ABSTRACT
Arbitration is a quasi-judicial process used as an alternative to the adversarial system of court room litigation for the reason that it provides cost-effective, timely and speedy resolution. The present article aims to analyze the lacuna in Arbitration laws in India and the recent efforts of the Indian Government to overcome these shortcomings. The analysis brings forth the recent amendments and steps taken to ensure place of India as the preferred seat of Arbitration. The Ministry of Law and Justice byway of setting up the New Delhi International Arbitration Centre Center wishes to promote the use of Institutional Arbitration for Domestic and International Commercial Disputes. There has been a plumage in the both Domestic and International trade & commerce stirring the increase in number of commercial disputes wherein Arbitration has projected itself to be a suitable selection worldwide instead of litigation especially when it comes to International Trade Disputes. Keeping in mind this reality the Law Ministry has examined the scope of Institutional Arbitration in India for resolving cross-border commercial disputes and be amongst the world leaders next to SIAC, LCIA and many others as the preferred seat for resolving Commercial Disputes. Institutional Arbitration is necessary in India due to lack of infrastructure and delay in arbitration proceedings along with the fees Arbitrators being so pricey some parties cannot afford this means of Dispute Resolution. With the 2019 Amendment to the Arbitration and Conciliation Act, 1996 and the New Delhi International Arbitration Centre Bill coming into existence, will act as a panacea to shrinking future of Arbitration in India.
- INTRODUCTION
In recent times, economic development led by the continuous growth of International Trade has also led to increase in the number of Commercial Disputes arising out of International Commercial transactions. In India, increase in the number of disputes unfortunately is not parallel with the number of effective dispute resolution mechanisms available to the disputants apart from Judicial Settlement. Though there is provision for Alternative Dispute Resolution mechanisms for disputants to resolve their disputes outside of the courtroom in order to save time and cost, the system in India has not proven to be adequate, especially Arbitration. Up until now the Arbitration procedure was as slow as any courtroom procedure and extremely expensive for the disputants due to the high fees of the Arbitrators. There is also the issue of Jurisdiction when there are International parties to the dispute. Arbitration has grown to become the most preferred alternative for resolving cross-border commercial disputes and countries like Singapore and London are disputant’s first choice as their preferred seat of Arbitration. Considering all the above points in discussion India recognized its need to level up their system of dispute resolution and thereby, recently, further amended the Arbitration and Conciliation Act, 1996. Apart from this, a new bill has also been introduced for establishment of International Arbitration Center, which is the main topic of discussion in this article. It is done in order to present the country with an Arbitration system free of flaws and promote Institutional Arbitration in India.
There are two different types of Arbitration, Ad hoc Arbitration and Institutional Arbitration and both are governed based on the UNCITRAL rules of International Commercial Arbitration. This article aims to discuss the efforts made by the Indian Government to encourage the use of Arbitration in order to reduce the burden of litigation on Judiciary. With its recent efforts, the government has disseminated the benefits of alternative dispute resolution mechanism and aims to educate the public of the advantages associated with the same. It has been a topic of discussion for long now, that an effective legal system leads to strong economy. Singapore is an example of this ideology whereby encouraging the growth and use of Arbitration it has grown to become of the richest country in the world. Therefore, indicating that growth of International Dispute Resolution mechanisms is complementary to the growth of international business in the state/country. Following this scheme of growth the Indian Government marched forward with overcoming the lacuna in the Arbitration laws in India. Let us now discuss the latest steps taken by the Government for the future of Arbitration in India.
