REGULATORY BODY IN THE FIELD OF ARBITRATION: A BOON
Alternative Dispute Resolution widely known as ADR is defined as means of setting disputes outside the courtroom. The practice involves set of techniques which is aimed at providing resolution without undergoing litigation so as to curb the ruination of money and time which is involved in court proceedings.
“Discourage litigation. Persuade your neighbours to compromise whenever you can. Point out to them how the nominal winner is often the real loser — in fees, and expenses, and waste of time. As a peace-maker the lawyer has a superior opportunity of being a good man. There will still be business enough.”
– Abraham Lincoln
In recent years, ADR has achieved acceptance all over the place not only among general public but also in legal profession. The increasing fame of ADR can be explained by rising load of cases on traditional courts, imposition of lesser cost than litigation, time saving etc. There are mainly 3 types of alternatives in resolution of a dispute viz...
ADVANTAGES OF ARBITARTION
In comparison to litigation, where the parties are not able to "choose the judge", arbitration allows the disputed parties to appoint their own tribunal. It is especially useful for those cases where the subject matter of dispute is highly technical. The arbitrators can be chosen according to their expertise. Process of arbitration is faster as compared to traditional court proceedings.
The time being saved in arbitration process also saves the money of disputed parties. Because of being cost effective parties prefer arbitration than litigation.
The conflicting parties have control over the process of arbitration as compared to any other dispute resolution process. The concerned parties are directly associated in decision process by way of their consent to the agreement.
One of the main advantages of arbitration is that the matter between the disputed parties remain confidential as compared to trial.
ARBITRATION AND CONSILIATION ACT
Regulation is generally considered as antithetical to growth. In India growth of arbitration has been witnessed over the past decades. The Apex Court passed judgments overruling its earlier positions, and the government made necessary changes to the law, bringing in much-needed air of freshness in an otherwise stale and abused law. Arbitration in India has finally taken off.
However, this flight may be short lived. In India Arbitration is regulated by the law of arbitration. The law states that for adopting the process of arbitration as an alternative for dispute resolution, an agreement to that effect must be duly signed between the parties to the conflict.
The Act is broadly based upon UNCITRAL Model Law which was enacted to amalgamate, define and amend the law in relation to domestic arbitration, international commercial arbitration and the enforcement of foreign arbitral awards.
The courts in India are increasingly adopting arbitration procedure and are enforcing valid arbitration agreements. The principle of non- interference by the traditional courts is contained in the statement of objects and reasons of the Arbitration and Conciliation Act. The act empowers the disputed parties to choose number of arbitrators as long as this is not an even number. The most important process in the arbitration is the appointment of arbitrator. If a party fails to appoint arbitrator for dispute resolution within the stipulated period of time than the other party may seek the appointment of arbitrator by applying in Supreme Court or High Court.
Arbitration and Conciliation Act provides no clear-cut rules regarding the manner and method regarding which the disputed parties have to communicate with the tribunal. All-important communications are in written form. It is upon the discretion of the disputed parties for the language(s) to be used in the arbitration agreement. If the parties make no choice of the agreement than it is upon the tribunal to choose the language(s) for the agreement. The Act does not require consistent agreement from the tribunal. Unless otherwise agreed by the disputed parties, any decision of the tribunal can be made by a majority of all its members.
The Arbitration and Reconciliation (Amendment) Act, 2019 has strengthened and made the arbitration procedure user friendly, cost effective and time bound. The bill was introduced in Rajya Sabha on July 15, 2019 by the Minister for Law and Justice, Mr. Ravi Shankar Prasad and was passed by both the houses. The bill was introduced with the aim of amending the Arbitration and Conciliation Act, 1996. Further, the Bill seeks to establish an autonomous body called the Arbitration Council of India (ACI) for the advancement of arbitration, mediation, conciliation and other alternative dispute redressal mechanisms.
Under the amended act, arbitration tribunals need to make their award within one year for all arbitration proceedings. The bill removed this time restraints on International commercial arbitration. Also, there is no time limit to file written submissions before arbitral tribunal. The bill further provides that all the information about the dispute shall be kept confidential before the tribunal. The judicial intervention has been greatly reduced in the arbitration proceeding by the introduction of Arbitration and Reconciliation (Amendment) Act, 2019.
It is to be noted that currently no mandatory laws regulation arbitration in India, except the Arbitration and Conciliation Act, which assures partial independence in respect of most procedural matters. The act does not adhere to any strict requirements for an arbitration agreement. It must be in writing. The agreement may be in the form of an arbitration clause in a contract or in a separate agreement. There is no specific form for an arbitration agreement and the courts will look upon the wording to determine whether the disputed parties intended to enter into an arbitration agreement.
