Moily calls for transparency and speedy redressal of cases through ADR
8.1.2011 (UNI) 'Utmost importance' of transparency and speedy redressal mark an effort to amend a 14-year-old law intended to make India the most preferred destination for alternative dispute resolution, Law and Justice Minister M Veerappa Moily said.
'The idea is to make India the most preferred destination for ADR,' Dr Moily told hundreds of delegates from India and abroad at the opening of an International Conference on ADR - Conciliation and Mediation.
The conference attended by several Supreme Court and High Court Judges, lawyers and other professionals is sponsored by ICADR whose chairman and Karnataka Governor Hans Raj Bhardwaj addressed participants.
ADR involves processes and techniques of resolving disputes outside of the judicial process or litigation and include negotiation, mediation, collaborative law, arbitration and conciliation.
Experts and officials have been stressing ADR not only as a means of expeditious disposal of disputes, but especially given more than 30 million cases pending in courts which often take several years to adjudicate each matter.
But unlike Western jurisdictions where ADR has been an effective system of settling disputes, in India a large number of such awards are known to end up in courts again.
Indian Arbitration suffers on account of such issues as partial conduct of arbitrators, disregard of conflict of interest and silence of law on punishing malafide acts or misconduct.
Critics say arbitration often takes inordinately long, costs quite a bit and hardly substitutes court processes, with one or another party challenging an award.
No comprehensive data are available as to how many awards are challenged or how they end up, nor any empirical study of flaws in the process or practice to which they point.
Most ADR processes depend on a neutral person capable of providing an unbiased opinion acting as a facilitator or decision maker, although, in collaborative law, each party has an attorney facilitating the resolution process within contracted terms.
Lawyers and other ADR professionals acknowledge the importance of independence and impartiality of arbitrators or the arbitration process but argue that institutional arbitration is somehow reliable in that respect.
A Paper circulated by senior advocate Shishir K Dholakia notes 'one important difference in the circumstances obtaining in foreign countries and India. In many foreign countries, institutional arbitrations are the norm, while in India the same is not always true.' Dholakia suggests that institutional arbitration perhaps inspires confidence in courts that the arbitration process is fair, 'partly because the institutions have developed reputation over time ensuring the independence and impartiality of arbitrators as also of the arbitral process.' But critics do not rule out misconduct just because a process is carried out under institutional auspices.
Indeed, experts cite the relative failure of such arbitration to pick up in India in spite of huge pendency and delays in courts.
India has two facilities offering such arbitration-- the ICADR and the Indian Council of Arbitration, but neither has tapped the potential offered by slow court processes.
At the conference, the Law Minister acknowledged that 'the scenario in the field of arbitration is not as ideal as it should be.' Dr Moily said, 'arbitration has become a business, often involving very large sums, and bringing in its train substantial monetary earnings for all concerned and there has been a concurrent decline in the standards of at least some of those who take part in it.
'It is a fact to be faced and part of facing is to recognise that some means must be found of protecting this voluntary process from those who will not act as they have agreed or as is expected of them.
'Here lies the need for providing some ground of recourse in case of patent and serious illegality causing substantial injustice.' India's Law Commission has suggested making available in case of domestic arbitration a new ground for challenges-- mistake appearing on face of award-- as Section 34 A in the Arbitration and Conciliation Act, 1996.
In 2001, the Law Commission of India studied its working and recommended amendments, following which an Arbitration and Conciliation (Amendment) Bill 2003 was introduced in Rajya Sabha.
The Bill was referred to a Departmental Related Standing Committee on Personnel, Public Grievances, Law and Justice which examined it and told Parliament in 2005 that its provisions gave room for 'excessive' Court intervention.
In April 2010, the government acknowledged the problem of 'gross illegality' in some arbitral awards and invited public suggestions on how the law be amended to make Indian arbitration acceptable at home and abroad.
A government study recently recounted an award requiring the Sikkim government to pay Rs 33 crore as damages to a lottery organiser 'without any basis or proof of such damages as required by law in total disregard to the basic and fundamental principles.' The matter went to the Supreme Court which said the award 'not only demonstrates perversity of approach but per se proves flagrant violation of the principles of law governing the very award of damages.' While the Court set aside the award there was no effective punitive consequences so far as the arbitrator was concerned.
The study called it 'a glaring example of misuse of power by the arbitrator and the need for some recourse at least in such extreme cases.' It underscored how Indian law has been deficient in checking conflict of interest or bias. Courts themselves have made observations as to malafide arbitral awards.
Lack of accountability and uncertainties of duration and costs have made Indian arbitration among the least preferred recourses for international disputes, compared to such jurisdictions as Singapore or Paris.
'The biggest issue in our arbitration is the lack of accountability,' Dr Moily noted some months ago and spoke of injecting accountability into the system.
In India, arbitrators do not enjoy immunity in law and may be liable for damages subject to courts' jurisdiction.
Experts privately agree on the need for a deterrence, but question its feasibility in a jurisprudence not always hard on even criminals. UNI