INTERNATIONAL COMMERCIAL

ARBITRATION

UNIT I: INTRODUCTION
Dr. Madhuri Irene, B.Sc, LLM, PHD
Associate Professor, ILS, IUD
madhuriirene@ifheindia.org, mobile: 9247133349
Meaning and Nature of word commercial
The word "commercial" has its roots in the Latin word commercium, which combines - com- (together) and
merx (merchandise). Over time, it has evolved to encompass a broad range of meanings, primarily connected
to trade, business, and commerce.
MEANING:
General Meaning: Related to or engaged in commerce or trade. Refers to activities intended for profit or
economic exchange.
Legal Meaning: In a legal context, "commercial" pertains to transactions, relationships, or activities that are
conducted for business purposes. Often associated with laws governing trade, contracts, partnerships, and
other business operations.
Economic Meaning: Denotes activities or entities that are profit-oriented or market-driven.
Cultural Meaning: Sometimes used to describe things created for mass appeal or profit, such as "commercial
music" or "commercial art.“
NATURE:
Profit-Oriented: The primary characteristic of commercial activities is the pursuit of financial gain. They
involve the buying and selling of goods, services, or intellectual property.
Transactional: It inherently implies an exchange, whether it be goods, services, or value in monetary terms.
Dynamic and Evolving: Commercial activities adapt to changes in markets, laws, and consumer behavior,
reflecting their flexible and evolving nature.
Regulated: Governments and international bodies often regulate commercial activities to ensure fairness,
transparency, and accountability in trade and business.
"commercial" - broadly encapsulates activities or concepts associated with trade, economic exchange, and
business operations, characterized by a focus on profitability and regulated interactions.
Commercial Activity
• Commercial activity refers to actions, operations, or transactions that are undertaken
with the primary aim of generating profit or conducting business.
• These activities are central to commerce, trade, and the functioning of economies,
involving the exchange of goods, services, or information for monetary or other
value.
Features of Commercial Activity
• Profit-Driven: The main purpose of commercial activity is to generate revenue or
profit. It contrasts with charitable or non-commercial endeavors.
• Transactional: Involves the buying, selling, leasing, or exchange of goods, services,
or rights. Transactions can occur between businesses (B2B), businesses and
consumers (B2C), or among individuals.
• Economic in Nature: Directly contributes to the economic ecosystem by creating
jobs, generating income, and producing goods or services.
• Regulated by Law: Commercial activities are subject to various laws and regulations,
including contract law, tax law, consumer protection, and trade laws.
• Wide Scope: Encompasses activities in various industries such as retail,
manufacturing, banking, real estate, entertainment, and technology.
 Commercial Disputes
• Commercial disputes arise from disagreements between parties engaged in business or trade, often
involving the rights, obligations, and liabilities associated with commercial transactions. These disputes
can be complex due to the involvement of contracts, laws, and global trade norms.
Characteristics of Commercial Disputes:
• Transactional Basis: Commercial disputes stem from business transactions, such as the sale of goods,
services, or financial dealings. They are typically contractual in nature but may also involve torts,
regulatory issues, or intellectual property.
• Monetary and Non-Monetary Stakes: Monetary claims, such as compensation for breach of contract or
recovery of dues, are common. Non-monetary issues may include disputes over performance, intellectual
property rights, or regulatory compliance.
• Diverse Parties: Disputes may arise between businesses (B2B), businesses and consumers (B2C), or
businesses and governments (e.g., regulatory issues).
• Complexity: Commercial disputes often involve intricate issues like multi-jurisdictional laws, cross-border
trade, and technical terms in contracts. They may require expertise in specific industries or fields.
• Legal and Regulatory Framework: Governed by domestic and international laws, such as contract law,
trade law, arbitration statutes, and treaties. May involve regulatory bodies and compliance with trade
practices.
• Time-Sensitivity: Often urgent, as delays in resolution can impact business operations, reputation, and
financial health.
• Custom and Practice: Many commercial disputes are influenced by industry-specific practices and norms,
which may not be codified in law but are critical to the resolution.
 kinds of International commercial disputes
International commercial disputes encompass a wide range of disagreements that arise
between entities from different countries in the context of cross-border trade and business
dealings.
• Contractual Disputes: Breach of contract, Force Majeure, Interpretation of Contractual Terms-
Ambiguous clauses or conflicting interpretations which lead to disagreements about rights and
obligations.
• Intellectual Property Disputes: Trademark and Copyright Infringement, Patent Disputes, Trade
Secrets, Misappropriation, Sharing or using confidential business information without
authorization, any matter lead to legal claims.
• Regulatory and Trade Disputes: Antitrust and Competition Law Violations, Import and Export
Restrictions, Dumping and Subsidies,Financial and Investment Disputes
• Breach of Loan Agreements: Failure to repay loans or comply with loan terms and conditions,
legal action by lenders.
