ARBITRATION IN INDIA: THE PAST, PRESENT AND THE FUTURE.

Arbitration is a simpler, faster, and neutral dispute resolution mechanism widely utilized as an alternative to escape the inherent delays in judicial proceedings. Since the dawn of time, Arbitration has evolved on the principle of compromise, and gradually over time, the practice of arbitration has become robust and effective with many statutory laws, rules, and institutes enacted worldwide.

ARBITRATION IN INDIA.

India, in the yesteryear, has been uprightly focused on promoting commercial arbitration at a bigger stage. It has been an earnest endeavor of the legislature and the legal fraternity to transform India into a hub for arbitration at the global level. As India emerges as one of the fastest growing economies in the world, it is attracting a lot of global business communities for arbitration, and for India to take a big leap to become an International arbitration hub it has to be at par with the leading international arbitration centers, its practices and mechanisms and also the various statutory laws and rules enacted by different countries and institute evolving around arbitration.

The Indian Government's vision till 2030 is not only to make India the hub for International arbitration but also to make sure that the arbitration system shall remain dynamic, amenable to adopt new and changing practices as well as be aware of the fact that adjudication of disputes by way of arbitration is a time bound practice..  

ARBITRATION IN THE PAST

The statutory laws of Arbitration have their roots in India since the late 18th century and have evolved but the history of India is evident that mutual dispute resolution existed in rich ancient times as well, however, the development and progression of a codified Arbitration law in India started in the late 18th century till 1940 and in between 1940-1995 and post 1995.  

In the year 1772 during the British era, the first codified arbitration law was enacted in India by introducing the Bengal Regulation Act of 1772 followed by the Bombay Regulations Act of 1799 and Madras Regulation Act of 1802 all known as The Indian Arbitration Act, 1899. This only applied to the Presidency towns of Calcutta, Bombay, and Madras. Thereafter, the Code of Civil Procedure, 1908 came into force, and the Second Schedule of the said code provided for the recourse to arbitration, Until the Arbitration Act of 1940 was passed which was predominantly based on the English Arbitration Act of 1934. The Arbitration Act of 1940 consisted of a comprehensive set of rules superseding previous arbitration-related legislation. However, the act only dealt with domestic arbitration while the enforcement of foreign awards was dealt with by the Arbitration (Protocol and Convention) Act, 1937 for the Geneva Convention Awards and the Foreign Awards (Recognition and Enforcement) Act, 1961 for the New York Convention Awards. The act of 1940 also did not prove to be strong legislation as it was not time and cost-effective and did not have proper guidelines for fees and time-bound to conclude disputes although it was in force for more than half a century, there were no strict integrated laws that governed Arbitration in India. The Supreme court in Guru Nanak Foundation v. Rattan Singh, (1981) 4 SCC 634 also remarked ‘how the proceedings under the Arbitration Act, 1940 are conducted and without exception challenged in Courts, has made Lawyers laugh and legal philosophers weep.’

With the introduction of the UNCITRAL Model Law on International Commercial Arbitration, 1985. India needed a more structured mechanism to make arbitration more robust and compatible with the changing times. After the introduction of Liberalization, Privatization, and Globalization of economic structure in 1991 in India, a much-needed comprehensive change in domestic laws of arbitration was need needed to make them at par with the other countries, thus, the Arbitration and Conciliation Act, of 1996("A & C Act 1996") was enacted making provisions for adjudication of domestic arbitration, international arbitration seated in India, enforcement of foreign awards, and the resolution of disputes through conciliation.

ARBITRATION IN THE PRESENT

At present owing to the globalization, industrialization, and development of economies all over the world, commercial disputes have increased rapidly leading to a large number of disputes with an outpaced resolution process.

It was evident to anyone who cared to take a look, that the Indian Arbitration Act required further amendment, clarification, and some reform. The landmark Supreme Court decision in Bharat Aluminum & Company & Ors. v. Kaiser Aluminum Technical Service Inc. & Ors. (2012) 9 SCC 552 spiraled two proposals for amendments to the Act and finally culminated in the 20th Law Commission's Report No. 246 issued in August 2014, with a Supplementary Report in February 2015, on proposed amendments. The Report had a fresh look at the various lacunae in the Act and subsequent court rulings over the years and suggested some long-awaited and critical amendments.

Extensive amendments were brought about by the Arbitration and Conciliation (Amendment) Act, 2015, The 2015 Amendment primarily focused on minimizing judicial interference and provided complete arbitral autonomy. It further demonstrated a clear preference for institutional arbitration by making special allowances in respect thereof, for instance by exempting institutions and arbitrators appointed by them from the fees set out in the Fourth Schedule (presumably on the basis that every institution has its schedule of fees, which is carefully considered and fixed.

The 2019 Amendment firstly amended Section 36 of the A&C Act, 1996 which empowered the court to grant an unconditional stay of the enforcement of an award when a prima facie case of fraud or corruption is made out in the contract or the arbitration agreement or the making of the award and Secondly, it amended Section 43J of the A& C Act, 1996 and instilled specified certain qualifications, experience and accreditation norms for arbitrators in a separate schedule of the Act.

