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History and Evolution Of The Arbitration Law In India With Comparison To Singapore

Alternate dispute resolution (ADR) is growing its importance in the present times due to the very fact that the dispute resolution between the parties is settled quickly and the expenses of the procedure are very less in comparison to the litigation. Arbitration is one such form of the Alternate Dispute Resolution (ADR) which means that the dispute between the parties were settled by an impartial third party i.e. arbitrator appointed by the court or by the parties and the decision that has been drawn from the resolution is binding on both the parties.

In India the arbitration procedure is governed by the arbitration law. The objective of this research paper is to gives its readers an overview on the concept of arbitration law in India, in comparison with the arbitration law in Singapore. In this paper the history and development of the arbitration law has been shown in the lenses of both the Indian and the Singapore context.

While penning this article I have found out that the concept of arbitration started with Lex Mercatoria, a Latin term which in the literal sense is the "Law of the Merchants", which is primarily followed in the medieval period and later it had transformed into trade laws. On the face of it, the term arbitration in general is basically adjudication of the disputes between the parties by an impartial third party i.e. arbitrator, arbitration is a consensual process in which both the parties come to an agreement to settle down a dispute, to one or more arbitrators who can make a binding decision on the dispute.

However, a deeper look into this process, we can surmise that the arbitration is a form of alternative dispute resolution (ADR) in which the disputes between the parties are resolved outside the courts with the help of the third party which simultaneously reduces the unnecessary expenses and will get the justice without any delay that is usually witnessed in the courts and the very purpose of the arbitration in any country is to minimize the intervention of the court and for fast delivery of the justice.

Further, this paper aims to showcase the difference in the procedure followed in India with that of the Singapore Arbitration procedure and what all changes can be made to the Indian procedure in the aspect of the Arbitration Law in order to make it more progressive and make it step forward with the present arbitration law. The detailed analysis of the above mentioned issues have been conducted with the help of the relevant literature, case laws and the relevant legislations in India and Singapore.

History Of Arbitration

The practice of Arbitration is widespread across the globe since the ancient times in one or the other forms of the dispute resolutions. The concept of Lex Mercatoria mainly deals with resolving the trade disputes of the merchants and traders. And in the modern times this concept has been turned into International trade laws and is accepted across the globe.

It has been stated in the book written by Elkouri and Elkouri, which it is said that King Solomon of the Jewish empire was the first arbitrators in the world and in this book it has been, manifested that his way of arbitration proceedings are still followed by the Modern day arbitration process.[1]

King Solomon has settled an issue between the two women who were claiming that one of them is the mother of the baby, then the king has ordered his men to bring a sword and divide the baby in to two equal parts and give equal parts to both the women, one women aid that instead of dividing the baby into two halves give the baby to the other woman only but the other woman said that she has no problem with dividing the baby into two halves, by this the King have his reasoning that woman who said don't divide the baby is real mother and the other one is not real.

In India, the concept of arbitration is pervasive even before any codified law came to existence, in our country the mentions of the arbitration are found in the Brhadaranayaka Upanishads.[2] It is believed that Brhadaranayaka is one of the oldest Upanishads which include the philosophical concepts of the Hinduism and in Sanskrit the literal meaning of this Upanishad is great forest book.

And according to most scholars it is believed that this was written in between 1000 and 700 B.C. In India the popularity of the arbitration has been increased since the end of the nineteenth century and there was statutory recognition for arbitration as a form of alternate dispute resolution (ADR).

It was first started with the enactment of the Indian Arbitration Act of 1899 which is primarily based on the English Arbitration Act, 1899, but it was applicable to only the presidential towns of India i.e. Madras, Bombay, and Calcutta. Later on by the changing times new legislations on the arbitration has come into force and has brought new changes to the previously made laws.

Legislative Enactments

The Arbitration Law in India has been developed under three phases they are Pre-British period, during the commencement of the British Rule and after the British Rule. In the Pre-British period, the arbitration has been in the form of the panchayats, as the issues between the people are resolved in the panchayat by the group of the people and the decision given by them was binding on the parties to the issue.[3]

During the period of the British rule the first legal attempt was made to codify the law pertaining to the arbitration and the act was Indian Arbitration Act, 1899, this act was based on English Arbitration Act, 1899, however, this extent of this act is only for the presidency towns such as Madras, Bombay, and Calcutta and this act was not applicable to the other parts of India. In this act it has sought that the parties in the disputes in writing can refer to the court having jurisdiction to refer an arbitrator for settling the dispute.

