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The economic reforms and the economic policies introduced by the country made it a favourable destination for foreign investments and trading relations with the world. The Indian court system has had to undergo immense pressure since the advent of the commercial relations. It has been overburdened by the presence of pending cases, and the addition of further cases would have resulted in an overload to the system. When foreign investors desired to resolve their disputes either by litigation or by alternative means under India's notoriously gridlocked court system, they often found it necessary to move on.

Alternate Dispute Resolution:

The purpose of dispute resolution is to settle disagreements outside of court with the help of a third party after the two parties have failed to resolve their differences and reached an impasse[1]. The path forward is well-established after efforts between the client or policy holder and the insurer to resolve any differences between them have progressed without resolution and reached a disagreement in an effort to avoid the cost and time associated with trial.

The law allows the court to suggest terms for a possible settlement if it appears as though there may be elements that would be acceptable to the parties, and this settlement will then proceed to arbitration, conciliation, mediation, or judicial settlement in accordance with the applicable law.

One reason for the slow judicial process in India is the emphasis placed on alternative dispute resolution mechanisms the People's Court system, based on mediation, is a uniquely Indian approach to alternative dispute resolution, as it is very different from the standard approach towards alternative dispute resolution in the form of arbitration and conciliation provided by the Arbitration and Conciliation Act of 1996.

This is because it is a mediation-based system, as opposed to an adversarial system based on litigation. The India's constitution guarantees every one access to justice, and this is provided principally through Article 39A[2], which provides that everyone has the right to get justice. This right must not be denied to any citizen, as this was concluded by the 222 nd law commission of India in its report.

In India the development of arbitration is divided into three phases called as the Pre- British rule, commencement of British rule and the last is the position after the arbitration and conciliation act, 1996.
  1. Pre-British Rule:

    Arbitration proceedings have developed in India since the beginning of the 19th century, and they are a long history and prevalent form of alternative dispute resolution. They are used in India since the Vedic times. In the past, we have learned that there have been many disputes and problems, and in order to solve these disputes or problems, people have often gone to a group of wise men within the community known as a �Panchayat' to seek advice.
    The decisions they have made are significant for the parties. So, earlier disputes were resolved through the local governing body[3].
  2. Commencement Of British Rule:

    The Bengali judicial system allowed the judge to recommend the parties to the arbitration, with the parties themselves to be mutually agreed upon. The Bengal regulation acts of 1787, 1793 and 1795 provided certain powers to the court to refer suit to arbitration in the case where both the parties consent to go for arbitration. These acts also authorize the courts to provide references for the cases not exceeding more than two hundered rupees for the disputes relating the cases of debts, breach of contracts and partnership accounts.
  3. Position After The Act Of 1996:

    The Arbitration and Conciliation (Amendment) Act, 2000 was in force from 1 April 2000 and it was repealed by The Arbitration and Conciliation Act, 2009, which came into force on 01 April 2009. It was an effective amendment.
    1. An act to consolidate and amend the law relating to domestic.
    2. To define the law relating conciliation.
    3. Enforcement of foreign arbitral award.
    4. The act of 1996 has advantage over 1940 Act.
    5. Where there is arbitration agreement, the curt is required to direct the parties to resort to arbitration per agreement.
    6. The ground on which award of arbitrator could be challenged before the court under the 1940 have been severely cut down.
    7. The role of arbitral institution in promoting and organizing arbitration has been recognized for the first time in law.
    8. Under act of 1940 there was a time limit of four month within which arbitrator had to make award.
    9. The importance of transnational commercial arbitration has been recognized and it has been specifically provided that even where the arbitration is held in India the parties would be free to designate the applicable to the subject of dispute.

Kinds Of Arbitration:

Alternate dispute resolution involves settling a dispute outside the court. In one form of alternative dispute resolution (ADR), early neutral evaluation, there is an attempt to understand and possibly resolve the dispute before the formal court.

The following are the kinds of arbitration recognized in India:
  1. Institutional arbitration:
    Institutional arbitration is the procedure in which a professional organization assumes the functions of a dispute resolution institution, including assisting in the processes, and administering that process as provided by the rules of that organization. When an arbitral institution conducts arbitration, it is called institutional arbitration.

    The parties have a choice of referring any differences to be resolved to the institution of their choice, as elected. One or more arbitrators can be chosen either by the governing body of an organization, where the disputants can select the arbitrators from that organization's pre-selected panel, but this should be restricted to the panel selected by the governing body.
  2. Ad hoc arbitration:
    In case of an ad hoc arbitration, an institution is not appointed to administer the process, but the parties themselves will be in charge of the decision making process. They will be choosing the procedure, the number of arbitrators, and the manner in which the proceedings must take place. Ad hoc arbitration means that the party that is going to be the arbitrator or the arbitrator is completely free to set their own rules.

    So, the arbitrator is not required to imp element the same rules that are applied in other arbitrations. The geographic jurisdiction of Ad hoc Arbitration is important, since most of the issues will be resolved in accordance with the laws of the nations where the seat of arbitration is located. This makes it very important for the parties to the agreement to decide on the location of the arbitration.
  3. Fast track arbitration:
    The fact that the arbitration process is time-consuming is why the "court of public opinion" works like a remedy to the issue of time. Fast track arbitration is a method which is time-dependent in relation to the arbitration and conciliation act. Its procedure is set up in a way that it abolished all time consuming techniques, and upholds the simplicity which is the original prime purpose.

