International Journal of Pure and Applied Mathematics

Volume 120 No. 5 2018, 1635-1644

ISSN: 1314-3395 (on-line version)
url: http://www.acadpubl.eu/hub/
Special Issue
http://www.acadpubl.eu/hub/

INTERNATIONAL COMMERCIAL ARBITRATION

1
RAGINI. R
1
STUDENT,5THYEAR B.A.B.L.(HONS), SAVEETHA SCHOOL OF LAW, SAVEETHA INSTITUTE
OF MEDICAL AND TECHNICAL SCIENCES, SAVEETHA UNIVERSITY, CHENNAI-
77,TAMILNADU,INDIA.
2
PROF DR.A.SREELATHA
2
SAVEETHA SCHOOL OF LAW, SAVEETHA INSTITUTE OF MEDICAL AND TECHNICAL
SCIENCES,SAVEETHA UNIVERSITY, CHENNAI -77,
TAMILNADU,INDIA.
1
[email protected] , [email protected]

ABSTRACT
International Commercial Arbitration (ICA) means a lawful relationship which is considered
commercial, where both of the parties or either of the parties is a resident or foreigner or is a body
corporate outside India or is an organization, affiliation or group of people whose main administration or
control is in the hands of foreign body. Therefore, under Indian law, an arbitration with a seat in India,
however including a foreign element like foreign parties or foreign transactions will also be considered as
an ICA, and consequently subject to Part I of the Arbitration and Conciliation Act, 1996. Where an ICA is
held outside India, Part I of the Act is not applicable on the parties yet the parties would be liable to Part
II of the Act. International Commercial Arbitration is an arbitration where the issue included is a cross-
fringe question and the parties would prefer not to get into filing of case in national courts. International
Commercial Arbitration, in this way enables the parties to dispose of the long and complicated method of
the courts. International Commercial Arbitration, not like the previously set up laws and procedures, deals
with the terms and the way already chose by the parties in the arbitration agreement. The entire method of
arbitration spins around the arbitration agreement already entered by the parties. This paper attempts to
study about the concept of International Commercial Arbitration and its applicability in India.
KEYWORDS: arbitration, conciliation, commercial, foreign transactions, arbitration agreemen

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The rapid development of Globalization, liberalization and evolution in International commercial

connections, it is progressively relevant to have an adaptable and speedy technique for settling disputes.
Arbitration is a favorable procedure chosen by the parties for settling the disputes between them, wherein
parties willfully consent to present their case to an impartial third party and consent to be bound by
his/her choice. Section 2(1)(f) of The Arbitration and Conciliation Act, 1996, characterizes an
International Commercial Arbitration which implies: an arbitration relating to matter in dispute emerging
out of legal relations, regardless of whether legally binding or not, considered as commercial under the
law in India and where either of the parties is—
(i) A person who is a national of, or routinely resident in, any nation other than India; or
(ii) A body corporate which is consolidated in any nation other than India;
(iii) An organization or an association or a group of people whose main administration and control is in
any nation other than India;
(iv) The Government of a foreign nation
The extent of this section was decided by the Supreme Court in the case of TDM Infrastructure Pvt. Ltd.
v. UE Development India Pvt. Ltd2, where disregarding organization having an outside control, the
Supreme Court inferred that, "an organization consolidated in India can just have Indian nationality with
the end goal of the Act."
However the Act only perceives organizations controlled by foreign nationals and a body corporate
situated outside India, the Supreme Court has not barred its application to organizations enlisted in India
also, having Indian nationality. Thus, in such a case the company has double nationality, one based on
foreign administration and other in view of enlistment in India, for this purpose such company would not
be considered as a foreign corporation under the Act. The aim of this paper is study the enforcement of
foreign arbitral awards in India.

RESEARCH QUESTION
P: Why it is difficult to enforce foreign arbitral awards in India?
I: The Arbitration and Conciliation Act, 1996, Newyork Convention, Geneva Conventions
C: Comparison between foreign and domestic arbitral awards
O: Provide proper guidelines facilitating the enforcement of foreign arbitral awards
Whether enforcement of foreign arbitral award in India is against public policy or not?

