ARBITRATION AT THE TIME OF THE PANDEMIC ROLE OF APPS AND THE FUTURE OF ARBITRATION

Author:

Sumeet , SOA, National Institute of law, Bhubaneswar


Editor:

Sri Sai Kamalini, School of Law, Sastra University, Chennai.

INTRODUCTION

Arbitration is the mode of setting dispute by referring it to a nominated person who decides the issue in a quasi-judicial manner after hearing both the sides. Variety of arbitration agreement, the subject matter of disputes and the laws governing them. In the wake of the rapid spread of the novel corona virus referred to as Covid-19 pandemic, the situation of Worldwide has become unpleasant. The government has declared Lockdowns by imposing some restriction on the movement of people and the opening of different institutions. By such a decision of the government, the lives of the people become such a condition that only the people are living but their daily life and duties become halt. After a long period, the government unlocks everything slowly by imposing some restrictions like maintaining social distance and many more.

APPLICATIONS AND ITS ROLE

For which there has been a considerable effect of the day to day hearing of the arbitral institutions all across the globe. To overcome such problems the arbitral institution has come with an alternative method of online mode of communication. By using some applications through the internet which help to carry out the different arbitral activities.

Despite the increasing restrictions and complete lockdown in the country, some arbitral proceedings, which are urgent, may be conducted virtually.. The Hon’ble Supreme Court of India has released guidelines concerning the usage of video-conferencing for court functioning. Further, all high courts across India have been consistently using various e-platforms such as Zoom, Whatsapp, Cisco, WebEx, Vidyo and Skype amongst others to hear pending urgent cases. In light of the above, it is befitting that arbitrations are also conducted virtually in a manner which is compliant with the tenets of due process. However, the tribunal should be mindful of certain concerns such as in equal access to technology (especially in a country like India) and travel restrictions (on account of Covid-19) to determine the viability of conducting virtual proceedings.[1]1

IMPORTANT LEGISLATIONS WHICH FACILITATE ONLINE ARBITRATION:

Section 19 of the Arbitration & Conciliation Act, 1996 states that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 nor the Indian Evidence Act, 1872. The parties to the arbitration proceeding or the Arbitral Tribunal may decide on the procedure to be followed in the conduct of such arbitration proceedings. Section 18 of the Act lays down the ingredients of due process. The covid-19 impact has compelled the judicial forums of India (including Supreme Court and High Courts) to use electronic means to hear pending matters.2

As arbitration is the mode of setting dispute by referring it to a nominated person who decides the issue in a quasi-judicial manner after hearing both the sides. Variety of arbitration agreement, subject matter of disputes and the laws governing them. While the Arbitration & Conciliation Act, 1996 is silent on the conduct of arbitration proceedings through video conferencing, Section 19 certainly empowers the Arbitral Tribunal to allow the same. The Arbitral Tribunal can direct the parties to the arbitration proceedings to file pleadings through electronic mail and conduct proceedings through the means of video conferences aiding social distancing with minimal loss of productivity. Such things can be done by online mode by sending the e-mails about the agreements which they signed digitally by using DSC (Digital Signature Certificate) to show their consent for the agreement. The Information Technology Act, 2000 (“IT Act”) under Section 4 (Legal recognition of electronic records) and Section 5 (Legal recognition of electronic signatures) read with Section 65B (Admissibility of Electronic Records) of the Indian Evidence Act, 1872 provides the necessary legal recognition to such electronic records and proceedings.

While the application of Sections 4 and 5 of the IT Act is straightforward concerning pleadings (such as claim statement, defence statement, rejoinders etc.), concerns do arise in the case of affidavits. Presently, India does not permit e-notaries and lacks facilities for the same. Consequently, the affidavits accompanying the pleadings cannot be notarized remotely. This might prove to be a major hurdle in transitioning towards a fully electronic proceeding unless notaries are permitted to electronically notarize documents[2].2

The amount of stamp duty required to be paid varies from state to state depending on where the award is passed. In order to facilitate swift execution of electronically passed arbitral awards, the Stockholding Corporation of India Limited (SHCIL) has been set up to provide e-stamp services which permits online payment of stamp duty for certain states. Certain states have developed their infrastructure, for instance, Maharashtra has developed its e-stamping facility i.e. Electronic Secure Bank and Treasury Receipt (e-SBTR).

