Public Policy under Arbitration Laws in India

Arbitration has been one of those legal reforms which India is waiting for for the past 2 decades. ADR has been successful in foreign countries when it comes to effective justice delivery mechanisms. The situation of the judiciary in India is pretty bad. It was reported last year that approx. 4 crore cases are pending in the courts of India, especially district courts where the piled cases amount to 3 crores.

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Online Dispute Resolution in India

By Nevin Clinton

Introduction

It is a known fact that justice comes with costs and always with delays, especially in a hugely populous country like India. The huge backlog of cases has not helped in painting a good picture of the Indian judiciary despite its best efforts. Therefore, Alternative Dispute Resolution (ADR) mechanisms like arbitration and mediation are becoming more and more common and accepted among the masses. In a similar vein, Online Dispute Resolution (ODR) is a much newer prospect that is being explored by the Indian government as well as enterprises. 

What is Online Dispute Resolution?

The United Nations Commission on International Trade Law defines Online Dispute Resolution as the ‘use of electronic communications and other information and communication technology for dispute resolution.’ It involves the parties to a dispute taking their case online and giving complete details on the same to a neutral third party (arbitrator or mediator) who will then come up with a solution to resolve it. 

Advantages of Online Dispute Resolution

ODR comes with a plethora of advantages

  • It significantly reduces costs. Statistics from ODR India state that cost reduces by 15-24% when opting for ODR over normal court proceedings.
  • Disputes get resolved very quickly. It could even take less than a month for disputes to be completely resolved. 
  • It completely reimagines dispute resolution from the typical concept of a long drawn out courtroom process to a service that can be availed easily.
  • It focuses on solutions that are arrived at through negotiation, mediation and conciliation. Instead of a dispute usually being an adversarial one, it turns into a collaborative process here. 
  • There are various specialized ODR service providers to suit the needs of the nature of the dispute.

Issues with ODR

There are some very obvious problems that might crop up with regard to ODR

  • Accessibility for all could be an issue as not everyone has the requisite facilities and/or skillset to adhere to the procedure involved in ODR. 
  • It might take time for acceptance of ODR among the people as trustworthiness takes time to build. ODR service providers must also be wary of the kind of reputation they build in order to increase confidence. 
  • Lack of awareness about ODR is another problem, as is the fact that there aren’t a lot of trained professionals to offer such services. 
  • Since important documents and the like will be required to be submitted online for ODR, concerns about privacy could come up.

ODR Mechanism in India

ODR in India has had a considerable boom over the course of the last few years or so. The COVID-19 pandemic has been one of the key contributors to the same. The ICICI Bank played a key role by initiating a project along with Sama to resolve disputes relating to loan repayments. Various other popular services like the Centre for Online Resolution of Disputes (CORD) have also emerged during this time period. Such operators have helped increase the awareness among people and companies about ODR. 

The government has also recognized the prospect of ODR becoming a key mechanism in the future. To look into it, a high-level committee was appointed in 2020, headed by retired Justice A.K. Sikri in order to come up with recommendations on how to develop the mechanism. Some of the suggestions that the committee came up with are as follows.

  • A legislation on ODR which gives complete backing to it
  • Various incentives including tax concessions for ODR startups and companies
  • A national body to regulate ODR
  • Sufficient budget to be allocated to the body
  • Making mediation for some category of disputes (like consumer issues) mandatory

Earlier this year, the government through NITI Aayog launched a handbook in order to explain the advantages of ODR and to encourage top companies to adopt it. 

Conclusion

Despite its few drawbacks (that pale in comparison to its merits), ODR is an excellent mechanism to resolve disputes. It is still in its early stages in India, but judging by its recent growth and with proper backing by the government, it could become one that forms a key part of the Indian legal system.

ENFORECEMENT OF FOREIGN AWARDS

SCOPE OF ENUIRY U/S 45 OF THE REFRENCES OF DIRPUTE TO ARBITRATION IN RESPECT OF COMMERCIAL DISPUTE AN INTERNATIONAL COMPANY AND INDIAN COMPNAY

Section 45 of the Act confines only to the question whether the Arbitration agreement “Null and void, inoperative or incapable or being performed” but does not extend examination of legality and validity of substantive contract of which arbitration agreement is part. Once it is found that arbitration agreement is a legal and valid agreement, capable of being performed by parties to the suit, court has no discretion but to pass an order referring the parties to arbitration in terms of the agreement. This is the directive of Supreme Court in Sasan Power Ltd Vs North American Coal corporation (India Pvt Ltd) (2016) 10 SCC 183-in this case the Hon’ble Supreme court again followed the proposition of laws as settled in Bhatia International Vs Balk Trading S.A.

SECTION 47 & 48 OF THE ARBITRATION AND CONCILIATION ACT, 1996

Enforcement of foreign award cannot be opposed on the ground of the filing of the suit for damages after unsuccessful filing a counter claim in the arbitration proceedings without such award. The Hon’ble Supreme court in the Govind Rubber Ltd. Vs Loids Dreyfus Commodities Asia Pvt. Ltd. 2015 (13) SCC 477- the supreme court in the said judgment approved the law as held in Astro Vencedor Compania Naviera SA Vs Mahanaftgmbh (1970) (2) Lawyers Report Page 267, Pauls Smith Ltd. Vs H & S International Holdings Inc (1991) (2) LLOyds Report Page 127 and also followed the law laid down in Cairncross Vs Lorimer, (1860) (7) NS 149 : (1843-60) All England Report Page 174” Saratchandra Dey Vs Gopal Chandra Laha (1891-92) 19 IA 203

PUBLIC POLICY

The Hon’ble Supreme court before the recent amendment to Arbitration and Conciliation Act, 1996 has been pleased to hold that wider meaning given to expression “Public Policy of India occurring in section 34 (2) (b) (ii) in Saw Pipes case reported in (2003)(5) SCC 705 has no application to enforcement of foreign awards under section 48 (2) (b) of the Act.

Suit challenging foreign seated ICA agreement held to be not maintainable unless the court has come to a prima facie finding that the agreement is void or question must be left to the arbitrator to decide the same on kompetenz kompetenz principle- international chambers of commerce rules (1998). Chatterjee pertochem Co. Vs Haldia Petrochemicals Ltd (2014) (14) SCC 574

                    REVIEW OF FOREIGN AWARDS ON MERITS

The Hon’ble supreme court of India reaffirmed the law that Indian courts are not authorized to review foreign awards on merits. Once a foreign award has attained finality, there is no scope for a second look at the merits at the stage of enforcement of foreign awards:- Srilalmahal Ltd. Vs Progtto Grano Spa (2014) (2) SCC 433.