2
2008 (2) UJ SC 0721

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OBJECTIVES
1. To study the concept of International Commercial Arbitration
2. To examine the concept of objective arbitrability
3. To summarize the position of international commercial arbitrations under Indian Laws.
4. To study the advantages and disadvantages of ICA.
5. To study about the arbitral proceedings in ICA.
HYPOTHESIS
H0: The enforcement of foreign arbitral award is against the public policy.
Ha: Though the enforcement of foreign arbitral awards is difficult, international commercial arbitration is
the effective way to resolve the international commercial disputes.
RESEARCH METHODOLOGY
This is a doctrinal research. Only secondary sources have been referred for this study. The primary
sources which include interviews with people were not possible. Secondary sources include books related
to the International Commercial Arbitration and research articles on enforcement of foreign arbitral
awards were referred. Ample websites and blogs have also been referred for the study.
ARBITRABILITY
Objective arbitrability is nothing but determination of the subject matters which can be resolved by
arbitration. An arbitral award may be set aside due to non-arbitrability of the subject-matter of the dispute.
There are various disputes which cannot be brought before arbitration. The non-arbitrable include:
1. matter regarding rights and liabilities which emerge out of criminal offenses;
2. marital disputes (regarding divorce, judicial separation, restitution of matrimonial rights and child
custody);
3. guardianship matters;
4. indebtedness and winding up issues;
5. matters regarding the public charities or public trusts under the Public Trusts Act;
6. testamentary issues (grant of probate, letters of administration and succession authentication); and
7. eviction or tenancy disputes.
ARBITRATION AGREEMENT
According to section 7 (1) of The Arbitration and Conciliation Act, 1996 (altered in 2015) "arbitration
agreement" is an assent that is agreed by the parties for arbitration of all or any of the matter in
controversy between the parties. The connection between the parties must be a lawful relationship, which
shall or shall not be a contractual relation. According to section 7 (2) of the act, there can be an entire
separate agreement for the arbitration or it can be as an arbitral clause in a arbitration agreement.

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According to section 7 (3) of the act, the arbitration agreement must be in writing. According to section 7
(4) a arbitration agreement is thought to be in composing in the event that it is contained in-
A document authenticated by the parties to the arbitration;
An exchange of letters, messages, data through electricity, which also involves telecommunication;
If a contract contains an arbitration clause, then such agreement is also regarded as arbitration agreement,
provided that the agreement should be in writing and the aim is to include the arbitration clause as part of
the assent.

NEED FOR INTERNATIONAL COMMERCIAL ARBITRATION

1 .Speedy method of settling disputes: Court process includes broad methods and laws, which a party
needs to take after. In the event that parties allude their dispute to arbitration, they require not take after
stringent procedures of law. Consequently, the dispute ends up expedient.
2. Enforceability of Arbitral Awards: It is more promptly and quickly implemented when rather than the
court judgments.
3. Impartial Arbitrator: Neutral third person is chosen resolve disputes. This third person is chosen by
both the parties to dispute mutually.
4. Arbitrator might be a specialist: In light of the issue of arbitration, parties may select a particular
arbitrator having that specific specialized experience and mastery in the matter which is brought for
arbitration.
5. Arbitration is cost efficient: since arbitration is a speedy remedy, does not include an excessive number
of complicated procedures, it is more affordable when compared with the complex litigation procedures.
INTERNATIONAL COMMERCIAL ARBITRATION – THE INDIAN
PERSPECTIVE
International commercial arbitration is an arbitration that deals with commercial matters, wherein the
parties might be of a foreign country or a resident there or an affiliation or an organization registered
there.
A similar relationship is trailed by Indian law. In a case when the seat of arbitration is in India however
no less than one of the parties is a foreigner, at that point such issues would come under the purview of
ICA and is dealt with Part I of "The Arbitration and Conciliation Act". In any case, if the seat of
arbitration is outside India, at that point Part I would not be pertinent and such issues would go under the
ambit of Part II of the act.

