While handling of business transactions with one another, we often come across a variation of viewpoints which result in strained relations and problems between parties. In such a situation, the legal system comes into play. The various modes of resolutions offered by the Indian legal framework are recourse to Courts or alternate dispute mechanisms including, conciliation, mediation and arbitration.
Arbitration the safe mode
Arbitration is a mode of settlement of disputes by mutual agreement, where the rights and obligations are determined by the self-appointed authority, in respect of their matter, and are binding on them. The authority involved in the dispute resolution amongst the parties may be a single Arbitrator or a panel of Arbitrators constituting a Tribunal thereby.
Arbitration may be carried out at domestic (which concern the parties residing in the same country) as well as international levels (where the parties reside in different countries).
In India, provisions regarding arbitration are monitored under the Arbitration and Conciliation Act, 2015 (hereinafter referred to as “the Act”).
The parties dealing in cross-border transactions are aware about the complexities involved in the nature of their commercial handlings. They, usually try to ensure that the differences amidst themselves are dealt with by the persons possessing adequate knowledge and requisite expertise in the arena. The parties take resort to international institutions, prescribing rules and procedures regulating to arbitration. Some such institutions are International Chamber of Commerce, International Centre for Alternative Dispute Resolution, etc.
In India, foreign awards, issued by the process of international arbitration are governed under Part II of the Act. As per Section 49 of the Act, where the Court is satisfied that the foreign award is enforceable according to the Act, the award shall be deemed to be a decree of that Court.
In the news
Recently, disputes between Reliance Power Netherlands BV - a wholly owned subsidiary of Reliance Power (hereinafter referred to as “Reliance”) and Prestige Capital Holdings (a Seychelles-based company) & Kokos Jiang arose in respect to Reliance’s coal mines in Indonesia. The parties referred the matter to the Arbitration Tribunal constituted under Singapore International Arbitration Centre (hereinafter referred to as “SIAC”) rules in Singapore. SIAC, on August 21, 2018, passed an award of of USD 56 Million (INR 390 Crore approx.) in favour of Reliance.
The advent of globalization has lead to the increase in international trade. While more and more corporates conduct business overseas, they prefer to incorporate in their contractual terms the option of referring the dispute to international arbitration to unlock their stalemates.