The scope of arbitration was modified after the enactment of the Civil Procedure Code Act, 1908 and it is section 89 and schedule Ⅲ of CPC that had made the application of provisions of arbitration to all the parts of India where the Indian Arbitration Act was not extended.[4]

The succeeding act was the Arbitration Act of 1940, this act was more systematic and specific on arbitration and it has ameliorated the shortcomings of the previous act, this act is applicable to whole of India. This act has provided for an agreement between the parties for appointment of an arbitrator by the third person and with the consent of the parties can appoint three arbitrators.

And the appointment of an arbitrator can be revoked only by the leave of the court, the death of one of the party to the arbitration. The lacunae in this act were that it has dealt with the adjudication of the local arbitration rewards and this act no provision to deal with the foreign arbitration rewards.

And in the case of Guru Nanak Foundation v. Rattan Singh, the Supreme Court has held that this act by giving an observation on the Arbitration act of 1940 and has stated that "the way in which the proceedings under the Act are conducted and without exception challenged in Courts, has made Lawyers laugh and legal philosophers weep" and has stated that this act was ineffective, time consuming so, to cover all these shortcomings in the act this has led to the introduction of the Arbitration Act of 1996.[5]

Despite the 1940 act being defective, it has been in effect till the year of 1995, the subsequent was made i.e. The Arbitration and the Conciliation Act, 1996, this act was made for the purpose of encouraging the investment for the foreign investors and during the period of 1990s the LPG reforms has started in India. And this act has reduced the complexity the earlier act has had; this act was enacted in consonance with UNCITRAL model law on international commercial arbitration. This act provides for both the domestic and foreign commercial disputes rewards.

The Arbitration and Conciliation Act of 1996, was divided into four parts and in which part Ⅰ of the act deals with the domestic arbitrations where the arbitrations were held in India but this was interpreted creatively by the honorable court in the case of Bhatia International v. Bulk Trading S.A. & Anr., it was held that arbitration benches that are seated outside India are subjected to part 1 of the act, which provides about the procedural details for domestic arbitration. And the provisions of part Ⅰ of the act are applicable to the foreign arbitrations as well. This act unlike the previous acts gives much importance to the agreement of the parties and necessity of the arbitration agreements for the sake of the arbitration proceedings.

However, this act has been criticized for excessive involvement of the court and expenses in the arbitration proceedings, the charges of the fees by the arbitrators and absence of time limit for adjudication makes this act cumbersome.[6]

The needful amendments were made in the subsequent act, the Arbitration and Conciliation Amendment Act, 2015, this act has added a new interpretation to the term 'courts' in the aspects of domestic and international arbitration. It has laid down that international arbitrations which are outside India are subjected to the provisions of this act and arbitral rewards for such cases are enforceable in India. In order to minimize the intervention of the court, this act has stated that refer the subject matter to the arbitration if there are arbitration agreements on such issues.

The prescribed period for the arbitration proceedings is 12 months has been mentioned under this act. In the case of Perkins Eastman Architects DPC & Ors. v. HSCC India Ltd., the court has held that the party to the arbitration cannot appoint any person of his choice as an arbitrator and the court has the discretionary power to appoint an independent arbitrator under the provisions of this act.[7]

The Arbitration and Conciliation Amendment Act of 2019, was constituted by an ad-hoc committee headed by Justice Sri Krishna and has proposed some improved in the 2015 act. For reducing the burden on the courts and the chief justice of the High Court can appoint bench of arbitrators for speedy disposal of justice. Those arbitration institutions have been empowered to deal with the adjudication of the cases of international arbitration.

For the speedy disposal of the justice the above said should be disposed within six months from the date of appointment of the arbitrators. The significant work made by this amendment act was the establishment of the Arbitration Council of India and that will regulate the arbitration in the country.

Procedure Of Arbitration Law In Singapore

Singapore being one of the most progressive Asian nations, it is moving towards to become the leading member in the arbitration hub. In Singapore there are predominantly two distinct frameworks where the issues can be arbitrated and the courts intervention is minimal in regards to the proceedings between the parties.

In Singapore there are both the domestic as well international arbitration, in the domestic arbitration is government by the arbitration act and it applies to only Singapore and the situations where the international arbitration act is not applied in the country. Whereas the international arbitration act applies to both the domestic as well as the international arbitrations where the parties have the written agreement for application of the model laws of 1985.

