History And Development Of Arbitration Law In India
In the Biblical sense, King Solomon was the first Arbitrator in a dispute
between two women who claimed to be the mother of a baby boy. Some writers also
assert that the methods used by King Solomon were similar to those used in court
cases today. Arbitration was also used by Philip II, father of Alexander the
Great, in resolving territorial disputes in Greece back in 337 B.C. After all,
about 600 BC, in a dispute between Athens and Megara, over the who responded to
the island of Athens. Thus, International Arbitration can be easily traced back
to the ancient world.
The arbitration process flourished in India from the end of the nineteenth
century. Arbitration in India was officially recognized as a means of resolving
disputes for the first time when the Indian Arbitration Act was passed, 1899,
however, it was limited to only three presidential cities namely Madras, Bombay
and Calcutta. It was also incorporated in Section 89 and Schedule II of the
Civil Code, 1908, where arbitration provisions were extended to the various
districts of British India where the Act of 1899 was not extended.
The 1899 Act and the provisions of the Civil Procedure Code, 1908 were found to
be inadequate and therefore highly competent and therefore, the Arbitration Act,
1940 came into force and repealed the 1899 Act and the relevant provisions of
the Civil Code. , 1908.
The 1940 Act was a reflection of the English Arbitration Act, 1934 and was the
complete law on the subject but had no provisions to deal with the enforcement
of foreign awards and as a result, only dealt with the settlement of domestic
disputes. The 1940 law could not achieve its goal as its operation was far from
satisfactory. Justice D.A. Desai expressed dissatisfaction with Indian courts
and the inefficiency of the 1940 Act to Guru Nanak Foundation v Rattan Singh,
(1981) 4 SCC 634, in which he briefly stated:
"Endless, time-consuming, complex and expensive court procedures forced
lawmakers to seek alternative, informal, effective and speedy courts to resolve
disputes, by avoiding applause and this led to the Arbitration Act, 1940.
However, the manner in which prosecutions under the Act continued and without
choosing to be challenged in the Courts, it caused the lawyers to laugh and the
legal philosophers cried."
Modern Law Of Arbitration
Bengal Regulation, 1772:
The modern law of arbitration was enacted in India from 1772 by the Bengal
Regulation of 1772, during the British rule. Mediation in India was recognized
as a settlement of disputes and for the first time when the India Arbitration
Act was enacted, 1899. Three presidential cities were closed: Madras, Bombay and
Calcutta. Commend the parties for submitting their decision on their reason for
Bengal Regulation, 1781:
For example, the rule of Bengal 1781 as long as the judge recommends and has so
far to the best of his ability, without coercion, governs the parties to submit
an unilateral agreement to be agreed by the parties.
The Bengal Regulation of 1787, 1793 and 1795 introduced certain procedural
changes by giving the court the power to appeal against parties' consent and
also authorized the court to promote criminal proceedings not exceeding Rs 200
in a debt-related dispute, co-operation. accounts and contract violations.
Bengal Regulation of 1802, 1814 and 1833 by making various procedural changes as
Regulation VII of 1827 provided for the resolution of civil disputes.
Legislative Code 1859:
After the establishment of the Indian Legislature in 1834 the Code of Civil
Procedure Act, 1859 was passed with the intention of consolidating the process
of public courts but this code could not achieve its purpose as this code had
not been made superior to the Supreme Court. court (crown court under the Royal
Character). The Code of 1859 was amended from time to time and was replaced by
the passing of the Civil Procedural Code, 1877. This code of 1877 and 1879 and
the third code of public policy was established in 1882, replacing the previous
Indian Communication Act 1899:
The Legislative Council enacted the Indian Arbitration Act in 1899. It was based
on a model of the English Law of 1899. This action was used in cases where if
the matter brought to a resolution was the subject of a claim, the case could be
a break or otherwise set in the presidential city.
