Domestic & International Arbitration
Difference between international and domestic arbitration in the light of various decided case laws...Author Name: agneskv
Difference between international and domestic arbitration in the light of various decided case laws...
Domestic And International Arbitration
The Constitution of India, Article 51, clauses (c) and (d) provide that the  state shall endeavour to (c) foster respect for international law and treaty  obligations in the dealings of organised peoples with one country and (d)  encourage settlement of international disputes by arbitration. In the spirit of  the Constitutional mandate the President of India promulgated the Indian  Arbitration and Conciliation Act 1996. The Indian Ordinance gives freedom to the  parties – subject to minimal restrictions in carrying out the arbitration  agreement. Under the law there is no clear definition of terms such as Domestic  Arbitration or foreign Arbitration either in the statutes or in the decided  cases. However the term international commercial Arbitration has been defined in  the 1996 Act. The 1996 Act covers domestic arbitration (where both parties are  Indian national) as well as international commercial arbitration where at least  one party is not an Indian national. The Act of 1996 has been divided in three  Parts. Part I entitled, “ARBITRATION” and there are 10 Chapters containing  Sections 2 to 43. Part II entitled, “Enforcement of certain Foreign Awards” and  contains Chapter I & II containing
 
 Sections 44 to 60. Chapter I of part II deals with “New York Convention Awards”  and Chapter II deals with ‘Geneva Convention Awards”. Part III (Sections 61 to  81) deals with ‘Conciliation’. Part IV (Sections 82 to 86) provides for  Supplementary Provisions. Section 2(2) provides for applicability of Part I.  Existing Section 2 (2) reads as follows:
 “Section 2(2): This part shall apply where the place of arbitration is in  India.”
 
 Domestic Arbitration
 Domestic Arbitration takes place in India when the arbitration proceedings, the  subject matter of the contract and the merits of the dispute are all governed by  Indian Law, or when the cause of action for the dispute arises wholly in India  or where the parties are otherwise subject to Indian jurisdiction. In the  domestic arbitration, the cause of action for the dispute should have arisen  wholly in India or the parties are otherwise subject to Indian jurisdiction.  Domestic arbitration is an attractive option for the settlement of disputes.
 
 In a domestic arbitration:
 1) The arbitration takes place in India
 2) The subject matter of contract is in India
 3) The merits of the dispute are governed by the Indian Law.
 4) The procedure of arbitration is also governed by the Indian Law.
 
 In the Indian Arbitration and Conciliation (Amendment) Bill 2003, the definition  of the term domestic arbitration was given as:
 
 ‘Domestic Arbitration’ means an arbitration relating to a dispute arising out of  legal relationship whether contractual or not, where none of the parties is:
 
 i) An in individual who is a nationality of , or habitually resident in, any  country other than India; or
 ii) A body corporate which is incorporated in any country other than India; or
 iii) An association or a body of individuals whose central management and  control is exercised in any country other than India; or
 iv) The Government of a foreign country
 
 Where the place of arbitration is in India and shall be deemed to include  international arbitration and international commercial arbitration where the  place of arbitration is in India.
 
 There are conflicting views of the Courts in India about applicability of Part I  in respect of International Commercial Arbitration where seat of arbitration is  not in India. In a case before the Delhi High Court,  Dominant Offset Pvt. Ltd. v. Adamouske Strojirny AS, the petitioners  entered into two agreements with a foreign concern for technology transfer and  for purchase of certain machines. The agreement carried an arbitration clause  which provided that the place of arbitration would be London and the arbitration  tribunal would be International Chamber of Commerce in Paris. The parties having  developed a dispute, a petition was filed in the High Court of Delhi with a  prayer for reference to arbitration in terms of the Arbitration Clause for  enforcement of the agreement. The Court extensively studied the provisions of  the Act so as to see whether it was a matter coming under Part I of the Act. The  Court held that Part I of the Act applies to International Commercial  arbitration conducted outside India. The Court opined that Section 2(2) which  states that “Part I shall apply where the place of arbitration is in India” is  “an inclusive definition and does not exclude the applicability of Part I to  those arbitrations which are not being held in India”. The Court also held that  the application under Section 11 for the appointment of arbitrators could be  treated as a petition under section 8 for reference of the parties to  arbitration. This decision was followed in Olex Focas Pvt.  Ltd. Vs. Skodaexport Company Ltd.  In this case the High Court  allowed relief under Section 9 (interim measure by Court) and ruled -
 
