Need for the Reforms in the Indian Arbitration System

Context

Vice President Jagdeep Dhankhar has recently underlined the need for reformation in the Indian Arbitration system.

Key Highlights

• He highlighted that the procedure has turned out to be very complex.
• Award (by arbitration court), objection to award, appeals, after which invocation of Article 136 of the charter is followed with the aid of review and Curative petitions, which has come to be the norm.
• Therefore, he burdened the need for streamlining to enhance efficiency.
• Article 136 deals with Special leave to enchantment by the Supreme Court.
• Article 136 allows citizens to document so-called special depart petitions (SLPs) to enchantment earlier than the Supreme Court against any “judgement, decree, determination, sentence or order in any cause or matter surpassed or made by any court  or tribunal in the territory of India”. 
• It is as much as the apex court to decide whether it desires to listen to an appeal or not.

Arbitration Mechanism in India

• Arbitration is a quasi-judicial process of settlement of disputes between Trading Member, Investor, Clearing Member, Authorised Person, Listed Company and so on. 
  • Arbitration aims at quicker criminal resolution for the disputes. 
  • The Arbitration and Conciliation Act 1996 has been modelled on strains of the UNCITRAL (United Nations Commission on International Trade Law) framework of legal guidelines.
• Arbitration Agreement: Parties can conform to remedy their disputes through arbitration either before or after a dispute arises.
• Arbitral Tribunal: The arbitral tribunal, constituted of one or more arbitrators, is appointed by means of the events or as in step with the technique agreed upon by them.
  • The choice on the dispute is in most cases binding on the events.
  • Generally, there is no right to appeal an arbitrator’s decision.
• Arbitration Proceedings: The Arbitration Act presents a framework for engaging in arbitration complaints, consisting of the appointment of arbitrators, the behavior of hearings, submission of evidence, and issuance of the final arbitral award.
• Enforcement: The Act empowers arbitral tribunals to grant meantime measures to maintain the rights of parties, pending the very last decision of the dispute.
  • Arbitral awards, as soon as granted, are enforceable in the identical manner as court judgments.
• Institutional and Ad Hoc Arbitration: Arbitration in India may be carried out thru institutional arbitration bodies like the Indian Council of Arbitration (ICA), International Chamber of Commerce (ICC), or through ad hoc arbitration where events at once rent arbitrators.
• Amendment in 2019: In 2019, in addition amendments were made to the Arbitration Act to streamline the arbitration method, expedite lawsuits, and decrease the scope of interference by courts.

Need for the Arbitration Mechanism

• Overburdened Judiciary: Arbitration affords an opportunity mechanism for resolving disputes efficiently and expeditiously, thereby relieving the burden on the courts.
• Promotion of Business and Investment: A robust arbitration framework is crucial for fostering a conducive enterprise environment and attracting foreign funding. 
• International Trade and Commerce: Arbitration gives a neutral and the world over recognized discussion board for resolving cross-border disputes, providing actuality and predictability to events engaged in international transactions.
• Confidentiality and Privacy: Arbitration court cases are generally personal, allowing events to hold the privacy in their disputes and touchy business information. 
• Specialized Expertise: Arbitration permits parties to choose arbitrators with information inside the applicable difficulty count number or industry, ensuring that disputes are resolved by experts who apprehend the complexities and nuances of the problems involved.

Challenges

• Judicial Interference: Courts frequently entertain demanding situations to arbitral awards on grounds that go past those approved beneath the law, leading to delays and undermining the finality of arbitral awards.
• Delays and Backlogs: Factors contributing to delays include procedural complexities, frequent adjournments, and demanding situations in imposing procedural timelines.
• Lack of Specialized Arbitrators: Despite efforts to sell arbitration, there may be a scarcity of certified and skilled arbitrators, specifically those with understanding in specialized fields.
• Costs and Accessibility: The prices associated with arbitrators’ costs, felony representation, and administrative costs deter events from opting for arbitration, specifically in low-cost disputes.
• Confidentiality Concerns: Despite provisions for confidentiality in arbitration lawsuits, worries persist regarding the disclosure of sensitive statistics and the potential for breaches of confidentiality.
• Institutional Infrastructure: While there are numerous arbitral establishments in India, the institutional infrastructure for arbitration remains underdeveloped as compared to other jurisdictions. 

Way Ahead

• Reforms aimed at streamlining processes, improving judicial aid, selling arbitration schooling and training, and strengthening institutional infrastructure can contribute to the growth and improvement of the arbitration mechanism in India.

Source: The Hindu

UPSC Mains Practice Question

Q.What are the major changes brought in the Arbitration and Conciliation Act, 1996 through the recent Ordinance promulgated by the President? How far will it improve India’s dispute resolution mechanism? Discuss. (2015)

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