Unit IV(a)- Arbitration

Aaditya Vikram Sharma

Introduction
• As we already know, parties in international commercial transactions prefer
that disputes be adjudicated by a neutral body.
• Such a neutral body is usually thought to be an arbitration tribunal which has
no links with either of the parties.
• “Having no links” implies that the dispute would be solved in a neutral and
unbiased seat.
• In these slides, we shall revisit the concept of international commercial
arbitration. I will also list out the prominent arbitration centres globally.
• Then, we will see how international commercial arbitration awards play out as
per the Arbitration and Conciliation Act, 1996. We will then discuss the kinds
of arbitrations.
Revisiting Arbitration in the Arbitration
and Conciliation Act, 1996
• The definition of Arbitration is given in Section 2(1)(a)-
“Arbitration” means any arbitration whether or not administered by
permanent arbitral institution;”
• So, in India, arbitration is said to occur when it is administered by a
permanent body (for e.g., the Delhi International Arbitration Centre,
http://www.dacdelhi.org/).
OR
• When it is administered by an ad-hoc (temporary) body. (for e.g. at a
law firm after the arbitrators have been chosen by the parties). Once
arbitration ends, this ad-hoc body ceases to exist.
Revisiting International Commercial Arbitration
in the Arbitration and Conciliation Act, 1996 (1)
• In my previous upload, I have already dealt with the concept of International
Commercial Arbitration.
• Section 2(1)(f) of Arbitration and Conciliation Act, 1996, defines
International Commercial Arbitration as follows-

(f) “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 incorporated in any country other than India; or (iii) 2 *** 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;”
Revisiting International Commercial Arbitration
in the Arbitration and Conciliation Act, 1996 (2)
So, there are a few elements that we need to look at for an Arbitration to
classify as an International Commercial Arbitration-
1. There shall be a legal relationship between the parties, which may be
contractual.
2. Such a legal relationship must be considered ‘commercial’ in India.
3. At least one of the parties should be either-
• A natural person, habitually resident in any country except India; or
• A body corporate, incorporated outside India; or
• An association of individuals whose central management and control is outside
India; or
• The Government of a foreign country.
Revisiting International Commercial Arbitration
in the Arbitration and Conciliation Act, 1996 (3)
• So, that is the concept of International Commercial Arbitration under
the Indian law.
• You can see that a basic criteria that you can follow is that at least
one of the parties should be from outside India.
 International Arbitration Tribunals
This is a list of International Arbitration Tribunals that are often visited
by Indian parties. I am picking up this list from Wikipedia as it’s quite
relevant (please note that you’re still not allowed to cite Wikipedia in
your PSDA’s)-
Institution Acronym Seat Operator Established

International Court of Arbitration ICC Paris,  France International Chamber of Commerce 1923

London Court of International Arbitration LCIA London,  United Kingdom 1892

Singapore International Arbitration Centre SIAC Singapore,  Singapore 1991

Hong Kong International Arbitration Centre HKIAC  Hong Kong 1985

Arbitration Institute of the Stockholm Chamber of Commerce SCC Stockholm,  Sweden Stockholm Chamber of Commerce 1917

International Centre for Settlement of Investment Disputes ICSID(ICSID) Washington,  United States 1966
(International Center for Dispute Resolution)

American Arbitration Association(International Center for AAA(ICDR) New York,  United States 1926
Dispute Resolution)

