This article has been written by Shivanii Singh, 2nd year Student studying in South, Calcutta Law College, Calcutta University.
INTRODUCTION
Arbitration is gaining popularity in India nowadays. Indian courts, overburden with pending cases, are not able to solve the pending cases. It takes a long time for the court to give judgment or solve a case. Whenever any business agrees to enter into an agreement with the other party, an arbitration clause is actually put at the end. The corporate entities do not want to waste their crucial time in courts. So they put an arbitration clause at the end.
In this article, the context will be more on International arbitration along with relevant cases where arbitration resolved international disputes in which India was a party in 2024.
This analysis focuses on the landmark decisions of the Supreme Court of India, which have contributed to the development of the arbitration regime in the country, and examines the aspect of resolving international conflicts through the means of arbitration as of the year 2024.
KEYWORDS-International arbitration,international trade disputes, supreme court cases , international disputes involving India.
INTERNATIONAL ARBITRATION-DEFINITION
International Arbitration is a means of resolving disputes by appointing a suitable third party to provide a legally bound decision. Rather than appearing in court, parties proceed in front of a tribunal in a process that is described as private-sector dispute resolution. Because, It is not tied to the courts in any jurisdictions, international arbitration is generally geographically flexible, the parties, wherever,they are placed,can agree to the place of arbitration and the governing law, most suitable to them. Interstate Arbitration, Investor-State Arbitration, International Commercial Arbitration are the three types of International arbitration.
LEGAL FRAMEWORK FOR INTERNATIONAL ARBITRATION IN INDIA
ARBITRATION AND CONCILIATION ACT 1996
The legislation known as the Arbitration and Conciliation Act was enacted on January 16, 1996. The law is applicable throughout India. Nevertheless, the law applies nationwide in India, except in Jammu and Kashmir where only specific sections will be enforceable regarding international commercial arbitration or conciliation. In 1985, the United Nations passed the Model Law on International Arbitration and Conciliation, urging all countries to prioritize its implementation. This led to the implementation of the mentioned Act.
UNCITRAL MODEL LAW
The UNCITRAL Model Law on International Commercial Arbitration was created and approved by the United Nations Commission on International Trade Law (UNCITRAL) on June 21, 1985. In 2006, revisions were made to provide more detailed provisions on interim measures.
The model law is not mandatory, however, states can choose to adopt it by integrating it into their own laws, as Australia did with the International Arbitration Act 1974, as amended.
The draft legislation was released in both English and French versions. Translations are now available in all six languages of the United Nations.There is enormous distinction between UNCITRAL Model Law on International Commercial Arbitration (1985) and the UNCITRAL Arbitration Rules UNCITRAL explains the difference as follows: “The UNCITRAL Model Law provides a structure that can be adopted by the internal laws of individual countries concerning arbitration. The UNCITRAL Arbitration Rules are adopted by the parties at the time of concluding the contract or when a dispute arises in order to govern the process of arbitration for resolving the disputes.
WHY PARTIES PREFER INTERNATIONAL ARBITRATION OVER DOMESTIC COURTS?
- Prevention of bias- In order to avoid bias which domestic courts can cause,there is a common notion in the minds of parties is that the courts of the contract breacher’s country might favour it when any international dispute arises. To avoid such scenarios from occurring, the parties opt for international arbitration.
- flexibility – Flexibility in International Arbitration, such as diverse laws, rules, arbitration institutions, and jurisdictional scope, is appealing to parties.
3 Rules and procedures-Rules and procedures- It entails an improved overall process and handling of arbitration proceedings.
4.International arbitration provides more legal customization for disputes compared to domestic courts.
Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. (2024)
This particular case is one of the most prominent cases in India and the media. This instance underscores the significance of honoring agreements and the arbitrator’s decision. Amazon’s investment was in Future Coupons in this particular scenario. It held a share in Future Retail. The contract between them effectively limited Future Retail’s ability to sell its assets without approval from Amazon. In spite of the agreement, Future Retail went ahead and sold its business to Reliance Retail. It was taken to the arbitration panel and limited upcoming retail sales of its assets to reliance retail. The High Court affirmed the tribunal’s decision.