• Investment Disputes: Foreign Exchange Regulations Etc.,
• Other Types: Product Liability Disputes, Transportation and Logistics Disputes, Construction
and Infrastructure Disputes etc.,
 Dispute Resolution in International Trade and Commerce
• International trade thrives on trust and smooth transactions. However,
disagreements and conflicts are inevitable, making effective dispute resolution
mechanisms crucial for maintaining stability and fostering growth.
Need for Dispute Resolution:
• Complexities of International Trade: Contracts span borders, involving
different legal systems, cultural nuances, and languages. This complexity
amplifies the risk of misunderstandings and disputes.
• Protection of Rights and Interests: Businesses need enforceable
mechanisms to protect their rights and interests when trade agreements go
awry. This covers issues like breach of contract, intellectual property
infringement, and trade barriers.
• Maintaining Predictability and Confidence: Knowing that fair and efficient
dispute resolution options exist enhances trade confidence and encourages
investment.
• Avoiding Costly Litigation: Litigating trade disputes through national courts
can be lengthy, expensive, and often ineffective due to jurisdictional
hurdles. Alternative dispute resolution methods offer faster and more cost-
effective solutions.
 Different Modes of International Dispute Resolution
• Negotiation: Direct discussions between parties to settle disputes without third-party involvement.
• Pros: Cost-effective, preserves relationships, allows for flexibility and tailored solutions. Cons: Time-
consuming, may not be effective for complex disputes or power imbalances. Best for: Early-stage disputes,
situations where amicable resolution is desired.
• Mediation: A non-binding process where a neutral third party facilitates negotiations to reach a mutually acceptable
solution.
• Pros: Neutral facilitator guides communication, enhances understanding, and encourages compromise.
Cons: Requires willingness from both parties, outcome not binding, mediator lacks decision-making
power. Best for: Reaching mutually agreeable solutions, preserving relationships, resolving
communication breakdowns.
• Arbitration: A private dispute resolution process where parties agree to have their dispute decided by one or
more arbitrators.
• Pros: Binding decisions, faster than litigation, flexible procedural rules, often chosen for specific expertise. Cons:
Costly, less transparent than judicial systems, potential for arbitrator bias. Best for: Complex technical disputes,
parties seeking final and enforceable decisions, privacy concerns.
• Litigation: A formal process where parties resolve disputes in national courts.
• Pros: Established legal framework, accessible remedies, opportunity for appeals. Cons: Lengthy and
expensive, subject to national court procedures and delays, inflexible and public process. Best for: Disputes
involving public law issues, serious breaches of contract, seeking precedent-setting judgments.
• Other Mechanisms: Good Offices/Conciliation: Neutral third party facilitates communication and helps parties
negotiate directly. Expert Determination: Technical experts provide binding decisions on specific issues within a dispute.
Mini-trials: Abbreviated trials with simplified procedures, providing non- binding preliminary assessments.
International arbitration:
• International Arbitration is a fascinating and increasingly prominent mode of dispute
resolution for settling cross- border disagreements
• Meaning: International arbitration is a private, consensual, and binding method where
parties appoint neutral arbitrators to resolve their disputes outside the national court
system.
• These arbitrators, chosen for their expertise in the relevant field (e.g., trade law,
finance),
decide the case based on the parties' arguments and evidence. Their decisions are final
and binding, enforceable in most countries under the New York Convention.
• Advantages of International Arbitration:
• Neutrality: Avoids potential bias of national courts, particularly in politically sensitive
contexts.
• Flexibility: Parties can tailor the proceedings to their specific needs and choose
applicable
rules and procedures.
• Expertise: Arbitrators can be chosen based on their specific knowledge of the
relevant industry or legal issue.
• Confidentiality: Proceedings are often confidential, protecting sensitive business
information.
• Enforcement: Awards are generally enforceable under the New York Convention,
simplifying cross-border enforcement.
• Speed: Compared to national courts, arbitration tends to be faster and more efficient.
 Types of International Arbitration:
• Institutional Arbitration: Conducted under the auspices of an arbitral institution
like the International Chamber of Commerce (ICC) or the London Court of
International Arbitration (LCIA), which provide established rules and procedures.
• Ad hoc Arbitration: Parties design the procedural framework themselves, with less
reliance on institutional rules.
Key Stages:
• Agreement to Arbitrate: Parties include an arbitration clause in their contract,
specifying the chosen arbitral institution or rules.
• Dispute Arises: When a dispute arises, a party initiates the arbitration process.
• Tribunal Formation: Parties appoint or agree on arbitrators, forming the arbitral
tribunal.
• Proceedings: The tribunal conducts hearings, takes evidence, and hears arguments
from both parties.
• Award: The tribunal issues a binding award resolving the dispute, often
accompanied by reasoning.
• Enforcement: The winning party can seek enforcement of the award in a national
court of any country that is party to the New York Convention.
 Meaning and Nature - (ICA)
• International commercial arbitration (ICA) is a method for resolving disputes arising from international
commercial agreements outside of state courts.
