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RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY

LUCKNOW

ARBITRATION LAW
PROJECT

TOPIC: WAYS TO PROMOTE INSTITUTIONAL ARBITRATION AMONGST THE


CORPORATE AND BUSINESS INDUSTRY- INDIA

Submitted for the project work, B.A. LL.B. (Hons.) 5 years integrated course at Dr. Ram
Manohar Lohiya National Law University, Lucknow.

Under the Guidance of: Submitted By:

SHAKUNTALA SANGAM ADITI VATSA


Asst. Professor of Law, Roll No: 07
Dr. Ram Manohar Lohiya Section ‘A’
National Law University. VIIth Semester.
INTRODUCTION:
In the past two decades, resolving the disputes through Arbitration has become a standard
practice. With the advent of globalization where the world’s trade is unified, disputes between
the contracting parties have increased where no party wants to submit the dispute in the
jurisdiction of other’s in order to resolve the disputes smoothly Arbitration has come a long way
which helps the parties to resolve the disputes retaining autonomy, saving time and money. In
spite of various benefits offered by the Institutional Arbitration mechanism studies have showed
that 60% of the Indian Arbitration is through Ad-Hoc mechanism in case of state parties. Where
International Commercial Arbitration is concerned SIAC’s studies have shown that 91 of the 271
cases administered involved Indian parties. The reason for this international preference is the
image of the long drawn process of litigation in India.

There are several Institutions established in India which provides dispute resolution services, yet
a small number of these institutions are successful foremost amongst there is the Indian Council
for Arbitration (ICA) which was set up in 1965 at the national level under the initiatives of the
Govt. of India and apex business organizations like FICCI. There are several misconceptions
relating to Institutional Arbitration that exists among the parties due to which most of the
corporate disputes are resolve through Ad-Hoc mechanism or resolved through International
Institutions which defies the primary purpose of making India as a Hub for International
Commercial Arbitration.

One of the misconceptions that exists among the parties is relating to the administrative expenses
that are being charged by the Institutions for effective governance of the Arbitration Proceedings,
the parties often believe that submitting the disputes would lead to inflexibility and taking away
their party autonomy.
The decision regarding the choice regarding the dispute resolution forum often rests with the In-
house counsel who is not actively familiar with the Arbitration practice and who has the mind set
of dragging the disputes to the civil courts.

CRITICISMS:

Government of India is under constant appraisal to improvise the Arbitration Law In India and to
promote Institutional Arbitration in India due to various economic factors attached to it and one
is bringing Foreign Investment in India.
However, this constant Appraisal is not effective due to various criticisms faced by the
Institutions set up in India these are:
 Setting up of arbitration institutions with international standard with hearing centres on
widened jurisdiction of India is one of the foremost challenges.
 Dearth of Infrastructural facilities: Most of the Institutions set up in India lacks
advanced infrastructural facilities such as space, video-conferencing and big data analysis
holding capacity and runs on the old technology and practices which makes them
obsolete to compete with the International Institutions.
 Lack of Monitoring: there are dozens of Arbitral Institutions set up in India but often
tend to delay the Arbitration proceedings and extend the timelines fixed by the rules. This
often leads the parties to adopt for Ad-Hoc proceedings.
 Lack of advanced professionals: The appointed panel of arbitrators are often the retired
Judges or the lawyers who are not actively involved in the Arbitration proceedings and
often invests their time in resolving the disputes through old litigation system and
emphasizing on the principles of Code of Civil Procedures and Evidence Act which
delays in arbitration proceedings to conclude on time.
 Cultural differences: The term cultural-differences is a subjective term and vary from
country to country. Setting up of DAC(Delhi Arbitration Centre) was a commendable job
by the Delhi High Court but it failed in its working because the working of DAC is
similar to civil courts where the arbitrators are the retired judges or lawyers who conduct
the proceedings in no way different than the ordinary civil court procedures and the
mindsets with which the parties come to the Arbitration centre is similar to that of courts.

