ARBITRATION: THE INDIAN CHAPTER
- Jaibatruka Mohanta
Arbitration is one of the noble methods to settle disputes, it is one of the legs of the Alternate Dispute Resolution mechanism. The practice of Arbitration is an old one in India, the Brits had introduced it way back in July, 1899. Prior to this, modern Arbitration laws had crept into India as early as in 1772 by the Bengal Regulation Act, 1772. Though the application of the Arbitration law, 1772 and the Indian Arbitration Act, 1899 was confined only to the presidency towns i.e. Bombay, Calcutta and Madras.
However, with time Arbitration has come a long way from being considered just a compromise between parties to it being applicable to almost every form of civil dispute that arises today. With the enactment of the Arbitration and Conciliation Act, 1996 ("Act”) it was envisioned that the gaps that were being left by courtroom litigation would be filled. The concept was popularized for the following reasons:
Arbitration was supposed to be cost effective;
It was a way to resolve disputes in the minimalist time;
It was a way to adjudicate matters with precision and efficiency; and
Lastly, it was a way through which the burden from the Indian courts would have reduced substantially over the years.
Nevertheless, the 4 points mentioned haven’t been cherished through the enactment of the Act rather it has crucified the development of arbitration as a means of fostering the troubles that were already being faced due to excessive litigation. It has raised alarming concerns, that can be summed up in the following points:
Arbitration was supposed to be time bound, however, matters have been lying pending over multiple years;
It has proved to be heavily expensive and cumbersome to unnecessary formalities;
As almost every contract is linked with a multiple range of contracts, the concern of multiple proceedings has been on the rise;
It definitely has become an affair only for “Corporate bodies” and as far a common man is concerned, the cost is escalating multiple times in comparison to litigation.
Why is Arbitration seeing the dusk?
The reasons are manifold and most crucial among them is the fact that realizing ‘the current process being followed is flawed and needs to be reconsidered, beginning from the Act to the procedure that has been in practice’.
The procedure that arbitration generally follows in India is quite rigid. The claim of disputes, recording of evidence, the chief and cross examination, followed by the final arguments and finally the award. In this entire process, for some matters it takes years to arrive at the last stage. Arbitration as a method was introduced to cut short the tiring judicial litigations, however, every arbitral session is long and expensive. The large corporate houses, putting in money for the sessions and vice versa from the other end, matters are extended beyond the prescribed limits in the Act with the application for extension and the process continues.
A New Dawn
India adds close to 70, 000 law graduates every year to the legal fraternity. More than half of them are only aware of the word “arbitration” that too in a very vague sense. Rigorous training in law school on the practical nuances of arbitration proceedings shall instill them with a know-how of how the matter actually proceeds. Law schools must have a Centre for Arbitration Proceedings, where actual proceedings take place, this shall give first-hand experience to undergraduates that in reality “this is the method of arbitration”.
Practical application of knowledge not in the form of practical based questions in examinations rather as a practice beginning from the grooming years which will instill the required skills in them. This will over the years help the students be in a position to sharpen their skill sets by learning the nuances of the practice. Thus, by the time they step into the world of practice they are well aware of how exactly proceedings are conducted and what can be their contribution in making the process easier.
On the other hand, commercial contracts today are inter-linked. In a way, if there is one main contract, owing to which many other contracts are formed. Now, if the parent contract falls into an arbitral dispute, the position of all other contracts also become a point of concern. Therefore, how to approach the multiplicity during an arbitral proceeding, there needs to be well drafted laws, to take care of the nitty-gritties that are present during the impact in such scenarios.
The most crucial for any dispute is the essence of time, arbitration seems appealing to an outsider, as it sounds, progressive and ensures a timely redressal of dispute. However, the reality has been quite the opposite. The Act must ensure that for various kinds of disputes, a stipulated timeline must be present. Contracts are varied in nature or there are different corporates that come for arbitration. Therefore, a thorough market study must be conducted, over the past learnings and it shall be incorporated into the Act in a table format, as to which kind of contract requires what amount of time to be settled. The provision of extension must be revisited with the point that if it is actually helping in furthering the essence of the justice.
With the advent into the third decade of the 21st century and various progresses that are taking place across the glove each day, our justice redressal system should be able to absorb the contract breaches or criminal activities that are levelled against it. In a few years, contracts in space law will be in a rise in addition to many other sectors as well. Therefore, in a manner where humans are reaching Mars, are laws should at least reach the rockets that shall be carrying humans to the outer space.
Jaibatruka Mohanta is a fourth year student at Pravin Gandhi College of Law, Mumbai.
Gajendra Singh vs. Durga Kunwar (1925) ILR 47All 637.