This parallel existence of courts and confidentiality tends to create a conflict: while arbitration guarantees privacy, proceedings before courts are public. Confidentiality is held out as one of the cornerstones of arbitration. Sides resort to arbitration so that trade secrets, financial data, and in-house strategies do not enter the public record.
One of the most significant prohibitions now in force is the ban on banks and NBFCs investing in AIF schemes that hold downstream investments in their own debtor companies. A “debtor company” refers to an entity to which the bank or NBFC has an existing or recent exposure.
In Dhansar Engineering Co. Pvt. Ltd. v. Eastern Coalfields Ltd., the applicant sought review of an order dated 1st December 2022, when the court rejected his request under Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator. The dispute arose from a 2017 contract for coal removal work. Dhansar relied on a Coal India Ltd. circular dated 7th April 2017 mandating arbitration for future contracts. The Court held that while Clause 2 was the relevant provision, there was no reference to arbitration in the contract nor mutual consent to incorporate an arbitration clause. Citing Section 7 of the Act and Supreme Court precedents, it ruled that a policy circular alone does not create a binding arbitration agreement without express incorporation. The review was dismissed.
One of the most important aspects of arbitration law is the extent of intervention by the judiciary. While arbitration seeks to minimize court intervention, some checks and balances are unavoidable. This can be seen in Section 37 of the Arbitration and Conciliation Act, 1996, dealing with appealable orders.
With the increase in cross-border trade and investment, parties from different jurisdictions often need a neutral, enforceable, and efficient mechanism to resolve disputes. International arbitration has emerged as the preferred method of dispute resolution in global commerce, offering flexibility, party autonomy, and the ability to enforce arbitral awards across more than 170 jurisdictions under the New York Convention.
Arbitration is a more structured type of ADR where parties consent to refer their dispute to an arbitrator or a panel of arbitrators, who render a final and binding decision referred to as an award. The procedure is similar to an in-chambers court hearing but takes place in a secret location and permits flexibility in procedure.
Due to the time-sensitive and technical nature of construction projects, arbitration has come to be a widely used method of dispute resolution in the construction industry. It offers a discreet, effective, and expert vehicle for resolving disputes without recourse to time-consuming court actions.
Section 9 of the Arbitration and Conciliation Act, 1996, is the most significant provision under this Act, which governs interim measures by the court. This part authorizes the courts to provide interim relief to parties before, during, or even following the completion of arbitration proceedings, but before the enforcement of the arbitral award.
International arbitration is fundamentally a method of resolving disputes through a neutral third party or tribunal, typically outside the judicial systems of any one country. It is governed by mutually agreed-upon rules or institutional frameworks such as those offered by the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), Singapore International Arbitration Centre (SIAC), or UNCITRAL rules, among others.
In SN Prasad v. Monnet Finance Ltd & Ors, the Supreme Court ruled that a guarantor who is not a party to a loan agreement containing an arbitration clause cannot be compelled to participate in arbitration. SN Prasad, who gave a personal guarantee via a separate letter but did not sign the arbitration agreement between the lender and borrower, was wrongly impleaded in arbitration proceedings. Despite the arbitrator passing awards against him and the Delhi High Court upholding them, the Supreme Court clarified that without an arbitration agreement involving the guarantor, arbitration proceedings and awards cannot bind them.
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