commission for International Trade Law (UNCITRAL). Section 7 of the Arbitration and Conciliation Act, 1996 deals Arbitration agreement. It means(1) In this Part, arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in(a) A document signed by the parties; (b) An exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or (c) An exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. (5) There reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. 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.

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Article Source: http://EzineArticles.com/2233076

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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 law18.

18

Ibid.

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CONCLUSION The preamble of Indian Arbitration and Conciliation Act, 1996 (No.26 of 1996) provides: An Act to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto. The Indian Arbitration and Conciliation Act, 1996 the governing arbitration statute in India. It is based on the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985. India has a comprehensive, contemporary and progressive legal framework to support international arbitration that is on a par with that of the world's leading arbitration institutions. Party autonomy and maximum judicial support with minimum judicial intervention are the abiding features of the New Arbitration and Conciliation Act, 1996, which provides for maximum judicial support of arbitration and minimal intervention.

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BIBLIOGRAPHY: BOOKS: 1. Paranjape, N.V, Law relating to Arbitration and Conciliation in India, 4th edition, Central Law Agency, Allahabad, 2009 2. Sridhar, M., Alternative Disputes Resolution, Negotiation and Mediation, 1st edition, Lexis- Nexis Butterworths, New Delhi, 2006 3. Dr., Myneni, S.R., International Trade Law, 1st edition,2008, Allahabad Law Agency 4. Singh Avatar, Law of Arbitration and Conciliation, 6th edition, Eastern Book Company, Lucknow, 2002 WEBSITES: 1. www.uncitral.org 2. www.ebc-india.com 3. www.manupatra.com 4. www.lexis-nexis.com SEARCH ENGINE: 1. www.google.com 2. www.legalserviceindia.com 3. www.yahoo.com

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