i
TABLE OF CONTENTS
Acknowledgement...........................................................................................................ii
List of
abbreviations......................................................................................................iii
List of
Cases....................................................................................................................iv
Introduction.....................................................................................................................1
Challenges in introducing adr system in india: a brief
overview.................................2
Legislative
problems.........................................................................................................4
Intervention of
courts.......................................................................................................6
Cultural
norms..................................................................................................................9
Adequate human
resources............................................................................................11
Financial
resources.........................................................................................................13
Lack of adequate political
support................................................................................15
Conclusion.......................................................................................................................17
Bibliography....................................................................................................................18AcknowledgementI
deem it my proud privilege to express my indebtedness and sincere
thanks to all those who have in various ways, helped in the
successful completion of the project and without their invaluable
help this project would not have been a reality.I am extremely
thankful to Mr. Prashant Chauhan Faculty of law who was constant
source of knowledge and inspiration at all levels throughout my
project who took a lot of pain in providing guidance about project
report.Finally, I express my most sincere gratitude to my Parents
and my Family members for supporting and encouraging me to do this
challenging project. I deeply acknowledge the support and
inspiration by my academic career.
LIST OF ABBREVIATIONSIi
ADR Edn. e.g.No.Alternate Dispute ResolutionEdition Example
Number
Para p. Sec US Vol. ICAUNCITRAL
SCCParagraph Page SectionUnited States Of America
Volume
International Commercial Arbitration
United Nations Commission on International Trade Law
Supreme Court Cases
iii
LIST OF CASES
Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC
445
Hooters of America v. Phillips, U.S. 4th Circuit Court of
Appeals, CA-96-
3360-4-22, Decided: April 8, 1999
Indian Oil Corporation Ltd., v. Coastal Bermuda Ltd., [1990] 2
Lloyds Rep.,
407
Konkan Railway Corporation v. Mehul Construction Co., 2000 (7)
SCC 201
Oil and Natural Gas Corporation v. SAW Pipes, (2003) 5 SCC
705
SBP & Co. v. Patel Engineering, (2005) 8 SCC 6181
INTRODUCTION
This project is a detailed study Challenges in introducing ADR
system in India. Understanding the Socio, Economic and Legal
barriers affecting the Settlement of Disputes. The Project deals in
detail with these Problems and how does it affect the Indian ADR
system. Further, it provides suggestions to overcome these problems
in ADR mechanism in India.
AIMS AND OBJECTIVES
The aim of the project is to critically examine the Challenges
in introducing ADR system in India. Our aim is to conduct a
critical study of these problems in the light of various cases and
also in reference to various other authorities on the subject.
HYPOTHESIS
The hypothesis so assumed in this study is that ADR mechanism is
marred by various Socio, Economic and Legal Barriers and that
Government and citizens must work hand in hand to overcome these
Problems.
METHODOLOGY
In this project my research methodology is not an empirical one
but analytical. To prepare this project I had referred the books on
ADR available in the Library of the Gujarat National Law
University, and also used the web browsing for my research.
Challenges in introducing ADR system in India: A Brief
Overview
The Alternative Dispute Resolution (ADR) mechanisms slowly but
gradually evolved to provide justice to the persons in legal
disputes. It is a process voluntary in nature and has gained legal
recognition in the contemporary world over a period of time. In
India, Arbitration is an ancient concept, finding its roots in
ancient India. Panchayats are an example of such out of court
dispute resolution.1 The practice is still prevalent in villages
even today where senior villagers sits and resolve disputes of
fellow villagers.
ADR in India is governed by the Indian Arbitration and
Conciliation Act 1996. The Arbitration and Conciliation Act, 1996
as applicable in India today was created on the lines of the Model
Law of the UNCITRAL (United Nations Commission on International
Trade Law) but Alternate Dispute Resolution as such was
incorporated in laws of India as way backin 18402. Over a period of
time, processes, procedures and powers pertaining to
Arbitration
and the right of parties to the same were incorporated in The
Civil Procedure Code, Indian
Contract Act, Specific Relief Act and by further incorporation
of Indian Arbitration Act
1899, subsequently repealed by the Indian Arbitration Act of
1940 and them finally by the
Arbitration and Conciliation Act, 1996 which came in force with
effect from 25th January
1996.
