Author: Adharva B Bose, Army law college, Pune

This paper explores the history and evolution of arbitration over the decades as a method of dispute resolution, tracing its roots from the ancient civilization to the present day where arbitration is often preferred by many because of its practical advantage. Arbitration began as an informal process in ancient Greece and Rome. Later gaining importance in medieval trade and commerce through merchant guilds and maritime practices. During the 18th and 19^th century it expanded to international diplomacy with milestones like the Jay Treaty of 1794. With the Hague Conventions of 1899 and 1907 and the creation of the Permanent Court of Arbitration marked its start of institutionalization. In the modern era instruments like the New York Convention (1958) and the UNCITRAL Model Law (1985) transferred arbitration to the preferred method for resolving cross border disputes. While in India, arbitration evolved from customary practices and colonial influences to being codified in the Arbitration and Conciliation Act 1996, with amendments enhancing its efficiency. In today’s time arbitration is not only used for commercial disputes but also addresses emerging fields like technology, energy and environmental issues highlighting its adaptability to growing global needs. This study highlights arbitration’s role as a flexible, efficient and neutral justice system.

Arbitration is the process of dispute resolution in which a neutral third party (arbitrator) renders a decision after a hearing at which both parties have an opportunity to be heard. In Collins v. Collins, 28 LJ Ch 184: 53 ER 916 Romily, M.R. defined arbitration as “An Arbitration is a reference to the decisions of one or more persons, either with or without an umpire, a particular matter in difference between the parties”. The Supreme Court relying on Russell on Arbitration,16^th Edn.,p. 54 has defined arbitration as “a particular method for the settlement of disputes. Parties not wishing the law’s delays know or ought to know that in referring a dispute to arbitration that take arbitrator for better or worse and that his decision is final both as to fact and law”. The word Arbitration comes from the Latin word arbitrary meaning “to judge” . Initially Arbitration was developed in the absence of court and now it is an alternative to courts.  

 Arbitration existed even before the establishment of courts and modern laws. Before courts justice was rendered by village heads or Elders of a particular community. People go to elders with their issues and the elders settle the conflict relying on their personal experiences, relationship with the community and practices.  

Many laws that use arbitration today have their roots in ancient practices like family matters, property issues, trust, estate and labour disputes.

In this paper we will explore the History of arbitration, how it evolved throughout the years and its current standing in the modern legal system.

1. ANCIENT CIVILIZATION

The origin of arbitration can be traced back to 4000 BC, Homer’s Illiad. China, Italy and India among other countries claim to be the first country to start the process of arbitration to resolve disputes. The earliest organised concept of arbitration is traced back to Greece around 600 B.C., when the Amphictyonic Council was formed to promote peace and protect the temple of Delphi. The amphictyonic council encouraged people to resolve conflicts through arbitration rather than go to war with it. Even powerful ancient rival states like Sparta and Argos incorporated arbitration clauses in their treaties. Later in Roman law arbitration became more formalized, for instance, Pompey guided Parthians and Armenians to resolve their disputes through arbitration recognizing arbitration as a valuable tool to maintain peace.

The arbitration we use today is similar to the one used by ancient Greeks. Both parties' agreement was required in designating the Arbitrator and the matters in disputes. The Arbitrator was the one who fixed time and place of investigation. He was pledged to be fair and neutral. The decision was also written out and deposited in temples and other public places, and oaths were taken by the parties involved to impose the sentence (decision). 

2. MEDIEVAL PERIOD

During the middle ages arbitration was recognised and have been used more frequently yet their beneficial influence was restraint due to the lack of idea of conciliation among people. Blackstone describes it as “ a method whereby the parties, injuring and injured , submit all matters in dispute concerning any personal chattels or personal wrongs , to the judgment of two or more Arbitrators), who are to decide the controversy, and if they do not agree , it is usual to add that another person be called in as umpire, to whose sole judgement it is then referred , or frequently there is only one Arbitrator originally appointed.” 

During this time merchants and traders relied on arbitration or an informal justice system as the courts were often slow, expensive and easily influenced wherein arbitration was a quicker and fair justice system at that time and alongside helping to maintain stability among trade and commerce. Association or merchants or maritime communities that handled shipping and trade across the seas often turned to arbitration when conflict arose, which were resolved through a panel or respected, proficient merchants or heads of the communities who acted as arbitrators. They were selected as arbitrators because of their practical knowledge and skill rather than their knowledge in legal matters.

