Brain Booster Articles
ARBITRATION: THE FUTURE OUTLOOK
Author: Riya Maggu, II year of B.A.,LL.B.(Hons.) from SRM University, Sonipat, Haryana,Delhi-NCR
Seldom a times litigation can be proved very expensive, time-consuming and can also take a toll on the mental and physical health of an individual along with the fact, the dissatisfaction it brings to both the parties. Now, this comprehended limitation of the formal adjudication process have made policy makers, judges and academician globally think about means to resolve disputes in a timely, inexpensive and humane manner. This has given rise to a movement since second half of 21st century to promote effective use of alternatives to formal litigation and these alternatives include arbitration, mediation, conciliation and other indigenous mechanisms of dispute resolution. The primary objective of all these alternative modes is to avoid the heavy expenses, delay and to promote universal principal of speedy justice to each and every citizen of this country. Many developed countries all around the world has accepted these alternative modes and has provided certain supportive and legal framework to give better recognition to alternative dispute solving methods.
Arbitration is a form of Alternative Dispute Resolution (ADR), a method of solving disputes without the involvement of the courts. Various legislations relating to ADR has been made in our country like Section 89 of the Civil Procedure Code, 1908, Arbitration and Conciliation Act, 1996 and Legal Services Authority Act, 1987[i]. In simple words, arbitration means solving of disputes between two individuals with the involvement of a third party outside court’s jurisdiction. The arbitration law passed by our government is the result of various changes and ordinances taking place in today’s modernised society to keep a balance with the emerging economic reforms as a result of globalisation.Conceptually, arbitration is an established mechanism for final and binding determination of disputes, concerning an obligation by independent arbitrators, in accordance with procedures, structures and substantive legal and non-legal standards chosen by the parties directly or indirectly. These features of arbitration attribute to develop into rubrics of independent process of international dispute resolution. The arbitration process makes sure that all necessary elements of judicial system are present e.g., equal opportunity to parties to present their case before tribunal, unbiasness of arbitrators etc. But the difference is all this operates in a private framework where parties have more freedom to choose the adjudicators.
According to Gary B. Born, an eminent scholar, arbitration is regarded widely as a more preferred way of resolving international commercial disputes for a ton of reasons.[ii]Arbitration as a process has autonomous characteristics when compared to formal and public litigation process to which many people are tilted thus overburdening our judiciary.
Firstly, arbitration as a process is independent of intervention of public institutions with extremely limited control and its system is one of its kind, which consist a system wholly outside the national court and law system.
Secondly, by their virtue of choice parties’ resort to a specific alternative dispute resolution system which means parties specifically have rejected the jurisdiction and interference of the courts.
Third and most important feature of arbitration is the confidentiality it provides to parties. Unlike, the court proceedings which are open to public at a large is likely to infringe an individual’s private matter but there is no such kind of thing under arbitration, it is more private and secretive when compared to public court proceedings.
These confidentiality obligations are implied in some arbitration agreements while some arbitration rules expressly impose these duties. Moreover, arbitration takes less time to resolve disputes when compared with litigation because there is limited right to appeal to the arbitration award hence it eliminated the appeal process which can cause delay in finality of adjudication.
Fifthly,an arbitrator has considerably more flexibility in to take in consideration types of evidence which he/she may deem to fit as per the issue, unlike in court proceedings where a judge is bound by statutory rules and judicial precedents and the trial court is bound by established procedure to govern the evidence, hence giving less flexibility.[iii]
Finally, but not last arbitration has an ‘internationalist approach’. This approach allows party to having avoid jurisdictional disputes, choice of law debates which in turn makes international arbitration more attractive and hence popular.[iv]
These advantages have majorly contributed to the increasing number of approaches where people resort to alternative dispute resolution system over the formal litigation or adjudication process. Given greater appeal of arbitration to different sectors of cooperation, we can expect the use of this kind of dispute resolving method more frequently than the normal litigation.