- NDIAC BILL 2019
On July 3, 2019, a new bill namely, The New Delhi International Arbitration Centre Bill 2019 was introduced in Lok Sabha by the Minister of Law and Justice, Mr. Ravi Shankar Prasad. This initiative by the Ministry of Law and Justice is a substantial effort to ensure that India marks its place in the field of International Arbitration amongst the well-known and established International Arbitration Centers around the world. As has been stated in the bill, it seeks, “to provide for the establishment and incorporation of New Delhi International Arbitration Centre for the Purpose of creating an independent and autonomous regime for institutional arbitration and for acquisition and transfer of undertakings of the international Centre for Alternative Dispute Resolution and to vest such undertakings in the New Delhi International Arbitration Centre for the better management of arbitration so as to make it a hub for institutional arbitration and to declare the Delhi International Arbitration to be an institution of national importance and for matters connected therewith or incidental thereto.”[1]
It is an undisputed fact that the Indian Judicial system is burdened with numerous pending cases wherein most cases have been ongoing for 15 years or more. When the party in dispute resorts to procedure for settlement of their dispute it is not with a mindset of wanting to wait for decades at length to arrive at a resolution to their dispute. With Alternative Dispute Resolution (“ADR”) coming into the picture, there has not only been reduction in the additional burden of settling the cases with the already pending cases with the court of law, but more importantly it has given disputants a hope that they do not have to spend most of their lifetime and energy arriving at a resolution to their dispute. Dispute resolution mechanisms, more specifically Arbitration, are time bound in ways that the International Arbitration Rules make it mandatory upon the arbitral tribunal to conclude the arbitration proceedings in a limited period of time. The United Nations Commission on International Trade Law known as the “UNCITRAL Model Law”[2] on International Commercial Arbitration lays down guidelines and provides a pattern that the lawmakers of the state and the national government can follow and thereafter adopt as domestic law for the purpose of regulating domestic and international arbitration[3] in their country. Thereby, following the UNCITRAL Model Law the Indian Arbitration and Conciliation Act, 1996 places a time limit for arbitral award under Section 29A[4]. Section 29A was inserted by the Arbitration and Conciliation Amendment Act (2015) and states, that:
“(i) The award shall be made within a period of twelve months from the date the tribunal enters upon reference.
- If the award is made within six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.
- The parties may, by consent, extend the period specified under sub-section (i) for making award for a further period not exceeding six months.
If the award is not made within the period specified in sub-section (i) or the extended period specified under (iii), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after he expiry of the period so specified, extended the period.”[5]
The fact there is a provision mandating a time period to abide by gives disputants a hope that their dispute will be resolved within a stipulated time period, at the earliest. Arbitration as a dispute resolution mechanism gives parties the liberty to customize the procedure, laws applicable, seat of arbitration, language as they deem fit[6]. It gives parties the autonomy to draw the procedure in a manner they wish for the arbitral proceedings to be conducted by laying it down in the form of an arbitration clause of a contract or draw out a separate arbitration agreement. It is pertinent to mention that by giving parties the liberty and flexibility to draft their own procedure leaves them with no window, wherein they can raise an appeal against the arbitral award rendered by the arbitrators they agreed to be a part of the tribunal[7]. It is also noteworthy to mention that even in the case where an award has been set aside under section 34 of the Arbitration & Conciliation Act, 1996, the matter cannot be remanded back to the arbitral tribunal for a fresh decision and this has been upheld by the Supreme Court in its judgment namely, Radha Chemicals vs. Union of India[8]. Arbitration in this regard serves as a speedy dispute resolution mechanism deleting the aspects of appeal which is the sole reason why matters never reach their finality as there is always an appeal lying somewhere. Arbitral awards can only be set side or annulled based on the grounds as laid down under national laws of the seat of the arbitral proceedings[9] or under the institutional rules that under which the proceedings are conducted.
It is because of the aforementioned reasons that Arbitration as a dispute settlement mechanism that puts at bay the delay in arriving at a settlement and at the same time gives parties the freedom to decide on the procedure, that the parties mostly resort to Arbitration instead of judicial settlement. And this especially the case in commercial cross border disputes.
- FEATURES OF THE BILL
The New Delhi International Arbitration Centre Bill 2019 has been enacted in order to support the choice of the potential disputants who wish to arbitrate instead of resorting to judicial settlement. There arises a question wherein parties have initially instituted a suit before the court of law for judicial settlement and thereafter realize that the matter is better suited for arbitration, the parties can at that point file an application under section 8[10] of the Arbitration and Conciliation Act, 1996 to refer the matter for Arbitration. Individually one or both parties can mutually file and application under section 8 of the said Act for referring the matter to Arbitration. This illustrates the initiative of the national laws to promote settlement through Arbitration. The New Delhi International Arbitration Centre Bill, 2019 aims at increasing the promotional efforts multi fold.
Before the said bill of 2019 was passed it was the responsibility of International Centre for Alternative Dispute Resolution (“ICADR”) to promote the use of ADR mechanism as a new forum and procedure for resolving domestic and international commercial disputes with least costs and quick resolution[11]. Despite the various efforts along with bringing ICADR into existence for the purpose of publicizing the concept of ADR, it has not taken flight and International Arbitration in India is still in its adolescence. Therefore, the unrealized efforts of ICADR have led to enactment of New Delhi international Arbitration Bill 2019 to make India the hub of international and domestic arbitration. International arbitration institutions centers like Hong Kong International Arbitration Centre (“HKIAC”), Singapore International Arbitration Centre (“SIAC”), London International Arbitration Centre (“LIAC”) and now even Mauritius International Arbitration Centre (“MIAC”) are one of the most preferred choices of Arbitration Institutions amongst disputants to resolve commercial disputes.
