Contemporary legal developments in ADR
Authors: Snigdha Shandilya and Pritish Kumar Pattnaik
Designation: 5th year, KIIT School of Law, Bhubaneswar
Contact : +91-79784*****; 94393*****
The rise of ADR was to settle disputes quickly by the third party, which will reduce the burden of pending matters on the court. These third parties were not the state-appointed judges. The disputes were categorized into different types and are referred to as the tribunal suitable for it. Every dispute is separate like land, property, or money, and the person in the conflict also has a different role in each. ADR aimed to bring more efficiency, flexibility, and tailored outcomes with more parties' participation and privacy. ADR includes arbitration, negotiation, and mediation, which has been adopted by most countries like China, Russia, and Africa. The goal is to provide community peace.
Legislative changes at International Level
The countries like Europe saw major revolution and development from going through a trial by ordeal to trial by law. In the late 20th century, the ADR came into role play as a modern way of providing justice because of the expensive formal trials and crowding over the crowd, which resulted in the delay of justice. This concept arose by the US government who established local courts and trained mediators from social workers, lawyers, and psychologists. Nowadays, modern disputes don't have a simple right or wrong answer, making it complicated and raising the demand for creative solutions. This is only possible with specialists leading to different kinds of tribunals.
During the years, many international organizations have also emerged; one such example is of The Iran-US Claims Tribunal. This step was taken by considering that all the disputes cannot be handled in the same way. There has been a significant development in the International Criminal Court for civil and criminal prosecution. They have taken many initiatives to seek apologies, forgiveness, and attempt to heal the past for making better interstate relations with the help of mediation. Negotiation has been used amongst the chain of 200 countries worldwide to negotiate treaties that come under environment protection, health, education, and many more while playing a role in setting up the private and public laws. The most common cross border disputes have been trying to resolve through Arbitration. However, they have to lastly rely on national courts and the powers and enforcement of it.
Recent Legislative changes at National level
The impact of Arbitration has been seen increasing in India, which lead to the opening of the new Arbitration centre at New Delhi on 20th April 2018, named as Nani Palkhivala Arbitration Centre. This was established in Chennai and became the first arbitration centre to provide administration facilities for ad hoc arbitration. This was become the first arbitration forum to have two centres in India. Whereas on the other hand, Mumbai Centre for International Arbitration ("MCIA") provided approx. Two hundred fifty hearings in the year 2018.
With the inauguration of the centre in Delhi, it turns to be India's first arbitration forum having two centres in India. With the recommendation of the Sri Krishna Committee Report and other norms prescribed by the GOI for the Indian Arbitration development. With the support of the Maharashtra Government, it had become an independent platform for Arbitration.
On 10 August 2018, there were some amendments in the Arbitration and conciliation Bill 2018, including framing an Arbitration council body that would act as an independent body for framing policies and developing guidelines. It mainly focuses on encouraging the usage of Arbitration and maintains such awards inside the state and abroad.
The remarkable history of Amendments
The modern Arbitration act got enacted in 1772 by the Bengal Regulation Act and was promulgated with the other names of presidency towns, including Bombay and Madras, later on in 1799 and 1802. The first Indian Arbitration Act was enacted upon the British Arbitration Act, 1889. Meanwhile, the application of this act remained inside the presidency towns. Under this act, the arbitrators' names shall be mentioned in the agreement, and the Arbitrator shall also be a sitting judge in the Arbitral disputes.
It was decided in the case of Gajendra Singh v. Durga Kunwar, that the compromise between the parties shall be considered as the award in the Arbitration.
Meanwhile, it was also observed in the case of
Dinkarrai Lakshmiprasad v. Yeshwantrai Hariprasad that the Indian Arbitration Act, 1889, had complexities, gigantic, and need significant changes and development.
Later on, section 312 to 325 of CPC, 1859 used to deal with the Arbitration, whereas sections 326 and 327 were for providing Arbitration without the interference of any court. Then came the Arbitration Act 1940, which got modified after independence. During this, section 33 of the act that states to decide that the award is nullity remained under controversies. The act also remained silent on individual private arty contracts, and the rules were not similar to the High court. These shortcomings resulted in a massive loss to the parties due to the mala fide act of arbitrators. There was even no provision for the appointment of a new arbitrator if the old one dies, and marginal notes were also not considered the parts of an act.
This contributed to significant flaws in the act, which ultimately gave rise to the Arbitration Act's Enforcement, 1996. Here, the court can pass interim orders under section 9, either during the ongoing arbitral proceedings or before the commencement of the same. The proceedings needed to be started under 90 days after obtaining Interim order from the court, which was also restricted to the court from interfering into the Arbitration process. The amendment also allowed no further application to be entertained by any court if the arbitration proceedings have already commenced.
Later it was observed that the act was not very well-drafted, which gave rise to the second round of Amendment in 2005. This amendment dealt with the distinction between Arbitrators outside and present in India, and words were added in section 2(2).
Another contradiction was related to the language of section 2(4) and 2% concerning the proceedings taking place outside India. This made the distinction between domestic and foreign awards and stated that in the case of Inter-Parte Suits, the interim order should not be maintainable due to the pendency of the foreign states' proceeding.
And that shall not be an element or cause of action any suit for Injunction, which leads to the third round of amendment 2015.
Here, the dilemma arises that whether Part I of the Arbitration and Conciliation Act, 1996, can be applied to foreign arbitrations? Initially, it was examined in the judgment of Bhatia International v. Bulk Trading, The Hon'ble Supreme Court of India had interpreted section 2(2) of the Arbitration and Conciliation Act, 1996, which states that the provisions of arbitration laws shall apply in India. The Hon'ble Supreme Court had compared the statutes with the UNCITRAL Model, which prescribes the provisions of the law shall apply in the Arbitration within the state's territory.
In the case of Bharat Aluminum and Co. v. Kaiser Aluminum and Co., the apex court of India had to reconsider the laws applied in Bhatia International. The constitutional bench of Hon'ble Supreme Court of India had decided that Part 1 of the Arbitration and Conciliation Act, 1996 shall be applicable in the Arbitration takes place within India's territory.
It was stated that the Arbitration in India should stipulate the cases which are out of the scope of judgment for being outside India. The developing countries like India and Pakistan had also agreed upon referring the matter in the Permanent Court of Arbitration for the dispute about the Indus Water Treaty 1960. This move stated the importance of Arbitration globally.
It also stated that the two Indian companies could refer to Arbitration with the governing law for their dispute, outside India. It was held so, as they already consist of some foreign element and expressly choose the governing law as stated under Section 28(1)(b) of the Arbitration and Conciliation Act, 1996 Act. This was a boon as many people were looking forward to starting their business in foreign countries. There was also an addition that even after the arbitration clause's absence in the agreement, the matter can still be referred to Arbitration in the dispute relating to Trust deed and act.
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