• It involves submitting the dispute to a neutral third party (arbitrator or panel of arbitrators) chosen by the
parties, who will make a binding decision.
• International arbitration is rapidly developing into a system of governance for transnational
commerce and investment.
• International commercial arbitration date back to ancient civilizations, such as Mesopotamia and Egypt.
• These early forms of arbitration were typically ad hoc and informal, with disputes being resolved by
merchants or other respected individuals.
• Consensual: Parties voluntarily agree to resolve their dispute through arbitration instead of traditional
litigation.
• Neutral: Arbitration tribunals are typically independent and neutral to both parties, aiming for fair and
unbiased decisions.
• Flexible: Procedures can be tailored to specific needs and preferences of the parties,
allowing for more control and customization compared to court proceedings.
• Private: Unlike court proceedings, arbitration generally allows for confidentiality, protecting sensitive
information and business interests.
• Binding: Arbitral awards are final and binding upon parties, similar to court judgments.
Objectives of International Commercial Arbitration
• Provide an efficient and fair alternative to state courts for
resolving cross-border commercial disputes. This means
offering a faster, more streamlined process with specialized
expertise compared to potentially lengthy and complex court
systems.
• Maintain neutrality and impartiality in adjudicating
disputes. This is especially crucial in cross-border situations where
different legal systems and cultural interpretations may be involved.
• Uphold the sanctity of contracts and international trade
agreements. By enforcing arbitral awards, it strengthens
confidence and predictability in international commerce.
• Promote commercial peace and cooperation. By offering a swift
and amicable resolution mechanism, it encourages continued
business relationships and reduces friction between parties.
 Growth and Historical development of ICA
• The rise of International Commercial Arbitration (ICA) as a preferred method for resolving
cross-border disputes is a fascinating story, marked by steady growth and significant
historical milestones. Here's a closer look at its trajectory:
• Early Beginnings (18th - 19th Century):
• Scattered Cases: Early instances of international arbitration appeared in treaties and
specific agreements, resolving trade disputes between nations or private parties.
• Limited Recognition: National courts often viewed arbitration with scepticism, raising
concerns about enforceability and potential conflicts with domestic laws.
• Jay Treaty (1794): This landmark agreement between the United States and Great Britain
established three mixed commissions to settle outstanding claims stemming from the
American Revolution, highlighting the potential of arbitration for complex international
disputes.
• Institutionalization (Early 20th Century):
• Rise of Chambers of Commerce: International chambers of commerce like the International
Chamber of Commerce (ICC) emerged, offering arbitration services and establishing
standardized arbitral rules, promoting consistency and predictability.
• New York Convention (1958): This landmark treaty standardized the enforcement of arbitral
awards across contracting states, significantly boosting confidence in ICA and simplifying
enforcement procedures.
• Increased Use: With improved legal frameworks and institutional support, ICA became a
more attractive option for businesses seeking quicker, more flexible, and potentially less
expensive alternatives to national courts.
• Modern Expansion (Late 20th - 21st Century):
• Globalization: The surge in international trade and investment fueled the
demand for efficient dispute resolution mechanisms, further propelling ICA's
growth.
• Specialization: Arbitration institutions and individual arbitrators developed
expertise in specific fields like construction, maritime, and intellectual property,
catering to the diverse needs of businesses.
• Technological Advancements: Virtual hearings, online document sharing, and
other tools enhanced accessibility and efficiency, making ICA even more
attractive for global disputes.
• Current Landscape and Future Trends:
• Continued Growth: ICA remains the dominant method for resolving international
commercial disputes, with case numbers reaching new highs annually.
• Emerging Challenges: Issues like arbitrator selection, transparency, and cost
concerns are receiving increasing attention, prompting efforts to improve and
adapt procedures.
• Focus on Diversity: Efforts to increase diversity in the arbitral community and
address concerns about potential bias are ongoing, aiming to further strengthen
the legitimacy and fairness of ICA.
 The Jay Treaty of 1794
• The Jay Treaty of 1794, officially titled the Treaty of Amity, Commerce, and
Navigation, was a significant agreement between the United States and Great
Britain, signed on November 19, 1794, by John Jay and Lord Grenville. It aimed
to resolve outstanding issues from the American Revolution and prevent a
potential war between the two nations.
Key Provisions:
• British Withdrawal from Northwest Posts: Britain agreed to withdraw its troops
from forts in the Northwest Territory (present-day Ohio, Indiana, Michigan, Illinois,
Wisconsin, and Minnesota), which they had occupied despite the Treaty of Paris
ending the war.
• Debt Repayment: The U.S. agreed to compensate American citizens for pre-
Revolutionary debts owed to British creditors.
• Limited Trade with British West Indies: The U.S. gained limited access for its
ships to trade with certain British West Indian islands, although restrictions
remained on key exports like cotton.
