Fast Track Arbitration

Fast Track Arbitration

Author: Vaishnavi Dandotikar, ICFAI Law School, Hyderabad

In India, the Supreme Court is at the top of the judicial setup. It, along with the High Courts, is supposed to be the watchdog of the citizen’s rights. All the provisions for the smooth functioning of the courts are mentioned in parts V and VI of the Constitution. 

Over time due to the overburdening of courts, the Judiciary was forced to look into alternative modes of dispute resolution to effectively carry out its duty. The Courts could simply no longer keep up with the steady inflow of suits filed by the citizens. This created a huge backlog and the time taken to grant justice had increased exponentially. 

The Indian Judicial System had recognized that it could no longer deliver its main duty; that the common man had to struggle for years to get justice. For this reason, the Indian Judiciary in cooperation with the Indian Government decided to introduce various modes using which the masses could champion justice. 

Historical Overview – 

Throughout history, instances of alternative modes of dispute resolution can be found in India. The local rulers incorporated this methodology into their system of governance so as to decrease the burden on the main courts of their territory. 

Among the Aryans in ancient India, the system of dispute resolution was a well-planned one. They had several bodies to resolve any issue which might arise between two kinsmen. Colebrooke, an English Scholar and a Commentator on Ancient Hindu Law point out that the decisions of the Kula could be revised by the Sreni and the decisions of the Sreni could be revised by the Puga. This system empowered the people to resolve the disputes on their own before approaching the local prince for a settlement. 

Under the Gupta Kings, at the lowest level of the judicial set up existed a guild or a village assembly. It was the main objective of this assembly to resolve the disputes between the parties and to help them in arriving at an amicable settlement. 

Under the Mughal rulers, the villagers would settle the dispute among themselves. If the dispute could not be resolved then, the parties to the dispute could approach the panchayat for further adjudication. This system was in accordance with the aim of the Emperor to provide justice to each and every one of his subjects. 

The Maratha Judicial system took inspiration from the ancient Hindu texts. The parties to the dispute had to sign an agreement stating that they will obey the rules of arbitration. Then, the dispute would be resolved with the help of a panchayat. 

With the advent of British rule in India, the pre-established judicial system which was followed by the various dynasties of India was slowly being replaced by the British Legal System which relied on courts for everything. The British with the help of the Bengal Resolutions aimed to introduce arbitration as a viable mode of dispute resolution. 

In 1899, they passed the Indian Arbitration Act. It was the first act of its kind in India. The first piece of formal legislation laid down arbitration provisions. It was later amended in 1940 to better suit the needs of British India. 

The Constitution of the Republic of India in accordance with its Gandhian values places a lot of importance on the system of Panchayats. It also introduced the concept of Lok Addalats which operated as bodies that the common man could approach for quicker dispute resolution. The Government replaced the old Arbitration Act with the new Arbitration and Conciliation Act in 1996. This new piece of legislation is one of the most important statutory provisions for alternative modes of dispute resolution in modern India. 

Current provisions – 

The Arbitration and Conciliation Act under section 2(a), defines arbitration as – 

“arbitration whether or not administered by permanent arbitral institution;”

The act enables the parties to the dispute to avail modes of settlement that fall outside the jurisdiction of the court. The parties may enter into an arbitration agreement as mentioned under section 7 of the act. The section states that – 

“7. Arbitration agreement.—(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

 (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. 

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in— (a) a document signed by the parties; (b) exchange of letters, telex, telegrams or other means of telecommunication 1 [including communication through electronic means] which provide a record of the agreement; or 1. Ins. by Act 3 of 2016, s. 3 (w. e. f. 23-10-2015). 8 (c) an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.”

This is to say that the parties can either enter into a contract or they can enter into another agreement which enables the aggrieved party to get their issue resolved through arbitration. Such an agreement or a contract must be in writing. 

Under section 8 of the Act, the Judicial authority can direct parties to arbitration if they are of the belief that this methodology will help the parties resolve their dispute in a more equitable and peaceful manner.

Chapter III of the Act lists the provisions for the composition of an arbitration tribunal. The tribunal will act as the neutral third party who will guide the parties to the dispute and grant them an arbitral award at the end of the process. 

Under section 10 (1), the parties are free to appoint any number of arbitrators as they like. One thing they must make sure of is that the number should not be even. If the parties fail to fulfill the guidelines laid down in subclause 1, then the tribunal shall have only one arbitrator in accordance with section 10 (2) of the Act.

One important feature of arbitration as mentioned under section 19, the parties are not bound by the provisions of the Civil Procedure Code and the Indian Evidence Act. This gives them the autonomy and the freedom to fine-tune the entire procedure in accordance with their needs. According to subclause 4 of the same section, “the arbitral tribunal has the power to determine the admissibility, relevance, materiality, and weight of any evidence.”

Section 29 B of the Act provides for fast track arbitration. It states that – 

1. The arbitration procedure shall be wrapped up in six months from the time of the beginning of the procedure. 
2. The procedure shall not have any oral arguments. Everything will be done in written pleading so as to save time.
3. An oral hearing will only take place if the parties make a special request for one. 

These measures were introduced based on the recommendations made by the 246th Law Commission report. This was done to reduce the time taken by arbitration panels to give an award. Sub-clause 6 of the aforementioned section states that if the award is not granted within six months, the arbitrator’s salary shall be reduced by five percent every month. 

According to section 35 of the Act, the award granted by the tribunal shall be binding on both parties. If the parties want to appeal, they can do so to the appropriate court under section 37 of the Act. 

Conclusion – 

The main objective of introducing the arbitration system in India was to help the courts and the people. It was supposed to be a way for the masses to acquire justice more speedily. When the process which was supposed to be fast itself became time-consuming, the government had no choice but to introduce further provisions which will help those in need. Even the arbitration process had started to become heavy on the pocket and long, the introduction of provisions under section 29 B was the manna for those in need.  

References – 

1. Naresh Lata Singla, “Speedy justice and alternative disputes redressal”, 2012, Punjabi University. 
2. The Judiciary, available at – https://legalaffairs.gov.in/sites/default/files/chapter%207.pdf. 
3. The Arbitration and Conciliation Act, 1996, s. 2(a), 7, 8, 10, 19, 29B, 35, 37.