Is it time for India to create a special court for Arbitration - Part 2

Rahul Kumar & Aditya Singh [i]

 

Introduction


A High-Level Committee under Justice B N Srikrishna was set up to review the institutionalization of arbitration mechanism in India. One of the key recommendations of the Committee was to set up a permanent arbitration bench to deal with such commercial matters, in the domain of the court. This part of the piece aims at showing how creating a permanent tribunal would help resolve the various problems that currently plague the arbitration scenario of the country. It will further aim to provide suggestions as to how the powers of this Permanent tribunal can be defined and structured to better serve the needs of the times.


Do away with Ancillary Petitions


The most avoidable delays in any arbitration proceeding are the petitions pertaining to referring parties to arbitration, the appointment of arbitrators, securing any interim relief sought before the court and any other basic point of the dispute before the passing of any award. All such petitions do not require a thorough review of the merits of the dispute and it is imperative that these do not hinder the progression of arbitral proceedings. However, filing such petitions before the courts with their notoriously long pendency rates and wait times inevitably prolongs the proceedings. Creating a Permanent Arbitration Appellate tribunal which would have the authority to listen to and determine all such proceedings in the first instance will result in cutting down on waiting times considerably and allow Arbitration to be a quick and efficient dispute redressal mechanism.


One innovative way time can be saved in proceedings related to such matters would be to allow for such matters to be heard and disposed of without ever requiring the parties to convene in one place, through online forums. Especially when deciding the appointment of arbitrators, there is no requirement for appreciation of any evidence, perusing any affidavits etc. and hence, such matters can be just dealt with through one simple video conference conducted by the Appellate Tribunal.


The appealability of such matters can also be shut down by classifying these functions of the Permanent Tribunal as ‘administrative functions’ and therefore reducing the scope of appeals. An inspiration can be taken from the Income Tax Appellate Tribunal, where an appeal lies to the High Court only if a substantial question of law arises for determination. A similar approach could be adopted to stop appeals which do not determine the position of law but can be adjudicated based on the facts of the case.


Substitute Courts for appeal against the award


This piece proposes the creation of an Appellate tribunal with a position parallel to the High Courts, with its orders only appealable in Supreme Court, in line with Article 141 of the Constitution. While in an ideal scenario, an award passed by retired justices of the High Courts and Supreme courts would definitely have some thought behind it and would not require it to be subjected to appeals in the Public Fora, even if the legislation insists on the judiciary possessing the capacity to review arbitral awards, that power should only be kept with the highest court of the land. This is required as subjecting any party to an appeal in a trial court, which can then be appealed further in higher courts, is nothing but litigation in arbitration’s clothing. One major benefit of such a Tribunal would be that there would be consistency in the judgements, as the singular tribunal would without question be more uniform in its thinking as compared to various civil and high courts of the country. It must be realised that after an order is passed, the successful claimant would like to enjoy the award and try and remedy the wrongs it has been subjected to and such appeals do nothing but undercut the concept of speedy and effective justice.

The mandates of an award must be expeditiously affirmed, except for any glaring error and efforts must be made to make sure the non-compliance of the losing party results in contempt proceedings against them. Such a measure is not a far-fetched idea, as, in the recent case of Daiichi Sankyo Co. Ltd v. Oscar Investments Ltd., the CJI remarked “It is true that it is possible for a court while exercising jurisdiction in contempt, to pass consequential orders in the nature of sequestration orders to secure the properties which the contemnor had put beyond the reach of the court.


Creating a specialist arbitration bar, another recommendation of the B N Srikrishna Committee, that consists of lawyers that specialise in this field would inevitably increase the quality of the tribunal as a whole and provide parties with experience and qualified options in matters pertaining to such disputes. Saving Time and Money


Another problem that needs to be addressed when it comes to judicial intervention is the rising costs. Filing a petition in the High Court itself is not cheap, pair it with the fees of the lawyer filing the petition and the situation becomes ever so undesirable. Creating a tribunal with low filing costs and making it compulsory for the losing party to bear the costs would further bolster the arbitration regime in the country. Furthermore, the most obvious benefit of establishing a permanent arbitration appellate tribunal, as was the intention of every special cause tribunal formulated in the country, would be the expeditious disposal of matters. However obvious it may seem, it is a benefit that can only be realised in practice if the tribunal is structured in a way that allows it to function most of the time, akin to the timings and work schedule of normal court. It must be regular in its sessions and a large of panel of retired justices must be appointed in order to quickly dispose of the cases.


Conclusion


Arbitration is future of dispute resolution; it provides the convenience and flexibility that a civil court just cannot provide. However, for a country like India to flourish in this field and establish itself as a global arbitration hub, which is a goal of the government, it has to take cognizance of such problems and it must be done now. As has been highlighted over this two-part piece, arbitration in India not only suffers from time delays and excessive judicial intervention, it is also plagued by inconsistent judgements and erroneous grounds of dismissal of awards. Even if the spirit of the legislation was to provide for an effective alternative to traditional courts, its interpretation by these courts has reduced it to nothing but an added first step to a long, arduous, and costly journey of litigation.


It is imperative that the government gives due consideration to the establishment of a permanent bench of arbitration, something which has been conveniently ignored ever since the recommendations were given by the committee. Furthermore, a specialised bar, consisting of lawyer with expertise on such manners needs to be constituted in order to foster a better arbitration environment in the country. Such practices have already been adopted by countries such as France and Switzerland and therefore the preference of the international market towards these countries for their arbitration disputes does not come as a surprise.

One of the main ways the government can show its commitment towards making India a hub for arbitration is by making it a part of all major government contracts; if the government was to be subjected to the arduous process that arbitration has become in India, it will leave no stone unturned into making it a better experience. One of the recommendations of the Srikrishna Committee was that India’s National Litigation Policy should promote arbitration in the country by including arbitration clauses in all government clauses.

 

Aditya Singh is an undergraduate law student from Dr Ram Manohar Lohiya National Law University, India. They hold interests in various fields of law including Arbitration Law, Insolvency Laws, IPR, Alternative Dispute Redressal processes and Securities Law. For any discussion related to the article, he can be contacted via mail at adi823549@gmail.com. Rahul Kumar is an Advocate at Sarvada Legal and can be contacted at rahul@sarvada.co.in


Is it time for India to create a special court for Arbitration - Part 2
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