Which Law governs Arbitration

Law which governs Arbitration in India is Arbitration and Conciliation Act,1996

Owing to its global development, Law of arbitration do recognizes that there is a difference between the law governing the main contract and the law governing the conduct of the proceedings before the Arbitral Tribunal.

Arbitration gives independence to the Parties to nominate which of the specific national laws will govern either or both these divisions.

Substantive Law and Curial Law

In international commercial arbitration, it has become a norm that at the very inception the parties agree upon a Substantive Law and on Curial Law.

Parties are free to choose substantive law applicable to the contract, curial law applicable to arbitration proceedings and the judicial seat of arbitration. Such choice can be express or by implication Substantive law is the law governing the contract while the curial law is the law governing the arbitration proceedings between the parties to the dispute.

This doctrine of separate existence means that it is possible for an Arbitration agreement to be governed by a different substantive law than the governing law of the substantive main contract. To avoid uncertainty it is always advisable to specify the applicable law in the arbitration agreement itself.

The law which governs Arbitration in India is Arbitration and Conciliation Act,1996.

International Arbitration is usually governed by more than one Law

• the law governing the substantive bilateral contract
• the law governing the Arbitration procedure or seat of Arbitration
• the law governing the Arbitration agreement/clause
• the law of the Country/State where the award will be enforced.

Generally, the mutual understanding and the agreement to resolve disputes by way of arbitration emanates from a clause within a Business contract. As such the Arbitration agreement is a mutually binding Contract on its own and is quite independent in its existence from the substantive contract in which it incorporated.

The Arbitration and Conciliation Act,1996 applies to arbitrations which are held in India between Indian nationals and to international commercial arbitrations whether held in India or out of India. Part 1 of the Act covers all kinds of international commercial arbitrations.

In case where there is no express choice of law governing the contract as a whole or the arbitration agreement in particular, there is, in the absence of any contrary indication, a presumption that the parties have desired that the proper law of the contract as well as the law governing the arbitration agreement are the same as the law of the country in which the arbitration is agreed to be held.

Choice of seat of Arbitration

The choice of a particular seat of Arbitration may have important and unexpected consequences as the law of that place may confer powers on the courts or on the Arbitrators that may not be in the knowledge of the parties.

Part VI of Indian Dispute Resolution Centre Domestic Arbitration Rules, 2019 Article 48 - Governing Law provides that the terms of the Schedule and any non-contractual obligation arising out of or in connection with them shall be governed by and construed in accordance with India law.