INNOVATION AND EFFICIENCY IN ARBITRATION

By Indhu Kartikeyan

INTRODUCTION

Over the decade we can see various changes in the world that have made us rethink what would be next and what we would have to adopt. The changes makes the world a better place in technological so much so that in legal prospects. The mode of legal development everyone visualizes is a speedy and less cost effective style in dispute settlement. Dispute settlement in every way and in every country has its time concern as well as cost. Currently many countries are suiting up for an alternative channel where they could be able to settle their dispute in a swift way. Justice delayed is a denial of Justice. Every country have adopted new ways for a speedy and most efficient style in dispute settlement. Most common principle adopted my most of the developed as well as developing countries is settlement of dispute through Arbitration, Mediation, Negotiation and Conciliation.

ARBITRATION IN HISTORY

 We can trace the use of arbitration in the Medieval Era where the Merchant of England and well within the continent of Europe along with the merchants of Mediterranean and Baltic sea used arbitration as a mechanism of dispute settlement. The first statue to enacted for arbitration is England Arbitration Act, 1899 which was later consolidated into the Act of 1950. This Act was adopted by almost all the common wealth of Nations. In USA the statue of arbitration was adopted by the state of New York in the year 1920 later came in to be Federal Arbitration Act, 1925. With the recommendation of American Bar Association the entire country of US enacted the Uniform Arbitration Act of 1955 can Bar Association the entire country of US enacted the Uniform Arbitration Act of 1955. Through this development country emphasis the courts to order the parties to adopt for the alternative method of dispute settlement and not to intervene where voluntary arbitrary clause is present in the parties agreement.

MEANING OF ARBITRATION

The process of Arbitration has not be defined in any statues. Most of the statue concerning arbitration only highlights the procedure and enforceability of the arbitration agreements. To be precise the process of arbitration is that an alternative form of settling a dispute with legal binding nature.

One good definition for Arbitration can be traced back to the case of Collins v Collins, in which Romilly M.R defines arbitration as, ” An arbitration is a reference to the decision of one or more persons, either with or without an umpire, of some matters or matters in difference between the parties”.

In arbitration there is no punishment it is a relief which is awarded to the parties. So there is no jury to act as a catalyst in giving penalty instead there is the arbitrator who understands the disputes with predisposed knowledge regarding the issues and tries to reach out for a solution for the current standing problems.

To be precise, Arbitration is alternative form of dispute settlement that the parties are bound. What makes arbitration deter from mediation and conciliation or negotiation is the legality. Arbitration is backed by a legal process with the expected flexibility whereas there is no clause of legal bound situation in the part of other forms of dispute settlement. In short the arbitration ends a dispute whereas mediation or conciliation only settles the disputes where the party may prefer not to stand to the decision of the mediator or conciliator.

WHY ARBITRATION?

Why does the parties opt for arbitration? Who are the parties to such disputes? How does the parties chose arbitration as form of dispute settlement? All these questions arises commonly about why there should be an alternative remedy when there is a structured judiciary and more. To answer these questions the main objective of Arbitration is speedy remedy. . As we know that general court bound litigations takes years and years to get complete where the parties stands frustrated. There is a greater delay in justice. The arbitration generally eases this procedural system and give away a speedy relief. The parties are usually are business entities who have strain in the business with the other or any disputes in relation with a monetary benefits chose arbitration as an alternative approach.

The commercial form of arbitration is highly common than any other disputes which are actually emerging and arbitration is getting into those areas. When we see into the growth of arbitration in settling the commercial disputes being here is due to the speedy remedy they require for the business promotions. Delay in such judgments could causes a huge impairment in business transaction. Time is an essence of business contracts so mostly the arbitrations are into business agreements.

The parties who desire to chose arbitration as a form of dispute settlement can opt for two method either the parties can include the arbitration clause as their mode of dispute settlement in their commercial contract ex-ante or they can separately draft an arbitration agreement inclusive of procedures and venue of arbitration. Arbitration procedure can be customized which is the prompt reason for the traders and business entities to adopt arbitration rather than litigation.

