Arbitrary Arbitration
One of my favourite quotes is the following: The way in which the proceedings under the Act are conducted and without exception challenged in courts has made lawyers laugh and legal philosophers weep. Experience shows and law reports bear testimony that the proceedings under the Act have become highly technical, accompanied by unending prolixity at every stage, providing a legal trap to the unwary. An informal forum chosen by the parties for expeditious disposal of their disputes has by the decisions of the courts been clothed with legalese of unforeseen complexity. This was the Supreme Court of India, commenting on the state of arbitration in Guru Nanak Foundation vs Rattan Singh & Sons (1981).
We have an estimated 25 million cases pending in various courts. On an average, it takes 20 years for disputes to be resolved. Longer, if land is at stake. No matter how much of statutory reform is carried out, the legal system will not be credible until speed of dispute resolution is improved and this can be accomplished in various ways, some of which involve reducing demand for court cases. If there is a dispute, it need not always be taken to courts for adjudication. Conciliation, mediation and arbitration are other avenues. However, despite the Arbitration Act of 1940, this route never really took off. In a generic sense, this was because arbitration was never freed from the apron strings of courts.
We now have the Arbitration and Conciliation Act of 1996, designed to make arbitration more efficient. This book is about arbitration and the 1940 and 1996 statutes. It also incorporates related items like Hague Rules, INCO terms, Paris Rules and model forms of arbitration.
What were the reasons for arbitration failing earlier? One can't do better than to quote selectively from a beautiful introduction to the book (reproduced from an address to the Inter-pacific Bar Association Conference on Business and Law) written by Fali Nariman. Alternative Dispute Resolution is not ingrained in us it is a new graft like a new Heart or a new Kidney; like the human body the body politic looks for an opening to reject it. During two centuries of British rule in India all of us were brought up on the milk of Anglo-Saxon jurisprudence and Anglo-Saxon jurisprudence simply abhorred resolution of disputes outside His Majestys Courts..... This has been in our psyche ever since the Contract Act, 1872, was drafted. Section 28 of that century old law completely barred alternate dispute resolution: it only just about tolerated arbitration....It as because of this that the traditional attitude of Courts towards arbitration had always been paternalistic almost school masterly.... Although Indian law
favours dispute-resolution by arbitration, Indian sentiment, abhors the finality attaching to arbitral awards and a substantial volume of Indian Case law bears testimony to the long and arduous struggle to be freed from binding arbitral decisions.
Will the 1996 statute, modelled on United Nations Commission of International Trade Law principles, improve matters? The book is optimistic, but Fali Nariman remains sceptical. The new version makes arbitration more independent of courts and systems become less open-ended. But I have personally felt uncomfortable with the drafting of several sections of the new statute. Let me cite a couple of examples from Section 34, both concerning applications for setting aside an arbitral award. First, an award can be challenged if it is in conflict with the public policy of India. Since no one knows what the countrys public policy is, this implies that any award can be challenged. Second, an award can be challenged if the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case. Otherwise unable is a vague and subjective expression, capable of varying interpretations. Nevertheless, compared to what happened earlier, there have been improvements.
What about the book? Its useful. Its a lawyers book. As is customary with several such tomes, the English is bad and the text is littered with typing and proof reading mistakes, even in quotes. However, a necessary addition to the library if you are interested in the law of arbitration.