The Arbitration Act 2001 of Singapore, under its provisions it states that either party of the arbitration proceedings or the arbitration tribunal can apply to the court to issue a ruling in regards to the question of law that affects the rights of the parties and either party can appeal to the court on any question of law unless it is expressly excluded in the provisions of the act the above both instances has been mentioned under section 45 and section 49 of the act respectively. Even though both Singapore arbitration act of 2001 and International arbitration act 1994 are based on the UNCITRAL model law on International commercial arbitration 1985.

International arbitration is the widely accepted and preferred way for resolving the cross border disputes and Singapore is most preferred seat in the Asia-Pacific region for arbitration, because it has established itself in the first place among the other nations by performing well at various indexes such as Corruption perceptions index and World justice project's rule of law index.

The other main reason for preferring Singapore as an arbitration hub is because it is arbitration friendly nations and it adapts to UNCITRAL model of laws, which accords with the globally accepted rules for the arbitration process. The Singapore legislation helps in reducing the time by restricting the grounds for the appeals by the parties, when the appeals is of such nature that is questioning the law and this will help the party winning the arbitration proceedings to proceed with the enforcement of arbitral award upon the issuance.

And the last reason for preference given to Singapore is the operation of the judicial system in Singapore; the judicial system provides maximum support and minimum intervention of the court in the arbitrational proceedings between the parties. The Singapore Arbitration Act is not in consonance of the International Arbitration Act, 1994 and it has restricted the access to the courts.

The primary distinction between the two legislations is the intervention of the courts in the matters of arbitration, under the international arbitration the intervention of the courts is limited to the instances that are expressly provided by the law itself, whereas under the domestic law the parties can apply to the court for the determination of the question of law arising in the course of the arbitration proceedings which affects the rights of the parties.

Singapore is known to have an independent judiciary in arbitration related issues. And as per the Singapore arbitration law the parties in the dispute have the right to choose the way of the procedure that their arbitration has to be dealt. Since, Singapore has got the independence it has been under the practice of the arbitration and the government of the Singapore has taken a step forward to establish its arbitral institution, Singapore International Arbitration Centre (SIAC) and from then the SIAC has got global attention and it is looked upon as the international hub for the arbitration.

The Singapore Court of Appeal recently held that in the case of Anupam Mittal v. Westbridge Ventures II Investment Holdings, 2023 SGCA that the proper law governing subject matter arbitrability at the pre-award stage should be the law governing the arbitration agreement, and also provided guidance on what law governs an arbitration agreement when no express choice of law was provided.[8]

Suggestions For Betterment Of Indian Arbitration Law

The arbitration has become one of the significant methods in the adjudication of the disputes between the parties. In the year 2020, the arbitration and conciliation amendment act ordinance has been promulgated by the President. This ordinance has proposed some other provisions and amendments to existing provisions that are not present in the earlier act.

With the comparison to the Singapore arbitration law the Indian arbitration law has to adapt some of the government initiatives, and judicial support. In India the even though the arbitration takes place it takes more time and the laws are not strict enough those of the Singapore, the SIAC has placed the country in a better position has adopted strict time frame for the completion of the arbitration proceedings which helps in reducing the expenses and fast disposal of the justice. The above mentioned suggestions will help in the efficient arbitration in India.

As it is already known that the concept of the arbitration for India is not new, even though there is no codification of the laws in the country but in some other form the concept of the arbitration is existent from the ancient times. In India with the present laws it can be said that the arbitration is still in the evolution stage, it has been evolving by the way of amendments, which enabling the adding of the new things and the shortcomings in the earlier acts so that the efficient arbitration will be in existence.

It is said that arbitration is a form of the ADR, and the purpose of the ADR is t decide the matters without the intervention of the court, but the arbitration defeats the meaning of the ADR because there is a part of court intervention in the arbitration process.

The amendments to the acts make the arbitration the preferred mode of the dispute resolution in the country and if the laws are good enough it reduces the burden on the courts and I would finally conclude by saying that the efficiency and professionalism comes only with the change in legislations within time to time.

  1. Frank D. Emerson, History of Arbitration Practice and Law, 1970.
  2. Singh, Preet, International Arbitration on Commercial Matters in Indian Perspective, Available at:
  3. History of Arbitration Process and Law, Available at:
  4. The Code of Civil Procedure, 1908.
  5. (1981) 4 SCC 634.
  6. (2002) 4 SCC 105.
  7. SC 1628 (2019).
  8. Anupam v. Westbridge (CA), 55.

Award Winning Article Is Written By: Mr.Boddu Harshith Sai
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Authentication No: JU354745916050-30-0623

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