ADVANCING COMMERCIAL DISPUTE RESOLUTION: THE INDIAN ARBITRATION INSIGHTS WITH RESPECT TO SINGAPORE.
The Singapore International center for arbitration is one of the leading international arbitration centers in the world, It is the mostly favored arbitration institute by companies for its competitive cost, efficient adjudication in a very time constrained manner. This article highlights the advancements made in the field of commercial dispute resolution in India over the years, its drawbacks and the Indian law ministry's endeavor to improve and adjudicate commercial disputes and how India can proceed further given the country's rapid improvements in the global market and on the path to become the fifth largest economy in the world. India at present is not geographically distant to the world and the endeavor should remain the same with respect to choosing India as a favored place for arbitration like Singapore.
ADVANCEMENST IN TECHNOLOGY IN THE LEGAL FIELD IN LAST FEW YEARS IN INDIA.
l Online service of summons
The Supreme Court of India in Central Electricity Regulatory Commission v. National Hydroelectric Power Corporation Ltd 2012 had issued directions for effecting service through emails. Many of us know Justice G. S. Patel’s observations in Kross Television India Pvt Ltd & Anr Vs. Vikhyat Chitra Production & Ors 2017. The Justice held that the purpose of service is to put the other party to notice. Where an alternative mode (email and WhatsApp) is used and service is shown to be effected and acknowledged, it cannot be suggested that there was ‘no notice’.
In Cognizance limitation Cognizance for Extension of Limitation, Suo Motu Writ (Civil) No. 3 of 2020 the Supreme court took note of the difficulties for physical service of summons on account of lockdown and COVID-19 pandemic, the Supreme Court further allowed the service of notices, summons and pleadings etc via email, FAX, tele- messenger services such as Whatsapp, Telegram, Signal etc. The CJI observed "It has been brought to our notice that it was not possible to visit post offices for services of notices, summons, pleadings. Such service of all the above may be done through email, fax and other instant messenger services like Whatsapp and other telephone messenger services".
The Delhi High Court in Tata Sons Ltd & Ors. Vs. John Doe(s) & Ors 2016, allowed the Plaintiff to serve the summons on one of the Defendants through WhatsApp, text message, and email, and to file an affidavit of service. Justice G. S. Patel in SBI Cards & Payments Services Pvt. Ltd. v. Rohidas Jadhav 2018 reiterated the stance by accepting the service of notice through WhatsApp after finding that the notice served was not only delivered but the attachment was opened as well.
The Supreme Court in Indian Bank Association & Ors vs Union Of India & Anr and the Bombay High Court in Ksl and Industries Ltd., Vs Mannalal Khandelwal and the State of Maharashtra permitted service through emails.
ODR: Online dispute resolution
“ODR is the resolution of disputes, particularly small- and medium-value cases, using digital technology and techniques of alternate dispute resolution (ADR).
The pandemic has served as a catalyst in making parties rely through online modes of resolutions. Online Tools like Email became modern method for communication among the tribunal and the parties for filings, applications, notices and etc. Hearings by video conference through more nimble, synergetic, and efficient systems like Zoom, Google Meet, Microsoft Teams, Skype Meet Now, Webex and many other video teleconferencing platforms became an acceptable alternative to in-person depositions, courtroom testimonies and motion hearings.
ODR follows the Information Technology Act, 2000, as well as the Arbitration and Conciliation Act, 1996. The IT Act enumerates that electronic records and signatures can be introduced as evidence and given legal recognition under the Indian legal system ( S. 4, 5 & 65-B of Evidence Act). In State of Maharashtra vs. Dr. Praful B. Desai (2003 4 SCC 601), the Supreme Court acknowledged the use of video conferencing to record witness statements. Therefore, the submissions and the proceedings can take place online. .
The NITI Aayog had constituted a high level committee in June 2020 under the chairmanship of Justice A K Sikri, Retired Judge, Supreme Court of India to develop an action plan that can aid in mainstreaming ODR and thus promote access to justice through ODR. The report recommends measures at three levels to tackle challenges in adopting ODR framework in India. (i) At the structural level, it suggests actions to increase digital literacy, improve access to digital infrastructure and train professionals as neutrals to deliver ODR services. (ii) At the behavioral level, the report recommends adoption of ODR to address disputes involving Government departments and ministries. (iii) At the regulatory level, the report recommends a soft-touch approach to regulate ODR platforms and services. This involves laying down design and ethical principles to guide ODR service providers to self-regulate while fostering growth and innovations in the ecosystem.