As said above originally, in ancient India, ADR as we know today
was the way disputes were generally settled. The whole village by
way of Gram Panchayat used to solve the problems of the villagers
by sitting together and mediating the problems faced by the two
parties.3 Since the advent of the modern legal system, this method
of dispute settlement has largely been set aside. Today, this age
old method of dispute settlement has become corporate savvy and
exclusive to big concerns. 4 It has become the talk of the
boardrooms and the way thecorporate world now looks towards
settlement of disputes.
1The Report of the Expert Committee on Legal Aid: Processual
Justice to the People,Government of India, Ministry of Law, Justice
and Company Affairs, 1973 Report2 Act IX of 18403 K Ravi Kumar,
Alternative Dispute Resolution in Construction Industry,
InternationalCouncil of Consultants (ICC) papers, available at
www.iccindia.org, at p. 24 Report on National Juridicare Equal
Justice Social Justice, Ministry of Law, Justice and Company
Affairs, 1977 Report3
The reason as to why such a phenomenon is witnessed in our
country is very interesting. First of all, the process still is a
very costly affair as very few people specialize in this field that
are competent enough to arbitrate on various matters, thereby
resulting in making ADR a very exclusive and high end service.5
Secondly, ADR is just too flexible in nature and there is no
guarantee in its proceedings. There is no set procedure which is
required to be followed while finding solutions through ADR. Such a
system juxtaposed with the modern legal systemwhich is time-tested,
predictable and follows a set procedure, becomes a much safer and
hence attractive option for dispute settlement for the common man
than arbitration.6
Also, the Indian Law recognizes mainly Arbitration as a way of
ADR which pretty much curtails the full scope of ADR. The major
drawback due to the same is that Arbitration involves the principle
of arbitrability of subject matter. Since most matters which have a
specific legislation to its name are left out due to the
non-arbitrability of its subject matter,the actual scope of ADR is
heavily compromised on. It is important that if ADR has to reach
the common man and not just remain a corporate toy then it be
allowed to spread out its wings and fly. Fed up with the regular
litigation in courts, business persons very smartly resorted to
arbitration, as a large number of companies in the world do, only
to discover shockingly thaton most of the occasions it is even
worse than litigation.7
5 Inaugural address by Justice K G Balakrishnan, Chief Justice
of India, on International
Conference onInstitutional Arbitration in Infrastructure and
Construction, New Delhi, October 16, 2008
6 Rishabh Sinha, Sarabjeet Singh, Taking Alternative Dispute
Resolution To The Common
Man, National Law Institute University, Bhopal
7 Hernando de Soto, The Other Path, 1st ed., Harper & Row
(1989)4
Legislative Problems
The 1996 Act was brought on the statute book as the earlier law,
the 1940 Act, did not live up to the aspirations of the people of
India in general, and the business community in particular. The
primary purpose of enacting the 1996 Act was to conform to the
UNCITRAL Model Law and thus fulfil the international obligation and
also to placate the business community. Unfortunately, at that time
there was no thorough scrutiny of the Model Law. While the U.K. did
not adopt the Model Law completely and several other countries,
including the U.S.,never went to adopt the Model Law, India adopted
it fully.8 As a matter of fact, India simply
copied the provisions of UNCITRAL Model Law. No attention was
paid to the special needs of business community in India, the legal
environment, social conditions, lack of judges and infrastructure
in the courts, etc.
The result was predictable there would be chaos. Whenever there
is chaos and confusion, certain groups of people prosper. They make
the most of the chaotic situation. The same happened in India.
During all this confusion with the enforcement of new law, the
lawyers, as always, emerged as the group benefiting most from the
situation. As the situation was unclear as to what would happen
with the new sections in the new law, how the courts would
interpret different words and phrases, the business communitys
anxiety grew with eachpassing day.9 Besides the lawyers, the
retired judges also made a lot of hay. And, as the sun is
still shining bright, they are continuously making more and more
hay.10 We will do well to remember that judges and lawyers,
somewhere in the heart of hearts, are not two different sections.
