When legal luminaries like the Union Law Minister, Kiren Rijiju; Senior Advocate and Former Solicitor General of India, Ranjit Kumar; and Senior Advocate and Established Jurist in Arbitration, Dr. PC Markanda meet, it is obvious that something worthwhile would come for incorporation in the legislative regime in near future. The occasion was the Competent Foundation Memorial Webinar in the memory of former Chief Justice of India, Justice Madan Mohan Punchhi, writes advocate and anchor of the webinar Satyam Tandon.
Whilst the advent of alternate dispute mechanisms in India has been available since quite some time, arbitration has recently been picking up more than the rest. However, due to various irregularities in law and practical issues, India has still not been able to become a full-fledged hub for facilitating international disputes in arbitration. This article aims to identify those issues and put forth practical solutions with regard to the same.
The recent case between Amazon and Reliance showcases India’s pro arbitration regime to the fullest. The decisive questions before the Delhi High Court initially were, whether the emergency award is an interim order under section 17(1) of the Indian Arbitration Act, and whether it can be enforced under section 17(2). The Supreme Court judgment emphasized party autonomy in arbitration, which includes the right of the parties to choose institutional rules as the governing rules of arbitration. Once chosen, the parties are bound by such rules. The Court also held that the Indian Arbitration Act does not prohibit the parties from agreeing to a provision providing for an emergency arbitrator and that the term “during the arbitral proceedings” is wide enough to encompass emergency arbitration proceedings.
The Court ultimately held the emergency award to be an interim order under section 17(1) of the Indian Arbitration Act and enforceable under section 17(2). In a narrower sense, it is a huge victory for Amazon but in the broader scheme of things, it is a victory for Indian arbitration and a sigh of relief for arbitral institutions.
However, despite positive developments, the country has not achieved its full potential to emerge as a hub of arbitration. There are a variety of reasons for that. Firstly, with regard to the non-existence of a mandatory arbitration clause in the disputes related to the central government; public sector undertakings and the state governments. I believe that a mandatory clause for making New Delhi as the center of arbitration, shall not only speed up the process of procurement of justice, but also make it feasible for potential litigants to have access to justice.
Secondly, the autonomy of regulatory bodies is always questioned by foreign players, as the bodies always predominantly include government officers, which inter alia triggers a lack of confidence from foreign players. Due to the same, foreign players always question the integrity of such a body and ultimately are deterred from Indian arbitration.
Thirdly, we live in the era of specialization and not generalization; which is why the creation of a special arbitral bar and bench is imperative. Being a practicing advocate, I am privy to various learning’s from my seniors, and as far as I can summarize those, it would not be wrong to say that the generation preceding us was a generation of lawyers having miscellaneous work, such that they were not confined to one space of law in which they used to solitarily practice. It is true that exceptions exist, but my seniors never restricted themselves to one line of work, while my generation wants to hire an IT specialist for IT work; and an HR specialist for HR work etc. Similarly, it is necessary that lawyers specialize in arbitration and only arbitration, which can be fostered through a special arbitration bar.
Fourthly, the aforementioned point shall also solve the problem of lawyers treating arbitration as a secondary source of income. The problem therein being that lawyers who arbitrate, also litigate, and end up taking afternoon dates, which inevitably get postponed. Therefore, a special bar shall not only allow lawyers to specialize but also speed up the process.
Fifthly, with such specialists in place, the same shall also allow timely conduction of procedure under Section 23. Moreover, it shall create a much-needed change in the culture of arbitration and foster a new mindset towards the same. Further, this shall have a knock-on effect on the cost-effectiveness of the same and make it inexpensive, as if arbitrators are able to hear the matter in one-sitting itself, it shall go a long way in establishing a better culture.
Sixthly, the need for specialists must not only be in lawyers but in arbitrators as well, such that only retired judges must not be considered as potentially viable arbitrators, but youngsters should also be given a chance to become arbitrators. I believe that this shall allow young members of the bar to be able to gain first-hand experience and knowledge in handling an arbitration proceeding.
Seventhly, promotion of institutional arbitration is a must. I believe that this shall definitely create a sense of dependability and trustworthiness amongst foreign players who shall be then more likely to participate in an Indian arbitration proceeding. I believe so because when an arbitration proceeding is governed and being monitored by a body of rules, it necessarily fosters more faith. On the flipside, in various MSME contracts, the arbitration is against the body, and the arbitrator is the Managing Director of the body, which does not inspire faith in a fair and equitable proceeding.
Eighthly, as recent judgments have shown, Courts have already started taking a pro-arbitration approach. This was evident in Sundaram Finance Ltd. v. Abdul Samad (Civil Appeal no. 1650 of 2018), wherein it was held that “an award holder can now initiate execution proceedings before any court in India where assets are located.” Similarly, in Ssangyong Engineering & Construction vs NHAI 2019 3 RAJ 323, the Delhi High Court opined that if a contract can be interpreted in two ways, it is not open for the court to interfere with an arbitral award, just because the court prefers the other view, and that a court cannot substitute its view over that of arbitrators.
Ninthly, business hubs like Ludhiana, Kolkata, Lucknow and Kanpur, must be considered as targets for promoting arbitration.
Tenthly, arbitrators can be ranked in terms of their cost-effectiveness, trustworthiness and arbitrariness in deciding disputes. I believe that the same shall inculcate a sense of equity amongst new and old arbitrators because they shall seek to preserve their reputation in order to be able to command hefty fees and work.
Little doubt that the potential of India’s business community can be channelized to facilitate Indian arbitrations and make the nation a global hub. It is obvious to caveat this with a statement that it can only be done with the support of the judiciary in providing pro-arbitration and pro-foreign investment approaches in their judgments.