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Published : August 14, 2017 | Author : licitus07
Category : Arbitration | Total Views : 941 | Rating :

Learning Advocate

The Lethargic Process Of Alternate Dispute Resolution Today

The Indian judicial system is primarily known for the long pending cases. Constant adjournments and prolong delays often bring out inconsequential judgements thereby leaving a huge scope of challenging the same by way of filing an appeal in the higher courts and consequently pouring more into the number of already pending cases. The legal profession has become mesmerized due to the stimulation in the court room thereby making the professionals to forget that they are the healers of the conflict and that the proper pace is very significant for the conflicts to be solved. The expansion of trade beyond the boundaries and globalisation of the world economy has made the emergence of new economic order which demands for effective and efficacious alternatives for the settlement of emerging commercial disputes. A large investors and foreign traders have expressed their concerned about the sluggish system of dispute resolution prevailing in India. Cases filed in courts often take years to stand for its argument stage, by the time the case reach to stage of final hearing, parties losses the hope and faith in the Judicial system thereby degrading the confidence in the dispute resolution system of the country. To ease out these acrimonious situations, the legislation adopted an alternate dispute resolution system thereby enacting an enactment of Arbitration and Conciliation Act 1940( herein after referred to as the "ACT").

The practice of settling disputes by reference to a person or persons of their choice is a common position since ancient India. The Civil Procedure Code 1859 provided with the chapter on arbitration. Thereafter Arbitration action Act 1940 came into existence, the act was enacted in lines with English Act of 1889. The act did not contained provisions for the international arbitration. The Act of 1940 was replaced by the act of 1996 which was designed with the intention of implementation of UNICITRAL MODEL law, to create provisions for international arbitration as well and to develop a pro-arbitration atmosphere in India. The act was introduced with much trumpet blast with the belief that the said act would reduce the overwhelming load of the Indian courts system. The Act of 1996 has enclosed the role of court which is very minimal. As per the Arbitration and Conciliation Act of 1996, the role of court is not supervisory but that of assistance. Parties can take assistance of the court in between the arbitration proceedings. Section 5 of the act clearly says that “the court should not interfere in the arbitration matters unless it is provided for so there”. This makes the intention of the act evident that the courts shall assist in the arbitration process and that the tribunal formed should act independently of the intervention of courts thereby solving the dispute speedily. Section 34 of the Arbitration and Conciliation Act, 1996 provided for setting aside the award passed in the arbitration proceedings, still there is lot of interference of courts in arbitration disputes or arbitration awards. Hence it would not be wrong to say that if the delay is failing the Indian judicial system then the delay is also failing the arbitration forum. The current practice is still far from reaching the objective of the act and the UNICITRAL MODEL of law.

The basic problem lies in the way in which the adjournments are granted. The prominent system of arbitration in India is ad-hoc arbitration which is accompanied by the tendency to grant frequent adjournments, because of pressure from the senior counsels appearing in the proceedings, it is also that the arbitration proceedings are held after hours so that the practice in the courts should not get affected. Subsequently, the arbitrators are often burdened with long pending cases and the dates fixed are with the gap of months. Also most of the times it is the retired judges who are appointed as the arbitrators- (this is specifically when the arbitration is institutional arbitration) and who, by the virtue of long tenures are aware of carrying on with the procedure by keeping intact with the tedious rules and evidence. As a result arbitrations merely become a battle of pleadings and procedure, wherein each party trying to stall if it works to their favour. Many a times it happens that the arbitrators themselves are not aware with the entire procedure of the proceedings thereby leading to the failure of application of their own mind while dealing with the interim prayers prayed during the proceedings by the parties, consequently the parties become bound to seek interference of the courts and the circle of prolongation of the proceeding goes on. There also exists the temptation for the arbitrators to prolong the proceedings so as to earn higher fees per sitting. Lawyers are often not trained in law and practice of the arbitration and there is tendency among them to seek adjournments. Many a times it is seen that the lawyers failed to balance between the court practice timings and arbitration proceedings all of which add up to a lack of standards in conducting the arbitration practice in India. This has driven parties to opt for arbitration process outside country; gravitation is more towards the conduction of proceedings at London being the popular for the purpose and Singapore as the emerging international arbitration hub. As a result, the parties prefer to go through the court proceedings even if that means going through the delay. The delay for the arbitration proceedings in India can be extended further for the reasons that the way in which the arguments are done in Indian courts are long-lasting and in much depth of the matter. Each and every fact and evidence, may that be related in toto or not are argued in depth and by taking into considerations all the minute details. Also the counsels and senior counsels that appear in the proceedings schedule the proceedings after the court hours, these results either in weekend hearings or hearings for few hours due to which the continuity in the proceedings is lost between the sessions. This is also a noteworthy reason for the extended proceedings, due to the gap between two dates of the proceedings invites a need to retread the matter and to refresh the arbitrators to help them to the recollection of the evidence. The arbitrators are themselves trended with the model of Indian Courts and hence cannot restrict the parties from going into the tedious unwarranted arguments resulting in them being unable to ensure that the hearings will go in a particular pace.

