CHANGING PHASES OF ARBITRATION IN INDIA

Introduction

I will see you in the Court” is a pretty common and prevalent line that comes into usage multiple times by people whenever they encounter or experience any unjust act of varying magnitudes. Every citizen looks up to the4 courts and the judicial system as a whole as a shield that would not only protect them but serve them with justice. With the amount of faith the citizens have placed in the judicial system, a whole lot of responsibility comes complimentary. The courts have to cater to a huge number of issues every single day and the number just keeps rising. The hike is so massive that the system itself falls short of personnel and the time to serve every citizen equally. This perhaps is a shortfall. But, an alternate method of redressals has been provided, with one of them being “arbitration”. It is an ‘out of court settlement’ method, whereby the agreement of the parties, the dispute is handed over to the arbitrators who provide a binding decision on the same. This comes under ADR, i.e., Alternate Dispute Redressal methods, which further includes reconciliation, mediation, mini-trial, private judging etc. The process of the methods included herein is not so rigorous and gruesome, the main aim here, is the quick and just disposal of the cases, without taking them to the actual courts. Generally, civil matters can be sought by this technique.

Growth of Arbitration in India

Though the method of arbitration has been existing in India since the year, 1940, the regular usage of the same by the citizens has begun only recently and it has now come to the mainstream.[1]A huge number of reforms and amendments have taken place in the regulations and ordinances relating to arbitration, keeping in view the economic reforms in the country. Major amendments were introduced from the year 2015 to 2019. A new major set of amendments were introduced in the year 2019, which gave rise to the Arbitration and Conciliation (Amendment) Act 2019, brought in by the Arbitration council of India, recently with some more developments we have the Arbitration and Conciliation (Amendment) Act, 2021. The recurring developments and amendments in the act, clearly point to the fact that arbitration is becoming a more preferred method by the people and it is a positive factor, keeping the burden and hence, major delays in the court system.

Major recent amendments

Following are some of the amendments which have greatly influenced arbitration as a more prevalent method amongst the masses:

  • Challenging the arbitral award

People still think over when they get an arbitral award thinking that it may be unfair to them, so in order to provide the surety of fair decision making to the people, the courts have laid down the order of automatic stay on the enforcement of any arbitral award if it is proved without a doubt, prima facie that it was influenced by fraud or the like. In addition, the appeals against an order of the court under the arbitration act were not entertained beyond 120 days earlier, but after the amendment, the appeals can even be condoned after 120 days, but only in exceptional cases after the clear reasons have been stated.[2] The award can also be set aside if a party brings conclusive evidence of any defect in the award, or of its invalidity “on the basis of the records of the arbitral award”, rather than just putting forward any evidence as per the earlier act, prior to the amendment.[3]

  • Interference by the courts

If the interference of the courts is more than necessary in the arbitration proceedings, then the whole purpose of out of court settlement is being served by arbitration. Provisions have been made in the act which specifies the extent of interference of the courts in the act.[4] The factors which call for interference from the courts has also been mentioned in the act, the scope of interference has been significantly reduced to provide for the fact that arbitration is an independent method and not a subsidiary of the regular courts. The Supreme Court, recently in the 2021 amendment has held that the Indian courts cannot modify the arbitral award that has been challenged in front of them, keeping the point of limited interference in mind. [5]

  • Criteria to become an Arbitrator

The criteria to become an arbitrator, including the qualifications, experience and norms which were supposed to be followed as mentioned in the eighth schedule under section 43J of the Arbitration and conciliation (amendment) act, 2019.[6] It has been omitted now after the 2021 amendments. The said section has been done away with, by mentioning the line “The qualifications, experience and norms for accreditation of arbitrators shall be such as may be specified by the regulations[7]. The rationale behind the same is that the matters in which the regulation is made are matters involving variable levels of intricacies and administrative details, so there is no point for them to be provided in the amendments itself.

Also, since it has now been established that the courts only have a very limited scope of interference in the arbitration process, after the 2019 amendment, certain provisions to protect the interests and maintain a level of confidentiality have been for the arbitrators have been made. It is to be noted that these provisions are only applicable to the acts done by them in good faith and if even a hint of fraud and malafide is detected in the acts, action may be taken by the courts against the arbitrators.[8] All the parties, arbitrators and their institutions are required to maintain the confidentiality of the arbitral award all through and disclose the same only at the time of implementation.  This particular amendment transformed the process of arbitration into a reserved proceeding, much like the one taking place in the courts.[9] Above mentioned are some of the basic yet significant amendments that have managed to divert the complete flow of the act and turn it into a developed act that provides foolproof solutions and is somewhat just like the courts.

Conclusion

Many efforts have been made by the judicial system in order to bring establish arbitration as a more prevalent method of settling disputes, but we still have a long way to go to make it as the most common method. Even after a ton of amendments, there is still a huge number of people who are not even aware that such a method exists, let alone adopting it. Efforts should be made to make people more aware of the same as it does have a lot of advantages and it may even prove to be a permanent cure for the ailment of procedural and other delays that our judicial system faces. If cases start being well handled outside of the courts, and only the most complex and grave cases started entering the courts, justice would be served to every single person well and within the time he/she should be getting it rather than waiting around for it for a crucial chunk of their lives. The amendments are very useful and appropriate keeping the latest trends in mind, like the take with which things or situations are approached by the people. So, the act has kept growing and it has turned out to be effective and efficient, if more people use it, this method would be very helpful in the long run.

Author(s) Name: Lakshya Bhatia (Maharaja Agrasen Institute of Management Studies, Delhi)

References:

[1] India: Arbitration Law In India Key Judgments And Updates For The Year 2021, 2021 ,  dispute-resolution, 01 February 2022, by Acuity Law accessible <https://www.mondaq.com/india/arbitration-dispute-resolution/1156308/arbitration-law-in-india-key-judgments-and-updates-for-the-year-2021> accessed Feb 28, 2022.

[2] Government of Maharashtra v. Borse Brothers Engineers & Contractors Pvt. Ltd. CIVIL APPEAL NO. 995 OF 2021 ( SLP (CIVIL) No.665 of 2021) accessible at <https://indiankanoon.org/doc/197941333/> accessed Feb 28, 2022.

[3] Section 34(2)(a) of the Arbitration and Conciliation (Amendment) Act, 2019

[4] Section 34 Arbitration and conciliation act, 1996

[5] The Project Director, National Highways No. 45 E and 220 (NHAI) v. M. Hakeem & Anr, 2021 SCC OnLine SC 473

[6] Eighth schedule, Arbitration and Conciliation (Amendment) Act, 2019

[7] Section 3, the Arbitration and Conciliation (Amendment) Act, 2021

[8] SECTION 42A of Arbitration and Conciliation (Amendment) Act, 2021

[9] SECTION 42B of Arbitration and Conciliation (Amendment) Act, 2021