 “A careful reading and scrutiny of the provisions of 1996 Act leads to the clear  conclusion that sub-section (2) of Section 2 is an inclusive definition and it  does not exclude the applicability of Part I to this arbitration which is not  being held in India. The other clauses of Section 2 clarify the position beyond  any doubt that this Court in an appropriate case can grant interim relief or  interim injunction.” However, Court added that courts should be extremely  cautious in granting interim relief in cases where the venue of arbitration is  outside India and both parties are foreigners.
 
 The Calcutta High Court in East Coast Shipping v. MJ Scrap took a different view  and held that Part I of the Act would apply only to arbitrations where the place  of arbitration is in India. In a subsequent decision of Division Bench of the  Delhi High Court in Marriott International Inc v. Ansal Hotels Ltd., Delhi High  Court endorsed the view expressed by the Calcutta High Court. The Division Bench  referred the another decision reported as Kitechnology N.V. v. Union Gmbh  Plastmaschinen in which the Single Judge of Delhi High Court held that where  none of the parties to the agreement was an Indian and the agreement was to be  covered by German Law which provided arbitration to be held at Frankfurt,  Section 9 of the Act will have no applicability and the Court will have no  jurisdiction to pass an interim order in that matter.
 
 International Arbitration
 International Arbitration can take place either within India or outside India in  cases where there are ingredients of foreign origin relating to the parties or  the subject matter of the dispute. The law applicable to the conduct of the  arbitration and the merits of the dispute may be Indian Law or foreign law,  depending on the contract in this regard, and the rules of conflict of laws. The  most significant contribution of 1996 Act is the categorical definition of  international commercial arbitration. Clause(f) of sub-section (1) of section 2  of the 1996 Act defines international commercial arbitration as arbitration  relating to disputes arising out of legal relationships, whether contractual or  not, considered as commercial under the law in force in India and where at least  one of the parties is:
 
 a) An individual who is a national of, or habitually resident in or any country  other than India
 
 b) A corporate body which is incorporated in any country other than India
 
 c) A company or an association or a body of individuals whose central management  and control is exercised in any country other than India
 
 d) The government of foreign country.
Thus it is clear from the above discussion that international arbitration can  take place in India in accordance with the same procedure as domestic  arbitration. Arbitration becomes ‘international’ when at least one of the  parties involved is resident or domiciled outside India or the subject matter of  the dispute is abroad. In International arbitration the law applicable may be  the Indian Law or a foreign law, depending on the terms of contract in this  regard and the rules of conflict of laws.
 
 Meaning of international
 The international or domestic character of commercial arbitration may result  in the application of a different set of rules. Several legal systems have  special rules for domestic and international arbitration. The prominent examples  for such nations are Australia, Bermuda, Canada and also in the US where the  Federal Arbitration Act only applies to international and interstate  arbitration. Other system opts for a unified regulation such as France England  etc. It has been suggested that the introduction of an International Commercial  Act in the US would make clear that the protective review standards appropriate  for domestic disputes would not affect cross-border arbitration. It would also  clarify the relationship between federal and state arbitration law. What makes  arbitration an international one? What are the criteria employed for such a  classification? The international or domestic character of commercial  arbitration is not to be confused with the domestic or foreign character of  awards for which different regime for their enforcement exists.
 
 Scope of the term International
 Any arbitration matter between parties to the arbitration agreement shall be  called an international commercial arbitration if:
 
 (1) The matter relates to dispute
 
 (2) Such disputes have arisen out of legal relationship
 
 (3) Such legal relationships may or may not be contractual
 
 (4) The disputes should be those which are considered commercial under the law  in force in India and
 
 5) Where at least one of the parties is;
 (i) That which habitually resides abroad, whether a national of that country or  not; or
 (ii) A body corporate which is incorporated abroad
 (iii) A company or an association or a body of person whose central management  and control is exercised abroad; or
 (iv) The government of a foreign country.
 
 It is for the arbitrators to determine whether an international commercial  arbitration agreement exists or not. Disputed question of fact cannot be  agitated in a writ petition.
 
