Specialised Arbitration And The Transformation Of Indian Dispute Resolution

  • Specialised Arbitration And The Transformation Of Indian Dispute Resolution

    Arbitration in the recent times has emerged as a promising solution for litigants struggling to get prompt assistance from the overwhelmed Indian Courts. The two types of Arbitration namely Ad Hoc Arbitration and Institutional Arbitration are most widely used to address disputes expeditiously between parties. Parties have the autonomy to choose the Arbitrators adjudicating their dispute...

    Arbitration in the recent times has emerged as a promising solution for litigants struggling to get prompt assistance from the overwhelmed Indian Courts. The two types of Arbitration namely Ad Hoc Arbitration and Institutional Arbitration are most widely used to address disputes expeditiously between parties. Parties have the autonomy to choose the Arbitrators adjudicating their dispute in the Ad Hoc setting and to choose the Institution of their choice in the other. Arbitrations whether conducted under the Institutional or Ad hoc frameworks, possess a generalist character and lack industry-specific focus owing to the ability to administer any dispute without specific requirement. However, in recent years, certain specialised Arbitral Institutions have emerged, offering industry-specific rules and regulations, procedures and protocols, and adjudicators.

    Specialisation is unavoidable, especially within the realm of Arbitration as it can directly impact the efficiency of the process. This specialisation in Arbitration has materialised in various forms to streamline it within particular industries. For instance, the setting up of the Court of Arbitration for Sport, CAS to administer Arbitrations related to sports, the Chambre Arbitrable Maritime de Paris to handle Maritime Arbitrations, and the WIPO Arbitration and Mediation Centre to address disputes on intellectual property.

    The authors have attempted to examine this query by evaluating the objective of the standard Indian practice of Ad hoc Arbitration and analyse if the purpose has been fulfilled. Further, the authors have taken into account the context of Foreign Arbitration with the possibilities of incorporating the practice of specialised Arbitration in the Indian scenario.

    Challenges faced by Ad hoc Arbitrations in India

    Amidst India's burgeoning economy, challenges like commercial disputes, partnership dissolution, and contract breaches impede individuals from recovering costs pressing for a dire need for urgent redressal of issues and recovery of damages.

    In India, it has been commonplace for the losing side to mount a challenge to Arbitral Awards, by way of setting aside awards or filing objections to enforcement actions.[i] Application for setting aside of an Award becomes a way to resist the enforcement and push the parties back into the long proceedings. If not a favourable decision, the losing party hence seeks refuge in the extra time bought with the initiation of this process of challenging.

    Specialised Arbitration and Revolutionising the Arbitration Practice

    Let us look at the need for specialization with an example. Given a substantial volume of around 90% of the world's goods being transported by sea, maritime and trade disputes occupy a significant portion of the international commercial Arbitration landscape. In this scenario the most efficient way to address these disputes would be to have a specialised Maritime Arbitration to be given a preference.[ii]

    The Singapore Chamber of Maritime Arbitration Rules[iii] ensure that disputants and the tribunal are aware of what is to be expected in the process on how expert witnesses might be appointed, how a hearing should be conducted, specialised procedures for expedited claims, bunkering disputes and collision matters.[iv]

    1. Inclusion of Experts

    This practice can be internally mended by making certain changes to the existing system. An alternative perspective can be that as long as the Arbitrators possess the requisite expertise, the choice between a Specialised Arbitration Centre, a Generalist Arbitration Centre or an Ad Hoc arrangement will not significantly impact the outcome of the dispute. It also has to be considered that even in the specialised problems, a part of the problem could relate to a generalist legal matter for instance, contract formation where the specialised industrial knowledge may be of a limited necessity. In such cases if the matter is being heard by a generalist Arbitrator, adjudication of the limited part relating to the special nature of the dispute can be done by an expert in that specific domain. To resolve this issue, institutions like Society of Construction Arbitrators or the London Maritime Arbitrators Association (LMAA) are serving as platforms for peer review by establishing selection mechanisms to guarantee that arbitrators listed on their rosters possess the essential specialized expertise and capabilities. Even the "generalist" Arbitration Centerscan follow the footsteps of the Hong Kong International Arbitration Centre(HKIAC) that launched specialist rosters, such as the Panel of Arbitrators forIntellectual Property, to adhere to specific disputes. If nothing the generalist Arbitration centres can adopt specialised rules to meet the purpose without any major changes in their function.[v] These tailor-made rules will offer enhanced certainty and convenience to parties by providing a framework specifically designed for a particular type of dispute.

