Broadly Speaking: ROLE OF COURTS IN ARBITRATION

ARBITRATION: AN INTRODUCTION

Arbitration is a process in which parties to an agreement submit their dispute to one or more arbitrators. The decision of arbitrator is binding on the parties. The essential characteristics of arbitration are as follows-

• Arbitration is consensual- It means that arbitration can only take place if all the parties agree to it.
• The dispute should be in terms of a defined legal relationship.
• The agreement may be in the form of an arbitration clause or a separate agreement.
• The agreement must be in writing.
• The agreement must be signed by all the parties.

In India, arbitration is governed by The Arbitration and Conciliation Act, 1996. It was amended in 2015 and also in 2019. The main objective of amending The Arbitration and Conciliation Act, 1996 was to make arbitration a preferred mode of settlement in commercial cases and to make India a hub of international commercial arbitration.

TYPES OF ARBITRATION

The different types of arbitration in are as follows:-

Institutional Arbitration, Ad hoc arbitration and Fast Track Arbitration are the types of arbitration that are primarily recognised in India. However, the most common arbitration exercised in India is Ad hoc arbitration. It is a cost- effective method as well as suits the kind of infrastructure that we have in India.

ROLE OF COURTS IN ARBITRATION

The Arbitration and Conciliation Act, 1996 is broadly based upon the UNCITRAL Model Law. These days, the Indian courts are increasingly adopting the approach towards arbitration to enforce valid arbitration agreements unless they find that prima facie that no valid arbitration agreement exists. The court plays a major role during the three stages of arbitration:-

• Pre-Arbitral Procedure- Stage I, also known as the Pre-Arbitral Procedure. It begins with the courts referring the parties for arbitration. Section 8 of The Arbitration and Conciliation (amendment) Act 2015 states that any judicial authority should refer the parties for arbitration. The court plays the following role in the Pre- Arbitral Stage:-

1. Establishment of Arbitration Tribunal- The court intervenes during the appointment of arbitral tribunals and during the course of interim relief by courts and arbitral tribunals. The court has an authority to establish tribunals to deal with the disputes.
2. Appointment of Arbitrators- The Supreme Court or the High Court or a person appointed by them has to appoint arbitrators within 60 days from the date of notice to the opposite party.
3. Interim Relief by Court and Arbitral Tribunal- The court grants relief in the pre-arbitral stage. Section 9 of The Arbitration and Conciliation (amendment) Act, 2015 states that the procedure of arbitration must commence within 90 days of the order granting interim relief.

• During Arbitral Proceedings- The court plays the following role during the Arbitral proceedings, that is, Stage II :-

1. Assistance of Court in Taking Evidence- Evidence plays a crucial role in arbitral proceedings. It is an important medium to ensure fair and just award. Section 27 of The Arbitration and Conciliation Act, 1996 on receipt of an application from the tribunal or a party, the court, in accordance with the rules of taking evidence, may order that the evidence must be directly provided directly to the arbitral tribunal. In case, the orders of the court are not complied with, then, it shall be subjected to disadvantages, penalties and punishments by the order of the court.

• ROLE OF COURT IN POST- ARBITRAL AWARD- The Court also plays a major role in Stage III.

1) Role of Court in Setting Aside Arbitral Award- After the arbitral award is passed, the aggrieved party can apply for such award after issuing a prior notice to the other party. Section 34 of The Arbitration and Conciliation Act deals with setting aside a domestic award resulting from an international commercial arbitration. Section 48 deals with the conditions regarding the enforcement of foreign awards.

2) Public Policy- Public policy refers to a set of principles according to which communities need to be regulated to achieve the good of entire community of public. Any arbitral award which is in conflict with the public policy of India can be set aside. However, the Act has failed to define it.

3) Limitation Award- Section 34 (3) of The Arbitration and Conciliation Act states that an application to set aside the arbitral award must be filed within 30 days, beginning from the day when the applicant receives the award.

4) Enforcement of Award- The Arbitration and Conciliation (amendment) Act 2015 requires all the parties to file a separate stay application in which a conditional award may be passed by the Courts, having due regard to certain provisions of CPC, with reasons recorded in writing. Thus, the courts have sufficient powers to allow only legitimate challenges against awards and to ensure that the attempts to delay enforcement will cost the applicant.

Frequently Asked Question-

1. What is the difference between arbitration and court?

ANS- The distinction between court and arbitration is that the court deals with litigation whereas arbitration means to settle disputes between the parties outside the court.

[The author, Arsha Sharma is a 2nd year Ba.LLB(Hons.) student at The Law School, University of Jammu.]

[1] ‘Arbitration- Wikipedia’ < https://en.wikipedia.org/wiki/Arbitration> accessed on 24 May 2020

[2] ‘All you need to know about Fast Track Arbitration Proceedings’< https://blog.ipleaders.in/fast-track-arbitrtaion/> accessed on 24 May 2020.

[3]‘The Arbitration and Conciliation Act, 1996- Wikipedia’ <https://en.wikipedia.org/wiki/Arbitration_and_Conciliation_Act_1996> accessed o 24 May 2020

[4] ‘The difference between Arbitration and Litigation’< https://www.thebalancesmb.com/arbitration-vs-litigation-what-is-the-difference 398747> accessed 24 May 2020.