Key Features of the Arbitration and Conciliation
Registration of Real Estate Projects
Courts have also followed the lead, with a number of recent decisions narrowing the scope of judicial interference. The executive has also sought to bring about efficiencies in arbitration involving government entities by encouraging ministries to comply with arbitration awards, pending any proposed challenge, in the interests of ensuring cashflow, particularly in relation to large infrastructure disputes.
Advantages / Disadvantages
Advantages of commercial arbitration in India include:
Resolution time, which is nearly always substantially less than the time taken in resorting to conventional dispute resolution methods.
Freedom of parties to choose the procedure under which their dispute is to be settled, therefore saving time. This becomes particularly relevant in more complex disputes where the parties are able to set block dates for trial and hearing, which is a big advantage over the court system where trials can go on for up to a decade, with multiple judges hearing the dispute at different stages.
Ability of parties to appoint arbitrators with specialist knowledge, which is particularly useful in disputes involving technical matters. In court proceedings, the parties may find themselves before courts which do not have sufficient experience in handling commercial disputes.
The disadvantages include:
- Court interference. Historically, this was a significant disadvantage of arbitrating disputes in India but this has been remedied to some extent with recent legislative measures and judicial decisions. However, in the limited circumstances where judicial intervention is permitted, it continues to be a problem primarily due to the severe backlog of cases, and the time taken to dispose of matters, even if on merits the outcome is pro-arbitration.
- Lack of a specialist arbitration bar. This means that hearings in some arbitrations are conducted after court hours, or over the weekends for a few hours each day, with hearings spread out over several months. This problem has been partly remedied by the strict timelines now imposed by law to complete arbitration proceedings. There has also been increased specialisation among lawyers in arbitration recently.
- Reluctance of the parties, counsel and the courts to appoint arbitrators from outside the pool of retired judges which has resulted in arbitrations routinely being conducted like an extension of the court system with arbitrators willing to apply the procedural rules of court as a matter of course. To avoid this, parties are forced to choose from a very limited pool of competent arbitrators who tend to be expensive and busy. These problems are compounded by the fact that a majority of arbitrations in India are ad hoc without an institution exercising some degree of control or oversight over the process and the arbitrators.
- Lack of proper transcription facilities in India, resulting in hearings taking significantly longer than they should. This significantly reduces the cost and time efficiencies of arbitration.
Legislative Framework
The Arbitration and Conciliation Act, 1996 (Arbitration Act) applies to arbitrations in India. Part I of the Arbitration Act deals with arbitrations seated in India and Part II deals with arbitrations seated outside India. Certain provisions of Part I of the Arbitration Act (such as court assistance in aid of arbitration) also apply to arbitrations seated outside of India.
There have been a series of judicial decisions and legislative amendments in recent years that apply partly prospectively and partly retrospectively. The version of the Act that will apply in any case will depend on the date on which:
- The arbitration was commenced.
- Court proceedings relating to the arbitration (if any) were commenced.
- The arbitration agreement was executed.
The Arbitration Act is largely based on the UNCITRAL Model Law (Model Law). There are however some significant departures which make it difficult to apply the Model Law jurisprudence directly to each case. For example, the standard for referring parties to arbitration under the Arbitration Act is significantly lower than that prescribed under the Model Law. The Arbitration Act prescribes time limits for the completion of an arbitration, while the Model Law does not. Further, unlike the Model Law, the Arbitration Act contains detailed provisions about the imposition of costs.
Mandatory legislative provisions
The Arbitration Act contains a number of mandatory provisions, including in relation to:
- Requirements for the form of the arbitration agreement.
- Mandatory reference to arbitration by courts.
- Grounds of ineligibility, presumed impartiality and lack of independence of arbitrators.
- Time limits for completing arbitration proceedings.
- Grounds for setting aside an arbitral award and challenging enforcement of an arbitral award.
A violation of these conditions can either preclude reference to arbitration, render proceedings invalid or result in an award being set aside by courts. However, a breach of the conditions of independence and impartiality can be addressed by the court's powers to substitute one or all members of the tribunal (section 29A(6), Arbitration Act).