• Navigation Rights: The treaty established principles for navigation rights on the
Mississippi River and the Great Lakes.
• Boundary Commissions: Joint commissions were created to resolve
outstanding border disputes between the U.S. and British North America.
Contd..
Impact and Controversy:
• Maintaining Peace: The treaty successfully prevented war between the U.S. and
Britain, which was a significant achievement at a time of heightened tensions.
• Economic Benefits: Limited access to the West Indies helped boost some
American exports, but overall trade benefits were less substantial than hoped.
• Domestic Opposition: The treaty faced strong criticism within the U.S.,
particularly from Democratic-Republicans who felt it gave too many concessions
to Britain without securing significant gains.
• Limited Impact on Indian Rights: While the treaty included provisions allowing
Native Americans to freely pass through each other's territories, it failed to
address their broader concerns about land ownership and sovereignty.
• Legacy:
• The Jay Treaty set a precedent for peaceful resolution of disputes between the
U.S. and Britain through diplomacy and negotiation.
• It contributed to the consolidation of American independence and facilitated
further economic and political development.
 Treaty of Ghent in 1814
• The Treaty of Ghent, signed in 1814, formally ended the War of 1812 between the United States
and Great, it wasn't directly related to international commercial arbitration. However, it did have
some indirect implications and led to a subsequent event that involved arbitration.
• Treaty of Ghent and its purpose:
• This treaty focused on ending the War of 1812, restoring peace, and establishing the pre-war
boundaries between the two nations.
• It didn't specifically address any commercial issues or disputes between merchants or traders.
• Indirect connection to international commercial arbitration:
• The war had disrupted trade and commerce between the two nations, so the treaty's restoration
of peace potentially paved the way for increased trade and commercial activity in the future.
• However, the treaty itself didn't establish any specific mechanisms for resolving potential
commercial disputes that might arise from this increased trade.
• Subsequent arbitration:
• One specific disagreement emerged after the treaty regarding the ownership of islands
in Passamaquoddy Bay, located on the border between Maine and New Brunswick.
• This dispute wasn't directly addressed in the Treaty of Ghent.
• In 1822, the two nations agreed to submit the issue to arbitration by the Emperor of Russia, who
ultimately awarded the islands to the United States.
• This arbitration can be seen as an example of how the Treaty of Ghent, by establishing peace and
encouraging trade, indirectly led to a situation where international commercial arbitration was
used to resolve a specific dispute.
Contd…
Background:
• The War of 1812 involved maritime trade disputes, one of the key areas where ICA is
used today.
• The treaty aimed to resolve those disputes and other issues stemming from the war.
Arbitration Element:
• The Treaty of Ghent created two joint commissions to settle specific issues:
• One commission dealt with the boundary between the US and British North America
(present-day Canada).
• The other commission addressed compensation for property seized during the war.
Significance for ICA:
• While not a formal arbitration process, the Treaty of Ghent's use of joint commissions to
resolve disputes laid the groundwork for the development of ICA.
• It highlighted the potential of neutral and independent third parties to resolve
international conflicts peacefully.
• Additionally, the treaty's emphasis on resolving trade-related issues further
demonstrates the early connection between international commerce and dispute
resolution mechanisms.
 Hague Conventions 1899 and 1907
• The Hague Conventions of 1899 and 1907, officially known as the Hague Conventions on the Laws and
Customs of War and Neutrality, were a series of international treaties aimed at regulating
warfare and promoting peaceful dispute resolution.
• While not directly related to International Commercial Arbitration (ICA), they played a significant role
in establishing the legal framework for international relations and indirectly influenced the
development of ICA.
• Key Features of the Hague Conventions:
• Codification of international law: Defined rules and regulations governing warfare, including the conduct of
hostilities, neutrality, and the treatment of prisoners of war.
• Emphasis on neutrality: Protected neutral states from being drawn into conflicts and established principles
for their rights and duties.
• Peaceful settlement of disputes: Encouraged diplomatic solutions and created the Permanent Court of
Arbitration (PCA) for resolving international disputes.
• Humanitarian concerns: Established limitations on warfare to protect civilians and property.
• Specific Provisions with Potential Indirect Links:
• Convention I: For the Pacific Settlement of International Disputes (1899): This convention
established the Permanent Court of Arbitration (PCA), which served as an early forum for resolving
international disputes, including some commercial disputes.
• Convention IV: Respecting the Laws and Customs of War on Land (1899 and 1907): This
convention included provisions on protecting private property and civilian populations during
conflicts, which indirectly contributed to the concept of protecting commercial interests through
peaceful dispute resolution mechanisms like ICA.
 Permanent Court of Arbitration
• Established in 1899: The PCA, established under the Hague Conventions, was the first permanent
institution dedicated to resolving international disputes peacefully, including some commercial
disputes.
• Early Forum for ICA: Despite not being solely focused on commercial matters, the PCA served as a
crucial platform for developing precedents and practices that later influenced the development of
modern ICA.
