Arbitration Law

RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY LUCKNOW

ARBITRATION LAW PROJECT TOPIC: WAYS TO PROMOTE INSTITUTIONAL ARBITRATION AMONGST THE CORPORATE AND BUSINESS INDUSTRY- INDIA Submitted for the project work, B.A. LL.B. (Hons.) 5 years integrated course at Dr. Ram Manohar Lohiya National Law University, Lucknow.

Under the Guidance of:

Submitted By:

SHAKUNTALA SANGAM

ADITI VATSA

Asst. Professor of Law,

Roll No: 07

Dr. Ram Manohar Lohiya

Section ‘A’

National Law University.

VIIth Semester.

INTRODUCTION: In the past two decades, resolving the disputes through Arbitration has become a standard practice. With the advent of globalization where the world’s trade is unified, disputes between the contracting parties have increased where no party wants to submit the dispute in the jurisdiction of other’s in order to resolve the disputes smoothly Arbitration has come a long way which helps the parties to resolve the disputes retaining autonomy, saving time and money. In spite of various benefits offered by the Institutional Arbitration mechanism studies have showed that 60% of the Indian Arbitration is through Ad-Hoc mechanism in case of state parties. Where International Commercial Arbitration is concerned SIAC’s studies have shown that 91 of the 271 cases administered involved Indian parties. The reason for this international preference is the image of the long drawn process of litigation in India. There are several Institutions established in India which provides dispute resolution services, yet a small number of these institutions are successful foremost amongst there is the Indian Council for Arbitration (ICA) which was set up in 1965 at the national level under the initiatives of the Govt. of India and apex business organizations like FICCI. There are several misconceptions relating to Institutional Arbitration that exists among the parties due to which most of the corporate disputes are resolve through Ad-Hoc mechanism or resolved through International Institutions which defies the primary purpose of making India as a Hub for International Commercial Arbitration. One of the misconceptions that exists among the parties is relating to the administrative expenses that are being charged by the Institutions for effective governance of the Arbitration Proceedings, the parties often believe that submitting the disputes would lead to inflexibility and taking away their party autonomy. The decision regarding the choice regarding the dispute resolution forum often rests with the Inhouse counsel who is not actively familiar with the Arbitration practice and who has the mind set of dragging the disputes to the civil courts. CRITICISMS: Government of India is under constant appraisal to improvise the Arbitration Law In India and to promote Institutional Arbitration in India due to various economic factors attached to it and one is bringing Foreign Investment in India. However, this constant Appraisal is not effective due to various criticisms faced by the Institutions set up in India these are:  Setting up of arbitration institutions with international standard with hearing centres on widened jurisdiction of India is one of the foremost challenges.  Dearth of Infrastructural facilities: Most of the Institutions set up in India lacks advanced infrastructural facilities such as space, video-conferencing and big data analysis holding capacity and runs on the old technology and practices which makes them obsolete to compete with the International Institutions.  Lack of Monitoring: there are dozens of Arbitral Institutions set up in India but often tend to delay the Arbitration proceedings and extend the timelines fixed by the rules. This often leads the parties to adopt for Ad-Hoc proceedings.

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Lack of advanced professionals: The appointed panel of arbitrators are often the retired Judges or the lawyers who are not actively involved in the Arbitration proceedings and often invests their time in resolving the disputes through old litigation system and emphasizing on the principles of Code of Civil Procedures and Evidence Act which delays in arbitration proceedings to conclude on time. Cultural differences: The term cultural-differences is a subjective term and vary from country to country. Setting up of DAC(Delhi Arbitration Centre) was a commendable job by the Delhi High Court but it failed in its working because the working of DAC is similar to civil courts where the arbitrators are the retired judges or lawyers who conduct the proceedings in no way different than the ordinary civil court procedures and the mindsets with which the parties come to the Arbitration centre is similar to that of courts. Ways and means to promote Institutional Arbitration in India: 

