COMPARATIVE ANALYSIS OF ARBITRATION
LAWS: ENHANCING INDIA’S LEGAL FRAMEWORK
THROUGH GLOBAL PRACTICES

ABSTRACT
This study presents a comparative analysis of domestic and international arbitration law with
specific focus on Indian legal framework. Since some national laws are viewed as antiquated, having narrowly focused subject topics, or mistakenly equating arbitration with courtroom litigation, national laws have been observed with great skepticism for regulating both domestic and international arbitration collectively. This study examines key similarities and dissimilarities
within these procedural rules varying across the world. Certain regulations strive to guarantee
inclusivity with contemporary advancements, they mostly focus on domestic arbitration and fall
short of encompassing cross-border agreements. As a result, in cases of international arbitration
involving parties with diverse national laws, cultures, and languages there is considerable freedom
to independently determine the venue, norms of conduct, and methods of enforcement, facilitating
the easy reaching of a consensus. Through a comprehensive review of statutes, judicial precedents
and scholarly articles, this paper analyses the procedural nuances with intervening encumbrances
and imparts practical strategies from successful international arbitration models to make objective
amendments to the Indian arbitration framework.

INTRODUCTION
The worldwide integration of trade through cross-border transactions exacts a necessity for an
expeditiously effective mechanism to cater the commercial disputes, and prevent stagnating
hindrance to their reputation, relations as well as the economy. Arbitration as a resolution had been
around as a successful alternative for a long time. Though it has ancient roots, in Indian territory
it has mapped its existence from the end of the nineteenth century, when it was given legal
recognition under the Arbitration Act, 1899 followed by subsequent amended acts. The dart of
globalization in 1991 compelled the legislature to enact a determined law called The Arbitration
and Conciliation Act,1996 with an objective to attract higher foreign investment while building an
ease of business environment. The dictionary meaning of ‘arbitration’ is the process of solving an argument between people by assisting in reaching an acceptable outcome, which legally means parties arbitrating to settle a dispute. The 1996 Act, has been crafted on the lines of UNCITRAL3 model law which provides guidance to States enacting an arbitration law, while parties to an ad hoc arbitration4 have been
provided a separate set of laws5. Some countries like Hungary and Canada when adopting the Model Law omitted the criterion of internationality whereas other countries like Tunisia akin to France added it as a default criterion. While other countries provided a more relaxed approach such as Hong Kong offered an option of submitting their dispute to domestic or international arbitration law. The Indian act, also deals with both domestic arbitration and international
arbitration under Part I and II, respectively. This essay traces a twofold comparison between Indian
laws on national and international arbitration, along with contrasting it with international laws.
Before diving into the comparative debate, it is imperative to objectively analyze the distinguished
procedural norms for domestic and international arbitration. National laws have faced great
skepticism for regulating international arbitration and domestic arbitration collectively due to
being outdated, limited subject matters, or fallacious to equate arbitration with courtroom
litigation.6 Even modish laws with comprehensiveness limit themselves primarily with domestic arbitration failing to include cross-border agreements. In case of international arbitration where
parties are from different culture, language and national laws thereby, ample liberty is conferred
to them to autonomously decide the seat, conduct and enforcement rules, to reach a consensus with
ease. Hence, international arbitration provides a platform with relaxed norms transcending
domestic limitations.
Given the drastic wearisome history of Indian courts choked with backlog and pendency, a finer,
faster and fairer alternative was the need for national growth. In the trade sector, disputes are bound
to arise between parties though the adjudication process may vary as per regionality, i.e. national
and international stage. There is a significant distinction among reliefs, rules, enforcement of
awards and other procedures concerning domestic and international arbitration. With reference to
Indian laws, even in the presence of a specific act, and subsequent amendments, there are
shortcomings that demarcate a line between adoption of Indian domestic and international
arbitration. Efforts shall be made towards codified restriction of judicial intervention and
eradication of pendency from arbitration to make international trade and arbitration preferable over
domestic hassle.

