INTERNATIONAL ARBITRATION

ABSTRACT

Globalization has brought the world closer. It has made cross-border contracts easier, allowing individuals from all over the world to collaborate and engage in a variety of commercial and non-commercial endeavors. Conflicts between the parties are typical in these situations. International arbitration offers parties of various countries an easy, affordable, and effective way to resolve disputes. It entails the selection of an impartial third party, known as the arbitrator, to resolve the disagreement between the parties outside the purview of domestic courts, in accordance with the process decided upon by the parties. Compared to domestic courts that apply a state’s laws, international arbitration offers a more impartial forum. Arbitration tribunals, on the other hand, are private institutions that are not bound by any country’s laws and can efficiently deal with disputes arising from transnational transactions. This article seeks to dwell into the topic of international arbitration as a subject.

WHAT IS ARBITRATION

Arbitration is commonly understood to be a process whereby the parties concerned mutually consent to submit their dispute to an arbitrator, a non-governmental decision-maker. After that, the arbitrator conducts impartial adjudicative procedures where all parties are given the chance to be heard and have a final decision that is legally binding.

WHAT IS INTERNATIONAL ARBITRATION

International arbitration is a dispute resolution mechanism, like domestic court litigation, except it is carried out by private adjudicators called ‘arbitrators,’ and it extends beyond a country’s borders. It is a more expedient and consensual form of conflict resolution than traditional judicial procedures. It is impartial, binding, and enforceable.

 It makes it easier for parties with disparate legal, linguistic, and cultural backgrounds to get together and settle their differences.

 Usually, parties enter ‘arbitration agreements’ beforehand. Such an agreement is “an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not,” according to Article II(1) of the New York Convention.

Thus, “a neutral form of dispute resolution is provided to businesses engaged in international transactions” by means of international arbitration.

 “Furthermore, international arbitration has the added advantage of providing a neutral forum for the resolution of a cross-border dispute.”

INTERNATIONAL ARBITRATION AGREEMENT

 An arbitration agreement (mandated in concerto), in general regarded as the basis of arbitration, is an agreement which submits the existing dispute between the parties or a potential dispute that may arise in the future between the parties to arbitration. 

ENFORCEMENT OF ARBITRATION AGREEMENT[1]

There are two ways to examine whether an arbitration agreement is enforceable. Firstly, it refers to the lack of jurisdiction of national courts which can also be called negative enforcement. Second, it refers to the submission agreement which can be called positive enforcement. Arbitration agreement prevents the national courts from resolving the dispute between the parties regarding that specific contract. with an action on the merits.

LAW APPLICABLE TO ARBITRATION AGREEMENT

There are different and many criteria for determining the applicable law to the arbitration agreement, but the most common ones are the law chosen by the parties, the law applicable to the main contract, the procedural law applicable to the arbitration and the law of the place of the arbitration.

• The Law Chosen by the Parties
• The Law Applicable to the Contract
• The Procedural Law Applicable to the Arbitration
• The Law of the Place of the Arbitration

TERMINATION OF ARBITRATION AGREEMENT

• Termination of the Agreement by Mutual Consent
• Termination Grounds Related to the Parties
• Termination Grounds Related to the Arbitrator

 INTERNATIONAL AND DOMESTIC ARBITRATION CONTRAST

The word “international” is used to distinguish arbitrations that are strictly national or domestic from those that in some manner cross national borders and are therefore referred to as “international” or, in Judge Jessup’s language, “transnational.” ( It has been said that every arbitration is a ‘national’ arbitration, in that it must be held at a given place and is accordingly subject to the national law of that place. In a narrow sense, this is correct. If an international arbitration is conducted in Brussels, Brussels will serve as the arbitration’s location or “seat,” and Belgian law will govern the tribunal’s decision. However, in actuality, it is common to distinguish between “international” and “domestic,” or solely national, arbitrations. This is for both pragmatic and legal reasons. First, to the extent that the procedure in any arbitration is regulated by law, that law is normally the law of the place of arbitration: that is to say, the law of the ‘seat’ of the arbitration. Secondly, the parties to an international arbitration are usually (but not always) corporations, States, or State entities, whilst the parties to a domestic arbitration will more usually be private individuals. meaning of ‘international arbitration.’   

UNCITRAL Model law

The UNCITRAL Model law on Arbitration is an international legal framework that provides the set of provisions on international commercial arbitration conduct & management. On June 21, 1985, it was founded. It is one of the three arbitration pillars established by the UN to help nations with disparate legal systems unify their arbitration legislation. Since the model law is not a treaty, nations are allowed to duplicate or alter it. It has already been approved by more than 70 jurisdictions.