There have been instances where the parties have decided upon arbitration through emails Shakti Bhog Foods Ltd. V. Kola Shipping Ltd., (2009), Trimex International FZE Ltd. v. Vedanta Aluminium Ltd. (2010). In Grid Corporation of Orissa Ltd. vs. AES Corporation (2002), the Supreme Court explicitly mentions that : “when an effective consultation can be achieved by resort to electronic media and remote conferencing, it is not necessary that the two persons required to act in consultation with each other must necessarily sit together at one place unless it is the requirement of law or of the ruling contract between the parties”
1. WHY IS SIAC FAVOURED ?
l Singapore has established its reputation as a transparent, independent, and neutral third-country venue for dispute resolution: Singapore is ranked 17th globally, and it is the top-ranked Asian country, in the World Justice Project’s Rule of Law Index 2021—affirmation of Singapore’s adherence to the principles of accountability, just law, open government, and accessible and impartial justice and is ranked fourth globally, and is the top-ranked Asian country, in the Corruption Perceptions Index 2021.
l Convenience and connectivity: Singapore is closer to India than the other established arbitration venues in Europe. It also boasts a stable and open economy, a useful Double Tax Treaty with India and excellent flight connectivity within the region and internationally.
i. Singapore arbitration awards are enforceable in India and also 140 over countries worldwide that have signed up to the New York Convention of 1958 on the enforcement of arbitration awards.
ii. India is one of the largest and most dynamic economies in the world. In addition to Singapore, many of India’s top Asian trading partners such as China, Indonesia, South Korea, Malaysia and Japan are amongst SIAC’s leading foreign users.
l Indian users have contributed significantly to the success of SIAC. Over the past five years, Indian parties have consistently been one of SIAC’s top three foreign users, and were the top foreign user in 2013, 2015 and 2016, 2017, 2019, 2020, 2021, 2022.
l The number of Indian parties at SIAC also increased by more than 50 percent over the years. Their presence at SIAC stands to increase given the rapid pace of India’s industrial and trade growth.
2. ADVANCEMENT OF INSTITUTIONALISED ARBITRATION IN INDIA MAKING IT AN INTERNATIONAL HUB LIKE SIAC
· Ad hoc arbitration in India riddled with problems: delayed proceedings (average duration of cases before a sole arbitrator tribunal was 13.0 months while the median duration was 11.3 months. For cases before a three-member tribunal, the average duration was 15.3 months and the median duration was 11.7 months.), unprofessional arbitrators, poor quality of awards, appointment of retired judges excessive court intervention at all stages of the arbitration proceedings, overemphasis on strict adherence of legal procedures and moving applications for the smallest of requests, completing cross examination in 1-2 hearings involving hundreds of disputed documents.
· Indian institutions that administer arbitrations: Indian Council of Arbitration (“ICA”), the Delhi International Arbitration Centre (“DAC”), the Mumbai Centre for International Arbitration (“MCIA”). Many of these institutions have their own sets of arbitral rules, panels of arbitrators, and offer venues for conducting arbitral proceedings. They offer varying degrees of administrative support for arbitrations.
l As India emerges as an economic power, it is also attracting the global business community for arbitration and if India has to become a global hub of arbitration, we have to be at par with the international practice and laws, and will have to win the confidence of all stakeholders by:
u By promoting Indian arbitration institution on an international level.
u By offering opportunities for settlement similar to litigation in order to remain a competitive method of dispute resolution with increased transparency.
u By Improving the diversity of the pool of candidates and setting benchmarks and collecting data on progress and publishing, and aggregating data to help promote transparency about the state of diversity and facilitate improvements.
l The Indian Govt has also E-Court Phase III project with a budget of Rs. 7 thousand Crores for building Digital & Paperless Courts that aim to bring court proceedings under a digital format in a court, thereby, limiting the use of paper and speeding up the disposal of cases, Digitization of all court records will further pave the way for a completely paperless environment in future.
3. IMPROVEMENTS NEEDED TO MAKE INDIA AN INTERNATIONAL ARBITRATION HUB.
To make India an International hub for commercial arbitration, India has to tackle a lot of domestic challenges like:
n Arbitration Should be made mandatory and not voluntary. Justice Hima Kholi emphasized on ‘Making ODR or ADR voluntary may defeat the purpose. It should be made mandatory [for specified categories], and it should cover about three [sessions] so that parties don’t feel that it’s a mere formality
n Promote Institutionalized arbitration in India with respect to commercial disputes: The government should work to promote Institutionalized arbitration and should be made mandatory where the Government is a party to arbitral proceedings. There should be mandatory reference of disputes over INR 5,00,00,000 (INR 5 crores) to institutional arbitration.
n Changes in arbitration culture : there must be changes to arbitration culture in India. It was suggested that there be training and awareness program relating to arbitration law and practice through bodies such as the CIArb. Additionally, costs must be imposed on parties who delay the progress of Arbitral proceedings etc
n Change in Mindset: The Then Chief justice of India, Justice D.Y Chandrachud has also emphasized that there must be a fundamental change in mindset and to not to view dispute resolution as a relatable place like a court where justice is administered but as a service that is availed of.
