THE FUTURE OF ARBITRATION IN INDIA

INTRODUCTION

A quasi-judicial adjudicatory process called arbitration allows the parties to resolve their differences through the appointment of arbitrators by the court or by the parties themselves. The provisions of the Arbitration & Conciliation Act, 1996 regulate, limit, and control procedures and decision-making. In Arbitration a precise set of procedural steps is followed in a formal, private hearing.[1]ADR is a more preferred form of dispute resolution over litigation because of the increasing court processing times, increased prices of hearings, and continuous time delays that impact the litigants. ADR refers to a wide range of dispute resolution techniques and can be used to resolve disputes to a conflict instead of going to court. ADR Methods are of 4 types:-

  • Negotiation
  • Mediation
  • Arbitration
  • Conciliation[2]

One of the well-known forms of alternative dispute resolution is arbitration. It is the forum when parties adopt, according to an agreement, a forum other than a court of law to resolve their issues. The development of arbitration has been justified by the need to lighten the burden of the court and give the parties access to quick relief. By mutual consent of the parties, an arbitration procedure involves submitting a disagreement to one or more arbitrators who then render a legally enforceable judgments. Instead of going to court to resolve their disputes, the parties opt for Arbitration. Arbitration can also be termed as outside the court settlement of disputes that arise between the litigants. Nowadays governed by special legislation is Arbitration and Conciliation Act 1996, the Civil Procedure Code 1908 has a specific provision Sec-89 which provides opting of Arbitration as a dispute-solving mechanism between litigants.

The following are the essential characteristics of arbitration:

  • It is consensual;
  • The parties appoint the arbitrators;
  • Arbitration is neutral; and
  • Arbitral decisions are binding on the parties and final, with little room for appeal.
WHY IS ARBITRATION PREFERRED OVER THE JUDICIARY

 It is a method of dispute resolution when a party or parties are chosen to resolve the disagreement. They serve as the neutral third party in the dispute. An arbitrator is a neutral person who gives the decisions after hearing both parties to the disagreement. Matters in arbitration are disposed of much earlier than the traditional court cases. When a dispute needs to be resolved without the expense and inconvenience of going to court; arbitration is adopted instead of litigation. It is also less expensive when compared with litigation. It is more flexible and party-centric in comparison to litigation.

WHAT IS THE IMPORTANCE OF ARBITRATION IN LEGAL ASPECTS?

The Arbitration and Conciliation Act, of 1996 governs arbitration in India.[3] As per the Arbitration Act 1996, the parties to the dispute are absolved to appoint the arbitrator of their choice and if they do not do so then the chief justice or the person so appointed by him on this behalf will do the needful. Since the Arbitrator is as per the mutual consent of parties it’s quite more appealing to parties to the suit to refer the case for Arbitration. According to the Act, parties will be referred to arbitration if any matter that is brought before a court is covered by an arbitration agreement.[4] The Bill specifies that a court must use this power of referral even if a prior court decision says otherwise.[5] Unless it determines that there is no valid arbitration agreement, the Court must order the parties to submit their disputes to arbitration.[6]

WHAT IS THE FUTURE OF ARBITRATION IN INDIA?

Additionally, a tiered system of assigning disputes to arbitral institutions has been added by the 2019 Amendment. The Arbitration Council of India will now grade arbitration institutions as per the 2019 modification. According to the legislation, arbitral institutions must be evaluated based on their structure, the standard and competence of their arbitrators, their performance, and their adherence to deadlines for resolving local or international commercial arbitrations.[7] Arbitration in India is not well structured as in other countries like Singapore, the UK, the USA, etc. most arbitration controversies deal with Government contracts and as an age-old practice, these contracts stipulated arbitration by the departmental head. Most of the arbitrators appointed through the High Courts to settle disputes are the estate or sphere of a feudal lord of retired judges. Arbitration is a judgment grounded on perceptible. It is devoid of the complications of the Civil Procedure Code and Evidence Act. Still, the arbitrators having a purely legal background are unfit to appreciate specialized data of the contractual obligations of the parties and essay the proceedings as any other action.

