Introduction
Arbitration, Negotiation, Conciliation, and Mediation are the upcoming ways of Alternate Dispute Resolution of resolving a matter as the Courts are overloaded with the cases. Arbitration is the way of deciding the dispute between parties with the help of an arbitrator which is neutral to both parties. Either by the Court or by the parties themselves can appoint the arbitrator. Moreover, International Commercial Arbitration (ICA) is the preferred option to solve the disputes between two parties who belong to different countries. The increase in international trade has led to an increase in cross-border commercial disputes, thus increasing the need for a mechanism that will address this issue. The Arbitration and Conciliation Act, 1996 deals with domestic arbitration as well as ICA when the seat is in India.
Arbitrability under the Indian Law
The important issue related to the Arbitration is what kind of disputes can be resolved by the arbitration. The Supreme Court in its various judgments has looked upon to the matters which can be settled through arbitration. In Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd., 2011 (5) SCC 532, the Supreme Court held that arbitration can adjudicate only 3 matters. Those are:
1. Disputes covered by the arbitration agreement.
2. Disputes referred by the parties to the arbitration.
Also Read: Efficiency and Cost vs. Procedural Fairness and Substantive Quality in ICA
It also stated that arbitration cannot solve some disputes. Those are: 1. Disputes arising out of criminal offences.
2. Matrimonial Disputes
3. Insolvency and Winding up matters
4. Testamentary matters.
In the above-mentioned disputes, special courts have been set up and special acts have been enacted to provide the procedure of concluding a dispute.
Definition of International Commercial Arbitration
Section 2(1)(f) of the Act deals with the definition of the International Commercial Arbitration.
It states that the ICA means an arbitration relating to disputes arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and where at least one of the parties is-
(i) An individual who is national of, or habitually resident in, any country other than India; or
(ii) A body corporate which is a corporation in any country other than India; or
(iii) A company or an association or a body of individuals whose central management and control is exercised in any country other than India; or
(iv) The Government of a foreign country.
Thus, where a seat of arbitration is in India and one of the parties involved is a foreign party, then also it will be treated as ICA and the rules related to the domestic arbitration of India will apply.
One of the two important aspects of International Commercial Arbitration is Confidentiality and Transparency. The second aspect is whether in the arbitration process the concept of procedural fairness and efficiency is accompanied?
Confidentiality and Transparency
It’s important to seek a balance between confidentiality and transparency in ICA. Confidentiality is one of the important characteristics of the arbitration which helps the parties to decide to refer their dispute to arbitration. Moreover, 156 countries have signed The Convention on the Recognition and Enforcement of Foreign Arbitral Award, 1958 popularly known as the New York Convention. It has no provision for confidentiality in arbitral proceedings. However, there is a minor difference between privacy and confidentiality.
The proceedings of ICA do adhere to the principles of privacy but are not of a confidential nature. Privacy means that until and unless the arbitrator allows, a third party cannot be a part of the arbitral proceedings. On the other hand, confidentiality refers to the obligations on the parties of the amount of information that a party can share with the arbitrator and the parties during the arbitral proceedings. Both are important elements in the arbitral proceedings.
Also Read: Procedure for Execution of Arbitral Award
Procedural Fairness and Substantive Quality
The due process in ICA plays an important role in coming to the conclusion of any dispute which is resolving through arbitration. Though the matter is not put up in Court. Nevertheless, the ICA must follow due process. However, violations of the basic due process will lead to the sanctions; therefore, the arbitrator should check and see to it that the tribunal holds proceedings in a manner that is fair to both the parties. ICA is a process between two parties who belong to different cultures, therefore, a due process for one party will sometimes be prohibited and unethical in another culture. The arbitrator has a duty towards efficiency also. Hence, Being inefficient in providing justice shall not help us achieve procedural fairness. As a result, the arbitrator has to maintain equilibrium between efficiency and procedural fairness.