ASSIGNMENT ON

“INTERNATIONAL COMMERCIAL
ARBITRATION”

ITM UNIVERSITY, RAIPUR (C.G.)

Session: 2018-19

Submitted by:
Anshul Mishra
Enrolment No: D0130
B.B.A. LL.B. VIII Semester

SCHOOL OF LAW
 ITM - UNIVERSITY RAIPUR (C.G)

INTERNATIONAL COMMERCIAL ARBITRATION

Introduction

International Commercial Arbitration is a means of resolving disputes

arising under international commercial contracts. It is used as an
alternative to litigation and is controlled primarily by the terms
previously agreed upon by the contracting parties, rather than by
national legislation or procedural rules.

According to Section 2 (1) (f) of the Arbitration and Conciliation Act,

1996,
“International commercial arbitration” means an arbitration relating to
disputes arising out of legal relationships, whether contractual or not,
considered as commercial under the law in force in India and where at
least one of the parties is-

(i) An individual who is a national of, or habitually resident in, any

country other than India; or
(ii)A body corporate which is incorporated in any country other than
India; or
(iii) A company or an association or a body of individuals whose
central management and control is exercised in any country other
than India; or
(iv) The Government of a foreign country;

Growth of International Commercial Arbitration

International commercial arbitration as we know it today began in

Continental Europe in the 1920s. There were difficulties in the then
current situation. The first difficulty was that in many countries an
agreement to arbitrate could be validly entered into only in regard to an
existing dispute by a so-called compromise. In those countries an
agreement to arbitrate all disputes that might arise in the future in
connection with a contract was not valid.

1923 Geneva Protocol on Arbitration Clauses

The difficulties in regard to the agreement to arbitrate were effectively
eliminated for non-domestic arbitration agreements by the 1923 Geneva
Protocol on Arbitration Clauses adopted by the League of Nations.

1927 Geneva Convention for the Execution of Foreign Arbitral Awards

The second widely recognized difficulty was in regard to the recognition
and enforcement of foreign arbitral awards. Therefore, four years after
the adoption of the Protocol on Arbitral Clauses, in 1927 the League of
Nations adopted the Geneva Convention for the Execution of Foreign
Arbitral Awards. Contracting States agreed to enforce arbitral awards
made in conformity with the 1923 Protocol in the territory of another
contracting State.

1958 Convention on the Recognition and Enforcement of Foreign Arbitral

Awards
It turned out that there was a significant problem with the 1927
Convention in the requirement that the party seeking enforcement of the
award had to prove that the conditions for recognition had been fulfilled.
The only way to satisfy the requirement was to have the award
recognized in the country where the arbitration had taken place. At the
ensuing diplomatic conference it was found to be advantageous to
combine the provisions of the 1923 Protocol and the 1927 Convention
into a single convention. The result was the 1958 Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (New York
Convention).

1961 European Convention on International Commercial Arbitration

In 1961, three years after the adoption of the New York Convention, the
European Convention on International Commercial Arbitration was
adopted. The Convention is noteworthy as being the first international
instrument to have the words “international commercial arbitration” in
its title.

1976 UNCITRAL Arbitration Rules

The strength of the desire for internationally acceptable rules of
procedure was demonstrated by the rapid and overwhelming reception of
the UNCITRAL Arbitration Rules after they were adopted by the United
Nations Commission on International Trade Law in April 1976. The
Rules, which were specifically, designed for use in ad hoc common
law/civil law arbitrations.

International Commercial Arbitration & Arbitration and

Conciliation Act, 1996

It is a main feature of the Act, 1996 that it makes a crystal clear

distinction between Domestic Arbitrations (Part I) and International
Arbitration (Part II). Overlooking such as distinction has been a
shortcoming of most legal systems in the world, leading to a uniform
treatment of both types of arbitration.

Bhatia International v. Bulk Trading,1

It was held that all the provisions of Part I of the Indian Arbitration &
Conciliation Act, 1996 were to be applicable to all arbitration whether
domestic or foreign-seated unless the parties by agreement express or
implied, had excluded wholly or partly, the provisions of Part I of the Act.
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services,2
The Supreme Court addressed the subject matter of the appeal and held
that Part I of the Act will not apply in case of foreign seated arbitration.
The decision was given prospective effect and therefore applied to only
arbitration agreements executed on or after September 6, 2012.

Arbitration and Conciliation (Amendment) Act, 2015

1
(2002) 4 SCC 105
2
(2012) 9 SCC 649
The amendment has settled the provisions that Part I of the Act will not
apply in case of foreign seated arbitration except Sections 9, 27 and 37
unless a contrary intention appears in the arbitration agreement. The
Amendment Act is applicable prospectively with effect from October 23,
2015.

Conclusion

In recent years there has been a significant increase in international

businesses operating out of India. This has led to an increase in
international arbitrations having its seat of arbitration in India. Both
arbitration and litigation perform the same function i.e. effective delivery
of justice but the fact is that arbitration has few characteristics which
makes it a more viable option as compared to its counterpart. Thus, the
degree of protection that it guarantees is far reaching.