Dispute resolution is an anachronism

WITHOUT CONTEMPT

This is hardly the backdrop for India being regarded as an effective jurisdiction for timely and effective enforcement of commercial disputes. Little wonder that the Arbitration and Conciliation Act, 1996 was introduced with the hope that it would speed up resolution of commercial disputes. However, the arbitration bar comprises lawyers from the court litigation ecosystem, and so are arbitral tribunals largely drawn from retired members of the judiciary.

The consequence: an extremely ineffective and ridiculously slow "alternate" dispute redressal system that is hardly a real alternative. Adjournments take place in units of several months and even the basic discipline of court timings falls by the wayside.

If disputes in commercial contracts that have a limited tenure can take years to resolve, one would wonder what the "India story" is all about. That India has attracted investments despite such a sad state of affairs with dispute resolution only goes to underline how much more India could progress if the legal system gets its act together.

It is in this context that a proposal of the government to write a law to carve out a "commercial division" in various high courts has to be appreciated. The proposal entails defining "commercial disputes" as disputes involving transactions of trade and commerce such as those relating to interpretation of mercantile and commercial documents and agreements. It is also proposed to bring in intellectual property disputes within the scope of commercial disputes.

To hear such disputes, it is proposed that every high court would constitute a "commercial division" comprising one or more division benches (benches comprising more than one judge) that would resolve only commercial disputes. While all new commercial disputes would be heard only by such commercial divisions of high courts, all existing and pending proceedings before the high courts relating to commercial disputes would stand transferred to the commercial divisions.

Even disputes pending before lower courts would stand transferred to the high court, provided the value of the subject matter of the dispute is lower than the applicable pecuniary value limit. Every dispute of a value of Rs. 1 crore would automatically go the commercial division, but the chief justices of high courts would be given flexibility to raise the bar subject to the restriction that they cannot draw the line above Rs. 5 crores. In other words, should any dispute have a value of above Rs. 5 crores, they are bound to be heard only by the division benches of the commercial division.

The moving of proceedings to the commercial division courts having exclusive jurisdiction is not the highlight of the proposed law. What is more important is the fast track procedure proposed. While the Code of Civil Procedure would indeed be applicable, the proposed law would entail a special procedure to expedite commercial dispute resolution.

Every plaint in a suit involving a commercial dispute would have to be accompanied by, among others, affidavits of persons providing evidence, a draft of issues likely to arise in the dispute, a list of interrogatories and an application for production and discovery of documents considered necessary, demonstrating the relevance. The defendants would be obliged to file a written statement and a counter-claim, if any, within one month of the receipt of the plaint. Within 15 days of the written statement being filed in response, the plaintiff would have a right to seek permission to file a rejoinder. If permitted, such rejoinder would have to be filed within one month.

The commercial division courts may nominate designated persons as court commissioners to record statements in cross-examination of witnesses