India’s Evolving Approach to Arbitration
The Supreme Court of India’s recent decision in Pam Developments Private Limited v. The State of West Bengal & Anr.[1] has sparked a renewed debate on granting pre-reference interest in arbitration cases.
In this instance, the company Pam Developments Private Limited (Pam Developments) received a contract from the Government of West Bengal. Because of issues related to belated payments, Pam Developments requested for arbitration while filing a claim against the State, requesting payment for the overdue amounts in addition to an interest claim which covers the time before the arbitration was filed (the period prior to filing for arbitration). An arbitral tribunal allowed pre-reference interest to Pam Developments, which the State of West Bengal contested afterwards.
Devas Multimedia Pvt. Ltd. v. Antrix Corporation Ltd. (2024)
Two years after the verdict in the following case, ANTRIX Corporation Ltd. and Devs Multimedia Pvt. Lived. Back in 2024, the Honorable Supreme Court of India examined the foreign award delivered in favor of Devas Multi Media Private Limited by the International Chamber of Commerce Arbitral Tribunal Organization ICAC The major points in this case revolved around the issues of public policy in the context of complex arbitrations combating corruption.
GROWING APPROACH TO INTERNATIONAL ARBITRATION OF INDIA
India’s growing emphasis on arbitration indicates a positive shift towards a more arbitration-friendly and stable environment.
Throughout history, Indian courts have been recognized for their involvement in arbitral awards, frequently leading to unforeseeable outcomes that do not align with global standards. In the midst of a slow change, multiple decisions in favor of arbitration from India’s Supreme Court and important High Courts have occurred.
It supported the idea of minimal intervention in arbitration awards issued by tribunals based in India;acknowledged the necessity of promptly enforcing and implementing foreign arbitral awards;verified that interim arbitral decisions in arbitrations seated in India can be enforced within the country; andAffirmed the position and validity of third-party financing in arbitration.
Changes to the Indian Arbitration and Conciliation Act are in line with the evolution of the judiciary’s approach. In June 2023, India formed a committee of experts to investigate shortcomings in the regulation of arbitration in the country. The committee is anticipated to deliver its report in the first quarter of 2024. Although the committee has a broad mandate, it is anticipated to tackle topics like third-party funding guidelines, arbitrator fees, and the courts’ authority to review arbitral awards or adjust their damages elements, as has happened in certain instances.
Local arbitral bodies are spearheading the enhancement of India’s arbitration environment. The Mumbai Centre for International Arbitration (MCIA), the Delhi International Arbitration Centre, and the newly established Institution of Arbitration, Mediation and Conciliation, Hyderabad (IAMC), are new institutions aiming to rival established international institutions for disputes related to India. In 2022, the MCIA’s caseload increased by 20 percent, and it is currently handling disputes worth more than $1 billion.
Positive outlook on arbitration in India
We anticipate India to continue being an interesting area for investors and arbitration stakeholders to keep an eye on in 2024.
Overall, the environment seems to be moving towards being more favorable to arbitration. However, investors should keep in mind that India’s extensive size and variety are reflected in its judicial system: there will still be risks of excessively lengthy enforcement or interim relief proceedings when dealing with local courts. Commercial parties looking for more assurance or reliability should carefully consider before selecting India as the arbitration agreement’s seat.
Furthermore, investors seeking to maintain the option of seeking redress through international law as BIT and FTA talks advance should take into account treaty structuring in their investment strategies in India.
Indian Oil Corporation Ltd. v. Amritsar Gas Service
In the Supreme Court case of Indian Oil Corporation Ltd. v. Amritsar Gas Service, the apex court reiterated the policy of leaving arbitration with minimal judicial intervention. The bench pointed out that generally, an arbitral award ought to be supported unless there are compelling reasons to the contrary which helps to safeguard the sanctity of the arbitral process. This decision assists in expediting the resolution of disputes by ensuring that the courts will honor the arbitration agreements, which in turn increases the confidence in the system of arbitration in India.