• Evolution of Arbitration Procedures: The PCA's experience contributed to the refinement of
arbitration rules and procedures, paving the way for more standardized and efficient systems.
• The Permanent Court of Arbitration (PCA) holds a significant position in the evolution of
international commercial arbitration (ICA). While not directly comparable to modern court systems
Contemporary Role:
• Diverse Services: Today, the PCA offers a wider range of dispute resolution services beyond
traditional arbitration, including mediation, conciliation, and fact-finding.
• Focus on Commercial Disputes: While still handling various kinds of international disputes, the PCA
has a notable specialization in commercial arbitration, serving as a preferred forum for businesses
and investors.
• Flexibility and Neutrality: The PCA offers flexible and adaptable procedures, catering to the specific
needs of parties involved in international commercial disputes. Additionally, its neutral status makes it
a trusted institution for parties from different countries seeking impartial resolutions.
Contd….

Key Features:
• Panel of Arbitrators: Unlike a fixed court, the PCA maintains a large pool of
experienced arbitrators from various legal backgrounds, allowing parties to
choose suitable neutrals for their specific dispute.
• Administrative Support: The PCA provides administrative and logistical
support throughout the arbitration process, ensuring efficiency and smooth
proceedings.
• Enforcement of Awards: PCA awards are generally enforceable under the New
York Convention, facilitating compliance with the arbitral decision.
Limitations:
• Non-binding Opinions: the PCA cannot issue binding judgments. but, its awards
are highly respected and usually complied with by the parties.
• Costs: Arbitration through the PCA can be expensive.
• Limited Enforcement Mechanisms: While enforceable under the New
York Convention, enforcing awards in certain jurisdictions can still be
International Chamber of Commerce 1919- ICC
The founding of the International Chamber of Commerce (ICC) in 1919 was
a landmark event with significant implications for both international trade
and dispute resolution, particularly International Commercial Arbitration
(ICA).
Context:
Following the devastation of World War I, there was a strong desire for
global cooperation and a stable, predictable environment for international
trade.
Existing mechanisms for resolving international commercial disputes were
fragmented and unreliable.
Founding Vision:
Established by business leaders from multiple countries, the ICC aimed to
promote open trade, ethical business practices, and peaceful resolution of
trade disputes.
They envisioned themselves as "Merchants of Peace," using their economic
influence to foster international cooperation and prevent future conflicts.
Key Contributions in 1919:
• Promoting trade liberalization: The ICC advocated for freer trade policies and removal of
barriers to international commerce.
• Establishing the International Court of Arbitration (ICC Court): This permanent arbitration
institution offered a neutral and efficient forum for resolving international commercial disputes. It
quickly gained recognition as a trusted and reliable alternative to national courts.
• Standardizing arbitration rules and procedures: The ICC developed the ICC Arbitration
Rules, which provided a clear framework for conducting arbitration proceedings. These rules
became widely adopted and helped to create predictability and certainty in international
arbitration.
• Promoting awareness and acceptance of arbitration: The ICC actively promoted the use of
arbitration among businesses and governments, contributing to its growing popularity as a
preferred method for resolving cross-border commercial disputes.

Long-Term Impact:
• The ICC's efforts in 1919 laid the foundation for the modern system of international
commercial arbitration.
• The ICC Court remains a leading arbitral institution, handling thousands of cases every year.
• The ICC's rules and procedures are widely used and serve as a benchmark for other arbitral
institutions.
• The ICC continues to play a crucial role in promoting international trade and advocating for
peaceful resolution of disputes.
 Court of International Arbitration (ICC Court)- 1923
• Need for a Permanent Institution: After WWI, the fragmented nature of international dispute resolution
methods hindered smooth international trade. The ICC Court emerged to offer a neutral and efficient
forum for resolving commercial disputes between parties from different countries.
• Early Structure and Operation: Initially, the Court functioned with an administrative council and a roster
of arbitrators. The ICC Arbitration Rules, created in 1923, provided a framework for proceedings.
• Contribution to ICA Development: The ICC Court played a pivotal role in establishing ICA as a credible
and reliable alternative to national courts. Its success and reputation fueled wider adoption of arbitration
principles and standardized procedures.
• Current Role and Significance:
• Function and Services: Today, the ICC Court administers arbitration proceedings involving diverse
commercial disputes like international sales, construction contracts, and intellectual property. It offers
various services, including case administration, arbitrator appointment, and support throughout the
process.
• Caseload and Statistics: The Court handles thousands of cases annually, reflecting its global
reach. Parties come from over 180 countries, demonstrating its diverse clientele. The increasing caseload
signifies the continued trust businesses place in ICC arbitration.
• Global Influence and Reputation: The ICC Court is widely recognized as the leading arbitral institution
globally. Its standardized rules, neutrality, and enforcement framework foster predictability and confidence
in international trade. It actively contributes to shaping the evolution of ICA best practices and standards.
