Introduction
In accordance with the UNCITRAL Model Law on International Commercial Arbitration (1985), also referred to as the “UNCITRAL Model Law,” was enacted the Arbitration and Conciliation Act (hereinafter referred to as the Act) in order to put into practice the arbitration method of resolving disputes between parties. Before the UNCITRAL Model Law, the Arbitration Act of 1940 served as the governing legislation for the arbitration process. In place of bringing their dispute to court, the parties may decide to seek the assistance of an unbiased third party, sometimes known as an arbitrator, in order to assist them in reaching a settlement of their differences. The decision reached by the arbitration panel is final and legally binding until and until it is intervened in by the court and overturned. An arbitration agreement is an essential piece of paper to have on hand if a dispute has to be resolved via the use of an arbitral panel. The courts in India are now processing tens of thousands of cases each day. The Arbitration process was established so that it may help reduce the workload of the courts. A dispute may be quickly, affordably, and effectively resolved via the use of arbitration.
In spite of the fact that arbitration is a separate method for settling a dispute, the Arbitration Act of 1996 makes it clear that the courts have the jurisdiction to intervene in the process. This provision may be found in the act itself. In order to pick an arbitrator in accordance with Section 5 of the Act of 1996[1], the Courts may only intervene in the event that the arbitration agreement does not comply with the requirements of the law or if the arbitration procedure does not adhere to the terms of the agreement. A court will not step into arbitration proceedings unless it is absolutely necessary to uphold the principles of justice and preserve the rights of the parties involved.
Ability of the judiciary to intervene
When it comes to the participation of the judicial system in arbitration conflicts, it is easy to get mired in the weeds of various definitions and constraints. The practice of arbitration in India is always evolving, which contributes to the topic’s overall sense of diversity. The critical questions in this context are: (a) may the court get engaged in the arbitration process? (b) if so, to what extent may it do so? The Act, along with its subsequent changes in 2015 and 2019, was enacted in order to stimulate the use of arbitration as a method of conflict resolution and provide relief for an already overburdened judicial system. For this reason, legislators were careful to include clauses that would restrict judicial involvement in order to ensure that matters would be diverted from traditional litigation to arbitration rather than being litigated in court. This was done in order to guarantee that matters would be resolved through arbitration rather than being litigated in court.
As was mentioned before, the jurisdiction of the courts and other forms of judicial intervention in arbitration processes is quite limited. For instance, the Apex Court issued a ruling, in Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd.,[2] that the lower courts should not interfere with an award only due to the fact that there is a difference of opinion over how the facts and the contract should be interpreted. Even if the explanation given in the judgment is only implied, the courts should nonetheless adhere to the viewpoint of the arbitral tribunal. The only exception to this rule is if the award portrays perversity that is inexcusable in accordance with Section 34 of the Act, 1996[3].
When parties opt for a method of Alternative Dispute Resolution (ADR) like arbitration, they are choosing to opt out of the court’s jurisdiction. As a result, the Supreme Court has ruled that the involvement of the courts in the proceedings should be limited. This is due to the fact that parties choose to exclude the jurisdiction of courts when they opt for a method of ADR like arbitration. McDermott International Inc. v. Burn Standards Co. Ltd.[4] is an example of one of the scenarios in which the courts have the jurisdiction to overturn an arbitral judgment according to Section 34 of the Act, 1996. This provision was at play in this particular case. Since the arbitral decision cannot be altered in any way to correct the errors that were made, the court is the only entity that has the authority to overturn it.
Is it justifiable for the judiciary to intervene?
In line with the Act of 1996, parties may enter into agreements to arbitrate a dispute. Under this law, the parties have the option to choose the arbitrator or arbitrators of their choice. In the event that there is a dispute between the parties, the court will first refer the matter to the arbitration panel or bench. A provision is known as “Judicial Intervention” was included in the Act in order to guarantee that the administration of justice is conducted in a fair and unbiased manner.
Domestic arbitration is by far the most common form of dispute resolution used in India. As a direct result of this, there is a scarcity of any and all foreign components. They have taken an adversarial stance against us as a result of the government’s engagement. The arbitrators who have been picked by the centre may have a preexisting prejudice in favour of one of the contending parties for a variety of reasons. It’s possible to buy justice with the right combination of politics, money, and power. As a result of the less formal nature of arbitration proceedings, they are also less complex. However, due to the fact that arbitrators often lack expertise, it may be difficult for them to appropriately oversee arbitration sessions. The concept of arbitration law represents an ideal that does not correspond to the way in which the whole legal system operates. To phrase it another way, the objective has been accomplished.
Regrettably, the representatives of both parties often lack knowledge of the arbitration system and proceed with the dispute as if it were a court case, which is a blatant breach of the law’s intended purpose. Because the majority of arbitrators appointed by courts under Section 11 of the Act[5] are retired judges who rely on long-established procedures and arguments based on their expertise on the bench, the process may be lengthy and laborious, much like court proceedings. This is due to the fact that most arbitrators appointed by courts under Section 11 of the Act are retired judges. As a direct consequence of this, arbitration consists of things such as subjects, oral and written evidence, chief and cross-examination, etc.
To put it another way, if the stated purposes and objectives of the Act are not protected or adhered to, then the common man will be compelled to go to court in order to seek justice as a result of it. As a result, the participation of the Courts in the administration of justice and the realization of the objective or aim of the Act is justified.
Conclusion
ADR, which is a novel concept in the Indian legal system, is gaining in popularity in order to lighten the load of pending cases that are now being carried by the courts in India. When a dispute is resolved by arbitration, the parties involved have the ability to choose the arbitrator who will handle the matter according to their own preferences.
The Arbitration Act of 1996 states that the courts have the authority to step into the proceedings of an arbitration case; however, this authority is limited to issues that are expressly addressed in the arbitration agreement. The courts have a role to play in upholding fairness and equality in order to guarantee that people who have been harmed are given the opportunity to get justice for their mistreatment. The court may claim that it is intervening because it is doing so to protect the interests of the parties or to maintain a careful check on the arbitration process in order to detect any misbehaviour in order to provide justification for its engagement.
The engagement of the judiciary is appropriate in the modern setting of India. Because of their extensive experience on the bench, judges who have since retired are often chosen to serve as arbitrators. This is due to the fact that they are aware of the stringent requirements of evidence and the procedural fairness that come with sitting on the bench. Due to the fact that court intervention watered down the fundamental purpose of arbitration, it is essential to settle on a strategy that can be carried out with a sufficient number of honest, educated, and competent arbitrators as well as institutions that are well-equipped to conduct the arbitration. The future success of arbitration in India is contingent on the availability of arbitrators who are not just well-trained but also honest and who work for arbitral institutions that are well-equipped. If individuals start to feel that opting for arbitration rather than going to court significantly lowers the possibility that they will get high-quality justice, then there is little hope for arbitration as a dispute resolution method.
Everyone who is a part of the process, including those who represent parties in arbitrations, those who are arbitrators themselves, and those who are consumers of arbitration, has to be committed to the arbitration process. It is of the utmost importance that a procedure of arbitration that is both fair and easy to use be developed.
Author(s) Name: Himanshi Choudhary (O.P. Jindal Global University, Sonipat)
References:
[1] Arbitration and Conciliation Act, 1996, s 5
[2] Dyna Technologies Pvt. Ltd. v Crompton Greaves Ltd. 2019, SCC OnLine SC 1656
[3] Arbitration and Conciliation Act, 1996, s 34
[4] McDermott International Inc. v Burn Standards Co. Ltd. 2006, 11 SCC 181
[5] Arbitration and Conciliation Act, 1996, s 11
