Prior to the enactment of The Arbitration and Conciliation Act, 1996 which was modelled on the UNCITRAL Model Law, the Arbitration Act, 1940 was enacted to consolidate and amend the law relating to arbitration.
The Arbitration Act, 1940 allowed for court interference at various stages of the arbitration proceedings which stalled the progress of the dispute and gave the court oversight over the resolution process. These delays and the lack of speedy resolution led to foreign investors becoming sceptical of investing in unstable domestic business environments. The Supreme Court in the case of Guru Nanak Foundations Vs. Rattan Singh[1] held that “the way in which proceedings under the Act are conducted and without an exception challenged, has made lawyers laugh and legal philosophers weep” in view of the “unending prolixity, at every stage providing a legal trap to the unwary.”
This criticism comes from the fact that
- The 1940 Act gave powers to the court to interfere with the proceedings and undercut the authority of the arbitral tribunals,
- The parties could move the courts whenever they felt that the matter was not proceeding in their favour and,
- The awards granted were allowed to be challenged on numerous grounds which defeated the entire purpose of arbitration
Under Part II of the Arbitration and Conciliation Act, 1996, the imprint of the New York Convention can clearly be seen. Section 47, for example, reflects words used in the Convention verbatim and other sections are similarly enumerated in the spirit of the Convention.
Section 47 states “Evidence.—(1) The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court—
(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;
(b) the original agreement for arbitration or a duly certified copy thereof; and
(c) such evidence as may be necessary to prove that the award is a foreign award.
(2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.”
This is derivative of Article 4 of the Convention which states,
“To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:
(a) The duly authenticated original award or a duly certified copy thereof;
(b) The original agreement referred to in Article II or a duly certified copy thereof.
2. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.”
The striking similarity between the Convention and domestic law may be observed and is a demonstration of India’s commitment to the Convention and to other contracting parties. This law reflects the Government’s attempts to create a conducive environment that promotes arbitration at all levels.
This judgement, recognised as influential, laid down broad propositions in regard to harmonising inconsistent decisions taken in past arbitration matters. It also paved the way in bringing the arbitration regime in India on par with the New York Convention and UNCITRAL Model Law as well as to attenuate the court’s role in intervening in ongoing arbitrations.[3]
While discussing whether Part I of the Act had been impliedly excluded, the court overruled Bhatia International v. Bulk Trading SA[4] and Venture Global Engineering v. Satyam Computer Services Ltd[5] and held that Part I of the Act would be considered impliedly excluded when the juridical seat is outside India or where a foreign law is chosen as the law governing the arbitration agreement. This would apply prospectively only to arbitration agreements concluded on or after 6 September, 2012.
Nations globally have striven to create a regime of standard legal rights, liabilities and procedures that help in seamless resolution of disputes through the adoption of various Conventions since 1928. India has fulfilled its international obligations by accepting established global norms by the incorporation of various amendments, legislations and precedents. Though India’s experience with the ADR ecosystem has been rife with missteps, progress is steadily being made in regard to building a reliable dispute resolution system which instils confidence in the minds of businesses, investors and other stakeholders.
