ABSTRACT

When society came in to existence and people interacted with each other, than the origin of
their rights gave, birth to the conflict among them. To solve out the dispute among them there
was a need of mechanism .In this regard they have started to solve their disputes through
third neutral party, whose decision was agreed by both the parties Later on it was known by
the name of puncha . The phenomena of development has engulfed within its fold varied
aspect of humanity .The wider diffusion of information in commercial era and in the era of
globalization and industrialization, when the world is coping with many problems.
Commercial transactions are increasing gradually as well as disputes are also increasing .A
large number of cases are pending. So this situation gives over burden to the judiciary and
delayed justice to parties .To overcome from this situation, we need a costless, convenient
and speedy mechanism apart from judiciary.

In that situation International Commercial Arbitration has contributed progressed in

commercial field. The mélange of concept like liberalization and consumerism has brought in
a schematic change in the outlook of trade and its related concepts booming multilateral,
bilateral and transnational treaties and policies has made an inevitable impact across the
frontiers. Thus International Commercial Arbitration is consider as an excellent means of
setting commercial disputes. Once again lawyers and adjudicating tribunals to primarily
international law to determine the proper municipal law applicable in particular relationships
.Due to problems and inadequecies associated with this private international law approach,
there have been increased international efforts in last few decades towards unifying and
harmonizing the rules applicable to some transnational relationship, particularly the rules
related to International commerce. Obviously, International Commercial Arbitration is a
sprout of Arbitration popularly known as, The Alternative Dispute Resolution Procedure
which gained momentum due to efficiency,speedy and cost effective settlement of dispute
over the obscure lengthy and cumbersome court procedure. International Commercial
Arbitration has conquered the field of dispute resolution in International business and has
become a business itself now. Because in present scenario it has lost the real objects for
which it was made.

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 The diversity of commercial activities has resulted in the growth of various system of
arbitration. which do not make use of court litigation.

Today in Commercial contractual relations developed into relationship rather than

being limited to the mere exchange of goods. Corporate activity largely involves
implementation of strategies, the required performances of which include many subtle
variable that do not always lead themselves at least not naturally to evaluation solely by
traditional legal concepts like in construction industries most of the technical disputes are
resolved by the technical specialist, engineers and architects. But further due to the
international character of the contracts different kind of dispute had been arise. Now the
parties by contracting on carefully selected termed. Trade terms and legal rules have shifted
the emphasis away from the goods towards the document. Useful trade terms have been
developed largely by trade custom.

At International level, international conventions have been developed in an attempt to

harmonies the rules relating to international trade law.

The means available for the settlement of international disputes are commonly
divided in to two groups. Those considered so for, namely negotiation, mediation and
conciliation are termed diplomatic means because the parties retain control of the dispute and
may accept or reject a proposed settlement as they see fit. On the other hand, arbitration and
judicial settlement are employed when what is wanted is a binding decision, usually on these
bases of international law, these are known as legal means of settlement.

Judicial settlement involves the reference o f a dispute to the world. Court or some
other standing tribunal such as European Court of Human rights. Arbitration in contrast
requires the parties themselves to set up the machinery to handle a dispute, or series of
disputes between them. The importance of arbitration as a means of resolution of business
disputes has been on an increase with the advent of globalization and liberalization of trade
during last decade. The general assembly of the United Nation has, therefore, recommended
that all countries give due consideration to model law on International Commercial
Arbitration and Conciliation rules adopted by united nation commission on trade rules and
laws i.e.{UNCITRAL}.

The model law and rules make significant contribution to the establishment of a
unified arbitral legal frame work and efficient settlement of disputes in International
commercial relation, before this, trade world was facing so many problems regarding the

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resolution of their disputes but after the emergence of International commercial arbitration,
up to some extend problems are being resolved worldwide by giving the model law. But this
model law provides only a base to the countries to establish their arbitration rules according
to their own choice. On the same pattern India made an Act regarding arbitration i.e.
Arbitration and conciliation Act 1996, it is a consolidated and amended Act . In this research
I have made an attempt to find out the status and applicability of International Commercial
Arbitration in commercial obligation: with special reference to India. Through this doctrinal
research, I have examined the problems or hurdles in International Commercial Arbitration.
This thesis is divided in to Six chapters.

