Corporate India is more willing than ever before in resorting to arbitration for dispute resolution. The robust domestic legal framework for alternative dispute resolution that has been put in place in recent years would not only reduce the burden on courts, but also unlock economic values faster, and help boost the confidence of foreign investors, Arun Chawla, Director General, Indian Council of Arbitration, told Priyansh Verma. Excerpts:
Q. How have India’s legal reforms in dispute resolution been seen by foreign investors?
The Arbitration and Conciliation (Amendment) Act, 2015 & 2019, was introduced to boost the efficiency and credibility of the arbitration process. Additionally, the introduction of the Mediation Act 2023, with India being a signatory to the Singapore convention on mediation, has facilitated effective Alternative Dispute Resolution (ADR) of commercial disputes, making India an appealing destination for foreign direct investment. Thee reforms have significantly enhanced the environment for foreign investment. The willingness of domestic companies to embrace modern dispute resolution methods provides foreign investors with increased confidence.
Q. What is the potential of artifical intelligence in ADR?
AI holds the potential to transform the ADR ecosystem by offering new tools and capabilities for parties, decision-makers, and other stakeholders. Utilizing AI for improved decision-making can make ADR proceedings more efficient, cost-effective, and fair. Specific AI technologies revolutionizing the ADR process include predictive analytics, negotiation automation, and improved case management. However, it’s crucial to develop these systems carefully to consider information that typically influences dispute resolution, such as emotional responses or abstract qualities of negotiating parties.
Q. Is the arbitration mechanism in India sufficient to ease the ADR process?
India’s arbitration and ADR framework have undergone significant changes in recent years. As is evident through the 2015 and 2019 amendments to the Arbitration and Conciliation Act. These amendments are aimed at reducing the burden on courts and providing quicker resolution of commercial disputes, which is critical for the development of the economy.
In the 2015 amendment, courts refrained from giving a broad interpretation to the term “public policy”. The award of an arbitral tribunal can be set aside only on the grounds enumerated in section 34 of the Act, and no other ground. The amendments have opened up opportunities for lawyers and law firms to practice in India, particularly in arbitration, marking a significant step towards inclusivity and a more global approach, all of which would ease the ADR process,
Q. Has the new Mediation Act produced results?
India’s new Mediation Act of 2023 has the potential to significantly influence the global landscape of ADR by promoting the use of mediation as a preferred method of resolving disputes. The Act provides a comprehensive legal framework for the conduct of mediation proceedings, enforces settlement agreements, and encourages parties to voluntarily participate in mediation. As India emerges as a leading proponent of mediation, other jurisdictions may look to emulate its legislative model and promote the adoption of mediation as a mainstream ADR mechanism worldwide.
Q. What is the role of institutional arbitration in commercial dispute resolution?
Institutional arbitration is indeed emerging as the preferred method for resolving commercial disputes. The main advantages include enforceability, avoidance of specific legal systems and national courts, flexibility, and the ability of parties to select their arbitrators.
Factors contributing to the growing prominence of institutional arbitration include its speed, efficiency, and cost-effectiveness, since much of the costs are pre-determined and hence adds to the manage cost in an effective manner. Additionally, it also offers advantages over ad hoc arbitration processes, such as a more formal method and the procedures are laid down for it.
Q. What’s your take on the Supreme Court’s perspective on the recent amendments made to the Arbitration Act?
The Court has clarified its position on arbitration agreements in unstamped or inadequately stamped contracts, emphasizing the fundamental principles of separability and Kompetenz-Kompetenz that are integral to the Arbitration Act. The apex court ruled that agreements are not rendered void or unenforceable solely due to insufficient stamping. The court also addressed emergency arbitration, highlighting that the current provisions in the Arbitration Act are sufficient to accommodate emergency arbitration without requiring an amendment. The court has recommended that Parliament should consider introducing a specific limitation period for parties seeking to appoint an arbitrator in a dispute.
These suggestions should be considered by the lawmakers to enhance the efficiency of arbitration processes.