 Criteria For Establishing ‘International’ Character
 There are three ways of establishing the international character of arbitration.  An arbitration may be international because;
 (a) Its subject matter or its procedure or its organization is international or
 (b) The parties involved are connected with different jurisdiction; or
 (c) There is combination of both
 
 A) The objective criterion:
 Dispute with foreign element or of international character.
 
 The objective criterion focuses on the subject matter of the dispute and the  international or national character of the underlying transaction. Hence the  international commercial interest or the cross border element of the underlying  contract, or the fact that the dispute is referred to a genuinely international  arbitration institution, such as the ICC, the LCIA or ICSID would be sufficient  for the arbitration to qualify as international. The objective criterion is  found most simply in French Law. Article 1492 of the French Code of Civil  Procedure reads
 
 Arbitration is international if it implicates international commercial interest.  An almost verbatim approach is found in Portuguese law. There is a significant  body of French case law relating to the concept of international transaction.  The most prominent among them are Renault v. V 2000, Murgue Seigle v. Coflexip,  Chantiers Modernes v. CMGC and Aranella v. Italo-Equadoriana. The French Courts  have taken a liberal approach in order to delimit the purely economic definition  of international arbitration; arbitration is international if it results from a  dispute involving the economies of more than one country. It was emphasised by  the Paris Court of Appeal that;
 
 ‘The international nature of arbitration must be determined according to the  economic reality of the process during which it arises. In this respect all that  is required is that the economic transaction should entail a transfer of goods,  services or funds across national boundaries, while the nationality of the  parties, the law applicable to the contract or the arbitration, and the place of  arbitration are irrelevant. The approach of the French Courts has been  consistent and has effectively promoted international commercial arbitration.  The Romanian Code Of Civil Procedure takes a more classical conflict of laws  approach in Article 369. Accordingly an arbitration taking place in Romania  shall be considered international if it has arisen out of a private law relation  having a foreign element.
 
 B) The subjective criterion:
 Diversity of nationality/place of business of the parties.
 
 According to the subjective criterion the focus is on the different nationality  or domicile or place of business of the parties to the arbitration agreement. It  follows that parties, individuals or companies should come from different  jurisdiction. The subjective criterion was employed by previous English  Arbitration Law; England Arbitration Act 1975 section 1(4)(a)(b) and Arbitration  Act 1979 section 3(7)(a)(b). The 1996 Arbitration Act included a provision  (section 85) which distinguished between domestic and international arbitration  but it was not brought into effect. It is currently applied in Article 176(1) of  the Swiss Private International law. The provisions of this chapter shall apply  to any arbitration if the seat of the arbitral tribunal is Switzerland and if,  at the time when the arbitration agreement was concluded, at least one of the  parties had neither its domicile nor its habitual residence in Switzerland. The  subjective criterion may significantly restrict the scope of international  arbitration. An illustration of potential pitfall can be seen in the example of  a distributorship agreement. Two companies from the same country enter into a  distributorship agreement according to which, one of them receives world-wide  distributorship rights of the other companies products. Disputes arising out of  such an agreement would be domestic under Swiss law if both companies have their  seat in Switzerland. In contrast such a dispute is international under French  Law.
 
 C) The Modern Combined Criterion:
 The Model Law Approach and other National Legal Systems.
 
 A third approach combines both the subjective and objective criteria. The new  tendency towards a combined criterion can be found in the Model Law.
 
 According to Art 1(3) arbitration is international if:
 
 a) The parties to an arbitration agreement have, at the time of conclusion of  that agreement, their places of business in different states ; or
 
 b) One of the following places is situated outside the state in which the  parties have their place of business:
 
 i) The place of arbitration if determined in , or pursuant to, the arbitration  agreement
 
 ii) Any place where a substantial part of the obligations of the commercial  relationship is to be performed or the place with which the subject matter of  the dispute is most closely connected; or
 
 c) The parties have expressly agreed that the subject matter of the arbitration  agreement relates to more than one country.
 
 The Model Law creates a flexible and effective system for the determination of  international character of arbitration. Its approach consists of alternative  criteria and also includes a conflict of laws rule for the connection of legal  entities with a particular legal system. Article 1(3) (c) has been criticised as  too broad as it allows the parties to a dispute to internationalise it without  apparent reason or any foreign link. Accordingly some countries like Hungary and  Canada when adopting the Model Law omitted this final case of internationality.  Other countries like Tunisia added as a default criterion the French approach.  While yet other countries such as Hong Kong offer the parties to arbitration the  option of submitting their dispute to domestic or international arbitration law.
 
