LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

                 In order to address the issue of delay before Traditional Courts and in order to decrease the burden of courts, Alternative Dispute Resolution Mechanism was mooted and now everybody is aware of Arbitration proceedings. As everybody knows, Arbitration proceedings are governed by Arbitration and Conciliation Act, 1996 in India. On one side, we have been witnessing a trend where the Arbitration Clause is incorporated mechanically in almost all the agreements. Again, we have been listening the criticism that the Arbitration Law has failed to yield the desired result as it is too costly and at the same time the proceeding gets delayed like a proceeding in traditional civil courts.

The main difference between a proceeding before a traditional court and a proceeding before Arbitrator is as follows:
     (a) in arbitration, parties are at liberty to select a person to decide their disputes.
     (b) even in the absence of consensus, the Chief Justice of concerned High Court, can appoint an arbitrator on an application under section 11 of Arbitration and Conciliation Act, 1996 and the Arbitrator is not burdened like traditional civil courts in either case.
     (c) The parties are at liberty to choose the place of arbitration, the procedure to be followed by Arbitrator etc., and it encourages the parties to the dispute to effectively participate in the process of dispute resolution and try to get their disputes resolved early.
     (d) The Arbitrator need not follow Civil Procedure Code though he is supposed to adhere to the principles of natural justice.
     (e) There is no need of paying court fees in an Arbitration proceeding though parties need to bear the expenses of proceeding as agreed or as directed by the court.
     (f) The appeal provision is limited considering the provisions of C.P.C and invocation of Article 227 normally when it comes to traditional mode of adjudication.
     Despite the difference between a proceeding of traditional Civil Court and an Arbitrator, and despite few advantages of resorting to Arbitration to get the disputes decided, it is often criticized that the Arbitration Mechanism too failed to produce the desired results. The criticism is like:
      1. Arbitration proceeding is too costly.
      2. Arbitration proceeding to gets delayed in many cases.
     I want to deal with as to why there is such a criticism on our Arbitration Mechanism. The Arbitration proceeding becomes too costly when the Arbitrator had to have many sittings and the proceeding is prolonged abnormally. As such, we need to concentrate as to why the Arbitration proceeding too gets delayed at times. 
     Its really a complicated issue to dealwith. A party, who feels that they don't have a good case, may try to drag the Arbitration proceeding to the extent possible. For dragging the case, he will seek adjournments very often and file Interim Applications even if he knows that the same will get dismissed. No Arbitrator will dismiss an Interim Application filed by a party to the proceeding unless both parties are heard and as such it consumes lot of time. Again, a party may prefer an appeal or an application to the High Court seeking to set-aside the interim order. Once the matter reaches the High Court pending main Arbitration, then, it will consume some time and main Arbitration proceeding gets stalled.
     This tactic of dragging a matter is there everywhere and it is same before the traditional civil courts and also before Arbitrator at times. In my observation of Arbitration proceeding, I have seen the reasons as to why even the Arbitration proceeding gets delayed abnormally.
     If we need to make this Arbitration mechanism truly purposeful decreasing the burden on traditional courts, then, we need an action plan. We need more trained and expert arbitrators who will not take much time to take a decision on something during the course of proceeding. The Arbitrator must be able to dismiss an Interim Application even on presentation after giving reasons if he feels that it is unnecessary and not maintainable. Its not happening in reality. Again, the Court should not entertain appeals or applications seeking to set-aside the Arbitration Award loosely and the application seeking to set-aside the order or the award should be dismissed at the first instance itself if there is no ground for interference.
      Thus, in my considered opinion, to counter the criticism that the Arbitration is too costly and proceeding gets delayed abnormally, we need to:
      (a) concentrate on the issue of appointment of Arbitrators and we need more trained and expert arbitrators.
       (b) The interference of courts against the interim orders of Arbitrator should be very very careful.
Dispute the fact that resolving disputes through Arbitration is really a good mechanism, unless we plan well with needed reforms, then, it can not certainly produce goods and prove that it can be really alternative to the traditional adjudicating mechanism like Civil Courts.      

"Loved reading this piece by Member (Account Deleted)?
Join LAWyersClubIndia's network for daily News Updates, Judgment Summaries, Articles, Forum Threads, Online Law Courses, and MUCH MORE!!"

Tags :

Category Corporate Law, Other Articles by - Member (Account Deleted) 


Post a Suggestion for LCI Team
Post a Legal Query