    1. Specialized Arbitrators

    Justice Hima Kohli in an event hosted by the International Arbitration and Mediation Centre, Hyderabad (IAMC), emphasized the need for the creation of a Specialized Arbitration Bar composed of experts and legal practitioners dedicated to Arbitration.[vi] The emphasis lies on professionals and legal practitioners who are committed to the practice of arbitration. Here the term 'dedicated to Arbitration' becomes subjective interpretation which should ideally be construed as practitioners willingly prioritizing Arbitration.

    A significant impediment to the advancement of Arbitration is its relegation to a secondary status compared to traditional legal practices. These experts, must be adequately qualified with the relevant knowledge and prior exposure of the subject matter of the proceeding in hand. The awards should not possess even a hint of misinterpretation of the provisions of law or inadequate exposure to interpretation as this makes it susceptible to a challenge. This issue can be resolved by hence appointing adequately qualified individuals as Arbitrators. Essentially, their reliability and accuracy should be of such high calibre that it minimises the potential for challenging the award, reducing its likelihood to nearly zero.

    1. Abolishing the Secondary treatment

    Arbitration cannot be treated as a 'part-time' profession of the persons qualified as Arbitrators. It is commonplace for an arbitrator to be involved in an alternative profession, such as a lawyer or solicitor. However, it is imperative to prioritise ensuring that the arbitrator's engagement in an alternate profession does not lead to any compromise in the quality of justice being dispensed.

    A prominent group of professionals designated as Arbitrators includes retired judges. While they may seem to be the most suitable individuals at first glance, it is crucial to take into account the Litigation approach ingrained in their thought processes due to their prior training and experience. On a closer examination of this detail, one would also argue that this Litigation approach might lead to the unnecessary prolonging of the Arbitration proceedings. Judges, by habit, may diverge from the distinct and expeditious approach fundamental to Arbitration. Consequently, it would undermine the fundamental and essential purpose of Arbitration as a mechanism for dispute resolution.

    1. Global Practice of Arbitrating Efficiently

    There exists a gap between the efficient practices of Foreign Arbitrations in comparison with the Indian Arbitration. This can be bridged by the development of institutions providing Arbitration services. Looking at International Arbitration, the practice of Specialized Arbitration is being given the importance it deserves. For instance, the art world has its own specialised institution called the Court of Arbitration for Art (CAfA), which was launched in 2018 in The Hague, Netherlands. India, on the forefront, lacks the institutions which would make the process of specialised Arbitration easier.

    It's worth noting that Amendments to Arbitration rules, which have been implemented in recent years by many prominent commercial Arbitration Institutions such as the ICC in Paris or the LCIA in London (in 2012 and 2014 respectively), are primarily designed to enhance the expediency, efficiency, and cost-effectiveness of proceedings. Interestingly, these modifications often mirror the mechanisms found in the rules of specialized Arbitration Institutions.[vii]

    Problems can hence be traced at the stage of prioritising Ad-hoc Arbitration in place of Institutional Arbitration. Arbitrators must be appointed from the pool of Arbitrators consisting of candidates with credible and relevant experience with the ultimate decision resting with the parties.[viii] There should be a strict requirement coupled with fulfilment of certain necessities before their appointment as Arbitrators. It is imperative for institutional authorities to ascertain whether the expert selected to serve as an Arbitrator possesses the necessary time and energy to fulfil the essential responsibilities associated with the ongoing Arbitration. Ensuring that the appointed individual can dedicate near-undivided attention to the Arbitration at hand is of utmost importance. To take care of this at an early stage, even the curriculum for qualification as an arbitrator be revised and training programs be involved in the curriculum to bring more sensitivity to this issue.

    India as an aspiring Arbitration Hub can give preference to Institutional Arbitration in place of Ad hoc Arbitration. In this dire necessity to transform the practice of Arbitration, the setting up of IAMC at Hyderabad, the Indian Council of Arbitration (ICA) in New Delhi, Delhi International Arbitration Centre, Mumbai Centre for International Arbitration among others are a ray of hope towards the aspiration of a better Arbitration practice and a constructive step taken towards enhancing the Alternative Dispute Resolution (ADR) landscape of the country.[ix]