Chapter one is related with Introduction and genesis .It contains Meaning and
definition of Arbitration, International and Commercial in general as well as statutory. In this
chapter it is explained that what is International Commercial Arbitration and in statute of
1996, Section 2{f}, Arbitration and Conciliation Act defines that Arbitration is International
where at least one of the parties is:

1. an individual who is a national of, or habitually resident in, any country other than
India; or
2. a body corporate which is incorporated in any country other than in India :or
3. a company or an association or a body of individuals whose central management and
control is exercised in any country other than India: or
4. least
one of the party should not be of India.

Then the characteristic of International Commercial Arbitration is described as;

international Commercial Arbitration is a mechanism for the settlement of disputes.

It is Consensual
It is a private Procedure
It leads to a final and binding determination of the rights and obligation of the
Parties.

There are certain reasons behind the emergence of Commercial Arbitration such as
that Commercial men prefer to use arbitration rather than the Courts to resolve their business
disputes because Courts litigation have various negative factors such as length, Cost of legal
proceeding Complete Procedure etc.

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 Arbitration has various positive factors such as flexibility, expediousness, time
saving, cost etc. these are due reasons due to that Commercial Arbitration got success at
domestic as well as International level and parties choose arbitration rather than choosing
litigation in a courts than I have discussed genesis of International Commercial Arbitration,
as the origin of Arbitration is not clear, but the references of settlement of early International
and private disputes would be found in Sumerian inscription that dates back to 4000BC and
use can found the examples of Arbitration by history that there was a system of Arbitration
established by king such as Kulani, Shreni, Puga etc and in this process a British Corporate
House i.e. East India Company who had settled in India for commercial activity took over
virtual control of a territory. They were however, surprised to find that the people were
settling their commercial as well as property disputes mainly through arbitration instead of
conventional courts. Therefore, to streamline the process, they issued a number of regulations
starting from 1772 to 1802 and later on the Code of Civil Procedure, 1859, for the 1st time,
recognized reference to arbitration without intervention of the courts.

Chapter two includes municipal law relating to commercial agreements,

enforcemen
importance of agreement in international commercial arbitration. As agreement is an essence
of arbitration, arbitrators powers do not come from the state but from an agreement of parties
involved in the dispute me theories which involves the parties
other than the signatories and what are the grounds of refusal and the effect of ground of
public policy on international Commercial Arbitration because if a contract is made contrary
to public policy, its performance cannot be enforced either at law or in equity. So every
arbitration agreement must be in accordance w
covers a wide range of topic. In a case of Egerton v/s Brownlow (1853) 4HLC1 stated that

Chapter three is related with the convention and protocols regarding International
Commercial Arbitration such as at the beginning of 20th centaury in 1899 and 1907 Hague
conventions were for the Pacific settlement of International disputes than in 1923 Geneva
convention and protocol than New York convention of 1958,in 1975 United states and most
south American nations negotiated the Inter American Convention on International
Commercial Arbitration also known as Panama convention.
commercial arbitration treaty was held in 1961 known as European convention on

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International Commercial Arbitration after that{ICSID}International center for settlement of

initiating of [IBRD] International Bank for reconstruction and development. Later on during
1980and 1990 for encouraging capital investment in developing market [BITS] Bilateral
Investment Treaties came in to existence. Now over the past several decades large number of
developed states have enacted the legislations dealing with International commercial
Arbitration on the basis of {UNCITRAL]United Nation Commission On Trade Rules And
Laws 1985,for example India made legislation in1996 known as Arbitration and conciliation
Act.

Chapter four deals with foreign Arbitral Award which is a instrument recording the
tribunals decision provisionally or finally and determines the claims of the parties, this
chapter also deals with the types of awards, making of award, contents of an award and the
wide range of remedies are available in Arbitration and the procedure of filing of foreign
Arbitral Award in India.

Chapter five deals with International Commercial Arbitration Quo Indian municipal
law. In this chapter I have explained the International Law and the national law regarding
commercial arbitration and public international law and general principles of law. Such as
Lex mercatoria, UNIDROIT, trade usages, equitable principles, than explained the applicable
law and the Indian perspective as arbitration and conciliation act 1996 then status through
judicial interpretation and in last of this chapter. I have been made comparison between
UNCITRAL model arbitration laws with national law.

Chapter six deals with conclusion and suggestions, in conclusion of my research I

have found that international commercial arbitration is a remarkable remedy in commercial
obligation but due to some hurdles in its applicability it cannot be an ultimate remedy. There
are certain challenges or problems before it like.