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Training of the Arbitral Panel: the Arbitral panel should be well trained and it should compromise judicial staff and subject matter expert who is well trained in the Arbitration Proceedings keeping aside the old traditional litigation rules and applying the new rules to achieve the desired result. In order to develop a pool of arbitrators focus on five aspects would be crucial: one, training of the arbitrators especially for the ones not having any judicial background so that the awards passed by them can withstand judicial scrutiny; two, developing a system of blacklisting of arbitrators who try to overstretch the process and delve upon those issues on which they do not have expertise, three setting up of dedicated arbitral bar, four setting up of designated and specialized Arbitral Tribunals in the same manner as commercial benches and courts, at High Courts and District level and five having designated institutions in place to appoint arbitrators as is done in Hong Kong and U.S.A. Funding of the Arbitral Institutions: one of the primary aspects for efficient working of any organization is the inflow of capital. The Arbitration Institutions should be sufficiently funded in order to procure upgraded technological equipments with better trained staff for day to day operations. The institution can be Government funded or Private owned just like Indian Council of Arbitration(ICA) which is self sufficient and The Singapore International Arbitration Centre (SIAC) was set up as a not for profit non-governmental organization in 1991. Though, it was funded by the Singapore government at its inception, SIAC is now entirely financially self-sufficient. Like all other institutes it is also a private, not-for-profit Company not linked to, or associated with, the government of any jurisdiction. Considering the present Scenario in India the Arbitral Institutes need Government funding for the effective implementation of the programmes set up by the Government. Vibrant eco-system: The Arbitral Institutions should be fair and transparent in its working, creating such an atmosphere where they are credible and independent in their working which will help in establishing reliability in the mindset of the parties to submit their disputes to the Arbitral Institutes set up in India. Technological Advances: functioning of Arbitral Institutes is an old fashioned process which is no different than filing a plea in the Civil Court which makes it

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incompatible to compete with the International Institutions. There is a need for technological up gradation such as e-filing facility which will reduce large voluminous paperwork, award status database, credit rating for the parties and also for the panel in their decision making process, video conferencing needs to be scaled up and be put to extensive use in the process of arbitration. One example being video conferencing as no adjournment would be required, testimony of the experts can be recorded through video conferencing in order to reduce adjournments. Establishing a culture think-tank for discussion: for creating a sound Arbitral Institute a significant culture needs to be developed where learning becomes two way process. The Institutes should establish themselves as a learning Centers where various discussions and suggestions are welcomed which will help the judicial members and the technical members to enlighten and upgrade their knowledge. Constant Appraisal and training of the Arbitral panel: The Arbitral panel should be constantly appraised for their work performance and crediting them with the work done and also black listing the Arbitrators who are delaying the process beyond the given time limit. Workshops and training for the Arbitrators should be on a monthly basis in order to update themselves with the international standards. Exchange programs should be conducted by the Institutions for the Arbitrators which can help them to witness the Arbitration atmosphere in the developed Institutions and the manner in which proceedings are carried on, which will help them to implement better international practices. Improvement in the Infrastructural Facilities: Well Equipped Libraries should be set up with proper space, conference halls should be properly equipped with adequate space. Specialized Institutes: The Arbitration Institutes can be set up based on their expertise i.e. Domestic Arbitration and International Commercial Arbitration. India being a diversified country where foreign investment is at high scale due to various factors favoring trade in India there is a scope of Domestic Arbitration and International Arbitration equally. The Arbitral Institutes can be divided into two way window mechanism which provides specialized services of their respective fields making sure that the administrative staff and the panel is well equipped in their respective field and who are compatible to match with the standards of the International Institutes.

CONCLUSION: In order to develop India as a hub for International Commercial Arbitration and to promote Institutional Arbitration among corporate’s in India a high level Committee was set up in July,2017 where in the members were entrusted to scrutinize the major changes required in the Arbitration Act and to analyze the criticisms faced by the Institutional Arbitration and also seeking remedies in order to promote a strong Arbitration environment with efficient administrative work and credible panel of Arbitrators.

BIBLIOGRAPHY: 1. https://blog.ipleaders.in/how-to-promote-institutional-arbitration/ 2. https://blog.ipleaders.in/promoting-institutional-adr-to-make-india-a-hub-of3. 4. 5. 6. 7.

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