In this blog post, Aranya Saha, a student of Jogesh Chanda Chaudri Law College, Calcutta University, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the applicability of the law of limitation in Arbitration.
Starting from an International Company to a local company, everyone wants to save time and money. They choose the fastest and the cheapest way to resolve matters, which is why alternate methods of solving disputes gets is cognizance.
ADR processes basically helps the parties save both money and time but there are instances where ADR process has made the matter more complex and is not able to resolve the issue. The matter involves huge expenditures for hiring lawyers. Now the reality in the ADR process is that it also involves a lot of expenditure from both sides of the two parties as they have to pay a huge amount to the arbitrator or the mediator.
The thing which the ADR process does is that it does not involve the court or any governmental authority and gives the parties more independence and flexibility when it comes to choosing what laws and rules will apply. Everything happens mutually between the parties and it is upon the parties to choose a mediator or a third party to resolve their matter or sometimes an expert in some specific field when an ordinary person may not have the technical expertise or when the matter involves any technical issue.
These new methods of resolving disputes facilitate parties to take cost effective and efficient way to solve their matter. Alternate methods have the advantage of providing services that makes the parties less hostile and a sense of control. It also has the mutual consent to accept the outcome of the dispute resolving process. Alternative Dispute Resolution has mainly 5 types of methods: negotiation, mediation, arbitration, collaborative law and sometimes a process called conciliation which for the present purpose is considered same as mediation. Arbitration is a form of Alternative Dispute Resolution, where the parties to a dispute appoint a third party rather than approaching the court. The parties to a dispute submit their respective argument to the neutral third party and most of the time the decision given are binding because of the prior agreement between the parties.
Arbitration is one of the most efficient way to solve disputes by the help of a third neutral party but as popularly stated that “every coin has two faces” means that everything has its pros and cons, thus this is imply that the arbitration process of solving disputes also has its loopholes.
- It saves a lot of time by allowing the parties to resolve their differences/ disputes/issues in a short period of time as compared to the excessive stint taken by the Hon’ble Courts in resolving the very same issues. The numerous numbers of cases pending in courts leads to docket explosion. Morepver, the population in India is so huge that the judiciary is not able to adjudicate at the rate cases are filed.
- It saves a lot of money that is disbursed on lawyers and other miscellaneous expenses that one has to undergo in the process of litigation. Some court proceeding can be very expensive when people look for good and renowned lawyers. Saving cost is one of the reasons arbitration is adopted everywhere.
- It puts the parties in control by giving them opportunities to discuss their case by giving them a forum to put forth their own views and thereby giving them a chance to put themselves on a clean slate.
- Access to justice is much easier and much faster in case of arbitration, because it allows people, who cannot afford fees or cannot afford to lose time, to acquire a remedy without getting into the sweat breaking system of the court.
- It focuses on the issues that are important to the people instead of just stressing upon the legal rights and obligations.
- It leads to more flexible remedies than in court, i.e. the people make agreements that the court cannot order or enforce upon.
- It produces good results by reducing stress upon the people and satisfying them by giving them the desired results and by preserving good relationships between them.
- Compatibility: arbitration method might not be suitable for certain types of cases. Some cases are to be dealt in the court of law; there is no other ‘informal’ means of solving the said cases.
- Waste of time and money: if the case is not solved because the parties have to approach the court anyway.
- The possibility of bias: though negligible, a conflict of interest or at least the appearance of impropriety may arise if a neutral in arbitration gets a good deal of repeat business from the same institution.
- The process is an informal procedure where there is opportunity to abuse power and also manipulate.
- Lack of power to establish legal precedent as decision of mediator is not final; it can only be final in rare cases in arbitration.
- Unfamiliar procedure and lack of awareness in people is another demerit of arbitration mechanism as it is new method and most people in developing countries are not having any know how about these processes.
The Indian Penal code has provisions for disputes to get it solved by an arbitrator. The arbitration and conciliation act has been made in this respect. It deals with the laws relating to the functioning of the arbitration process. The tribunals are not bound by any law to make its decision in that respect. The parties are free to choose the procedure to be followed by the arbitral tribunals but where the parties choose two different procedures and cannot come to a decision than the tribunal may fix the appropriate proceeding.
The section 21 of the said act says that a dispute is solved by arbitration only if the aggrieved parties approach the arbitrator in respect of the dispute in concern on the date on which it is referred. The awards made by the arbitrator have same binding effect on the parties but where the parties settle the dispute by self, the arbitral proceeding is terminated and an arbitral award on the agreed terms will be made.
The section 43 0f the Arbitration and Conciliation Act 1996 deals with limitations. The Limitation Act 1963 will apply in the very same way as it applies in court proceedings. The parties who enter in an arbitral agreement with another for some dispute which may arise in the future shall apply to the arbitral tribunals within the specified time period. Such time period may be extended by the court if it is of the opinion that the case is such that undue hardship would likely be caused if it is not extended. In cases that the court has jurisdiction to order that an arbitral award be set aside, the time between the arbitral award and the order of the court shall be excluded in computing the time prescribed by the Limitation Act 1963.
It may be useful to conclude that the arbitration system is developing a lifetime of its own, one shall not stand surprised once s/he sees the quantity of unresolved disputes being narrowed to zero within the close to future. Generally the total method could prove fateful nevertheless in many another manner it’s the foremost applicable manner of proving the terribly renowned locution, “justice delayed is justice denied”, to be true, one shall not sit up for justice being delivered if he or she is within the hands of the arbitration system. Due to the increased quantity of workload within the numerous courts all round the world, individuals are turning towards a simple and low-cost (in some cases costly nevertheless feasible) system, which might resolve their dispute i.e. towards arbitration. Generally at the disposal of the judge and generally as a result of some contractual agreement, individuals do flip their backs onto the courts and move in direction of the arbitration system. The arbitration system is a gratifying system, which already enunciated its roots within the numerous legal systems of the globe, such that there’s a private international body governing the procedures of resolving disputes through different means.
- The arbitration and conciliation Act, 1996 by O.P VERMA.