Ways and means to promote Institutional Arbitration in India:

 Training of the Arbitral Panel: the Arbitral panel should be well trained and it
should compromise judicial staff and subject matter expert who is well trained in
the Arbitration Proceedings keeping aside the old traditional litigation rules and
applying the new rules to achieve the desired result. In order to develop a pool of
arbitrators focus on five aspects would be crucial: one, training of the arbitrators
especially for the ones not having any judicial background so that the awards
passed by them can withstand judicial scrutiny; two, developing a system of
blacklisting of arbitrators who try to overstretch the process and delve upon those
issues on which they do not have expertise, three setting up of dedicated arbitral
bar, four setting up of designated and specialized Arbitral Tribunals in the same
manner as commercial benches and courts, at High Courts and District level
and five having designated institutions in place to appoint arbitrators as is done in
Hong Kong and U.S.A.
 Funding of the Arbitral Institutions: one of the primary aspects for efficient
working of any organization is the inflow of capital. The Arbitration Institutions
should be sufficiently funded in order to procure upgraded technological
equipments with better trained staff for day to day operations. The institution can
be Government funded or Private owned just like Indian Council of
Arbitration(ICA) which is self sufficient and The Singapore International
Arbitration Centre (SIAC) was set up as a not for profit non-governmental
organization in 1991. Though, it was funded by the Singapore government at its
inception, SIAC is now entirely financially self-sufficient. Like all other institutes
it is also a private, not-for-profit Company not linked to, or associated with, the
government of any jurisdiction. Considering the present Scenario in India the
Arbitral Institutes need Government funding for the effective implementation of
the programmes set up by the Government.
 Vibrant eco-system: The Arbitral Institutions should be fair and transparent in
its working, creating such an atmosphere where they are credible and independent
in their working which will help in establishing reliability in the mindset of the
parties to submit their disputes to the Arbitral Institutes set up in India.
 Technological Advances: functioning of Arbitral Institutes is an old fashioned
process which is no different than filing a plea in the Civil Court which makes it
incompatible to compete with the International Institutions. There is a need for
technological up gradation such as e-filing facility which will reduce large
voluminous paperwork, award status database, credit rating for the parties and
also for the panel in their decision making process, video conferencing needs to
be scaled up and be put to extensive use in the process of arbitration. One
example being video conferencing as no adjournment would be required,
testimony of the experts can be recorded through video conferencing in order to
reduce adjournments.
 Establishing a culture think-tank for discussion: for creating a sound Arbitral
Institute a significant culture needs to be developed where learning becomes two
way process. The Institutes should establish themselves as a learning Centers
where various discussions and suggestions are welcomed which will help the
judicial members and the technical members to enlighten and upgrade their
knowledge.
 Constant Appraisal and training of the Arbitral panel: The Arbitral panel
should be constantly appraised for their work performance and crediting them
with the work done and also black listing the Arbitrators who are delaying the
process beyond the given time limit. Workshops and training for the Arbitrators
should be on a monthly basis in order to update themselves with the international
standards. Exchange programs should be conducted by the Institutions for the
Arbitrators which can help them to witness the Arbitration atmosphere in the
developed Institutions and the manner in which proceedings are carried on,
which will help them to implement better international practices.
 Improvement in the Infrastructural Facilities: Well Equipped Libraries should
be set up with proper space, conference halls should be properly equipped with
adequate space.
 Specialized Institutes: The Arbitration Institutes can be set up based on their
expertise i.e. Domestic Arbitration and International Commercial Arbitration.
India being a diversified country where foreign investment is at high scale due to
various factors favoring trade in India there is a scope of Domestic Arbitration
and International Arbitration equally. The Arbitral Institutes can be divided into
two way window mechanism which provides specialized services of their
respective fields making sure that the administrative staff and the panel is well
equipped in their respective field and who are compatible to match with the
standards of the International Institutes.

CONCLUSION:

In order to develop India as a hub for International Commercial Arbitration and to


promote Institutional Arbitration among corporate’s in India a high level Committee was
set up in July,2017 where in the members were entrusted to scrutinize the major changes
required in the Arbitration Act and to analyze the criticisms faced by the Institutional
Arbitration and also seeking remedies in order to promote a strong Arbitration
environment with efficient administrative work and credible panel of Arbitrators.
BIBLIOGRAPHY:

1. https://blog.ipleaders.in/how-to-promote-institutional-arbitration/
2. https://blog.ipleaders.in/promoting-institutional-adr-to-make-india-a-hub-of-
arbitration/
3. https://www.livemint.com/Opinion/AXgpyH01L4oIMw43nDx5NN/Pushing-
institutional-arbitration-in-India.html
4. http://arbitrationblog.practicallaw.com/indias-institutional-push-to-institutional-
arbitration/
5. http://arbitrationblog.kluwerarbitration.com/2018/01/07/uncitral-technical-notes-
online-dispute-resolution-paper-tiger-game-changer/
6. http://www.mondaq.com/india/x/696044/Arbitration+Dispute+Resolution/Arbitratio
n+In+India+The+Way+Forward
7. http://www.icaindia.co.in/HLC-Working-Paper-on-Institutional-Arbitration-
Reforms.pdf