COMPARING INDIAN LAWS ON DOMESTIC AND INTERNATIONAL ARBITRATION
Analogous to cause of action under civil jurisdiction, Indian arbitration contains disputes7
categorized as ‘have arisen’ or ‘may arise’. However, many countries refuse to consider potential
disputes, but by means of higher flexible features of international arbitration rules, the concerned
party can opt for benefitting norms of any other national or institutional set of rules surpassing
domestic restrictions. Parties engaged at international level are conferred with the autonomy to
decide their own procedural rules as per suitability of any law to their subject matter. Where
domestic arbitration is bound to be decided by territorial substantive law8 international cases are
liberated to be decided on a different substantive than their lex arbitri and lex fori. In case of
absence of prescribed law, the tribunal is mandated to apply appropriate laws as per the terms of
contract and trade usages.
A rule concerning a fixed time limit of 12 months to conclude the proceedings after completion of
pleadings was specifically mandated for domestic arbitration however the court exempted
international parties to be confined by any strict boundations, and were to merely oblige by the
same.9 Evidently, the courts as well as arbitration tribunals endeavour to secure the liberal sanctity
of international parties to opt for convenient procedural rules from all over the world. The lex
arbitri may differ from lex fori as well as the laws concerning the original contract owing to the
fact that a different nation can be opted for recognition and enforcement of awards. Similarly, the
appointment of arbitrators varies in both types of arbitration. In domestic arbitration, arbitrators
are retired judges, advocates or any other person while the institutional arbitration ICA lists 1200
arbitrators from which the parties are made to choose. International arbitration, however, provides
for an open debating field which is preferable since such relaxation in terms of choosing arbitrators
who are likely experts in the field encompassing the dispute. These relaxations intend to provide
a more neutral, favorable set of rules with higher expertise arbitrators.
Indian courts have been notoriously known for long delays, pendency of cases and exceeding their
judicial powers, thus the legislature expressly bars judicial intervention except in some specific
circumstances.10 Involvement of the court, as explicitly specified in part I of the Act, is evidential
through several rights such as the right to seek judicial assistance in appointment of arbitrators11  right to interim relief12, assistance of court in taking evidence13 and setting aside an arbitral
award14. Although Part I deals with domestic arbitration, however, these reliefs are exempted for
application in international cases as well.
Under Interim relief by court (S.9), the act does not strictly define these residuary powers led to
arbitrary use in wake of curative objectives, thus prompting court’s interference. Applicability of
this section in international context has been a debatable contention. Initially, S.2(2) was held to
be an inclusive definition, excluding applicability on any arbitration not held in India15. It shall be
incongruous as to the procedural conduct, where neither arbitral nor judicial proceedings were to
be in India but the grant of a protective recourse16. This issue, however, was clarified stating that
the grant of relief under S.9 shall be extended to international commercial arbitration having a
foreign seat governed by a foreign law, but subject to two conditions17, (a) parties shall not agree
contrarily, and/or (b) nation of enforcement of arbitral award, shall be a signatory to New York
Convention or Geneva Convention and be recognized by India18. The rationale behind conferring
a supervisory jurisdiction to India likely can be to reflect liberal Indian arbitration rules to
increment foreign attraction towards India as a preferable place for arbitral reliefs and remedies.
It is learned that arbitration is a one-way road, where if the parties agreed to resort to it cannot step
back. In its furtherance, the arbitral award granted by the arbitrators is final and binding, which
generally has no remedy unlike a civil ruling. Although domestic arbitration provides limited
grounds of appeal, there are no such remedial features in international arbitration since it engages
a variety of laws to reach a decision, which contributes to the efficient factor, and its appeal shall
imply attacking it.
The supervisory jurisdiction of the court extends to its role in setting aside the award, when parties
seek to challenge the award although under limited grounds only.

