Published On: 15th August, 2024
Authored By: Abhinandhan H
School of Law CHRIST University
Introduction
Justice Can Sek Keong, Former Chief Justice of Singapore once stated “ As India’s economy continues to develop and grow, foreign investments and joint ventures will grow in tandem. Disputes will inevitably arise and the need to resolve these disputes will transform India into an important venue for international arbitration.” Arbitration is a method of dispute resolution that is used as an alternative to litigation. The parties mostly prefer to have arbitration sessions over the long process of litigating for a simple reason to minimize the cost during the procedure and also arbitration process is not that much of a time-consuming one than the litigation process.
Research Methodology
The research methodology used for the purpose of this article is the doctrinal method of researching where several secondary sources are used for the purpose of this article.
Body
The arbitral award is something that is given as a judgment or a final order by the arbitrators.. it is equivalent to the judgment given by the judges of the courts. An arbitration award is as effective as a civil judgment, provided that it is confirmed as a judgment [1]. Section 31[2] outlines the legal requirements in terms of the form and contents for arbitral awards. To ensure the official validation of the ruling, Section 31 requires arbitral awards to be made in writing and signed by all of the arbitrators that make up the tribunal. When there are several arbitrators involved, the signatures of the majority of the Arbitral Tribunal members will suffice, provided that the explanation for any missing signature is mentioned.
Through an interim award, an arbitration tribunal renders a final determination of certain issues that have been raised in the arbitration proceedings but keeps the arbitral reference pending for the determination of the remaining issues. [3]
India’s arbitration regime is governed by the Arbitration and Conciliation Act, of 1996, which is based on the UNCITRAL Model Law on International Commercial Arbitration. The Act has been amended several times, notably in 2015, 2019, and 2021, to make arbitration more efficient and reduce judicial intervention. The way arbitration has been in use in the Indian context shows that India will soon become one of the largest users of this method of Alternate Dispute Redressal (ADR) in the days to come. An Arbitration tribunal is the one that makes the arbitration procedure happen and it is the one that gives the awards and the redressal to those who seek justice through arbitration. However, this is not a process where one needs to have lengthy sessions and so may a number of sittings. The parties, come together to reach a common ground so that their contract or agreements can continue further. The process of arbitration is done by an arbitrator who can be appointed by the agreement and consent of the parties. If there is any issue with the appointment, then the court of the arbitration tribunal can step in and appoint an arbitrator for the same. The arbitrator post having multiple sessions with the parties later makes them reach a common ground where their dispute is solved and are contended with the end result. The arbitrator cannot give the parties straight jacket solutions like how the judges give in the courts but rather they can suggest certain things which the parties agree upon and further discuss to come to their result. The job of the arbitrator is more like a regulator and facilitator of the sessions.
Types of Arbitrations in India
The arbitral award is the final order that is given by an arbitration tribunal for arbitration and there are some types of arbitration when it comes to the Indian context like Domestic Arbitration, International Commercial Arbitration & Ad – hoc Arbitration, etc. All of these are different when it comes to the different people that they cater to. For example, the domestic one deals only when both sides are Indians, and the International commercial arbitration is held where one party can be Indian and the other one is a foreign party. All of these facilities are available as parties can be both from India and foreign. The awards are also awarded with respect to the provisions accordingly. In the Indian context, the awards are given under Part I of the Arbitration Act and are enforceable like how the judgments are given by the courts. The international award context is with respect to the New York Convention or the Geneva Convention, to which India is a signatory.
There are certain mandatory and non-mandatory aspects with respect to arbitral awards that is an arbitration seated in India , regardless of whether it is ad hoc or institutional would be governed by the provisions of the Arbitration Act and these are according to section 31 of the Act. An arbitral award must also include the date of rendering and the arbitration location, as specified by Section 20 of the Arbitration Act, in addition to the previously mentioned information.[4] The costs of arbitration shall be fixed by the Arbitral Tribunal in accordance with Section 31-A of the Arbitration Act.[5] The Arbitration Act’s Section 36 lays forth the guidelines for enforcing arbitral awards from arbitrations held in India. After receiving an award, the award-holder must wait for three months before seeking enforcement of the award.[6] Section 34 of the Arbitration Act permits objections to the award to be made during this period. Once this three-month period is over, if a Court deems the award to be enforceable, there can be no further challenges during the enforcement process.[7] The Code of Civil Procedure, 1908 (CPC) regulations shall govern the enforcement of the award, just as they would apply to a court decree.[8] A petition seeking enforcement of an arbitral award may be filed at any place where a decree may be executed. An applicant is not required in such a scenario to request a transfer of decree from the Court, which would preside over the arbitral proceedings.[9]
India is a signatory of both the New York Convention[10] and the Geneva Convention[11] concerning the recognition and execution of foreign arbitral awards. An award that is binding on a party and originates from a territory designated by India as a convention nation becomes enforceable within India if the award is made by a signatory to either of these conventions. The first stage in the process of enforcing a foreign award in India is the filing of an execution petition. Initially, the Court assesses if an arbitral ruling satisfies the requirements specified in the Arbitration Act. In the event that the Court decides the arbitral award is enforceable, it will be carried out just like a court order.
Challenge to the Arbitral awards
The arbitral award in India can be challenged on limited grounds, including incapacity of the parties, Invalidity of Arbitration Agreement, Lack of Due Process, Excess of Authority, Composition of the Tribunal & Violation of Public Policy.
