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Arbitration is a legal technique for the extra judicial resolution of disputes , wherein the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. Arbitration in India , USA and in other countries often includes alternative dispute resolution (ADR), a category that more commonly refers to mediation (a form of settlement negotiation facilitated by a neutral third party). It is more helpful, however, simply to classify arbitration as a form of binding dispute resolution, equivalent to litigation in the courts, and entirely distinct from the various forms of non-binding dispute resolution, such as negotiation, mediation, or non-binding determinations by experts.
Arbitration is today most commonly used for the resolution of commercial disputes, particularly in the context of international commercial transactions and sometimes used to enforce credit obligations. It is also used in some countries to resolve other types of disputes, such as labour disputes, consumer disputes or family disputes, and for the resolution of certain disputes between states and between investors and states. ARBITRATION
Arbitration can be either voluntary or mandatory and can be either binding or non-binding. Non-binding arbitration is, on the surface, similar to mediation. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable.
Arbitration is well seen in the Old and New Testaments of the Bible and thus the formal non-judicial arbitration first began with the History of the Bible . In the New Testament Jesus Christ speaks of Arbitration , Judiciary as well and it can be said with some certainty that arbitration, as a way of resolving disputes predates formal courts.. Records from ancient Egypt also attest to its use especially with high priests and their interaction with the public.
Arbitration was popular both in ancient Greece and in Rome.Under English law, the first law on arbitration was the Arbitration Act 1697, but when it was passed arbitration was already common. The first recorded judicial decision relating to arbitration was in England in 1610 The noted Elizabethan English legal scholar Sir Edward Coke refers to an earlier decision dating from the reign of Edward IV (which ended in 1483). Early arbitrations at common law suffered from the fatal weakness that either party to the dispute could withdraw the arbitrator's mandate right up until the delivery of the award if things appeared to be going against them (this was rectified in the 1697 Act).
The Jay Treaty of 1794 between Britain and the United States sent unresolved issues regarding debts and boundaries to arbitration, which took 7 years and proved successful.
In the first part of the twentieth century, many countries (France and the United States being good examples) began to pass laws sanctioning and even promoting the use of private adjudication as an alternative to what was perceived to be inefficient court systems.
The growth of international trade however, brought greater sophistication to a process that had previously been largely ad hoc in relation to disputes between merchants resolved under the auspices of the lex mercatoria. As trade grew, so did the practice of arbitration, eventually leading to the creation of a variant now known as international arbitration, as a means for resolving disputes under international commercial contracts.
In the Histroy of Arbitration it is noteworthy to know about the Arbitration by the Popes , which has a history dated back after the Days of Christ. This is analysed , based on the following Sources . NEGRO, Bismarck, il Papa et l'Arbitrato Internacionale (Asti, 1882); POOLE, Illustrations of Medival Political Thought (London, 1884); MURPHY, Chair of Peter (London, 1885); LPEZ, Derecho y Arbitraje internacional (Paris, 1891); RICHET, Les Guerres et la paix (Paris, 1899); GIERKE, Das deutsche Genossenschaftsrecht, III, tr. MAITLAND, Political Theories of the Middle Age (Cambridge, 1900); OLIPHANT, Rome and Reform (London, 1902); BARRY, Papal Monarchy (London, 1902); CARLYLE, History of Medival Political Thought in the West, I (London and Edinburgh, 1903), II (London and Edinburgh, 1909); BARRY in Dublin Review (Oct., 1907), 221-43; FIGGIS, Political Theories from Gerson to Grotius (Cambridge, 1907); GOSSELIN, The Power of the Pope in the Middle Ages (New York, 1852); SCHOLTZ, Die Publizistik zur Zeit Philipps des Schnen (Stuttgart, 1903); RIEZLER, Die literarischen Wiedersacher der Ppste zur Zeit Ludwigs des Bayers (Leipzig, 1874); HERGENRTHER, Church and State, etc. tr. (London, 1872).
An institution almost coeval with the papacy itself. The principle of arbitration presupposes that the individuals or groups of individuals submitting to arbitrament are united in some common bond. As soon therefore as this common bond has come prominently before public opinion, there necessarily results a tendency to settle disputes by reference to it. Thus the growth of law, i.e. the gradual evolution from private revenge or vendetta to the judgment of some public authority, can in the history of any known nation or tribe be traced parallel with the awakening feeling of social solidarity. It was just because men began to realize, however rudely, that they were not single units but members of a society, that they understood how every tort or wrong-doing disturbed not merely the individual directly affected, but the whole body of which he was a member. It was this recognition of the social disadvantages of disorder that led to compromise, to mutual pledges, to trials by combat, to ordeals, and eventually to the regulations of courts of law. This is most patently manifest among the Northern nations in the primitive history of the jury system.
Now this same principle was bound to operate internationally whenever the various groupings of Europe realized their solidarity. The same undoubted advance would be made when men became conscious that the theory into which law had developed as an adjudication between individuals by the society, was applicable also in matters of international dispute. But this consciousness required to be preceded by the recognition of two principles:
- (1) that nations were moral persons
- (2) that they were united in some common organism.
The first principle was too abstract in its nature to be professed explicitly at once (Figgis, "From Gerson to Grotius", vi, 177). The second would be very quickly recognized if only some concrete symbol of it could become evident to public opinion. This concrete symbol was fortunately at hand, and the result was arbitration. For the medieval papacy directing the conscience of Europe, legislating for the newly-converted peoples, drawing to itself the representatives of each national episcopate, constituting a sacred shrine for royal pilgrimages, could not fail to impress on the Christian nations a sense of their common faith. It was the papacy which therefore at one and the same time, by treating each nation as a separate unit, expressed in a primate with his suffragan bishops, and yet by legislating identically in matters of faith and morals for all the nations, expounded the double thesis of nationalism and internationalism. It was a standing concrete expression of the two principles aforesaid, viz, that the nations were separate individuals, yet members of a Christian brotherhood, moral persons yet subject to the common law of Christendom. Hence, owing to the circumstances of Western politics, papal arbitration was a necessary consequence of the very idea of the papacy. In treating of papal arbitration, three points must be set out:
- (A) the principles on which the popes claimed the right to arbitrate, i.e. the papal theory of the relationship between the Holy See and the temporal powers;
- (B) the most important cases of historical arbitration by the popes;
- (C) the future opportunity for this arbitration.
The papal theory
It is evident that before the conversion of Constantine there could have been little question of the relations between Church and State. The Church was undeniably conscious of her independence, but up to that date Christianity had practically none but spiritual duties to perform. The Apostolic writings preach submission to authority and do not at all raise the problem of the adjustment of the relationship between pope and Caesar. The conversion of Constantine therefore opened up a large field of speculation. This begins indeed from the assembling of the General Council of Nicaea (325). Here, according to Rufinus (H. E., I, ii, in P .L., XXI, 470), the emperor himself laid the basis of all development in this direction. He declared that God had given to the priests (i.e. to the whole ecclesiastical corporation) power to judge even emperors (et ideo nos a vobis recte judicamur).
Hosius of Cordova, who had been president of that council, in his defence of Athanasius has the same thought, noting that God had given to Constantine the empire and to the priesthood He had confided the Church (quoted by St. Athanasius, "History of the Arians", xliv, in P.G., XXV, 717). This entire separation of the two powers, ecclesiastical and lay, is generally laid down with very definite clearness by the earlier writers (Lucifer of Cagliari, "Pro Athanasio", in P.L., XIII, 826; St. Optatus, "De Schismate Donatistarum", III, iii, in P.L., XI, 999). Not that any slight is put upon the imperial dignity, for to the prince first of all is applied the title which subsequently becomes proper to the popes alone. He is called Vicarius Dei (Ambrosiaster, "Qustiones Veteris et Novi Testamenti XCI", in P.L., XXV, 2284; Sedulius Scotus, "De Rectoribus Christianis", 19 in P.L., CXII, 329). Yet he has no jurisdiction over the spiritual functions of his subjects, "for who", says St. Ambrose (Ep., XXI, 4, ad Valentinum, II, in P.L., XVI, 1046), "would venture to deny that in matters of faith, it is the bishops who sit in judgment over emperors, and not the emperors who sit in judgment over bishops?"; and the two popes who first have any prominent teaching on the matter, Felix III (483) and Gelasius I (492), use precisely the same language, describing the Church and the State as two parallel powers, entirely separate.
"The emperor", says Gelasius in an epigram (Ep. XV, 95, ad Episcopos Orientales, in P.L., LIX), "is the Church's son, not sovereign" (Filius est non prsul ecclesi). This pope has fortunately left us two complete treatises on this question. In his Fourth Tractate and his Eighth Letter (P.L., LIX, 41), he formulates his views, which completely agree with this idea of two different orders, separate, yet in so far interdependent that they both work towards the same purpose, i.e. the salvation of the souls of men. The next step is marked by the forcible and clear doctrine of St. Gregory the Great (590). His relations with the emperors are too well-known to need restatement. It will be sufficient to note that, in his own words, he would go as far as possible to accept every law and statute of the imperial throne. "If what he does is according to the canons, we will follow him; if it be contrary to the canons, then so far as may be without sin, we will bear with him" (Epist., Lib. XI, 47, in P.L., LXXVII, 1167). Indeed, when in actual fact the Emperor Maurice prohibited public officials from entering monasteries, Gregory promulgated the decree, though at the same time warning Maurice that it by no means agreed with the declared will of the Divine Omnipotence. By thus acting he said he had performed his duty of obeying the civil power and yet had kept his faith with God by declaring the matter of that obedience unlawful (Lib. III, 65, in P.L., LXXVII, 663).
A last example of the papal doctrine of this period may be taken from the writings of this same pope. Maurice had given judgment in some matter, contrary to the sacred laws and canons. The Bishop of Nicopolis, who as Metropolitan of Corcyra happened to be concerned in the affair, appealed to the pope against the imperial rescript. Gregory wrote admitting the bishop's interpretation to be correct and adhering to it, yet declared that he could not dare publicly to censure the emperor lest he should seem in any way to oppose or despise the civil power. (Lib. XIV, 8, in P.L., LXXXII, 1311). His whole idea appears to have been that the prince represented God. Every action therefore of the public authority (whether it tended to the sacred ends for which Government was founded, or was apparently destructive of ecclesiastical liberties) was equally to be respected or at least not publicly to be flouted. This curious position taken up by the popes, of excessive subservience to the civil rulers, was due to a threefold cause:
- (a) The need of correcting a certain anarchical spirit noted by the Apostles (1 Peter 2:15, 16; Galatians 5:1; 2 Corinthians 3:17; 1 Thessalonians 4:10, 11, 5:4).
