Development of Institutional Arbitration- Can India effectively deal with it?
Author: Priyangi Mohi
Designation: Student, Institute of Law, Nirma University
Institutional arbitration can play a very important role in ensuring a convenient initiation, continuation and completion of arbitral proceedings mostly at today’s time when everything has gone digital. There were many efforts made in the past which has given an edge to institutional arbitration. Institutional arbitration has many advantages other than that are provided by ad-hoc arbitration. As it not only provides procedural rules on the basis of which arbitration takes place but also general administration. The need has been realized for strengthening institutional arbitration in a digital world.
Recent development of Institutional Arbitration
A research was conducted by the Chartered Institution in 2011 which provided with the data that 62% of arbitrators are institutional arbitrators all over the world. In 2013 another research was conducted in India by Pricewate house coopers which showed that only 40 % of arbitrators in India were Institutional arbitrators. Although the instances where institutional arbitration are preferred in India are increasing as for instance in 2014 India stood on third position in number of cases that were filed by foreign parties in Singapore International Arbitration Centre (SIAC).And then in 2019 India has become the top users of SIAC.
In July 2017, a high level committee that was chaired by Justice Srikrishna that was established for the purposes to review institutional arbitration in India and the report suggested regarding establishment of Arbitration Promotion Council of India (APCI) as an autonomous body for grading arbitral institutions. Then in 2019 when the Arbitration and Conciliation Act was amended with the aim to strengthen he institutional arbitration. A new chapter was also set up in the act for setting up the Arbitration Council of India which would grade arbitral institutions through their framed policy and promote institutional arbitration in India.
The need behind strengthening institutional arbitration has gained attention in recent times when there is lockdown and travel restrictions due to spread of COVID-19 and arbitral tribunals and bodies have reacted quickly by strengthening its capability to incorporate efficient virtual hearings and e- filings. Institutional arbitration has many benefits in today’s digital time because as institution arbitration provides for remote case management systems and many institutions have already established a platform for virtual hearing and e- filing and for payment. These institutions have put forward structural guidance for virtual hearings including introducing or providing service providers who conducts test runs in order to ensure smooth functioning of such hearing. Virtual arbitrators which are monitored by such institutions are both cost efficient and saves time.
Steps that should be taken to make Institutional Arbitration a success in India
In order to boost institutional arbitration first, the shortcomings should be recognized and steps shall be taken for their removal. Some of the major problems in the field of institutional arbitration is that timely arbitration proceedings do not happen and when luckily it takes place ample opportunities are given to parties to approach courts which could intervene in the proceedings. The arbitrators are charging very hefty fees so much so that the parties are unable to afford it. Although step was taken through The Arbitration and Conciliation Act, 2015 by fixing fees and time line for the arbitration procedure but again the courts have been given the power to intervene to investigate about the responsible agent causing the delay. High Court has the power to make rules for fees and manner in which payment is done which would lead to lack of uniformity in arbitral proceedings across India. Arbitration in India can only grow when Institutional arbitration are promoted.
As the quality of arbitration proceedings are largely dependent on the skills and quality of arbitrators and courts are not having adequate expertise in appointing them. It is better that the role of assigning is given to arbitral institutions so that there is no same specific set of roster of judges who would decide on such application. Secondly time problem can be tackled by promoting institutional arbitration where proceedings are carried on daily basis and it would prevent backlog of cases and it would help in preventing delay. Institutional arbitration can also solve the issue of high fees by fixing a fees schedule that would negate any space for ambiguity.
Regarding finality of the decision given by arbitrators in institutional arbitrators are concerned, steps shall be taken where the order passed can only be appealed to Registrar/ President(Head) of the institutions which would almost negate the parties to approach courts apart from the situation where the arbitration agreement provides for court’s intervention. Institutional arbitration can only be attractive hub for the foreign parties when judiciary is supportive of arbitration. The concept of indemnity cost rule can also be introduced which would serve as strong incentive for parties. The resources and infrastructure which assist the proceedings can also be boosted. In order to invite worldwide participation Institution should be given opportunities and ample resources to participate at International conferences on arbitration. It would encourage foreign parties to arbitrate in India as well as enrich bilateral relationship with other International Arbitral Institutions. The benefits of Institutional arbitration has been realized in today’s digital time and it has become the need of hour and for the correct implementation it is necessary that all the problems are resolved.
The setup of institutional arbitration should be developed in India as there are major advantages over ad- hoc arbitration like there are predetermined arbitration procedure, the rules have already been updated as per the latest development, there are efficient panel of professional and arbitrators for support, suited infrastructure that is well built. And the institutional arbitration would only grow when there is efficient governance, adequate support is given from government, support from the legislature in building arbitration jurisdiction and less interference by the judicial bodies in order to preserve the sanctity of institution and autonomy of parties.
[i] Vyapak Desai & Bhavana Sunder, Institutional Arbitration & The future, LEGAL MEDIA GROUP) https://www.nishithdesai.com/fileadmin/user_upload/pdfs/NDA%20In%20The%20Media/News%20Articles/200918_A_Institutional_arbitration_and_The_Future.PDF. [ii] CIArb Costs of International Arbitration Survey 2011, CIARB, https://www.international-arbitration-attorney.com/wp-content/uploads/2017/01/CIArb-Cost-of-International-Arbitration-Survey. [iii] Corporate Attitudes & Practices towards Arbitration in India, 2013, PRICEWATERHOUSECOOPERS, https://www.pwc.in/assets/pdfs/publications/2013/corporate-attributes-and-practicestowards-arbitration-in-india.pdf. [iv] 3 SIAC Annual Report 2014, SIAC (2014) https://www.siac.org.sg/images/stories/articles/annual_report/SIAC_Annual_Report_2014.pdf . [v] SIAC Annual Report, 2019, SIAC (2019) https://www.siac.org.sg/images/stories/articles/annual_report/SIAC%20AR_FA-Final-Online%20(30%20June%202020).pdf [vi] 6 Report of the High Level Committee to Review the Institutionalization of Arbitration Mechanism in India, (July 2017) http://legalaff airs.gov.in/sites/default/fi les/Report-HLC [vii] The Arbitration and Conciliation (Amendment) Bill, 2019, PRS LEGISLATIVE RESEARCH https://prsindia.org/billtrack/the-arbitration-and-conciliation-amendment-bill-2019#:~:text=The%20Arbitration%20and%20Conciliation%20(Amendment)%20Bill%2C%202019%20was%20introduced,%2C%20on%20July%2015%2C%202019.&text=The%20Act%20contains%20provisions%20to,law%20for%20conducting%20conciliation%20proceedings. [viii] Supra note 1, at 1. [ix] Adv. Shijo George, What India needs to do to make Institutional Arbitration Success in India? ,INDIAN NATIONAL BAR ASSOSIATION https://www.indianbarassociation.org/what-india-needs-to-do-to-make-institutional-arbitration-success-in-india/. [x] Mridul Godha, Kartikey M. The New-Found Emphasis on Institutional Arbitration in India, KLUWER ARBITRATION BLOG (Jan 7, 2018) http://arbitrationblog.kluwerarbitration.com/2018/01/07/uncitral-technical-notes-online-dispute-resolution-paper-tiger-game-changer/. [xi] PRS Legislative Research, (Feb. 9, 2018) http://www.prsindia.org/billtrack/the-new-delhi-international-arbitration-centre-bill-2018-5036/