Written by S. Ashita of BVDU New Law College, Pune
Edited by Annanay Goyal
Abraham Lincoln, the United States of America’s 16th president, congruently said “Discourage lawsuits in lieu of Arbitration. Persuade the friends, if possible, to negotiate. Point them out how often the nominal winner is a real loser — in fees, expenses and time-waste.”
Arbitration is a method of the arbitration of conflicts. Arbitration is the legal, impartial arbitration by an independent third party to a dispute. An arbitration hearing may involve the use of a tribunal or an individual arbitrator. A tribunal may consist of any number of arbitrators although for obvious reasons wishing to avoid a tie some legal systems insist on an unusual number. The most frequent numbers of arbitrators are one and three. The disputing parties delegate their authority to arbitrator(s) to settle the conflict. Arbitration is an alternative to court proceedings (litigation), and generally as final and binding (unlike non-binding mediation, negotiation, and conciliation).
HISTORY OF ARBITRATION IN INDIAN CONTEXT
The historical evolution of Arbitration in India can be traced back to “Brihadaranyaka Upanishad” under the Hindu Law. It provided for different types of arbitral bodies consisting of three main bodies, namely: local courts, individuals engaged in the same business or profession, and Panchayats. In ancient times people also voluntarily submitted their disputes for legal arbitration to the Panchayats. Sandra Day O’Connor, the Supreme Court of the United States of America’s Honourable Retired Justice, has appositely stated that the courts should not be the places where dispute resolution begins, but rather the places where disputes end after alternative methods of dispute resolution have been carefully considered and tried.
ARBITRATION CAN CHANGE DELAYED LITIGATION BECAUSE OF THE FOLLOWING[i]
Depending on the subject-matter, the normal period within which a case is resolved in a court is between 6 years to 30 years. According to a new regulation, the arbitrator is expected to pass the arbitral award within 12 months from the date of the case’s reference. This is a conceivable proof of the momentum in which decisions are made on the cases that have opted for the Arbitration route.
Flexibility is the allurement of arbitration, especially procedural flexibility because it allows the parties to specify conditions in their arbitration contract governing how the process will work. It also gives them the freedom to negotiate in compliance with the conflict on an appropriate plan.
Arbitration is a private process involving only designated parties, and the proceedings are confidential. In comparison, a trial is a systematic procedure carried out in a federal courtroom. This function is an advantage as in some instances the publication of the subject matter of the conflict may influence the company’s credibility. It also helps the parties to concentrate more on the conflict than on the public impact.
Arbitration is considered cheaper than litigation, particularly given that less time is spent on resolving the dispute. Evidence and discovery rules are also limited thereby leading to a significant cost reduction.
Selection of Arbitrator
To the cases that a judge is whimsically selected, the parties are at liberty to select the arbitrator with subject-matter experience.
In arbitration cases, the Byzantine rules of proof and practise do not apply — making them lesser stilted and easier to respond to the interests of those involved.
Opposing sides are usually permitted to participate in an arbitration completely, and also to help arrange the resolution. This seeks to make them cooperate constructively instead of raising their tension and hostility towards each other, as is often the case in litigation.
RELEVANT CASE LAWS[ii]
Radha Chemicals v. Union of India[iii]
In the case of Kinnari Mullick and Anr. vs. Ghanshyam Das Damani[iv], the Supreme Court reaffirmed its position. It was held that the court has no jurisdiction to refer the matter to the arbitrator for a fresh decision whilst deciding on a Section 34 petition. Also, the Court’s power under Section 34(4) to delay the trial for a defined reason was found to be limited. And it can only be invoked upon request by the party before the Reward is set aside.
M/s Emkay Global Financial Services Ltd. v. Girdhar Sondhi[v]
The court held that an appeal for an arbitral award to be set aside would usually entail little in the record that was before the arbitrator. However, where there are matters not found in such documents that are relevant to the resolution of issues arising under Section 34(2)(a). They may be brought in by affidavits filed by both parties to the Court’s notice. Except where strictly appropriate, cross-examination of people swearing to affidavits should not be permitted. When the facts come from an analysis of the two parties’ affidavits.
Anilkumar Jinabhai Patel (D) V Pravinchandra Jinabhai Patel[vi]
The suspension time specified by Section 34(3) of the Arbitration Act, 1996 will start starting from the date on which the signed copy of the award was submitted to the party presenting the motion to set aside it. Also, the court ruled that Section 31(5) of the Act mandates that each participant be given a signed copy of the certificate.
M/s Simplex Infrastructure Ltd. v Union of India[vii]
In this case, the court held that strict adherence must be made to the statutory time limit for contesting an Arbitral Award.
[iii] Civil Appeal No. 10386 of 2018
[iv] (2018) 11 SCC 328
[v] Civil Appeal No. 8367 of 2018
[vi] Civil Appeal No. 3313 of 2018 arising out of SLP (C) No.15668 of 2012
[vii] 2019 2 SCC 455
Image courtesy: The Statesmen