Joinder of Parties
Choice of Law
Enforceability of award
Applicability of Law
Problem of Jurisdiction
Costs
Lack of awareness in India

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The harmonization and unification of law as to make the national legal regimes in
Consonance with each other as Prime objective of UNCITRAL has provided the model
Arbitration law. This is with a view to providing for a credible, harmonized, system of rules
governing the resolution of Commercial dispute. But still there is need of some provision for
unifying and harmonized the disputes, researcher suggest some suggestions, few are left for
insertion.

1.There should not be the single number of arbitrator it should always be minimum three,in

International Commercial Arbitration section 10 of Arbitration and conciliation Act 1996

deals with the number of arbitrators. The Parties are free to determine the number of
arbitrators. Provided that such number is not an even number. Failing the determination of
number of arbitrators the arbitral tribunal shall Consist of a sole arbitrator.This Section need
amendment, there should always be an arbitration consist with minimum number of three or
more but it should not be in a single number because a case should always be decided by the
majority decision.

2.The seat of arbitration must be fixed Like Consumer forum, Labour Court etc. are fixed,
in same manner the seat of arbitrations must be certain or fixed.

3.Reference should be mandatory; number of litigations are pending in the courts. So in

each and every cases court should refer the party to the arbitrators. It will solve out the cases
easily and without using the complex procedure of the courts, it will provide speedy and
cheaper justice to the public. As section 89 and Order 10 Rule I. A,B,C of C.P.C. (Civil
Procedure Code) Provides the Provision : That where it appears to the Court that there is a
element of settlement, on which parties are agreed than Court will ascertained the provisions
of settlement and will send to the Parties for

(a) Arbitration
(b) Conciliation
(c) Judicial resolution like Lok Adalat.
(d) Mediation

4. Subject matter of arbitration should not be limited to the Commercial matter. Now the
question arises that what mattes may be referred to arbitration (a) Civil matters in
disputes all matters which may from the subject matter of civil litigation affecting
rights, or in other words all disputes between Parties relating to private rights or
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 obligations. Which civil courts may take cognizance with in the meaning of section 9
of civil Procedure Code of 1908, may be referred to arbitration. In Isribai U/S
Pevrbia, AIR 1930 Sind 195; 121 court observed: it has been held by a bench of this
court that there is no bar to refer to arbitration under the provision of schedule II of
the civil Procedure code a suit which relates to personal rights between the Parties, e.
or question of marriage which is cognizable by a civil Court.

(b) Pure question of law or a question of law and fact may be referred to decision of
an arbitrator.1

So it is suggested that each and every civil cases should refer to arbitration
5. There should be the provision of fixed salary for the arbitrator because arbitrator is an
human being and a human nature is, to get more money, he may be corrupt and biased.
But if the salary is fixed than chances to be corrupt and bias is less. Specially on
international level

It is found that high rate of Arbitration fee demanded by the arbitrators in ad hoc
arbitration and indulging in granting free adjournments without valid grounds to
ount or percentage as a salary of
the arbitrator.

6.India should become Hub of Arbitration India should be known as hub of arbitration
and it is not possible without establishing the Institutional Arbitration Center in India
because in International Commercial Arbitration it is necessary that at least one party
should be of foreign but not even an Indian nor a foreigner want to arbitrate his dispute
in India because there is a lack of Institutional arbitration centers , for example
establishment of {LCIA} London Council of International Arbitration is a good
beginning in this regard.

7.Mandatory clauses in each business transaction- Practically it is found that parties are
always refuses to include Arbitration clause in a commercial contracts and agreements so
in practice, one clause should be mandatory in each business transaction, that if in future
any dispute will arise between them, firstly it should be resolved through arbitration. If
arbitration fails to resolve such matter than we can move to the other remedies available.

8.Qualification must be Compulsory A person, who is appointed as arbitrator must be

qualified or should have the knowledge of law because arbitration is not judicial but it is
quasi judicial mechanism.

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9.Arbitral award should be enforcing with binding force over each and every party.

10.Awareness: - Majority of Indian population is not aware of arbitration for resolution of

disputes. Therefore, awareness programs must be undertaken by Indian Council of
Arbitration and all Chamber of Commerce in the States. The ICA, FICCI, Assocham and

need for such programs so that arbitration gets a boost and the pendency of cases in the
courts may come down to some extent.

11. Fixed Time Limit-In International Commercial Arbitration to resolve the dispute there
should be a fix time limit.

12. Support by Bar Council of India- There should be a whole hearted support by Bar
Council Of India by advocating Arbitration as a first step for resolution of disputes and to
advise their members to guide the disputing parties to consider arbitration as an
alternative for settlement of their disputes.