They are the same. Most of the judges, at some point of time in
their career, have been lawyers. Thus, it is a simple case of you
scratch my back and I will scratch yours. Barring a few, with their
spine intact, others give arbitration reforms only a lip
service.
The new Act has, more than once, proved to be a legislative
failure. A number of loopholes
have made this legislation a good example of bad legislative
effort. The definition of
8 Paul Whitley, ARBITRATION IN INDIA, Talk to the European
Branch of the C.I.Arb. at
Salice dUlcio, Italy, 9th / 10th April 2005
9 Kachwaha, Sumeet, The Indian Arbitration Law : Towards a New
Jurisprudence, Int. A.L.R. 2007, 10(1), p. 13-1710 Javed, Judicial
Ambush of Arbitration in India, L.Q.R. 2004, 120 (OCT), pp.
571-5745
Court11 in the Arbitration and Conciliation Act, 1996, is
substantially different from that in the earlier law of 1940. Due
to this new definition, there is tremendous load of work on the
District Judge, which was earlier shared by other judges in the
Civil Court. The experience of the last ten years testifies it
amply that the District Judge is not able to devote as much time as
is expected to arbitration matters and the cases are simply poling
up. It adds to the delay and makes matters worse for the litigants.
The District Judge is the senior-most judge in the district taking
care of civil matters and as a matter of practice, she is also the
senior-most judge taking care of criminal matters as the Sessions
Judge. The designation of the head of the District Judiciary is,
therefore, District and Sessions Judge. As the routine criminal
matters of bail, interim applications, etc. are much more urgent
than the civil matters like arbitration, most of the time of the
District and Sessions Judge is devoted to criminal matters. Even
with the best of intentions, the District and Sessions Judge is
generally not able to earmark sufficient time for arbitration
matters which require in-depth study.
Barring a few cities where the High Courts exercise ordinary
original civil jurisdiction, all matters pertaining to arbitration
have to be filed in the principal Civil Court of original
jurisdiction in a district. By definition this is the Court of the
District Judge. Any civil court of a grade inferior to such
principal Civil Court or any Court of Small Causes has been
intentionally kept out by the legislature. This leaves the Court of
the District Judge and onlythis court to have jurisdiction over
arbitration matters.12
Thus, the arbitration matters keep pending and litigants have no
option but to wait patiently. At times, litigants do opt for
extra-legal methods to settle the dispute which is not a good
practice for the economy and the society. It brings a bad name to
the judicial system and erosion in faith starts taking place. It
also forces foreign investors and business partners to perceive
India as a place with slow-moving judiciary. Therefore, there is an
adverse effect onthe business in particular and economy in
general.13
11 Sec. 2 (e), The Arbitration and Conciliation Act, 1996
12 Special Address by Dr. S. Muralidhar, International
Conference on ADR, Conciliation, Mediation and Case Management
Organised By the Law Commission of India at New Delhi on May 3-4,
200313 Indu Malhotra, Fast Track Arbitration, ICAs Arbitration
Quarterly, ICA, 2006, vol.
XLI/No.1 at p 86
INTERVENTION OF COURTS
The primary purpose of Alternative Dispute Resolution (ADR)
methods, of which arbitration is the most popular, is to avoid
going to the court. However, intervention by courts is inevitable.
At times the interference is desirable so as to prevent the
arbitration process from going astray. Interference by courts is
universal and is observed throughout the world. In most of the
jurisdictions, the subordinate judiciary is empowered to look into
arbitrationmatters, however, a number of matters reach the highest
court. India follows the same system and a large number of
arbitration matters are filed in the lower courts
As arbitration is a creation of contract between the parties.
Hence, party autonomy is the heart and soul of each and every
arbitration contract. However, this autonomy is not unbridled. The
applicable law and public policy provide the boundaries to this
autonomy. Rules of arbitral institutions also curtail the autonomy
of parties. Moreover, intervention of courts becomes necessary in
cases of bias of arbitrators, misconduct of proceedings, etc.
Courts also intervene in setting aside or enforcing an award.
