For smooth functioning of business and industry, Quick decision of any commercial dispute is necessary.
Internationally, it is accepted that normally commercial disputes should be solved through arbitration and not through normal judicial system
An arbitrator is basically a private judge appointed with consent of both the parties.
Object of arbitration is settlement of dispute in an quick, convenient, inexpensive and private manner so that they do not become the subject of future litigation between the parties.
Indian Parliament made Arbitration Act in 1996.
It deals with Arbitration process.
Suppose American company and Indian company made some business deal and then had some dispute. Both of them went for Arbitration in America and the American arbitrator gave an order “Indian company is guilty and it should transfer its Ahmedabad’s factory to that American company”.
This order is called “Foreign Award”.
Now to implement or enforce this award, The American company has to send a copy of this judgement to the concerned Indian court in Ahmedabad and that Indian court will pass an order that “Indian Company shall transfer the ownership of Ahmedabad’s factory to that America Company before xyz date”.
One advantage of foreign award, according to foreign parties, is that Indian courts come into picture only at the time of implementation of award.
And the Indian courts can refuse to implement the award only on limited grounds.
Why in News?
10-years ago, Supreme Court had given a ruling that Indian companies can approach Indian courts against unfavorable awards by foreign arbitration panels.
But in Sept.2012, Supreme Court said in a judgement that if an Indian investor chooses to go for arbitration with a foreign company abroad, Indian courts would have no jurisdiction to interfere with the arbitration award unless provided under law.
Implication of SC Judgment
Foreign companies have so far found it extremely difficult to get foreign arbitration awards against their Indian partners enforced through Indian courts because courts would stay the award saying they have the jurisdiction to do so.
But now Supreme court has said that Indian courts have no business to interfere with such foreign judgments, hence It’ll create a more investor-friendly atmosphere for foreign companies intending to set up shop in India.
Can you please explain about advance pricing agreement
Agreed.. I have some doubts..
1. isn’t this “foreign award” taking away the autonomy of the Indian Companies?
2. since the dispute would be between Indian company and foreign company, would’nt the Indian courts have a right to safeguard an entity which pays taxes to the government? why only foreign award and not Indian award?
3. Why is the dispute(since being commercial) not solvable by WTO?
And kindly provide the source from which this became the latest news. I have been reading the hindu quite regularly. May be my reading is flawed. Perhaps I need to revisit the paper reading way..
and why couldn’t the vodafone case be solved by an arbitrage?
wat abt the recent apple vs samsung case? is that case carried out by arbitration process?
1. No , it ain’t taking away the autonomy of the Indian entity coz, it’s not obligatory for the companies to opt for a foreign arbitration. It all depends on the terms of contract between the respective companies. If the companies opt for an arbitration process in India, then the respective companies would have to abide by the arbitration award given by the Indian court or any other arbitrator as such. I think it covers ur second question too.
3. Arbitration process is currently governed by United Nations Commission on International Trade Law(UNCITRAL), Vienna convention, New York convention. I think this is coz, arbitration is more about the companies internal disputes and it does nt involve any trade related policies as such , hence doesn’t cm under the ambit of WTO. And Vodafone case is about capital gains tax , it’s different case altogether.
and this S.C. judgement was published in the Hindu news paper two days before(check me on this ).
@udhayarasu , Samsung and apple case was not between the two companies working together , but it was a patent related case. U know what arbitration is all about? Simple. For example, if company A of India and company B of America decide to partner in business and they would write in their term of contact that , should any dispute arise between us then we shall have arbitration in county A or B or C… Hope this clarified!
@yunus.. good enough bro.. thanks.
Thanks a lot
@yunus.. yeah, thats clear but still a questions ticks in my mind. whether this arbitration process applies to domestic companies also wen two companies come together?? if so, in wat way the disputes are addressed?
@yunus.. thanks for your previous explanation.. thats limpid :-)
Deviating from the topic, I found this glossary useful-
PS- The common link being Arbitrage
Thanx Shrutika, a useful content.
thank u shrutika
my ques may seem irrelevant here but plz oblige.
What is the logic behind not including bank officers as gazetted officers?
(PS:If the level of exam is taken into account the CDS exams are also not that difficult.;-)
1. UNABLE TO FIND ARTICLE TITLED – WHY NOTES MAKING FROM NEWS PAPERS IS IMPORTANT IN THE CONTEXT OF PRELIMS 2013?
MY UNDERLYING ACTUAL DOUBT: SIR, I UNDERSTAND WHY NOTES MAKING IS IMPORTANT(OF COURSE FOR QUICK AND ORGANIZED REVISION) AND HOW TO MAKE NOTES FOR OPTIONALS, G.S TOPICS SUCH AS I.R., ESSAY, PROFILE BASED QUESTIONS AND OTHERS… FROM TEXT BOOKS, MAGAZINES AND NEWSPAPERS (COURTESY: YOUR ARTICLE ON NEWSPAPER IN 1 HOUR).
BUT, WHY SHOULD ONE PREPARE NOTES FOR S&T, ENVIRONMENT AND OTHERS IN THE CONTEXT OF PRELIMS? WHY CAN’T ONE REVISE UNDERLINED/HIGHLIGHTED NEWSPAPER DIRECTLY BECAUSE ANYWAY IT IS THESE HIGHLIGHTED 2-5 SENTENCES THAT WILL BE WRITTEN TO FORM ‘NOTES’?
sir, i want previous year papers for Assistant in commissoner of employee provident fund,i am very much pleased if u gave that paper sir
thank you, Mrunal sir and Yunus sir.