 Another successful merger of the subjective with the objective criteria can be  found in the 1994 reform of Article 832 Italian Code of Civil Procedure.  Accordingly if at the date of signing the arbitration clause or submission to  arbitration at least one of the parties has its domicile or principal place of  business abroad or if a substantial part of the obligations arising out of the  relationship to which the dispute refers must be performed abroad.
 
 Section 202 US Federal Arbitration Act gives the definition of the arbitration  agreement or arbitration award falling under the New York Convention. While the  nationality test is used for the purpose of the New York Convention, the case  law of the US Supreme Court introduces objective criteria. The cohabitation  functions effectively.
 
 Foreign Arbitration
 A foreign arbitration is an arbitration conducted in a place outside India, and  the resulting award is sought to be enforced as a foreign award.
 
 Ad hoc Arbitration
 Ad hoc arbitration is arbitration agreed to and arranged by the parties  themselves without recourse to any institution. The proceedings are conducted  and the procedures are adopted by the arbitrators as per the agreement or with  the concurrence of the parties. It can be domestic, international or foreign  arbitration. In case of disagreement on the appointment of an arbitrator under  ad hoc arbitration cases, section 11 of the 1996 Act empowers the chief justice  of the High Court or Chief Justice of the Supreme Court as the case may be to  appoint arbitrators. A scheme made by the Chief Justice may designate a person  by name or ex-officio or an institution which specialises the field of  arbitration. This new provision has really given recognition to the role of  arbitral institutions in India.
 
 Institutional Arbitration
 Institutional arbitration is arbitration conducted under the rules laid down by  an established arbitration organisation. Such rules are meant to supplement  provisions of arbitration act in matters of procedure and other details the Act  permit. They may provide for domestic arbitration or for international  arbitration or for both, and the disputes dealt with may be general or specific  in character. In India there are a number of commercial organisations which  provide a formal and institutional base to commercial arbitration and con  conciliation. There are several merchant associations which provide for in house  arbitration facilities between the members of such associations and their  customers. In all such cases, the purchase bills generally require the  purchasers and sellers to refer their disputes in respect of purchase or the  mode of payment or recovery thereof to the sole arbitration of the association  concerned, whose decision is final and binding on the parties. Stock exchanges  in India also provide for in-house arbitration for resolution of disputes  between the members and others. The Board of Directors of each stock exchange  constitutes the appellate authority for hearing appeals from the award of the  arbitral tribunal. There is an increasing trend for use of this in-house  facility by members of such institutions. In the international field many  commercial transactions and economic cooperation agreements between and foreign  parties provide for the settlement of dispute by means of arbitration either on  an ad-hoc basis or an institutional basis.
 
 Nationality of Arbitration; International Arbitration in International  Convention.
 
 European Convention
 Only the European Convention attempts a definition of an  international arbitration when it is setting out its scope of application. In  Art 1(1) (a) it states;
 
 1. This Convention shall apply:
 a) To arbitration agreements concluded for the purpose of settling dispute  arising from international trade between physical or legal person having, when  concluded the agreement, their habitual place of residence or their seat in  different Contracting States.
 
 Both the subjective and the objective criteria are present. They are to be  applied cumulatively. Unfortunately the first criterion may prevent some  arbitration which is international from falling within the scope of the  Conventions.
 
 New York Convention
 The New York Convention confines its application to foreign awards, but makes no  attempt to provide a definition of international arbitration. The rapid  development of international commercial arbitration has forced national legal  systems not only to tolerate international commercial arbitration, but also  provide for favourable, legal regimes within which it can flourish. It has been  rightly suggested that in 1980s and the 1990s we have experienced a period of  competition amongst legislators and judiciary; they all tried to attract more  international arbitrations.
 