Complete freedom to parties to do what they like in an arbitration
is not acceptable and the natural corollary is that
completenon-interference by courts in undesirable. For instance, in
the Hooters case,14 the court
refused to uphold the arbitration clause and said,
The parties agreed to submit their claims to arbitration-- a
system whereby disputes are fairly resolved by an impartial third
party. Hooters by contract took on the obligation of establishing
such a system. By creating a sham system unworthy even of the name
of arbitration, Hooters completely failed in performing its
contractual duty.
Interference by courts in such cases is essential, desirable and
should never be done away with, howsoever strong the critics
are.
Major thrust and legislative intent of the new Arbitration and
Conciliation Act, 1996 is to reduce excessive judicial intervention
due to which the earlier Arbitration Act, 1940 suffered serious
infirmities. Section 8(1) of the New Act, therefore, makes it
mandatory duty for thejudicial authority i.e. court to stay legal
proceedings if started, where the subject matter has
14 Hooters of America v. Phillips, U.S. 4th Circuit Court of
Appeals, CA-96-3360-4-22, Decided: April 8, 19997
been referred to an arbitral tribunal. Similar provisions are
made in connection with the New
York and Geneva.
The enactment of the 1996 Act was initially met with approbation
by the Court in cases like Konkan Case15, (which stated clearly
that the provisions of the 1996 Act unequivocally indicate that the
Act limits intervention of the Court with an arbitral process to
the minimum) but subsequent reality however, has been far from
ideal. Even as a global study has indicated that an overwhelming
91% of the respondents were against the mechanism of appealing
international arbitration, cases like ONGC Case16 and SBP & Co
Case17. Have sharply belied governmental attempts to promote
arbitration in India. ONGC Case witnessed the challenge of an
arbitral award on the ground that it was in conflict with the
public policy of India; instead of taking a narrow interpretation
of the phrase public policy as being something in excess of a prima
facie transgression of Indian law, the Court adopted a very broad
understanding of the same. The Court went on to equate patent
illegality with error of law and held that any contravention of an
Indian legislation would ipso facto make the award violative of
public policy.
The doors were thus flung open for the very rounds of
painstaking judicial review that the
Act was put in place to avoid18. SBP & Co further extended
the scope of judicial intervention when the Supreme Court ruled
that it was within the powers of the Chief Justice of India to
adjudicate on issues like valid arbitration agreements and went on
to state that the CJ could even call for evidence to resolve
jurisdictional issues while performing the function of appointing
an arbitrator when the parties failed to come to an agreement. The
Supreme Court went on to say that such decisions would be final and
binding upon the parties. This effectively flouted the principle of
competence and thus amounted to a situation where the arbitral
tribunals power to determine its jurisdiction was
undermined.Effectively therefore, Courts endowed themselves with
powers which would substantively delay arbitral proceedings (be it
by raising specious objections to preliminary issues or by
15 Konkan Railway Corporation v. Mehul Construction Co., 2000
(7) SCC 201
16 Oil and Natural Gas Corporation v. SAW Pipes, (2003) 5 SCC
705
17 SBP & Co. v. Patel Engineering, (2005) 8 SCC 618
18 Aloke Ray, Dipen Sabharwal, What Next for Indian
Arbitration?, The Economic Times,
29 August, 20068
sabotaging the appointment process) which goes against the
fundamental reason for enacting Section 13 of the 1996 Act. This
thus brings us to what has been called the dispute between high
principles (stressing the need for justice, though the heavens
fall) and low principles (an equally insistent clamour to end
litigation) in adjudication today19. The expansion of the Courts
intervention into the judicial sphere has aroused serious
misgivings; ONGCs expansive interpretation of the term public
policy has been followed by a catena of caseswhich all reiterate
the judiciarys right to review the arbitral award. In cases like
Hindustan Zinc Case,20 the Supreme Court has stated that awards
could be set aside on grounds like being contrary to the terms of
contract since ONGC gave license for interference in such grounds.
This indeed sets a dangerous precedent since, as stated earlier;
the encouragement of ADR was based on a need to circumvent the
lengthy court process.