The model law balances the parties’ right to select their own procedure with the need to provide default rules to fill any gaps. It consists of 36 Articles organised into 9 chapters that cover every stage of arbitration, from the limitation of court intervention to the recognition and imposition of the award.

• Relevance of UNCITRAL Model law
  The UN’s essential legal component in the area of international trade law is UNCITRAL. In general, every country has extremely different laws. Nonetheless, because arbitration frequently involves multinational parties, it carries an international flavour.

 Thus, it needs uniformity of states & in that regard domestic laws of arbitration that have been included b/w different countries needs to be in uniformity. If not so, it would result in creating hurdles to the smooth flow of trade. Hence, it plays a vigorous role in scrapping out the hardships.

INTERNATIONAL ARBITRATION CLAUSE

One of the main components of cross-border contracts is an international arbitration provision, which outlines the procedures for settling disputes outside of the conventional court system. These carefully draughted articles specify important factors including the applicable law, the arbitral institution to be used, and the arbitration’s appointed seat.

The number of arbitrators, the language used in the proceedings, and any confidentiality clauses may be specified by the parties. Mechanisms for implementing policies and providing emergency relief are discussed alongside financial considerations, such as cost and fee allocation. An arbitration agreement must normally be in writing in order to be enforced in most jurisdictions. The UNCITRAL Model Law’s Article 7 likewise specifies this.

LANGUAGE OF THE PROCEEDINGS OF INTERNATIONAL ARBITRATION

The parties to the arbitration often choose the language of the proceedings in international arbitration. Nonetheless, the arbitral tribunal will make the decision if the parties haven’t reached a consensus over the arbitration’s terminology. The tribunal will usually issue a procedural order or ruling on that matter detailing the language to be used for the proceeding.

EVOLUTION OF INTERNATIONAL ARBITRATION

Arbitration has ancient roots, but these earlier forms of arbitration were more informal and were primarily based on customs. As trade and commerce expanded globally, businesses sought alternative dispute resolution mechanisms The modern era of international arbitration began in the late 19th century with the establishment of institutions like the Permanent Court of Arbitration and the International Chambers of Commerce.

Among other things, The Hague Convention of 1899 established the guidelines and processes for the settlement of disputes through international arbitration, which helped to establish the foundation for international arbitration. The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), which makes it easier for arbitral awards to be recognised and enforced across national borders and increases the enforceability and efficacy of international arbitration, was the major development in the field of international arbitration.

The Hague Convention also approved the Convention for Pacific Settlement of International Dispute (1899). It established a mechanism for arbitration, conciliation, and judicial settlement of international disputes.

With the advent of bilateral and multilateral investment treaties, investor-state arbitration rose to prominence in the 20th century. the International Centre for Settlement of Investment Disputes in 1966. An impartial forum for the resolution of investment disputes is offered by this center.

ADVANTAGES OF INTERNATIONAL ARBITRATION

There are the following advantages to opting for international arbitration:

1. Neutral platform
2. Enforceability
3. Easy and flexible procedure
4. Expertise of arbitrators
5. Privacy and Confidentiality Binding outcome
6. Cost-effectiveness
7. Direct

CONVENTIONS GOVERNING INTERNATION ARBITRATION

There are several international conventions governing international arbitration. Arbitrations held in nations that have ratified these agreements are subject to their provisions. Some of these conventions are:

The Geneva Convention

The Geneva Convention for the Execution of Foreign Arbitral Awards, [2]1927 and the Geneva Protocol on Arbitration Clauses in Commercial Matters (1923) were the two most early modern accords on international arbitration.

The New York Convention

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards approved the “New York Convention” in 1958.  It offered a common framework for international arbitration awards to be recognised and upheld.

 It was negotiated during the three weeks of the 1958 United Nations Conference on Commercial Arbitration, which was attended by 45 parties.

The Inter-American Convention

The majority of the countries in South and Central America as well as the United States adopted the Inter-American Convention in 1975. Formally known as the Inter-American Convention on International Commercial Arbitration, it seeks to establish uniform rules regarding arbitral awards, it is also called the ‘Panama Convention.’

The European Convention

1964 saw the ratification of the 1961 European Convention on International Commercial Arbitration. It now consists of 31 states, most of which are in Europe and a few of which are not. The arbitration agreement, the procedure, and the arbitral award are the three stages of the arbitration process that it covers.

