CENTRAL UNIVERSITY OF SOUTH BIHAR

SCHOOL OF LAW AND GOVERNANCE

TOPIC :- Mediation Proceeding International Commercial Arbitration

SUBMITTED BY :- SUBMITTED TO :-

YASHASVI RANJAN Dr. Deo Narayan Sir

CUSB2013125139 ASSISTANT PROFFESOR

SEMESTER 8th Dept. - School of Law and

Governance

SECTION 'A'

BA.LLB 2020-25
 ACKNOLWLEDMENT

I the student of the Central University of South Bihar, Dept. of Law, LL.B(H) 5th semester,
do hereby acknowledge our gratefulness towards all the persons associated in the
completion of this project.

First of all, we would like to pay our thanks to our respected teacher Assistant Professor
Dr. Deo Narayan sir who has chosen me for this topic and also provided us help with
knowledge, inspiration and information. It would not be possible for us to complete the
same without her sincere and affectionate help.
Secondly, we again would like to thank our Srivastava Sir (dean of the dept.) who has
provided us appropriate environment with library facility to gather the informtation which
needed for the project.

Lastly, I pay our thanks to our parents, friends who contributed to some extent to complete
the same
 .Mediation Proceeding International Commercial Arbitration

Introduction

At present world, international investment, trade and commerce are rapidly developed everywhere. In
order to make international trade, there are no possible way to avoid the controversy in the field of
trade and commerce. To settle the trade disputes, businesspersons submit their dispute before the
arbitrator or arbitrators than that of court room. It is popular way to settle the disputes arising among
them. It is needed to use this type of proceeding, when they commence their business with another
person or persons, that is to say, they assert the arbitration clause in their agreement.

Arbitration proceedings are non-judicial means for submitting a controversy to a third person or persons
for a binding decision. Arbitration may result either from agreement of the parties or legislation which
requires that process particularly in the field of commercial transactions.

International arbitration has enjoyed growing popularity with business and other users over the past 50
years. There are a number of reasons that parties elect to have their international disputes resolved
through arbitration. These include the desire to avoid the uncertainties and local practices associated
with litigation in national courts, the desire to obtain a quicker, more efficient decision, the relative
enforceability of arbitration agreements and arbitral awards, the commercial expertise of arbitrators,
the parties' freedom to select and design the arbitral procedures, confidentiality and other benefits.

There are many advantages to use the arbitration means for the settlement of commercial disputes. So,
businessmen choose the way to provide the arbitration in their contracts. This is useful and popular in
commerce. There are two kinds of international commercial arbitration, Institutional and Ad Hoc. The
parties to the agreement also free to chose the types of arbitration and place, language, arbitrators, etc.

Meaning and Nature of ICA

International commercial arbitration is an alternative method of resolving
disputes between private parties arising out of commercial transactions conducted across
national boundaries that allows the parties to avoid litigation in national courts. It helps
to resolve disputes among the international parties arising out of the internal commercial
agreements. Section 2(1)(f) of the Arbitration and Conciliation Act 1 defines international
commercial arbitration as disputes arising out of the legal relationship where one of the
parties is a citizen, resident, or habitually residing out of India. International commercial
arbitration is used by the traders of different countries as a way of settling their business
conflicts.

International Commercial Arbitration is a process of resolving disputes between parties in

different countries through an arbitrator or a panel of arbitrators. It involves submitting the
dispute to arbitration instead of pursuing litigation in a court of law. The arbitrator or panel of
arbitrators will make a binding decision on the dispute.

International commercial arbitration can be used to resolve various disputes, including those
related to contracts, intellectual property, investments, and construction. It is often used in cases
where the parties involved in the dispute have a commercial relationship and wish to maintain a
working relationship after the dispute is resolved.

Evolution of Mediation in India

The use of mediation, as an Alternative Dispute Redrassal (ADR) mechanism dates back to
centuries before thr British came to India. Back then informal panchayats were used to resolve
disputes between the parties where the respected elderlies of the villages or the Mahajans were
appointed as mediators. Till date, Panchas or Pancha Parmeshwars, as neutral third parties, are
used to settle disputes informally between the erring individuals or groups, by some tribes in
India. However, with the onset of the British colonialism, mediation began to be recognized as a
formal and legalized ADR mechanism.

Mediation gained popularity as an ADR mechanism with the re-introduction of Lok Adalats in
the Indian Judicial system. Enacted in1987, the Legal Services Authority Act gave a statutory
status to the Lok Adalts in India for the first time. Under this act, the decision of the Lok Adalats
have been awarded the same status as that of a civil court.

The terms 'mediation' and 'conciliation', whose usages were considered to be synonymous
previously, received significant distinctions in their usages when the Arbitration and Conciliation
Act was enacted in 1996. Not only did the act lay down a clear definition for conciliation but
also consolidated the laws relating to domestic arbitration in India. The mediator, unlike the
conciliator, does not take an active part in the mediation process and thus, the terms cannot be
used as a substitute for each other.