The debate between finality and justice is perhaps best resolved
by the reasoned judgment of EVANS J., in Indian Oil Case21 where he
held that these two factors are not inconsistent with each other.
If either of them is to prevail, then it should be the requirement
of justice. But justice, even fairness, is not an abstract concept.
It has to be applied in this context between two parties who were
in dispute with each other and who agreed that the dispute should
be resolved by an arbitral tribunal. They agreed that the
tribunal's award should befinal. But they agreed this on the basis
that the arbitration procedure would be regulated by law. The Court
has statutory power to set aside an award when the arbitrators
misconduct themselves or the references. But it also has the
unqualified discretion to remit the award to the chosen tribunal.
If the power is exercised, but only in circumstances when it would
be unjust not to do so, then there is not, in my judgment, an
uncovenanted or an unacceptablerestriction on the agreed finality
of the tribunal's award.
19 Zaiwalla, Sarosh, Challenging Arbitral Awards: Finality is
Good but Justice is Better ,
20(2), Journal of International Arbitration , 2003
20 Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4
SCC 445
21 Indian Oil Corporation Ltd., v. Coastal Bermuda Ltd., [1990]
2 Lloyds Rep., 4079
CULTURAL NORMS
In general, the community throughout India is still manifesting
its hostility to arbitration. The continuing attitude of certain
urban arbitrators being characterized by a lack of sensitivity
towards the national law of a developing country as ours and their
mandatory application, either due to the ignorance, carelessness,
or to unjustified psychological superiority complexes, negatively
affecting the legal environment required to promote the concept
ofarbitration especially in the field of business
relationships.22
The arbitrators do not understand how things are done in various
parts of India. Hardly any of them have any connection with or
understanding of traditions and cultures of whole India. They do
not even take the trouble to understand parties perspective in the
proceeding at hand.
Of themselves, such comments might simply be a reflection of
sour grapes parties finding some reason to criticise a process
which they feel is outside their control or delivers a result which
does not reflect their wishful thinking. If that were the only (or
predominant basis) for such comments, they would be easy to explain
away.
People from different backgrounds (ethnic, religion, racial,
caste etc.) often harbour predisposed standpoints regarding each
others cultures, customs and attitudes. It is not difficult to see
how this could erroneously translate into a perception of bias vis
an Arbitral Tribunal which does not reflect the culture of one or
more of the parties. Arbitrators above allneed to be aware of such
considerations and adjust their approach accordingly.23
Unfortunately Politics and religion factors may also play a part
in the dynamic which is the relationship between the Tribunal and
the parties. The role of the Tribunal should include awareness of
potential issues and using the process dynamically to avoid such
issuesaffecting the process negatively (a simple illustration of
this might be persuading the parties
22 Sarah Hilmer, Did Arbitration Fail India or Did India Fail
Arbitration, Int. A.L.R.
10(2), 2007, pp. 33-37
23 Khawar Qureshi, Cultural sensitivity and International
Arbitration, McNair Chambers, accessed at www.McNairChambers.com,
29th June 200810
to shake hands with each other at the beginning of the hearing,
and taking other steps to
break the ice, as well as making the atmosphere less
confrontational).
Miscommunication is also a major barrier for arbitration in
India. In a country which has many languages, words spoken can
often acquire a very different connotation when translated.24 Body
language, facial expressions and gestures can sometime send the
wrong signals.
How business is done in different cultures may reveal stark
differences. In the not too distant past, a nod and a handshake
were often the only evidence to signify that an agreement had been
reached. Even now, some jurisdictions reveal very clear patterns of
behavior in the way business is done. Indeed, there have been
dramatic changes over the past decade with contracts in India
becoming much more detailed and heavily negotiated than was
previously the case. However, the Tribunal needs to be alive to
such potential differences of approach, which might easily be
interpreted otherwise as a lack of evidence to substantiate a
particularposition.
