CS Professional · Arbitration, Mediation and Conciliation

Conceptual Framework of International Commercial Arbitration: formula sheet

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Key formulas

Definition test: International commercial arbitration = commercial legal relationship (under Indian law) + at least one party from the four foreign categories; Both conditions must be met. Section 2(1)(f).
Four foreign categories: (i) foreign national or habitual resident individual; (ii) body corporate incorporated abroad; (iii) association or body of individuals with central management and control abroad; (iv) Government of a foreign country; Only one party needs to fit. The word "company" was omitted from clause (iii).
Meaning of Court: ICA: High Court exercising ordinary original civil jurisdiction, or High Court hearing appeals from subordinate courts' decrees. Other arbitration: principal Civil Court of original jurisdiction in a district (includes High Court with ordinary original jurisdiction); Section 2(1)(e). The forum differs for international commercial arbitration.
Substance of dispute in ICA seated in India: Rules of law designated by parties; if none, rules the tribunal considers appropriate; Section 28(1)(b). In other arbitrations, substantive Indian law applies (Section 28(1)(a)).
Nature of award made in India: Award under Part I = domestic award; Section 2(7). Applies even where the arbitration is international and the place is India.
Part I applicability: Part I applies where the place of arbitration is in India. Sections 9, 27 and 37(1)(a) and 37(3) also apply to an ICA seated outside India, unless the parties agree otherwise; Section 2(2) and its proviso.
Ad hoc arbitration: Parties design and run the process; no institution administers it; Parties fix appointment, procedure, place, language and fees themselves.
Institutional arbitration: Institution + its rules + administration of the case; Rules referred to in the agreement form part of the agreement (Section 2(8)).
Parties may authorise an institution: Section 2(6): freedom to determine an issue includes the right to authorise any person, including an institution; Does not apply to Section 28, which deals with the rules applicable to the substance of the dispute.
Fallback appointment in ad hoc cases: Section 11(4), (5), (6): appointment by the Supreme Court or High Court, or its designate; Under Section 11(12)(a), in an international commercial arbitration the reference is to the Supreme Court.
Timing under Section 11: 30 days to appoint or agree; court to endeavour to dispose of the application within 60 days of service of notice; Section 11(4), (5) and (13).
Court's scope at appointment: Section 11(6A): confine to examining the existence of an arbitration agreement; Applies to applications under Section 11(4), (5) or (6).
Arbitration agreement (Section 7): Agreement to submit defined disputes (present or future) + defined legal relationship + in writing; It may be a clause or a separate agreement. Section 7(3) requires writing.
Writing under Section 7(4): Signed document OR exchange of communications (including electronic) recording the agreement OR claim-and-defence exchange without denial; Section 7(5): reference to a document with an arbitration clause counts if the contract is in writing and the reference makes the clause part of it.
International commercial arbitration (Section 2(1)(f)): Commercial relationship + at least one party foreign (individual national or habitual resident; foreign body corporate; association with foreign central management and control; foreign government); A company is covered through the body corporate limb. Central management and control applies to associations or bodies of individuals.
Seat vs venue: Seat = legal home deciding supervisory courts and procedural law; Venue = physical place of hearings; A venue does not by itself become the seat. The agreement read as a whole decides.
Territorial rule (Section 2(2)): Part I applies where place of arbitration is in India; Proviso: Sections 9, 27 and 37(1)(a), 37(3) also apply to ICA seated abroad unless the parties agree otherwise.
Substance of dispute in ICA seated in India (Section 28(1)(b)): Parties' designated rules of law; else rules the tribunal considers appropriate; Designation of a country's law means its substantive law, not its conflict rules, unless otherwise expressed.
Court in ICA (Section 2(1)(e)(ii)): High Court exercising ordinary original civil jurisdiction, or otherwise a High Court hearing appeals from subordinate courts; The Court must have jurisdiction as if the subject-matter were a suit.
Domestic arbitration seated in India: Place in India + not international commercial → Indian substantive law in force; Section 28(1)(a). The tribunal decides in accordance with the substantive law for the time being in force in India.
International commercial arbitration, law designated: Place in India + ICA + parties designate → tribunal applies the designated rules of law; Section 28(1)(b)(i). Parties may designate rules of law, not only a national law.
Designation of a country's law: Designated country's law = its substantive law, not its conflict of laws rules; Section 28(1)(b)(ii). Applies unless the parties have expressed otherwise.
No designation: No designation → rules of law the tribunal considers appropriate given all circumstances; Section 28(1)(b)(iii). The tribunal chooses; it need not apply a conflict rule.
Equity decisions: Ex aequo et bono / amiable compositeur only if parties expressly authorise; Section 28(2). Silence or implied consent is not enough.
Contract and usages: In all cases: take into account contract terms + trade usages; Section 28(3), as substituted by Act 3 of 2016 (from 23-10-2015). It applies to domestic and international cases.
Four layers of governing law: Law of contract + law of arbitration agreement + lex arbitri (seat) + law of substance; Each can differ. Name the layer before you answer.
Domestic-seat, non-international case: Section 28(1)(a): Place in India, not international commercial arbitration → substantive law in force in India; Parties cannot pick a foreign law for this category under this clause.
International commercial arbitration, party choice: Section 28(1)(b)(i): Tribunal decides per rules of law designated by the parties; Applies where the place of arbitration is in India. 'Rules of law' is wider than the law of one country.
Designation of a country's law: Section 28(1)(b)(ii): Designated law = substantive law of that country, not its conflict of laws rules; Unless the parties express otherwise. This excludes renvoi.
No designation: Section 28(1)(b)(iii): Tribunal applies rules of law it considers appropriate given all circumstances; The tribunal chooses; a particular conflict rule is not prescribed.
Equity decisions: Section 28(2): Ex aequo et bono / amiable compositeur only if parties expressly authorise; Silence means strict law.
Contract terms and usages: Section 28(3): In all cases, take into account contract terms and applicable trade usages; Applies to every award.
Validity of arbitration agreement: Law chosen by parties; failing indication, Indian law (s. 34) or law of country where award was made (s. 48); Used in set-aside and foreign award enforcement tests.
Default three-member tribunal: Each party appoints 1 arbitrator; the two appointed arbitrators appoint the third (presiding); Applies only if the parties have not agreed a procedure (Section 11(3)).
Thirty-day triggers: Party fails to appoint within 30 days of request, or two arbitrators fail to agree on the third within 30 days of their appointment → court appointment on request; Section 11(4). For a sole arbitrator, 30 days from receipt of a request to agree (Section 11(5)).
Who appoints in international commercial arbitration: Supreme Court (or person or institution designated by it); Section 11(12)(a). In other arbitrations, the High Court (Section 11(12)(b)).
Scope of court's examination: Confined to the existence of an arbitration agreement; Section 11(6A).
Disposal of application: Endeavour to dispose of within 60 days from service of notice on opposite party; Section 11(13).
Award time limit: 12 months from completion of pleadings under Section 23(4); extendable by consent by up to 6 months; Section 29A(1) and (3). For international commercial arbitration, the proviso makes this an endeavour.
Additional fees for early award: Award within 6 months of tribunal entering upon reference → additional fees as parties agree; Section 29A(2).
Fee reduction on court-extended delay: Reduction not exceeding 5% per month of delay attributable to the tribunal; Section 29A(4) proviso; arbitrator must be heard first.

