This article is written by Archit Adlakha pursuing Certificate Course in Arbitration: Strategy, Procedure and Drafting from LawSikho.
The concept of alternative dispute resolution has been under the limelight for its cost-effective, procedural flexibility, and relatively quick results. It is a sensible way to keep companies out of court and away from litigation which can tie up the profits for years and years on a stretch.
What is arbitration?
Arbitration can be defined as a procedure in which the parties to a dispute agree to settle the same outside the court with the appointment of an arbitrator who makes the final decision on the matter. As Justice Kurian Joseph puts it, “arbitration is a method of settlement of disputes that is independent of the court system”. The purpose of arbitration is to bring about a speedy and inexpensive settlement of disputes.
Arbitration is usually carried out by an arbitrator or a designated arbitrator. It involves two or more parties who may be private citizens, public officers, or both. The proceedings are conducted through written instruments known as arbitration clauses. These arbitration clauses are legally binding and cannot be breached by either party in the arbitration. The two parties may not, however, agree on the nature or duration of the arbitral proceedings.
Advantages of arbitration
- A settlement can be reached more efficiently and cost-effectively in an arbitration process, as compared to a court judgment.
- While agreements and contracts end up on the termination table, arbitration removes this entire arrangement of contract work and can instead allow a fine-tuned procedure for reaching a mutually acceptable settlement on both sides.
- The process helps in not only resolving the dispute but also enabling fair settlements.
- Alternative dispute resolution (ADR) is a global mechanism for resolving disputes out of court.
- It further helps to ease the burden of cases on the court and rather than the parties fighting each other for years and years on the end, spending an exorbitant amount of money they tend to resolve the matter quickly and on their terms which lead to a peaceful settlement.
- It further comprises a binding and enforceable mutually agreed protocol for the solution of disputes.
Disadvantages of arbitration
- There are so many guidelines and so many institutions providing the facility that it becomes very difficult to choose the same.
- The use of alternative dispute resolution in a comprehensive sense is still a few years away from a realization by Indian arbitration practitioners. Indian arbitration is still not a mature affair and the court system itself is much behind in the matter.
- The concept of arbitration is yet to take roots in the minds of Indian arbitration practitioners.
- The setting up of numerous alternative dispute resolution centres has not helped in this regard.
- One of the prime problems of most arbitration centers in India is that the selection process is not clear-cut.
What does res judicata mean?
The doctrine of res judicata was developed from the jus honorarium, that is, law based on a judge’s concept of what was fair or right (equity) and not upon the strict letter of the law. Res means “subject matter” and judicata means “adjudged” or decided and together it means “a matter adjudged”. Res judicata has its origin from the Code of Civil Procedure after which into the Indian legal system. Res judicata comes into being when either of the party approaches the court after a judgment has already been passed for the same issue
Res judicata is a rule of evidence that provides that when a matter has been determined by a court of competent jurisdiction, such determination is conclusive upon the parties to an arbitration proceeding and shall not be relitigated.
For example, A dispute involving property or rights is said to be “res judicata” in two ways: Res judicata can apply if the dispute has been already adjudicated by a court, and res judicata can apply if a dispute has been already adjudicated by an authority recognized under the law of the parties. It comes into being when a case has already been “judged”, and a dispute is likely to be heard as an appeal only to the decision already delivered. The first instance of “res judicata” in India was brought about by the historic judgment of the Supreme Court of India in the Ayodhya dispute, in the famous case of “Shri Ram Kishan vs the State of UP” in 1986.
The doctrine of res judicata
The double jeopardy provision of Article 20(2) of the Constitution of India protects people from being put on a second trial after the case has already been adjudicated. So the doctrine of res judicata addresses this issue and it bars any party to retry a judgment once it has been decided.
For example, in the case of Dadu Dayalu Mahasabha vs Mahant Ram Niwas & Another, Supreme Court of India 2008, a dispute has arisen as to who would inherit and manage the gaddi of the said trust. After filing the necessary documents, the issues were framed and eventually the matter decided was against the respondent. The suit was dismissed holding that he was not entitled to hold or manage the Gaddi in question. The respondent filed another case with the same issue but the learned trial judge by his judgment opined that the said suit was barred by the principles of res judicata, the issues arising therein being directly and substantially in issue between the parties in the previous suit as well. It dealt with in detail as to how the causes of actions in both the suits were the same.
Section 11 of the Civil Procedure Code incorporates the doctrine of res judicata also known as the “rule of conclusiveness of judgment”. The doctrine of res judicata has been explained in the case of Satyadhyan Ghosal v. Deorjin Debi, Supreme Court of India, 1960. The judgment delivered by Das Gupta explained that an appeal was made by landlords who obtained a decree for ejectment against the tenants. But they had not been able to get possession of the same. An application was made by the tenant under Section 28 of the Calcutta Thika Tenancy Act, 1949, and alleged that they were the Thika tenants. This application was denied by the landlords reiterating that they were not Thika tenants within the meaning of the Act.
The tenants moved to the High Court of Calcutta under the Civil Procedure Code. The court used the principle of res judicata to give a final order. The result came that the original court, as well as the higher court, can proceed with any future litigation on the basis that the previous decision was correct.
The doctrine of res judicata says:
- That no person should be disputed twice for the same reason.
- It should be the state that decides there should be an end to litigation
- A decision made by a judicial authority must be accepted as the correct decision.
Application of res judicata in arbitration
In arbitration, one of the major issues that come up in practice is the application of the principle of res judicata. It is well known in India that the application of res judicata in arbitration is not restricted only to litigation and arbitration, but also to other legal proceedings, as in our daily lives. Res judicata is a principle in the law of torts or criminal procedure that the subject matter of a suit or proceeding shall not be re-opened by another plaintiff, except in the case of its rescission. It means that a judgment of a court can’t be changed and re-opened. Its application in arbitration should be closely monitored as it can be misused quite easily. A party may use the principle of res judicata to create an element of doubt in the legal proceedings which have already been adjudicated. It can be used as a delay or pressure tactic to harass the opposite party into dropping the case or settling it without looking out for consequences. It poses a direct threat to the administration of justice which is in turn opposite to what our nation and constitution stand for. This is a widely known and followed law that is of utmost importance. This principle is also recognized in international law, such as the Rome Statute and the UN Charter.
In Foreign Award (recognition & reinforcement) Act, 1961, it has been said to have come into force if its articles and provisions have been accepted by the court for the time being. The question therefore arises, does the settlement of arbitral proceedings have the same status as the acceptance of a treaty? It was held that the Arbitration Act, 1961, is merely one of law, and does not have the force of a judgment, and does not necessarily settle any matter. The court however would not be surprised if a party raised such a complaint. In such circumstances, “res judicata” would not apply, but if the decision of the court is not in favor of the party, then the party concerned would be permitted to appeal to the Supreme Court on a point of law.
To conclude, I feel that res judicata in arbitration proceedings plays a very vital role and contributes to the pillars of justice. It should be a law available to everybody which provides a remedy on which individuals can rely to uphold justice. Regular checks and balances must be kept in place to keep a check so no individual can take advantage of others using this provision. Certain provisions as roadblocks should be introduced so that there are limited cases in which this provision can be applied and misused.
- On the application of the doctrine of res judicata in commercial matters, l Cuffe, J.K., (1922)
- International and Comparative Law, Perceiving Principles, Courts and Awards of Superior Jurisdiction (Chicago: The University of Chicago Press), J. Wiedeman, (ed.)
- The Law of Tribunals: A Casebook of International Humanitarian Law, the law of war and humanitarian law in international relations and international law, l Haque, B.P., (1989)
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