24Prathamesh D. Popat, Online Dispute Resolution In India,
Proceedings of the UNECE Forum on ODR 200311
Adequate Human Resources
A system is as good as the people who work it. Because of a
number of reasons vested interests of different professional groups
being one of the most important arbitration has not been as
efficacious as it should have been.25
Lawyers too, are often not trained in the law and practice of
arbitration and there is a tendency among them to prolong
arbitrations, seek unnecessary adjournments, sandwich arbitrations
between their regular court appearances, etc., all of which add up
to a lack of standards in conducting arbitration in India. This has
driven parties to opt for arbitration outside the country (adding
to the gravitational popularity of London and, increasingly,
Singapore as centres of international dispute resolution), or even
go back to choosing litigation in Indian courts as a `lesser
evil'.
It is not enough to simply enact a progressive law on
arbitration. It is much like having a brand new stadium, a
certified football and a first-rate football field. One also needs
well- trained players and referees who know the rules of the
game.
The availability of skilled, trained and honest arbitrators as
well as well-equipped arbitral institutions is vital for the
further success of arbitration in India. If there is an emergent
opinion that by choosing arbitration over litigation, parties have
substantially diminished their chances of getting good quality of
justice, that would obviously bode ill for the future of
arbitration. What is needed is inculcation of a culture of
arbitration among the key stakeholders the bar, the Bench, the
arbitrators, arbitral institutions and the consumers of arbitration
and for them to display a sincere commitment to prevent the
`banalisation' ofarbitration.26
Indian lawyers and judges will do well to be aware of and absorb
some of the best arbitration practices from jurisdictions which
have a more developed culture of arbitration, if arbitration is to
provide the benefits it is capable of delivering. Ten years on,
arbitration in India underthe 1996 Act is far from having fulfilled
its potential and continues to be on probation.
25 Justice S.B.Sinha, ADR and Access to Justice: Issues and
Perspectives, SCR, 2008
26 Nancy J. Manring, ADR and Administrative Responsiveness:
Challenges for Public
Administrators, Public Administration Review, Vol. 54, No. 2
(Mar. - Apr., 1994), pp. 197-
20312
Further, most ad hoc arbitrations or even institutional
arbitrations in India are conducted by retired members of the
judiciary who by virtue of long tenures behind the Bench have got
accustomed to tedious civil procedure and evidence rules (which
they are exempt from applying to arbitration proceedings) and fall
into that trap much too easily. As a result, arbitrations
effectively become a battle of pleadings and procedures, with each
party trying its best to stall if it works in their favour.
Moreover, having retired and having an opportunity to earn some
post retirement money, coupled with the fact that there is no fixed
schedule of fees and it is totally up to the whim and fancy of the
Arbitrator to fix his fee, a self interest for prolonging the
proceedings comes into picture. Needless to say, quite a few
arbitrators find it difficult to maintain that balance unless they
are either overloaded with work (in which case they are earning
anyway) or they find pride in quick disposal, monetary issues being
irrelevant.27 The Arbitrator may not be familiar with Arbitration
law or how to properly conduct the process. Furthermore the
retiredjudge will also not be familiar with technical expert
matters.
27D. M. Popat, ADR AND INDIA: AN OVERVIEW, THE CHARTERED
ACCOUNTANT, DEC 2004, p. 75613
FINANCIAL RESOURCES
However, at any rate in India, it is becoming increasingly
common for arbitration proceedings being conducted at expensive
venues. On several occasions, even when the proceedings last for a
very short duration, the parties have to pay for a whole day. If
the venue is a five-star hotel, the expense will be heavier.28
Parties feel embarrassed if they have to reject request for an
expensive venue.
On the other hand, there are places available, which are fairly
decent and not as costly as five star hotels. Several public
institutions do make their conference rooms available for
arbitration and all facilities are available at inexpensive rates.
The Commission has been informed that in certain arbitrations which
have been continuing for years, the costs of meeting the expenses
of the venue are running into lakhs of rupees. One party who is
rich enough may agree but another, not so rich, may not, but may
have to share the huge costs ultimately, depending upon the order
of the arbitral tribunal as to cost in the award.