 The two main effects of this competition were the modernisation and  liberalisation of arbitration regimes and the transfer of the favourable  treatment of international arbitration into domestic level. This was also  reflected in the new trend of unified regulation of international and domestic  arbitration. The Dutch legislator opted for a unified system with the argument  what is good for international arbitration is also good for domestic  arbitration. The same approach to a single arbitration was taken in Sweden,  Germany and other countries. In England although different systems were  anticipated in the Arbitration Act, the domestic rules were not put into effect.  The modern unified arbitration system minimise the importance of distinction of  the national and international arbitration. An undisputed significant role  towards unification and internationalization of international commercial  arbitration is ascribed to the success of Model Law.
 
 Model Law And The Term International
 Divergent views were expressed as to the appropriateness of relating  sub paragraph (b) (1). Less than one view the provision should be deleted for  essentially two reasons. One reason was that there was no justification to  qualify a purely domestic relationship as international simply because a foreign  place of arbitration was chosen. Party autonomy was unacceptable here since it  would enable parties to evade mandatory provisions of law, including those  providing for exclusive court jurisdiction, except where recognition or  enforcement of the foreign award was later sought in that State. The other  reason was that the provision arbitration agreement but also the case where it  was determined only later, pursuant to the agreement, for example by an arbitral  institution or arbitral tribunal. It was felt that the later case created  uncertainty as to what was the applicable law and as to the availability of the  court services before the place of arbitration was determined. Under another  view only the latter reason was convincing and therefore sub-paragraph (b)(1)  should be maintained without the words “or pursuant to”.
 
 The prevailing view was to retain the entire provision of sub paragraph (b)(1).  It was noted that the provision only addressed the question of internationality,  i.e., whether the (Model) Law for international cases or the same State’s law  for domestic cases applied. It was thought that the principle of party autonomy  should extend to that question. The Commission in adopting that view, was  agreed, however that the concern relating to non-arbitrability, which had also  been raised in a more general sense and should be met by a clarifying statement  in a separate paragraph of article 1 along the following lines: ‘This Law does  not affect any other law of this State which provides that a certain dispute or  subject matter is not capable of settlement of arbitration’.
 
 As regards subparagraphs (b) (ii) and (c), the Commission was agreed that their  respective scope was not easily determined in a clear manner. In particular, sub  paragraph (c) was regarded as unworkable due to its vague ambit. While there was  some support in maintaining the provision, though possibly in some modified  form, the Commission after deliberation, decided to delete the subparagraph(c).
 
 However in order to balance the reduction in scope due to that deliberation, it  was proposed to add on opting-in provision, either only to sub paragraph (b)(ii)  or as a replacement for sub paragraph (c). It was thought that such a provision  provided for a more precise test than the one set forth in paragraph sub  paragraph (c). In response to that proposal a concern was expressed that such a  subjective criterion would enable parties to freely to label as international a  purely domestic case. Others, however, considered that any such concern was  outweighed by the advantages of a system that provided certainty to the parties  that their transaction would be recognized as international, a characterization  that should properly fall within the scope of party autonomy. In response to  that consideration the view was expressed that it was inconceivable that any  State which deemed it necessary to retain a special law for domestic cases would  want to allow parties to evade that system.
 
 Differences Between International And Domestic  Arbitration
 A domestic arbitration is one where the following two ingredients are present:
 1) Both the parties to the arbitration agreements are the nationals or residents  of the same country.
 2) The agreement provides for arbitration in the country of the parties to the  arbitration agreement.
 
 The arbitration agreement will be considered as international arbitration  agreement where one of the parties is a foreigner, not with standing the fact  that the arbitration is to take place in a particular country as highlighted in  the case of Gas Authority of India Ltd. v. SPIF CAPAG. The New York Convention  will apply to an arbitration agreement if it has a foreign element or flavour  involving international trade and commerce, even though such an agreement does  not lead to a foreign award.
 