 Geneva Protocol on Arbitration Clauses 1923
• The Geneva Protocol on Arbitration Clauses, signed in 1923, was a significant milestone in the development of
international commercial arbitration (ICA). While it is no longer in force, its historical and conceptual contributions
remain relevant.
Key Provisions:
• Recognition of arbitration agreements: Contracting states agreed to recognize and enforce arbitration
agreements between parties subject to their jurisdictions, even if the arbitration was to take place in a different
country.
• Neutrality: The protocol emphasized the importance of neutral arbitral tribunals, promoting confidence in the
fairness of the process.
• Facilitating procedures: Signatory states pledged to facilitate procedures required for arbitration within their
territories, upholding the legal framework for enforcement.
Impact and Significance:
• Globalization of ICA: The protocol encouraged cross-border commercial agreements with arbitration
clauses, facilitating international trade and dispute resolution.
• Standardization and predictability: Recognizing arbitration agreements fostered confidence and predictability
in international business transactions.
• Foundation for future conventions: The protocol paved the way for subsequent agreements like the New York
Convention of 1958, which further broadened and strengthened the enforceability of international arbitration
awards.
Limitations and Superseded Status:
• Limited scope: The protocol only applied to certain types of contracts and specific categories of parties.
• Enforcement challenges: Difficulties existed in enforcing some provisions across all signatory states.
• Replacement by New York Convention: The New York Convention, with its wider scope and stronger
enforcement mechanisms, superseded the Geneva Protocol in 1958.
 Geneva Convention on the Execution of Foreign Awards 1927
• Geneva Convention on the Execution of Foreign Awards, signed in 1927, played a crucial role in the
development of international commercial arbitration (ICA).
Key Provisions:
• Enforcement of Arbitral Awards: Similar to the New York Convention, the Geneva Convention aimed to
facilitate the enforcement of arbitral awards across state borders. However, its scope was narrower, only
applying to awards made under agreements covered by the Geneva Protocol on Arbitration Clauses of
1923.
• Conditions for Enforcement: Awards could be enforced if issued in a territory of a signatory state, based
on an agreement within the Protocol's scope, and not conflicting with public policy.
• Limited Recognition: Unlike the New York Convention, the Geneva Convention had fewer ratifications
and didn't achieve the same level of global recognition.
Impact and Significance:
• Paving the way for broader conventions: The Geneva Convention was a stepping stone towards more
comprehensive agreements like the New York Convention. It tested the concept of enforcing foreign
arbitral awards and exposed some limitations that were addressed in later treaties.
• Promoting ICA internationally: By facilitating enforcement, the convention encouraged cross-border
commercial agreements with arbitration clauses, contributing to the growth of ICA.
• Standardization and predictability: Recognition and enforcement provisions offered some level of
predictability for businesses relying on arbitration in international trade.
• This Convention is effectively superseded the Geneva Convention in 1958.
 New York Convention on Recognition and Enforcement of
Foreign Arbitral Awards 1958.
• The New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, signed in 1958, is a cornerstone of international commercial arbitration
(ICA).
• It is widely considered the most important treaty governing the enforcement of
foreign arbitral awards across different countries.
• Key Features:
• Wide Scope: Applies to arbitral awards made in the territory of one contracting
state and arising out of differences relating to commercial
relationships, regardless of the nationality of the parties or the place of the
arbitration.
• Mandatory Enforcement: Contracting states are obliged to recognize and
enforce arbitral awards, subject to limited exceptions like public policy concerns
or procedural irregularities.
• Neutrality: Promotes the principle of neutrality, ensuring awards are treated
equally regardless of the nationality of the parties or the place of arbitration.
• Standardized Procedures: Provides a framework for enforcement
procedures, promoting predictability and efficiency.
• Impact and Significance:
• Globalized Enforcement: The New York Convention has greatly facilitated
the enforcement of foreign arbitral awards across the globe, creating a stable and
predictable environment for international commercial transactions.
• Growth of ICA: Contributed significantly to the growth and popularity of ICA as a
preferred method for resolving cross-border commercial disputes.
• Confidence and Predictability: Promotes confidence and predictability for
businesses engaging in international trade by ensuring their arbitration agreements
will be respected and enforced.
• Standardization: Established standardized norms and procedures for
enforcement, reducing uncertainty and legal challenges.
• Current Status and Future:
• Widely Ratified: With 195 ratifications, the New York Convention enjoys near-
universal acceptance amongst countries engaging in significant international trade.
• Continued Relevance: Despite occasional challenges, the New York Convention
remains the central pillar of international arbitration enforcement.
• Future Development: Ongoing discussions address issues like potential
amendments to adapt to evolving realities of international trade and arbitration
practice.
UNCITRAL Model Law on International Commercial Arbitration
• Established by the United Nations General Assembly in 1966 the United Nations Commission on
International Trade Law (UNCITRAL) . The move was in response to the rapid rise of global trade
that took place in the 1960s. At the time, national governments recognized the need for
harmonized global standards to replace the various national and regional regulations which, until
then, largely governed international trade.
