"Give justice fair, divide in halves,
But if this too meets hurdles' wrath,
Then grant us merely five small lands,
Keep your kingdom vast and grand."
Yet Duryodhan, blind with pride,
Refused this plea and cast aside,
Blessings of peace he could not earn,
Instead, to bind lord, he turned.
When arrogance shadows the heart so vile,
Reason fades in its blinding trial.
He roared with fury, bound in disdain,
Spoke words of might, but all in vain."
 
The verse depicts the conversation between Duryodhana and Shri Krishna which shows the roots of mediation in mythology. Shri Krishna's attempt to mediate between Pandavas and Kauravas to avoid the great Indian war, although offering a peaceful compromise, faced discourteous rejection by Duryodhana to even give five villages as a replacement for half the kingdom to the Pandavas. This failure displays that ADR even with the good intent does not always yield fruitful outcome, especially when the other party is not willing to compromise in good faith.

India has a significant history in regards of Alternate Dispute Resolution (ADR). The Panchayats especially five elder members of the community, acted as an arbitral tribunal to resolve wide range of disputes including marital, contractual, and criminal matters[1]. People of the village feared them due to the power they possessed to pass punishments such as excommunication, ostracism or exclusion from the religious and social functions of the community[2]. This showcases the impact of imposing strict rules and punishments and how it can make parties bind to the decision given by higher authority.

ADR: Navigating the Roadblocks

Arbitration is the foremost choice of the parties among all the other methods of ADR, yet this has become an inaccessible part of dispute resolution to major sections of society. There are few major reasons as to why India is far from becoming a global arbitration hub. The exorbitant fees of arbitrator make this more expensive than the litigation which in turn raises the question- Is arbitration for underprivileged?

The 2014 LCI report suggests the fees is unilateral and disproportionate[3]. Apart from this, few reasons such as credibility of arbitrator, competency of arbitrator in aspect of capability to arbitrate the matter as per his qualification, inadequate formulation of arbitration in a way that is capable of enforcing the arbitral award with minimal judicial intervention, making it an impediment in achieving the objectives of arbitration and making arbitration a pre-litigation stage rather than a method of ADR.

1. High costs in arbitration: a barrier to access

   As per the Ad hoc arbitrations, there is no concrete fee structure of the arbitrators. The fees of arbitrator are decided by the consent of the parties, but this is not as simple as it seems. The cost of professional standing of a particular arbitrator and the cost of venue determines the fees, and it can be disproportionate. Most of the arbitrators charge fees according to per sitting, whereas for few instances the fees are not determined at the preliminary stage, which in turn results in an increase in number of sittings. The cost seems cheaper if the proceedings are limited but this is not the case always due to multiple adjournments by arbitrators, who are mostly retired judges, and they treat arbitral proceedings the same manner as litigation. There have been few developments in respect of fees. The Supreme Court in the case of Oil and Natural Gas Corporation Ltd. vs. Afcons Gunanusa JV while interpreting Sections 11(3A) and 11(14) of the Act, emphasized that arbitrators cannot unilaterally determine their fees, as this undermines the principle of party autonomy — a cornerstone of arbitration. It was held that, in the absence of an enabling provision in the Act allowing arbitrators to independently impose binding or enforceable orders regarding their fees, such unilateral fee fixation is impermissible unless agreed upon by the parties. Likewise, the court, while exercising its power under Article 142 of the Constitution of India, set guidelines to hold a maximum of four hearings at the preliminary stage to finalise the fees of the arbitrators through a tripartite agreement between the parties and the arbitral tribunal. The main question is whether arbitration is for the underprivileged? Parties often resort to arbitration to settle disputes as it seems cheaper than litigation, but many times it becomes difficult to finalise the fees of the arbitrator. Comparatively, the other party may have no issue in giving out the fees desired by the arbitrator — not only does this become embarrassing but it can be prejudicial to the party who is not in a position to afford the desired amount. It can create a bias in favour of the party who readily agreed to pay, and sometimes the cost of arbitration approaches or even exceeds the amount involved in the dispute or the award, making arbitration more expensive than litigation. The big players will always have an upper hand over the small players, which results in denial of justice to the aggrieved party. Institutions like Mumbai Centre for International Arbitration (MCIA) and Delhi International Arbitration Centre (DIAC) have adopted ad valorem fee structures. For instance, MCIA's administrative fees can vary from INR 1,10,000 to INR 50,00,000, which can still be unaffordable. Complexities involved such as fees of arbitrators (charged per-session or hourly), fees of senior advocates or specialized lawyers (ranging from INR 10,00,000 to INR 1,00,00,000), venue rentals, travel, and accommodation for arbitrators or parties — all add to the financial burden. Arbitration to be accessible to the underprivileged must undergo several reforms, which should address its existing structural and financial issues.
   • Solutions such as promoting regional arbitration centres with capped fees for small-value disputes, since many leading institutions are situated in metropolitan cities, and expansion of these institutions to smaller cities is necessary.
   • Introducing expedited arbitration rules for disputes below a certain monetary threshold can reduce cost and time.
   • Other reforms could be to strengthen the Fourth Schedule of the Act by expanding its applicability to institutional arbitration, which would prevent arbitrators from demanding exorbitant fees.
   Nevertheless, these problems have become the barrier of arbitration in becoming cost effective dispute resolution.
    

