Introduction

The importance of International arbitration has been recognised all over the world. Globalization has brought the world closer and it’s more of a Global village now. The cross-border trade and investments have resulted in more intricate connections between the firms, Investors and government. In such cases arising of disputes is a common thing and therefore here comes the role of international arbitration. International arbitration is a simple, inexpensive, and time-efficient way of treating disputes. It provides more of a neutral platform for the parties as it’s not bound by the particular law of the state.

International Commercial Arbitration (ICA)

International Commercial Arbitration helps to resolve disputes among the international parties arising out of commercial transactions which are conducted cross-border without involving litigation in Domestic Courts. Section 2 (1)(f) of the arbitration and conciliation act, 1996 ( Hereinafter-Act) define International Commercial Arbitration as “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— (i) an individual who is national 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) 2*** 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”

The scope of Section 2 (1)(f) of the arbitration and conciliation act, 1996 was determined by the Supreme court in the case of TDM Infrastructure Private Limited v. UE Development India Private Limited(2008). The Supreme Court held that “When both the companies are incorporated in India, and have been domiciled in India, the arbitration agreement entered into by and between them would not be an international commercial arbitration agreement.”

Growth of International Arbitration in India

India is continuously trying to make India a hub for International arbitration by establishing new arbitral centers in India. Mumbai center for International Arbitration (MCIA). It’s the first of its kind of arbitral institution in India, established in a joint initiative between domestic and international business and legal committee.

The MCIA aims to be India’s premier forum for commercial dispute resolution by providing:

• Arbitral rules which draw on the latest innovations in international arbitration best practice and are also attuned to the Indian market;
• A dedicated secretariat which facilitates the efficient, flexible, cost-effective and impartial administration of arbitration proceedings.

Understanding the complexities of Section 2(1)(f)

1.    1996:  “International Commercial Arbitration” in terms of section 2(1)(f) of the Act meant an arbitration relating to a commercial dispute where at least one of the parties to dispute is: ”… (iii) a company an association or a body of individuals whose central Management and control is exercised in any country other than India; or..."

2.    2008: The Supreme court determined the scope of Section 2 (1)(f)(iii) in the case of TDM Infrastructure Private Limited v. UE Development India Private Limited. (2008) 14 SCC 271 where it was concluded that “a company incorporated in India can have only Indian nationality for the purposes of the Act,”  despite TDM Infrastructure Private Ltd.  having foreign control. This is a key decision that establishes the ‘place of incorporation’ principle. This in turn, paved the way for the amendment.

3.    2014: The Law commission of India proposed various revisions to the Act in its report No. 246 of August 2014, taking into the account reason offered in TDM Infrastructure verdict in proposing deletion of the word ‘a company or’.

4.    2015: The 2015 Amendment Act deleted the word ‘a company or’ from purview of definition thereby restricting the definition of International Commercial Arbitration (ICA) only to the body of individuals or associations.

5.    2018: In M/S Larsen and Toubro Ltd. SCOMI Engineering BHD v Mumbai Metropolitian Region Development Authority,(2019) 2 SCC 271 the Supreme Court held that the arbitration between an Indian Entity and A Consortium of Indian and Foreign Entities would not be an “International Commercial Arbitration” under the Indian Arbitration and Conciliation Act, 1996 .

6.    2019: In Aslam Ismail Khan Deshmukh v. Asap Fluids 2019 SCC OnLine BOM 304 the Bombay High Court held that if one of the parties to the arbitration satisfies the requirement of being a national of, or habitual resident in, it would constitute an “International Commercial Arbitration”.

7.    2021: In Amway (India) Enterprise v. Ravindranath Rao Sindhia (2021) 8 SCC 465 the Supreme Court decided that where one party habitually resides in a foreign country, arbitration becomes an international commercial arbitration even when the business is being carried through an office in India.

Conclusion

In the view of the above stated judgments it can be concluded that:

• If the parties of the dispute are the individuals, then their nationality or habitual residence shall act as a determination factor for the case.
• On the other hand, if one of the parties of the dispute is a corporate entity then the arbitration will we decided on the basis of place of incorporation.
• Whereas in the case of dispute between two parties, where one of the parties is a consortium or a joint venture of two of more entities then the identity of the lead member under of the entity will be used as a determination factor for deciding the nature of the arbitration.

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