INTERNATIONAL ARBITRATION

Arbitration process are highly adopted and useful in case of an international dispute settlement. We call it an Investor-State Arbitration or State-State Arbitration. The investor or investment based arbitration settlement is most popular in case of an international scenario.

When a foreign investor or a State wants to invest or to enter into a treaty, their preference of dispute settlement would be Arbitration. The reason is that they do not want get tangled by the nexus of legal procedures of multi-jurisdiction. Arbitration is where the parties are free to make up their procedure and chose an arbitrator who is specialised in their stream of trade and business makes arbitration more cosy and ease for the parties requiring speedy remedy. Another significant development in international arbitration is the enactment of Institutional Arbitration. Arbitration can be processed in two ways either institutional or Ad-hoc. In Adhoc arbitration which was early used, the parties chose their arbitrators on their own and those arbitrators will chose a presiding arbitrator and the dispute gets resolved. On the advent of Institutional arbitration where arbitration agencies are present to help the parties to chose the arbitrators and with the help of panel of arbitrators chosen under the institution made the arbitration more impartial and adhered with neutrality.

The first such institute was proposed by Czar Nicholas II after the first world war in the Paris conference of League of Nations which lead to the creation of Permanent Court of Arbitration, 1899 which happen to settle international disputes of State- State arbitration settlement along with Investor-State Arbitration settlement. They have an administrative office in Hague, Netherland which provides various dispute settlement mechanisms to international community.

Many instruments plays a vital role in development of arbitrational laws in various nations. These instruments include the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) and the United Nations Commission on International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration (the “UNCITRAL Model Law”), to give but a couple of examples. To date, the New York Convention has been ratified by 157 states, and legislation based on the UNCITRAL Model Law has been adopted in a total of 106 jurisdictions in 75 states.

EXPEDIENCY AND EFFICIENCY OF ARBITRATION

More are the efficiency in arbitration than in other forms of dispute settlement. Some of the advantages of arbitration is highlighted in as follows: 

  • Quicker and effective
  • Very long narrative pleading is not required
  • There are no battles in arbitration between the parties
  • No crowded docket
  • The hearing of evidences are perfectly streamlined
  • Award of arbitration has the effect of decree of a court
  • Parties are free to select the forum, the procedures and the arbitrators
  • Hard and fast rules of evidences are not followed 
  • Strict adherence to law is not necessary
  • It can be private and confidentiality maintained
  • The schedule of hearing and scope

The advantages sounds greater and which gives a positive nod for the business enterprises to opt for the arbitration. Delay in justice system in most of the world have made arbitration an on developing mode of speedy justice remedial approach. Arbitration is not too perfect to be left out of criticism there vested a certain amount of disadvantages which everybody have to look into before entering into an arbitrational form of dispute settlement. They are

  • There always exists a pre-trail motion in the court to force the parties into arbitration or· to prove that such arbitration clause pertaining to any controversies exists in the contract entered. All these pre-trails delays the process 
  • Selection of arbitrators is also time consuming
  • Highly cost effective: The arbitrators and the administrative services of the institution are Highly cost effective. The arbitrators and the administrative services of the institution are charging more from the parties. If there is any delay in discovery or if the parties wish for an extensive hearing the charge of arbitration at par increases are charging more from the parties. If there is any delay in discovery or if the parties wish for an extensive hearing the charge of arbitration at par increases.
  • Parties have no right to discovery
  • As there no need to stick to the rules of evidence the arbitrators tend to allow hearsay evidence and also affidavits
  •  The arbitrators doesn’t really required to give the reason for the award given
  • Arbitrators are more likely to reach a compromise rather than ending the dispute
  • Limited rights of appeal and jury proceedings with few exceptional clauses

Though many congeniality exists in arbitration exists, when compared to litigation arbitration stands out best. It is well suited for international cases and well established in the streams of insurance, construction, energy and shipping industry also in financial service.