 A contract was entered into between an Indian and a foreign party. On disputes  arising between them, arbitration proceedings were commenced in India and both  the parties preferred claims and counter claims before the arbitral tribunal.  The parties also agreed that they will govern by the law of India. An award  passed under the said arbitral proceedings was held to be a domestic award made  under part 1 of the Act as emphasised in the case of Nirma Ltd v. Lurgi Energie  Und Entsorgung GMBH. The definition of the term international commercial  arbitration is given in section 2 (1)(f) of the Act. The definition makes no  distinction whatsoever between international commercial arbitrations which take  place in India and internal commercial arbitration which take place outside  India as mentioned in the case of Bhatia International v. Bulk Trading SA. In  Bhatia International the question was whether an application filed under Section  9 of the Act in the Court of the third Additional District Judge, Indore by the  foreign party against the appellant praying for interim injunction restraining  the appellant from alienating transferring and/or creating third party rights,  disposing of, dealing with and/or selling their business assets and properties,  was maintainable. The Additional District Judge held that the application was  maintainable, which view was affirmed by the High Court. The Supreme Court,  reaffirming the decision of the High Court, held that an application for interim  measure could be made to the courts of India, whether or not the arbitration  takes place in India or abroad. The Court went on to hold that “the arbitration  not having taken place in India, all or some of the provisions of Part I may  also get excluded by an express or implied agreement of parties. But if not so  excluded the provisions of Part I will also apply to ‘foreign awards’. The  opening words of Sections 45 and 54, which are in Part II, read ‘notwithstanding  anything contained in Part I’. Such a non obstante clause had to be put in  because the provisions of Part I apply to Part II”.
 Supreme Court referred to similar provision in UNCITRAL Model law. Article 1(2)  of the UNCITRAL Model Law reads as follows:
 “(2) The provisions of this law, except Articles 8, 9, 35 and 36, apply only if  the place of arbitration is in the territory of this State.”
 
 Supreme Court highlighted the word ‘only’ and observed as follows:
 “Thus Article 1(2) of the UNCITRAL Model Law uses the word “only” to emphasize  that the provisions of that law are to apply if the place of arbitration is in  the territory of that State. Significantly, in Section 2(2) the word “only” has  been omitted. The omission of this word changes the whole complexion of the  sentence. The omission of the word “only” in Section 2(2) indicates that this  subsection is only an inclusive and clarificatory provision. As stated above, it  is not providing that provisions of Part I do not apply to arbitrations which  take place outside India
 
 Applicability Of Part 1 Of The Act
 Section 2(2) provides that Part 1 will apply where the place of arbitration is  in India. It does not provide where place of arbitration is not in India. It  does not provide that Part 1 will ‘only’ apply where the place of arbitration is  in India. It is, therefore, clear that Part 1 would apply to arbitrations which  take place in India but does not provide that provisions of Part 1 will not  apply to arbitrations which take place out of India. By omitting to provide that  Part 1 will not apply to international commercial arbitration which take place  outside India the effect would be that Part 1 would also apply to international  commercial arbitration held out of India. Thus in respect of arbitrations which  takes place outside India even the non derogable provisions of Part 1 can be  excluded. Such an agreement may be expressed or implied.
 
 Where an international commercial arbitration is held in India the provisions of  Part 1 will compulsorily apply and parties are free to deviate only to the  extent permitted by the derogable provisions of Part 1. In case of International  commercial arbitration held outside India, provisions of Part 1 will apply  unless the parties by agreement, expressed or implied, exclude all or any of its  provisions. In that case the laws or rules chosen by the parties would prevail.  Any provisions in Part 1 which is contrary to or excluded by that law or rules  will not apply in the latter case.The Supreme Court observed that if the part I  of the Act is not made applicable to arbitration held outside India it would  have serious consequences such as (a) amount to holding that the Legislature has  left a lacunae in the said Act. There would be lacunae as neither Part I or II  would apply to arbitrations held in a country which is not a signatory to the  New York Convention or the Geneva Convention. It would mean that there is no  law, in India, governing such arbitrations; (b) leaves a party remediless in as  much as in international commercial arbitrations which take place out of India  the party would not be able to apply for interim relief in India even though the  properties and assets are in India.
 
 Thus a party may not be able to get any interim relief at all.
 
 The Supreme Court made certain observations in respect of International  commercial arbitration which take place in a non-convention country. The Court  observed that international commercial arbitration may be held in a  non-convention country. Part II only applies to arbitrations which take place in  a convention country. The Supreme Court referred to the definition of  international commercial arbitration which is defined in Section 2(f) of the Act  and held that the definition makes no distinction between international  commercial arbitration which takes place in India or those take place outside  India. The Supreme Court also observed that Sections 44 and 53 define foreign  award as being award covered by arbitrations under the New York Convention and  the Geneva Convention respectively. Special provisions for enforcement of these  foreign awards are made in Part II of the Act. To the extent part II provides a  separate definition of an arbitral award and separate provision for enforcement  of foreign awards, the provision in Part I dealing with these aspects will not  apply to such foreign awards.
 
