INTRODUCTION
“Alternative Dispute Resolution (ADR) is making its mark in India as an alternate way to resolve disputes. ADR refers to resolving disputes in different ways without going to trial in the courts. ADR is a method that saves time, is cost-efficient and reduces pressure on the already backlogged courts. The most popular ADR methods are Arbitration, Conciliation, and Mediation. This paper focuses on the arbitration method of ADR and delves into how arbitration has evolved in India from the British period to the modern post-independence scenario.”[1]. It also looks at the current situation of arbitration.
Arbitration in India is not a modern concept; it has existed since immemorial times. We can see the existence of arbitration during the Vedic Period. “The role of Mediator was also found during the Vedic period in the name of Madyamasi. The history of the Arbitration has been traced back to the Vedic period.”[2] “In ancient India, there were different grades of arbitration, such as Puga, Sreni, Kula and Panchayat. Puga is a board of persons from different sects and tribes residing in the same locality. Sreni is an assembly of tradesmen and artisans belonging to different tribes. Kula is a group of persons found by family ties.”[3] Thus, we can see that arbitration is not a new concept; it is present in our rich heritage and culture. However, Arbitration got its legal structure or a legal effect on the system only during the British Period.
ARBITRATION DURING THE BRITISH INDIA
“Between 1772 and 1827, the East India Company enacted various new rules and regulations for three major primary presidencies, Bombay, Calcutta”[4], and Madras, which was a beginning that provided a legislative structure to the law of Arbitration in India. These laws needed to be clarified but significantly changed the panchayat system that prevailed in India. “The Bengal Regulation of 1772 was the first rule regarding arbitration, which recommended that parties present their case for arbitration, and the arbitrator’s award would be final,”[5] like the court’s decree. Thus, the regulation of 1772 became the first rule of arbitration, starting a chain of rules and regulations that led to where we are today.
The next set of regulations came in the years 1780 and 81, which made the arbitrator’s award more binding. These regulations did not allow anyone to appeal the decision of the arbitrator until and unless the arbitrator was proven guilty of corruption. The Regulation of 1793 enabled the courts “to refer cases, with the consent of both parties to arbitration and they further empowered the courts to refer cases whose value was less than 200 to arbitration and also disputes relating to debts, disputed bargains, partnership account and breach of contract.”[6]
The British Legislative Council was established in the year 1834 and enacted the Code of Civil Procedures in 1859. “Arbitration in suits was given under sections 312 to 325 of the code and sections 326 and 327[7] Talked about arbitration without court intervention. However, at that time, this code was not in force in the presidency towns like Calcutta, Bombay, and Madras.”[8] The above provisions were enacted only after 1862 in the above three presidencies. The Code of Civil Procedures was later repealed, and it was reenacted in different years but still contained provisions regarding arbitration. The legislative council enacted the Indian Arbitration Act of 1899[9]. This became the first-ever specific legislation that regulated arbitration in India. “This act broadened the scope of arbitration, as it defined the term ‘submission’ to mean a written agreement to submit present and future differences to arbitration whether an arbitrator is named therein or not.’ Before this, the term ‘submission’ was only limited to ‘subsisting disputes.’”[10]
In 1923, the Geneva Protocol on Arbitration Clauses was signed, and in 1927, the Geneva Convention on the Execution of Foreign Arbitral Awards was signed. The Arbitration (Protocol and Convention) Act of 1937[11] was enacted to give effect to these international conventions. “Only those matters that were considered ‘commercial’ under the law in force in India came under the purview of this act.”[12] However, “the judicial rebuke and the hue and cry made by of the commercial community led to the enactment of a consolidating and amending legislation, i.e., The Arbitration Act of 1940.”[13]
The Arbitration Act of 1940 was the last arbitration act enacted pre-independence regarding arbitration. This Act continued to govern arbitration for almost 56 years until the next arbitration Act was enacted in 1996.
