Broadly speaking: EVOLUTION OF ARBITRATION IN INDIA

Profile of Author : Priya Mishra is a 3rd year law student pursuing B.B.A LL.B from MMDU, Ambala. Corporate Law, Company Law, and ADR hold her keen interests.

EVOLUTION OF ARBITRATION

In Ancient India, the settlement of disputes was done through tribunals chosen by the parties themselves. As per ancient Indian practice, there were three primary bodies namely ‘Puga’ (The Local Courts), ‘Srenis’ (The people engaged in the same profession), and ‘Kulas’ (Members concerned with social matters of a particular community) and all the three collectively known as ‘Panchayats’. The members of the Panchayats were called ‘Panchas’. The decisions provided by Panchayats represent a primitive and crude form of arbitration.

The Bengal Regulation Act of 1772 led to the appearance of Modern Arbitration Law. This was a consequence of the successful resolution of conflicts amongst the parties to disputes by appointing their tribunals.

Until 1996 ( Arbitration and Conciliation Act, 1996 ), the law governing Arbitration in India consisted mainly of three statutes:

• The Arbitration ( Protocol and Convention ) Act, 1937.
• The Indian Arbitration Act, 1940.
• The Foreign Awards ( Recognition and Enforcement ) Act, 1961.

However, the absence of validity and critique in the above acts led to the enforcement of The Arbitration and Conciliation Act,1996. This act modernizes all the prior outdated acts. The act came into force on August 22nd,1996. This statute invalidated all the previous declarations with the primary purpose to deliver quick resolutions of disagreements between the parties and to restrict the judicial interventions. The act encompasses International as well as domestic arbitration and conciliation. This enactment was the first round of amendments in the Arbitration Act. Later on, many amendments were done to smoothen the functioning of the adjudication process in India[1].

KINDS OF ARBITRATION

Arbitrations that are largely recognized in India are :

1. Institutional Arbitration

The council of arbitration procedurally provides justice following the rules and regulations of an institution.

Some Indian arbitrations that are allocated by international arbitral institutions such as The Court of Arbitration of the International Chamber of Commerce, The Singapore International Arbitration Centre, and The London Court of International Arbitration.

There are at the moment 35 Arbitral Institutions in India for a) Domestic; b) International; c) PSUs; d) Trade and merchant associations; and e) City-specific chambers of commerce and industry. Such institutions either have their own rules or are governed by the rules of UNCITRAL.[2]

Here, the chosen institution sets forward the statutes that will regulate the arbitration process. The institution provides a council of arbitrators for the disputing parties to choose from. They provide the facility for the hearing process in a less cost-effective manner. Also, the substitution of arbitrators available here.

2. Ad-Hoc Arbitration

Ad-Hoc Arbitration administers its proceedings with the help of tribunals following the rules laid down by the parties to the conflict. Here, there is no arbitration institution to regulate the proceedings, hearings, and protocols. Ad Hoc arbitration allows the parties to build their own agreed-upon rules. The function of selecting arbitrators, the process of adjudication, type of awards, the statutes of law used during the arbitration proceedings, and the venue for litigation. There are no removal approvals for non-compliance with the agreed-upon rules, therefore issues of honesty, principles, and ethics arise frequently.

Still, the success of the ad hoc arbitration is guaranteed only in a lawsuit of mutual agreement of parties.

3. Fast Track Arbitration or Expedited Arbitration

This is the most effective and powerful method of resolving disputes which is time-bound and cannot be halted due to any reason whatsoever. Here, an exclusive Arbitral Tribunal is established upon the approval of disputants with fixed time limits and exclusive techniques to be commemorated to stimulate the procedure of conflict resolution. It cuts down the expenses and uncertainties arise from the regular arbitration proceedings. It paved its door into Indian statutes through Arbitration and Conciliation (Amendment) Act, 2015.[3]

