Emergency Arbitrator

The courts of this country should not be the places where resolution of disputes begins. They should be the places where the disputes end after alternative methods of resolving disputes have been considered and tried. - Sandra Day O'Connor

Introduction

The Alternative Dispute Resolution as mechanism to resolve conflicts is gaining popularity, owing to the lengthy legal process in disposal of cases. Especially, in a country like India were the backlog of cases is haunting the Indian legal system, need for an Alternate Dispute Resolution mechanism becomes even more vivid. In such a circumstance, a quick and efficient remedy as an alternative of court becomes paramount.

In India, The Arbitration and Conciliation Act, 1996, hereinafter as, 'Act' is serving the above stated purpose. This Act was not the first law that came into existence as an alternative to courts for dispute resolution. The first codified law on Arbitration can be traced back in 1899, with the advent of British rule in India. From time to time, the Legislature has either repealed the law to make a way for a much better legislation or has made amendments in the existing one, to harmonize the dynamic needs of society.

Arbitration can be defined as a method wherein the parties to the dispute decide to get their dispute resolved through a third party (not being the court). The only requirement is that there has to be an express condition/contract, to refer the dispute to Arbitration, in case of any conflict. Further, the number of arbitrators has to be odd (1, 3, 5 etc.). Under the Act, door of courts too can be knocked to have any interim relief which is vital. Arbitrator, under this Act, can be any independent person in whom the parties repose their trust and the strict procedure of Evidence does not apply. In India, there are permanent arbitration institutions like Indian Council of Arbitration (ICA), Chamber of Commerce, where the disputes can be referred.

Although this Arbitration Act of 1996 was a very good legislation but there still remained some grey area which had to be undone in order to make the procedure under the Act more efficient and effective.

2015 Amendment and the Way Ahead

In 2015, this Act was amended to provide the Arbitrators with more teeth. The definition of Public policy was made explicit by including in it (1) Fraud or corruption by other party. (2) Contravention of the fundamental policy of law of land. (3) Conflict with the notions of morality, as a ground for appeal.

Further, every attempt has been made to make Arbitration a speedy remedy for disposal of any conflict by inculcating following deadlines (1) Arbitral award has to be made within 12 months of the referring of the dispute by one party, further extendable to 6 months with the consent of both the parties. (2) Any challenge to the arbitral award has to be disposed of within a period of 12 months.  Under the 2015 amendment, the Court has been empowered to refer the parties to an arbitration where there is an agreement to the same. The interim order by the court, is to be granted only if the court comes to the conclusion that such arbitral tribunal will not be able to provide such relief. Under the Amendment Act, the relevant court for all the arbitration matter have been stated to be the principal civil court or the High court with original jurisdiction.

With this amendment in 2015, every attempt has been made to meet the object with which the Alternative Dispute Resolution is opted.  Fast Track procedures are availed for early disposal. But, there still remains a provision that I personally feel must be inculcated in the Act, to make it more potent. If under the Act, a provision of Emergency arbitrator is inculcated, the Arbitration and Conciliation Act would turn out to be a one stop destination for any dispute.

Emergency Arbitrator

An Emergency Arbitrator, is an arbitrator that is appointed within a very short span of time, to provide some urgent interim relief that cannot wait for the normal hearing by the Arbitrator.

In India, there is no such provision of an Emergency Arbitrator and the party for any interim relief has to knock the doors of the Court. If such a provision is inculcated in the Act, an Arbitrator may be appointed under certain Institutional arbitration rules for determination of applications for urgent interim relief as soon as the request for arbitrator has been filed and before the arbitral tribunal is constituted.

There are few institutions in the world which have made a provision for Emergency Arbitrator and they are as follows:

  1. The International Center for Dispute Resolution (AAA-ICDR).
  2. Stockholm Chamber of Commerce.
  3. Singapore International Arbitration Center (SIAC).
  4. International Chamber of Commerce’s International Court of Arbitration (ICC).
  5. London Court of International Arbitration (LCIA)

In India, the 246th Law Commission Report finds the mention of appointment of Emergency Arbitrator. The commission has recommended an amendment to be made in the definition of Arbitral tribunal under Section 2(1)(d)  of the Act to ensure that the institutional rules which provide for an Emergency Arbitrator are given statutory recognition in India too.

The initial case studies with regards to Emergency Arbitrator was introduced under SIAC rules in 2010, which are very instructive.

In this first case between two Indian parties, claimant sought emergency relief by the way of an injunction to restraint the respondent from invoking bank guarantee.

SIAC, in the said case had appointed the Emergency Arbitrator within 14 hours. And after having a telephonic hearing, interim order was passed within a week.

Bombay High Court in HSBC PI Holdings (Mauritius) v. Avitel Post Studioz Limited & Ors (2011), in exercise of its jurisdiction to grant interim measures of protection, directed relief in terms of the awards made by the Emergency Arbitrator under the SIAC emergency arbitrator provisions.

Conclusion

In India, speedy trail is a fundamental right of every litigant, but the justice delivery system had made it a distant dream. Arrears and backlog of cases are mounting with each day passing, irrespective of the hierarchy of the court.  In such a scenario, an effective alternative for dispute resolution and independence from the dependence of the court becomes cardinal. Amending the Act to include the provision of Emergency arbitrator in my opinion will help in such a circumstance and in turn will have an profound impact on disposal of disputes.

 

Nishtha Malhotra 
on 11 September 2017
Published in Corporate Law
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