The act does not contain any certain provision on separability. However, Indian Constitution under article 13 recognizes the doctrine of separability which facilitates the separation of valid arbitration clause from the parent contract so that it can constitute an agreement by itself.
However Indian traditional courts have recognized the concept of multi- party agreements but The Arbitration and Conciliation Act, is silent on multi- party agreements. Further, the present act requires no specific background and qualification of arbitrator. The nationality of arbitrator is not a matter of concern unless the agreements states otherwise. The only thing which the act requires is that the arbitrator must be independent and impartial. The arbitrator is said to be impartial when he listens both the parties equally. The appointment of arbitrator can be challenged by the disputed parties, if the parties concerned are able to raise justifiable doubts in respect of independence and impartiality of Arbitrator or if he/she fails to possess the required qualifications agreed between the disputed parties.
The Arbitration and Conciliation Act entrusts the arbitrator with broad powers to manage the proceedings
The act in question only requires that while exercising these powers, the arbitrator should not encroach the principals of natural justice. The arbitrators are expected to adhere on principals of natural justice while setting up the dispute. The disputed parties must be given proper notice of hearing and also equal opportunity to present their case. It is expected that arbitrator should not act partially or show particular interest towards the appointing party. The conclusion given to the dispute should be according to the facts provided by the parties and not by the personal knowledge of the arbitrator.
The only thing which is required to commence arbitration under Arbitration and Conciliation Act is the issuance of the notice by one party to the other party in which intention to transfer the dispute to arbitration tribunal is stated. Further, The Limitation Act, 1963 also applies to all the proceedings of arbitration under Arbitration and Conciliation Act which states that “any proceedings commenced after the limitation period of three years from the date on which conflict arose shall be considered time barred”.
The Amended Act, 2019 has introduced certain privileges to arbitrator with respect to acts done with bona fide intentions. The Act states that the decision of arbitrator shall be final binding upon the disputed parties subject to any rights to challenge the award. The Arbitration and Conciliation Act further also allows the Tribunals to rectify any computation, clerical or any typographical error and makes an additional decision so as to claim omitted error from the original decision.
India is a vast country with an estimation of 31 million cases pending in the court of law. According to a survey held on 31st December, there were 59,272 cases pending in the Supreme Court of India, 3.8 million cases were pending in High Court and almost 27 million cases were pending before the subordinate judiciary.
There are some cases which are pending for more than 5 years. Around 26% of the cases i.e. more than 8.5 million. It has been seen that on an average it takes 20 years or more to resolve the land or real estate dispute. Almost 12 million people are waiting for a trail for criminal cases in the country. There is a study conducted which states that India takes 1420 days and 39.6% of the value claim for the dispute resolution. India is at 178 position in the ranking of 189 economies on the ease of implementing contracts. It has been seen in a survey that the quality of judicial processes which is concerned with the court structure, court proceedings, case management, court automation and alternative dispute resolution in India is on a bad position.
At the end the Statistics shows the worst condition of disputes which has been resolved in the courts so Arbitration has help to solve the disputes faster and in a better way.
The angst of the Indian traditional Courts enunciated in Guru Nanak Foundation v. Rattan Singh and Sons, is as true today as it was so many years ago. In that case, Justice DA Desai succinctly stated:
“Interminable, time consuming, complex and expensive Court procedures impelled jurists to search for an alternative Forum, less formal, more effective and speedier for resolution of disputes, avoiding procedural claptrap and this led them to Arbitration Act, 1940.
However, the way in which the proceedings under the Act are conducted and without exception challenged in Courts, has made Lawyers laugh and legal philosophers weep…Informal Forum
chosen by the parties for expeditious disposal of their disputes has by the decisions of the Court been clothed with ‘legalese’ of unforeseeable complexity.”
The UNCITRAL Model Law, on which the Arbitration Act is based, also aims to, “protect the arbitral process from unpredictable or disruptive court interference” as this is, “essential to parties who choose arbitration (in particular foreign parties)” .
Arbitration and Conciliation Act delineates as a Judicial System’s savior where it endeavors to bear the load of overburdened Courts and buoy the faith of people in India’s Justice regime. As with the rapid growth of economy, not only the development has been outpaced but the commercial disputes too, as the Development and Dispute are two sides of the same coin and the multiplicity of outstanding disputes in the courts has led to exorbitant delay’s in the administration of Justice and cost buttload of money to the parties in the litigation process thereby undermining the people’s faith in the Judicial System.
Ergo, the provision of Arbitration and Conciliation Act has been promoted as a way to resolve disputes effectively as the proponents of arbitration commonly point to a number of advantages it offers over litigation as already discussed in the former part of this article.
Year of study- 3rd year
College- Fairfield Institute of Management and Technology (GGSIPU)