The judiciary has and is also continuously contributing to achieving the said objective by consistently adopting a pro-arbitration stance over the past years and has commonly upheld arbitration agreements despite minor defects. The decisions passed in the recent past are also evidence of a favorable approach of the Indian Judiciary towards improving arbitration in India. From a catena of landmark judgment from Oil & Natural Gas Corporation Ltd vs Saw Pipes Ltd AIR 2003 SC 2629, Phulchand Export Ltd vs OOO Patriotm (2011) 10 SCC 300 to Venture Global Engg. v. Satyam Computer Services Ltd (2010) 8 SCC 660 the judiciary has shown its commitment to enforce arbitration on an international level.

The progressive aspect of the A&C Act, of 1996 did not stop with more than 20 arbitration institutes set up in India in different states with their infrastructure, management, panel of arbitrators, and rules to conduct the arbitration, the goal to promote Institutionalized arbitration and eventually to make India an International arbitration hub is at full swing. Some notable institutions include the Delhi International Arbitration Center, Mumbai Centre for International Arbitration (MCIA), Indian Council of Arbitration (ICA), Gujarat International Maritime Arbitration Center,(GIAC), Hyderbad Arbitration Center,(HIAC) each contributing to efficient and credible dispute resolution in India. 

There is a growing acceptance of institutional arbitrations worldwide and if India has to become a global hub of arbitration it has to adhere to international practice for this harmonious function, the support of the judiciary plays a vital role in aiding the ease of making institutionalized arbitration efficient.

A few statistics of some of the notable Arbitration institutes in India are given below

l The Delhi International Arbitration Centre (DIAC) had 9,707 cases listed for arbitration, and 8153 cases were heard in 2023.

l The Mumbai Centre for International Arbitration (MCIA) has received 83 cases since inception and in 2023 they received 23 new matters out of which 87% were domestic and 13% international and 95 % of this arbitration arose from contracts containing an 'organic' MCIA Arbitration clause.

l The Gujarat International Maritime Arbitration Centre (GIMAC) is conceived as a specialist ADR center established under the auspices of Gujarat Maritime University, with a mission to organize and manage arbitration proceedings in disputes related to the maritime and shipping sector. With envisaged access to experienced arbitrators, legal professionals practicing in maritime & admiralty law as well as professionals and experts from the maritime and shipping sector, the GIMAC intends to shape up the ADR mechanism for quick and effective dispute resolution in the maritime and shipping sector and compete at par with other globally renowned maritime Arbitral institutions.

The government of India has always focused on promoting small sectors and has rightly remarked that “Our aim should be to encourage arbitration for smaller, contractual disputes especially where parties are small or medium-scale business owners”.

To continue with the endeavor to make India an international hub for arbitration, The Ministry of Law and Justice in 2023 with the intent to be on par with the other parts of the world had invited recommendations from stakeholders to improve and reform the overall ecosystem of Arbitration in India.

ARBITRATION IN THE FUTURE

The legal establishment is "no longer at ease here, in the old dispensation it witnessed the birth of new ways of doing things and the death of the old order”.Over the years arbitration in India has improved with the constant effort of the Government and the Judiciary, It is still trying its best to revamp arbitration practice by promoting institutionalized arbitration from ad-hoc arbitration. With the growing involvement of technology and the introduction of Artificial intelligence, e-discovery software, and predictive coding and the constant, disruptive involvement of science and technology in the legal field, the old meticulous methods are being replaced by new efficient, and effective ones.

The COVID-19 pandemic, undoubtedly, was a disaster of epic proportions, but it also proved as a catalyst and paved a new path that brought about a change not only in the field of arbitration but also in the judicial proceedings. It compelled the world to adapt to newer systems that proved more nimble, flexible, and efficient. Online Platforms like Zoom, Google Meet, Microsoft Teams, Skype Meet Now, Webex, and many other video conferencing platforms became an acceptable alternative to in-person depositions, testimonies, and hearings making arbitration or judicial proceedings efficient, convenient, and hassle-free.

As of today, most renowned arbitration centers have already incorporated rules related to virtual hearings of arbitration proceedings.

Looking towards the future of Arbitration in India which is still evolving. Technology is indeed, an 'aid' to the arbitration world, it is an opportunity to make the existing toolkit more efficient and modern for the stakeholders and can enhance the knowledge of legal professionals. With the help of technology and Artificial Intelligence, the parties enjoy a great deal of agency and autonomy which can tailor-make the process in their endeavor to achieve efficiency. The participation of technology has only furthered this endeavor and now three years since the pandemic, virtual hearings have become a mainstay in the arbitration process. This growing use of digitalization in the courtroom or the arbitration process has increased productivity, cost-effectiveness and overall efficiency. International arbitration has become efficient and cost-effective. Promoting and encouraging digitalization is also a step in the direction of embracing ‘green’ and eco-friendly arbitrations, doing away with mountains of paperwork that entail commercial disputes. However, it has its drawbacks with issues relating to data security, cyber-attacks, privacy and confidentiality, lack of technological literacy, higher probability of tutoring or witness deposing online, etc.

CONCLUSION.

Arbitration is expanding and the proceeding is made more efficient with the advancement of technology along the way but despite the world changing and adapting to new technologies, one thing remains true and unchanged is that no matter how advanced technology gets, it can never be a satisfactory substitute of the ‘human mind and touch’.  India is still developing and is yet to do more labour in the field of arbitration to be at par with other international institutes, nevertheless despite the challenges shortcomings and criticism, the practice of arbitration in India is blooming and with a little more push, India, undoubtedly would become one of the leading countries in the field of Arbitration.