The Arbitration Process in India - An Overview

Arbitration has emerged as a preferred method of dispute resolution in commercial matters in India. The Arbitration and Conciliation Act, 1996 (as amended in 2015, 2019, and 2021) provides the statutory framework for the conduct of arbitration proceedings in India.

Statutory Framework

The Act is largely based on the UNCITRAL Model Law and provides for both domestic and international arbitration. Part I of the Act governs arbitrations where the seat is in India, while Part II deals with enforcement of foreign arbitral awards under the New York Convention and the Geneva Convention.

Commencement of Arbitration

An arbitration is deemed to have commenced on the date on which a request for the dispute to be referred to arbitration is received by the respondent. The parties may agree on institutional arbitration (through bodies such as the Indian Council of Arbitration, LCIA India, or SIAC) or ad hoc arbitration where the procedure is determined by the parties or the arbitral tribunal.

Constitution of the Arbitral Tribunal

Unless otherwise agreed by the parties, in an arbitration with three arbitrators, each party appoints one arbitrator, and the two appointed arbitrators appoint the third arbitrator who acts as the presiding arbitrator. In the case of a sole arbitrator, if the parties are unable to agree on the appointment, the Chief Justice of the concerned High Court or a person or institution designated by them may appoint the arbitrator.

Conduct of Proceedings

The arbitral tribunal is required to treat the parties with equality and afford each party a full opportunity to present its case. The tribunal has the power to determine its own procedure, subject to the parties’ agreement and the provisions of the Act. Hearings may be conducted in person or through video conference, and the tribunal may decide the dispute on documents alone if the parties agree.

The Arbitral Award

The arbitral award must be in writing and signed by the members of the tribunal. It must state the reasons upon which it is based unless the parties have agreed that no reasons are to be given, or the award is a consent award. The award is final and binding on the parties.

Challenge and Enforcement

A domestic arbitral award may be challenged under Section 34 of the Act on limited grounds, including invalidity of the arbitration agreement, inability of a party to present its case, and violation of public policy. A foreign award may be enforced under Part II subject to the conditions specified in the Act.

The amendments introduced over the years have sought to streamline the process, minimise court intervention, and align Indian arbitration law with international best practices, making India an increasingly attractive seat for arbitration.