Challenges of Arbitration in India

Arbitration is gaining traction in India. With so many conflicts, having a robust arbitration structure is essential for the speedier settlement of issues.

India has a total of 3.53 crore pending cases. Due to this, many people turn to tribunals to resolve their conflicts. Alternative conflict resolution solutions are extremely beneficial and necessary for any organisation, and it assists them in resolving internal disputes at a faster rate than any legal system could.

What Is Arbitration?

Arbitration is a conflict settlement that occurs beyond the courtroom. In arbitration, an impartial person or a group (the arbitrator) evaluates the matter & analyses both parties before passing a verdict on the disagreement. These judgments have legal consequences, and arbitration could only occur when both sides agree to it.

Types of Arbitration In India

 Arbitration can be divided into two categories.

• Ad-hoc arbitration, and 

• Institutional arbitration

The litigants and the judge must decide on the processes for arbitration during ad hoc arbitration. Furthermore, because the arbitration processes are not standardised, ad hoc arbitration might lead to jurisdictional or procedural faults and deficiencies in the ruling. 

Ad-hoc arbitration has an increased chance of judicial intervention. During institutional arbitration, the arbitral proceeding generally has set procedure norms. Arbitration establishments also have competent arbitrators on staff and a panel that reviews all arbitration rulings. Due to this, the chances of a court overturning an arbitration institution’s decision are slim.

Mechanism of Arbitration in India

1. Clause of Arbitration- A contract or provision states that if a disagreement emerges between the participants, adjudication will resolve the matter.

2. Notice of Arbitration- If a disagreement arises or a party chooses to resolve it through adjudication, the person who defaulted against it will issue an arbitration notification, which will initiate the arbitral course of treatment between both sides.

3. Arbitrator Appointment- Each side will designate the arbitrators in a manner stated with a clause of arbitration or relevant provisions after receiving notification from another side.

4. Claim Statements – In India, the next stage in such an arbitration hearing is writing a claim statement. The disagreement between both the litigants, the circumstances that led to the conflict, and the reimbursement sought from the defendant are all included in the counterclaim. The opposite party might respond to the claim statements with a counterclaim. Top arbitration attorneys can help you with the counterclaim in response to the claim statements or defence.

5. Hearing of Parties – The arbitration panel will hear both sides & respective arguments.

6. Award – An arbitration panel will make a ruling after concluding. The court’s ruling is called an ‘Award,’ but it is binding upon the participants. On the other hand, the High Court can hear such arguments against arbitration awards.

7. Award implementation – The judgement must be carried out after the arbitration has approved it. With the assistance of a qualified adjudication attorney, the side that has been awarded must file again for the award’s implementation or compliance.

Issues and Challenges Regarding Arbitration in India

• The expense of arbitral proceedings is high, and the process is slow.

• Arbitration processes are frequently stretched out by attorneys on both sides, making incorrect petitions at different phases.

• Appellants might add to the postponement by refusing to admit failure or victory.

• The judiciary reduced the extent of administrative involvement in Provisions of section 34 of the Arbitration & Conciliation Acts.

• The Authority’s limited ability to overturn an arbitration ruling almost always implies that it would be sustained, though it looks to be unjust or unreasonable.

• Arbitral proceedings are typically done in front of cameras, and verdicts are rarely publicly disclosed, raising questions about neutrality and justice.

• In Guru Nanak Society versus Rattan Singh & Sons, the Supreme Court voiced displeasure with the unnecessary delays and slowness in resolving legal disputes.

• The parties frequently ignore even stipulations allowing for independent arbitrator costs and set resolution deadlines.

• In a sector that depends on legal regulations, inspections, and compliances, noncontingent delays in proceedings related to arbitration can be quite a hassle.

Conclusion

Arbitration has proven to be a blessing in this respect for the Indian judicial structure, which requires a mechanism for dealing with matters languishing in the courtroom. Arbitration settlements are beneficial in lessening the excessive strain placed on the judicial process and in various ways, such as speedier judgement, lower costs, and the ability for litigants to present their terms of service, etc.