- (b) The relation in which the protected Church stood to the first Christian emperor, represented by the words of St. Optatus, "De Schismate Donatistarum", III, iii: "Non enim respublica est in Ecclesia, sed Ecclesia in republica est . . . Super Imperatorem non sit nisi solus Deus" (The state is not in the Church, but the Church is in the state . . . Let God alone be above the emperor).
- (c) The influence of the Biblical language as regards the theocratic kingship of Israel.
The teaching of the papacy that civil authority was held independently of any ecclesiastical gift was continued even in the days of Charlemagne, whose father owed so much of his power to papal influence (Decretals, I, 6, 34). Yet even the new line of Csars claimed to hold their power of God. Their titles run "Gratia Dei Rex" or "Per misericordiam Dei rex" etc. (cf. Coronation of Charlemagne in "Journal of Theological Studies", April and July, 1901). Thus through the ninth and tenth centuries the separation-theory of Pope Gelasius was generally taught and admitted. Both pope and emperor claimed to hold their power direct from God. He is the sole source of all authority. A new theory, however, was developing. While admitting that civil rulers are of God, the good by God's direct appointment, the wicked by God's permission for the chastisement and correction of the people's sin (Hincmar, "Ep. xv ad Karolum regem", in P.L., CXXVI, 98), some writers partially broach the idea that without justice the king is no king at all, but a tyrant (Mon. Germ. Hist.: Epp., IV, "Epistola Vari Karoli Magni Script.", 7 etc.), for he must govern according to the laws which in turn depend on the consent of the people (Hincmar, "De Ordine Palatii", 8, in M. G. H.: Leg., sect. II, vol. II).
Thus the compact-theory of a mutually binding engagement between sovereign and subjects enters the full stream of European political thought. It is perpetuated in the Old English Coronation oaths (Stubbs, "Select Charters", Oxford, 1900, 64 etc.). The use made of this theory by the popes will appear shortly. So far then the papal political ideals sketched out two authorities, independent, separate; the one supreme in temporal matters, the other in spiritual. Then in the tenth century, the point was raised, at first in a perfectly academic way, as to the relative importance of these two spheres of Government, as to which took precedence of the other. At first, the result of the controversy left things more or less as they had been. The one side asserted that the priesthood was the higher, because, while it was true that the priests had to render obedience to kings in temporal matters and the kings to priests in spiritual matters, yet on the priests rested the further burden of responsibility of seeing that the king performed his temporal duties in a fitting way, i.e. that the king's actions were matters of duty, therefore matters of conscience and therefore matters that lay under the spiritual jurisdiction of the Church.
These arguments may be briefly summarized thus:
- (a) that both powers lay within the physical pale of the Church;
- (b) that the priest was responsible for seeing that the king did his duty;
- (c) that the priest consecrated the king and not vice versa.
The others ("Tractatus Eboracensis", in M. G. H.: Libelli de Lite, III, 662 sq.) replied by asserting that the emperor had no less to see that the Church affairs were properly conducted (as much later Sigismund at Council of Constance; Lodge, "Close of Middle Ages", London, 1904, 212). Thus Leo III and Leo IV had submitted practically to the interference of Charlemagne (800) and Louis II (853); and the concrete example of the Synod of Ponthiou (853), summoned by the pope and commanded by the emperor, was a standing example of this general responsibility of each for the other (M. G. H.: Leg., II, vol. II, no. 279). It is interesting however to recall a distinction thrown out almost at hazard by a twelfth-century canonist (Rufinus, "Summa Decretorum", D. xxi. c. 1). Commenting on a supposed letter of Nicholas II to the people of Milan, he distinguishes the papal right to interfere in temporal matters by conceding to him not a jus administrationis but a jus jurisdictionis, i.e. the right of consecrating, etc.
The advent (1073) of Gregory VII to the papal chair greatly affected the policy of the Holy See (Tout, "Empire and Papacy", London, 1909, 126; Gosselin, "Power of the Pope in the Middle Ages"). But it is not so much his actions as his theories which are here under consideration. He took over the old patristic teaching that all rule and government had its origin in the fall of Adam, that original sin caused the necessity for one man to have command over another. Consequently he had hard things to say of the imperial position. Moreover he claimed more power than his predecessors. Both he and the emperor took extreme views of their respective offices. The pope wished to put himself at the head of the temporal rule, exercising the power described in Jeremias i, 10. The emperor spoke of his traditional right of appointing and deposing popes. Neither can be taken as representing the general sentiment of their time. The story of Canossa with its legendary details is no more representative of public opinion in the eleventh century than is the dramatic surrender of Pascal II in the twelfth. Hildebrand, despite his high courage and noble character, does not really continue the teaching of his predecessors.
Eventually, the Concordat of Worms (23 Sept., 1122) took up and handed down the average medieval political practice, Without satisfying the extreme representatives of papal or imperial claims. Gregory, however, developed the contractual idea of the Coronation oath. This he declared to be, as were all other oaths, under the Church's dominion, and consequently could be annulled by papal authority, thus releasing subjects from obedience to their sovereign (Decretum, causa xv, Q. 6, c. 2; Stephen of Tournai, "Summa Decretorum", causa xv, Q. 6, c. 2. Auctorit. iii). The next great papal ruler, Innocent III (1198-1216), did not take the same attitude toward temporal power, though in personal exercise of authority he exceeded Gregory. He says explicitly: "We do not exercise any temporal jurisdiction except indirectly" (Epistol, IV, 17, 13). He interfered, it is true, to annul the election of Philip of Suabia and to confirm Otto in the imperial dignity, but he was at pains to point out that his legate was only a denunciator, or declarer of worthiness, not a cognitor or elector. The pope could not override the electoral system of the empire, he could only judge, confirm, and, in divided elections only, decide on the candidate (Decretals, 1, 6, 34; Carlyle, "History of Medival Political Thought", II, 217; Barry, "Papal Monarchy", XVIII, 292).
Again in the dispute between the French and English Kings, Innocent III distinctly declares that he makes no claim to settle matters of fiefs (non enim intendimus judicare de feudo cujus ad ipsum spectat judicium, Decretals, ii, I, 13). Nor had he any intention of diminishing the royal authority. His whole justification rests on three grounds:
- (a) the English king had appealed to him against his brother-king on the Gospel principle, for it was a matter of sin, i.e. against peace;
- (b) Philip had himself appealed earlier against Richard I;
- (c) A treaty had been made, confirmed by oaths, then broken.
This therefore lay within the pope's jurisdiction. On another occasion, he even went so far as to order the Bishop of Vercelli to declare null and void any letters produced from the Holy See dealing with matters that belonged to the secular courts of Vercelli, as he would only interfere on appeal, especially since the imperial dignity was at the moment vacant (Decretals, ii, 2, 10; cf. Alexander III's action in a similar case, Decretals, ii, 2, 6). Even excommunication was in his hands no arbitrary power, for, if it were applied unjustly or even unreasonably, he protested that it would be null and void (Decretals, v, 39, 28). He retained of course in his own hands the right to decide whether a particular matter came within the cognizance of the spiritual courts or not (Ibid., iv, 17, 13).
After Innocent's death, the attitude of Gregory VII was revived by Boniface VIII (1294-1303) and John XXII (1316-34). Though some twenty years separate their reigns, these two pontiffs held practically the same attitude towards temporal rulers and gave rise to a large polemical literature, which is practically continuous for some fifty years (see Scholz and Riezler, infra, bibliography). It seemed to those times that either pope or emperor must be supreme. The writers who defend the lay side are of many shades of feeling: Pierre du Bois (Wailly, "Summaria Brevis", 1849, "Mmoires de l'Acadmie des Inscriptions" etc., 435-94); Marsilius of Padua (Poole, "Illustrations of the History of Medival Thought", 276 et passim); William of Ockham (ibid. 260); John Wycliff (De civili dominio, 1 cap., 17 fol., 40, c., ibid. 284). Not merely do they protest against papal interference, but, as a counterblast, endeavour to make the king or emperor according as they defend Philip the Fair, Edward I, or Louis of Bavaria take the most important place in the working of the Church's internal organism (cf. Baldus de Ubaldis, 1327-1400, in his "Consilia", 228, n. 7: Imperator est dominus totius mundi et Deus in terra, i.e. the emperor is lord of the whole world and God on earth).
Certain defenders of the Holy See are no less vehement. They rightly forbid Csar to meddle with matters within the spiritual sphere of life; but, not content with this, they endeavour to put the emperor directly under the pope. Augustinus Triumphus (De potestate ecclesiastica XXXVIII, 1, 224), and gidius Colonna (De ecclesiastica potestate, II, 4) assert that all temporal rule comes ultimately from the pope, that he alone has the supreme plenitude of power, and that none can be absolved from his high jurisdiction. While these high claims, the inheritance of ages of universal faith when the popes were really the saviours of popular liberties, were being thus set forth, the power of the civil authority had de facto enormously increased. The theorizing of Marsilius of Padua, Ockham, and others led to the doctrine of unrestrained royal absolutism (Poole, loc. cit., 259). The German princes with their territorializing ideals, the French kings with their strong and efficient monarchy, and the English Tudor sovereigns no longer brooked interference from Rome even in purely spiritual matters. The phrase of the Treaty of Westphalia (1648) cujus regio ejus religio, i.e. the religion of the prince is the religion of the land, sums up the secular reply to the ecclesiastical order.
After the Reformation had served, even in countries like France and Spain which did not adopt the new religion, the purpose of fettering conscience even more than before, the State had in actual practice put the Church under its heel. The State continued to claim, because it exercised, the power to interfere and rule in all matters, whether spiritual or temporal. The Church claimed, though it no longer freely exercised, the right to independence, nay supremacy, in all matters affecting religion, and to be in some way the fountain of all temporal dominion (St. Thomas, "Quodlibet", 12, Q. xiii, a. 19, ad 2um: Reges sunt vasalli Ecciesi). Francisco Surez and later theologians certainly moderate the vehemence of Augustinus Tnumphus and his companions. It is true of course that the post-Tridentine writers expound what has been called "the indirect power" of the pope in civil affairs, while they curb in various ways the growing civil absolutism of the times. The name of sovereignty was withdrawn, but its substitute was suzerainty, which meant little less than the other (Figgis, "From Gerson to Grotius", VI, 181). Hence the undeniable tendency of Catholic theologians to repeat in clear language the cases in which rulers may lawfully be put to death. Hence also their unqualified defence of popular rights. Says Filmer ("Patriarcha", I, i, 2, 1880) concerning the power of the people to deprive or correct the sovereign. "Cardinal Bellarmine and Calvin both look asquint this way".