Center for Arbitration and Mediation of the Chamber of Com

merce Brazil-Canada CAM-CCBC(CAM-CCBC) São Paulo,  Brazil 1979
(International Center for Dispute Resolution)
What are the different types of
arbitration? (1)
(a) Domestic arbitration.-Domestic arbitration means an arbitration
proceeding-
• which takes place in India and;
• in accordance with the Indian law;
• and where the cause of action wholly arisen in India between the
parties who are subject to Indian jurisdiction.
 What are the different types of
arbitration? (2)
(b) International commercial arbitration.- As discussed above, international
commercial arbitration means an arbitration relating to disputes arising out of
legal relationship, 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 incorporated in any country 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. [Section 2(1)(f)].
• In an international arbitration there are elements of foreign origin in relation
to the parties or the subject-matter of the dispute.
What are the different types of
arbitration? (3)
(c) Institutional arbitration.-This type of arbitration is administered by an
arbitration institution-
• The parties to an arbitration agreement may stipulate in the agreement to
refer the dispute between them to an arbitration institution for resolution.
• The Indian Council of Arbitration (ICA), New Delhi, Federation of Indian
Chambers of Commerce and Industry, New Delhi, and International Center
for Alternative Dispute Resolution, (ICADR), New Delhi are the leading
arbitration institutions in India.
• Note that ICADR is now being replaced by the New Delhi International
Arbitration Centre. See-
https://www.prsindia.org/node/842463/chapters-at-a-glance. The Bill has
now become an Act.
What are the different types of
arbitration? (4)
(d) Statutory Arbitration.-Some Central and State Acts provide for
resolution of disputes arising under the Act by arbitration.
• Section 2(4) of the Arbitration and Conciliation Act provides that except
sections 40(1), 41 and 43, Part I of the Act shall apply to every arbitration
under any other enactment as if the arbitration were pursuant to an
arbitration agreement and as if that other enactments were an arbitration
agreement, unless the provisions of Part I are inconsistent with that other
enactment or with any rules made thereunder.
• In the case of any inconsistency between the provisions of that Act and
the provisions of Part I of the Arbitration Act, the provisions of that Act
will prevail.
 What are the different types of
arbitration? (5)
(e) Ad hoc arbitration.-Ad hoc arbitration refers to arbitration where the procedure is
either agreed by the parties or in the absence of an agreement, the procedure is laid
down by the arbitral tribunal at a preliminary meeting once the arbitral tribunal has
been constituted.
• In ad hoc arbitration, the Arbitration is agreed to and arranged by the parties
themselves without any assistance from an Arbitral Institution.
• If the parties do not agree as to the person who will be the Arbitrator or if one of
the parties is reluctant as to the choice of the Arbitrator or in appointing the
Arbitrator, the other party will have to resort to court for relief under section 11 of
the Arbitration and Conciliation Act.
• In ad hoc arbitration, the fees of the Arbitrator is agreed upon by the parties or
fixed by the arbitral tribunal.
What are the different types of
arbitration? (6)
(f) Fast track arbitration or document only arbitration.- Fast track arbitration is a specialised type of
arbitration, which is very fast and time bound.
• It can be adopted for the resolution of international as well as domestic disputes.
• The agreement for the resolution of dispute through fast track arbitration is the same as for the
ordinary arbitration, except that, in addition to the provision for arbitration, it provides that the
parties have agreed for fast track arbitration.
• The parties can adopt the Fast Track Arbitration Rules of any institution for the speedy and time
bound resolution of their dispute.
• Fast track arbitration is suitable for those disputes where the parties wish a resolution of disputes very
fast, such as within a few days or few weeks.
• Documents only arbitration is based only on the claim statement and statement of defence and a
written reply by the claimant if any.
• The written submission by the parties may be in the form of letters written to the tribunal or may be a
formal document produced by lawyers.
What are the different types of
arbitration? (7)
(g) Look-sniff arbitration.-Look-sniff arbitration or quality arbitration is
a combination of the arbitral process and expert opinion.
• The arbitrator in this type of arbitration is a person having special
knowledge and expertise in a particular area of business.
• The expert in the field examines the commodity concerned or its
samples and gives to the parties his decision on the quality of the
goods based on such inspection.
• There are no formal hearings or submissions by the parties.
What are the different types of
arbitration? (8)
(h) Flip-flop arbitration or pendulum arbitration.-In this type of
arbitration, the parties formulate their cases beforehand and then they
invite the arbitrator to chose one of the two.
• The arbitrator makes an award favouring any one of the parties. He
cannot decide somewhere in between.
• He must, after hearing the evidence adduced by the parties, decide as
to the case of which of the parties is correct.
• In this type of arbitration, the party who inflates his claim may loose
everything.
• This type of arbitration is also called baseball arbitration.
Conclusion
• In this presentation, we have learned about the definition of
International Commercial Arbitration as per the Arbitration and
Conciliation Act, 1996.
• We have also gone through the various kinds of arbitration.
THANK YOU!