Arbitration is a widely used method for resolving disputes in India, providing parties with a quicker and more flexible alternative to traditional litigation. However, navigating the intricacies of arbitration law can be challenging. In this blog post, we’ll break down some essential concepts in Indian arbitration law and provide insights based on legal precedents and statutes.
Under Section 2(h) of the Arbitration and Conciliation Act, 1996, a party can apply to set aside an arbitral award. This section defines ‘party’ as a party to an arbitration agreement1. This means that only those directly involved in the arbitration agreement can seek to set aside an award.
The 2019 Amendment introduced Sub-Section (ca) in Section 2(1)(c), defining “arbitral institution” as an institution designated by the Supreme Court or a High Court under the Arbitration Act2. This amendment clarifies the recognition of specific arbitration institutions, adding a layer of institutionalization to the arbitration process.
The determination of jurisdiction and the seat of arbitration is crucial. The Act specifies that applications to set aside arbitral awards can only be filed in the courts defined under Section 2(1)(e) of the Act3. The Supreme Court has emphasized that the seat of arbitration often indicates exclusive jurisdiction45.
In various cases, the Indian judiciary has reaffirmed that the choice of the seat of arbitration confers exclusive jurisdiction to the courts of that seat67. Parties must carefully consider the implications of their chosen seat in the arbitration agreement.
Disputes can arise even before arbitration begins. Courts have ruled that a claim made prior to the invocation of the arbitration agreement constitutes a dispute8. Parties should be aware of this when initiating arbitration proceedings.
The timing of claims and adherence to the arbitration procedure is essential. In some cases, parties must follow specific procedures to introduce additional claims during arbitration9. Failure to do so can impact the validity of the arbitration process.
Section 4 of the Arbitration Act states that a party who proceeds with arbitration without timely objecting to non-compliance with arbitration provisions is deemed to have waived their objection10. Parties must be diligent in raising objections to protect their rights.
Section 5 of the Arbitration Act limits judicial intervention in arbitration matters, except in specific circumstances11. For example, courts can intervene in matters related to the appointment of arbitrators or enforcing arbitration agreements.
The Supreme Court has clarified that a party not signatory to the arbitration agreement cannot be subjected to arbitral proceedings12. The burden of proving a third party’s intention to consent to the arbitration agreement lies with the applicant.
Understanding key concepts in Indian arbitration law is crucial for parties involved in arbitration proceedings. Whether you’re a party to an arbitration agreement, an institution, or a legal practitioner, these insights can help navigate the complexities of arbitration in India.