Arbitration Law in India: Things you should know

Arbitration Law in India: Things you should know

In this article, we will discuss the law governing arbitration in India, the current status and effectiveness of arbitration in India, and finally the future of arbitration in India.

The law governing arbitration in India

In India, the law relating to arbitration is influenced by English common law. Arbitration in India is regulated by the Arbitration and Conciliation Act 1996, which has been developed following the 1985 UNCITRAL Model on International Commercial Arbitration and the 1976 UNCITRAL Arbitration Rules.

This Arbitration Law separates two types of arbitration: ad hoc arbitration and institutional arbitration.

Ad hoc arbitration means that the conduct of the arbitration follows the rules agreed between the parties.

Institutional arbitration is the situation in which the arbitration is governed by the rules of procedure of an institution, for example, a court. Several mandatory rules in the Arbitration Law require that an arbitration agreement be respected. The arbitration agreement must necessarily indicate the cases that will be brought before the courts by the arbitrators, the mandate to initiate and end the arbitration proceedings, and the possibility for the parties to challenge the arbitration awards.

The disputes that can be governed by arbitration and the current situation of arbitration in India

Indian institutions are generally not that effective today. According to the 2019 World Bank report, India ranks 77th out of 190 in Ease of doing business, 163rd in enforcing contracts, and on average it takes 1445 days to resolve business disputes in Indian courts. In such a context, the country must develop a comprehensive, effective, and results-oriented arbitration system and reform its traditional judicial system.

With 35 arbitration institutions and e-city specific chambers of commerce and industry in India for national, international, trade, and merchant associations, India does not allow all disputes to be resolved by arbitration. In India, the following cases can be resolved by arbitration, among others: criminal offenses, marriage disputes, guardianship matters, trust litigation ...

The future of arbitration in India

India made ambitious changes to its arbitration system. For example, the Arbitration Law has been amended so that contested arbitration decisions are no longer automatic, which would necessarily improve the efficiency of arbitration procedures and make them truly profitable. The amendment was passed to improve its quality in arbitration proceedings, reduce interference from courts with respect to arbitration awards to India, and to reform the country's fiduciary institutions with respect to arbitration awards.

Furthermore, since the early 2000s, India has been trying to implement the technology as a benchmark in arbitration proceedings, with the COVID pandemic being the catalyst for such ambition. To be precise, India has always authorized arbitration procedures by whatever means required by article 19 of the Arbitration and Conciliation Act, which states that "the parties agree on the procedure to be followed by the arbitral tribunal in developing its procedures. ". Arbitration The Council of India (ICA) urges arbitration institutions to conduct arbitration proceedings by any means of professional management items including video conferencing and necessary for communication, especially in the context of COVID and lockdown.