The problem in the arbitration proceedings have been encircled by the repeated interventions of the courts. Though the Arbitration and Conciliation Act, 1996 has aimed in lessoning the intervention of courts in between the arbitration proceedings, but how much success has this act achieved? The act makes intervention of courts especially in the case where awards should be reviewed but the intention is only to achieve fairness and not to stretch the hours of delays. In ONGC v Saw Pipe Ltd the Apex court has made the scope of challenge wider than in the act of 1940. The Supreme Court has interpreted the term “public policy” in the widest possible manner. Every award in the court can now be challenged by taking the widest interpretation of the decision in afore stated case. One more decision of the Supreme Court i.e in the case of SBP & Co v Patel Engineering Ltd held that the power of appointment of arbitrator is not the judicial power but is an administrative one thereby over ruling the decision of 7 judge constitutional Bench in the judgement of Konkan Railway and gave various hallmarks of litigation insofar as the appointment of arbitrator is concerned. The court is now being called upon to decide various issues such as arbitration agreement, the particular arbitration clause executed in the contract, limitation so on and so forth thereby paving a way for the delays in the process of appointment of arbitrators and consequent delaying the arbitration proceedings thereafter. In a recent judgement in McDermott International Inc v. Burn Standard Co. Ltd and others (2006) 11 SCC 181, the learned Judges observed:

“We are not unmindful that the decision of the of this Court in ONGC had invited cionsiderable adverse comments but the correctness or otherwise of the said decision is not in question before us. It is only for a larger Bench to consider the correctness or otherwise of the said decision.”

The position of the law is summarized in para 52:

"The 1996 Act makes provision for the supervisory role of courts, for the review of arbitral award only to ensure fairness. Intervention of the courts is envisaged in the few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. the court cannot correct the errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court’s jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it."

The need of an hour is to institutionalise the process of arbitration and also to inculcate the lines and suggestions given by the Standing Committee of the Parliament, such as accountability of the arbitrators, no specific rules as to who can appoint arbitrators, time limit for making an arbitral award and along with the consequences for not making the arbitral award within that time limit. The institutionalised arbitration can be a tremendous help to speed up the process of Arbitration. The biggest boon of the Arbitration proceedings is that it is not bound by any legislation and is completely based on the principles of natural justice; the arbitral institutes will make available with pre-established rules of the institution and will bind the arbitrators to follow the same. The institutions will provide with the assistance of the administration along with the list of qualified arbitrators which will ease the process of appointment of arbitration thereby saving the time of parties. This will establish a format for proven records which will save the time spend in making the narration of facts repetitively. There is a need for fast track mechanism in commercial matters so that there will not be escalation of cost owing to delays.

Finally, there is a need to curb the intervention of courts, the tendency of banging the door of courts and asking for intervention in between the proceedings. As mentioned before, section 5 of the act clearly envisages the party autonomy and non-intervention of courts. This also means that no judicial authority will intervene unless provided. There is also a need that the petitions challenging the awards shall be decided on for being challenged on the technical and procedural grounds and shall be disposed of expediously, otherwise the entire purpose of deciding a matter by referring the same to arbitration will get frustrated. The change should be in our minds, in the minds of lawyers and professionals. The purpose of arbitration is to bring about cost effective and speedy resolution of dispute. The constant adjournments should strictly be disallowed and the lawyers too must accept the briefs before the arbitrators only when the can give their complete commitment. Also, the arbitrators should not take work exceeding their capacity to handle. Arbitrators have complete freedom to establish their own procedure and hence they are the only one who can inspire and ensure the speedy disposal of the matter. Ultimately, the arbitrator himself will play a major role in taking on the proceedings in most effective manner thereby applying their mind with accurate and timely interpretations of all the provisions of the act, only then India will be able to survive in this emerging trend of alternate dispute resolution system. Only then foreign investors will be attracted and consequently nation will progress.


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