Another more important aspect is the huge expense in
arbitrations. While the Judges who decide cases in courts are paid
by the State, the case of arbitrators is different. Parties have to
pay fee to arbitrators also. Lawyers fee is anyway there whether
before courts or before arbitrators. These days fee payable to
arbitrators is quite heavy. We have obtained the views of lawyers
and arbitrators. But we have to take care of interest of the
parties also.
Further it needs to be considered what happens if the
appointment of arbitrators is to be automatic and if the appointing
authority under Section 11 should consider nothing else.
The prevalent procedure before the arbitrators today is that at
the first hearing, the claimant is directed to file his claim
statement and documents in support thereof. At the second hearing,
the opposite parties are directed to file their reply and
documents. Then, the claimant files his rejoinder at the third
hearing. Normally at each of these stages, there are at least two
or three adjournments. Sometimes, applications for interim
directions are also filed. Thus, today, the first occasion for
considering any question of jurisdiction does not normally arise
till at least6 adjournments have gone by. If the respondent is the
State or a public sector undertaking, the
28 Christine Cervenak, David Fairman and Elizabeth McClintock,
Leaping the Bar: Overcoming Legal Opposition To ADR in the
Developing World, Dispute Resolution Magazine, Spring 199814
number of adjournments are certainly more. Parties pay fees to
the arbitrator s for each hearing running into thousands of
rupees.
If indeed it is a partys plea that there is no dispute that can
be referred to arbitration (because the contractor has given a no
claims letter) or if it is the plea that the dispute is excepted
from arbitration or if a person says, he is not a party to the
arbitration, or that the arbitration agreement is not in existence,
these issues can normally be taken up only after at least five or
six adjournments have taken place. By that time, quite a large
amount of money would become payable towards the arbitration fees
or may have been paid. Therefore, the cost factoris also important
for the parties and cannot be left out of consideration.29
Lastly, if the Government or a public sector undertaking has
clear documents to show that there is no dispute in existence or
that the dispute relates to an excepted item, or if a person says,
he is not a party to the arbitration agreement, there is no reason
why an expensiveprocedure of arbitration should be invariably
embarked upon.
29 Indu Malhotra, Fast Track Arbitration, ICAs Arbitration
Quarterly, ICA, 2006, vol. XLI/No.1, p. 2915
LACK OF ADEQUATE POLITICAL SUPPORT
India follows the doctrine of separation of powers. The three
organs Legislature, Executive and Judiciary work independently,
however, there is definite overlap between the first two. The
President is the Chief Executive and also an integral part of the
Union Legislature. All the members of the Council of Minister,
which is headed by the Prime Minister, must be a member of
parliament, and if not, must become a member within six months.
Thus, the Government has a definitive say in the legislative work.
Due to coalition governments coming to power for a number of years,
the main ruling partys agenda must be acceptable to other coalition
partners and it surely dents the definitive say of the Government.
In the last couple of years it has become increasingly difficult
for the Government to be sure of getting even the bills introduced
by the Government itself, passed in the Parliament. One such
example is the Arbitration and Conciliation (Amendment) Bill, 2003
which was introduced by the Government of the day on the
recommendation of the Law Commission. It becomes even more
difficult with clash of personalities and egos resulting in
hijacking of law making system by a couple of self-proclaimed
Messiah of masses.
In 2001, the Sixteenth Law Commission, under the chairmanship of
Justice B. P. Jeevan Reddy, forwarded a report, number 176, to the
Union Government suggesting necessary amendments to the 1996 Act
after five years of its coming into force.30 The then Union Law
Minister, Mr. Arun Jaitely, had expressed his desire to get the new
law on arbitration reviewed as various shortcomings were observed
by the legal and business fraternity in its provisions and certain
representations received by the Law Minister.
The Commission initially prepared a Consultation Paper and held
two seminars, one at Mumbai and another at Delhi in the months of
February and March, 2001 and gave wide publicity to the paper by
putting it on the website. Retired judges and leading lawyers were
invited for the seminars. Many luminaries also participated in the
seminars and gave their written notes putting forth their
suggestions. Proposals not contained in the Consultation Paper were
also made and were exhaustively discussed. After making an in-depth
study ofthe law relating to subject, looking into the position of
the law in foreign jurisdictions, the
30 Law Commission of India, One Hundred And Seventy Sixth Report
On The Arbitration
And Conciliation (Amendment) Bill, 200116
Commission made various recommendations for bringing amendments
in the 1996 Act. A Bill entitled The Arbitration and Conciliation
(Amendment) Bill, 2001 had also been prepared by the Commission
bringing out various provisions through which the 1996 Act was
proposed to be amended.