    While specialization within Arbitration is both inevitable and beneficial, there's no compelling reason why it cannot be integrated into the existing framework of "generalist" Arbitration Centres and rules. It's plausible that these institutions could introduce some form of specialist Arbitrator rosters, rules, or guidance, although their practical usefulness might be limited. However, there are strong arguments in favour of specialist Arbitration Centres, which foster specialized expertise and have operated successfully for decades. Additionally, many specialized Arbitrations occur on an ad hoc basis, such as in the maritime and commodity trading industries. Overall, specialist disputes can be effectively resolved through either Specialist or Generalist Arbitration Centres /rules, or on an ad hoc basis. Competition between Specialist and Generalist Centres, as well as between various regional Centres, may appear significant, but its actual impact may be less profound. Nonetheless, competition that enhances the efficiency and efficacy of International Arbitration should be encouraged and praised.[x]

    Additionally, the disputing parties should carefully evaluate their options and select the most suitable Arbitral body and rules for their specific type of dispute, considering how well these options align with their business needs while maintaining standards of quality, efficiency, and cost-effectiveness.

    Disputes within certain industries, such as maritime and trade, often entail specialized industry knowledge, legal expertise, and unique business considerations. Rather than being compelled to pay for mandatory services that may not be relevant or beneficial, the disputing parties in order to tailor their Arbitration process to their specific needs and preferences, adopt specialised Arbitrations.[xi]

    The escalating issue of the ineffective and diminishing prominence of Ad hoc Arbitration and the arbitrary procedure of appointing Arbitrators has to be addressed. It can be dealt with by aligning Ad hoc Arbitration with the quality of Institutional Arbitration and curating its enforceability as strong as judgements from the courts. Further, the appointment of Arbitrators must have an additional criterion of prior experience in that field to bring more genuineness, accuracy and reliability to the Arbitral Award. This would hence help reduce the scope of challenge of these awards and unnecessary burden on the courts. Having incorporated these solutions, India would rapidly be able to cope up with successful practices worldwide and hence fulfil the foremost aim of establishing itself as an Arbitration Hub in the real sense.

    Views are personal.

    [i] Ashutosh Ray, Piyush Prasad. (2023) Coming of Age of Indian Arbitration. 2022 Year in Review.

    [iv] Singapore Chamber of Maritime Arbitration, Global Arbitration Review, https://globalarbitrationreview.com/organisation/singapore-chamber-of-maritime-arbitration

    [v] Panel of Arbitrators for Intellectual Property Disputes, HKIAC, https://www.hkiac.org/arbitration/arbitrators/panel-arbitrators-intellectual-property

    [vi] Tellmy Jolly, Justice Hima Kohli Calls For Creation Of Specialized Arbitration Institutions And To Promote Gender Diversity Amongst Arbitrators At IAMC International Arbitration Day, LiveLaw, (9 Oct 2023) https://www.livelaw.in/news-updates/supreme-court-judge-justice-hima-kohli-specialized-arbitration-institutions-gender-diversity-arbitrators-239627

    [vii] Łukasz Gembiś (K&L Gates, Poland), Are We Dealing with the Trend of Specialised Arbitration?, Kluwer Arbitration Blog, (09 May, 2016), https://arbitrationblog.kluwerarbitration.com/2016/05/09/are-we-dealing-with-the-trend-of-specialised-arbitration/

    [viii] Elizabeth Montpetit, The era of specialised arbitration: Part one: Art, sport, finance, Thomson Reuters Practical Law Arbitration Blog, (07 May, 2020) (http://arbitrationblog.practicallaw.com/the-era-of-specialised-arbitration-part-one-art-sport-finance/

    [ix] Tellmy Jolly, Justice Hima Kohli Calls For Creation Of Specialized Arbitration Institutions And To Promote Gender Diversity Amongst Arbitrators At IAMC International Arbitration Day, LiveLaw, (9 Oct 2023) https://www.livelaw.in/news-updates/supreme-court-judge-justice-hima-kohli-specialized-arbitration-institutions-gender-diversity-arbitrators-239627

    [x] Grigori Lazarev, Thoughts on specialist arbitration: centres, rules and arbitrators, Thomson Reuters Practical Law Arbitration Blog, (09 May, 2016), http://arbitrationblog.practicallaw.com/thoughts-on-specialist-arbitration-centres-rules-and-arbitrators/

    [xi] Damien Glenn Yeo, Choosing an arbitration model – why flexibility is key, Global Arbitration Review, (07 July 2021), https://globalarbitrationreview.com/review/the-asia-pacific-arbitration-review/2022/article/choosing-arbitration-model-why-flexibility-key#footnote-018-backlink

    Next Story