Government’s proposal to amend the Arbitration and Conciliation Act comes out at a time when Arbitration laws across the globe (Australia, UK, Eastern Europe) are experiencing an overhaul. This comes at a time when our law has seen decisions like the Bhatia’s and the Saw pipes which were retrogressive, and made the law look very different from what it reflected back in 1996. The amendments have been proposed to the Act in almost all the crucial areas right from its application to interventions by the courts. In this post I would like to point out the need of understanding two concepts in the realm of ADR in India, in the way they are so understood internationally.
The proposed amendment to Section 2(2) of the Act inserts the word ‘only’ into the Section. It reads “This part shall apply only where the place of Arbitration is in India”. The amendment is aimed to cease the discussion as to the applicability of Part I to arbitrations which happen outside India, but it does leave a scope of mischief by using the word place instead of seat. Most of the legal regimes in the context of Arbitration use the words place and seat interchangeably. Even the UNCITRAL Model Law seems to use the word place. The difference between venue and seat of arbitration is well recognized in International Commercial Arbitration and it is the seat to which a substantive legal significance is attached, the venue being a mere locale where proceedings may be carried on account of convenience. The Act also lacks provisions which may help to determine as to where an award is made (in cases where it is signed by arbitrators in respective countries, telephone, emails etc.) so it does not endeavor to address the difference between venue and seat. This difference may not be well understood in the scheme of the Act and may cause, or restrict the application of the Act as lex loci arbitri in certain cases.
Also, the concept of mediation and conciliation is understood interchangeably across legal regimes. Part III of the Act deals with conciliation but does not refer to mediation. After the amendment to S.89 of the CPC, courts can refer certain disputes to mediation where it appears that there exists an element of a settlement which may be acceptable to the parties. Extending the provisions of Part III of the Act to mediation referred to by a court would address different issues which are encountered in court annexed mediations.
Hi
ReplyDeleteIs the difference between seat and venue uniformly recognzed. Is there really a difference. Can u illucidate through case laws or any other authority on this point.
hello,
ReplyDeletewell Internationally seat is a place to which a substantive legal significance is attached, as it is decisive as to the law governing the arbitration (lex loci arbitri). Arbitration agreement too (unless a contrary intention is manifest)would be governed by the law of seat of arbitration. It would be the courts of the seat of arbitration which would be of assistance in course of arbitral proceedings (injuctions, appointment of arbitrators). Parties in a sense get to choose the legal regime that would govern the arbitration between them by the choice of the seat of arbitration. In contrast, the venue of arbitration is merely a place where a proceeding may be held on account of convenience or otherwise. Eg. two parties may choose London as a seat of Arbitration and subject their arbitration to English law, whereas the proceedings may be held in New Delhi on account of convenience of the parties and arbitrators. This difference is well accepted under ICC and LCIA rules also the UNCITRAL model law supports that position.
I have checked the ICC , LCIA and the UNCITRAL rules, but its only the LIA which accepts this position, and not the other two as mentioned by you in the last line of your comment.
ReplyDeletePlease let me know if you differ.
Please do not go by the nomenclature used in those documents. What is often used as “place” is called as “seat” in practice. What does not exist in ICC Rules and UNCITRAL is the nomenclature of “seat” but all the three make provision for an ad-hoc location of arbitration in Article 14(2) ICC Rules, Article 16 LCIA Rules, Article 20(2) of the UNCITRAL Model Law & Article 18 (2) of the UNCITRAL Rules. And the recognition of an ad hoc location where the tribunal might conduct arbitration addresses the contingency that has been discussed in the post eg. Article 31(3) of the Model Law deems that the award be made at the “place” or arbitration irrespective of where it is actually made (on account of sitting of the tribunal). Article 25(3) of the ICC Rules too addresses that contingency.
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