No doubt in this long controversy both ecclesiastical and secular writers went too often to extremes. It is in the rights that each allows the other, that we must look for the more workable hypothesis. Thus when the lay writers describe the spiritual rule of the Papacy (Dante, "De Monarchia"; Ockham, "Octo Questiones", q. 1, c. 6, ad 2), they depict almost literally the position of a Leo XIII or a Pius X, prophesying the greatness of such an office. And when the ecclesiastico-political writers sketch their theory of a state (Nicolas of Cusa, "Concordantia Catholica"; Schardius, "Syntagma"), directing, ordering, educating the free lives of free citizens, they are no less prophets of a desirable order. Moreover Pius IX expressly declared that, for their execution in the temporal sphere, the ecclesiastical ideals depended no less than the lay ideals on the consent and custom of the people, in the absence of which the papacy no longer claims to exercise power and rights, that public law and common consent once accorded to the Supreme Judge of Christendom for the common welfare (Discorso agli Accademici di Religione Catholica, 20 July, 1871).
It appears, therefore, that in the past all papal attempts to end wars and decide between contending rights of disputing sovereigns, were really in the nature of arbitration. Popes like Innocent III never claimed to be the sources of temporal rule, or that whatever they did for the peace of Europe was done by them as supreme temporal rulers; but only on the invitation or acceptance of the princes interested. Even popes like Gregory VII, Boniface VIII, and others, who exercised most fully their spiritual prerogatives, were unable to act efficiently as peacemakers, until they were called in by those at war.
Historical cases of papal arbitration
The various interpositions of Innocent III to allay the differences in European diplomacy, such as it then was, have been already alluded to. It will be better to pass at once to later historical examples.
The popes made frequent efforts to negotiate between the Kings of France and England during the Hundred Years' War, but the most famous attempt is that of Boniface VIII in 1297. It came just after the controversy between Philip the Fair and the pope concerning the Bull "Clericis laicos". Eventually Boniface gave up many of his earlier demands, partly through pressure from the French king, partly because he found that he had gone too far, partly in the interests of European peace. The more fully to achieve the latter purpose, he offered to arbitrate in the quarrel that had been further complicated by the alliance formed between the Flemish and the English. The Cardinal of Albano and Prneste was sent to Creil on 20 April, 1297. But the temper of French thought is expressed in the protest of King Philip that he would submit to arbitration as did Edward I and the Count of Flanders, but that he looked for nothing more than arbitration, not for recourse to the pope as to a higher feudal court. He laid down three propositions and completed them by a practical conclusion:
- (a) The government of France belonged solely to the king;
- (b) the king recognized no temporal superior;
- (c) he submitted his temporal affairs to no man living.
Therefore he came to the Roman Court for arbitration, not as to Boniface VIII the supreme sovereign pontiff, but as to the lawyer Benedetto Gaetani. The terms of the arbitrament are not of present interest; this only should be noted, that Boniface placated the French king by deciding largely in his favour, to the disgust of the Count of Flanders, but issued his award in a Bull (Lavisse, "Hist.de France" (Paris, 1901).
One of the first public acts of Alexander VI was to effect a settlement between Spain and Portugal. These two nations had been foremost in undertaking voyages of discovery in the East and West. The result was, that as each expedition on landing annexed the new-found territories to its own home government, there was continual friction between the rival nations. In the interests of peace, Alexander VI offered to arbitrate between the two countries. He issued his Bull "Inter Ctera," 14 May, 1493, fixing the line at meridian of 100 leagues west of the Azores and Cape Verde Islands assumed to be practically of the same longitude Spain to have the western, Portugal the eastern division. The following year (7 June) by the treaty of Tordesillas the imaginary line was moved to 370 leagues west of Cape Verde. To this the pope as arbitrator assented, and thus averted war between the two countries ("Civilt Cattolica", 1865, I, 665-80; Winsor, "History of America", 1886, I, 13, 592; "Cambridge Modern History", I, 23-24).
More curious examples are found in the invitation given to Leo X and later to Clement VII to arbitrate between Russia and Poland over Lithuania (Rombaud, "History of Russia", London, 1885). The success of this led to Gregory XIII being asked to settle the difference between Bathory of Poland and Ivan the Terrible. Gregory between 1572 and 1583 sent to Moscow the Jesuit Antonio Possevino, who arranged peace between them. Ivan ceded Polotsk and all Livonia to the Poles ("Revue des Questions Historiques," Jan., 1885).
Perhaps the best-remembered case is that of 1885, when war was averted between Germany and Spain by the arbitration of Leo XIII. It was over the question of the Caroline Islands, which though discovered by Spain had been practically abandoned for many years. England and Germany had presented a joint note to Spain, refusing to acknowledge her sovereignty over the Caroline and Palao group of islands. German colonists had been established there. But the climax was reached when on 25 August, 1885, both Spanish and German war vessels planted the flags of their respective countries and took solemn possession of Yap. On 24 September, Bismarck, out of compliment to Spain and to propitiate the pope (Busch, "Life of Bismarck", 469-70, London, 1899), referred the matter to Leo XIII. The pope gave his award on 22 October, succeeding perfectly in adjusting the conflicting claims of Spanish sovereignty and German interests. Finally the whole matter was amicably accepted and signed at the Vatican by both powers on 17 December of the same year (O'Reilly, "Life of Leo XIII", xxxiii, 537-54).
Lastly, in 1897, the same pontiff arbitrated between Hayti and San Domingo. But the terms of his arbitration do not appear to have been published (Darby, "Proved Practicability of International Arbitration", London, 1904, 19). For the celebrated case of Adrian IV and his gift of Ireland to Henry II, see ADRIAN IV.
The increasing movement of arbitration, growing stronger with each fresh exercise of it, together with the fact that owing to the action of Italy the popes have been excluded from the Hague Conference, makes the thought suggest itself of how far the papacy is situated today to act as a general arbitrator:
- (1) It has ceased to hold any territorial dominion and can therefore stand forward as an impartial judge unlikely to be affected by temporal interests.
- (2) It has interests in too many lands to be likely to favour any one country at the expense of others.
- (3) It is wholly international, and adaptable, because alive, to the various environments of temperament, customs, laws languages, political constitutions, social organizations, in which it finds itself. The clergy of each country are national in the sense of being patriotic; not in the sense of being separated in matters of faith from Catholics elsewhere.
- (4) It is ruled by a pontiff, ordinarily indeed Italian; but his group of advisers is a privy council drawn from every continent, race, and nation. So detached has he been, that it is precisely three Italian popes who have refused to acknowledge the Italian spoliation of the Patrimony of St. Peter.
- (5) As the greatest Christian force in the modern world its whole influence must be heavily thrown into the scale of peace.
- (6) It has about it a halo of past usefulness, touched about with the mellow hue of time.
It has seemed to men so different as Leibniz (Opera, V, 65), Voltaire (Essais, II, ix), Ancillon (Tableau des Revolutions, I, 79, 106, Berlin, 1803), to have been set in a position not to dictate to, but to arbitrate for, the world. And because it has gone back to the older, simpler, more spiritual theories of Gelasius I, Gregory I, and Innocent III it has now opportunities which were denied it, so long as it claimed the more showy rights of Gregory VII, Boniface VIII, and John XXII. Just as under Pius II the Church created the idea of a European Congress (Boulting, "neas Sylvius," 279, 350-51, London, 1908), so it is to be hoped that under her presidency the practice of arbitration by a permanent tribunal may be made more universal, more practicable, and of greater
Today, arbitration also occurs online, in what is commonly referred to as Online Dispute Resolution, or ODR. Typically, ODR proceedings occur following the filing of a claim online, with the proceedings taking place over the internet, and judgment rendered on the basis of documentation presented.
Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed will be final and binding. Arbitration is not the same as
- judicial proceedings, although in some jurisdictions, court proceedings are sometimes referred as arbitrations
- alternative dispute resolution (or ADR)
- expert determination mediation
Though there are a few disadvantages Parties prefer to resolve their disputes through arbitration because of a number of perceived potential advantages to judicial proceedings:
- when the subject matter of the dispute is highly technical, arbitrators with an appropriate degree of expertise can be appointed (as one cannot "choose the judge" in litigation)
- arbitration is often faster than litigation in court
- arbitration can be cheaper and more flexible for businesses
- arbitral proceedings and an arbitral award are generally non-public, and can be made confidential
- because of the provisions of the New York Convention 1958, arbitration awards are generally easier to enforce in other nations than court judgments
- in most legal systems, there are very limited avenues for appeal of an arbitral award
Judicial Arbitration :
- In the United Kingdom, small claims in the County court are dealt with by a procedure called "small claims arbitration", although the proceedings are held in front of a district judge, paid for by the state. In Russia, the courts dealing with commercial disputes is referred to as the Supreme Court of Arbitration of the Russian Federation, although it is not an arbitral tribunal in the true sense of the word.
- ^ Although all attempts to determine disputes outside of the courts are "alternative dispute resolution" in the literal sense, ADR in the technical legal sense, is the process whereby an attempt is made to reach a common middle ground through an independent mediator as a basis for a binding settlement. In direct contrast, arbitration is an adversarial process to determine a winner and a loser in relation to the rights and wrongs of a dispute.
ARBITRATION IN INDIA: RESOLVING INTERNATIONAL COMMERCIAL DISPUTES IN INDIA
Increasingly, arbitration is recognised as the most effective method of solving commercial disputes, especially those of an international dimension. It can achieve equitable solutions more quickly than litigation, and at less cost; it allows parties to adopt whatever procedure they choose for the resolution of differences; it enables parties to decide the Venue for the proceedings.
Within and around Asia, India offers both the resources and a venue for Arbitrations and dispute resolution procedures and is dedicated in its mission to advancing and supporting arbitration as a means of resolving commercial disputes
The Indians have long been aware of the advantages of arbitration, acknowledging its value as a method of resolving disputes. This we can very well find as being spoken of by Thiruvalluvar in his 2 Line 7 Word Thirukkural . I have written elaborately on this in my Article Thirukkural and Contemporary Laws . Now more recently we have extended tradition by the statutory adoption of the UNCITRAL Model Law for international commercial arbitration and the UNCITRAL Rules of Arbitration, with relevant modifications to fit into its institutional framework.
With a sophisticated and well placed legal system, India is also a party to the New York Convention (on enforcement of arbitration awards) allowing arbitral awards to be enforced by the Courts in almost any country around the world.
India has a comprehensive, contemporary and progressive legal framework to support international arbitration that is on par with that of the world's leading arbitration institutions. Party autonomy and maximum judicial support with minimum judicial intervention are the abiding features of the New Arbitration and Conciliation Act, 1996, which provides for maximum judicial support of arbitration and minimal intervention.
