The Indian civilization has always been rich in statesmanship and administration. As a result, the civilization had discovered the art of settling disputes through negotiations a long time back. India has had a tradition of arbitration way before it even got its name. Further, with the onset of the British era, this settling of disputes became more systematic and was very much visible in the panchayati system. However, presently the arbitration process and laws in the country have been amended in a manner that they become more aligned with the foreign laws. Thus, it becomes important for us to go through the evolution of arbitration in India at least once as it would enable us to have a better understanding of the present situation of settlement of legal matters in a country like India, which has a huge chunk of pending legal matters.

The British government was the first government in India to formalise arbitration by enacting the first Act with regards to arbitration, known as the Arbitration Act in the year 1899. This Arbitration Act of 1899 was a replica of the English Arbitration Act, 1899. It was extended to various parts of British India through section 89 schedule II of the Code of Civil Procedure. Since the English Arbitration Act, 1899, was replaced by the English Arbitration Act 1934, changes had to incorporated in the arbitration act which was in place in India, thus a new act was executed which was known as the Arbitration Act, 1940. However, this new act catered only to domestic arbitration. It had no provisions with regards to foreign arbitration. As a consequence, it became redundant and had to be replaced by a new act which would consolidate foreign arbitrations. Furthermore, India becoming a signatory to the Geneva Protocol of Arbitration Clauses 1923 in the year 1937 required it to make certain amendments to the arbitration laws prevalent in the country. Post the enacting of the Arbitration Act, 1940,  India became a signatory to the New York Convention in 1960. However, there was a major problem which had to be tackled. The 1940 Act did not serve a fulfilling purpose as it did not contain any provision with regards to the enforcement of foreign awards because of which a new law had to be enacted which came to be known as the Foreign Awards (Enforcement and Recognition) Act, 1961. It had to be enacted, necessarily, as India had become a signatory to the New York Convention. Lastly, the Indian judiciary had recommended certain changes to be made to the 1940 act because of which the Law commission intervened and examined the cause of the hardships and back logs being caused by the 1940 act in the arbitral proceedings. Finally, the Law Commission concluded that the act be amended instead of being revoked entirely. Thus, the Arbitration and Conciliation Act, 1996, was formulated based on the United Nations International Commission on International Trade Law (UNICTRAL).  Another crucial aspect of the Arbitration and Conciliation Act, 1996 is that it applies to both domestic and foreign arbitration. The 1996 act strengthened the faith that the foreign investors had in the Indian commercial market. This helped India gain a lot of foreign direct investments at a point in time when it was facing economic crisis. The country has very few companies being run by the private players; most of the big industries were owned and run by the government and private players had to go through a very tedious process of getting licenses and permissions to conduct any form business. However, as time would have had it, even the 1996 act was soon proving to be somewhat problematic as it created confusion in the judges’ decision making. The Honourable Supreme Court rendered a landmark judgement in the case of Bhatia International v. Bulk Trading S.A. wherein it held that part 1 of the Arbitration and Conciliation Act, 1996, would be made applicable to the Arbitrations seated outside India unless it has been excluded either impliedly or expressly. Contrarily, the Supreme Court delivered a series of judgements wherein it held that part 1 would apply to arbitrations seated outside India. This proved to be problematic as it increased the degree of judicial intervention in the arbitral proceedings. As a consequence, the arbitral proceedings became increasingly regressive and tedious. So, a new act had to be put in place which was the Arbitration and Conciliation Act, 2015. This act had certain integral features related to International Commercial Arbitration and Arbitral Tribunals. Section 2(2) stated that unless otherwise provided sections 9, 27 and 37 of the Act would apply to International Commercial Arbitrations. Section 9 of the Act mentioned that the court cannot intervene much once an application is presented before an arbitral tribunal. Section 17 of the Arbitration and Conciliation Act, 2015 vested the tribunal with all those powers that were being enjoyed by the courts. Lastly, section 34 prescribed the degree of court interference. Despite meeting most of the necessary needs that the act had to cater to, it failed to include one critical aspect, which was the issue of institutional arbitration. Since there was no clear provision associated with institutional arbitration, the government felt the urgency to bring about an amendment to the 2015 act, which brings us to the last point in the evolution of arbitration law in India.  Coming to the present legal situation of arbitration in India, the 2019 act of Arbitration and Conciliation is being adhered to. This act is nothing but an updated and modified version of the 2015 act. It consists of all the necessary amendments required to make the arbitration process more conducive to the moder day societal changes. This act established the Arbitration Council of India (ACI) to promote and monitor institutional arbitration and other modes of settling disputes such as mediation and conciliation. The act has made it mandatory for the ACI to grade the arbitration institutions. Further, a 30-day time period was made compulsory for the appointment of an arbitrator from the date of acceptance of the request. The qualifications, norms and experiences required for an arbitrator were clearly layed down. Section 29 A provided the timeline for the arbitration process to ensure a smooth and quick resolution. One important amendment was that, only a person who is an advocate as per the Advocates Act, 1961 along with a minimum ten -year practice could become an arbitrator in the settlement process. In conclusion, as arbitration has been a growing preference amongst the people when it comes to settling of conflicts, it has been in a constant state of evolution as the society has been constantly evolving in the current times. In India, institutional arbitration has witnessed a major rise due to its flexible nature. It is a quicker and easier mode of settling matters, especially at a time when the courts of the country are already overburdened. The current rise of arbitration in India is indicative of the fact that the country might become an arbitration hub in the future.

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2. www.legalserviceindia.com
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7. www.juscorpus.com