What should the Indian Arbitration be Like?

The very recent ordinance introduced in 2015 for the Arbitration and Conciliation Act, 1996 strikes at the core agenda of implementing an Alternative Dispute Resolution mechanism. An expeditious yet pocket friendly is what the Indian Arbitration should look forward to. Seemingly the only beneficiaries of such alternative mechanism are either the MNCs or those of the Metropolitans, even though this process is an exact derivative of the historical dispute resolution mechanisms of India cited in Manusmriti the first Indian legal doctrine. The major improvement which in my view will be the game changer are the following:

1. Expedited Process of Arbitration

The foremost criticism of the Indian Arbitration was that arbitrations, particularly ad hoc arbitration which form the majority of the national arbitrations, were overly prolonged activities that nullified the very reason for which the Arbitration comes into operation and the parties chose a dispute settlement mechanism Alternative in the first place.

The reforms aim to solve this problem by:

  • The setting of time limits (a period of 12 months) when the trade-offs must be concluded and award must be delivered
    put the burden on the arbitral tribunal to conclude arbitration.
  • If the exchange is not made within 12 months (or other extended period of 6 months – if the parties agree), then the mandate of the arbitrator will be automatically are revoked.
  • After the 12-month period (or extended period of 6 months – if the parties agree), only the courts can extend the time for completion of the arbitration.
  • Prescribing hearings daily (as opposed to court sessions after only a few hours), no routine adjournments, and for imposing exemplary costs on any part of punishment for any delay.
  • The arbitrators award, for an additional fee, to complete arbitration within 6 months, and punish the referees, by reducing costs or even the substitution of arbitrators an unjustified delay in arbitrations.

The amendment introduces a new accelerated mechanism, like many comparative international institutional arbitration rules, to complete arbitration within six months (dedicatedly dictated by the UNCITRAL model of arbitration majorly followed by the leading International Arbitration Centers. This essentially gives the parties the opportunity to adopt an accelerated resolution process where disputes can be decided only on the basis of documentary evidence. The court may ask the parties for oral hearings if necessary. However, the main purpose of having this new provision is to quickly resolve disputes between the parties which developed a test is not necessary. This would be able to bind faith in the general litigants to pursue the alternate dispute resolution, thereby increasing its acceptability in the populous.

2. Regulating the fees of the arbitrator

The ADR mechanism when it was introduced seemed sweet, hidden its cosmetic veil was an underlying monopoly of the arbitrators charging according to their whims. Unless this nexus of syphoning of money from the aggrieved is checked, it shall remain less desirable for the common man and always an alternative and would not be adopted as a healthy mechanism to solve their grievances.

The law now provides detailed guidelines to the newly introduced Annex – 4, on the rights provided by the arbitrators. While this may call for a degree of criticism from the arbitrator’s community – it will definitely bring a degree of certainty and relief among users who are often left to thank you for referees, judges often retirees Supreme Court and the High Court, charging exorbitant fees under different heads. Therefore, arbitrations in India were neither quick nor profitable. Parties, for fear of inviting an adverse decision of the referee, were in no position to discuss or negotiate fees with the referees. Therefore, the costs of the arbitration, including the place and secretarial costs, would often operate at exceptionally high levels, almost exorbitant. It is important to note that this limitation shall not apply to fresh international arbitrations and administered arbitrations/institutional.

A schedule of fees for arbitrators was scheduled for all ad hoc arbitrations, except for international arbitrations. What this means, is that for international arbitration, India, the fees prescribed by law would not apply. This exclusion recognizes that international arbitrations typically involve much higher stakes and complexity and, therefore, requires leading international arbitrators to be appointed as arbitrators. Therefore, any prescription or regulation of fees in these cases would be against-productive and act as a deterrent to lead international arbitrators to accept appointments in India.