Arbitration Act To Speed Proceedings

By asserting that the chief justice is exercising his administrative power in appointing an arbitrator, the Supreme Court last week has attempted to reduce the chances of prolonged litigation over arbitration proceedings.

Though this principle was declared last year in Ador Samla Ltd vs Peekay Holdings Ltd, a new batch of disputes came to the Supreme Court soon after, seeking a review of the doctrine. However, the Apex Court stood by its earlier decision in the latest case, Konkan Railway Corporation Ltd vs Mehul Construction Co.

Under the new Arbitration and Conciliation Act 1996, when the parties fail to agree on the arbitrators, one of them may approach the chief justice who will appoint the arbitrator.

 

If the dispute is domestic, the chief justice of the high court which has the jurisdiction will appoint the arbitrator. If the dispute involves international commercial arbitration, the Chief Justice of India or his designate will appoint the arbitrator.

Two questions were raised in this regard in the latest batch of cases. What is the nature of the order passed by the chief justice? Secondly, if the order is administrative in nature, what is the remedy open to the person concerned if his request for appointment of an arbitrator is turned down by the chief justice or his nominee?

If the order is held to be judicial, it would open the gates of the high court or the Supreme Court to prolonged ligitation. A special leave petition can also be moved. This would lead to further delay in the arbitration proceedings, as such issues take time to be resolved at the apex levels.

The purpose of enacting the new Arbitration Act, replacing the 1940 Act, was to speed up arbitration proceedings, which had become notoriously slow in recent times. The new law provides for greater autonomy in the arbitral process and limits judicial intervention to a narrower sphere than under the previous law.

A challenge to the award could be only on limited grounds like the invalidity of the agreement, want of jurisdiction of the arbitrator, or want of notice on the appointment of the arbitrator. This was in tune with the `Uncitral