n Increased accessibility: Institutional infrastructure, management, panel of the arbitrators and rules to conduct the arbitration. Geographically accessible, Connecting with beneficiaries and adapting to change Future of an institution depends on its connecting with those who have to implement its objectives and end user. Whenever I interact with a CA or CS institution they always have a question as to when they would get a chance to become arbitrators. This culture of arbitration inadvertently becoming an imitation of a courtroom, because of the arbitrators being former judges despite there being no such legal obligation needs an overhaul. There needs to be a change in the temperaments and outlook of the arbitrators. More young Arbitrators should be encouraged, more arbitrators should be trained and more preference should be given to arbitrators who have expertise in the disputed subjected matter.
n Minimalized Judicial intervention - There has been growing concern about the judicial intervention at the time of referring to arbitration or during the arbitration proceedings. Despite many amendments and precedents, judicial intervention in Arbitral proceedings still cannot be kept on check. The Arbitration amendment draft of 2024 as proposed many changes in arbitration proceeding which may prove to be a bane towards the furtherance of arbitration in India.
Arbitration Institutions of India statistics
l The Delhi International Arbitration Centre(DIAC) since 2019 has shoen remarkable improvements in adjudicating arbitration and is helping India emerge as an attractive destination for arbitration at the global level. The number of administered arbitration cases registered by the Centre has grown steadily over the past five years, marking an increased interest in the Centre as a neutral forum for the resolution of commercial disputes from parties doing business in and through the MEASA region. In 2023, A total of 355 cases was registered (up from 340 in 2022, representing an increase of 4.4%), broken down as 323 administered arbitrations (up from 292 in 2022, representing an increase of 11%).
l The Mumbai Center for International Arbitration has also seen a 20% growth in the total number of cases administered under the MCIA Rules. They have administered many domestic and international cases since inception in 2018 with 93% time frame completion timeline received. The center reported 24 fresh cases in 2023 and an average of 2 new case filings every month totaling to 83 cases administered since inception.
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 the experienced arbitrators, legal professionals practicing in the 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.
l The Indian Council of Arbitration is not only the leading Arbitral institution in India but also one of the most important arbitration centers in Asia Pacific that handles more than 400 domestic and international arbitration cases each year.
4. PROCEDURAL DIFFERENCE BETWEEN INDIAN ARBITRATION ACT AND SIAC.
Indian Arbitration Act: Arbitration and Conciliation Act, 1996 | Singapore International Arbitration Act, 1994 | Singapore International Arbitration Rules, 2016 |
APPLICATION FOR APPOINTMENT OF ARBITRATORS | ||
l India The appointment of Arbitrators in India is governed by Section 11 of the Indian Act, An Application under section 11(6) is filed before the concerned court for the appointment of an Arbitrator. Sec 11 (6) mandates the court to examine the existence of an Arbitration agreement but since the Arbitration and Conciliation on act does not set any time bounds for the court to decide an application under sec 11(6) and with courts being overburdened with section 11 (6) applications pending for over more than a year with no proper mechanism to address it. The delay caused by the judicial intervention just to form an Arbitral Tribunal affects the very essence of a speedy resolution process. In M/s Shree Vishnu Constructions v. The Engineer in Chief, Military Engineering Service & Ors (2023)it was noted that several applications under section 11 were decided and disposed of after a period of four years which defeated the very purpose of the amended Arbitration Act,1996. Such observation was made on a detailed report/statement on the number of pending section 11 applications before the Telangana High Court. The apex court also noticed that even an application filed in the year 2006 was still pending. It further noted that all efforts must be made by High Courts to dispose of such applications ‘at the earliest and preferably within a period of six months from the date of filing of the applications’. | l Singapore (1) Default Appointments Sections 9 and 9A of the Singapore IAA set out the basic guidelines for the appointment of arbitrators in international arbitrators in the absence of an agreement between parties on this matter. While parties are a liberty to determine the number of arbitrators hearing their dispute (usually one or three arbitrators), where there is no such determination or agreement, the appointment must be made, upon the request of a party, by the appointing authority.
