In this blog post, Amit Halder, a Fourth-Year BA LLB student from Calcutta University and pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the enforcement of foreign arbitral awards for an MNC situated in India.

ADR originated in USA  in order to find alternatives to the normal legal system, which was adversarial, costly, unpredictable, rigid, over-professionalised, harmful to relationships, and limited to some specific kinds of matters and issues. The American origins of the concept are not unexpected because Americans have always been good when it comes to their legal system and government. The picture of their litigation system has certain features such as: trials of civil actions by a jury, lawyers’ contingency fees, lack of application with the rule “the loser pays the costs”.

In 1898, Congress followed initiatives that began a few years earlier in Massachusetts and New York and authorized mediation for collective bargaining disputes. In the ensuing years, special mediation agencies, such as the Mediation Board and Conciliation for railway labour, (1913) (renamed the National Mediation Board in 1943), and the Federal Mediation and Conciliation Service (1947) were established and funded to carry out the mediation of collective bargaining disputes. Additional state labour mediation services followed.

The 1913 New lands Act and later legislation reflected the belief that stable industrial peace could be achieved through the settlement of collective bargaining disputes; settlement in turn could be advanced through conciliation, mediation, and voluntary arbitration.  In developing countries most people opt for litigation to solve their disputes that is why there are so many burdens on the judiciary and large number of pending cases which ultimately leads to complex situation for both the parties and courts.

“Justice delayed is justice denied” is a phrase which is popularly believed. The reason for backlog of cases, which is also known as “docket explosion”, cannot be blamed simply on the inefficiency of courts and the judiciary. To solve the problem of one lakh case by one court  sounds quite impossible. The reason being its non-implementation of ADR processes and opting litigation. ADR makes speedy process through which people in other countries are solving their disputes and accepting amicable settlement. Many countries like India, Bangladesh, and Sri Lanka have started accepting this process of resolving matters outside the courts to decrease hardship to both the parties. ADR today falls into two broad categories: court-annexed options and community-based dispute resolution mechanisms.

Arbitration is one of the effective way to solve disputes between parties with the help of a third neutral party. In this respect the arbitration and  Conciliation Act of 1996 has been made to regulate the matters relating to arbitration. The parties in dispute gets into an arbitration agreement beforehand which may arise in near future. It is more likely a contract between the parties which is in written form and signed by both the parties. When a matter is taken to the arbitral tribunal the parties are free to choose the number of arbitrators to solve the matter. The number of arbitrator must be in odd number and failing to which the tribunal will decide the sole arbitrator. The decisions make by the members of the tribunal will have binding effect on the parties. Such decisions made are known as arbitral award.

The section 44 of the Arbitration and Conciliation Act of 1996 specifies that foreign award means an arbitral award on difference between persons arising out of legal relationships, whether contractual or not, are considered as commercial under the law in force in India. The parties entering into such agreement are treated as bound for all and any purposes relating to the issues of disputes. The foreign awards are enforced and are deemed to be a decree of the court, the court may pass an interim order if it finds it necessary to protect the interest of the party applying for enforcement and execution of a foreign award. No party can refuse the enforcement of such award only if the party approaches with valid proof to the court that the subject matter of the agreement is invalid. In order to make a foreign award enforceable certain conditions are to be fulfilled:

• The agreement must be in accordance with the law.
• The award must be capable of settling the dispute concerning the subject matter.
• That the decision is made with differentiation and that it is being made in accordance with submission.
• The composition or the procedure is in accordance with the agreement.
• The procedure is in accordance with the law of the country where it take place.
• The award is entertained and is not suspended by any of the prevailing law of that country.
• The enforcement of the award is in accordance with the public policy of India.
• The award has been annulled in the country in which it was made.

The orders for enforcement will be treated as binding between the concerned parties.

The arbitration process still has its have pros and cons. The process of arbitration have more cons which are incurable. This leads to a lot of malpractice by the dispute parties. The process is informal and may sometime lead to violation of laws. At times, it leads to waste of money and time because if the case is not solved by an arbitrator then the parties have to approach a court of jurisdiction for justice. The arbitration system is a gratifying system, which already enunciated its roots within the numerous legal systems of the world, such that there’s a private international body governing the procedures of resolving disputes. It may be useful to conclude that the arbitration system is developing a lifetime of its own, one shall not stand surprised once s/he sees the quantity of unresolved disputes being narrowed to zero within the close to future.

PREFERENCE

• THE ARBITRATION AND CONCILIATION Act, 1996 by O.P VERMA.