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Arbitration is an ancient concept and its origin can be traced back to Greek and Roman City-States. As early as the sixth century B.C., Greek city-states were resolving disputes like ownership of properties, assessment of damages, etc. through arbitration. Even the works of eminent historians like Herodotus and Thucydides refer to arbitration. Under Roman law, the term ‘compropmissum’ or compromise was a well-known and oft chosen mode of dispute resolution and is considered to be a precursor of arbitration.

India also has a long tradition of arbitration and the concept of non-judicial dispute resolution was prevalent in the Indian society,  before any codified law. The works of Yajnavalka refers to certain special arbitration courts in ancient India. Even the panchayat system in India is considered as one of the earliest forms of arbitration. While describing the concept of arbitration, Chief Justice A. Marten observed as “It is indeed a striking feature of ordinary Indian life. And I would go further and say that it prevails in all ranks of life to a much greater extent than is the case in England. To refer matters to a panch is one of the natural ways of deciding many a dispute in India. It may be that in some cases the panch more resembles a judicial Court because the panch may intervene on the complaint of one party and not necessarily on the agreement of both, e.g., in a caste matter. But there are many cases where the decision is given by agreement between the parties”

Arbitration in ancient India is a vast subject and merits its article. The present article shall deal with the development of codified laws in India governing arbitration. The development of the arbitration regime in India can be broadly classified under 3 distinct phases:-

(i) The Pre-1940 phase;

(ii) The 1940-1996 Phase; and

(iii) The Post 1996 phase.


While proposing amendments to the Arbitration & Conciliation Act, 1996 it is felt necessary to adhere to the objectives of speedy disposal and least court intervention, which were the crucial aspects of the Act. However, where the Act has omitted to incorporate certain provisions of the Model Law, it is proposed to bring the Act in conformity with the Model Law. On that basis, so far as international arbitration is concerned, the provisions of Model Law are more or less adopted. However,  regarding domestic supervision, the proposals include stricter supervision by the court. The following are the proposals: 

  1. Section 5 of the Act does not need any amendment (para 2.1). 

  2. In section 8, the word ‘judicial authority’ should be replaced by the word ‘court’. The words “unless it finds the agreement is null and void, inoperative or incapable of being performed” to be included to bring sec.8(1) 306 in conformity with Art.8 of Model Law. In sec. 8, ‘court’ means the ‘court’ in which suit is filed. Appeals to lie to Division Bench of High Court from the decision of the court. 

  3. In sec.11, the words ‘Chief Justice of India or his nominee’ should be replaced by the words ‘Supreme Court’ thereby meaning ‘Bench of two or more learned Judges of the court’. The words ‘Chief Justice of High Court or his nominee’ should be replaced by the words ‘High Court’ thereby meaning a ‘Bench of two more learned Judges of the court’. This will bring sec.11 in conformity with Model Law which uses the word ‘court’. This will clarify that power that is exercised under section 11 is  judicial. The Supreme Court and High Court to clear off jurisdictional issues if raised at the stage of section 11 itself. If oral evidence is necessary, before the said courts, the evidence is to be obtained by appointing Advocate Commissioners. 

  4.  In sec.16, the Act permits arbitral tribunal to decide questions of their jurisdiction, including objections regarding Section 307 as to the existence or validity of the arbitration agreement. Arbitral tribunal’s decision on preliminary issues to be allowed to be questioned before the court, within 30 days, even where the arbitrators have “rejected” the plea. The right to object to the decision “rejecting” the preliminary jurisdictional issues to be included in section 34 or section 37. In section 16(5), the word ‘shall’ should be replaced by the word ‘may’. 

  5. In sections 12 and 13, the decision of the arbitrators on the preliminary issue of bias or disqualification “rejecting” the plea to be also subject to objections to court under section 34 or 37. In section 13(4), the word ‘shall’ should be replaced by the word ‘may’. 

  6. Provision under section 9 (interim measures) in Part I should be made applicable even to foreign arbitration when the seat of arbitration is outside India. This will bring the Act in conformity with laws elsewhere which are based on Model law. 

  7. Provision under sections 8, 38, and 39 also to apply to foreign arbitration where the seat of arbitration is outside 308 India and where such arbitrations are not covered by Part II (New York or Geneva Convention Awards). Whether other provisions in the English Act 1996 to support foreign awards are to be introduced? Should there be a definition of ‘seat of arbitration’? 

  8. A provision similar to sec.21 of the 1940 Act, enabling any court (before which a suit or other proceeding is pending) to refer the parties to arbitration even if such an agreement is  after the commencement of the suit or proceeding, should be introduced. Provision to be made for challenging the award passed on such reference, in the same court. This will enable all courts, including High Court/Supreme Court to refer issues to arbitration, if parties so agree during the proceedings and deal with the correctness of the award in the same court (on grounds mentioned in sec. 34 and sec. 37) rather than give a fresh lease of life to the litigation. 