Maximum Court Support
The courts in India offer full support and encouragement for arbitration. At the request of a party:
- They stop a court case from being carried on in breach of an arbitration agreement
- They enforce foreign arbitral awards made in New York Convention countries
- They enforce awards made in international arbitrations taking place in India
They issue a wide range of interim measures of protection, including:
- preservation and interim custody of the subject matter of the dispute
- interim injunctions to preserve the status quo
- appointment of receiver
- securing the amount in dispute
- securing costs of the arbitration
- They issue processes to compel witnesses to attend arbitral proceedings
Minimum Court Interference
3 United Nations Commission on International Trade Law
Indian courts do not review the merits of an award in an arbitration, unless it is at the request of a party and only under restricted grounds of challenge laid down in the Arbitration Act. A foreign award may also only be reviewed according to a similarly limited set of criteria.
Cost-Effective Legal Services
In addition to using lawyers from their own country, parties to an international arbitration have the choice of being represented by experienced arbitration lawyers from among India's leading full service law firms with offices in all major cities of the country. This large pool of legal expertise is available at a cost that is considerably lower as compared to other countries of the world.
Arbitration in India offers parties to a dispute the advantages of
- quality trained arbitrators
- speed of resolution
- a lower cost base
- internationally enforceable decrees
It is not this alone however, which makes India a compelling choice for the conduct of international arbitration
With an open economy & pro-business environment, India offers substantial legal and business expertise - embracing all areas of comparative law, and of commercial/industrial practice - and makes this available to disputants .
The country is excellently placed geographically. A sub-continent in itself and also a part of Asia, historically and linguistically linked to the English language, being the language of international business.
Finally there is the lure of the country itself. India lies in south Asia, between Pakistan, China and Nepal, bordered by the world's highest mountain chain. Side by side with the country's staggering topographical variations is its cultural diversity, offering visitors a complete experience in itself.
UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW (UNCITRAL)
UNCITRAL Arbitration Rules
GENERAL ASSEMBLY RESOLUTION 31/98
Section I. Introductory rules
Section II. Composition of the arbitral tribunal
Number of arbitrators (article 5)
Appointment of arbitrators (articles 6 to 8)
Challenge of arbitrators (articles 9 to 12)
Replacement of an arbitrator (article 13)
Repetition of hearings in the event of the replacement of an arbitrator (article 14)
Section III. Arbitral proceedings
General provisions (article 15)
Place of arbitration (article 16)
Language (article 17)
Statement of claim (article 18)
Statement of defence (article 19)
Amendments to the claim or defence (article 20)
Pleas as to the jurisdiction of the arbitral tribunal (article 21)
Further written statements (article 22)
Periods of time (article 23)
Evidence and hearings (articles 24 and 25)
Interim measures of protection (article 26)
Experts (article 27)
Default (article 28)
Closure of hearings (article 29)
Waiver of rules (article 30)
Section IV The award
Decisions (article 31)
Form and effect of the award (article 32)
Applicable law, amiable compositeur (article 33)
Settlement or other grounds for termination (article 34)
Interpretation of the award (article 35)
Correction of the award (article 36)
Additional award (article 37)
Costs (articles 38 to 40)
Deposit of costs (article 41)
RESOLUTION 31/98 ADOPTED BY THE GENERAL ASSEMBLY ON 15 DECEMBER 1976
31/98. Arbitration Rules of the United Nations Commission on International Trade Law
The General Assembly,
Recognizing the value of arbitration as a method of settling disputes arising in the context of international commercial relations,
Being convinced that the establishment of rules for ad hoc arbitration that are acceptable in countries with different legal, social and economic systems would significantly contribute to the development of harmonious international economic relations,
Bearing in mind that the Arbitration Rules of the United Nations Commission on International Trade Law have been prepared after extensive consultation with arbitral institutions and centres of international commercial arbitration,
Noting that the Arbitration Rules were adopted by the United Nations Commission on International Trade Law at its ninth session 1/ after due deliberation,
1. Recommends the use of the Arbitration Rules of the United Nations Commission on International Trade Law in the settlement of disputes arising in the context of international commercial relations, particularly by reference to the Arbitration Rules in commercial contracts;
2. Requests the Secretary-General to arrange for the widest possible distribution of the Arbitration Rules.
1/ Official Records of the General Assembly, Thirty-first Session, Supplement No. 17 (A/31/17), chap. V, sect. C.
UNCITRAL ARBITRATION RULES
Section I. Introductory rules
SCOPE OF APPLICATION
1. Where the parties to a contract have agreed in writing* that disputes in relation to that contract shall be referred to arbitration under the UNCITRAL Arbitration Rules, then such disputes shall be settled in accordance with these Rules subject to such modification as the parties may agree in writing.
2. These Rules shall govern the arbitration except that where any of these Rules is in conflict with a provision of the law applicable to the arbitration from which the parties cannot derogate, that provision shall prevail.
*MODEL ARBITRATION CLAUSE
Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as at present in force.
Note - Parties may wish to consider adding:
(a) The appointing authority shall be ... (name of institution or person);
(b) The number of arbitrators shall be ... (one or three);
(c) The place of arbitration shall be ... (town or country);
(d) The language(s) to be used in the arbitral proceedings shall be ...
NOTICE, CALCULATION OF PERIODS OF TIME
1. For the purposes of these Rules, any notice, including a notification, communication or proposal, is deemed to have been received if it is physically delivered to the addressee or if it is delivered at his habitual residence, place of business or mailing address, or, if none of these can be found after making reasonable inquiry, then at the addressee=s last-known residence or place of business. Notice shall be deemed to have been received on the day it is so delivered.
2. For the purposes of calculating a period of time under these Rules, such period shall begin to run on the day following the day when a notice, notification, communication or proposal is received. If the last day of such period is an official holiday or a non-business day at the residence or place of business of the addressee, the period is extended until the first business day which follows. Official holidays or non-business days occurring during the running of the period of time are included in calculating the period.
NOTICE OF ARBITRATION
1. The party initiating recourse to arbitration (hereinafter called the "claimant") shall give to the other party (hereinafter called the "respondent") a notice of arbitration.
2. Arbitral proceedings shall be deemed to commence on the date on which the notice of arbitration is received by the respondent.
3. The notice of arbitration shall include the following:
(a) A demand that the dispute be referred to arbitration;
(b) The names and addresses of the parties;
(c) A reference to the arbitration clause or the separate arbitration agreement that is invoked;
(d) A reference to the contract out of or in relation to which the dispute arises;
(e) The general nature of the claim and an indication of the amount involved, if any;
(f) The relief or remedy sought;
(g) A proposal as to the number of arbitrators (i.e. one or three), if the parties have not previously agreed thereon.
4. The notice of arbitration may also include:
(a) The proposals for the appointments of a sole arbitrator and an appointing authority referred to in article 6, paragraph 1;
(b) The notification of the appointment of an arbitrator referred to in article 7;
(c) The statement of claim referred to in article 18.
REPRESENTATION AND ASSISTANCE
The parties may be represented or assisted by persons of their choice. The names and addresses of such persons must be communicated in writing to the other party; such communication must specify whether the appointment is being made for purposes of representation or assistance.
Section II. Composition of the arbitral tribunal
NUMBER OF ARBITRATORS
If the parties have not previously agreed on the number of arbitrators (i.e. one or three), and if within fifteen days after the receipt by the respondent of the notice of arbitration the parties have not agreed that there shall be only one arbitrator, three arbitrators shall be appointed.
APPOINTMENT OF ARBITRATORS (Articles 6 to 8)
1. If a sole arbitrator is to be appointed, either party may propose to the other:
(a) The names of one or more persons, one of whom would serve as the sole arbitrator; and
(b) If no appointing authority has been agreed upon by the parties, the name or names of one or more institutions or persons, one of whom would serve as appointing authority.
2. If within thirty days after receipt by a party of a proposal made in accordance with paragraph 1 the parties have not reached agreement on the choice of a sole arbitrator, the sole arbitrator shall be appointed by the appointing authority agreed upon by the parties. If no appointing authority has been agreed upon by the parties, or if the appointing authority agreed upon refuses to act or fails to appoint the arbitrator within sixty days of the receipt of a party's request therefor, either party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority.
3. The appointing authority shall, at the request of one of the parties, appoint the sole arbitrator as promptly as possible. In making the appointment the appointing authority shall use the following list-procedure, unless both parties agree that the list-procedure should not be used or unless the appointing authority determines in its discretion that the use of the list-procedure is not appropriate for the case:
(a) At the request of one of the parties the appointing authority shall communicate to both parties an identical list containing at least three names;
(b) Within fifteen days after the receipt of this list, each party may return the list to the appointing authority after having deleted the name or names to which he objects and numbered the remaining names on the list in the order of his preference;
(c) After the expiration of the above period of time the appointing authority shall appoint the sole arbitrator from among the names approved on the lists returned to it and in accordance with the order of preference indicated by the parties;
(d) If for any reason the appointment cannot be made according to this procedure, the appointing authority may exercise its discretion in appointing the sole arbitrator.
4. In making the appointment, the appointing authority shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and shall take into account as well the advisability of appointing an arbitrator of a nationality other than the nationalities of the parties.
1. If three arbitrators are to be appointed, each party shall appoint one arbitrator. The two arbitrators thus appointed shall choose the third arbitrator who will act as the presiding arbitrator of the tribunal.
2. If within thirty days after the receipt of a party's notification of the appointment of an arbitrator the other party has not notified the first party of the arbitrator he has appointed:
(a) The first party may request the appointing authority previously designated by the parties to appoint the second arbitrator; or
(b) If no such authority has been previously designated by the parties, or if the appointing authority previously designated refuses to act or fails to appoint the arbitrator within thirty days after receipt of a party's request therefor, the first party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate the appointing authority. The first party may then request the appointing authority so designated to appoint the second arbitrator. In either case, the appointing authority may exercise its discretion in appointing the arbitrator.
3. If within thirty days after the appointment of the second arbitrator the two arbitrators have not agreed on the choice of the presiding arbitrator, the presiding arbitrator shall be appointed by an appointing authority in the same way as a sole arbitrator would be appointed under article 6.
1. When an appointing authority is requested to appoint an arbitrator pursuant to article 6 or article 7, the party which makes the request shall send to the appointing authority a copy of the notice of arbitration, a copy of the contract out of or in relation to which the dispute has arisen and a copy of the arbitration agreement if it is not contained in the contract. The appointing authority may require from either party such information as it deems necessary to fulfil its function.
2. Where the names of one or more persons are proposed for appointment as arbitrators, their full names, addresses and nationalities shall be indicated, together with a description of their qualifications.
CHALLENGE OF ARBITRATORS (Articles 9 to 12)
A prospective arbitrator shall disclose to those who approach him in connexion with his possible appointment any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, once appointed or chosen, shall disclose such circumstances to the parties unless they have already been informed by him of these circumstances.
1. Any arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrators impartiality or independence.
2. A party may challenge the arbitrator appointed by him only for reasons of which he becomes aware after the appointment has been made.
