This Article is written by Mayank, Student of JSS LAW COLLEGE, Mysuru.
ARBITRATION
Arbitration is the generic term for a form of binding dispute resolution outside the national court system According to Halsbury’s law of England Arbitration is “a process used by the agreement of the parties to resolve disputes. In arbitrations, disputes are resolved with binding effect, by a person or persons acting in a judicial manner in private, rather than by a national court of law that would have jurisdiction but for the agreement of the parties to exclude it.”
Basically, there are two forms of the commercial arbitration and the parties in a dispute have the freedom of choosing either of the two forms if the parties choose arbitration as a mode of dispute resolution mechanism. These are ad-ho arbitration and institutional arbitration. Parties have the freedom to select self –administered (ad-hoc) or institutional-administered arbitration.
Where the parties are silent and there is no reference of any institution for administering/ conducting the arbitration, the arbitration will be an ad hoc arbitration.4 Institutional arbitration, on the other hand, is the one in which a specialized institution with a permanent character intervenes and assumes the functions of aiding and administering the arbitral process, as provided by the designated rules of such institutions.
BENEFITS OF ARBITRATION:
The reasons why parties choose or adopt arbitration to solve their dispute can be separated in to reasons that are applicable to arbitration in general and those that are applicable specifically to international arbitrations.
As healers of human conflicts, the obligation of the legal profession is to provide mechanism that can produce an acceptable result in the shortest possible time, with the shortest possible expense and the minimum of stress on the participants. That is what justice is all about. However, with the growth of international trade and delays in the disposal of cases in traditional court systems, Alternative Dispute Resolution (ADR) became increasingly important, particularly for commercial disputes.
Recognizing this need, the United Nations Commission on International Trade Law (UNCITRAL) introduced the Model Law on International Commercial Arbitration in 1985, aiming to provide a global framework for resolving commercial disputes. Once adopted, UNCITRAL finalized the law and offered it to governments interested in enacting it. In order to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards and to define the law relating to conciliation, the Indian legislature enacted the Arbitration and Conciliation Act, 1996.
On the basis of the UNCITRAL Model Law. It cannot be said that each and every provision of the said Model law forms part of the Act, even though the preamble of the Act says that it is expedient to make laws respecting arbitration and conciliation taking into account the UNCITRAL Model law and Rules.
Existence for specific dispute:
Arbitrators are chosen for a specific dispute. Whether the arbitral tribunal is composed of a sole arbitrator or a panel of three the tribunal remains with the arbitration from its commencement until its conclusion. Procedure in arbitration is flexible and can be adapted to the needs of the particular dispute.
No Appeal:
Arbitration is not subject to appeal on the merits. What the parties lose in legal security, because errors made by the tribunal in the application of the law cannot be corrected, they gain in the reduced amount of time required to reach a final decision and reduced costs.
Faster And Cheaper:
Faster decisions and lower costs as compared to litigation in the courts has been one of the traditional arguments in favour of arbitration. More recently, doubts have been raised as to whether arbitration is really faster or less expensive than litigation. There is no empirical evidence that can prove the case one way or the other. There are too many variables to be considered. What can be said is that the parties can have a relatively speedy arbitration at lower costs if that is what they want.
International Commercial Arbitration:
The most favourable situation for a party to a dispute in an international commercial transaction is to litigate in one’s own courts. Even if the courts are scrupulously unbiased, that party is litigating at home using its regular lawyers, following a familiar procedure and in its own language.
Litigating In Foreign Court:
While that is good for one party to the transaction, it is not so good for the other party who faces all the difficulties of litigating in an unfamiliar procedure, in a language that may be foreign and may not be the language of the contract, and not being able to use its lawyers who are familiar with the company.
Ease Of Enforcement
A final reason for the current popularity of international commercial arbitration is the comparative case of enforcement of an award as compared to the enforcement of a judgment of a foreign court. Unless there is a treaty between the State in which the judgment was issued and the State in which enforcement is sought, the requested court is under no international obligation to enforce the judgment.
CHALLENGES OF ARBITRATION IN INDIA
Arbitration in India faces a multitude of issues and challenges that hinder its effectiveness as a preferred method for resolving commercial disputes. Despite recent efforts to promote arbitration, several systemic problems persist.
Judicial intervention
Indian courts frequently interfere in arbitration proceedings, undermining the autonomy of arbitral tribunals. This includes challenges to arbitral awards and intervention during the appointment of arbitrators, which leads to excessive delays and erodes confidence in the arbitration process.
Enforcement Issues
There are significant challenges in enforcing both domestic and foreign arbitral awards in India. Complex enforcement procedures, lack of awareness among judges, and protracted court battles often complicate the process, deterring parties from choosing arbitration.
Lack of Institutional Support
While there are some established arbitral institutions, such as the Delhi International Arbitration Centre (DIAC), the overall infrastructure remains underdeveloped. This results in a lack of standardized procedures and administrative support, affecting the credibility and efficiency of arbitration.
Shortage of Qualified Arbitrators
India suffers from a limited pool of skilled arbitrators, particularly in specialized fields like construction and international arbitration. This shortage affects the quality of arbitration proceedings and can lead to difficulties in finding suitable arbitrators for specific disputes.
Excessive Delays
Arbitration proceedings can be lengthy due to various factors, including judicial interference and the overburdening of courts with cases. Delays in resolving disputes can negate the advantages that arbitration is supposed to offer over traditional litigation.
Public Policy Considerations
Indian courts have broad discretion to set aside arbitral awards if deemed contrary to public policy. The inconsistent application of this principle creates uncertainty and can lead to abuse, making parties hesitant to rely on arbitration.
CONCLUSION
To strengthen its position as a global arbitration hub, India must address these challenges while capitalizing on the inherent benefits of arbitration. Continued legislative reforms, enhanced institutional frameworks, and efforts to raise awareness about arbitration will be crucial. By fostering a more supportive environment for arbitration, India can improve its reputation as a viable venue for dispute resolution and attract more domestic and international business transactions.
REFERENCES
- https://arbitrationlaw.com/library/introduction-chapter-1-public-policy-exception-under-new-york-convention-history-1
- https://www.casemine.com/judgement/in/56090ab3e4b0149711172c8f
- https://www.studocu.com/row/document/islamic-university-in-uganda/llb/arbitration-lecture-notes/75325797
- https://www.academia.edu/43774099/UNCITRAL_Model_Law_A_Basis_for_Procedural_Regime_of_Alternative_Dispute
- https://www.legal500.com/developments/thought-leadership/arbitration-in-a-nutshell