INDIAN LAWS SURROUNDING INTERNATIONAL ARBITRATION

The Arbitration and Conciliation Act, 1996, which was modified in 2015 to better suit the demands of contemporary circumstances, serves as the principal body of Indian legislation governing international arbitration. This legislation, which is a comprehensive code, regulates both the conduct of the arbitral processes and the parties’ procedural rights. The UNCITRAL Model Law’s provisions were inserted into the statute to give India’s international arbitration procedures a foundation.

 One important aspect of Indian law concerning international arbitration is the enforcement of arbitral awards in India, subject to certain conditions, thereby promoting the principle of party autonomy and recognizing the finality of arbitral awards.

In the past, Indian courts were notorious in the world of international arbitration for interfering with arbitration and arbitral verdicts by using ambiguous standards that were at odds with globally recognised norms. However, India’s legislative and judicial intent has changed to take a pro-arbitration stance due to pressing needs.

India has made significant changes to the way it views arbitration, most notably by recognising institutional arbitration through legislation.

Notwithstanding all the progress, certain new concerns about international arbitration are starting to surface in Indian law:

• Institutional framework: Although India has a number of arbitral institutions, their infrastructure, knowledge, and effectiveness may not always match those of other countries.
• Judicial intervention: While the act aims to minimize judicial intervention in arbitration proceedings, Indian courts have often been criticized for excessive interference, particularly in cases involving international arbitration.
• Interpretation of Public Policy: Public policies impede the enforcement of international arbitral awards, making the procedure more challenging, expensive, and time-consuming.
• Confidentiality: India does not offer total protection for the confidentiality of the arbitral procedures, in contrast to certain other jurisdictions. Parties with delicate issues where confidentiality is crucial have expressed concern about this.[3]

DISTPUTES THAT ARE SOLVED BY INTERNATIONAL ARBITRATION

• Commercial dispute
• Construction dispute
• Investment disputes
• Sports disputes
• Intellectual property disputes
• Energy and natural resources disputes
• Maritime disputes and other cases as well.

FORUMS FOR INTERNATIONAL ARBITRATIO

The international arbitration forum is made up of a wide range of venues, associations, and establishments devoted to using arbitration as a means of settling conflicts between parties worldwide. By acting as neutral locations, these forums promote impartiality and fairness for the parties engaged in arbitration.

International Chamber of Commerce’s International Court of Arbitration

Founded in 1919 in Paris, the International Chamber of Commerce (ICC) is a key organisation for international commerce, promoting trade and investment across borders.

It aims to promote open markets, advocate for trade liberalization and establish international business markets and best practices. It actively engages with governments, international organizations and stakeholders to shape policies and regulations conducive to global commerce.

The International Court of Arbitration (ICA), a body founded in 1923, is one of its noteworthy innovations. ICA handles the arbitration process for resolving issues involving international commerce. The International Chamber of Commerce Rules of Arbitration are a collection of guidelines for international arbitration that are established by it and are updated on a regular basis. They grant it some authority to make decisions.

Permanent Court of Arbitration

The Hague Conventions for the Pacific Settlements of the International Disputes, which were signed in 1899 and 1907, created the Permanent Court of Arbitration (PCA). It deals with using arbitration to resolve conflicts between states and entities that resemble states. Basically, it is not an international organization per se, but an inter-governmental organization that assists in the arbitration process between states or state-like entities.

London Court Of International Arbitration

With its main office located in London, the London Court of International Arbitration (LCIA) provides worldwide services for individuals and companies seeking international arbitration.

Unless the agreement specifies otherwise, the arbitration will take place in London. For the interest of the party undertaking arbitration, the LCIA attempts to concentrate on the provisions of an arbitral tribunal. The American Arbitration Association’s (AAA) international section houses the International Centre for Dispute Resolution (ICDR).

Arbitration Centre of the World Intellectual Property Organization [5]

Leading authorities in international dispute resolution created the World Intellectual Property Organisation (WIPO) Arbitration and Mediation Centre. The Centre offers arbitration, mediation, and expert determination methods that are internationally recognised as being especially suitable for issues involving intellectual property, technology, entertainment, and other related fields.

The Centre maintains an office in Singapore in addition to its main office in Geneva, Switzerland. The lawsuit being filed with the WIPO concerns conflicts that are related to contracts as well as those that are not.

