“When will
mankind be convinced and agree to settle their difficulties by arbitration?” Benjamin Franklin.
Historically, arbitration was successfully used by the
ancient Greeks and the Vikings to solve interstate and intrastate conflicts. In
more recent history, arbitration played an important role in solving international
border disputes. Currently, negotiation and mediation are the widespread mechanisms for resolving international
conflicts and arbitration continues to be an efficient tool for conflict
resolution, particularly for international and national commercial disputes.
Though historically significant for the resolution of
disputes, in India, arbitration is not often used correctly in that way.
The sluggish judicial system, led to
delays rendering arbitrations inept and unappealing. With an eye to make India
an Arbitration hub, the Government of India has now approved number of
amendments for making Arbitration a preferred mode for settlement of commercial
disputes. This will not only lead to expeditious disposal of cases but also be
more user-friendly, cost effective and enhance
the efficiency of arbitration.
To start off on the right foot, an
application for appointment of an Arbitrator shall now be disposed of by the
High Court or Supreme Court as expeditiously as possible and an endeavor to
dispose of the matter within 60 days. Further,
Arbitral tribunal will now make its award within a period of 12 months
where parties may extend such period up to 6 months and shall be extended by
the court only on sufficient grounds. The court
while extending the period might also order reduction of fees of arbitrator(s)
not exceeding five per cent for each month of delay, if the court finds that
the proceedings have been delayed for reasons attributable to the arbitral
tribunal. As an incentive, additional fee shall be paid to the arbitrator, if
the award is made within six months. Also,
disputes be resolved through fast track procedure and award in such
cases shall be given in six months period.[1]
The Arbitral tribunal shall now grant all
kinds of interim measures which the Court is empowered to grant, and such order
shall be enforceable in the same manner as if it is an order of Court. Further, an application to challenge
the award is to be disposed of by the Court within one year and mere filing of
an application for challenging the award would not automatically stay execution
of the award. Award can only be stayed where the Court passed any specific
order on an application filed by the party. [2]
One of the most significant amendment is of
Section 34 relating to the grounds for challenge of an arbitral award, to
restrict the term 'Public Policy of India" (as a ground for challenging
the award) by explaining that only where making of award was induced or
affected by fraud or corruption, or it is in contravention with the fundamental
policy of Indian Law or is in conflict with the most basic notions of morality
or justice, the award shall be treated as against the Public Policy of India. [3]
In order to avoid frivolous and meritless litigation/arbitration,
a new Section 31A is to be added for providing comprehensive provisions for
costs regime which will be applicable both to arbitrators as well as related
litigation in Court. Further, in order to ensure
neutrality, the amendment mandates the arbitrator to “disclose in writing about
existence of any relationship or interest which may give rise to justifiable
doubts about his neutrality”. Any person in the position of conflict of
interest would be ineligible to be appointed as an arbitrator. Lastly,
amendments in Sections 2(1)(e) , 2(1)(f)(iii), 7(4)(b), 8(1) and (2), 9, 11,
14(1), 23, 24, 25, 28(3), 31(7)(b), 34 (2A) 37, 48, 56 and in Section 57 are
also proposed for making the arbitration process more effective.[4]
Thus, India did put in place a progressive
piece of legislation which is essentially based on the Model Law and the United
Nations Commission on International Trade Law (UNCITRAL ) Arbitration Rules
which had an effective law in place and the Government of India is certainly
committed to improve its legal framework relating to Arbitration. All it needs
now is inculcation of the culture of arbitration within the bar, the bench and
the arbitral community. The gear of the past needs to be dropped so that India,
undeniably, not only will have an attractive arbitration mechanism on offer which
could fairly be proclaimed that Arbitration is fair, effective, expedite and legally
binding but also could be recognized as an favorable international venue for
arbitration proceedings.
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