 The court finally concluded that “the provisions of Part I would apply to all  arbitrations and to all proceedings relating thereto. Where such arbitration is  held in India the provisions of Part I would compulsorily apply and parties are  free to deviate only to the extent permitted by the derogable provisions of Part  I. In cases of international commercial arbitrations held out of India  provisions of Part I would apply unless the parties by agreement express or  implied, exclude all or any of its provisions. In that case the laws or rules  chosen by the parties would prevail. Any provision, in Part I, which is contrary  to or excluded by that law or rules, will not apply”.
 
 Merely because the parties have stated that venue of arbitration shall be Hong  Kong, it does not follow that laws in force in Hong Kong. Where the Arbitration  clause states that ‘The 1996 Act’ will apply and this act would govern the  appointment of arbitrator, the reference of disputes and the entire process and  procedure of arbitration from the state of appointment of arbitrator till the  award is made and executed/given effect to.
 
 Conclusion
 The Govt of India recognising the need for reform in the law relating to  arbitration decided to act on the basis of the basis of the UNCITRAL Model Law  on International Commercial Arbitration and the ICC Rules for Conciliation and  Arbitration by enacting a new law based on the Model Law which was designed for  universal application. The law enacted in India in1996 based on the UNCITRAL  Model Law provides for the resolution of domestic disputes also. A significant  feature of the new Indian Law is that the role of courts therein is even more  limited than that envisaged under the Model law. It is significant that the  Model Law on which it is based was envisaged in the context of international  commercial arbitration but the new Indian Law treats the Model as equally  appropriate for domestic arbitration. This scheme eliminates a dichotomy in the  new Indian Law between the law applicable to domestic arbitration and that  applicable to international commercial arbitration.
 
 Bibliography
 1) Julian D M Lew, A Mistelis & Stefan M Kroll – Comparative International  Commercial Arbitration- VDM Verlag.
 2) S K Chowdary & K H Saharay- Arbitration Law- Eastern Law House, 32nd Edition  1991
 3) Ashwini K Bansal – Arbitration Procedure and Practise – Lexis Nexis, 1st  Edition 2009
 4) Henry J Brown and Arthur L. Marriott, ADR Principles and Practice (2nd edn.),  Sweet and Maxwell (in 2 Vol.) (1999)
 5) P C Rao & William Sheffield -Alternative Dispute Resolution -Universal Law  Publishing, 2004
 6) Susan B. Meek -Alternative Dispute Resolution -, M.D., J.D., 1996 edition.
 7) Peter H. Kaskell - Commercial Arbitration at It’s Best. Successful Strategies  for Business Users - Thomas J. Stipanowich, 2001 edition.
 8) Susan Patterson and Grant Seabolt- Essentials of Alternative Dispute  Resolution- 1997 edition.
 
 Journals referred
 Arbitration Law Journal February 2010
 Acts reffered
 1) The Arbitration and Conciliation Ordinance, 1996
 2) UNCITRAL Model Law
 # (1997) 68 DLT 157)
 # AIR 2000 Del.161
 # (1997) 1 Cal. HN 444
 # AIR 2000 Del 377 (DB)
 # (1998) 47 Del. RJ 397
 # Van Oord ACZ India Pvt Ltd. v. Gujarath Adani Port Pvt. Ltd 2005 (2) Arb LR  58:2005 (2) RAJ 303 (Guj).
 # Rev Arb 537 (1997)
 # Rev Arb 355 (1991)
 # Rev Arb 111(1989)
 # Rev Arb 311(1985)
 # Paco Rabanne Parfums v. Les Maisons Paco Rabanne Rev Arb 730(1994)
 # AIR 1994 Del 75
 # AIR 2003 Guj 145
 # AIR 2002 SC 1432
 # National Agricultural Cooperative Marketing Federation India Ltd v. Grains  Trading Ltd. AIR 2007 SC 2327
 
 The  author can be reached at: agneskv@legalserviceindia.com
ISBN No: 978-81-928510-1-3
Author Bio: Agnes K Varkeychan
Email: agneskv@legalserviceindia.com
Website: http://www.
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