1
section 2(1)(f) of Arbitration and Conciliation Act
https://www.indiacode.nic.in/bitstream/123456789/1978/3/a1996-26.pdf
The developement of mediation as an ADR mechanism can also be attributed to section 89 of the
Civil Procedure Code(CPC), 1908 which was inserted by the CPC (Amendment) Act, 1999 with
prospective effect from 1/7/2002. This particular development was due to the efforts of Hon'ble
Mr. Justice A M Ahmadi. Ahmadi, the then Chief Justice of India, had invited the Institute for
the Study and Development of Legal System (ISDLS) to India for a national legal exchange
programme between India and the USA. The ISDLS examined the problems of institutional
backlogs in the Indian judicial system and suggested the ADR mechanisms and legislalive and
structural reforms of the laws relating to these mechanisms following which, new reforms were
introduced in 2002 in the form of amendment of section 89 of the CPC. However, the
amendment was challenged by a group of lawyers following which the Malimath Committee and
the 129th Law Commission were constituted. In the light of the reports submitted by the
committees, the Hon'ble Supreme Court in the case of Salem Advocates Bar Association vs.
Union of India. made it mandatory for the courts to refer cases to the alternative forums, if they
were so pleased. This case is a landmark one in the development of mediation in India.

Since then, the judges of the Supreme Court have contributed significantly towards the
development of mediation as an ADR mechanism. Under Hon'ble Mr. Justice R C Lahoti, a
Mediation and Conciliation Committee was established and in a Project on Mediation was also
initiated in Delhi in the year 2005. In the same year, A Permanent Mediation Centre was
inaugurated at the Tis Hazari court complex and judicial mediation was started at the
Karkardooma court complex. Two mediation centres were also inaugurated, one at the
Karkardooma court complex in Delhi and another at the Patiala court in 2015.cant

Thus, mediation as an Alterantive Dispute Redrassal mechanism, has received significant

impetus over the years through the enactment of various legislations and by the efforts of various
judges of the Supreme Court.

Conduct of Arbitral Proceeding2

Article 17 - Notice of request for arbitration.
Article 18 - Representation and confidentiality.
Article 19 - Duty to expedite and preliminary meetings.
Article 20 - Place of Arbitration.
Article 21 - Language
Article 22 - Statements of Claim and defense.

2
International Commercial Arbitration Rules of Procedure, link - https://vaniac.org/arbitration/rules-of-
procedure/international-commercial-arbitration-rules-of-procedure/ acessed 20th April 2024.
Article 23 - Further written statements
Article 24 - Time Limits
Article 25 - Evidence
Article 26 - Hearings
Article 27 - witnesses
Article 28 - Default of party
Article 29 - Experts

Steps In International Commercial Arbitration

1. Notice of Arbitration : To commence the proceedings of arbitration one party has to
provide the notice of arbitration under Section 21 of the act, to the other party requesting to
refer the dispute to arbitrations begin. In this notice, there are two essentials : one is the
communication of an intention to refer the dispute to arbitration and the other is that the other
party to whom the notice has been served should take a step towards it.

2. Referral to Arbitration : The judicial authority can refer the subject matters of the case
to the arbitration if that agreement contains the clause of arbitration to settle the disputes
among the party if there are any. According to Section 8 of the Arbitration and
Conciliation Act, the judicial authority can refer the parties to arbitration if there is an
arbitration agreement.
3. Appointment of Arbitrators: The parties are at their discretion to appoint the arbitrator to
decide their case. If the parties are not able to appoint the arbitrators mutually due to
some issues then the court allows the parties to appoint each arbitrator and then these two
arbitrators will appoint the third party who will be neutral. If the parties fail to appoint,
they can request the Supreme Court and High Court to appoint the arbitrators. The High
Court or the Supreme Court can appoint any person or institution to appoint arbitrators.
In the cases of International Commercial Arbitration, the Supreme Court can appoint the
arbitrators for the parties and in the cases of domestic arbitrations, the High Court
appoints the arbitrators.The challenge to the appointment of arbitrators: The appointment
of arbitrators can be challenged only on these two criteria:
 When there are circumstances that raise reasonable suspicions about his or her
independence or impartiality.
 The arbitrator does not possess the qualities the parties required.
 4. Interim relief : Section 9 of the Act provides for interim measures of protection
not just before the commencement of arbitral proceedings and during the arbitral
proceedings but also after the arbitral award has been delivered 3. Section 17 provides
for interim measures ordered by the arbitral tribunal if it is found at the time on
proceedings that the disputed matter is dangerous then it can ask the party to provide
security4.

5. Challenge to Jurisdiction : According to Section 16 of the Act, an arbitral tribunal has

the authority to rule on its jurisdiction if there exists a valid arbitration agreement. If any
party has an objection regarding the invention of the tribunal then that party can file a plea
before the submission of defence5.

