This article has been written by Adv Priscilla Rodrigues, pursuing the Certificate Course in Arbitration: Strategy, Procedure and Drafting from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho), and Ruchika Mohapatra (Associate, Lawsikho).  

Introduction

Alternative conflict resolution techniques have grown in popularity in recent years, owing to their numerous benefits over the traditional way of litigation. In a report presented to Parliament in September 2014, the Ministry of Law and Justice showed that India is short of nearly 6,000 judges.

It’s worth noting that between 2006 and 2018, India saw an 8.6% increase in the number of cases pending in all courts, lengthening the time it takes for a judge to determine a dispute. These considerations make it possible to prevent litigation in India, particularly in contractual issues that can be resolved by alternative methods such as arbitration, which is regulated by the Arbitration and Conciliation Act, 1996. 

Alternative dispute resolution is a procedure for parties who do not agree or have certain disputes with one another. This resolution gives them more possibilities for reaching a compromise. Conciliation, mediation, arbitration, and Lok Adalat are some of the examples of these methods. These procedures are far superior to the traditional court procedures. They are both faster than traditional court procedures. They are also casual, requiring fewer protocols and formality on the part of the families.

Different methods to solve disputes

As we all know there are a few methods available for two parties to resolve disputes. The first and most common approach is to resolve disputes through courts when a dispute occurs between two individuals belonging to the same government, there is the same sense for the dispute to be resolved by the parties through the courts set up by that country’s law. Our conventional judicial system has become outdated and there has also been a need for another structure to sustain our judicial system as a replacement or alternative for settling disputes between peoples.  

Our judicial system has some drawbacks, such as an overburdened court, time-consuming, requiring a costly technical process with a low population ratio of judges, and unfilled vacancies with long procedural and pendency of cases.

Alternative dispute resolution mechanism in the Indian judiciary  system

Justice is the foundation and the focus of every civilized society. The quest for justice was an ideal that the human race aspired to down the line for decades. Dispute resolution is one of the Indian judiciary’s major functions and is essential to a stable society. The Government of India operates through various organs and the judiciary is directly responsible for the administration of justice.

The judiciary in India is the real point of the provision of justice. Resolving conflicts is one of the key factors for society’s peaceful existence. Arbitration, the ADR style, is accepted as an instrument of dispute settlement by the Indian judiciary. Originally, arbitration was regulated by the Indian Arbitration Act, 1940. 

The courts were mainly concerned about the control of the arbitral tribunals, and they were very keen to see if the arbitrator had exceeded his authority in determining the matter referred to him for arbitration.

The judicial process in India is not only expensive for an ordinary person but also it takes years and years to deliver justice. To address the much-criticized delay in the delivery of justice, the implementation of Alternative Dispute Resolution (ADR) mechanisms such as Lok Adalats, arbitration, mediation, and conciliation were considered and followed with praiseworthy results afterward.

The judiciary has figured prominently in developing and transforming India into an arbitration-friendly country, and the day is not far away when India will be a significant contender in hosting international arbitrations. When a party challenges an arbitration ruling, the Supreme Court of India and different High Courts have taken a hands-off attitude.

In recent years, Indian courts have repeatedly embraced an arbitration-friendly attitude. There have been numerous cases where courts have sustained arbitration agreements despite small flaws, thereby recognising the parties’ decision to have their problems resolved through arbitration. Despite adopting a pro-arbitration stance, the Supreme Court approved an arbitration agreement despite an error, concluding that because the parties’ purpose to arbitrate was obvious, the Court can make the arbitration agreement viable even if it contains certain faults.

Whenever litigants have attempted to circumvent the Arbitration Act’s requirements, the courts have typically refused to interfere with the awards made under the Act. Anti-arbitration injunctions have also been granted with caution by the courts. The High Court has ruled that if a party has recourse under the Arbitration Act, it cannot obtain an anti-arbitration order from the court by ignoring the Act’s provisions. In that particular ruling, one of the arbitrators was chosen in conjunction with another party and without implementing the consented process, prompting the party to seek an injunction from the Court prohibiting the arbitral tribunal from proceeding with the arbitration.