1. A party who intends to challenge an arbitrator shall send notice of his challenge within fifteen days after the appointment of the challenged arbitrator has been notified to the challenging party or within fifteen days after the circumstances mentioned in articles 9 and 10 became known to that party.
2. The challenge shall be notified to the other party, to the arbitrator who is challenged and to the other members of the arbitral tribunal. The notification shall be in writing and shall state the reasons for the challenge.
3. When an arbitrator has been challenged by one party, the other party may agree to the challenge. The arbitrator may also, after the challenge, withdraw from his office. In neither case does this imply acceptance of the validity of the grounds for the challenge. In both cases the procedure provided in article 6 or 7 shall be used in full for the appointment of the substitute arbitrator, even if during the process of appointing the challenged arbitrator a party had failed to exercise his right to appoint or to participate in the appointment.
1. If the other party does not agree to the challenge and the challenged arbitrator does not withdraw, the decision on the challenge will be made:
(a) When the initial appointment was made by an appointing authority, by that authority;
(b) When the initial appointment was not made by an appointing authority, but an appointing authority has been previously designated, by that authority;
(c) In all other cases, by the appointing authority to be designated in accordance with the procedure for designating an appointing authority as provided for in article 6.
2. If the appointing authority sustains the challenge, a substitute arbitrator shall be appointed or chosen pursuant to the procedure applicable to the appointment or choice of an arbitrator as provided in articles 6 to 9 except that, when this procedure would call for the designation of an appointing authority, the appointment of the arbitrator shall be made by the appointing authority which decided on the challenge.
REPLACEMENT OF ON ARBITRATOR
1. In the event of the death or resignation of an arbitrator during the course of the arbitral proceedings, a substitute arbitrator shall be appointed or chosen pursuant to the procedure provided for in articles 6 to 9 that was applicable to the appointment or choice of the arbitrator being replaced.
2. In the event that an arbitrator fails to act or in the event of the de jure or de facto impossibility of his performing his functions, the procedure in respect of the challenge and replacement of an arbitrator as provided in the preceding articles shall apply.
REPETITION OF HEARINGS IN THE EVENT OF THE REPLACEMENT OF AN ARBITRATOR
If under articles 11 to 13 the sole or presiding arbitrator is replaced, any hearings held previously shall be repeated; if any other arbitrator is replaced, such prior hearings may be repeated at the discretion of the arbitral tribunal.
Section III. Arbitral proceedings
1. Subject to these Rules, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated with equality and that at any stage of the proceedings each party is given a full opportunity of presenting his case.
2. If either party so requests at any stage of the proceedings, the arbitral tribunal shall hold hearings for the presentation of evidence by witnesses, including expert witnesses, or for oral argument. In the absence of such a request, the arbitral tribunal shall decide whether to hold such hearings or whether the proceedings shall be conducted on the basis of documents and other materials.
3. All documents or information supplied to the arbitral tribunal by one party shall at the same time be communicated by that party to the other party.
PLACE OF ARBITRATION
1. Unless the parties have agreed upon the place where the arbitration is to be held, such place shall be determined by the arbitral tribunal, having regard to the circumstances of the arbitration.
2. The arbitral tribunal may determine the locale of the arbitration within the country agreed upon by the parties. It may hear witnesses and hold meetings for consultation among its members at any place it deems appropriate, having regard to the circumstances of the arbitration.
3. The arbitral tribunal may meet at any place it deems appropriate for the inspection of goods, other property or documents. The parties shall be given sufficient notice to enable them to be present at such inspection.
4. The award shall be made at the place of arbitration.
1. Subject to an agreement by the parties, the arbitral tribunal shall, promptly after its appointment, determine the language or languages to be used in the proceedings. This determination shall apply to the statement of claim, the statement of defence, and any further written statements and, if oral hearings take place, to the language or languages to be used in such hearings.
2. The arbitral tribunal may order that any documents annexed to the statement of claim or statement of defence, and any supplementary documents or exhibits submitted in the course of the proceedings, delivered in their original language, shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal.
STATEMENT OF CLAIM
1. Unless the statement of claim was contained in the notice of arbitration, within a period of time to be determined by the arbitral tribunal, the claimant shall communicate his statement of claim in writing to the respondent and to each of the arbitrators. A copy of the contract, and of the arbitration agreement if not contained in the contract, shall be annexed thereto.
2. The statement of claim shall include the following particulars:
(a) The names and addresses of the parties;
(b) A statement of the facts supporting the claim;
(c) The points at issue;
(d) The relief or remedy sought.
The claimant may annex to his statement of claim all documents he deems relevant or may add a reference to the documents or other evidence he will submit.
STATEMENT OF DEFENCE
1. Within a period of time to be determined by the arbitral tribunal, the respondent shall communicate his statement of defence in writing to the claimant and to each of the arbitrators.
2. The statement of defence shall reply to the particulars (b), (c) and (d) of the statement of claim (article 18, para. 2). The respondent may annex to his statement the documents on which he relies for his defence or may add a reference to the documents or other evidence he will submit.
3. In his statement of defence, or at a later stage in the arbitral proceedings if the arbitral tribunal decides that the delay was justified under the circumstances, the respondent may make a counter-claim arising out of the same contract or rely on a claim arising out of the same contract for the purpose of a set-off.
4. The provisions of article 18, paragraph 2, shall apply to a counter-claim and a claim relied on for the purpose of a set-off.
AMENDMENTS TO THE CLAIM OR DEFENCE
During the course of the arbitral proceedings either party may amend or supplement his claim or defence unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it or prejudice to the other party or any other circumstances. However, a claim may not be amended in such a manner that the amended claim falls outside the scope of the arbitration clause or separate arbitration agreement.
PLEAS AS TO THE JURISDICTION OF THE ARBITRAL TRIBUNAL
1. The arbitral tribunal shall have the power to rule on objections that it has no jurisdiction, including any objections with respect to the existence or validity of the arbitration clause or of the separate arbitration agreement.
2. The arbitral tribunal shall have the power to determine the existence or the validity of the contract of which an arbitration clause forms a part. For the purposes of article 21, an arbitration clause which forms part of a contract and which provides for arbitration under these Rules shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
3. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than in the statement of defence or, with respect to a counter-claim, in the reply to the counter-claim.
4. In general, the arbitral tribunal should rule on a plea concerning its jurisdiction as a preliminary question. However, the arbitral tribunal may proceed with the arbitration and rule on such a plea in their final award.
FURTHER WRITTEN STATEMENTS
The arbitral tribunal shall decide which further written statements, in addition to the statement of claim and the statement of defence, shall be required from the parties or may be presented by them and shall fix the periods of time for communicating such statements.
PERIODS OF TIME
The periods of time fixed by the arbitral tribunal for the communication of written statements (including the statement of claim and statement of defence) should not exceed forty-five days. However, the arbitral tribunal may extend the time-limits if it concludes that an extension is justified.
EVIDENCE AND HEARINGS (ARTICLES 24 AND 25)
1. Each party shall have the burden of proving the facts relied on to support his claim or defence.
2. The arbitral tribunal may, if it considers it appropriate, require a party to deliver to the tribunal and to the other party, within such a period of time as the arbitral tribunal shall decide, a summary of the documents and other evidence which that party intends to present in support of the facts in issue set out in his statement of claim or statement of defence.
3. At any time during the arbitral proceedings the arbitral tribunal may require the parties to produce documents, exhibits or other evidence within such a period of time as the tribunal shall determine.
1. In the event of an oral hearing, the arbitral tribunal shall give the parties adequate advance notice of the date, time and place thereof.
2. If witnesses are to be heard, at least fifteen days before the hearing each party shall communicate to the arbitral tribunal and to the other party the names and addresses of the witnesses he intends to present, the subject upon and the languages in which such witnesses will give their testimony.
3. The arbitral tribunal shall make arrangements for the translation of oral statements made at a hearing and for a record of the hearing if either is deemed necessary by the tribunal under the circumstances of the case, or if the parties have agreed thereto and have communicated such agreement to the tribunal at least fifteen days before the hearing.
4. Hearings shall be held in camera unless the parties agree otherwise. The arbitral tribunal may require the retirement of any witness or witnesses during the testimony of other witnesses. The arbitral tribunal is free to determine the manner in which witnesses are examined.
5. Evidence of witnesses may also be presented in the form of written statements signed by them.
6. The arbitral tribunal shall determine the admissibility, relevance, materiality and weight of the evidence offered.
INTERIM MEASURES OF PROTECTION
1. At the request of either party, the arbitral tribunal may take any interim measures it deems necessary in respect of the subject-matter of the dispute, including measures for the conservation of the goods forming the subject-matter in dispute, such as ordering their deposit with a third person or the sale of perishable goods.
2. Such interim measures may be established in the form of an interim award. The arbitral tribunal shall be entitled to require security for the costs of such measures.
3. A request for interim measures addressed by any party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate, or as a waiver of that agreement.
1. The arbitral tribunal may appoint one or more experts to report to it, in writing, on specific issues to be determined by the tribunal. A copy of the expert's terms of reference, established by the arbitral tribunal, shall be communicated to the parties.
2. The parties shall give the expert any relevant information or produce for his inspection any relevant documents or goods that he may require of them. Any dispute between a party and such expert as to the relevance of the required information or production shall be referred to the arbitral tribunal for decision.
3. Upon receipt of the expert's report, the arbitral tribunal shall communicate a copy of the report to the parties who shall be given the opportunity to express, in writing, their opinion on the report. A party shall be entitled to examine any document on which the expert has relied in his report.
4. At the request of either party the expert, after delivery of the report, may be heard at a hearing where the parties shall have the opportunity to be present and to interrogate the expert. At this hearing either party may present expert witnesses in order to testify on the points at issue. The provisions of article 25 shall be applicable to such proceedings.
1. If, within the period of time fixed by the arbitral tribunal, the claimant has failed to communicate his claim without showing sufficient cause for such failure, the arbitral tribunal shall issue an order for the termination of the arbitral proceedings. If, within the period of time fixed by the arbitral tribunal, the respondent has failed to communicate his statement of defence without showing sufficient cause for such failure, the arbitral tribunal shall order that the proceedings continue.
2. If one of the parties, duly notified under these Rules, fails to appear at a hearing, without showing sufficient cause for such failure, the arbitral tribunal may proceed with the arbitration.
3. If one of the parties, duly invited to produce documentary evidence, fails to do so within the established period of time, without showing sufficient cause for such failure, the arbitral tribunal may make the award on the evidence before it.
CLOSURE OF HEARINGS
1. The arbitral tribunal may inquire of the parties if they have any further proof to offer or witnesses to be heard or submissions to make and, if there are none, it may declare the hearings closed.
2. The arbitral tribunal may, if it considers it necessary owing to exceptional circumstances, decide, on its own motion or upon application of a party, to reopen the hearings at any time before the award is made.
