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India finally awakens to International Arbitration, resolves to strengthen the Arbitration regime

October,22,2016:

“India Resolves to Resolve”, was the mantra given by Hon’ble Justice Uday Umesh Lalit, Supreme Court Judge.

Inaguration-by-President-of-India
Inaguration-by-President-of-India

NITI Aayog along with NALSA and Government of India organised Global Conference on National Initiative towards Strengthening Arbitration and Enforcement in India.

Inaugural address was given by Chief Guest Shri Pranab Mukherjee, Hon’ble President of India. It was presided by Shri Justice T.S. Thakur, Chief Justice of India & Patron in Chief. Shri Arun Jaitley, Union Minister of Finance & Corporate Affairs was the Guest of Honour.

The 3 Day Conference started at Vigyan Bhawan, New Delhi, yesterday.

“India Resolves to Resolve”, was the mantra given by Hon’ble Justice Uday Umesh Lalit, Supreme Court Judge.

On day 2 of the conference, on 22nd October, 6 sessions took place on various themes.

Theme: Indian Arbitration Act; The Good, The Not-So-Good and the Unfinished Business

The Moderator Shri K K Venugopal set the ball rolling by observing that India has a culture of arbitration since ancient times in the form of Panchayat.  We have had legislated arbitration  laws since 19th Century .  He touched upon the Legislative History of Arbitration right from 1940 Act, 1996 Act as per UNCITRAL Model and the recent amendments made in 2015. He observed that even though 1940 Act had a time time but no such time limit was provided in the original 1996 Act.  However, a time limit has been introduced by Section 29 A.He stressed that to be a successful in India, the arbitration shall have to be cost effective and efficient.

He shared his experience from the State of California, USA where they have an arrangement where every Court has a panel of Arbitrators attached with it.  He suggested that Judicial Academies in India can maintain a panel of trained arbitrators that can work at grass root level with the Courts.  He also highlighted that Civil Courts should be encouraged to refer cases for Arbitration under Section 89 CPC which is not happening as on date.

Later during the interaction, he highlighted that there have been instances where retired judicial officers acting as arbitrators are charging exorbitant fee per half day session and this is having a very discouraging impact on the parties.  Fee is being charged even for the day when no effective proceedings take place.

Justice R C Lahoti pointed out the need for swift and cost effective arbitration in India and pointed out few shortcomings, peculiar to India that have been creating  hurdles in achieving the goal of swift and cost affective arbitration.  He suggested that there is need to develop infrastructure, providing atmosphere for qualitative arbitration   and having good arbitration centre with adequate Secretarial services including staff, stenographers and Library apart from physical infrastructure.

Justice Lahoti further highlighted the lack of transparency in appointment of arbitrators especially by the Courts.

A valuable suggestion was given for training of the arbitrators especially for the ones not having any judicial background so that the awards passed by them can withstand Judicial scrutiny.

Justice Lahoti further pointed out the problems in expeditious disposal of the proceedings i.e. absence of dedicated arbitration Bar.  It was also pointed out that the goal of disposal of the matter within the time frame provided under Section 29 A of the Act is hard to achieve because the process of completion of pleadings can consume several months.  He suggested that the time frame should start from the time when the trial begins, post completion of pleadings.

Hon’ble Shri Tathagat Roy, Governor of Tripura agreed with the views of Justice R C Lahoti regarding the reckoning of time limit from the date when trial begins after completion of pleadings.He highlighted that the instances of arbitral proceedings getting protracted can also be minimized by fixing a lump sum fees for the Arbitrators instead of provision of per hearing remuneration.

He highlighted that in appropriate cases,experts of appropriate fields may be made Member of the Arbitral Tribunal besides the Judicial Member.  He suggested that a legislative amendment should be brought in or an executive order passed so as to check mindless filing of objections under  Section 34 A & C Act against the arbitral award.  Until and unless there is a prima facie case justifying the need for an elaborate arguments on the objection petition, he suggested that there should be a provision of their dismissal at the inception stage.

The next Speaker Mr. Suresh Chandra highlighted the assistance being provided by the Government of India to various Arbitration Institutions and further informed that once the new rules are framed by the Government, the gaps, if any, will be filled up.

He  informed the house that Ministry of  Law is in the process of  creating a panel of arbitrators.  He stated that as a matter of policy, Government of India is not challenging arbitral awards, passed on sound grounds unless a legal advice to the contrary is given.  He said that objections are being filed only in around 20% of the arbitral awards while rest 80% are finally disposed at the arbitration stage alone.

Dr. Singhvi started his address by submitting that given the state of arbitration in India, the theme of the Session could have been given a more appropriately worded as “Indian Arbitration Act-The Good, The Bad, The Ugly”.  He lamented that development of arbitral infrastructure in India has continuously been neglected by all concerned stake holders.  He stressed that now is the time that The good, The bad and The ugly shall join hands, as it was done in the famous Hollywood movie to achieve the targeted goal, of making India a regional hub and global player in domestic and international arbitration.

 Dr. Singhvi highlighted that the Mantra of popularizing arbitration can be fully covered under the A,B,C D Formula i.e., Access, Backlog, Cost and Delay.  He also stated that one of the reasons of arbitration not attaining the full strength is that the judicial supervision of arbitral proceedings is looked upon by all concern as an unnecessary  intrusion.

He highlighted that even the judicial supervision lacks uniformity in so far as owing to the federal structure of States and Central relations in India and each State having its own Judiciary, the perspective of individual Courts to the objections filed under Section 34 of Arbitration and Conciliation Act vary  as per local conditions.  He further highlighted that in India there is a urgent need to have a separate arbitration Bar other than the conventional Court attached litigation Bars.  He highlighted the 1983 California, JAMS Program, which dedicated itself to the arbitration and other similar alternative dispute resolution mechanisms.  There is also a need to have Law Firms which are dedicated to arbitration so that lawyers are available for assisting the arbitrators 10.00 AM to 4.00 PM.

Dr. Singhvi observed that Section 29 A of the A & C Act mighthave been incorporated with good intentions but it can prove disasters in Indian conditions as the losing party would always try to misuse this and delay the proceedings.  He highlighted that there is no dearth of brick and mortar infrastructure in India but in the absence of operationalization of Arbitration centres in the right spirit and required zeal it can turn out to be a ghost infra without any soul.

Prof. Dr. Mool Chand Sharma acknowledged the need for having a time limit as has been provided under Section 29 A of the A & C Act, however, he pointed out that such time limit should be practical and justice oriented.

He suggested that while deciding the time limit, due regard should be given to the number of witnesses, number and complexity of issues involved, volume of record, the stakes involved and the number of arbitrators.  He further suggested that guidelines can be framed for providing time slabs for deciding the matters, keeping in view the considerations given above.  He highlighted that even though India has ancient culture of Arbitration & Conciliation but the same has to be rediscovered as per todays needs and has to be  reintroduced for resolving the disputes out of the Court.

The quconferenceestions/queries raised by the participants were addressed by the panel.

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