What Indian Arbitration needs to do to make Institutional Arbitration success in India?

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To stand tall before the world as a cogent and strong international arbitrator among the likes of Singapore, Australia and Hong Kong, India should adopt effective ADR mechanisms particularly Institutional Arbitration which offers less cost of litigation and also doesn’t drag the proceedings against the backlog of cases pending in the Indian courts. India which is the center of commercial transactions, in South East Asia, given its geographical richness and multilingual culture growth of commercial arbitration only becomes necessary. Measures should be therefore taken to buckle up Institutional Arbitration and become a hub for International Commercial Arbitration.

Challenges posed by the Indian legal system:

The Arbitration and Conciliation Act (1996 Act), based on UNICTRAL International Commercial Arbitration, 1985 gave rise to a few challenges:

  • Expensive, lengthy proceedings: Indian arbitration panels are known for frequent adjournments that contribute to long arbitration time-spans. Often, arbitrators lack the expert knowledge required to resolve disputes and calculate claimant’s damages, leading to further delay and numerous appeals against final awards. 50% of the respondents believe that arbitration is not cost effective and there are inordinate delays in the proceedings.
  • Judicial logjams: A problem with Indian courts is their traditional attitude towards arbitration. Judges suspect panel mediating on an issue isn’t acquainted with law and that they lack the complex negotiating skills or are inexperienced.
  • Judicial intervention at various stages stretches arbitral proceedings as Indian courts are typically known for giving frequent adjournments. SC has, in their recent decisions, raised questions on the foreign award, thereby acting as an active interventionist in the arbitration process.
  • Non-amendment of laws: Until recently(Ordinance 2015), arbitration laws were not amended which led to unavoidable hindrances in the workings of arbitration process.

Latest trends observed in the Arbitration proceedings:

  • E-Discovery is a growing trend in commercial arbitration proceedings, especially when parties seek significant discovery.
  • Rise in institutional arbitration: In the last three years, India has seen a growth of nearly 200% in the number of arbitral disputes. The entry of professional institutes (such as London Court of International Arbitration and Singapore International Arbitration Centre) in the market has brought in efficient structure, and effective case management. .
  • Hot-tubbing: It is gaining importance over the old-school methods of cross examination. The process enables lawyers and arbitrators to question experts in the presence of other specialists and challenge each other’s evidence, thereby simplifying trials and saving time.

Institutional Arbitration as a way forward:

Institutional arbitration in a nation flourishes only when its arbitral institutions fulfill the basic requirements to successfully and effectively carry out an arbitration process. These requirements include

  • A degree of permanency
  • Modern rules of arbitration
  • Qualified staff
  • Reasonable Charges

1. A Degree of Permanency: The institution in the commercial agreement clause should be in existence so as to resolve the disputes arising out of the agreement, inasmuch they don’t prove to be incapable of being performed.

2. Modern Rules of Arbitration: The laws of commercial arbitration change at regular intervals and it becomes imperative for the arbitral institutions to get in line with the changes so that the institution doesn’t become obsolete.

3. Qualified Staff: ICC has set the standard whereby each institution is under a “Counsel” drawn from the ICC’s staff of experienced and multi lingual lawyers who are well versed with diplomacy and profound legal knowledge. The assistance extends to explaining the rules, making sure that the time limits are observed, collecting fees, arranging visas and reserving accommodations.

4. Reasonable Charges: The process of arbitration is deemed effective if along with being expeditious and just, it is cost effective as well.

Conclusion:

Institutional arbitration comes along with great advantages – Reputation of the institution which is a prerogative that an arbitral award will be enforced, for instance – ICC. Strictly construing to the rules of the institution is another added advantage. Administration, a panel of quality arbitrators, remuneration of the award only prompt us to use Institutional Arbitration as a mediation and negation mechanism. Where the no. of cases is myriad and judiciary is involved with high profile cases, commercial disputes should therefore be disposed by arbitration laws and for that matter Institutional Arbitration.

By –

Tejaswa Naswa
1st Year, National Law Institute University, Bhopal