Stockholm Chamber of Commerce Arbitration Institute (SCCAI)

Despite being incorporated as a component of the Chambers of Commerce, the SCCAI performs independent functions. The SCC has a board and a secretariat to manage the proceedings and handles both investment and commercial arbitration. Singapore International Arbitration Centre (SIAC)

LANDMARK INDIAN CASES ON INTERNATIONAL ARBITRATION

Enforcement of foreign arbitral awards: In Sundaram Finance Ltd. v. NEPC India Ltd. (1999), the Supreme Court of India established the principle pertaining to the enforcement of foreign arbitral awards by ruling that the awards are enforceable in India and are subject to restricted grounds for challenge. According to their opinion, Indian courts should only become involved if upholding an arbitral result would go against public policy or the laws of the nation where the arbitration was held.

Application of A&C Act to international arbitration: In the case of Bhatia International v. Bulk Trading S.A. (2002), the Supreme Court addressed the question of whether the Arbitration and Conciliation Act, 1996, applied to international arbitration. The court held that Part I of the aforementioned act would apply to international arbitration as well, unless the parties to the dispute expressly or impliedly exclude its application. However, this decision created some ambiguity, which the court later clarified in the case of Venture Global Engineering v. Satyam Computer Services Ltd. (2010), where the Supreme Court held that in cases where the arbitration is held outside of India,  Unless the parties specifically or tacitly agree otherwise, Part I of the aforementioned statute will not apply.

Seat of arbitration: The Supreme Court decided in PASL Wind Solutions Ltd. v. GE Power Conversion India Pvt. (2021) that Indian parties could select an arbitration venue outside of India to resolve a dispute between them and that forums for such proceedings are not necessary. The International Court of Arbitration (ICA), a body founded in 1923, is one of its noteworthy innovations.

OVERVIEW OF ARBITRATION PROCEEDINGS

International commercial arbitration proceedings generally include the following stages.

1. THE REQUEST FOR ARBITRATION
2. THE ANSWER TO THE REQUEST
3. THE CONSTITUTION OF THE TRIBUNAL
4. THE PROCEDURAL HEARING
5. THE EXCHANGE OF FURTHER, MORE DETAILED PLEADINGS
6. DOCUMENT PRODUCTION
7. WITNESS STATEMENTS AND EXPERT REPORTS
8. HEARING EARING BRIEF
9. POST-HEARING.
10. THE AWARD

CONCLUSION

Arbitration has emerged as a lifesaver alternative to traditional litigation, with the expansion of international trade. Arbitration arises out of the arbitration agreement between the parties so that it reflects merely the parties’ free will. It provides speed, flexibility and even economic efficiency in dispute resolution. However, parties to the dispute are drafting arbitration agreements without due care resulting in many problems and even in the invalidity of the international arbitration agreement. Whether it’s a submission agreement or a language in the primary contract about arbitration, the arbitration agreement must have the following three components: “the agreement to arbitrate,” “the scope of the arbitration agreement,” and “finality of awards.”

BIBLOGRAPHY

1. 1 Blackaby Nigel et al., 1 An Overview of International Arbitration (2015), http://oxia.ouplaw.com/view/10.1093/law/9780198714248.001.0001/law-9780198714248-chapter-1 (last visited Jun 28, 2024).
2. Rachit Garg, All about International Arbitration, iPleaders (Apr. 2, 2024), https://blog.ipleaders.in/international-arbitration/ (last visited Jun 29, 2024).
3. Steve Nelson & Michael Robbins, GUIDE TO INTERNATIONAL ARBITRATION (2016).
4. thelegalquorum, India as a Hub for International Commercial Arbitration, The Legal Quorum (Dec. 25, 2023), https://thelegalquorum.com/india-as-a-hub-for-international-commercial-arbitration/ (last visited Jun 28, 2024).
5. Elif Berktaş Yüksel, INTERNATIONAL ARBITRATION (Arbitration Agreement, Enforceability, Kompetenz Kompetenz, Separability, Applicable Law, Termination).
6. Rukmini Das & Anisha Keyal, JUDICIAL INTERVENTION IN INTERNATIONAL ARBITRATION (2009).
7. Rukmini Das & Anisha Keyal, JUDICIAL INTERVENTION IN INTERNATIONAL ARBITRATION (2009).

[1] Rukmini Das & Anisha Keyal, JUDICIAL INTERVENTION IN INTERNATIONAL ARBITRATION (2009).

[2] Elif Berktaş Yüksel, INTERNATIONAL ARBITRATION (Arbitration Agreement, Enforceability, Kompetenz Kompetenz, Separability, Applicable Law, Termination).

[3] Steve Nelson & Michael Robbins, GUIDE TO INTERNATIONAL ARBITRATION (2016).

[4] internationalarbitrationandinternationallaw.pdf.

[5] International_Arbitration_laws_and_regulations_in_India.pdf.