Progressive momentum

Indian arbitration laws have undergone significant amendments over time, ensuring timely proceedings, reduced judicial intervention, and promotion of institutional arbitration to align with global practices

Progressive momentum

In the digital era, the world has become speedier and smaller. Allowing free trade and commerce is imperative. The economics of a country flourishes when statutory provisions cater to an environment for easier business modalities, which includes a flexible yet sound dispute resolution mechanism. Having speedy, cost-effective, and fair settlement of disputes is a key requirement in today’s era. Arbitration, one of the wings of Alternative Dispute Resolution (ADR), is one such midway solution. ADR methods enjoy significant advantages such as lower costs, time-bound procedures, greater flexibility of process, likelihood of settlement due to a less formal atmosphere compared to courts, and a higher degree of confidentiality, among others.

Globally, arbitration has become the major instrument for settling contractual obligations. Normally, every agreement, especially commercial ones, consists of an arbitration clause in case of a dispute. Arbitration is more formal than mediation and has certain similarities with conventional court proceedings, but with somewhat limited, simplified, time-bound procedures, including rules of evidence. Such alternative dispute resolution processes also safeguard personal and corporate relationships that might otherwise be prejudiced by the usual litigation processes.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the New York Convention) is one of the important treaties in private international law. India is a signatory to the same. The Convention was established owing to discontent with the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927. India, in fact, adhered to this as well. Thus, we have kept pace with various international developments in such fields. Our Arbitration and Conciliation Act, 1996, is based on the Model Law adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985. The main purpose of enacting the said Act is to encourage methods for speedy dispute resolution and eliminating unnecessary obstacles.

The arbitration process can help resolve most domestic commercial disputes to the advantage of all parties better than the regular legal process. Even international arbitration cases can be better handled.

To keep pace with current developments, the Indian arbitration law has undergone significant amendments in the last couple of years. Changes in the law signal a positive change for ensuring timely conclusion of arbitration proceedings and lesser, but appropriate, judicial intervention in the arbitral processes. The amendments are further aimed at promoting institutional arbitration, inculcating contemporary global practices for the ease of all, and bringing our nation at par with others. Certain significant amendments have been carried out in the Arbitration and Conciliation Act, 1996, which include, inter alia: confidentiality of arbitral proceedings; grounds for challenge to arbitrators as per international standards to uphold independence and impartiality of arbitrators; statutory framework for time-bound completion of arbitration proceedings and separate provisions for fast-track arbitrations. Additionally, grounds for challenge to arbitral awards have been limited; public policy has been narrowed down; promotion of institutional arbitrations is ensured; the provision of automatic stay on the enforcement of arbitral awards has been omitted, and a provision has been included that upon the filing of a separate application, seeking a stay on the operation of the arbitral award, the court may grant the stay while imposing certain conditions as it may deem fit. When the courts are satisfied that a prima facie case of either the arbitration agreement/contract or the award being induced by fraud or corruption is made out, an unconditional stay will be granted.

Wherever practicable, after legal advice and contemplation on various dispute resolution avenues, appropriate clauses for arbitration could be considered to be drafted in contractual arrangements.

Courts have, on several occasions, highlighted the relevance of ADR, including economic importance. Justice delayed is justice denied, while justice hurried is justice buried. Procedures such as arbitration, conciliation, mediation are a middle path solution to both these statements. India is now becoming a world leader in the same. Most people come across litigations and legal issues. Correct knowledge of legal provisions can make overall life easier and help save many costs.

The writer is a practising Advocate in Supreme Court and High Court of Delhi. Views expressed are personal

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