WAIVER OF RULES
A party who knows that any provision of, or requirement under, these Rules has not been complied with and yet proceeds with the arbitration without promptly stating his objection to such non-compliance, shall be deemed to have waived his right to object.
Section IV. The award
1. When there are three arbitrators, any award or other decision of the arbitral tribunal shall be made by a majority of the arbitrators.
2. In the case of questions of procedure, when there is no majority or when the arbitral tribunal so authorizes, the presiding arbitrator may decide on his own, subject to revision, if any, by the arbitral tribunal.
FORM AND EFFECT OF THE AWARD
1. In addition to making a final award, the arbitral tribunal shall be entitled to make interim, interlocutory, or partial awards.
2. The award shall be made in writing and shall be final and binding on the parties. The parties undertake to carry out the award without delay.
3. The arbitral tribunal shall state the reasons upon which the award is based, unless the parties have agreed that no reasons are to be given.
4. An award shall be signed by the arbitrators and it shall contain the date on which and the place where the award was made. Where there are three arbitrators and one of them fails to sign, the award shall state the reason for the absence of the signature.
5. The award may be made public only with the consent of both parties.
6. Copies of the award signed by the arbitrators shall be communicated to the parties by the arbitral tribunal.
7. If the arbitration law of the country where the award is made requires that the award be filed or registered by the arbitral tribunal, the tribunal shall comply with this requirement within the period of time required by law.
APPLICABLE LAW, AMIABLE COMPOSITEUR
1. The arbitral tribunal shall apply the law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable.
2. The arbitral tribunal shall decide as amiable compositeur or ex aequo et bono only if the parties have expressly authorized the arbitral tribunal to do so and if the law applicable to the arbitral procedure permits such arbitration.
3. In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.
SETTLEMENT OR OTHER GROUNDS FOR TERMINATION
1. If, before the award is made, the parties agree on a settlement of the dispute, the arbitral tribunal shall either issue an order for the termination of the arbitral proceedings or, if requested by both parties and accepted by the tribunal, record the settlement in the form of an arbitral award on agreed terms. The arbitral tribunal is not obliged to give reasons for such an award.
2. If, before the award is made, the continuation of the arbitral proceedings becomes unnecessary or impossible for any reason not mentioned in paragraph 1, the arbitral tribunal shall inform the parties of its intention to issue an order for the termination of the proceedings. The arbitral tribunal shall have the power to issue such an order unless a party raises justifiable grounds for objection.
3. Copies of the order for termination of the arbitral proceedings or of the arbitral award on agreed terms, signed by the arbitrators, shall be communicated by the arbitral tribunal to the parties. Where an arbitral award on agreed terms is made, the provisions of article 32, paragraphs 2 and 4 to 7, shall apply.
INTERPRETATION OF THE AWARD
1. Within thirty days after the receipt of the award, either party, with notice to the other party, may request that the arbitral tribunal give an interpretation of the award.
2. The interpretation shall be given in writing within forty-five days after the receipt of the request. The interpretation shall form part of the award and the provisions of article 32, paragraphs 2 to 7, shall apply.
CORRECTION OF THE AWARD
1. Within thirty days after the receipt of the award, either party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors, or any errors of similar nature. The arbitral tribunal may within thirty days after the communication of the award make such corrections on its own initiative.
2. Such corrections shall be in writing, and the provisions of article 32, paragraphs 2 to 7, shall apply.
1. Within thirty days after the receipt of the award, either party, with notice to the other party, may request the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award.
2. If the arbitral tribunal considers the request for an additional award to be justified and considers that the omission can be rectified without any further hearings or evidence, it shall complete its award within sixty days after the receipt of the request.
3. When an additional award is made, the provisions of article 32, paragraphs 2 to 7, shall apply.
COSTS (Articles 38 to 40)
The arbitral tribunal shall fix the costs of arbitration in its award. The term "costs" includes only:
(a) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the tribunal itself in accordance with article 39;
(b) The travel and other expenses incurred by the arbitrators;
(c) The costs of expert advice and of other assistance required by the arbitral tribunal;
(d) The travel and other expenses of witnesses to the extent such expenses are approved by the arbitral tribunal;
(e) The costs for legal representation and assistance of the successful party if such costs were claimed during the arbitral proceedings, and only to the extent that the arbitral tribunal determines that the amount of such costs is reasonable;
(f) Any fees and expenses of the appointing authority as well as the expenses of the Secretary-General of the Permanent Court of Arbitration at The Hague.
1. The fees of the arbitral tribunal shall be reasonable in amount, taking into account the amount in dispute, the complexity of the subject-matter, the time spent by the arbitrators and any other relevant circumstances of the case.
2. If an appointing authority has been agreed upon by the parties or designated by the Secretary-General of the Permanent Court of Arbitration at The Hague, and if that authority has issued a schedule of fees for arbitrators in international cases which it administers, the arbitral tribunal in fixing its fees shall take that schedule of fees into account to the extent that it considers appropriate in the circumstances of the case.
3. If such appointing authority has not issued a schedule of fees for arbitrators in international cases, any party may at any time request the appointing authority to furnish a statement setting forth the basis for establishing fees which is customarily followed in international cases in which the authority appoints arbitrators. If the appointing authority consents to provide such a statement, the arbitral tribunal in fixing its fees shall take such information into account to the extent that it considers appropriate in the circumstances of the case.
4. In cases referred to in paragraphs 2 and 3, when a party so requests and the appointing authority consents to perform the function, the arbitral tribunal shall fix its fees only after consultation with the appointing authority which may make any comment it deems appropriate to the arbitral tribunal concerning the fees.
1. Except as provided in paragraph 2, the costs of arbitration shall in principle be borne by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.
2. With respect to the costs of legal representation and assistance referred to in article 38, paragraph (e), the arbitral tribunal, taking into account the circumstances of the case, shall be free to determine which party shall bear such costs or may apportion such costs between the parties if it determines that apportionment is reasonable.
3. When the arbitral tribunal issues an order for the termination of the arbitral proceedings or makes an award on agreed terms, it shall fix the costs of arbitration referred to in article 38 and article 39, paragraph 1, in the text of that order or award.
4. No additional fees may be charged by an arbitral tribunal for interpretation or correction or completion of its award under articles 35 to 37.
DEPOSIT OF COSTS
1. The arbitral tribunal, on its establishment, may request each party to deposit an equal amount as an advance for the costs referred to in article 38, paragraphs (a), (b) and (c).
2. During the course of the arbitral proceedings the arbitral tribunal may request supplementary deposits from the parties.
3. If an appointing authority has been agreed upon by the parties or designated by the Secretary-General of the Permanent Court of Arbitration at The Hague, and when a party so requests and the appointing authority consents to perform the function, the arbitral tribunal shall fix the amounts of any deposits or supplementary deposits only after consultation with the appointing authority which may make any comments to the arbitral tribunal which it deems appropriate concerning the amount of such deposits and supplementary deposits.
4. If the required deposits are not paid in full within thirty days after the receipt of the request, the arbitral tribunal shall so inform the parties in order that one or another of them may make the required payment. If such payment is not made, the arbitral tribunal may order the suspension or termination of the arbitral proceedings.
5. After the award has been made, the arbitral tribunal shall render an accounting to the parties of the deposits received and return any unexpended balance to the parties.
DIFFERENT TYPES OF ARBITRATION
The subject matter for today is the "Need, importance and relevance of arbitration". The art and
science of arbitration is a living and changing thing. The essence of arbitration is the settlement of
disputes by a tribunal chosen by the parties themselves, rather than by the Courts constituted by the
\ State. The popularity of arbitration as a mode of settling disputes is due to the fact that "the arbitration is regarded as speedier, more informal and cheaper than conventional judicial procedure and provides a forum more convenient to the parties who can choose the time and place for conducting arbitration and the procedure. Further, where the dispute concerns a technical matter, the parties can select an arbitrator who possesses appropriate special qualifications or skills in the trade As a concept and as a process, arbitration is well embedded in commercial practices and social life. Arbitration is the means by which parties to a dispute get the same settled through the intervention of a third person, but without having recourse to a court of law. When two persons agree to have a dispute settled through arbitration, what they really mean is that the actual resolution of the dispute will rest with a third person called the arbitrator. The essence of arbitration, therefore, is that it is the arbitrator who decides the case and not the ordinary civil courts established by the state. The law of arbitration, is based upon the principle of referring the disputes to a domestic tribunal substituted in the place of a regular Court. Thus arbitration can be defined as a reference to the decision of one or more persons called arbitrators of a particular matter in difference or dispute between the parties. It can be defined as the determination of a matter in dispute by the award of one or more persons called arbitrators. Halsbury defines "arbitration" as the reference of dispute or difference between not less than two parties for determination after hearing both sides in a judicial manner by a person or persons other than a Court. An equivalent in the old Indian system for arbitration is Panchayat. In India arbitration has a very ancient heritage. Indian civilisation expressly encouraged the settlement of differences by Tribunals chosen by the parties themselves. In the Western world also arbitration has a very long history. The Greeks attached particular importance to arbitration. In the Bible Jesus Christ spoke of Arbitration being adopted for disputes settlement sans taking certain disputes to the Judiciary, and which is followed in Churches over many years all over the Globe especially in Catholic Churches barring the judicial proceedings adopted in the Vatican , The Popal City. This is set forth hereunder in this article.
Submission of disputes to the decision of private persons was recognised also under the Roman law known by the name of compromysm (compromise), arbitration was a mode of settling controversies much favoured in the civil law of the continent. The attitude of English law towards arbitration has been fluctuating from stiff opposition to moderate welcome. The common law courts looked jealously at agreements to submit disputes to extra-judicial determination.
It was the exigencies of business that brought about an increasing demand for commercial arbitration in England. The realities of business in due course brought about a change in judicial attitude. In India the history of statute relating to arbitration begins with the regulations under the East India Company made for the Presidency of Bengal, Madras( Chennai) and Bombay( Mumbai) . These regulations were later expanded in the Civil Procedure Act of 1859. In 1940, an Arbitration Act was passed for the whole of British India. On 26.01.1950 the Act was extended to the whole of India except the Part B States. That Act was repealed by the Arbitration and Conciliation Ordinance 1996 (Act 8 of 1996) which came into force on 25.01.1996 and on its expiry Arbitration and Conciliation Ordinance (Act 11) of 1996 and thereafter during the Parliament session in 1996 came to be enacted as the Arbitration and Conciliation Act, 1996.