The Government was supposed to act with alacrity so that the
necessary amendments could be made timely. With such an innocuous
thing as the definition of court, which should not have been
juggled in the first place, and for which there was agreement
between all the concerned parties and there was the recommendation
of the Law Commission, the Government did not act speedily
resulting in further delay.
The Government took time in going through the Law Commissions
report forwarded in September 2001. It took two years to propose an
amendment. On December 22, 2003, Mr. Arun Jaitley, the then Law
Minister, introduced the Arbitration and Conciliation (Amendment)
Bill, 2003 (hereinafter the 2003 Bill) in the Rajya Sabha.31 The
Bill proposed several amendments.
Political rivalry has resulted in the withdrawal of the 2003
Bill. Even when the amendments suggested by the Law Commission and
later introduced in the Rajya Sabha as the 2003 Bill are apparently
in the interest of the people at large, clash of two giants is
holding the nation to ransom.
The question which needs to be raised at this time is the wisdom
of simply copying a legislation without modifying it to our needs.
Also, it is high time to question the wisdom of constituting so
many committees to look into the recommendations of the Law
Commission. It is a well-known fact that Law Commission has very
eminent legal experts as members. Law Commission reports are a work
of collective wisdom. How can it be questioned? Not once, but so
many times. How many times do we need to review the work done by
the Law Commission and then the Legislative Wing of the Government?
This must come to an end. Also, the persons constituting all these
committees must introspect as to whatever they have been doing in
the name of reviewing the reports of the Law Commission is
worthwhile ornot.
31 Bill No. LXXV of 2003, Introduced in Rajya Sabha on December
22, 2003; available at
http://rajyasabha.nic.in/bills-ls-rs/arch2003.htm, accessed on 20th
August, 201017
CONCLUSION
As discussed earlier, there are many legal, socio and economic
problems in ADR mechanism in India. These problems arise due to
diverse and culturally rich population of India as well as lack of
political goodwill in this regard.
To overcome these barriers Government must act strictly and
should first of all adopt 176th Law Commissions Report. Coupled
with this Government at both state and Union Level must come up
with awareness programmes not only for the citizens but also for
the arbitrators. ADR is a fairly new concept and concepts like
these not only take time in percolating to the grass root levels,
acceptance of such a concept is also a big problem. Therefore a
robust programme imparting legal literacy to the masses in India,
especially inthe field of ADR becomes a necessity. Not only will
this allow bringing ADR to the common man, an aware citizen will
contribute positively to the development of the nation too.
The common citizens are also to be blamed for this error in ADR
mechanism too. People should opt for ADR instead of litigation and
use this mechanism wisely in order to get speedy and cost efficient
justice. The purpose which ADR was supposed to achieve. The legal
education of todays India needs to take the ADR mechanisms
seriously. Today these mechanisms are taught only as part of
speciality courses which primarily focus on the deployment of these
processes pertaining to areas of corporate mergers and
amalgamations.
India is a nation which epitomises a subtle mix of the modern
and the ancient. The preservation of the best of both is what
Indians are best at. Keeping in mind the same spirit of India, the
common Indian of today should get the best of all the dispute
resolution mechanisms in India. The motive behind any legislation,
amendment or new introduction has and always been the welfare of
the ordinary citizen of the country.18
BIBLIOGRAPHY
References
1. Ashwinie K Bansal , Arbitration : Procedure and Practice,
LexisNexis India
2. Avatar Singh, Law of Arbitration and Concilliation, Eastern
Law Book Company
3. N V Paranjape, Arbitration and Alternate Dispute Resolution,
2006
Websites
1. www.lexisnexis.com
2. www.westlaw.com
3. www.jstor.org
4. www.wto.org
5. www.heinonline.com