Quick revision

International commercial arbitration needs a commercial relationship and at least one foreign-linked party under Section 2(1)(f).
A body corporate counts if it is incorporated outside India; an association counts if its central management and control is exercised outside India.
Arbitral tribunal means a sole arbitrator or a panel of arbitrators.
Part I applies where the place of arbitration is in India, subject to the proviso for Sections 9, 27 and 37(1)(a) and 37(3).
Section 28(1)(a): in a domestic arbitration seated in India, the tribunal applies the substantive law in force in India.
Section 28(1)(b): in international commercial arbitration, the tribunal applies the rules of law designated by the parties.
A designated country's law means its substantive law, not its conflict of laws rules, unless otherwise expressed.
With no designation, the tribunal applies the rules of law it considers appropriate.
The tribunal decides ex aequo et bono or as amiable compositeur only if the parties expressly authorise it.
In every case the tribunal must take into account the contract terms and applicable trade usages (Section 28(3)).
Section 11: the default for three arbitrators is one by each party and a presiding arbitrator chosen by the two; the 30-day periods trigger a court request.
In international commercial arbitration, the Supreme Court acts under Section 11; in other arbitrations, the relevant High Court acts.

Common mistakes

Treating an arbitration as international because it is held abroad or the contract has foreign law. Fix: The test in Section 2(1)(f) is about the parties and the commercial nature of the relationship, not the seat or governing law.
Treating an Indian company controlled by foreigners as a party under clause (iii). Fix: An Indian-incorporated company is not incorporated abroad, so clause (ii) fails, and clause (iii) does not name companies. Apply the text as written.
Saying ad hoc arbitration has no rules at all. Fix: Say parties set their own rules or adopt rules like UNCITRAL, but no institution administers the case.
Treating institutional arbitration as always faster and cheaper. Fix: Say it usually adds certainty and support, but adds administrative fees and gives less flexibility.
Treating venue and seat as the same thing. Fix: Ask where the legal home of the arbitration is. Hearings in a city do not by themselves make it the seat. Read the whole agreement.
Saying Part I never applies to foreign-seated arbitrations. Fix: State the rule and the exception: Sections 9, 27 and 37(1)(a), 37(3) can still apply to an international commercial arbitration seated abroad, unless the parties agreed otherwise.
Saying parties can choose a foreign law in every arbitration seated in India. Fix: Party choice of law is in section 28(1)(b), which covers only international commercial arbitration. A domestic arbitration follows Indian substantive law.
Applying the conflict of laws rules of the designated country. Fix: Under section 28(1)(b)(ii), the designation is a reference to substantive law, unless the parties expressed otherwise.
Treating the law of the contract as automatically the law of the arbitration agreement. Fix: Treat the arbitration agreement as a separate layer. Look for a separate choice or the implied law before concluding.
Confusing seat law (lex arbitri) with the law of the substance. Fix: Lex arbitri governs procedure and court supervision. Substantive law decides the merits. Label each one separately.

Exam tips

Quote Section 2(1)(f) with the four clauses by number. Examiners reward exact structure.
Write the commercial test and foreign element test as two separate lines in every answer.
Do not state that the word company appears in clause (iii). Mention that it was omitted in 2015.
Close case answers with a consequence: Court meaning, Section 28(1)(b), or Section 2(7), to show analysis beyond the definition.
Where the seat is abroad, mention the Section 2(2) proviso on Sections 9, 27 and 37(1)(a) and (3).
Answer in comparison form: define, contrast on set heads, apply the Act, then conclude.
Quote Section 2(8), Section 2(6) and Section 11 only as far as you are sure; link them to the facts.
For clause-based questions, first classify the clause as ad hoc or institutional, then decide what happens on a failure.