Arbitration thrived in this period due to its ability to preserve business relationships and arbitration is about compromise, negotiation ,fair judgement and making sure the trade can be carried out in future as well. The awards are generally respected or complied by failing to comply; they risk being excluded from the trade network which would harm their business. Thus, arbitration not only settled disputes but also promoted trust and cooperation among traders, strengthening international commerce during this era.

3. EARLY INTERNATIONAL TREATIES

Arbitration in the 18^th and 19^th century took a new significant role in the field of international diplomacy like the signing of the Jay Treaty of 1794 between the United States and Britain which established arbitration commissions to settle issues regarding boundaries and trade, helping in  maintaining peace between two powerful nations. In the 19^th century arbitration gained further acceptance as a better or reliable way to handle borders and international treaties. During this time arbitration which was mostly used in trades and commerce was firmly entering the realm of International law and diplomacy and were now getting global acceptance and paving the way for modern arbitration. 

The Hague Conventions of 1899 and 1907 were milestones for international arbitration, as these conferences led to the creation of the Permanent Court of Arbitration (PCA) in 1899. The PCA was one of the first global institutes for arbitration, it still operates to this date handling cases including state, state entities and even private parties. The institutionalization of arbitration represents its establishment of arbitration as a legitimate tool for promoting peace and cooperation among nations. 

With the rapid growth of international trade after world war II, the nations needed a non biased , neutral and reliable way of solving disputes. The landmark New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) was adopted to ensure the arbitration award is enforced by every member state making arbitration highly effective.  During this period institutions such as the International Chamber of Commerce (ICC, 1923) and the London Court of International Arbitration (LCIA) were also rising; they provided standardized rules and administrative support for arbitration proceedings. Further the United Nations Commission on International Trade Law (UNCITRAL) introduced the Model Law on International Commercial Arbitration 1985. Many countries including India through its Arbitration and Conciliation Act, 1996 created their domestic arbitration laws on UNCITRAL, creating greater trust in arbitration as a tool for international dispute resolution. 

4. CURRENT PERIOD

Arbitration has become the preferred method of solving disputes because it provides neutrality, fairness, less time consuming, flexibility and global enforceability. Leading institutions like the International Chamber of Commerce (ICC), the Singapore International Arbitration Centre (SIAC), and the Hong Kong International Arbitration Centre (HKIAC) handle thousands of cases each year. Modern arbitration is adapting new challenges and technology by adding virtual hearing, online case management and expedited procedures. More women are appointed as arbitrators than before focusing on diversity. The scope of arbitration today is no longer limited to traditional business or commercial disputes. It is expanding into new areas that directly affect our modern world, such as renewable energy projects, supply chain disruptions, environmental challenges, and technology-related conflicts. This shift shows how arbitration is adapting to the evolving needs of global trade and society, making it a flexible and relevant way to resolve disputes in today’s interconnected world.

• ARBITRATION DURING ANCIENT PERIOD 

Arbitration has been prevalent in India right from the vedic era. According to Hindu Law, one of the earliest known treaties that mention arbitration is “Brhadaranayaka Upanishad”. Before the establishment of the court of laws, justice was rendered by village heads of a particular community . Cases back then were decided by Kulas and sometimes by Srenis (guilds) who were an association of persons who were competent to decide and judge fairly regarding the matters of trade. 

The above-mentioned courts – Kula, Sreni and Puga, were the three types of popular courts. In Yagnavalkya smriti Puga was referred and Narada smriti states that law suits can be decided by village councils (kulani) , corporation (sreni) and assemblies (puga). These institutions were not only chosen by parties to resolve conflicts and bind their judgements but were also considered divine bodies. These courts were constituted privately , and not by any royal proclamation or authority- they were almost like arbitrators to a large extent. 

During these days existed alongside courts that were established by King statutorily< where King was the presiding deity or a chief justice will be appointed by him. Appeals from Kula, Pugi and Sreni were allowed to be referred to the King against the decision of these private bodies. The above courts are also practically similar to the modern panchayats or arbitration tribunals. 

The justice system established by the king and the different arbitration institutes were the device for justice and conflict resolution before the British began to rule India. This was the beginnings of arbitration in India, where a village level Panchayat with 5 elders used to decide matters and everyone used to follow  and obey due to the fear of admonition, ex- communication and exclusion from all religious and social functions.

We can still find the Reflection of a council heading five members or panchayat even to this day in certain areas. 

• ARBITRATION DURING BRITISH ERA 

Arbitration was then formally introduced as a legal mechanism by the British. The Indian Act of Arbitration 1899 was the first legislature but it only applied to presidency towns like Bombay, Calcutta and Madras. Later the Civil Procedure Code 1908 extended arbitration to other parts of India but was supervised by court. 