What is meant by arbitration is not defined in the Arbitration Act, but an arbitration agreement is defined as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between the parties. Ronald Bernstein defines an arbitration as under
"Where two or more persons agree that a dispute or a potential dispute between them shall be decided in a legally binding way by one or more impartial persons in a judicial manner, that is, upon evidence put before him or them, the agreement is called an arbitration agreement or a submission to arbitration". Sec.7(5) of the Act expressly provides that reference to a document containing an arbitration clause would constitute an arbitration agreement. When, after a dispute has arisen it is put before such person for decision the procedure is called an arbitration and decision when made is called an award. Sometimes the submission instead of being voluntary is imposed by statute. Such arbitrations are called statutory arbitrations. There are more than 25 central Acts providing for statutory arbitration in India. For example, under the Co-operative Societies Act and under the Telegraph Act etc arbitration is provided for statutorily. The provisions of these statutes to the extent inconsistent with the provisions of the Arbitration Act will prevail over the provisions of the Arbitration Act.
Arbitration offers definite advantages that litigation from its very nature can never provide. Courts have always adopted a conservative approach to problems. The Courts of law are put into a straight jacket as it has to follow fixed procedure and fixed rules of evidence. Arbitration, on the other hand, is more informal. The Evidence Act is not applicable to arbitration. The Civil Procedure Code has no application. The arbitrator need only proceed in a manner conforming to justice, equity and good conscience. He is not henched in by any formulated rules. One of the major advantages of arbitration is that an expert arbitral tribunal can be selected considering the field of dispute, so much so, the entire procedure can be conducted without the intervention of expert lawyers, with major gains in speed and economy. Thus many disputes as to quality in commodity trades, many disputes arising out of construction contract etc. can be settled through arbitration in a speedy manner at lesser cost and more quickly than through courts.
Arbitrators and judges are similar in the business of dispensing justice - the judge in the public sector and the arbitrator in the private sector. The public legal system of any country represents a compromise between conflicting demands for quality, speed and cheapness of the decision - making process. Of these, quality of decision making is usually given the highest priority. Speed of the decision and cheapness have suffered considerably. Litigants had to que up for the services of the Court and to accept the delay, the inconvenience and often the loss consequent on the delay.
However, it must be said that the result of any arbitration depends upon the personality of the arbitrator. The arbitrator should always bear in mind the range of procedures open to him so as to be able to suggest to the parties the course which will save costs without reducing to an unacceptable extent the quality of the decision making process. To summarise, properly conducted arbitrations give acceptable results with speed and thoroughness at relatively lesser costs. As there is no right of appeal in Courts, the decision gains finality saving further time and costs.
However, in practice, one sometimes comes across disputes where the issue is how much is to be awarded or the assessment of damages for breach of contract. Here the proceedings generally tend to be bedevilled by wild overestimates for the claimant or underestimate for the respondents. The amount of claim is magnified and costs over-stated. Proceedings which should be an amicable attempt to resolve a genuine difference of opinion are turned into an adversarial and cynical game in which it is thought that victory will go to the most convincing liar or at least a long drawn out battle in which the initial wild exaggerations have first to be demolished before the real dispute is explored. What is termed in legal parlance as the forest technique' of pleading is used by claimants. The farrago of obscurities in the contract is highlighted - all instructions and drawings are without exception alleged to have caused disturbance and additional loss or to have been issued late in an attempt to avoid the exposure to the critical examination involved in a more selective analysis of the claim.
Such disputes are fertile soil for the lawyers. If the rival claims are small and each side believes that the difference results from a genuine difference of opinion the parties may be normally content to appear in person or by an employee before the arbitrator. They may even square up the disputes behind the back of the arbitrator. The resulting procedure shows arbitration at its most useful. But if the difference is great and one or both the parties think that the other is knowingly exaggerating, the tendency is to appoint advocate partly because the amount in issue is such as to justify the additional expense involved or partly because of the fear that unless every possible point in defence is taken the exaggeration of the opponent may be accepted by the arbitrator also partly because the task of exposing by cross examination the exaggerations of the claimant and his witnesses is the expert task of a lawyer.
The relevance of arbitration, its importance and its needs can never be over-emphasised. The rapid and phenomenal growth of commerce and industry and the complex and varied problems thrown out by them can find solution only through arbitration. Conventional courts are ill equipped to meet the needs
VITAL TYPES OF ARBITRATION
(1) Ad-hoc Arbitration: When a dispute or difference arises between the parties in course of commercial transaction and the same could not be settled friendly by negotiation in form of conciliation or mediation, in such case ad-hoc arbitration may be sought by the conflicting parties. This arbitration is agreed to get justice for the balance of the un-settled part of the dispute only.
(2) Institutional Arbitration: This kind of arbitration there is prior agreement between the parties that in case of future differences or disputes arising between the parties during their commercial transactions, such differences or disputes will be settled by arbitration as per clause provide in the agreement.
(3) Statutory Arbitration: It is mandatory arbitration which is imposed on the parties by operation of law. In such a case the parties have no option as such but to abide by the law of land. It is apparent that statutory arbitration differs from the above 2 types of arbitration because (i) The consent of parties is not necessary; (ii) It is compulsory Arbitration; (iii) It is binding on the Parties as the law of land; For Example: Section 31 of the North Eastern Hill University Act, 1973, Section 24,31 and 32 of the Defence of India Act, 1971 and Section 43(c) of The Indian Trusts Act, 1882 are the statutory provision, which deal with statutory arbitration.
(4) Domestic or International Arbitration: Arbitration which occurs in India and have all the parties within India is termed as Domestic Arbitration. An Arbitration in which any party belongs to other than India and the dispute is to be settled in India is termed as International Arbitration.
(5) Foreign Arbitration: When arbitration proceedings are conducted in a place outside India and the Award is required to be enforced in India, it is termed as Foreign Arbitration
Section 7 of Arbitration & Conciliation Act, 1996 says that it means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. It may be in the form of a clause in a contract or in the form of a separate agreement and should be in writing
Since Arbitration is based upon either contract law of the law of treaties, the agreement between the parties to submit their dispute to arbitration is a legally binding contract. All arbitral decisions are considered to be Final and Binding. This does not, however, void the requirements of law. Any dispute not excluded from Arbitration by virtue of law (e.g. criminal proceedings of compoundable nature) may be submitted to arbitration.
Arbitration exists under national and international law of Arbitration and it can be carried out between private individuals, between states or between states and private individuals.
Constructive Consent or Implied Agreement :
Section 7 (4) b, c
Agreement shall be considered in writing if it is contained in a document signed by the parties or an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement or an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
Constructive Consent , which is used in the Substantive Law , is a kind of estoppel , which is used in the Procedural Law as explained in Sections 114-177 of the Indian Evidence Act, 1882. The General Clauses Act , 1889 in Section 27 also explains of this kind of estoppel.
I have passed many Awards passed ex-parte based on this Constructive Consent.
enforcING an Arbitration Award
Winning an arbitration award will not be immediately end the dispute,especially when it comes to collecting payment from the losing party.What can be done to enforce the decision of the arbitrator? The author provide steps to giving the award binding effect and also address motions to vacate, modify or correct.
There are two fundamental differences between enforcement of a foreign award and a domestic award. As noted above, a domestic award does not require any application for enforcement. Once objections (if any) are rejected, the award is by itself capable of execution as a decree. A foreign award however, is required to go through an enforcement procedure. The party seeking enforcement has to make an application for the said purpose. Once the Court is satisfied that the foreign award is enforceable, the award becomes a decree of the Court and executable as such
The other difference between the domestic and foreign regime is that (unlike for domestic awards) there is no provision to set aside a foreign award. In relation to a foreign award, the Indian Courts may only enforce it or refuse to enforce it - they cannot set it aside. This "lacuna" was sought to be plugged by the Supreme Court in the recent decision of Venture Global Engineering v. Satyam Computer Services Judgment dated 10th January 2008, in C.A. No. 309 of 2008 where the Court held that it is permissible to set aside a foreign award in India applying the provisions of Section 34 of Part I of the Act.
The conditions for enforcement of a foreign award are as per the New York Convention. The only addition being an "Explanation" to the ground of public policy which states that an award shall be deemed to be in conflict with the public policy of India if it was induced or affected by fraud or corruption. Section 48 (2) of the Act
Indian Courts have narrowly construed the ground of public policy in relation to foreign awards (unlike domestic awards where Saw Pipes (supra) 40has construed it widely). In Renusagar Power Co. v. General Electrical Corporation41 the Supreme Court construed the expression "public policy" in relation to foreign awards as follows:
"This would mean that "public policy" in Section 7 (1) (b) (ii) has been used in narrower sense and in order to attract to bar of public policy the enforcement of the award must invoke something more than the violation of the law of India..... Applying the said criteria it must be held that the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality."
As noticed above, there is no statutory provision to set aside a foreign award under the Act. Foreign awards may be set aside or suspended in the country in which or under the laws of the award was made (Section 48 (1) (e) of the Act, corresponding to Article V (e) of the New York Convention) but there is no provision to set aside a foreign award in India. This fundamental distinction between a foreign and a domestic award has been altered by the Supreme Court in the recent case of Venture Global Engineering v. Satyam Computer Services Ltd.42 (Venture Global). Here the Supreme Court was concerned with a situation where a foreign award rendered in London under the Rules of the LCIA was sought to be enforced by the successful party (an Indian company) in the District Court, Michigan, USA. The dispute arose out of a joint venture agreement between the parties. The respondent alleged that the appellant had committed an "event of default" under the shareholders agreement and as per the said agreement exercised its option to purchase the appellant's shares in the joint venture company at book value. The sole arbitrator appointed by the LCIA passed an award directing the appellant to transfer its shares to the respondent. The respondent sought to enforce this award in the USA.43 The appellant filed a civil suit in an Indian District Court seeking to set aside the award. The District Court, followed by the High Court, in appeal, dismissed the suit holding that there was no such procedure envisaged under Indian law. However, the Supreme Court in appeal, following its earlier decision in the case of Bhatia International v. Bulk Trading 44held that even though there was no provision in Part II of the Act providing for challenge to a foreign award, a petition to set aside the same would lie under Section 34 Part I of the Act (i.e. it applied the domestic award provisions to foreign awards). The Court held that the property in question (shares in an Indian company) are situated in India and necessarily Indian law would need to be followed to execute the award. In such a situation the award must be validated on the touchstone of public policy of India and the Indian public policy cannot be given a go by through the device of the award being enforced on foreign shores. Going further the Court held that a challenge to a foreign award in India would have to meet the expanded scope of public policy as laid down in Saw Pipes (supra) (i.e. meet a challenge on merits contending that the award is "patently illegal").
