Alternative Dispute Resolution Mechanism – NCA, Lok Adalats, etc.

Arbitration in India: Issues

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Arbitrations and issues with it in India

Context

Plagued by delays and rising costs, arbitration in India needs urgent attention. The pandemic has only worsened the situation.

Issues with arbitrations process in India

  • Arbitrations in India suffers from rising costs and sluggish proceedings.
  • Arbitration proceedings are often dragged on by lawyers on either side filing misconceived applications at various stages of the proceedings.
  • Litigants, too, at times contribute to this delay with their stubbornness in not conceding a loss or defeat.
  • The courts have narrowed down the scope of judicial interference under Section 34 of the Arbitration and Conciliation Act.
  • The very limited recourse for setting aside an arbitral award under the Act invariably means that it will be upheld, even if it appears unfair or illogical.
  • The aggrieved party may well be stuck with the award and precluded forever from challenging it.
  • Arbitration hearings are generally held in camera, and decisions are usually not publicly accessible, giving rise to doubts about impartiality and fairness.
  • Arbitration proceedings have become more complex with time.
  • The Supreme Court, in Guru Nanak Foundation v. Rattan Singh and Sons, had expressed disappointment against the procedural delays and tardiness in the resolution of disputes through arbitration.
  • Even the clauses providing for fees of the arbitrators and fixed timelines for disposal are often disregarded by the players
  • The inevitable consequence of these drawbacks is a slow departure of the biggest litigant, the government, from the arbitration spectrum.
  • A sector that is dominated by approvals, protocols and scrutiny, uncertainty about the budget outlay towards arbitrations and unexpected delays in disposal does not inspire confidence and detracts from the sanctity of the process.

Way forward

  • Arbitrators have endeavoured to simplify the proceedings by limiting the pleadings, insisting on written arguments, reducing the number of sittings and laying down a schedule for various milestones.
  • Some restraint is needed from all quarters to bring its wheels back on the tracks. These are:
  • A small check on the arbitral fees and timelines.
  • Careful drafting of arbitration clauses.
  • Stringent procedural safeguards to curb delays.
  • Expeditious disposal of the court proceedings and legislative intent towards all of the above.

Consider the question “What are the issues faced by the arbitration in India? Suggest the measures to deal with these issues.” 

Conclusion

Arbitration still has the inherent potential and characteristics to outperform other modes of dispute resolution, but for that to happen, some changes are a must.

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