CONDUCT OF ARBITRAL PROCEEDING

• The parties shall be treated with equality and each party shall be given a full opportunity to present his case.
• The power of the arbitral tribunal as defined under sub-section (3) of the act includes the power to determine the admissibility, relevance, materiality, and weight of any evidence.
• The place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. The parties are free to agree on the place of arbitration.
• Commencement of arbitral proceedings. Unless otherwise agreed by the parties, the arbitral proceedings, in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.
• The claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defense in respect of these particulars, within the period agreed upon by the parties or determined by the arbitral tribunal unless the parties have otherwise agreed as to the required elements of those statements.
• The arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or oral argument, or whether the proceedings shall be conducted based on the documents on other Materials; Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, and not grant any adjournments unless sufficient cause is made out, and can impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.
• The parties shall be given sufficient advance notice of any hearing and any meeting of the arbitral tribunal for inspection of documents, goods, or other property. All statements and documents shall be communicated between the parties, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.
• If the claimant fails to communicate his statement of claim ( sub-section, (1) of section 23 ), the arbitral tribunal shall terminate the proceedings. If the respondent fails to communicate his statement of defense ( sub-section, (1) of section 23 ), the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant.
• If a party fails to appear at an oral hearing or to produce documentary evidence; the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it.
• An expert appointed by arbitral tribunal The arbitral tribunal may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal unless otherwise agreed by the parties.
• The court can assist in taking evidence. The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the Court for assistance in taking evidence of arbitral proceedings, shall be subject to the penalties and punishments by order of the Court.
• Arbitrators shall have the power to proceed Ex-parte where the respondent, without sufficient cause, fails to communicate his statement of defense or appear for an oral hearing or produce evidence. However, in such a situation, the tribunal shall not treat the failure as an admission of the allegations by the respondent and shall decide the matter on the evidence, if any, before it.

INTERIM REMEDIES

The arbitral bench is entrusted to allot interim relaxations during the arbitral proceedings until the making of an award.

One can apply to the arbitral bench for the appointment of a guardian for a minor person or a person of unsound mind for the objectives of arbitral proceedings or an interim measure of protection regarding any of the following matters:

• The preservation, interim custody, or sale of goods which are the subject matter of the proceedings.
• Conserving the amount in dispute in the arbitration.
• The detention, protection, or inspection of any property which is the subject matter of the dispute in arbitration.
• Interim injunction.
• The appointment of receivers.

AWARDS

The enforcement of the arbitral award lies under section 36 of the act. An Arbitral award implies the verdict given by the arbitrator or the arbitral bench founded upon the proceedings of the Arbitration. The award can be non - monetary. It can be money that one party has to pay to the other party; it can also be none - financial such as stopping a certain activity or giving incentives.

Any arbitral award shall be written and signed by the members of the tribunal. It shall contain the date and place of arbitration and shall also define the reason based on which the decision is taken.

The arbitral tribunal has the power to grant:

• Declarations.
• Injunctions.
• Payment of money.
• Specific performance.

If the award funds to be unreasonable or not justifiable on the part of the Arbitral bench, it can be set aside as mentioned under section 34 of the act.

Types of Arbitration Awards-

• Interim Award.
• Partial Award.
• Consent Award.
• Draft Award.
• Performance Award.
• Final Award.
• Additional Award

APPEALS

No appeal is entitled from an arbitral bench to the courts as the awards made by arbitral benches are deemed to be final and binding in terms of the decision on credits.

The Arbitration Act allows for challenges to the award ( section 34, Arbitration Act ). This right is available to all parties to the arbitration where the arbitration is seated in India.

A disputing party can raise the following grounds:

• Absence of an arbitration agreement.
• Absence of a valid arbitration agreement.
• lack of adequate notice of authorization of an arbitrator or inability of a party to present its case.
• Presence of partiality or absence of independence of the arbitrator.
• Conduct of the proceedings opposite to the effective agreement of the parties.
• Non-Arbitrability of the subject matter of the controversy.
• Dispute with the public policy of India.

ADVANTAGES

• Less backlog of cases.
• Confidential Proceedings.
• The proceedings are shorter and that's why it is a very cost-effective process.
• Less Time-Consuming.
• Expeditious and timely resolutions.
• The ability of parties to appoint arbitrators themselves.
• Arbitrators can be selected based on substantive knowledge and understanding.
• The final decision is binding.

DISADVANTAGES

• Success primarily depends on arbitrators.
• Liberty to appeal is restricted.
• Uncertainty in outcomes.
• Lack of rigid evidence.
• Lack of discovery process.

CONCLUSION

The objective of these reforms is to lessen the workload of the judicial system and make India core of robust ADR mechanisms, providing global and domestic arbitration, at par international ideals.

FAQs

1.What type of disputes that can be resolved through Arbitration?

• All commercial, civil, business, or contractual disputes can be resolved through Arbitration.

2.What makes Arbitration different from going to court?

• Arbitration and Litigation are quite similar, however, there are certain reasons why Arbitration is preferred against litigation:

1. More flexible.
2. Less time-consuming.
3. Awards are almost always final.

3.How are the arbitrators chosen?

• The following are common ways in which arbitrators are chosen :

1. By the parties.
2. By the arbitrators.

[1] 11 H.K. Sahara, Law of Arbitration and Conciliation 6 (Eastern Law House, Calcutta, 2001)

[2] https://www.thestatesman.com/india/arbitration-law-in-india-everything-you-want-to-know-1502757528.html/amp

[3]https://amlegals.com/fast-track-arbitration-in-india/

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