The USA context with referral to the Arbitration and Arbitral awards
In the USA, arbitration is governed by both federal and state laws. The primary federal statute is the Federal Arbitration Act (FAA) of 1925, which provides the legal basis for enforcing arbitration agreements and awards. Each state may also have its own arbitration statutes. Arbitration acts in all fifty states allow a party to confirm an arbitration award,[12] and the Federal Arbitration Act (FAA) similarly provides a confirmation process in federal court.
Types of Arbitration in the USA
There are certain types of arbitration in the USA domestic arbitration, International Arbitration, Commercial and Consumer Arbitration, etc the domestic one deals with cases where both the parties are from the USA, and under the FAA, domestic awards are enforceable through the federal courts, with limited grounds for refusal. International Arbitration deals with Arbitration involving parties from different countries, typically governed by international treaties like the New York Convention.
The Federal Arbitration Act (FAA) primarily governs the United States’ recognition and execution of arbitral rulings, however, other legal rules may sometimes be relevant, as this chapter discusses.
There are three chapters in the FAA, and depending on whether an arbitral ruling is local or international, a different body of law will apply to its execution. In general, Chapter 1 regulates domestic arbitration processes and awards. It instructs courts to uphold arbitral rulings unless certain conditions are met, such as those for vacatur, modification, or correction. As long as Chapter 1, Chapter 2, and the international treaties they implement do not conflict, Chapter 1 also applies to foreign arbitral awards. The Inter-American Convention on International Commercial Arbitration, also known as the Panama Convention, is implemented in Chapter 3 and essentially follows the New York Convention in terms of recognition and enforcement. Chapter 2 implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention).[13]
The challenge to the Arbitral Award
Challenges to arbitral awards in the USA are limited and include Fraud or Corruption, Evident Partiality, Lack of valid arbitration agreement, Procedural unfairness, Excess of authority, Misconduct, and Exceeding Powers.[14]
Comparative Analysis between both systems
Arbitration has emerged as the go-to process for settling conflicts both domestically and internationally. Although both the USA and India have created complex systems for managing arbitral verdicts, their methods differ due to their distinct legal traditions and political agendas. The main distinctions and parallels between the USA and India’s systems for arbitral awards are examined in this comparative study.
Even with changes meant to lessen the role of the courts, judicial interference is still a major problem in India, particularly when it comes to annulling and upholding awards. Indian courts have a history of becoming more active in the political sphere and of reading “public policy” widely. In contrast, the American system places more emphasis on an arbitration-friendly framework and does not involve the court as often as it does in India. The US courts only get involved when there are procedurally and materially significant difficulties.
The United States of America and India are both parties to the New York Convention, which makes it easier for international arbitral rulings to be enforced. Nonetheless, there are differences in how the Convention is interpreted and applied. Indian courts have occasionally come under fire for closely examining foreign awards, particularly in light of public policy grounds.
Foreign awards are usually easy to enforce in the United States of America, as long as one of the strict conditions outlined in the New York Convention is not violated.
One important justification for rejecting the implementation of arbitral rulings in both jurisdictions is the public policy exception. The Supreme Court of India has limited its jurisdiction to cover fraud, and transgressions of fundamental concepts of justice, and morality. As a result, the interpretation of public policy in India has changed.
The United States has a more conservative approach, limiting the public policy exception to transgressions against the nation’s core principles. This prevents an overly expansive interpretation that can jeopardize the pro-arbitration position.
While ad hoc arbitration is still common, institutional arbitration is becoming more and more popular in both India and the USA. In India, inefficiencies and delays in the legal process might result from a lack of institutional support. With organizations like the American Arbitration Association (AAA) and the International Centre for Dispute Resolution (ICDR) firmly established, the USA boasts a more developed structure.
Strong frameworks for arbitration are offered by both the USA and India, but the two countries’ strategies differ in that they prioritize different legal traditions. India is working to lessen judicial interference and move toward a more arbitration-friendly legal framework.
Conclusion
India and the USA have totally different standings when it comes to how they approach Arbitration. The USA has a more arbitration-friendly system where the judicial system encourages to adoption of arbitration and even the mindset of the people is also supportive of the Arbitration mechanism. The arbitral award is the award given post the arbitration process by the arbitration tribunals. They have a lot of institutions that help for the growth of Arbitration. On the other hand, the Arbitration system is not that vast in India. There is a sure growth but the issue is that it is not much widely used. The presence of the Arbitration Act has helped in a better way for the facilitation of Arbitration in India. The are upcoming institutions in India that are making a huge process.
References:
[1] Daniel D. Derner & Roger S. Haydock, ‘Confirming an Arbitration Award’ (1997) 23 Wm Mitchell L Rev 879
[2] The Arbitration and Conciliation Act 1996 S.31
[3] A J van den Berg, The New York Arbitration Convention of 1958 (Kluwer Law International, 1981), pp. 267, 268.
[4] The Arbitration and Conciliation Act 1996 S.31(4)
[5] Arbitration and Conciliation Act, 1996, S. 31-A.
[6] Arbitration and Conciliation Act, 1996, S. 34 read with S. 36.
[7] Rendezvous Sports World v. BCCI, 2016 Bom 6064.
[8] Arbitration and Conciliation Act, 1996, S. 36(1).
[9] Sundaram Finance Ltd. v. Abdul Samad, (2018) 3 SC 622.
[10] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.
[11] Geneva Convention on the Execution of Foreign Arbitral Awards, 1927.
[12] Trupti Shetty, Navigating Arbitration: A Comparative Analysis Of India And The United States ( VIA Mediation and Arbitration Centre Newsletter)
[13]Types of Arbitration (Law Times Journal, 10 August 2019)
[14] A J van den Berg, The New York Arbitration Convention of 1958 (Kluwer Law International, 1981), pp. 267, 268.