19 Award in conflict with public policy of India20, is one of the prominent grounds under which maximum awards are challenged, thus impacting the efficacy of arbitration. This doctrine of patent illegality21 builds a room for higher judicial intervention. Though attempts have been made to limit this vast concept by means of amendments22 and judicial precedents, yet its dynamic nature allows judicial interpretation
based on national law in relation to the impugned award. However, the court explicits its non-
application to international awards.23
The consequence of this domestic issue results in an outcome affecting internationally as well.
Several domestic companies who lose arbitral awards to foreign companies challenge the same in
Indian courts benefiting from the indefiniteness of the aforesaid ground, causing a disinclination
among foreign investors to contract with Indian companies. This practice24 along with arbitrary
and excessive intervention by judiciary ultimately affects foreign investment and economic growth
as well as tarnishes the image of Indian arbitration as an advantageous choice for international
commercial arbitration.
OBJECTIVES OF INDIAN ADR IN CONTRAST WITH OTHER MAJOR ADR SYSTEMS
IN THE WORLD
The Indian arbitration act has a stark difference from the United Kingdom arbitration act as well
with the main values of the Indian arbitration which focus on to consolidate and amend the
domestic, international and commercial arbitration which also includes the enforcement of foreign
awards.25 The Indian approach is more on remedy and improvement than expedience and
availability. This marks the very difference between the approach carried by both the nations, and
its ultimate impact on India failing to be a more preferable choice, since locus standi for opting
arbitration is expediency along with efficacious remedial provisions on the sidelines.
The Arbitration Act of the United Kingdom was declared as “probably the most radical piece of
legislation”26 because it focuses on making the act valuable and differs from adversarial court
proceedings contrasting the judicial way of resolution. These objectives that proved radical in the
20th century are seen as valuable and indispensable in today’s legal field. This legislation being
logical and clear focuses on ‘party autonomy’ and ‘judicial non-intervention’ and manages to
safeguard necessary public interest and is considered whole and advanced due to it being modelled
after UNCITRAL Model Law. Since these are the central themes of the statues, they make sure to
uphold these objectives to make ADR a fair doctrinal foundation for dispute resolution.
SAM and CO write in their blog appraising the 2019 Amendment Act that the 2019 Amendment is
intended to fix the loopholes created by the Arbitration and Conciliation (Amendment) Act 2015
and is a step towards making India an arbitration hub.27 The five most preferred seats for arbitration
are London, Singapore, Hong Kong, Paris and Geneva. ‘Greater support for arbitration by local
courts and judiciary’, ‘increased neutrality and impartiality of the local legal system’, and ‘better
track record in enforcing agreements to arbitrate and arbitral awards’ are the key adaptations that
would make other arbitral seats more attractive.
Indian international arbitration system has a rule of discontinuing the proceedings when the parties
fail to take any steps for a period exceeding six consecutive months or such other period as the
parties may agree with the approval of the Tribunal where as for the LCIA the deadline for response
is 28 days and for the SIAC it is 14 days.28 This is more likely to respect the time of the parties,
making the proceeding swift and not cumbersome. The Indian legislative system through the 2019
amendment attempted to analyze the foreign regulations and incorporate the Indian arbitration
system with the objectives, methods and statutes of LCIA, SCIA, etc. in order to modernize
approach to arbitration and emphasize on the acceptability of the method worldwide which in the
long run will affect Indian trade system and economy since a more dynamic, relaxed and expedited
session would likely attract the attention of foreign investors and business owners.
Companies investing in India are more likely to do so if we invest in following a more universally
acknowledged form of arbitration which emphasizes us to follow the main objective of arbitration
that is limitation on judicial intervention and expediency. The parties are more likely to get lost
and delayed in the procedure owing to higher number of case pendency. According to the National
Judicial data grid, the pendency stats is 10914318 for civil cases and 33331861 for criminal cases.29
The average pendency in any case brought to any of the high courts can go up-to three years and
one month, and can go up-to a staggering 6 years in case of any subordinate court. These drawbacks
will discourage foreign trade and investment in Indian businesses and companies. This should be
the focal point of improvement in order to encourage better global relations and trade between countries and organizations.

CONCLUSION
The comparison of national procedural rules reveals ongoing efforts to enhance its definiteness
with precision, yet there is scope of arbitrariness under non-specific grounds to meet its ultimate
objective. It is critical to recognize the court’s authority to intervene as a supervisor is crucial for
justice and to reconcile conflicting perspectives, however arbitration as an expedient alternative
shall be maintained by ensuring a strict limit to the judicial intervention. The global approach
would have an impact on India’s economy and trading system over time, and thus, a livelier, laid-
back, and quick resolution under arbitration would fairly draw in foreign investors and company
owners. While India strives to work on an inclusive, liberal and defined legislative framework,
there is potential for advancement of laws in compliance with international arbitration standards.
Emulating amendments from other inspirational arbitration models can enhance India’s ambition
as a preferred arbitration destination and contribute in achieving its objective to attract foreign
investment through a secured legal framework

Author: Kavya Aggarwal1
Co-Author: Simran Kar2  (2nd year student, University of Delhi.) Silver Medalist 🥈 Blog Competition In India 2024 by The Law Literates 

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