CHALLENGES FOR ARBITRATION INDIA BY - POORVA CHAWLA
CHALLENGES
FOR
ARBITRATION
INDIA
AUTHORED
BY - POORVA CHAWLA
Introduction
According to recent reports, India is estimated
to have 3.53 crore pending cases in total, where 58,669 cases are pending in
supreme court, 43,63,260 pending cases across all high courts and a whopping
3.11 crore pending cases only across all District and Subordinate courts in
India. Despite these statistics, more and more people are tilted towards the
judiciary to resolve their disputes. Alternate dispute resolution methods are
very helpful and very crucial for any business firm. It helps them to resolve
any disputes internally and with a greater pace than any judicial system can
ever do. The parties involved in an arbitration proceeding have power to add
their own terms and conditions, like they would do in any other form of
contract or agreement.
Various
forms of Alternate Dispute Resolution
Alternate dispute resolution involves
settling disputes outside the court. There are various forms of alternative
dispute resolution like early neutral evaluation, arbitration, conciliation,
mediation and negotiation. Although they fall under the same head but they vary
a lot from one another. Some important provisions relating to alternative
dispute resolution are provided in Section 89 of the Civil Procedure Code,
1908, Arbitration and Conciliation Act, 1996 and Legal Services Authority Act,
1987. Some of them are explained below:
·
Arbitration is typically used to resolve disputes between private entities,
outside the court machinery.
·
Negotiation is a dialogue between two or more people or parties intended to
reach a beneficial outcome over one or more issues where a conflict exists with
respect to at least one of these issues.
·
Conciliation refers to the process where the parties use a conciliator, who
meets the parties both separately and together, and tries to resolve the
dispute(s).
·
The fourth method of Alternate
Dispute Resolution is Mediation, it refers to a process a
person called as a mediator, sits between/with the parties and helps them to
negotiate and come to a final decision/settlement. The mediator tries to
facilitate open communication between the parties.
The present paper focuses on the
reasons for slow growth of arbitration in india. But, first we should discuss
arbitration and the process of arbitration to better understand and evaluate
the topic in question.
Arbitration
and its Process
Arbitration as explained above, is a
process of resolving disputes between private entities, outside the court
machinery. In simple terms, arbitration is a process when two or more parties
decide to settle a dispute outside the court(s).
A
simplified arbitration agreement involves following steps:
·
First of all, the parties to a
contract/agreement, adds arbitration clause into their agreement/contract and
if and when any dispute arises between them, one party informs the other party
about the dispute by issuing arbitration notice.
·
This is followed by response by
the other party and subsequent appointment of an arbitrator, decision on rules
and procedures, place of arbitration and language.
·
Once the arbitration proceedings
commence, there are formal hearings and written proceedings.
·
The arbitrator, if the matter
so requires, issues interim reliefs followed by a final award which is binding
on both parties.
·
The tricky part arises if
either of the parties, unhappy with the award, challenges it before the court.
This can be before the appellate court or the Supreme Court depending upon the
matter.
Reasons
for Hindrance in Growth of Arbitration in India
The Constitution of India provides
‘one’ with many reliefs and aims to deliver justice to each and every person,
who has been wronged. One such relief is the Process of arbitration that has
been provided under Arbitration and Conciliation Act, 1996 (A&C Act). But
due to the following reasons, Arbitration in India has not grown properly as it
is accepted to be:
Conventional thinking of
Indians
Although India is moving towards
modernisation, it is yet a developing country. Which means, most people are
ignorant towards arbitration and still trust courts more than alternate dispute
resolution. This is not necessarily a bad thing, putting faith in one’s
judicial system, but when the citizens of a country are ignorant and are
unwilling towards change, this kind of orthodox thinking can really harm rather
than helping anyone.
Lack of Proper Laws
The Arbitration and Conciliation Act was introduced in 1996, and last
amended in 2015. In India, there is a serious need for introduction of more
comprehensive law regarding arbitration process and proceedings. The law makers
need to extensively study the problems regarding the needs and requirements of
business houses, that usually deals with arbitration proceedings. The laws must
become strict and more carefully elaborated so that more and more people gain
assurance in Arbitration than the Judicial System. In simple terms, most
of the people are still not willing to take risks or a leap of faith regarding
matters of large magnitude that they may face in a business.
Intervention of Courts in
Arbitration Proceedings
The intervention of courts in
arbitration proceedings shall be kept to minimum. Due to such interventions,
those who opt for arbitration rather than pleading to a court, also result in
inclination towards courts furthermore. People sometimes find it better to
approach the court at first. Court intervention should be kept in check, not
only the intervention during arbitral proceedings, but the intervention after
the proceedings is concluded. This means, there must be a limited scope to
challenge the arbitral award under Section 34 of Arbitration Act, 1996.
In White Industries Vs. Republic of India, two issues arise: a)
Intervention of judiciary and, b) Delay in arbitration. And, so it was well
debated and agreed that the involvement of the judiciary should be minimised to
an extent.
Lack of Awareness
One
of the major issues due to which Arbitration is not growing in India is because
of lack of awareness among the people. Some businessmen, advocates or legal
advisors are only aware of the situation relating to arbitration proceedings
and due to this unawareness, many small scale businessmen or various newcomers
who are not aware of such remedies are left out of the scope of such
proceedings.
The
above-mentioned points are the main reason as to why arbitration is not growing
faster in India. And now, we must discuss how we can overcome these problems,
to create a better image of India as a business and arbitral destination.
Addressing Issues And Overcoming Them
·
Creating Awareness
Among the people is the first
and foremost need, if we want to create a better position for arbitration in
India. Messaging is critical. Promoting arbitration and, therefore, preventing
private players to rush to the courts without resorting to the relevant
provisions of arbitration in the contract, must be a goal. If people are
unaware of their rights, they can never seek justice. Keeping this in mind, it
is very essential for us to create awareness about arbitration, it’s needs and
its importance.
·
Mandatory Arbitration
Should be introduced. India will not
have a robust domestic arbitration environment unless institutional arbitration
becomes mandatory. This can only be done if arbitration agreements mention the
specific institution that will conduct arbitral proceedings.
·
Minimum Court Intervention
Minimum court intervention is
required. Arbitration is an Alternate Dispute Resolution (ADR) method, which
means resolving disputes by some other method than courts, and even then,
Courts are allowed to intervene in arbitration proceedings, the whole concept
of ADR is lost. Court intervention should be kept to minimum and in check,
like there must be a limited scope to challenge the arbitral award under
Section 34 of Arbitration Act, 1996.
·
Introduction of Proper Laws
Introduction of proper laws is also a
necessary requirement in such scenarios. Arbitration laws are required to be
amended on a regular basis, and are crucial if our goal is to improve the
conditions of the arbitration in India.
Conclusion
Indian legal system needs a way to
deal with cases that are pending in the courts, and arbitration has proved
itself a boon in this regard. Arbitration is not only helpful in reducing the
excess burden that is put upon the Legal System but is also helpful in many
more ways, like faster decision making, less costly, parties can put forward
their own terms and conditions, etc. If the above-mentioned reasons are somehow
overcome, and both legislature and judiciary keep a strict check on arbitration
laws, growth of arbitration in India is certain.