  1. Conventional thinking
    Although India is currently moving towards modernization, it is yet an underdeveloped country. This means that most people are still ignorant about arbitration and still prefer courts to alternate dispute resolution. When people are ignorant or when others don't agree with a given system, it may sometimes be a good idea to put your faith in that system, but when people are unwilling to change it often does more harm than good.
  2. Lack of Proper Laws
    It is necessary to introduce more comprehensive provisions on arbitration processes and proceedings in order to ensure procedural justice in arbitration proceedings between companies and employees in India.'. The law makers need to study the problems relating to the needs and requirements of business houses, which are usually involved in arbitration proceedings. The laws must be made stricter and more elaborately elaborated so that more and more people can gain confidence in arbitration procedures than the judicial system.
  3. Intervention of Courts in Arbitration Proceedings
    The intervention of courts in arbitration proceedings shall be kept to a minimum. This is why those who opt for arbitration rather than pleat a court, people will tend to develop a sense of favoritism towards the proceedings, as well. People often find it better to approach the court at first.

    There should be a limit on court intervention, not only the intervention during the judicial process but also the intervention during arbitral proceedings. This means, there must be a limited scope to challenge the arbitral award under Section 34 of Arbitration Act, 1996. And, so it was well debated and agreed that the involvement of the judiciary should be minimised to an extent.
  4. Lack of Awareness
    The main impediment to the growth of arbitration in India is a lack of awareness among people.As a matter of fact only some of the business people, advocates, are aware of the process relating to dispute resolution., and, it is obvious that many small-scale businesspeople who are unaware of such remedies are unable to avail themselves of such procedures.
  5. Problems in enforcement
    The award must be enforced at any cause so as to protect the parties. Lack of enforcement of arbitral award is also one of the major cause in failure of the development in India.

Overcoming The Issues:
As we know that, each and every problem has a solution. As a result it is important to address the solutions.

The solutions to certain problems faced in arbitration are as follows:
  1. Creating awareness among each and every individual.
    An awareness must be created to each and every individual irrespective of their professions in order to resolve the disputes quickly.
  2. It must be made mandate in order to get recognized and resolve disputes quickly.
  3. Court should interfere to refer parties to arbitration:
    An intervention might be best kept to a minimum and under control, there should nonetheless be a limited scope to challenge an arbitral award under section 34 of the Arbitration Act 1996
  4. Enforcement should be made mandatory:
    In some cases of Bhatia International v. Bulk Trading[4], Venture Global Engineering v. Satyam Computer ltd and Bharat[5] Aluminium Co v. Kaiser Aluminium Technical Service[6]. The court in Bharat Aluminum observed that the first part of the act exclusively lays down the procedures and guidelines for domestic arbitrations whereas the second part of the act in accord with the UNCITRAL Model Law, New York Convention, and Geneva Convention applies.It should be noted that arbitrations under Part I of the Arbitration and Conciliation Act, 1996 include both, arbitration in India between two Indian parties, and international commercial arbitration held in India.
  5. Proper laws must be introduced:
    In the case of Konkan Railway Corporation Ltd V. Mehul Construction Pvt Ltd[7] reaffirmed the judgment in the case of Ador Samia in 1997[8] and subsequently the decision in Konkan Railway Company PV. Ltd V. Rani[9] Construction it was observed that there is no adjudicatory function to be performed by the Chief Justice and his designation, therefore stating that the appointment orders passed under Article 11 of the act are purely administrative and not judicial, thereby invoking Section 141 of the Indian Constitution.

Arbitration not only helps reduce the excess burden that is placed on the legal system in a number of countries, parties can propose their own terms and conditions, etc. If these reasons are overcome, the legislature and the judiciary keep a check on arbitration. Alternate Dispute Resolution has been evolving in India for a long time. With the ongoing development of the world economy and the impact of globalization, it has become very difficult to keep up with the pace and fulfill the ever changing needs of current times.

  • Arbitration and conciliation act, 1996
  • The constitution of India
  1. Disagreements.
  2. Article 39A of the Constitution of India provides for free legal aid to the poor and weaker sections of the society and ensures justice for all.
  3. Panchayati raj
  4. Bhatia International v. Bulk trading S.A, (2002) 4 S.C.C. 105.
  5. Venture Global Engineering v. Satyam Computers Services Ltd., (2008) 4 S.C.C. 190.
  6. Bharat Aluminum Co. v. Kaiser Aluminum Technical Services Inc., (2012) 9 S.C.C. 552.
  7. Konkan Railway Corpn. Ltd. v. Mehul Constructions., (2000) 7 S.C.C. 201.
  8. Ador Samia (P) Ltd. v. Peekay Holdings Ltd and Ors., (1999) 8 S.C.C. 572.
  9. Konkan Railway Corpn. Ltd. v. Rani Construction Pvt. Ltd., (2002) 2 S.C.C. 388.

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