Arbitration Act Of 1940:
Then, on July 1, 1940, a specific law of mediation came into effect. We worked
all over India and this 1940 act had many conflicts, many criticisms and was
lacking in many areas where we worked even though it brought uniformity across
the country. The provisions of the Act of 1940 are as follows:
The arbitration law of 1940 made provision to protect the treaty from being
disrupted by the presence of the same lacuna in it. He made arrangements for
mediation without court intervention. In the case of mediation and intervention,
where the case was pending in court, all parties may agree to refer any dispute
to the settlement. The act of 1940 failed to achieve the goal and the whole
process under which it was concentrated in the courts. The Indian Law Commission
in its report dated 9 November, 1978 proposed broad amendments to the 1940
Although the 1940 Act attracted a lot of criticism and negative comments from
the Courts, however, no amendments were made to improve the application of the
1940 Act. Following the economic downturn in 1991, steps were taken to attract
foreign investors who needed a comfortable business environment and ease of
business. For this reason, the Mediation and Reconciliation Act, 1996 came into
force and repealed the 1940 Act. Interestingly, the 1996 Act was based on the
UNCITRAL Exemplary International Relations Act, 1985 and included both domestic
and international compensation. The main reason for the introduction of the 1996
Act was to prevent delays in mediation.
In the application of the 1996 Act, a dispute arose when the Supreme Court of
India in the case of Bhatia International v. Bulk Trading SA and another (2002)
4 SCC 105, stated that Part I of the 1996 Act will apply even to arbitration
proceedings. sitting outside of India unless set aside explicitly or implicitly.
In the same vein, the Supreme Court ruled in Venture Global Engineering v
Satyam Computer Services td (2008) 4 SCC 190.
These rulings were widely criticized for adopting a retrospective mechanism. The
matter was subsequently resolved in Bharat Aluminum and Co. v. Kaiser Aluminum
and Co., (2012) 9 SCC 552, where the Supreme Court ruled that Part I of the Act
does not apply to Part II of the Act. As per the decision of BALCO, the Courts
of India were unable to accept interim applications under Section 9 of the Act
on international remedies governed by Part II of the Act.
Despite the positive efforts of the legislature to make India a strong base for
mediation, the 1996 Act faced a number of issues including high costs and
substantial court intervention. Under the 1996 Act, the Award Challenge under
Section 34 would disqualify the Prize as there was a practice of granting
Default Residence when the Award was made at the insertion of Section 34. In
addition, there was no time limit for arbitral award. Another issue with the
1996 Act was that some Mediators charged exorbitant fees which was contrary to
the 1996 Act.
To address this concern, on April 8, 2010, the Department of Justice and Justice
invited invitations from prominent lawyers, jurists and state law professionals
to apply the 1996 Act. Subsequently, the Mediation and Reconciliation Act
(Amendment), 2015 was passed and certain amendments were made to the 1996 Act.
Interestingly, the provisions of Section 2 (2) provided that it is subject to
the contrary agreement, the provisions of Sections 9, 27 and clauses (a) of
subsection (1) and subsection (3) of the Constitution. Article 37 will also
apply to resolving international disputes.
In addition, Section 9 was amended to provide that once a tribunal has been
established, the Court will not accept an application unless circumstances so
require, thus limiting the Court's intervention. In addition, Section 17 was
amended and the teeth were provided in an Order passed by the Arbitral Tribunal.
The amendment gave the tribunal all the jurisdiction of the Court under Section
After all, the time limit for making an arbitral award was limited to twelve
months after the establishment of the arbitral tribunal and this was included in
the 1996 Act as a result of this Section. 29A (2015 amendment). Section 34 of
the 1996 Act was also amended to reduce the level of court interference. As per
Article 34 amended, the prize will be against India's public policy only if it
is affected by fraud or corruption, contrary to the basic policy of Indian law;
or contrary to basic moral principles or justice.
A major issue brought about by the 2015 amendment was whether Section 36 (2)
applies to pending courts under Section 34 of the Act. The matter was discussed
in the case of the Board of Control for Cricket in India v. Kochi Cricket
Pvt. Ltd. (2018) 6 SCC 287, in which the High Court ruled that Section 36
Amendment applies even to pending Section 34 applications on the effective date
of the Mediation Amendment Act, 2015. -2018 shall place all amendments in
contravention and shall be contrary to the purpose of the Amendment Act, 2015,
Section 87 was introduced by an amendment to the 2019 Act.