ARBITRATION AND CONCILIATION ACT, 1996
The United Nations Commission on International Trade Law (UNCITRAL) in year, 1985 passed the UNCITRAL model law[v]and it gave a very important contribution to the Arbitration and Conciliation Act, 1996 of our country. The main purpose of this very act is to consolidate all domestic and international arbitrary matters. The law related to conciliation and other matters associated therewith have been defined under this specific act only. The act has been proven very beneficial to consumers and the businesses both to ensure cost-effective arbitration award without any undue delay and with a very limited scope for the appeal process. The very essence of this act is to provide a supportive legal framework and to make arbitration a more preferred way of solving disputes without courts’ jurisdiction. Certain matters except criminal disputes, fraud, anti-trust or anti-competition claims and consumer disputes don’t come under the preview of this very legislation.
WHO IS AN ARBITRATOR AND WHAT IS HIS ROLE?
To be more specific, arbitrator is a professional person who helps both the parties under arbitration to solve the dispute and reach to a final and a binding decision. Arbitrator is a kind of a centric approach towards to two individuals in a dispute. In certain instances, an arbitrator is referred to as an “umpire or referee”.[vi]Section 10 and 11 deals with the appointment of arbitrator under arbitration and conciliation act, 1996. Section 10 provides for the Number of arbitrators and it states that, the parties in dispute are free to determine number of arbitrators they want but the arbitrators should not be in even numbers and Section 11 provides for appointment of arbitrator[vii] and according to it: the person of any nationality can be appointed as an arbitrator unless and until parties agree to same and parties are free to choose the procedure for appointment of arbitrator. When no such procedure is determined then the parties have to appoint an arbitrator themselves and those two arbitrators must appoint a third one. The arbitrator will be the one who will provide an interim arbitration award to disputed parties. There are several powers granted to arbitrator under the arbitration and conciliation act, 1996. The arbitration and conciliation act are the one to give a supportive legal framework to arbitration in India.
CHALLENGES TO ARBITRATION
There are number of reasons to talk about when we come to the hindrance in growth of arbitration in India due to which arbitration and many other forms of dispute resolution are underrated. The cliched thinking of Indians is one factor to contribute to low growth of arbitration in India. Although, it’s been more than 70 years of India to be independent but still people are more tilted towards courts to solve their disputes instead of going towards these methods, its is not necessarily a bad thing to put one’s faith in his/her country’s judicial system but at same time not adopting other means of dispute resolution proves that people are not wiling to go towards the change.
Secondly, not adequate legal framework to adopt the same because unless and until there wouldn’t be proper adjudication of laws by judicial system nothing can be done. Another major point of concern in regards to this is the arbitration and conciliation act still has various loopholes like debate regarding the seat and venue of parties or no mention of emergency concept by supreme court of India. This type of lacunae in our law, forces party to knock on doors of Indian courts.
Lack of awareness, is the third most important factor in this regard. There are many people in country who are not aware about alternative dispute resolution methods other than court proceedings and formal litigation process. It’s only businessman, entrepreneurs, legal advisors or advocates who know about ADR or arbitration and hence all small-scale investors, and a lay-man are not aware with these kinds of remedies and thus are left out of such proceedings.
Indian legal system has always been very tremendous in giving justice to people but just like everything has its own drawbacks, the same applies to formal litigation and court proceedings process and arbitration in this regard has proved itself as a boon. Just like we need someone to support us through our life, similarly the concept of arbitration needs a supportive legal framework. Moreover, certain steps can be taken to promote growth of arbitration among people so that they can resort to these methods with same faith they resort to court proceedings and formal litigation at public level.
[i]blog. ipleaders, https://blog.ipleaders.in/challenges-arbitration-india/#Introduction, (last visited May 29, 2022). [ii]Born, International Arbitration, Law and Practice, Kluwer Law International, 2012 [iii]Tuckerlaw, https://www.tuckerlaw.com/2015/02/13/advantages-disadvantages-arbitration-vs-court-litigation/, [iv] Anirban Chakraborty, Law and Practice of Alternative Dispute Resolution in India: A Detailed Analysis,28 [v]Blog. ipleaders, https://blog.ipleaders.in/powers-and-functions-of-an-arbitrator-under-arbitration-and-conciliation-act-1996/ [vi]Blog. ipleaders, https://blog.ipleaders.in/powers-and-functions-of-an-arbitrator-under-arbitration-and-conciliation-act-1996/, [vii]Legistlative.gov.in, https://legislative.gov.in/sites/default/files/A1996-26.pdf