Experts said that although the reforms initiated by the government seek to promote institutional arbitration, they still contain provisions that will delay dispute resolution by allowing courts to intervene.
When the Arbitration Act was amended for the second time in 2019, it was strengthened to give powers of grading of arbitration institutions to the Arbitration Council of India (ACI), a body of experts and policy makers that lays down rules of procedure for arbitration. Will make.
Now, under the new proposed amendments, the Arbitration Council of India will only have powers to “recognize” arbitration institutions. Additionally, the amended law seeks to empower courts to designate arbitral institutions in cases coming before them.
“It is good that the gradation has been removed. However, designation by courts after ACI recognition weakens the authority of ACI, leads to duplication of work, and invites unnecessary judicial intervention, all of which violate ADR (Alternative Dispute Resolution) principles,” Hyderabad. said P. Madhava Rao, registrar of Amica Arbitration, based in Mumbai. The Arbitration Council makes recommendations to the Government of the Institute.
He said, “As a result, this section should be removed from the amendments, and the designation section should be removed from the original Act altogether.”
Certainly, although the ACI was created in the 2019 amendment to the Arbitration Act, it has not yet been constituted.
The Amica Arbitration and Mediation Council also suggested that the government provide arbitrators with the power to collect evidence.
Under current law, arbitrators can only use evidence collected by the courts to resolve disputes.
“This is another major threat to the speed of justice delivery. When arbitral tribunals depend on the courts to take evidence, it will undoubtedly lead to delays, and the purpose of ADR will be defeated. Therefore, arbitral tribunals should be given this power They should take evidence instead of writing to the courts, which would increase the burden on the courts,” the set of recommendations said.
earlier amendments
However, this is not the first time that stakeholders have advocated for reducing court intervention. The Arbitration Act, passed in 1996, has called for reducing the involvement of courts whenever it was amended in 2015, 2019 and 2021.
This was to reduce the burden on the courts, which are overloaded with cases, and to empower the practice of arbitration as a dispute resolution mechanism to be completely independent.
Experts have also asked the government to provide powers to enforce awards to arbitral tribunals. At present, disputants have to approach civil courts to get such awards enforced.
Rao said, when arbitral awards are as binding as court decisions, there is no problem in allowing arbitrators to enforce their own awards.
Rao emphasized that arbitration is a system where parties take a decision by mutual consent to resolve an issue, as opposed to one party dragging the other to court without the consent of the other. Therefore, Rao concluded that appeals against enforcement of awards are unlikely in arbitration as the parties would seek to resolve the dispute voluntarily, and enforcement through the courts would only cause further delay.
Mint had earlier reported on August 15 that the Union Ministry of Law and Justice was researching on potentially applying global best practices to enforce arbitral awards.
While practitioners have called for reducing court interference, the current amendments which were open for consultation till November 3, have few provisions towards the same goal.
The draft amendment proposes an appellate arbitration tribunal for disputes to be resolved by arbitration institutions. This means that if the disputants have opted to resolve disputes through arbitration by engaging the services of a particular institution, and they wish to appeal against the arbitrator’s decision, they can appeal to any other appellate arbitration tribunal rather than a court of law. Can appeal.
But this amendment may also prove more costly for the disputants.
Shanen Parikh, Partner (Head – International Arbitration), Cyril, said, “The draft Bill provides for the option for parties to agree on appellate arbitral tribunals to decide the first challenge to an award, reducing a level of court interference in the arbitral process. Is.” Amarchand Mangaldas.
“Although this will relieve the courts of some of the pressure from challenges under section 34, further appeals under section 37 of the Act and up to the Supreme Court will still be available. With the possibility of increased court scrutiny on a tribunal decision, this ultimately It may not actually have the desired effect of reducing court intervention, and in any case will likely be more costly to the parties.” Parikh added.
Shiv Sapra, partner, Kochhar & Co, was of the opinion that the new appellate tribunal would be similar to the high courts, which currently hear arbitration appeals.
“It will be interesting to observe the criteria that will be laid down for appointment of members of such tribunals, as at present recourse is taken to the Hon’ble Courts under Sections 34 and 37. It is expected that the members to be appointed will be “This is an added advantage because it gives one party the freedom to choose between the two,” Sapra said.
Sections 34 and 37 of the Arbitration Act allow parties to appeal against arbitral awards in courts.
Some experts also pointed to online and digital mediums to resolve disputes.
Alaay Razvi, Managing Partner of Accord Juris, said digital dispute resolution is an important area that requires policy development. “Another important area to be looked into will be the improved framework that will support the digital dispute resolution process. Further amendments will be required from time to time, subject to new upcoming challenges, to make the provisions stringent and litigation friendly.” He said.