Bharat Coking Coal Ltd. v. Shree Durga Suppliers
The Supreme Court in Bharat Coking Coal Ltd. v. Shree Durga Suppliers explained the extent of the arbitral tribunal’s discretion with regard to the award of interest. The court emphasized that tribunals must take into account fairness in their decisions, particularly in respect of the claims for interest. This decision serves to reaffirm the principle that interest is to be awarded by the tribunal depending on the facts of the case, thus enhancing the predictability and consistency of arbitration in India.
FUTURE OF INTERNATIONAL ARBITRATION IN INDIA
India is predicted to emerge as an International Arbitration hub in the light of current legal reforms, which are aimed at enhancing the effectiveness of the arbitration framework. One such area is to enhance the enforcement of arbitral awards while reducing the discretion of the courts, which will undoubtedly encourage the investors more regarding the arbitration regime.
Furthermore, it is important to educate companies, as well as lawyers, about arbitration. Promoting the use of alternative dispute resolution provisions in commercial contracts will make.
As BITs progress, embedding strategic treaty structuring in investment plans in due course will prove relevant in order to pull in large inflows of foreign direct investments. All in all, these trends make India an attractive center for arbitration for both domestic and foreign audiences.
CRITICAL ANALYSIS
Recent changes to the law are meant to make the process of arbitration easier, minimize the interference of the courts, and make the arbitral awards easier to comply with. These are all changes that seek to go with the global trends and make India a better economy in which to invest internationally.
Nonetheless, some issues remain especially with regard to how long it takes to enforce, and how much the courts can interfere. In spite of the changes, the inconsistency and unpredictability of their local court practices can be troubling for investors. Also, with more and more people getting acquainted with arbitration, there is insufficient appreciation and awareness of its pros and applications in the corporate sector and among legal professionals.
It is equally important to strategically incorporate the structuring of treaties into the overall investment strategy. Particularly given that the country is currently in the course of devising BITs, the stakeholders have work to do to read the changing environment.
In conclusion, while India is on its way to becoming a viable destination for arbitration practice, it is important to overcome the existing issues and increase the level of awareness about arbitration amongst different parties. Further reforms and focus on education and awareness will create a better climate for arbitration in both national and international contexts.
CONCLUSION
As a final observation, it can be stated that the situation with international arbitration in India has been progressively changing due to the various legislative reforms and the increasing appreciation of the benefits of a speedy settlement of disputes through arbitration. In light of improved enforcement and diminished levels of court interference, India is gradually emerging as a viable destination for arbitration practices. Promoting the understanding of arbitration practices and using various forms of conflict resolution will help to achieve this even further. The strategic domestic and cross-border treaty structuring, as techniques to bolster the investment approaches, may assist the stakeholders in dealing with international arbitration challenges more efficiently.
REFERENCES
- Nishant Kumar, All About International Arbitration, iPleaders Blog (Aug. 26, 2023), https://blog.ipleaders.in/international-arbitration/
- What is Arbitration?, World Intellectual Property Organization (accessed Nov. 1, 2024), https://www.wipo.int/amc/en/arbitration/what-is-arb.html.
- John Doe, Migration Patterns in Southeast Asia, Migration Letters, Vol. 18, No. 3, p. 123 (2021), https://migrationletters.com/index.php/ml/article/download/6236/4217/17124
- Arbitration in Trade Finance, Trade Finance Global (accessed Nov. 1, 2024), https://www.tradefinanceglobal.com/legal/arbitration/.
- UNCITRAL Model Law on International Commercial Arbitration (1985) (with amendments as adopted in 2006), United Nations Commission on International Trade Law (accessed Nov. 1, 2024), https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration
