The jurisdiction of Indian Courts in International commercial arbitration
International Commercial Arbitration is arbitration where the case is a cross-border dispute and the parties do not want to get into the filing of a case in national courts. International Commercial Arbitration, in this way, aids the parties to get rid of the time consuming and technical process of the courts. The whole process of arbitration takes place according to the arbitration agreement earlier signed between the parties.
In International Commercial Arbitration Proceeding, it is also very often that the jurisdiction of the Courts is not certain as parties belong to a different nationality. Determination of the jurisdiction of courts is one of the vital questions to be decided by the courts.
The definition of international commercial arbitration is given under section 2 (1)(f) of The Arbitration and Conciliation Act, 1996 which states that, it means an arbitration relating to disputes arising out of legal relationships between the parties, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is,
An individual who is national of, or habitually resident in, any country other than India; or
A body corporate which is incorporated in any country other than India; or
The Government of a foreign country.
International Commercial Arbitration – The Indian Perspective
The matters are dealt under the provisions of International Commercial Arbitration when the seat of arbitration is in India but at least one of the parties is a foreign national. These matters are dealt with under part 1 of The Arbitration and Conciliation Act,1996. When the seat of arbitration is outside India, then such matters would come under the ambit of part 2 of the act.
The following laws would apply to ICA (International Commercial Arbitration), when the case falls under part 1 of the act, i.e., when the seat of the arbitration is in India.
Notice of the Arbitration
It is the first step in an arbitration proceeding. One party sends notice to the other party, asking for the settlement of the dispute through arbitration.
Court’s reference for arbitration
The section 8 of the act states that, on the date of submitting its first statement itself, if the party before the judicial authority, applies for referring the case to arbitration by submitting an application along with the original arbitration agreement, then the judicial authority has to accept such application and refer the parties to arbitration.
Interim reliefs in Arbitration
Interim relief is granted to the parties by the court under section 9 of the act and interim relief is granted by the arbitral tribunal under section 17 of the act. The purpose of this provision is to provide security to the party seeking relief until the final decision is given.
Appointment of arbitrators
Appointment of arbitrators is given under Section 11 of the act. Each party has to appoint one arbitrator and both the arbitrators have to then appoint a third arbitrator, within thirty days, because the arbitrators are required to be an odd number.
Grounds for challenging the appointment of an arbitrator
If an Arbitrator is found to be partial and dependent, then his appointment can be challenged and if he does not possess the qualifications then his appointment as an arbitrator can be challenged.
Basics of the proceedings
The parties are required to be flexible in terms of the language, procedure, and place of the arbitration. The arbitral tribunal will decide that in what sequence the evidence will be examined. The parties can also settle the dispute through mutual consent or it can be settled by the arbitral tribunal a well.
Cost of the arbitration
The tribunal decides the fee of arbitration and what amount each party has to bear.
Application for setting aside an arbitral award
An application under section 34 of the act can be made to the court to set aside the arbitral award if any party is not satisfied with the decision of the tribunal.
An appeal can be filed for the following situations:
Denial of interim relief under section 9 and section 17 of the act.
To set aside the arbitral award under section 34 of the act.
Finality and Enforcement of arbitral award
Under section 35 of the act, the award given by the tribunal is binding on both the parties. The award given by the tribunal is considered to be the same as an order passed by a court of law on the provisions of the Code of Civil Procedure, 1908.
When The Seat of Arbitration is Outside India
In the case of Bhatia International v/s. Bulk Trading, it was held that Indian courts have jurisdiction in order to see the significance of an arbitral award made in India, even if the actual law of the agreement is the law of another country.
In the case of Bharat Aluminium v/s. Kaiser Aluminium Technical Services, The doctrine laid down in the case Bhatia International v/s. Bulk Trading was overruled. The rationale behind the judgment is that it is the seat of arbitration that administers the jurisdiction and if the parties decide to conduct the arbitral proceedings outside India, then Indian courts do not have jurisdiction to grant interim relief to the related parties.