2. Eligibility and expertise of an arbitrator

   The arbitration act allows parties to appoint any individual as an arbitrator as long as they are independent and impartial. The act provides flexibility in choosing arbitrator but this can lead to appointing arbitrator who does not possess the required skill to arbitrate the matter, potentially undermining the credibility of the process.
   
   Institutions such as MCIA and DIAC maintains panel of trained and experienced arbitrators, even though parties show reliance on ad hoc arbitrations because there is flexibility to choose arbitrator and the fees of arbitrators is capped. Not only that, but exorbitant fees charged by institutional arbitrator also makes it a very expensive alternative.
   
   The problems with appointing arbitrator flexibly can cause delay in justice due to ineligible and inexperienced arbitrator who lacks necessary skills or technical knowledge pertaining to the matter which might result in passing arbitral awards without even considering technical aspect of the matter.
   
   This could cause harm to the parties involved in dispute and will eventually result in approaching court to resolve the issue which would take almost a decade. For instance, in case of Union of India vs. Singh Builders Syndicate[9], the appointed arbitrator was a retired judge who not only lacked the expertise to arbitrate the matter but treated arbitration the same manner as litigation, passed liberal adjournments and almost took a decade to a pass an arbitral award which had flaws in it. The constant delays and lack of expertise can make a mockery of the process of arbitration. Appointing any individual as an arbitrator or unilateral appointment can question the credibility of an arbitrator of his independence and impartiality, although the act has laid down certain regulations as arbitrator shall not to withhold any material information regarding any sort of relationship with either of the parties. Partiality pertains to the frame of mind or the state of mind of the adjudicator which is very difficult to prove.[10]
   
   Partiality can arise from various factors, such as the arbitrator not being particularly compatible with either party for example, if an arbitrator feels personally uncomfortable with a party's demeanour or communication style, it might inadvertently affect their judgement. Apart from this, dissatisfaction with the hospitality provided, or issues like one party's reluctance to pay the agreed fees, as discussed earlier. All these factors become very hard to prove and makes arbitration unreliable for the parties, hence parties either settle for less than what they deserve or choose the prolonged procedure of litigation.
   
   To overcome these hurdles the following solution could make notable reforms in arbitration:
   
   • Mandatory requirement of skill pertaining to the matter, arbitrator shall be made to submit verified certificate of the skill they possess to the parties which will be resourceful to arbitrate the matter. If the market demands expertise, it will naturally incentivize professionals to seek training and accreditation. There are various organizations who provide accreditation programs which can help build a pool of qualified arbitrator. This will help in reducing the delay in arbitrating the matter and when the arbitral award is passed with logical reasoning and considering all the contention of the parties than there are chances of minimal judicial intervention as well.
      
   • Promoting institutional arbitration, institutions like MCIA and DIAC consists the panel of trained and experienced arbitrators, who hold expertise which requires for a particular matter. Promoting institutional arbitration over ad hoc arbitration can enhance the quality of arbitration in India, although the fees of these institution are higher than ad hoc arbitration, providing subsidized fees for low-income groups or keeping a monetary threshold can make institutional arbitration an affluent choice.
      