Section 87 was challenged in the famous case of Hindustan Construction
Company Limited v. Union of India, (2019) SCC Online SC 1520, the Supreme
Court overturned the inclusion of Section 87 of the Mediation Act of 2019
Amendment as a Public Notice.
Another long-running issue in the country is Seat v. Venue. The High Court
referred to Bgs Sgs Soma Jv vs Nhpc Ltd. Public Appeal Decision No. 9307
of 2019 decreed on 10.12.2019, and ruled that the appointment of the chair gives
special powers to the courts of the said seat; and the arbitration tribunal,
regardless of whether it has been appointed as a tribunal, a tribunal or a
tribunal, is a legal tribunal unless there is a cross-reference. The Supreme
Court found that the decision of Hardy Exploration and Production (India) Civil
Appeal no. 4628 of 2018 dated 25.09.2018 is incorrect as it does not properly
follow the decision of the five BALCO judges.
The long-running dispute over the appointment of one-sided members has also been
stopped by the Supreme Court recently. In the case of Perkins Eastman
Architects DPC & Anr. V. HSCC (India) Ltd Arbitration Application No. 32 of
2019 ruled on 26.11.2019, the Court held that a person having an interest in the
outcome or decision of a dispute should not have the power to appoint a single
The 2015 amendments faced a number of challenges however, some issues were still
prevalent in the mediation process, one of which was the lack of institutional
negotiation culture in the country as many of the solutions were decisions. On
13 January, 2017 the High Level Review Committee on the Institutionalization of
Arbitration Mechanism in India, led by Justice B.N. Srikrishna the Retired Judge
of Supreme Court of India, was suspended.
In considering the Committee's recommendations, on 9 August, 2019, the Mediation
and Reconciliation Act (Amendment) was passed, 2019 and the Arbitration Council
of India (ACI) was introduced. In terms of the Amendment Act of 2019, the ACI's
core functions are to promote and promote ADR in the country, to balance the
mediators and mediators in the country, and to help improve institutional
mediation in the country.
Under the Act, there was no provision for a second appeal but the defeated party
began filing appeals under the Commercial Courts Act which caused a lot of
problems, so, because of the Amendment Act of 2019, Section 37 (1) of the Act,
the words "Appeal", substituted for the words "Despite anything contained in any
other law currently in force, a complaint".
The most controversial amendment to 2019 was the introduction of the 8th
Declaration Pledging Procedure that a person will not be eligible for mediation
unless he or she is a lawyer in terms of the Law of Attorney, 1961 with ten
years' experience as a lawyer. The same has been criticized as there has been
confusion as to whether this affects external mediators or not. Recently, the
Hon'ble Minister of Justice explained that principle 8 does not apply to
resolving international disputes.
The Amendment Act of 2019 took a continuous process and provided further
clarification of the Amendment Act of 2015. Interestingly, certain provisions of
the Amendment Act of 2019 have not yet been finalized and we must see how these
amendments will be implemented and much will depend on the functioning of the
Arbitration Council of India.
We can only hope that the mediation in India was made in accordance with the
views expressed by Justice Sabyasachi Mukharji in the F.C.I case. V.
Joginderpal Mohinderpal (1989) 2 SCC 347, in which he clarified that:
Arbitration in India is an ancient concept, originated in ancient India. All in
all, it can be said that arbitration is still in the development phase, a
mediation law in India regarding the issue of dispute resolution. But the
current mediation process must go through a process of amendment, in order to
work better in the coming days in the case of domestic or international trade
We must make the negotiation law simpler, less technical and more responsible
for the realities of the situation, but we must respond to the canons of justice
and fair play and make the mediator adhere to that process and practices that
will create confidence, not just by mutual justice, but by building the idea
that justice seems to be served.
Written By Rajpreet Kaur Kadamb, a first year student pursuing law from
Law Article in India
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