The purpose of passing the said bill in the discussion, as mentioned, is to promote Arbitration in international and domestic commercial disputes. The bill seeks to establish New Delhi International Arbitration Centre (“NDIAC”) to conduct arbitration, mediation and conciliation proceedings declaring the said institution national importance for the reason that it aims to make ADR a preferred mechanism of dispute resolution. The bill transfers the undertakings which were previously under ICADR to NDIAC.
- COMPOSITION
The Composition of NDIAC will be as follows:
- A Chairperson, who may be a Judge of Supreme Court or High Court or an eminent person with special knowledge to deal with the administration of arbitral proceedings.
- Two eminent persons with substantial knowledge and experience in institutional arbitration.
- Three ex-officio members who will be responsible for day-to-day activities relating to administration at NDIAC.
- Part time members from the recognized body of commerce andindustry[12].
The objectives of establishing NDIAC are substantial as they cover almost every aspect necessary to ensure that ADR is a well-known dispute resolution in India and be sorted after by the disputants.
With NDIAC coming into existence it will be beneficial to the Indian legal system as it aims at educating and training the lawyers and arbitrators by the way of establishing an Arbitration Academy. Just as the other well-established Arbitration Institutions maintain a list of arbitrators on its panel for the parties to choose from, similarly, the NDIAC will also maintain a list for permanent panel of Arbitrators.
One of the many objectives of NDIAC is to conduct seminars and conference relating to ADR in order to spread awareness about the various aspects and procedural efficiencies of ADR. NDIAC aims to educate lawyers, law students and other practicing professionals in the field of law, about ADR and more specifically International Commercial Arbitration.
NDIAC models itself on Permanent Court of Arbitration[13]in ways that it will provide administrative and technical assistance for conducting arbitration, mediation and conciliation.
- CONCLUSION
With this effort of Ministry of law and justice the void left with the unrealized efforts of ICADR may be filled. Arbitration is growing at a pace where it sees no end. It is an old means of dispute resolution that saw its modern face back in the year 1794 when Jay Peace Treaty[14]came into existence. The efforts that the Ministry of Law and Justice are in the right direction to bring India at par with the other nations as far as Alternative Dispute Resolution mechanisms are concerned. The NDIAC bill 2019 aims to overcome all the shortcomings and inadequacies in the field of International Commercial Arbitration by setting up NDIAC. With proper implementation and administration of the said Arbitration Institution we can hope for a better facilitation of ADR to state and non-stateparties.
[1] The New Delhi International Arbitration Centre Bill, 2019 http://164.100.47.4/billstexts/lsbilltexts/PassedLokSabha/2-C_2018_Eng.pdf
[2]https://uncitral.un.org/
[3]UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006, UNCITRAL http://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration
[4]Arbitration and Conciliation Act 1996, No. 26, Acts of Parliament, 1996 (India)
[5]Ibid
[6]UNCITRAL Model Law
[7]Piyush Joshi &Telma Raju, India: No More Reverse Passes: SC Reiterates that Appeal Against Arbitration Award cannot result in remand of matter back to the arbitral tribunal after the award is given, MONDAQ, (Sep, 29, 2019, 10:08 PM), http://www.mondaq.com/india/x/746810/Arbitration+Dispute+Resolution/No+More+Reverse+Passes+SC+Reiterates+that+Appeal+Against+Arbitration+Award+cannot+result+in+remand+of+matter+back+to+the+arbitral+tribunal+after+the+award+is+given
[8]Radha Chemicals v. Union of India, Civil Appeal no. 10386 of 2018
[9]Sherina Petit& Ben Grant, Awards set aside or annulled at the seat- Zombies, Ghosts and Buried treasure, NORTON ROSE FULBRIGHT, May 2018,https://www.nortonrosefulbright.com/en-in/knowledge/publications/e202e90e/awards-set-aside-or-annulled-at-the-seat-zombies-ghosts-and-buried-treasure
[10]Supra Note 4
[11]The International Centre for Alternative Dispute Resolution (ICADR)
[12]Supra Note 1
[13]https://pca-cpa.org/en/about/
[14]Julian Pauncefote& Jose Andrade,Treaty of Arbitration between Great Britain and the United States of Venezuela, PEACEMAKER, Washington D.C., Feb. 2 1897,https://peacemaker.un.org/sites/peacemaker.un.org/files/GB-VE_970202_Treaty%20of%20Arbitration.pdf
