Matters which can be placed under Arbitration

Mar 5, 2021 #ADR #Arbitration

Nisman Parpia

In the earlier times there were no rights and no laws as people were not educated enough and did not have any knowledge regarding arbitration but after developments, people started getting civilised and started considering the rights of individuals which also gave birth to numerous conflicts and adversities.

In such cases one party used to approach a third person whom they trusted completely to resolve the matters with their suggestions. An arbitrator or mediator is a person who is assigned the work to dissolve commercial disputes between parties being an independent person without approaching the court Arbitration has been defined under the arbitration and conciliation act, 1996 which says, “Arbitration means resolving disputes between the parties at the earliest point of time without getting into the procedural technicalities associated with the functioning of a civil court.” it’s referred to as a sort of alternative dispute resolution.

It is a legal mechanism in which disputes are settled outside the court saving a lot of time and resources. It solves an argument between two or more people by helping them to agree to an acceptable solution. An example of arbitration could be two people divorcing who cannot agree on terms, allowing a third party, who is an impartial adjudicator, chosen by them to help them negotiate and solve disputes.

Arbitration is often either voluntary or mandatory and may be either binding or non-binding. Non-binding arbitration is similar to mediation in which a decision cannot be imposed on the parties.

Characteristics of arbitration
● Arbitration is neutral.
● Provides the Choice of decision makers.
● Arbitration has to be consensual.
● Decision of the arbitral tribunal is final, binding and easy to enforce.
● The procedure of arbitration is confidential and participants are bound to secrecy.

● arbitration is a private procedure and the resolution can be kept confidential.
● Dispute is normally resolved much sooner.
● Expertise in technical matters.
● Cost-effective and more flexible.
● More convenient to both the parties.
● Impartiality and lesser complications.

Under Hindu law, ‘Brihadaranyaka Upanishad’ traces the earliest evolution of Arbitration in India. It provided for various types of arbitral bodies consisting of three main ones including the local courts, the people engaging in the same business or profession and the panchayats.
The members of the panchayats (panchas) were arbitrators of those times dealing with disputes however the first legislative Council for British India was formed in India got its first enactment on arbitration. The course of arbitration flourished in India since the end of 19 century at that time it was statutorily recognised as a form of dispute resolution for the first time when Indian arbitration act, 1899 was elected however it was confined to the three presidency towns only that is Madras Bombay and Calcutta.

It was further codified in Section 89 and Schedule II of the Code of Civil Procedure, 1908, where the provisions of arbitration extended to different regions of British India to which the Act of 1899 wasn’t extended. After that the arbitration act, 1940 which applied to the whole of India including Pakistan and Balochistan came and however post-independence the same was modified via ordinance.

All disputes which can be decided by the civil court involving private rights can be referred to arbitration. Hence disputes about property or money or about the number of damages payable for breach of contract are referred to arbitration.

All disputes however aren’t arbitrable and there are certain disputes which fall outside categories of arbitrable disputes as held by the Hon’ble Apex Court within the matter of Booz Allen and Hamilton Inc V. SBI Home Finance Ltd. These are:
● criminal offences
● guardianship matters
● insolvency and winding up proceedings
● matters of probate, letters of administration, succession certificate etc
● Fraud
● eviction proceedings
● patents, trademarks, copyright
● Anti Trust/ competition laws
● Bribery/Corruption Laws

While there’s no authoritative decision on the difficulty, the existing jurisprudence suggests that disputes involving problems with competition law also are not arbitrable. Disputes regarding a thing or a property cannot be resolved through arbitration while disputes regarding a specific person can be the law also prohibits reference to arbitration in consumer disputes.

There remain quite a few uncertainties about the arbitrability of intellectual property (IP) law disputes. The prevailing view is that while disputes pertaining to IP rights are in themselves not arbitrable, subordinate rights in persona in the nature of commercial arrangements relating to the use of IP rights are arbitrable.


Section 2 (1) (f) of the Arbitration and Conciliation Act 1996 defines International Commercial Arbitration as under:
“an arbitration concerning disputes that arise out of legal relationships, whether contractual or not, considered as mercantile law effective in India, where a minimum of one party is:
1. And individual who is a national of or have actually resident in any other country except India
2. A body corporate which is incorporated in any other country other than India.
3. The government of a foreign country.

4. A company/an association/of body Comprising of individuals who central management is exercised in any other country besides India.

International commercial arbitration is a resolution of disputes arising under commercial contracts which are international in nature; this arbitration is often an alternative to litigation wherein the parties to the arbitration control the terms mutually thereby avoiding their national legislation. It resolves cross-border disputes without having to file in national courts.


In Government of India v. Vedanta Ltd. Ors [judgement dated: 16.09.2020 in civil appeal no. 3185 of 2020]
The court announced the period of limitation for filing for enforcement of a foreign award under section 47 and 49 which would be governed by article 137 of the limitation act 63 prescribing a period of three years from when the right to apply accrues.

CRSC Research and Design Institute Group Co. Ltd. v. Dedicated freight Corridor Corporation of India Ltd. & Ors. [Judgment Dated: 30.09.2020 in OMP (I) (COMM.) 184/2020]
The court relied on Avantha holdings ltd. v. Vistara ITCL India Ltd. And stated that following conditions should be satisfied prior to interim protection being granted u/s 9:
1. Existence of arbitration clause and manifest intention of petitioner invoking and initiating arbitration proceedings.
2. existence of prima facie case, balancing of convenience and in repairable loss to justify the grant of interim relief.
3. existence of emergent necessity.

Anglo American Metallurgical Coal Pvt. Ltd. v. MMTC [Judgment dated 17.12.2020 in Civil Appeal No. 4083/2020]
Relied on Sudarsan Trading Co. v Government of Kerala in which the court held that the arbitral tribunal is the final judge of quality and quantity of evidence before it. The court also relied on the Associate Builders case and held that if the majority award is a plausible view of the case then it can never be interfered with.

Indian legal system needs a way to deal with cases that are pending in the courts, and hence arbitration has proved itself a boon in this regard. Arbitration is not only helpful in reducing the excess burden that is put upon the Legal System but is also helpful in making faster decisions.

There is a necessity of invention of a versatile, confidential, reasonable, favourable and time saving method of resolving disputes without making the parties to travel through the rigorous, time consuming and exhausting intricate procedure of the traditional delivery of justice. The Indian judiciary is thus leaving no stones unturned to simplify the procedures in the cases of International Commercial Arbitration.

Moreover, the amendment in Section 36 has given more teeth to the Act as now so as to challenge a gift under Section 34 of the Act the stay is not automatic as was the scenario in pre amended Arbitration and Conciliation Act 1996 before its amendment in 2015 and conditions like the Order XLI Rule 5 of Code of Civil Procedure is to be imposed by the Court adjudicating the correctness of the Award.

This factor would also cut out unnecessary challenges to an Arbitration Award in line with the aim of the Act and therefore the authoritative judicial dicta during this regard. Recently, amendments have also been made in the arbitration and conciliation bill in 2021.

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