Section 17 of the Registration Act, 1908 also mandates registration of an arbitral award if such award has bearing on the ownership status of immovable property. Presently none of the States in India provide for electronic registration of arbitral awards. In light of Covid-19, such initiatives towards easing procedures for registration and stamping will go a long way in truly promoting virtual arbitrations.

ADVANTAGES

Arbitral Tribunals in consonance with the changing technology and the strict statutory timelines enumerated in the Arbitration & Conciliation Act, 1996 may even resort to video conferencing in routine circumstances for convenience as well as cost-effectiveness even in domestic arbitration proceedings. Also helps the people to undergo different agreements for their business or to solve disputes through online easily which saves the valuable times and also it is cost-effective.

All these technologies may impact the key actors in arbitration proceedings. Take the example of counsel, or even the arbitrators themselves. When they use digital tools such as document management tools or NLP, this can save a lot of time and money. It’s especially relevant in the discovery phase. Sometimes we, as counsel, receive thousands of pages of documents, which would take a whole team several hours to review. But now we can have a tool or robot that can analyze the relevant data that is of crucial importance to our case.3

 The digitalization of the arbitration process, where you can use electronic submissions instead of sending hard copies. In arbitration cases, it is not unusual to sometimes have 300 exhibits and a brief of 200 pages, multiplied by five examples, because you need to send them to the whole tribunal, whose members may be located in New Zealand, Switzerland, and the United States, and also to the other counsel, that’s a lot of documents to print.[3]

LIMITATIONS

For availing to the online mode of arbitration there is some limitation .like all the parties would be required to have adequate technology to participate in the virtual gatherings. Parties or persons who face difficulty in communicating or difficulty in understanding the language. Arbitration is a process involves sharing, processing, exchanging and transferring of personal data concerning the parties involved including that of the witnesses, experts and other relevant persons. Confidentiality of proceedings, data and documents are one of the primary reasons for the popularity of arbitration for commercial disputes. However, frequent and recent instances of hacking and data leaks not only decrease the confidence of parties in virtually run arbitrations but also raises the concerns. Accordingly, the virtual form of arbitration mustn't just retain this confidentiality feature but also allow for the implementation of dynamic and robust measures capable of adapting to increasing challenges of cybersecurity and data privacy.

A primary difficulty that the parties face during the virtual proceeding is concerning examining witnesses. This may be because of several reasons:  counsels, as well as the tribunals, rely upon the witness’s facial expressions, body movements and hand gestures during an examination which might be difficult over a video-conference. Secondly,  ensuring that the witness, at the time of testifying, is alone and is not receiving any directions or assistance while providing his testimony can be a challenge. And also, counsels depend on instinct and intuition which require real-time reflexes and may need instantaneous inputs from his team. Additionally, an absence of clear video transmission may result in missing out on valid objections or cross-questions.[4]

CONCLUSION

Whereas the current pandemic and the resulting crisis has brought several new issues to the fore, the situation serves as a great opportunity for the arbitration practice to figure out the intricacies of IT usage and more specifically, how the present crisis can be directed towards more mature integration of IT with the arbitration. The present developments possess the tendency to uproot physical arbitrations as we know it and turn virtual arbitrations into the status quo. What remains to be seen is how speedily the stakeholders in the system including counsels, parties and tribunals acquaint themselves with the said developments keeping in mind that virtual arbitrations may very well be the future of arbitration. Presently, the flexibility of arbitral procedures has imbued the sector with the capacity to function even under the present situation.

[1] AKS Partners , Covid-19 and E-Arbitrations: An India Perspective,(15thOctober2020), https://www.lexology.com/library/detail.aspx?g=40e5193a-22d0-411c-97e7-222dc434c285 [2] AKS Partners , Covid-19 and E-Arbitrations: An India Perspective,(15thOctober2020), https://www.lexology.com/library/detail.aspx?g=40e5193a-22d0-411c-97e7-222dc434c285 [3] Mohit Khullar and Prachika Agarwal,Future of arbitration: A world view with an Indian perspective and theneed for a new normal life,(15thOctober 2020), https://journal.iaccm.com/contracting-excellence-journal/future-of-arbitration [4] Mohit Khullar and Prachika Agarwal,Future of arbitration: A world view with an Indian perspective and theneed for a new normal life,(15thOctober 2020), https://journal.iaccm.com/contracting-excellence-journal/future-of-arbitration

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