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SEAT OF INTERNATIONAL COMMERCIAL ARBITRATION INSIDE INDIA

The accompanying laws would apply to ICA (International Commercial Arbitration), when the case falls
under Part I of the Arbitration and Conciliation act, 1996, i.e., when the seat of the arbitration is in India.
Notice of the Arbitration
It is the initial phase in any arbitration proceeding, one party sends notice to the opposite party, requesting
the settlement of the dispute through arbitration. Hence, the following elements must be present:
1. There ought to be an intention of the party presenting the notice to allude the issue to arbitration.
2. The party telling ought to request that the other party settle the question through arbitration
Court's reference for arbitration
According to section 8 of "The Arbitration and Conciliation Act, 1996", if the party before the judiciary,
applies for alluding the case to arbitration by presenting an application with the original copy of the
arbitration agreement to the date of presenting its first statement itself, at that point the judicial authority
shall acknowledge such application and allude the parties to arbitration. If the requisites are conformed
then such judicial authority shall not pass any negative judgment, i.e., it can't deny the parties to allude to
arbitration disregarding any judgment, declaration or request of the Supreme Court or any Court, unless
the court feels that at first sight there is no arbitration agreement. But if the party neglects to present the
first copy of arbitration agreement or an appropriate date, at that point such application can be rejected.
However if the first arbitration agreement or the affirmed copy isn't present with the party or is held by
the other party, in such a circumstance the party applying will present the application with the copy of the
agreement and shall file a petition to the court to direct the other party to present the first copy of
arbitration agreement to the court. Where the application that has been submitted before the court is
pending, the parties may start or proceed with the arbitration and an arbitral award shall also be made.
Reliefs in Arbitration
Interim relief is accessible to the parties under section 9 and section 17 of The Arbitration and
Conciliation Act, 1996. Under section 9, relief is to the parties by the court and under section 17, relief is
conceded by the arbitral tribunal. The intention of this proviso is to give protection to the party until final
decision is given.
Appointment of Arbitrators
Section 11 of the act accommodates the appointment of arbitrators. The arbitrator can be of any
nationality unless consent is given by the parties. The parties need to appoint one arbitrator each and both
the arbitrators need to additionally name a third arbitrator, within a period of thirty days, since the
authorities are required to be an odd number. Nonetheless, if there are even number of arbitrators, for
instance there are two arbitrators and both the authorities give a similar choice, at that point, all things
considered, they are not bound to have a third arbitrator.

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Challenging the appointment of arbitrator

An arbitrator is required to act in an autonomous and unbiased way. These are the essential two
necessities that must be there in a person appointed as an arbitrator. But if he is biased ore partial, his
appointment shall be challenged. Besides, if he doesn't have the capabilities that are consented by the
parties then in that case his appointment shall be challenged. The arbitrator is also required to settle the
within the prescribed period.
Cost of the Arbitration
The arbitral tribunal determines the cost of the arbitration and that how much sum each party is required
to pay. However if the party declines or neglects to pay the lawful and administration expenses, at that
point the court shall decline to give the award. After declining to pay, the parties can approach the court
and the court can additionally give its decision on the cost.
Setting aside arbitral award
If the party isn't satisfied with the decision of the arbitral tribunal then he can make an application to the
court under section 34 of the act to set aside the arbitral award. For instance, if the party making the
application was not given legitimate notice of the appointment of arbitrators, or if a party was under some
insufficiency, or if the arbitration agreement isn't substantial, or if the arbitral award isn't identified with
the question, or is against the terms of arbitration, or the issues that shall not be determined by arbitration.
According to section 34 (2-A), an arbitral award emerging out of arbitrations other than International
commercial arbitration may likewise be set aside, if the award made is illicit in nature.
The application to set aside the award must be made within a period of three months from the date of
getting of the award, unless there is an adequate reason because of which the party couldn't have any
significant bearing inside the required time. In such a case the court can engage the application to set
aside the arbitral award for a further extended period of thirty days.
Appeals
An appeal can be petitioned under the following circumstances:
1. Refusal to give interim relief under section 9 and section 17 of the act.
2. To set aside the arbitral award under section 34 of the act.
Enforcement of arbitral award
The arbitral award is binding on both the parties under section 35 of the act and is regarded to be the same
as that of a decision of a court the Code of Civil Procedure, 1908.