   • Considering the current scenario of parties placing their reliance on ad hoc arbitration, creating a national arbitrators database seems necessary. The database which contains all the credentials, the areas of expertise of the arbitrator which will help parties to choose among them.
      

3. Judicial Intervention: a Boon or a Bane?

   Maintaining the sanctity of the arbitration, judicial intervention has to be minimal. Judiciary taking interest more than often in the arbitral proceedings will only harm the whole purpose of arbitration. Justice R.S. Bachawat described this balance as switching between the relationship between persons who are forced to cohabitate and are true partners.
   
   This analogy showcases the delicate balance between courts and arbitration. Courts shall provide supportive oversight without overstepping into arbitration's autonomy whilst coexisting. An imbalance can either lead to excessive judicial intervention or too little oversight which risks unchecked arbitral abuse. Judicial intervention is like a double-edged sword. Intervention ensures that there is no malpractice or abuse of power by arbitrator and that the outcome does not violate any public policy.
   
   In violation of public policy courts also have power to intervene in the foreign awards issued in international arbitration outside India. Likewise courts do not distinguish between government entities and private parties. According to section 18 of the act, the parties shall be treated with equality and so no special treatment shall be given to the government parties.
   
   This act mandates the court to treat each party equally giving chance to contend fairly. The Supreme Court emphasized upon this section in Pam Developments Private Ltd v. State of West Bengal. Subsequently excessive intervention can cause unusual delays and addition to the cost of the parties. Not only this will undermine the autonomy of ADR but can discourage parties from choosing ADR. Arbitration will then be only a pre-litigation stage.
   
   There can be instance where this will be terrible for underprivileged because, apparently all the resources might be exhausted in their disposal and approaching court will only be a lost battle or getting stay on arbitral award which would have favoured the underprivileged is the same. The prolonged procedure of court and undermining the autonomy of arbitration will be a biggest hurdle to meet the objectives of arbitration in India. There is a need for major reforms in the current structure.
   • Setting up of an appellate arbitral tribunal can solve all the problems herein with, there will be autonomy. At few levels there will be cost efficiency. Apart from this having separate and dedicated benches for arbitration related cases can result in better and quicker decisions equivalent to that of Delhi High Court.
      
   • To dispose of the matter within reasonable time limit as proposed by the commission to make addition of section 11(13) that to dispose of the matter within sixty days from the service of notice on the opposite party. The commission proposed the addition of sections 34(5) and 48(4) under which to dispose the matter within one year from the date of service of notice.
   Hence, major reforms could be a game changer for arbitration in India.

Conclusion
Arbitration has gone through various reforms in the last few years to be the best solution among ADR as it is speedy and cost effective than litigation. Although it has major challenges, it needs developments to meet the objectives of arbitration mainly to minimise judicial intervention, make it accessible to underprivileged and to achieve its ultimate goal of making India a global arbitration hub.

End Notes:

1. K.V. Satyanarayana, Law of Arbitration and Conciliation in India (2nd edition)
2. Law Commission of India, Report no 76, "Arbitration Act, 1940" (November 1978)
3. Law Commission of India, "Amendments to the Arbitration and Conciliation Act, 1996" (Report no 246, 2014) para 10.
4. [2022] SCC OnLine SC 1122 [127]-[496]
5. Union of India v. Singh Builders Syndicate, (2009) 4 SCC 523 [22]-[528]
6. According to value
7. (MCIA schedule of fees) https://mcia.org.in/mcia-schedule-of-fees/ accessed 02 January 2025
8. The Arbitration and Conciliation Act, 1996
9. (2009) 4 SCC 523
10. Lew, Mistelis and Kroll: Comparative International Commercial Arbitration (Wolters Kluwer 2007) 258
11. Anirudh Wadhwa et al (eds) in R.S. Bachawat's Law of Arbitration and Conciliation, vol.1 (4th edn. Wadhwa & Co., Nagpur 2010) 204
12. Venture Global Engineering vs. Satyam Computer Services Ltd (2008) 4 SCC 190
13. (2019) 8 SCC 112
14. Law Commission of India, "Amendments to the Arbitration and Conciliation Act, 1996" (Report no 246, 2014) para 24,25