• The official function of UNCITRAL is to modernize and harmonize the rules of international
business. The organization is responsible for helping to facilitate international trade and
investment. It is headquartered in New York with annual sessions held alternatively in Vienna.
• Adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985, with
amendments in 2006, it has been adopted or used as a reference point by over 100 countries,
making it a cornerstone of the global arbitration landscape.
Key features of the Model Law: Promotes arbitration: The Model Law encourages the use of
arbitration for resolving international commercial disputes by providing a clear and predictable
legal framework. Flexibility: Parties are granted significant autonomy to shape the arbitral process,
including choosing the number and qualifications of arbitrators, the applicable law, and the
procedural rules. Neutrality: The Model Law ensures the neutrality of the arbitral process by
protecting parties from undue interference by national courts. Efficiency and Speed: The Model
Law promotes efficient and expeditious proceedings by setting time limits and providing
mechanisms for streamlining the process. Enforceability: Awards issued under the Model Law are
generally enforceable in over 160 countries under the New York Convention on the Recognition and
Enforcement of Foreign Arbitral Awards.
 Impact of UNCITRAL:
• Harmonization: The Model Law has contributed significantly to the harmonization of national
arbitration laws, bringing greater consistency and predictability to international commercial
arbitration.
• Increased use of arbitration: The Model Law has played a key role in the increased use of
arbitration as a preferred method for resolving international commercial disputes.
• Improved legal framework: The Model Law has provided a robust legal framework for arbitration,
addressing common issues and gaps in national laws.
• Significant contribution to the development of international trade law: UNCITRAL's model laws
and legal guides have been widely adopted and have helped to harmonize and unify international
trade law.
• Promoted the use of arbitration: The Model Law on International Commercial Arbitration has
been instrumental in making arbitration a more attractive option for resolving international
commercial disputes.
• Supported developing countries: UNCITRAL's technical assistance programs have helped
developing countries to improve their legal frameworks for trade and investment.
UNCITRAL Model Law on International Commercial
Arbitration (1985), with amendments as adopted in 2006
• The Model Law is designed to assist States in reforming and modernizing their laws
on arbitral procedure so as to take into account the particular features and needs of
international commercial arbitration.
• It covers all stages of the arbitral process from the arbitration agreement, the
composition and jurisdiction of the arbitral tribunal and the extent of court
intervention through to the recognition and enforcement of the arbitral award.
• It reflects worldwide consensus on key aspects of international arbitration practice
having been accepted by States of all regions and the different legal or economic
systems of the world.
• Amendments to articles 1 (2), 7, and 35 (2), a new chapter IV A to replace article 17 and
a new article 2 A were adopted by UNCITRAL on 7 July 2006.
• The revised version of article 7 is intended to modernize the form required of an
arbitration agreement to better conform with international contract practices.
• The newly introduced chapter IV A establishes a more comprehensive legal regime
dealing with interim measures in support of arbitration. As of 2006, the standard
version of the Model Law is the amended version.
• The original 1985 text is also reproduced in view of the many national enactments
based on this original version.
Development of ICA after establishment of UNCITRAL model Law
The development of International Commercial Arbitration (ICA) after the establishment of the UNCITRAL
Model Law (adopted in 1985) has been transformative, shaping global arbitration practices
1. Institutionalization of Arbitration:
Global Adoption of UNCITRAL Model Law: Many jurisdictions adopted the Model Law to modernize
their arbitration frameworks. Countries like India (Arbitration and Conciliation Act, 1996), Singapore
(International Arbitration Act), and Australia incorporated its principles to align with international standards.
Proliferation of Arbitration Institutions: Growth of prominent arbitration centers: Singapore
International Arbitration Centre (SIAC), London Court of International Arbitration (LCIA), and Hong Kong
International Arbitration Centre (HKIAC). Institutions integrated Model Law principles to enhance transparency,
efficiency, and global acceptance.
2. Standardization of Procedures: Harmonized Rules: The Model Law provided a standardized framework
for arbitration agreements, appointment of arbitrators, interim measures, and recognition/enforcement of
awards.
3. Enhanced Recognition and Enforcement
•Pro-arbitration Judicial Trends: Courts in adopting countries became arbitration-friendly, minimizing
interference and upholding the finality of awards. Prominent cases upheld the Model Law’s spirit,
reinforcing investor confidence in arbitration.
4. Cross-Border Enforcement: Model Law adoption streamlined the enforcement of foreign arbitral awards,
reducing procedural delays and conflicting interpretations.
5. Technological Integration: Digital Arbitration: Evolving commercial practices led to advancements in
online arbitration and the incorporation of UNCITRAL’s Model Law on Electronic Commerce.
India’s Reforms and Milestones
India (1996): Adopted the Arbitration and Conciliation Act, 1996, incorporating UNCITRAL
principles. Marked a shift towards reducing court interference and aligning arbitration laws with
global standards.
