Introduction
The concept of res judicata is an important principle of law that has been accepted and applied in India for a long time. It is a Latin term that means ‘a thing adjudged’. The principle of res judicata is based on the maxim ‘interest reipublicae ut sit finis litium’ which means ‘it is in the interest of the state that there should be an end to litigation.’ The principle of res judicata is based on the principle of finality of judgments and prevents the re-litigation of matters that have already been decided by a court of competent authority. This principle applies to both civil and criminal proceedings. In recent times, the concept of res judicata has been extended to arbitral awards as well. This article will discuss the impact of res judicata on arbitral awards in India.
Res Judicata
Res Judicata is a Latin phrase that means “an issue already decided.” The term ‘Res’ denotes anything which is decided by a court of law. Section 11, CPC[1] incorporates the doctrine of Res Judicata. In the absence of such a doctrine, the parties’ dispute would continue indefinitely, and they would continuously trouble and harass each other.
Broader Domain of Res Judicata
The broader domain of Res Judicata is the parameter of a final decision i.e.:
- Appeal dismissed
- Did not appeal
- No provision for an appeal
If the decision is final, no party can canvass the same matter.
The extended version of Res Judicata seeks to prevent the filing of consecutive claims irrespective of the distinctness of the issues that arise out of the same factual matter as it puts an unreasonable burden upon the defendant to defend himself in such a piecemeal fashion.[2]
Arbitration
Arbitration is a process in which parties refer to one or more persons (arbitrators) to resolve their dispute and whose decision is deemed binding. A third party evaluates the parties’ arguments and evidence and renders a legally binding and enforceable decision. The procedure is less formal since all evidence rules are not followed. According to Section 2(a) of The Arbitration and Conciliation Act, 1996[3]–
“Arbitration means any arbitration whether or not administered by a permanent arbitral institution.”
It is an efficient technique for resolving conflicts in these modern times when time is of the essence. Nevertheless, not all issues are arbitrable, and certain disputes fall beyond the categories of arbitrable disputes, as determined by the Supreme Court in the case of Booz Allen and Hamilton Inc v. SBI Home Finance Ltd.[4] The process of arbitration is not as complex and time-consuming as the adversarial system. From the filing of the case to the determination of the final arbitral award, the prescribed time limit for the arbitration process is 12 months[5].
Arbitral Award
An arbitral award is a conclusive determination as to the disputes in question brought before the arbitral tribunal. Constituted to deliver a final decision on the matter, the arbitral tribunal must give a reasonable opportunity to all the parties to present their case for the successful confirmation of the arbitral award by the court. It is the outcome of the arbitration process and is legally binding on the parties involved. The award is usually written and signed by the arbitrator or tribunal and is based on the evidence presented during the arbitration proceedings. It may include an award of damages, an order for specific performance, or a declaration of rights and obligations. The award may also include an order for costs and fees associated with the arbitration process. The award is enforceable in the same manner as a court judgment.
Application of Res Judicata to Arbitral Award
When it comes to arbitral awards, res judicata can have a significant impact. This is because the doctrine prevents parties from challenging the same award multiple times. This means the parties cannot continually challenge the same award in different proceedings. This helps ensure that the parties cannot use the same arguments in multiple proceedings. It is worth noting that “the principles of res judicata apply to the arbitral processes” under Indian law. This res judicata effect, however, is said to exist between two separate arbitral tribunals. Its effect does not put restrictions upon the judicial courts. For the application of Res Judicata, an action must meet the triple identity test, which requires that the identity of the parties, the identity of the object, and the cause of action be the same. However, the cause of action would be distinct because of the independent origins of the writ jurisdiction and arbitration, and hence the triple identity test would not be fulfilled.[6] As a result, there is no res judicata between disputes determined by Constitutional Courts and arbitral tribunals.[7] Although normally, Res Judicata would not apply, its broader principles will certainly apply. If the award-debtor relies on some international ground to set aside the award in the enforcing court and that argument has not been raised before the arbitration seat, then he would be precluded from raising the same argument in the subsequent enforcement stage.
Conclusion
An arbitration proceeding cannot be considered a suit for Section 11, CPC. Therefore, Section 11 will not apply. However, the broader principles of Res Judicata will apply and once the arbitral award has been passed, then on the same matter, another arbitration will not apply. Arbitration, a form of Alternate Dispute Resolution came into the picture to decrease the workload of the courts and to reduce the cost of litigation however when the arbitral award is decided, it must be confirmed by the Courts for enforcement and this enforcement stage has proved to be a passive fight for checking the validity of the award itself by the award-debtor. This fight negates the benefit of the time-effective decision of the arbitration process. Thus, giving space to arbitration in Section 11, CPC is the need of the hour.
Author(s) Name: Avee Singh Dalal (Dr B.R. Ambedkar National Law University, Sonipat)
References:
[1] Civil Procedure Code, Sec. 11
[2] Peter Barnett, “The Prevention of Abusive Cross-Border Re-Litigation” (2002) 51 ICLQ 943 at p. 952.
[3] The Arbitration and Conciliation Act, 1996, s. 2(a)
[4] Booz Allen and Hamilton Inc v. SBI Home Finance Ltd. & Others, (2011) 5 SCC 532.
[5] The Arbitration and Conciliation Act, 1996, s. 29A
[6] Harshal Morwale, Arbitration Versus Writ Petition Against the State Entities in India: How To Resolve the Jurisdictional Conundrum? (Vol. 10(2) Indian Journal of Arbitration Law 2022)
[7] Id.