CASE LAWS RELATED TO ADR IN INDIA

Bharat Aluminum Co. v. Kaiser Aluminum Technical Services Inc., [(2012) 9 SCC 552 [8] In the landmark cases of Bhatia International and Venture Global Engineering, the Supreme Court held that Part I of the Arbitration and Conciliation Act, 1996 set out the procedures, award, interim relief and appeal provisions concerning an arbitration award and held that it would apply to all arbitrations held out of India, unless the parties by agreement, express or implied, exclude all or any of its provisions. The Supreme Court held that there is a clear distinction between Part I and Part II which applies to completely different fields and with no overlapping provisions. The court read the arbitration clause in light of “party autonomy” being the “grundnorm” of international commercial arbitration and stated that when interpreting such an agreement, it must be kept in mind that parties would have intended to avoid impracticable and inconvenient processes and procedures. The court, therefore, found that the proper law of contract was an Indian law while English law was only the law governing the arbitration agreement.

Inox Renewable Limited v. Jayesh Electricals Limited (13 April 2021) [9] The SC held that a change in the ‘venue’ of arbitration by mutual agreement of the parties will amount to a change in the juridical ‘seat’ of arbitration. Even if such an agreement is not in writing, it will be considered valid.

Board of Control for Cricket in India v. Deccan Chronicle Holdings Ltd, (16 June 2021)[10] In this Petition under Section 34 of the Arbitration & Conciliation Act, 1996, BCCI takes exception to a 17th July 2020 award by a learned Sole Arbitrator. The Bombay HC set aside an arbitral award that went beyond the terms of the agreement between the parties.

CONCLUSION

As Nani Palkhiwala said in a judgement“a court of law is like an ancient castle, constantly under form. There comes a time when it no longer pays to patch it up and it is better to resort to a new, compact house erected on ultramodern lines. The law of arbitration is continuously improving and giving individuals a way to resolve their disputes quickly and efficiently while also relieving the judiciary of some of its burdens. There are certain advantages to arbitration that gives it an edge over litigation and hence it is preferred over litigation. The disagreements are settled more promptly and without fuss under this approach of conflict settlement. Arbitration and litigation each have advantages and disadvantages Therefore, both arbitration and litigation can cooperate to reduce the backlog of cases, making both processes equally crucial and efficient.

Author(s) Name: Ananya Mishra (Integral University, Lucknow)

References:

[1] Kumari V, Tandon U, and Bharti S, Alternative Dispute Resolution Reading Material (Faculty of Law, University of Delhi 2020) <http://lawfaculty.du.ac.in/files/course_material/VI_Term/LB-602-%20Alternative%20Dispute%20Resolution%20-%20OK%20(1).pdf> accessed 20 July 2022

[2]‘Explain The Advantages And Disadvantages Of Alternative Dispute Resolution | The Lawyers & Jurists’ (The Lawyers & Jurists) <https://www.lawyersnjurists.com/article/advantages-disadvantages-alternative-dispute-resolution/> accessed 20 July 2022

[3] Stewart G, ‘Dispute Resolution Issues In Indian Cross-Border Transactions’ <https://www.jonesday.com/en/insights/2012/02/dispute-resolution-issues-in-indian-cross-border-transactions> accessed 20 July 2022

[4]  Ministry of Law and Justice, ‘The Arbitration And Conciliation (Amendment) Bill, 2015’ (PRS Legislative Research)

[5] ‘M/S. Eagle -Mpcc (J.V.) Vs The General Manager On 8 December, 2017’ (Indian Kanoon, 2022) <https://indiankanoon.org/docfragment/89806852/?formInput=existance%20of%20arbitration%20agreement%20%20%20doctypes%3A%20karnataka> accessed 20 July 2022

[6] ‘Review Of Arbitration And Conciliation Bill, 2015’ (https://indiafilings.com, 2022) <https://www.indiafilings.com/learn/indiafilings-review-arbitration-conciliation-bill-2015/#:~:text=Power%20of%20Courts> accessed 20 July 2022

[7] Department of Publication (https://wwwindiafilingscom/learn/category/compliance/)

[8] Bharat Aluminum Co v Kaiser Aluminum Technical Services Inc Supreme Court of India (Supreme Court of India)

[9] Inox Renewables Ltd. v Jayesh Electricals Ltd (Supreme Court of India).

[10] Board of Control for Cricket in India v. Deccan Chronicle Holdings Ltd, [2022] (High Court of Bombay).