India's ranking in the World Bank's ease of doing business index is 134. Ease of doing business has ease of settling commercial disputes at its centre. With the Arbitration and Conciliation (amendment) Bill coming in place, India could play a greater role in shaping the way forward.
It is said ‘justice delayed is justice denied'. Yet, the fact is that there are more than three crore pending cases in Indian courts. So, it seems it is a distant dream to think about justice in the real sense of the word. In this scenario, the Arbitration and Conciliation (amendment) Bill, to be tabled in the coming budget session, is much awaited to provide some respite with expectations running high.
Alternative Dispute Redressal (ADR), to clear conflicts outside of the courts, has hardly got its due. Arbitration is a tool that can lessen divergence and deliver justice by bringing conflicting parties to an amicable platform. Unlike litigation where the process is closely tied to defeating the 'opposing' party, in civil matters and business precisely, this is actually the least desirable outcome. Businesses are about togetherness and let litigation be for criminal matters. This lies at the very pith and substance of The Arbitration and Conciliation Act, 1996 but there are certain lacunae that have actually made it redundant and be contrary to the desired aim of its inception.
The desired growth in economy and investments would only be sustained if we have an enabling environment. Disputes are bound to occur with conflict of ideas and interests. Their redressal at the earliest is a sine qua non. The Arbitration and Conciliation Act, 1996 has sections which have kept the process of arbitration barely functioning. Delays in courts accompanied with complexities in processes has led to sub optimal results in the existing arbitration framework. Arbitration in India has unfortunately also become a judicial process.
There is a culture of frequent adjournments leading to delays in perpetuity. Further, it gets worsened with delays caused by the process of appeal. Given the nature of courts in India, the district level courts have a single authority called the district and sessions judge handling both civil and criminal matters, where the priority of urgency naturally shifts towards criminal cases and civil matters are subjected to a delayed justice. Arbitration was supposed to be a relief from this loop.
Moreover, there is the issue of the cost it takes to pursue arbitration. Arbitrators are paid in accordance with the hours spent on a case which advertently leads to delays. Appointment of arbitrators today is a judicial process whereby the concerned judge appoints arbitrators on her own. The Arbitration and Conciliation Act, 1996, is ambiguous about the challenging of awards and lacks enforceability. Further enforceability of foreign arbitration awards gets diluted by unreasonable judicial intervention and scrutiny. Given the changing scenario where businesses are going global and India partnering global initiatives, we cannot afford to have redundant frameworks.
These concerns have been addressed by recommendations of the Law Commissions 246th report that came out in august, 2014. The amendment bill that is going to be introduced in the budget session of 2015 is much awaited. The bill is expected to institutionalise arbitration so that it becomes a preferred option to settle commercial disputes and litigation is avoided, wherein the Law Commission has suggested for a specialised independent organisation for the appointment of arbitrators in order to reduce judicial intervention. There are cases where we've seen government officials getting appointed as arbitrators whereas experts in those fields could have served the purpose well. The commission suggests a statutory enforceability of arbitral awards, giving teeth to the very organisation of arbitral tribunals. There is also a call for binding the arbitrator to deliver the award within nine months, failing which she would invite a three year ban. Any challenge to the arbitration award shall be adjudged within a year's time.
Singapore's SIAC (Singapore International Arbitration Centre) sets quite a good benchmark to learn from, with its non-judicial nature of arbitration and swiftness in delivery of awards. In London and New York, arbitration centres add to predictability of contractual laws and facilitate subduction of specious appeals. These best practices must be replicated in India.
India's ranking in the World Bank's ease of doing business index is 134. Ease of doing business has ease of settling commercial disputes at its centre. In recognition of this, Law Associations of BRICS countries launched the BRICS Legal Forum on December 12, 2014 and adopted Brasilia Declaration setting out the broad objectives of the Forum. A credible and neutral arbitration centre in BRICS is at the heart of legal-economic progress of the nations involved, given the fact that between 2002 and 2012, intra-BRICS trade increased 922 per cent. With the amendments coming in place, India could play a greater role in shaping the way forward. It is time remove the blots persisting in our arbitral methods.
(The writer is a Research Intern at Observer Research Foundation, Delhi)
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