ORIGIN AND DEVELOPMENT OF INDIAN ARBITRATION

AUTHORS:

Rdhima Purwar, Symbiosis Noida

Samkit Jain, NLU Jodhpur

Apoorva Singhal, Ramaiah Institute, Bengaluru

EDITOR: Varshita Girish, CAIL Bengaluru



INTRODUCTION

Sir Herbert Read, an English Philosopher, marked the importance of Arbitration in the contemporary world by the words, “I can imagine no society which does not embody some method of arbitration”. Arbitration is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons i.e., to the arbitrators, by whose decision (the award) they agree to be bound.

When two siblings fight over a bar of chocolate, their mother would sit them down and divide the same equally between them. This way no one would be dissatisfied with the decision of the mother. This is the essence of Arbitration, wherein Arbitrator(s) sit the parties down and create a cordial environment and ask both the parties to state their problems and brainstorm with them to come to a decision which would be acceptable and make them both happy.

This is different from the process of litigation in various aspects vis-a-vis the proceedings are carried out privately and is concluded within a specified period and the outcome of the same does not punish anyone of the parties. It is a slightly costlier mechanism but it is hassle-free and efficient and has encouraged parties to prefer this mode of settling disputes.


EVOLUTION IN INDIA

The concept of Arbitration has found references in history books since the time of Christ. Brihadaranayaka Upanishad is considered to be the earliest treatise in India to propound the idea of Arbitration. Bengal Regulation Act, 1772, the first codified Arbitration Law in India goes back to 1772.

Running a business is a daunting task. It is bound to face obstacles at each stage. Irrespective of the secondary goals and obligations such as social responsibilities, the primary purpose of any business is to make profits. The speed of growth of the business may take a hit due to these obstacles as they might bring the organisation to a halt. Taking recourse from the Courts of Law to overcome such barriers was becoming increasingly tedious and time-consuming due to the huge backlog of pending matters. Clearing this backlog was next to impossible due to the vacancy in Judiciary and strikes by lawyers. This led the corporate sector to look into an alternate, swift mechanisms for redressing their disputes. This is when Arbitration as a mechanism burst onto the scene owing to its success in other Common Law countries like England.

The Arbitration Act, 1940 [1]was the first Act which was in the application in India (including Pakistan, Balochistan at that time). This Act faced many criticisms, a major one was that even in the absence or invalidity of an Arbitration Agreement, it did not hold the proceedings to be void. The criticisms were manifold, which paved the way for The Arbitration and Conciliation Act, 1996 [2]to replace the 1940 Act. Barring a few hiccups this Act was serving the purpose well until 2019, when it faced many criticisms especially about the timeline due to which, The Arbitration and Conciliation (Amendment) Act, 2019 [3] was passed which is the governing law as of now.


COMPARATIVE ANALYSIS WITH OTHER FORMS OF ADR

Alternative Dispute Resolution often referred to as ADR allows parties to settle their disputes without the intervention of the court and is widely accepted throughout the world, It may vary from region to region. The fluctuation depends upon the legal rules of the country. To settle the conflict between the people, ADR is accepted and it includes different methods of settlement like Arbitration, Mediation, Conciliation and Negotiation.

As compared to other methods, Arbitration is an adjudicatory process and is like adversarial proceedings wherein parties submit their dispute to a third party (the arbitrator) for a decision.

Mediation and Conciliation both are an informal process, whereas Arbitration is a formal process. Mediation is a voluntary process where the disputing people decide to mutually find a solution to their problem by entering into a written contract and appointing a mediator. This decision remains to the disputing parties, with the mediator acting as a buffer to bring them to an understanding. Conciliation is the settlement of the dispute outside the court. It is a process by which the discussion between the parties is kept going through the participation of a conciliator. [4]Conciliation is risk-free and is not binding upon the parties unless they sign it. It assists the parties to a dispute in reaching a mutually agreed settlement of the dispute.

Negotiation doesn't have any statutory recognition. It is a primary method of the alternative dispute resolution to resolve the dispute. It is a process where two parties in a dispute settle themselves, they can agree on without the interference of any third person. Both the parties intend to resolve the dispute, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. They engage in the dispute until they reach a free fair outcome for all individuals in the dispute. In negotiation, there was no fixed rule to resolve the dispute but parties followed the predictable manner.


CONCLUSION

Arbitration is a process where a person can resolve his dispute outside the court with the help of an arbitrator without involving in the long process of the court with the saving of a lot of time. The revolution has led to rapid growth in every issue globally. To correspond with the growth and save with the prolonged litigation, people use the alternative method to resolve the dispute to resort to quick remedial measures. An arbitration mechanism is an ideal tool used not only in India but globally this is the favourably way to resolve the dispute. Every arbitration is based on the process of application of law and its proof of significance in the actual proceedings. Thus, arbitration has emerged as the most preferred platform for quick resolution of disputes especially within the industrial and therefore the corporate realm.

[1] The Arbitration Act, 1940, Acts of Parliament, 1940 (India). [2] Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India). [3] The Arbitration and Conciliation (Amendment) Act, 2019, No. 33, Acts of Parliament, 2019 (India). [4] Lawperspective.in (2020), https://www.lawperspective.in/services (last visited Jul 7, 2020).

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