The Venture Global case is far reaching for it creates a new procedure and a new ground for challenge to a foreign award (not envisaged under the Act). The new procedure is that a person seeking to enforce a foreign award has not only to file an application for enforcement under Section 48 of the Act, it has to meet an application under Section 34 of the Act seeking to set aside the award. The new ground is that not only must the award pass the New York Convention grounds incorporated in Section 48, it must pass the expanded "public policy" ground created under Section 34 of the Act. In practice, the statutorily enacted procedure for enforcement of a foreign award would be rendered superfluous till the application for setting aside the same (under Section 34) is decided. The statutorily envisaged grounds for challenge to the award would also be rendered superfluous as notwithstanding the success of the applicant on the New York Convention grounds, the award would still have to meet the expanded "public policy" ground (and virtually have to meet a challenge to the award on merits). The Venture Global case thus largely renders superfluous the statutorily envisaged mechanism for enforcement of foreign awards and substitutes it with judge made law. The Judgement thus (in my respectful view) is erroneous. Moreover, in so far as the Judgment permits a challenge to a foreign award on the expanded interpretation of public policy is per incuriam as a larger, three Bench decision in the case of Renu Sagar (supra) holds to the contrary. Further Saw Pipes (on which Venture Global relies for this proposition) had clearly confined its expanded interpretation of public policy to domestic awards alone (lest it fall foul of the Renu Sagar case which had interpreted the expression narrowly). The Supreme Court in Venture Global did not notice this self-created limitation in Saw Pipes nor did it notice the narrower interpretation of public policy in Renu Sagar and therefore application of the expanded interpretation of public policy to foreign awards is clearly per incuriam.
Be that as it may, till the decision is clarified or modified, it has clearly muddied the waters and the enforcement mechanism of foreign awards has become clumsy, uncertain and inefficient.
5. Procedural requirements
A party applying for enforcement of a foreign award is required to produce before the Court:
(a) the original award or a copy thereof, duly authenticated in the manner required by the law of the country in which it was made;
(b) the original agreement for arbitration or a duly certified copy thereof; and
(c) such evidence as may be necessary to prove that the award is a foreign award. 45
a. The relevant court:
The Indian Supreme Court has accepted the principle that enforcement proceedings can be brought wherever the property of the losing party may be situated. This was in the case of Brace Transport Corporation of Monrovia v. Orient Middle East Lines Ltd.46 The Court here quoted a passage from Redfern and Hunter on Law & Practice of International Commercial Arbitration (1986 Edn.) inter alia as follows:
"A party seeking to enforce an award in an international commercial arbitration may have a choice of country in which to do so; as it is some times expressed, the party may be able to go forum shopping. This depends upon the location of the assets of the losing party. Since the purpose of enforcement proceedings is to try to ensure compliance with an award by the legal attachment or seizure of the defaulting party's assets, legal proceedings of some kind are necessary to obtain title to the assets seized or their proceeds of sale. These legal proceedings must be taken in the State or States in which the property or other assets of the losing party are located."
b. Time limit:
The Act does not prescribe any time limit within which a foreign award must be applied to be enforced. However various High Courts have held that the period of limitation would be governed by the residual provision under the Limitation Act i.e. the period would be three years from the date when the right to apply for enforcement accrues. The High Court of Bombay has held that the right to apply would accrue when the award is received by the applicant.47
6. Post enforcement formalities:
The Supreme Court has held that once the court determines that a foreign award is enforceable it can straight away be executed as a decree. In other words, no other application is required to convert the judgment into a decree. This was so held in the case of Fuerst Day Lawson ltd. v. Jindal Exports Ltd.48 where the Court stated:
"Once the Court decides that foreign award is enforceable, it can proceed to take further effective steps for execution of the same. There arises no question of making foreign award as a rule of Court / decree again. If the object and purpose can be served in the same proceedings, in our view, there is no need to take two separate proceedings resulting in multiplicity of litigation. It is also clear from objectives contained in para 4 of the Statement of Objects and Reasons, Sections 47 to 49 and Scheme of the Act that every final arbitral awards is to be enforced as if it were a decree of the Court.... In my opinion, for enforcement of foreign award there is no need to take separate proceedings, one for deciding the enforceability of the award to make rule of the Court or decree and the other to take up execution thereafter. In one proceeding, as already stated above, the Court enforcing a foreign award can deal with the entire matter."
One interesting feature of enforcement of a foreign award is that there is no statutory appeal provided against any decision of the court rejecting objections to the award. An appeal shall lie only if the court holds the award to be non-enforceable. Hence a decision upholding the award cannot be appealed against. However a discretionary appeal would lie to the Supreme Court of India under Article 136 of the Constitution of India. Such appeals are entertained only if the Court feels that they raise a question of fundamental importance or public interest.
G: Enforcement Statistics:
Lastly, one may examine the enforcement statistics (including grounds for challenge) in relation to foreign awards. Here one would notice that the courts have distinctly leaned in favour of enforcement and save for a lone case, foreign awards have invariably been upheld and enforced. The statistics (on the basis of reported cases) are as follows:
High Court and Supreme Court (1996 to September 2007)
Total No. of Challenges
(Petition to be made under section 48 not under section 34)
Requirement of separate execution proceedings
No grounds or reasons in award
Petition filed for winding up on the basis of foreign award
No Arbitration Agreement
1996 Act does not apply
The Institution wise break up of challenges is as follows:
Total No. of Challenges
IGPA (International General Produce Association)
Korean Commercial Arbitration Board
Viewed in its totality, India does not come across as a jurisdiction which carries an anti - arbitration bias or more significantly which carries an anti - foreigner bias. The figures show that notwithstanding the interventionist instincts and expanded judicial review, Indian courts do restrain themselves in interfering with arbitral awards.
Judged on this touchstone, India qualifies as an arbitration friendly jurisdiction.
1 The Arbitration Act, 1940 (10 of 1940) (1940 Act)
2 The Arbitration (Protocol & Convention) Act, 1937 (6 of 1937) (1937 Act)
3 Geneva Convention on the Execution of Foreign Arbitral Awards 1927. India became a signatory to this on 23rd October 1937 (one amongst six Asian nations to become a signatory).
4 Foreign Awards (Recognition &Enforcement) Act, 1961 (45 of 1961)
5 International Convention on Recognition & Enforcement of Foreign Awards done at New York on 10th June 1958. India became a signatory on 13th July, 1960.
6 Section 30 (a) of the 1940 Act.
7 (1994) 6 SCC 485
8 (2003) 7 SCC 396
9 The Arbitration & Conciliation Act, 1996 (26 of 1996)
10 Section 85 of the Act.
11 United Nations Commission on International Trade Law Model Law on International Commercial Arbitration, General Assembly Resolution 40/72, adopted on 21st June 1985 (Model Law).
12 Arbitration Rules of the United Nations Commission on International Trade Law 1976: General Assembly Resolution 31/98, adopted on 15th December 1976 (UNCITRAL Rules).
13 Section 13 (2)
14 Section 13 (4)
15 Article 13 (3) of the Model Law.
16 Section 16 (5) of the Act.
17 (2003) 5 SCC 705 (Saw Pipes)
18 (1994) Suppl (1) SCC 644
19 However see Supra, E' - A recent decision of the Supreme Court in the case of Venture Global Engineering v. Satyam Computer Services has held that the wider interpretation of "public policy" would apply to foreign awards as well.
20 See for instance, Chapter titled Judicial Supervision and Intervention by Mr. Fali S. Nariman; Asia Leading Arbitrators' Guide to International Arbitration, JurisNet 2007 at page 353.
21 (2006) 11 SCC 181 at 208
22 at 211
23 2004 (3) Arb LR 568
24 at 573 and 574
25 Daelim Industrial Co. v. Numaligarh Refinery Ltd (Arbitration Appeal No. 1 of 2002 dated 24th Aug 2006
26 Statement of Objects and Reasons to the Act para 4 (vii)
27 Section 36 of the Act
28 Section 2 (1) (e) of the Act
29 Section 34 (3)
30 (2005) 4 SCC 239
31 Section 17 and 49 of the Arbitration Act.
32 2003 (8) SCC 565
33 Venture Global Engineering v. Satyam Computer Services dated 10th January 2008, in C.A. No. 309 of 2008.
34 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 1965 (Washington convention)
35 (1994) 4 SCC 541
36 Section 44 (b) of the Act.
37 (1998) 2 SCC 281
38 Judgment dated 10th January 2008, in C.A. No. 309 of 2008
39 Section 48 (2) of the Act
41 (1994) Suppl (1) SCC 644
42 decision dated 10th January 2008 in Civil Appeal No. 209 of 2008 (Venture Global)
43 A somewhat strange move considering that the shares were in an Indian company and various Indian regulatory steps and authorities would be involved for transfer of shares. The Respondents move was perhaps influenced by the fact that the governing law under the Agreement was the law of the State of Michigan and the appellant was situated in the USA. The Respondent thus attempted to bypass the natural forum (India) hoping to enforce the award through the contempt of court mechanism of the U.S. Courts. This did not go well with the Indian Supreme Court.
44 2002 4 SCC 105
45 Section 47 (1) of the Act
46 (1995) Supp (2) SCC 280
47 2007 (1) RAJ 339 (Bom) and AIR 1986 Gujarat 62
48 (2001) 6 SCC 356
One of the most commonly asked questions concerning arbitration is:
"What can I do with the arbitration award once it is rendered?" The short answer is that absent very unusual circumstance's (such as fraudor corruption in the procurement of the award), an arbitration award can easily be confirmed as a court judgment, which can then be used to
collect payment from the losing party through judicial enforcement. This article has discussed the basic steps needed to enforce an arbitration award.
Enforcement procedures for arbitration awards are primarily governed byAn arbitration award can easily be confirmed as a court judgment, which can then be used to collect payment from the losing party
Once the successful party (the "judgment creditor") obtains a judgment on the arbitration award, that party may wait for the unsuccessful party (the "judgment debtor) to voluntarily comply or may seek an order of execution from the court. An order of execution (often in a standard, prescribed format) directs a court appointed person to seize the property of the
debtor or to make a civil arrest.
Arbitration started out of common sense in the community still exists as a Law for the community to be enforceable extra judicially. This Law can be well used if the Arbitrator becomes so knowledgeable in many other Acts of the State to compare and connect this Law with the other one, as I personally believe.
This Article explains how Arbitration Law emerged as the Common Sense Law. It speaks of the Procedure involved , It speaks on how arbitration can be conducted on the constructive consent of the Parties when there is no agreement or there be any need to change / modify the Agreement. This Article explains how Enforcement can be done finally.
DR. STEPHEN LOUIE
An International Arbitrator, has conducted many Arbitration as a Sole Arbitrator for HDFC ,ICICI, CITI, HSBC, SBI, BARCLAYS banks and many other NBFIs in India . Also written a number of books on Law & Arbitration. The specialty of the Author is well qualified in Psychology and Management barring Law to function as a learned and seasoned Arbitrator. Also Expertised in conducting cases in the courts using / interpreting all unused / forgotten sections strongly to bring the case to a success .