  9. S.34 (Sec.37) should be amended by providing (1) a right to object to the preliminary decision of the arbitral tribunal under sec.16 whether the tribunal accepts or 309 rejects the jurisdictional pleas; (2) a right to object to the preliminary decision of the arbitrator under sec.13 whether the tribunal accepts or rejects the plea. 

  10.  Sec.34 (or sec.37) to provide for objections to be filed where the arbitral tribunal omits to decide certain questions referred and conferring a power to remit the matter to the arbitral tribunal. 

  11. Sec.34 (or sec.37) should provide for objections to be filed if the award does not contain reasons  regarding any dispute and seek a supplement award containing reasons. 

  12. ‘Misconduct’ should be included as a specific ground of attack in sec.34 (or sec.37). Whether it should apply to domestic as well as international arbitration? 

  13. ‘Error of law apparent on the face of the award’ should be included as a specific ground in sec.34 (or sec. 37) (except where a specific question of law is referred to the arbitrators) but only in cases of domestic arbitration. 

  14. The provision enabling arbitrators to refer a question of law to the court should be included.. Provision for modification or remission of the award should be included. 

  15. Power should be granted to the court to supersede arbitration (in cases of domestic arbitration only). 

  16. Minority view should be appended to the award for information. 

  17. All awards should be filed in the ‘court’ for purposes of record by amending sec.31, so that authenticity of awards is taken care of. 

  18. Awards to be executable by the court under section 36 only if they conform to laws relating to stamp duty/registration. 

  19.  Employees of one of the parties should not be arbitrators, except in cases where they are employees of Govt. or Public Sector undertakings or corporations. 

  20.  Whether upper time limit should be provided for completing arbitration proceedings, subject to extension by the court only for special reasons, so far as domestic arbitrations are concerned?. Whether and what guidelines should be prescribed for fixation of fee of arbitrators and what special Code of Ethics is to be introduced to govern the arbitrators and lawyers appearing before arbitrators?


In the case of "Shri Lal Mahal Ltd. v. Progetto Grano Spa", the Hon'ble Supreme Court passed a landmark ruling on its own decision and significantly curtailed the scope of the expression, "public policy" as present under Section 48(2) (b) of the Arbitration Act and thereby limited the scope of the challenge to enforcement of the foreign arbitral awards in the country. It is important to note that previously the national courts were giving a very wide import to the word "public policy" to interfere with the foreign arbitral awards. The court had observed that Section 48 of the Arbitration Act does not in any way offer an opportunity to have a second look at the foreign award at the enforcement stage. The court affirmed that section 48 does not permit a review of the award on merits and that the procedural defects in course of foreign arbitration do not necessarily imply that foreign award would be unenforceable. [Civil Appeal No. 5085 of 2013]

Further, in the case of "Cruz City 1 Mauritius Holdings v. Unitech Limited" the Delhi High Court refused to intervene in the award wherein one of the challenges to enforcement of the foreign arbitral award was that the same  violates the foreign exchange laws of India, and it held that "122. Even if it is accepted that the Keepwell Agreement was designed to induce Cruz City to make investments by offering assured returns, Unitech cannot escape its liability to Cruz City. Cruz City had invested in Kerrush on the assurances held out by Unitech and notwithstanding that Unitech may be liable to be proceeded against for violation of provisions of FEMA, the enforcement of the Award cannot be declined." ".... And thirdly, if Cruz City has been induced to make an investment on a false assurance of the Keepwell Agreement being legal and valid, Unitech must bear the consequences of violating the provisions of Law, but cannot be permitted to escape their liability under the Award". [2014]

In another recent case of "Zee Sports Ltd. v. Nimbus Media Pvt. Ltd" [2017 SCC OnLine Bom 426] the Bombay High Court refused to interfere with the arbitral award on merits and relied on the judgement in "McDermott International Inc. v. Burn Standard Co. Ltd", [(2006) 11 SCC 181] where in the Supreme Court had observed that as under: "52 The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.".

The Hon'ble Kerala High Court in the case of "Emmanuel Cashew Industries v. CHI Commodities Handlers Inc", [MANU/KE/0329/2017] while dealing with a challenge to an arbitral award, observed that the mere filing of objections to the foreign award under Section 48 was not enough and the objector has to furnish "proof" of circumstances to satisfy any of the conditions mentioned in Section 48 of the Arbitration Act to refuse enforcement of the foreign award.