The Supreme Court in the case of S.B.P. and Co. v. Patel Engineering Ltd. and Anr 6 held
that if without judicial intervention the arbitral tribunal was constituted by the parties the arbitral
tribunal can determine all jurisdictional issues by exercising its powers of competence
under Section 16 of the Act.

6. Settlement during Arbitration : The parties are allowed to settle the dispute
mutually even if the arbitration proceedings are going on. If the parties arrive at the
settlement amicably, the arbitration proceeding will be terminated. Also if both the
parties give their consent to record the settlement then this would be known as a consent
award that would work as an arbitral award.

7. Arbitral Awards : The decision rendered by the arbitrators in an arbitration

proceeding is known as an arbitral award. The decisions are taken by taking the view of
both the parties and by the majority. An arbitral award should be in a written form
signed by all the members of tribunals. In the arbitral award, the date and place where it
is made should be mentioned. Each party is entitled to acquire a copy of the arbitral
award.

 The Challenge to an arbitral award : Section 34 of the Arbitration and

Conciliation act provides an application for setting aside an arbitral award. The
3
section 9 of Arbitration and conciliation act 1996, link -
https://www.indiacode.nic.in/bitstream/123456789/1978/3/a1996-26.pdf acessed 20th april 2024.
4
section 17 of Arbitration and conciliation act 1996 link -
https://www.indiacode.nic.in/bitstream/123456789/1978/3/a1996-26.pdf
5
section 16 of Arbitration and conciliation act 1996, link -
https://www.indiacode.nic.in/bitstream/123456789/1978/3/a1996-26.pdf
6
appeal (civil) 4168 of 2003 26/10/2005
 party can challenge arbitral award within three months from the date of receipt of
an rbitral award additional 30 days can be given if any goo d reason is given. A
party can challenge arbitral award on the following grounds by furnishing the
proof;

1. A party was under some incapacity.

2. Under the law, the arbitration agreement is not valid.
3. The party was not provided sufficient time to appoint arbitrators and was not
proper notice and was unable to present the case properly.
4. The arbitral award does not contain the solution of the dispute but it deals with
matters beyond the dispute.
5. The composition of arbitral trials and the arbitral proceedings were not according
to the agreement of the parties.
6. If the court finds out that the arbitral award conflicts with public policy or the
subject matter of the disputes are not capable enough to settle by arbitration.

Foreign Arbitral award : In the Arbitration and Conciliation act, foreign awards are
covered under part of the act that contains New York Convention Awardsand Geneva
Convention Awards. The New York Convention defines foreign arbitral award
differences between the parties arising out of he legal relationships. The definition of
the foreign award is given in Section 44 of the Arbitration and Conciliation Act. The
Geneva Convention defines the foreign awards in section 53 as differences between the
parties arising out of commercial matters 7.

7
section 44 of conciliation and arbitration act 1996 link -
https://www.indiacode.nic.in/bitstream/123456789/1978/3/a1996-26.pdf
 Landmark Judgments on International Commercial
Arbitration

1. Enercon (India) ltd. & ors vs. Enercon GmbH &Anr 8

It was held that the "venue" of an arbitration is the geographical location chosen based
on the convenience of the parties and is different from the seat of arbitration, which
decides the appropriate jurisdiction.

2. Shri Lal Mahal Ltd vs. Progetto Grano Spa 9

A seminal judgment was passed that established a distinction between the scope of
objections of the enforceability of a foreign award under Section 48 of 1996 act, and
challenges to set aside an award under section 34 of the 1996 act. The scope of the
expression public policy was substantially curtailed by the supreme court.

3. Bharat Aluminium Co. vs Kaiser Aluminium ltd. 10

The Constitution Bench has held that part I and part II are mut ually exclusive and the
parliament while enacting the statute had unequivocally adopted the principle
territoriality over subject matter of arbitration. In other words, the constitution Bench
has inter-alia, held that the centre of gravity for international commercial arbitrations
having a foreign seat was the juridical seat of arbitration and not where the contract had
to be performed.

8
(2014) 5 SCC 1
9
Civil appeal no. 5085 of 2013 arising from SLP(c) No. 13721 of 2012)
10
(Civil appeal no. 3678 of 2007)
 Conclusion

In a nutshell, we can tell that the ADR is rapidly developing at national and international
level, offering simpler methods of resolving disputes. The increasing trend of ADR
services can easily be inferred from the growth of “arbitration clause” in majority of
contracts. The effective utilization of ADR systems would go a long was in plugging the
loophole which is obstructing the path of justice. This concept should be deeply
ingrained in the minds of the litigants, lawyers and the judges so as to ensure that ADR
methods in dispensation of justice are frequently adopted. The methods of alternative
dispute resolutions are less time-consuming and are very cost-effective and thus,
awareness needs to be created amongst the people about the utility of ADR and
simultaneous steps need to be taken for developing personnel who would be able to use
ADR methods effectively with integrity. By using these methods people can resolve
their disputes informally without going through formal court trials.