ARBITRATION AFTER THE INDEPENDENCE
Even after independence, arbitration continued to be governed by The Arbitration Act of 1940. After Independence, the trade industry started picking up its pace, and thus, the reliance on the arbitration act kept on increasing. This showed us the shortcomings of the Act of 1940. “The provisions regarding the power and duties of the arbitrators were inadequate. The act didn’t say anything about the shortcomings in private contracts between individuals. The rules and procedures for filing awards were different for every High Court. There was a lack of provisions that prohibited an arbitrator or umpire from resigning at any time in the course of the proceedings, which resulted in parties incurring heavy losses in situations where the arbitrators or umpire acted mala fide.”[14] Even after its shortcomings, no amendments were made to improve it.
The first legislation on arbitration of independent India came in the year 1996 and has been amended various times till the present, the latest being in 2021. Various international and national events led to the enactment of The Arbitration and Conciliation Act 1996[15]. This act still regulates arbitration in India.
In 1985, India became a signatory of The United Nations Commission on International Trade Law (UNCITRAL) Model Law. “The General Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law, given the desirability of uniformity of the law of arbitral procedures and the specific needs of International Commercial Arbitration Practice. The UNCITRAL also adopted in 1980 a set of Conciliation Rules. An important feature of the said UNCITRAL Model Law and Rules is that they have harmonized concepts on arbitration and conciliation of different legal systems of the World and thus contain provisions which are designed for universal application.”[16]
“The Arrears Committee, known as Justice Malimath Committee, constituted by the government of India on the recommendation of the chief justice conference. The committee submitted its report in 1990. The committee made recommendations for having alternative modes of dispute resolution such as Arbitration, Conciliation and Mediation. They proposed enacting the new Act.”[17]
The second significant event that led to the passing of the 1996 Act was the opening up of the Indian economy in 1992. The Act of 1940 lacked rules for solving international disagreements, which had to be changed as now our economy had become global, and thus, regulating matters regarding international arbitration had become necessary.
“All these situations led to enacting the Arbitration and Conciliation Act of 1960. The act has undergone various amendments to meet the current requirements, with the latest in 2021.”[18]
CONCLUSION
Arbitration is a concept that has prevailed in India since ancient times. We have seen how it existed even in the Vedic period and continued developing. It was a significant way of resolving disputes in the ancient days. Then, the Britishers made a considerable attempt to give it a legal system. It took almost 250 years to make arbitration reach the point it is currently at in the legal system. However, the state of development of arbitration still needs to be completed. It is still developing with each new case law and legislation or amendment. It will keep evolving as law always remains in flux and never settles. “The law of arbitration in India is still growing, and this branch of law has yet to touch the summit. The Indian government has taken various significant steps to make the law for arbitration more efficient. Slowly but steadily, India is establishing itself as an arbitration-friendly country.”[19]
Author(s) Name: Suryansh Sadhwani (Ram Manohar Lohia National Law University, Lucknow)
[1] Madhusudan Saharay, Arbitration and Conciliation with Alternate Dispute Resolution (3rd edn, Universal Law Publishing Co., 2015) 2
[2] S. R. Manjula, ‘The History and Development of Law of Arbitration in India’ (2021) 4 Int’l JL Mgmt & Human 5831
[3] Madhusudan Saharay, Arbitration and Conciliation with Alternate Dispute Resolution (3rd edn, Universal Law Publishing Co., 2015) 2
[4] ibid
[5] Adithya Narayanan, ‘Evolution of Arbitration in India’ (2022) 4 Indian JL & Legal Rsch 1
[6] ibid
[7] Code of Civil Procedures 1859, s 312 – 327
[8] ibid
[9] Indian Arbitration Act 1899
[10] ibid
[11] The Arbitration (Protocol and Convention) Act 1937
[12] ibid
[13] ibid
[14] Adithya Narayanan, ‘Evolution of Arbitration in India’ (2022) 4 Indian JL & Legal Rsch 1
[15] Arbitration and Conciliation Act 1996
[16] Madhusudan Saharay, Arbitration and Conciliation with Alternate Dispute Resolution (3rd edn, Universal Law Publishing Co., 2015) 2
[17] S. R. Manjula, ‘The History and Development of Law of Arbitration in India’ (2021) 4 Int’l JL Mgmt & Human 5831
[18] ibid
[19] Rohan Madhok, ‘A Study on the Evolution and Development of Law of Arbitration in India’ (2021) 4 Int’l JL Mgmt & Human 2027