The Delhi High Court in the very recent judgment passed on 31 January 2018, in the case of Daiichi Sankyo vs. Malvinder Mohan Singh has refused to intervene in the foreign arbitral award passed in the favour of Daiichi Sankyo and it observed that under Section 48(2)(b) of the Act, the enforcement could be refused only if the award was contrary to the

(i) fundamental policy of India

(ii) interest of India and

(iii) justice or morality.

Further, the Delhi High Court affirmed that an award could not be said to be against the fundamental policy of Indian law in case there was a violation of provisions of a statute but only if there was a breach of a substantial principle on which is Indian law is based upon.

Lastly in a very recent judgment, passed in the case of "Kandla Export vs. Oci Export Corporation [CIVIL APPEAL NO. 1661-1663 OF 2018 @ SLP(CIVIL) No. 28582- 28584 of 2017] the Hon'ble Supreme Court had the opportunity to interpret the scope of Section 13 of the Commercial Courts Act and Section 50 of the Arbitration Act in light of the challenge to the execution of the foreign award under Section 13 of the Commercial Courts Act. The Hon'ble Supreme Court took a very pro-arbitration stand and refused to intervene by holding that appeals in respect of the arbitration proceedings are exclusively governed by the Arbitration Act and thereby the appeal provision of the Commercial Courts Act cannot be used be to circumvent the provisions of the Arbitration Act if no appeal is provided under the provisions of the Arbitration Act. In-Line with the Fuerst Lawson Ltd. vs Jindal Exports [(2011) 8 SCC 333] pronouncement, it was observed that the Arbitration Act was a self-contained code and thereby the amended Section 37 would hold precedence over the general provision contained in Section 13(1) of the Commercial Courts Act. The Hon'ble Supreme Court emphasized that interpretation given in the case  aligned with the objective of the Arbitration Act, which is to ensure the speedy resolution of the disputes.

These judgments affirm the fact that the Indian courts have taken a very strict adherence to the principle of non-interference with foreign arbitral awards and have taken proactive steps to ensure their speedy execution and thereby bolstering India's credentials as an arbitration-friendly regime which is generally characterized by minimal intervention by the national courts and the speedy resolution of the arbitration


While multiparty disputes continue to present difficulties for the international practitioner, the solution does not lie in compulsory consolidation. Such a device runs counter to the fundamental goals of the arbitral process, which seeks to limit judicial intervention and establish a self-governing mechanism for dispute resolution. Multiparty disputes are a fairly common feature of construction contracts and maritime charter party agreements. As a result, multiparty disputes should be anticipated and provided for in the respective arbitration clauses. Parties to such agreements should be required to decide in advance whether or not arbitrations should be consolidated in the event of a multiparty dispute. Allowing a party who has contracted for one method of arbitration to petition the court for an alternative method when they later determine that the method they have agreed upon no longer serves their particular interests undermines the fundamental concept that the arbitration clause is voluntarily entered into by a contractual allocation of risk. A more acceptable method of guarding against the problems of multiparty disputes would be for the parties to include or exclude consolidation in the arbitration clause at the time of contracting. Such an agreement could be made in the primary contract and incorporated by reference in the various subcontracts.

 Another alternative to compulsory consolidation would be for the major arbitral institutions to include provisions in their rules providing for consolidation in the event of a multiparty dispute. However, in keeping with the fundamental principle of freedom of contract, such provisions would have to include an opportunity for the parties to opt-out of the rule at the time of contracting. The opt-out requirement, rather than an opt-in requirement, would not place an onerous burden on any of the parties or pose any surprises at the time of the dispute. All parties who bargain at arm's length are assumed to have read and understood the rules that are incorporated into a contract which they have signed. Thus, if the institutional rules contain a consolidation provision and if the parties do not specifically contract out of the provision, the courts may order consolidation in the event of a multiparty dispute. The foreseeability of multiparty disputes in construction contracts and maritime charter party agreements  allows the parties to avoid unnecessary complications and makes court ordered consolidation unnecessary.

An arbitration agreement represents a contractual allocation of risk for which both parties have bargained and should not be disturbed merely because one party is dissatisfied with the bargain he or she has struck. The need for uniform recognition and enforcement of awards and the sanctity of the parties' contract outweigh the minimal benefits that court-ordered consolidation confers. In the final analysis, if consolidation is to be effected in accordance with the underlying principles of the arbitral process, it must be voluntarily entered into by the parties at the time of contracting. Where the parties intend to contract for consolidated proceedings in the event of multiparty dispute practitioners should take care to provide for contingencies such as alternate panel selection methods, alternate choice of law, and alternate choice of procedure. In addition, parties should consider limiting how far down the chain of privity they wish to have disputes consolidated and set clear and unambiguous limits on how far removed a party may be from the original contract to be eligible to participate in a consolidated proceeding. In this manner, the basic characteristics of self-governance and predictability can be preserved to the greatest extent possible.

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