[op-ed snap] Arbitration par charcha

Mains Paper 2 : Executive & Judiciary |

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Ways to make India as an arbitration hub.


CONTEXT

The government’s recent initiative and push for the New Delhi International Arbitration Centre Bill, 2019, to make India an ‘arbitration hub’ has to be seen in the larger and overall context, and not as a one-off measure.

Singapore as an ideal

  • Singapore attracts a vast majority of its international commercial disputes of Indian vintage and connection.
  • It has become the lead destination for dispute resolution as there was a clear vision and steady determination.
  • This made Singapore the ‘seat’ of arbitration and a preferred venue.

Ways to achieve it

1.A pro-arbitration culture backed by the trio

Judiciary –  Courts particularly need to take a pragmatic approach towards ‘minimum intervention and maximum execution’, which will respect the arbitral process and honour arbitral awards.

Legislature – The legislature had amended the Arbitration Act in 2015 and set timelines to increase the pace of arbitration, and make it more time-bound, result-oriented and disciplined. However, India requires gigantic measures to emerge as a ‘hub’.

Executive – The government has echoed the same sentiment and has given the need for making India an ‘arbitration hub’ and promoting ease of doing business the stature of a national priority.

2. Sanctity of contracts

  • Respecting the sanctity of contracts and honouring awards are vital to emerge as an ‘arbitration hub’.
  • However, an effective dispute redressal mechanism is not enough.
  • It is equally important to reduce the number of artificial disputes.
  • Numerous times needless disputes, particularly by PSUs, are pushed to arbitration where the arbitrator simply has to direct the parties to adhere to the terms of the contract.

3.Independent and expert arbitrators

This would bring in much-needed commercial certainty, uphold the sanctity of the award/contract, and enhance the quality of decision-making.

4. Effective enforcement of awards involving public bodies

  • Courts are highly cautious in enforcing awards against the government as they are swayed by unfounded nationalism and emotion.
  • What is required is a no-nonsense approach and a mindset tuned towards compliance, adherence and enforcement.
  • The answer lies in creating a culture of finality of arbitral awards so that a winner can get a touch-and-feel of the fruits of victory.
  • This will inspire confidence and create a vibrant arbitration culture for resolving commercial disputes.

A step in the right direction

  • The catalyst has to be government initiative, judicial and legislative support, and, above all, a conducive commercial mindset and environment.
  • What we need is a well-thought-out road map to establish a credible and trustworthy institutional framework.
  • Once the script is in place, a robust institutional framework will automatically trigger/take off.

Conclusion

A superstructure on a solid base is essential to meet the objective of making India an ‘arbitration hub’ and promote ease of doing business. This will ensure durability and longevity, which will serve India’s interests well, and who knows it may just open doors to ‘arbitration tourism’.

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