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SEAT OF INTERNATIONAL COMMERCIAL ARBITRATION OUTSIDE INDIA

Bhatia International v/s. Mass Trading3
In Bhatia International v/s. Mass Trading case, it was held that Indian courts can only utilize their
jurisdiction only to test the certainty of an arbitral award made in India, regardless of whether the actual
law of the agreement is the law of another nation.
Facts
In this case the parties had alluded the case to arbitration according to the principles of the ICC of
arbitration in Paris, with a sole arbitrator. The foreign party need a guarantee that they get the
recuperation of their claims from the Indian party and for that reason it moved to Indian court to secure its
property. The same was restricted by the Indian party on the ground that according to the New York
(Convention on Recognition and Enforcement of Foreign Arbitral Awards, finished up on tenth June,
1958), there is no proviso to assert interim relief through a court, other than the one where arbitration is
occurring. Therefore, for this situation the arbitration is occurring in Paris, hence the Indian court can't be
sought to grant the interim relief.
Held
The High Court set aside the request of the Indian party. The issue went to Supreme Court. The Supreme
Court upheld of the High Court.
Bharat Aluminum v/s. Kaiser Aluminum Technical Services (BALCO)4
The principle set down in Bhatia International v/s. Mass Trading case was overruled by the judgment of
Bharat Aluminum v/s. Kaiser Aluminum Technical Services.
Facts
The parties consented to an agreement concerning the supply of gear, modernization and up-gradation of
production facilities. But the dispute began emerging and the matter was alluded to arbitration. The seat
of the arbitration was in England and in this manner the procedures occurred in England and the award
was made for the Respondent. Disappointed with the decision, the litigant documented application against
the award in India, before the Chhattisgarh High Court under Section 34 of the act, i.e., under Part I of the
act.
Held
The court held that Part I of the act would not make a difference to the situations where the seat of
arbitration is outside India. It should be pertinent to just those arbitrations where the seat of the arbitration
is India. No suit can be petitioned for interim relief in India under PartI, when the seat of arbitration isn't

3
(2002) 4 SCC 105
4
Civil Appeal No. 7019 of 2005

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in India. This judgment will be appropriate to the cases in which debate occurred after the decision of this
case. The judgment has only prospective effect.

CONCLUSION

Due to modernization there is a huge development in International business and international transactions.
Such a development has led to many disputes with regard to the commercial transactions on an
international level. To resolve this types of disputes arbitration is preferred rather than an ordinary
litigation process since it speedy and cost efficient. Thus, where two parties consent to resolve their
dispute arising out of commercial transactions by way of arbitration is known as International
Commercial Arbitration. It also gives a sense of safeguard to the parties to enter into agreements at
International level. The judgment of the BALCO case holds significance with the view that parties while
entering into arbitration would prefer not to confront any complex procedures. It is essential that the
judicial procedure is followed in the nation where the arbitration is occurring for the purpose to simplify
the procedures for the parties in case of International commercial arbitration. Thus the international
commercial arbitration is the best method to resolve international commercial disputes though its
enforcement is difficult in India. Therefore separate legislations has to be brought for the effective
enforcement of the awards.

REFERENCES
1. https://www.lexology.com/library/detail.aspx?g=72bcbbe3-c139-46f2-b9ce-086394161f41;
2. http://theindianlawyer.in/pdf/International-Arbitration.pdf;
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Arbitration.pdf;
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10. http://madaan.com/arbitration.html;

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