Consentia on Multidisciplinary Research

NATURE AND SCOPE OF ARBITRATION IN INDIA

ABSTRACT

In arbitration the disputing parties to settle their dispute through the process of court by the third person who is a person chosen by concerning parties. General perception is that litigation is costly, time consuming and full of complication.

Thus the arbitration is a term of Alternate Dispute Resolution where by two litigating Parties desire their dispute to be settled outside the court.

It hardly need to be emphasized that arbitration is an alternate to regular courts, is known to the world in general in India in particular form ancient period the ADR system is now accepted by the society and the state. An arbitrator mat not be an independent at all as he may be related to either or both disputing parties; he may have no training or experience of Judge and may not have decided any dispute earlier. In certain categories of disputes specially family disputes party may not like to litigate in court of law and would feel at ease before a person who is known to them and in whom they have faith and legalistic approach is not required. The right litigant coming to the court of law is describe in a century old Baconian example of a sheep which ran for shelter to a bush to save itself from rain and hail, and has found itself deprived of its fleece when as a litigant dread law suit beyond almost anything else; short of sickness and death.

“Justice it has been said in the consent and perpetual disposition to render everyone in due but what is a due in a particular situation and circumstances is a matter of appraisement and adjustment. The balances have always been the symbol of even handed justice. Lord Denning said in “Jones v. National Coal Board Ltd.[1] Let the advocates after other put the weight into scales and “nicely calculated less or more” but the judge at the end decide which way the balance tilts be it even so slightly.

In every case, such technicalities and niceties of law are not required to be followed as it may not give a man his due. Rough a method of justice in such cases may be more appropriate and this consideration alone give preference to arbitration as well as other forms of alternate dispute resolution over litigation in the Supreme Court in oil and National Gas Commission v. Collector of Excise[2] to advise the government to have the disputes between it and other public sector undertakings decided by means of arbitration than restoring to the court litigation.

Section 89 of CPC has been amended in the year 2002 as per which the court before home suit is pending is empowered to refer the same for arbitration, conciliation, mediation. It indicates that among the alternate dispute resolution to the court arbitration is most commonly used way.

The Supreme Court in Konkon Railway Corp. v. Mehul Construction Co.[3] dwelled act of 1996 by a observing, to attract the confidence of the international merchantile community and the growing volume of India’s trade and commercial relationship within the rest of the world after the a new liberalization policy of government in India  Parliament persuaded to enact arbitration and conciliation act 1996 in UNCITRAL model and therefore interpreting any provision of 1996 act court must not ignore the object and the purpose of enactment of 1996. At base comparison of different provision of arbitration act 1940 within the provision of the act of 1996 would unequivocally indicate that 1996 act limits intervention of court with arbitral process the minimum.

The act of 1996 was object of achieve two goals. First to unify the legal regime surrounding arbitration for both domestic and international arbitration conducted in India. Second goal to improve the arbitration efficiency by reducing the needs of judicial intervention awards as judicial decrease and autonomy to arbitral tribunal decision.

There are four significant features of commercial arbitration[4] namely, 1. The choice of arbitration, 2. The decision of arbitral tribunal, 3. Agreement to arbitrate, 4. The enforcement of awards. Though not an integral part of arbitration process in some cases interim measures are required this is the fifth feature of arbitration.

The arbitration is a hybrid and totally divorced from the courts interference which may become necessary sometime in the interest of justice. To successful arbitration it is necessary to insure that;

  1. When it comes to an appointment of an arbitrator by the court the arbitral tribunal is constituted immediately so that the arbitration process begins without any loss of time.
  2. When the arbitration proceeding begins during the currency of those proceedings there is no interference by the court so that it is ensured that the proceedings culminate into an award as quickly as possible and are not struck in the judicial jargon.
  3. Application for interim measures are decided by quickly as possible and pendency of such application doesn’t affect the progress of arbitration proceedings.
  4. After the award the enforcement process does not lead to an endless game and the court battle does not turn into starting point of litigation.

In case ONGC v. Saw Pipes ltd[5] the Supreme Court interpreted the term “PUBLIC POLICY in INDIA” in the widest possible manner and interpretation in this expression has made  the scope of challenges even wider than award it was in the act of 1940. Every award is now challenged taking shelter of the observation made in saw pipes as if the court are setting an appeal.

Further seven judges bench judgement of the Supreme Court in the case SBPR Co. v. Patel Engg. Ltd.[6] Overruled the judgement of constitution bench in Konkan Railway and held that the power to appoint as arbitration is a judicial power and not administrative one as giving rise to various facets of litigation in so far as appointment of arbitration concern. The court raised various issues which were earlier not permitted in. View of Konkan Railway therby resulting in delay in imitation of arbitral process itself.

Section 9 of the act of 1996 give power to the court to, pass order which may be interim measures of protection. Though in domestic arbitration exercise of this power has not caused any problem, it may be stated that this premised on the assumption that the court would otherwise have jurisdiction related to the matter (in the international sense). This is held in Shreejee Traco (1)  Pvt. Ltd. v. Paperline entertainment ltd.[7] the supreme court assistance was sought for appointing an arbitrator in an offshore arbitration. The power of appointment by court exists under section 11 part 1 of the act (which applies to domestic arbitration alone). The court declined to exercise jurisdiction. It found that the arbitration was to be conducted in New York and the law governing the arbitration proceedings would be the law of seat of arbitration.

 CONCLUSION

In the above discussion alternate dispute resolution in a need both at the national and international front. Guilty of justice suffers when there is a disproportionate delay in deciding huge cases. The law and legal system should appeal the reason pf people is not a legal principle but a common sense observation of facts. An ADR technique is useful in dispensing justice effectively which is the basic pillar of every judicial system. ADR is an appreciable step if taken with serious concern and proper management. It is the spirit that has led to the evolution of ADR mechanism for the dispersion of justice with efficiency and stand fastness. A common man can enjoy number of its advantages from speedily justice, less expense to secure confidently and final satisfaction.

[1] (1975) 2 QB.55 Pg. 64

[2] (1995) 4 Supp. SCC 541

[3] 2000 (7) SCC 201

[4] Martin Hunter Alen Redform Law & Practice of international commercial arbitration (4, Ed.) Sweet & Maxwell Ltd.

[5] 2003 (5) SCC 705

[6] 2005 (2) SCC 618

[7] 2003 (9) SCC 79

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