Measures to be taken to make ADR more effective

There are certain measures that can be taken so that the arbitration process in India will no longer be allowed to drag on needlessly:-

• The transition from ad hoc to institutional arbitration should be pursued.
• Courts should impose steep fines on bogus requests to overturn arbitral rulings.
• Expert arbitrators should be appointed based on the circumstances of the case.
• Laws pertaining to arbitration, mediation, and conciliation lack a clear distinction and should be defined clearly.
• Each financial year, the state must specify a reasonable proportion of new issues that must be resolved using one of the ADR methods. It would encourage organisations to begin training and developing skills to advocates in the area of ADR, as well as building a profitable ADR practise.

Findings of the Law Commission of India

While the alternative methods have provided speedy justice to the people, some legal luminaries have raised a few relevant questions through these exercises. The Law Commission of India maintained that the reason for the judicial delay was not the lack of clear procedural rules, but rather the inadequate implementation or even absolute non-observance thereof. In its 14th Report, the Law Commission of India categorically stated that the delay did not result from the law-making process, but from the non-observance of many of its important factors. Given the huge number of cases pending, governance and administrative oversight of the judiciary by manual processes have become extremely difficult.

If we study the reports from the Law Commission of India it sheds light on the factors that contribute to delays and a huge backlog of cases before the courts. The main contributing factors are regular adjournments to clients and attorneys, trial boycotts by lawyers, a scarcity of presiding tribunals and tribunals, lack of adherence to basic procedures and standards of case management and disposal.

The Supreme Court in Brij Mohan Lal v. Union of India & Others made it clear that this state of affairs must be addressed: “An autonomous and effective judiciary is one of the basic structures of our Constitution … It is our constitutional obligation to ensure that the backlog of cases decreases and that efforts are made to increase the disposal of cases^.”

In the case of Avitel Post Studioz Limited v. HSBC PI Holdings Limited, the Supreme Court recently addressed the subject of whether or not claims of fraud can be handled in arbitration rather than in court. The Apex Court decided that “serious charges of fraud,” leading to non-arbitrability, could emerge solely if any of the following two requirements were met, but not otherwise:

In cases in which the Court decides that the arbitration agreement itself is irrevocably tainted by fraud; 

or when claims of arbitrary, fraudulent, or mala fide conduct are made against the State or its instrumentalities, giving credence to due process concerns rather than commercial questions.

Thus, it implies that all other cases containing “serious allegations of fraud,” that is, situations that do not fit the Supreme Court’s two criteria, would be arbitrable.

Alternative dispute settlement was once viewed as a voluntary act on the part of the parties seeking legislative recognition under the Civil Procedure Reform Act, 1999, the Arbitration and Conciliation Act, 1996, the Legal Services Authorities Act, 1997, and the Legal Services Authorities (Amendment) Act, 2002. What is required now is the implementation of the Parliamentary object.  

Conclusion

ADR and the judiciary should work in tandem as they both are reliant on one another; the Courts must urge the parties to resolve their conflicts constructively using ADR processes. The Courts’ engagement in the ADR process should be limited, and they should only act if needed; more freedom must be given to the ADR procedure in business disputes. The arbitrator, who is attempting to be an unbiased judge, ought to be rigorous and liable for any liability they may incur. Arbitrators should be given training and such advocacy programmes should be organised by the judiciary to give them and train them the proper method to conduct themselves in the ADR process. 

It is strongly recommended that in a country like India, where the ADR process is rapidly expanding with more cases being filed, the judiciary should commence arbitration advocacy under the Arbitration Act, allowing it to resolve more litigation and conflict cases in India.

Although the court system has attempted to extract obstacles during and after the arbitral proceedings by generally refraining from meddling with arbitral tribunal decisions or having to pass other arbitration-friendly judgments, this may not be enough to entice foreign entities to use India as a venue for arbitration. 

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