Strengthening Arbitration in India
Alternate Dispute Resolution (ADR), mainly denotes a wide range of dispute resolution processes that act as a means of disagreeing parties to come to an agreement without using the means of litigation. It is a collective term which refers to the ways in which the parties can settle disputes, with the help of a third party. It is also known as external dispute resolution (EDR). ADR has gained widespread acceptance among both the general public and the legal profession in the recent years and is also being adopted as the means to help settle disputes alongside court system itself. Arbitration is one of the most popular forms of ADR. In the process of arbitration there has to be a valid Arbitration Agreement between the parties prior to the emergence of a dispute for the process of arbitration to exist. In this method of dispute resolution, the parties refer the dispute to a third party, who is appointed as an arbitrator. It must be noted that the arbitrator is appointed by either party to the dispute and if the other party does not approve of the said arbitrator, the party can approach the Chief Justice for the appointment of the arbitrator. The decision of the arbitrator is binding on both the parties and his decision is given in the form of an award. It is important to point out that an arbitration tribunal has jurisdiction over its own jurisdiction. Therefore, if either of the parties is unhappy with the arbitral award then Section 34 of the Arbitration & Conciliation Act provides certain grounds upon which a party can appeal to the principal civil court of original jurisdiction for setting aside the award.
India has had a long standing tradition of resorting to arbitration as an ADR. The settlement of differences by tribunals chosen by the parties themselves was well known in ancient India as well. There were in fact, different sections of arbitrators with provisions for a variety of appeals in cases from the award of a lower section of arbitrators to arbitrators of the higher section. The Arbitration and Conciliation (Amendment) Act 2015 brought about certain significant changes which were required to support the growth of international arbitration in the country. One of these was the provision of finally allowing the arbitral institutions to create their own rules which are consistent with the Act in order to ensure that arbitrations are prompt and effective.
With growing global commercial trade and agreements, international arbitration is growing successfully. One of the major reasons for this is that parties from different jurisdictions and countries would rather avoid to subject themselves to jurisdiction of other countries. To develop India as a global hub for international arbitration it is essential that we open our gates to the outside world and include the best ingredients for creating word class Institutional and legal procedure. Recently, NITI Aayog, along with other supporting institutions, organised a three day Global Conference on “National Initiative towards Strengthening Arbitration and Enforcement in India”. Currently in the Indian context, arbitrations are not conducted in a very structured matter. The Law Commission of India has in its 246th Report noted that ad hoc arbitrations usually devolve into the format of a court hearing with the result that adjournments are granted regularly and lawyers too prefer to appear in court rather than completing the arbitration proceeding. What is therefore recommends is that India needs to promote institutional arbitration where a specialised institution with a permanent character aids and administers the arbitral process.
Strengthening of arbitration in the country would have to be done along with promoting arbitration as a mode for dispute resolution. This would include preventing tendency of private players to rush to the courts without resorting to the relevant provisions of arbitration in the contract whereby the commencement/continuation of the work was stalled. India is on the track of establishing confidence in its legal system which is the most important and significant condition for any country to become an international arbitration venue. It must also be mentioned that regular amendment in the Arbitration laws must keep up with economic changes to support the growth of arbitration. However, with regards India, it is important to reflect reforms in the implementation of the legislative changes by the judiciary together with building an institutional capacity to institutionalise arbitration in the country. Arbitration as an ADR is on its route of growth in the country and India is tirelessly working to raise its status as a global hub for international arbitration.