Arbitration is an increasingly popular method for resolving disputes, both domestically and internationally. In India, the Arbitration and Conciliation Act, 1996, provides the legal framework, aligning with international practices to ensure swift and fair resolution of commercial disagreements. A key distinction within the Act lies between domestic and international arbitration. Understanding these differences is essential for drafting effective arbitration agreements, invoking arbitration clauses appropriately, and enforcing arbitral awards, particularly those originating abroad.

Defining Domestic and International Arbitration

Domestic Arbitration:

• All parties involved in the dispute are Indian nationals or entities incorporated in India.
• The legal "seat" of the arbitration (the designated location) is within India.
• It is fully governed by Part I of the Arbitration and Conciliation Act, 1996, which includes:
  • Arbitration agreements
  • Constitution and powers of arbitral tribunals
  • Procedural rules
  • Enforcement of domestic awards
     

International Commercial Arbitration (ICA):

Under Section 2(1)(f) of the Act, ICA involves disputes where:

• At least one party is a foreign national, a foreign corporation, a foreign government, or an international organization.
• The subject of the dispute is a commercial relationship.

ICA can be seated either in India or outside India. The seat determines which part of the Act applies:

• Seat in India: Part I applies, inclusive of amendments from 2015 and 2019.
• Seat outside India: Part II applies, concerning the recognition and enforcement of foreign arbitral awards according to the New York and Geneva Conventions.

Enforcement Mechanisms:

• Domestic Awards: Section 36 of the Act stipulates that domestic arbitral awards are enforced as if they were decrees from a court. The 2015 Amendment removed the automatic stay of enforcement upon filing an application to set aside the award.
• Foreign Awards: Enforcement depends on the award originating from a country that is a signatory to:
  • The New York Convention (1958) (Sections 44–52), or
  • The Geneva Convention (1927) (Sections 53–60)
  Enforcement in India requires meeting specific conditions under Section 48, including:
  • The award being final and binding
  • Not violating Indian public policy
  • Being rendered by a competent tribunal
     

Key Differences Summarized:

Aspect	Domestic Arbitration	International Arbitration
Governing Law	Part I of the Arbitration and Conciliation Act	Part I (if seated in India) or Part II (foreign-seated)
Nationality of Parties	All parties are Indian	At least one party is foreign
Seat of Arbitration	Must be in India	Can be in India or abroad
Applicable Sections	Sections 2-43 of the Act	Part I (India-seated); Part II (foreign award enforcement)
Award Enforcement	As a decree of an Indian court	Under New York or Geneva Conventions
Judicial Intervention	Indian courts have supervisory power	Limited if seat is outside India; only for enforcement
Type of Dispute	Commercial or non-commercial	Limited to commercial disputes

Judicial Interpretation & Key Cases:

• Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012): The Supreme Court established a territorial approach, ruling that Part I of the Act does not apply to arbitrations seated outside India, limiting Indian court intervention in such cases.
• Vijay Karia v. Prysmian Cavi E Sistemi SRL (2020): The Supreme Court reinforced the pro-enforcement stance of the New York Convention, emphasizing that refusal to enforce foreign awards should be rare.

Impact of 2015 and 2019 Amendments:

• Clarification that Part I applies only to India-seated arbitrations, unless otherwise agreed.
• Strengthening of Section 9 (interim measures by court) and Section 17 (interim measures by the arbitral tribunal).
• Increased focus on institutional arbitration and expedited proceedings.
• These revisions harmonize procedures for domestic and India-seated international commercial arbitrations, fostering a uniform and arbitration-friendly legal environment.

Conclusion:
While both domestic and international arbitration aim to provide a private, binding, and efficient means of dispute resolution, their differences lie mainly in the parties involved, the location of the arbitration seat, and the relevant legal provisions of the Arbitration and Conciliation Act, 1996. Understanding these distinctions is crucial for selecting the appropriate forum, ensuring award enforceability, and mitigating potential legal challenges. Through progressive judicial interpretation and legislative amendments, India continues to solidify its position as a supportive jurisdiction for arbitration on the global stage.

Written By: Md.Imran Wahab, IPS, IGP, Provisioning, West Bengal
Email: imranwahab216@gmail.com, Ph no: 9836576565