| l SIAC Article 7 of the Singapore International Arbitration Centre (SIAC) Rules states that the Appointing Authority or the Chairman shall appoint the arbitrator as soon as practicable if the concerned parties fail to appoint a sole arbitrator or the two arbitrator fail to appoint a third arbitrator with in 14 days. All these rules emphasizes on party approval first before finalizing the appointment of an arbitrator or panel of arbitrators with the help of the court or an authority. What is common in the above rules is that their commitment to the timely appointment of arbitrators with the maximum possible involvement of the disputing parties in the process contrary to what the Indian law of Arbitration mandates. |
APPLICATION FOR CHALLENGING/ENFORCEMENT OF THE AWARD.. | ||
l India In India the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 recourse of court against arbitral award may be made only by an application for setting aside such award for the conditions under the section within a period of 1 year from the date in which notice in sub section (5)[12] is served upon the other party. | l Singapore (1) Domestic International Awards: the recognition and enforcement of Singapore seated domestic and international arbitrations are governed by the Singapore AA and Part II of the Singapore IAA respectively. An application under Section 19 of the Singapore IAA to enforce a domestic international award can be made pursuant to Order 69A rule 6 of the Singapore Rules of Court. A party may therefore challenge an arbitral award in this manner, or take a more proactive approach by making an application to set aside the arbitral award without waiting for the other party to attempt to enforce it.
| l SIAC According to the SIAC Rules Subject to Rule 33 and Schedule 1, by agreeing to arbitration under these Rules, the parties agree that any Award shall be final and binding on the parties from the date it is made, and undertake to carry out the Award immediately and without delay. The parties also irrevocably waive their rights to any form of appeal, review or recourse to any State court or other judicial authority with respect to such Award insofar as such waiver may be validly made. |
Legal requirements relating to form and content of arbitration agreement | ||
In India, there is no legal requirement as to the form and content of an arbitration agreement. It may be even contained in an exchange of letters or any other means of telecommunication, which provides a record of the agreement, including communication through electronic means. The agreement need not be signed but it must be in writing. | In Singapore, the definition of an arbitration agreement under the AA and IAA has been broadened via legislative amendments in 2012, to include arbitration agreements concluded by any means (orally, by conduct or otherwise), so long as such agreement is subsequently recorded. This is in line with option I of Article 7 of the 2006 Amendments to the Model Law. In addition, an arbitration agreement is deemed by law ‘where in any arbitral or legal proceedings, a party asserts the existence of an arbitration agreement in a pleading, statement of case or any other document in circumstances in which the assertion calls for a reply and the assertion is not denied’ under both the IAA and the AA.
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Arbitrability. | ||
The Indian Act recognizes the principle of non-arbitrability. It is an express ground for setting aside an arbitral award (‘the subject matter of the dispute is not capable of settlement by arbitration’). The Act, however, nowhere defines what is considered to be non-arbitrable. In India, prior to the 2015 Amendment, a court could at the reference stage go into the issue of arbitrability and decline reference if it found the dispute to be not arbitrable. The position now stands changed. Section 8 (1) of the Act is amended and also the insertion of Section 11 (6A) which provides that a court while appointing an arbitrator under Section 11 of the Act “shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” Hence the issue of arbitrability is to be examined by the tribunal and it is its call to treat it as a preliminary issue or no |
In Singapore, both the IAA and AA recognize that any dispute is generally arbitrable in Singapore, unless an arbitration of such dispute is contrary to the public policy of Singapore or ‘not capable of settlement by arbitration’. In Tomolugen Holdings Ltd v Silica Investors Ltd [2015] SGCA 57, that minority oppression claims were generally arbitrable. In L Capital Jones Ltd and another v Maniach Pte Ltd [2017] SGCA 03, the Singapore Court of Appeal confirmed that minority oppression claims were generally arbitrable but held that, on the facts of the case, a majority shareholder of a joint venture company had taken a ‘step’ in the court proceedings notwithstanding that it was the joint venture company that took out the actual striking out application.
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In SIAC rules as per rule 1 an arbitration agreement is Where the parties have agreed to refer their disputes to SIAC for arbitration or to arbitration in accordance with the SIAC Rules, the parties shall be deemed to have agreed that the arbitration shall be conducted pursuant to and administered by SIAC in accordance with these Rules |
CONCLUSION.
To match up the standard of this globally recognized and approved institution for arbitration like SIAC, the Institutionalization Arbitration in India will surely put India on the global map provided the rules and procedure are strictly adhered to. The continuous efforts by the Government to develop Centre and the infrastructure associated with smooth administration of arbitration and the institution will have to be made as per the global standards to ensure its success, and if it is achieved, then surely India would find its place on the institutionalized arbitration map with this Arbitration Centre as a forefront. With India on the path to become a leading economy and become a leading market in the coming years, many companies are looking for opportunities to invest and expand, India should seize this opportunity to implement robust commercial dispute arbitration laws and promote institutionalized arbitration. The Law ministry has also proposed an amendment to the Arbitration and Conciliation (Amendment) Bill, 2024 ("2024 Draft Bill") that seeks to promote institutional arbitration, further reduce court intervention, and facilitate the timely conclusion of arbitration proceedings in India. Arbitration should not be sidelined as it is the future to big commercial disputes and should it should be a constant endeavor of the government and practitioners to contribute towards the growth to make India an international hub for arbitration.
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