•2015 Amendment : Streamlined arbitration procedures, introduced timelines for awards, and
reduced judicial intervention. Provided clarity on the appointment of arbitrators and interim
measures.
•2019 Amendment: Established the Arbitration Council of India (ACI) to promote institutional
arbitration. Recognized the importance of confidentiality in arbitration proceedings.
•2021Amendment: Focused on streamlining procedures and preventing misuse of the
arbitration process. Allowed courts to grant an automatic stay on enforcement of awards.
Removal of Eighth Schedule: The 2019 requirement for arbitrator qualifications was removed,
providing greater flexibility in appointing arbitrators. Supreme Court of India in Amazon v. Future
Group reinforced the enforceability of emergency arbitration awards under Indian law.
Recent Trends and Developments
•Third-Party Funding: Increasing acceptance of third-party funding in arbitration, reducing
financial barriers for parties.
•Diversity and Representation: Efforts to enhance gender, cultural, and geographical diversity
 Principles of Interpretation of International Commercial Arbitration
• The interpretation of International Commercial Arbitration (ICA) agreements
and awards rests on a set of well- established principles aimed at ensuring
fairness, predictability, and efficiency in resolving cross-border disputes.
The key principles of Interpretation are as follows:
1. Pro-Arbitration Principle: Arbitral agreements are interpreted generously to
uphold their validity and effectiveness. Courts typically lean towards upholding
arbitration agreements unless there are strong grounds for refusing.
2. Autonomy of the Parties: Parties have significant autonomy to shape the
arbitral process. They can choose the applicable law, the number and
qualifications of arbitrators, the procedural rules, and other aspects of the
arbitration.
3. Good Faith and Fair Dealing: Parties, arbitrators, and all participants in the
arbitral process are expected to act in good faith and with due regard for
fairness throughout the proceedings.
Contd….
4. Interpretation in Context: The arbitration agreement and award should be interpreted in light
of the relevant context, including the surrounding circumstances, the purpose of the agreement,
and the applicable law.
5. Transnational Interpretation: Arbitrators often apply a "transnational" approach, considering
legal principles from various jurisdictions and international trade practices, particularly when
the chosen law is vague or silent on an issue.
6. Literal Interpretation: While context is important, clear and unambiguous language in the
agreement or award will generally be given its literal meaning.
7. Substantive and Procedural Rules: Arbitrators typically have some flexibility in applying
procedural rules, but substantive laws governing the underlying dispute must be applied
correctly.
8. Separability of Clauses: If one provision of the arbitration agreement is deemed invalid, it will
not necessarily affect the validity of the entire agreement.
9. Public Policy Exceptions: Courts may refuse to enforce arbitral awards that violate
fundamental public policy or are contrary to the law of the forum.
10. Finality of Awards: Arbitral awards are generally final and binding, with limited grounds for
appeal or challenge.
International Commercial Arbitration and International Investment Arbitration

International Commercial Arbitration International Investment Arbitration

Parties: Primarily private businesses or Parties: States and foreign investors
individuals engaged in commercial activities. (usually companies or individuals).
Disputes: Contractual disputes, intellectual Disputes: Investor-state disputes arising from
property violations, regulatory and trade investments made in a host country, often involving
issues, financial and investment disputes
breaches of treaties or investment
(exceptions apply), product
agreements, expropriation of assets, discriminatory
liability, transportation and logistics
treatment, unfair regulatory measures.
issues, construction and infrastructure
disputes. Legal Framework: Investment treaties
Legal Framework: Contracts, national (BITs, Multilateral Agreements), customary
laws, applicable trade agreements, arbitration international law, principles of state
rules (e.g., ICC, LCIA, UNCITRAL Model Law). responsibility, investment arbitration rules
Focus: Protecting private commercial (e.g., ICSID, UNCITRAL Arbitration Rules).
Focus: Protecting the rights and interests of foreign
interests, enforcing contractual
obligations, and achieving swift and final investors, promoting foreign direct investment, and
resolution of disputes. ensuring fair and equitable treatment.
Differences and Similarities
Differences:: Similarities:
Subject Matter: 1. Both offer an alternative to
• ICA deals with private commercial disputes,
• IIA focuses on disputes between investors
national court litigation.
and states regarding investments. 2. Both are based on consent of the
Nature of Parties:
parties and involve neutral
• ICA involves private entities,
• IIA involves states and investors. arbitrators.
national laws, and specific agreements
3. Both aim for final and binding
Legal Basis:
• ICA relies on contracts, , decisions.
• IIA draws on investment treaties, international 4. Both have established
law, and arbitration rules.
procedural rules and enforcement
Objectives:
mechanisms.
• ICA aims for resolution of commercial disputes
and enforcement of contractual obligations,
• IIA seeks to protect foreign investments and
ensure fair treatment of investors by states.