GENERAL STAGES OF ARBITRATION ARBITRATION IN INDIA

Arbitration is not new phenomenon in Indian culture. The method of arbitration dates backs to ancient times. One form of arbitral practice today is the “panchayat” system. In India, the procedure and process of Arbitration is governed under Arbitration and Conciliation Act, 1966 which is entirely based upon the UNCITRAL model of International arbitration. The alternative method of dispute settlement is budding in India. This major scheme of the Act.

The alternative method of dispute settlement is budding in India. This major scheme of the Act of 1966 is well organised under Part I and II of the Act. The Part I governs all the domestic arbitral awards whereas Part II is confined to the enforcement of International awards. This composite piece of legislation have raised the confidentiality of foreign investors to invest in India and to adopt Alternative Dispute method if any strain in Investment occurs. In order to further develop Arbitration in country there should be a proper governance into the system of Arbitration, proper infrastructure, both physical and human capital, should be provided and the country should promote arbitrational venue for both domestic and International Arbitration.

Supreme court of India indeed played a crucial role in developing arbitration in the country. It has interpreted have also heard cases regard to arbitration. In recent case Vinod Bhaiyalal Jain v Wadhwani Parmeshwari Cold the supreme have set aside a domestic arbitral award on the ground of bias, the arbitrator was acting as a counsel for one of the parties and refused to withdrew. In Imax Corporation v E-City Entertainment concerning the determination of limitation period of enforcement of a foreign award held that the limitation period for enforcing a foreign award would be twelve years from the date of the award.

PROSPECTIVE AND INNOVATION

 The impending era of our world would be into celerity and augmentation in every sphere and in every way. The progression can be invariably highlighted in the field of machine learning and data analysis. Incorporating technology into legal system is more of a creative act. The part of arbitration is one suited mode of legal system where technology can be incorporated. At this moment arbitration is incorporated with technological aspects for a future prospect and high innovation in arbitration that could be highly useful for international community to enhance the usage of arbitrations. The major portion of arbitration is spent in analysis of huge documents of the parties both by the counsel and arbitrators as well. Harnessing the technology of Artificial Intelligence and Machine learning would help to analyze the document more swiftly and accurately. The tools of data analysis can be synchronized to review large documents and even to select perfect arbitrators. These technology can also be used to present evidence with accuracy. These time saving application can be easily employed in arbitrational process which would make arbitration more convenient form of alternative adjudication.

Arbitration has recently entered into other new areas of dispute settlement. This is a positive approach for the future prospect of arbitration. One such area is Intellectual Property Arbitration which is able to settle cross-border Intellectual Property disputes. This has be facilitated by World Intellectual Property Organisation(WIPO) with its Arbitration and Mediation Centres that specifically provides services in settling issues arising out of Intellectual Properties.

Arbitration which is able to settle cross-border Intellectual Property disputes. This has be facilitated by World Intellectual Property Organisation(WIPO) with its Arbitration and Mediation Centres that specifically provides services in settling issues arising out of Intellectual Properties. Certain Industries like pharmaceutical industries solely rely upon patent rights such industries nowadays are adopting Arbitration as their mode of dispute settlement.

Another important scenario where the arbitration have evolved is the Introduction of Summary Dismissal Procedures. The Singapore International Arbitration Centre (SIAC) and the Stockholm Chamber of Commerce (SCC) have adopted this procedure and other countries are keen in adopting the same. The overview of the procedure is ex-ante analysis of a claim. The party may apply for Summary Dismissal claiming that there is no ground for any claim or defences in the case filed or manifestly the case presented has no merit to try under arbitrational tribunal or with an ad hoc arbitration. This ex-ante analysis will determine the case before the hearing which would be able to sway away unruly merits without wasting any money or time on the part of parties as well as arbitrators.

CONCLUSION

“At all events, arbitration is more rational, just and humane than the resort to sword”- Richard Cobden

To conclude, arbitration is a private form of litigation that is more efficient and flexible. The moment one enters into arbitration everything is at par under control and highly confidential. There stands an arbitrator or panel of arbitrators who understands the parties conscious and provides equity rather than penalty. In future, arbitration would have a greater impact in the international community. The parties are at a greater liberty to pick up everything in an arbitration proceedings and very swiftly they attain a merit out of the arbitration

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