The Arbitration Act 1940 was enacted to consolidate and amend arbitration laws in India after. It established a procedural framework for domestic arbitration in India and defined terms including “arbitration agreement” and “award” , but it gave the court too much powers making it time consuming, expensive and heavily litigated. The supreme court in Guru Nanak foundation v. Rattan Singh criticized it saying it clogged the process of arbitration making it complicated and confusing. This act was eventually replaced by The Arbitration and Conciliation Act 1996  incorporating global best practices in the Indian legal system based on the UNCITRAL Model Law on International Commercial Arbitration , 1985. The Arbitration and Conciliation Act,1996  modified the previous act and reduced judicial interference in arbitration , recognized domestic as well as international arbitration and introduced conciliation as an alternative to court. It made arbitration speedy dispute resolution . The Act was then formally amended three times in 2015 , 2019 and 2021. The 2015 amendment introduced methods to make the process of arbitration time bound and efficient. It also set a one year time limit for completing arbitration proceedings, with extensions allowed if needed, this ensured the disputes were solved faster. In the 2019 amendment, the most important changes was the creation of the Arbitration Council of India (ACI), mandating confidentiality and providing immunity for arbitrators acting in good faith. The burden of appointing arbitrators was also shifted to arbitral institutions promoting institutional arbitration and reducing the burden from the court. The main goal of this arbitration was to enhance the effectiveness of alternative dispute resolution methods. And lastly the amendment of 2021 made significant changes and the most important among them being the introduction of ground for an unconditional stay on the enforcement of domestic awards if the court is satisfied that the award or underlying agreement was induced by fraud or corruption. This amendment also omitted the eight schedule, which detailed arbitrator qualifications and now leaves these qualifications to be specified by regulations. 

• PRESENT SCENARIO

Indian courts became more supportive of arbitration. Now the judicial system follows a policy of minimal intervention which basically means that the courts will not interfere in arbitration matters until absolutely necessary. This has given businesses confidence that their disputes will be resolved fairly and efficiently.

Currently institutional arbitration is gaining popularity over ad hoc arbitration. Institutions in India like The Indian Council of Arbitration (ICA), Mumbai Centre for International Arbitration (MCIA), and Delhi International Arbitration Centre (DIAC) are providing professional facilities, trained arbitrators and transparency of cases helping India align itself with international or global practices. 

At global level India has positioned itself as an arbitration friendly jurisdiction. With government support, reforms and awareness arbitration in India is growing rapidly and is more reliable and business friendly. India is now actively promoting arbitration to reduce judicial backlogs. The Supreme Court also promotes a pro-arbitration approach emphasising minimal judicial interference.

Even though arbitration is considered a modern concept it has been practiced in various parts of the nation, in various communities and regions even before the establishment of courts. It has been used as an effective tool in maintaining peace and harmony among countries and individuals over the years. The practice of arbitration has gained trust and is considered the best and most efficient way of solving disputes. Over the years arbitration has evolved and the current version we follow is made perfect for easy and quick resolution of conflicts. It shows how our society values peaceful and fair ways to resolve any conflict.

In India, it emerged from traditional dispute resolution customs to being changed by British influence and later strengthened by the Arbitration and Conciliation Act, 1996 and its amendments. Globally, conventions like the New York Convention (1958) and the UNCITRAL Model Law (1985) made arbitration the backbone of international trade and investment disputes.

These arbitration is not just tied to business but it also involves areas like technology, labour rights etc. Its journey highlights the importance of arbitration and that while fights and conflicts are inevitable. This shows the trust people have in arbitration – its neutrality , and labour rights, reflecting changing global needs. And  proves that while conflicts are inevitable, fair and peaceful resolution has always been a shared human goal. While all this, the main goal of mankind was to peacefully and fairly resolve their conflicts at the earliest and maintain harmony. 

1. U. Pattabhi Ramiah, Arbitration & ADR 23–25 (2d ed. 2018).

2. Madhusudan Saharay, Text Book on Arbitration and Conciliation with Alternative Dispute Resolution 1–4 (4th ed.).

3. Nigel Blackaby et al., Redfern and Hunter on International Arbitration (5th ed. 2009).

4. Treaty of Amity, Commerce and Navigation, U.S.-Gr. Brit., Nov. 19, 1794, 8 Stat. 116.

5. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3.

6. U.N. Comm’n on Int’l Trade Law, Model Law on International Commercial Arbitration, U.N. Doc. A/40/17, Annex I (1985).