Even as the Chief Justice of India (CJI) TS Thakur on Sunday pitched for revisiting the legal framework to encourage arbitration and reforms in the existing Government-run institution as it has performed "dismally", Prime Minister Narendra Modi asserted his Government has initiated far-reaching legal reforms and is out to create a vibrant arbitration mechanism as investors need to be assured that the rules of the game will not be changed arbitrarily.
Examining the problems ailing the arbitration mechanism in the country at a three-day seminar on "Strengthening Arbitration and Enforcement in India", CJI Thakur criticised the performance of the Government-run International Centre for Alternative Dispute Resolution (ICADR), which handled a "dismal" 20 cases in two decades. As India lacks proper institutions to hold arbitration proceedings, people are being forced to approach "five star hotels and clubs" which proves a costly affair.
Also, he said there is a need to "revisit" the legal framework on arbitration awards to address and reduce prolongation in courts once the arbitration award is granted. "How judiciary will deal with arbitral award and the time courts take in deciding cases are arbitral award need to be looked into, the CJI said, adding, judicial orders hamper early settlement of arbitration disputes.
"I personally hold the view that once an award is made and it is challenged in the court, the first question the judge asks is 'who is the arbitrator'. This is because the judge wants to know whether the award is honest. There have been cases where the judges have faltered… there is a need to sensitize judges to show deference to arbitration awards subject to the grounds on which arbitration awards can be challenged," CJI said.
Prime Minister Narendra Modi, who was the Chief Guest at the closing day of the seminar organised by NITI Aayog, underlined the need to promote India as an arbitration hub. With more FDI coming into the country, creation of an enabling alternate dispute resolution ecosystem has become a "national priority". There is a need to assure businesses "that the rules of the game will not change overnight in an arbitrary fashion" and commercial disputes will be resolved efficiently.
"A robust legal framework backed by a vibrant arbitration culture is essential," PM said, highlighting the success achieved by the Government by scrapping over a thousand archaic laws, a comprehensive Insolvency and Bankruptcy Code, implementing the National Company law Tribunals, a statutory Monetary Policy Committee and a merger of the commodities and securities market. Amendments to the Arbitration and Conciliation Act making arbitrations time-bound was another feature PM highlighted to show his government's priority to strengthen institutional arbitration.
But no legal reforms can achieve results when there is an effective and efficient dispute resolution mechanism, added Modi, suggesting that his government is working on a strategy to converge existing tribunals reducing burden on courts.
CJI Thakur felt that arbitration holds great promise when courts are overburdened, judges are overworked and litigants wait endlessly for justice. "An avalanche of cases is putting judicial system under stress...18000 judges handle 50 million cases and dispose 20 million cases daily," CJI said.
PM said that speedy arbitration required "specialized arbitration lawyers" and "professionally run arbitral institutions that can deliver international standards of services at reasonable costs". Singapore featured in speeches of both CJI and PM as a preferred arbitration hub for its robust legal framework and ease of doing business.