Harry Potter’s plight couldn’t have gotten any worse. Determined to get justice, he approached Ms. Hermoine Granger, one of the city’s best lawyers, and asked her to file a case against the retail store. The proceedings began and years passed. The case went on for so long that Harry Potter’s legal expenses surpassed the car’s worth.
Here is where Arbitration comes into play. Harry Potter could’ve alternatively chosen Arbitration to resolve his dispute with the retail store. Arbitration is one of the most prevalent forms of Alternate Dispute mechanisms and the one that’s relied upon the most. As the name suggests, Alternate Dispute Resolution (ADR) includes alternatives to the traditional court system. These alternatives include Arbitration, Mediation, Negotiation, etc… Arbitration is an ADR mechanism wherein a person called the Arbitrator acts as a judge and solves disputes that comes before him. The judgment that he passes is known as an Arbitral award. In a court, a judge or a jury applies strict laws, statutes and procedures to decide a case whereas Arbitration is quick and informal. Arbitration and other ADR mechanisms are very similar to our age-old panchayat system. We could say ADR is simply a polished and a modern version of it.
It’s completely up to the parties to a case to decide whether they want to go for arbitration or not. Let’s assume Harry Potter chose Arbitration instead.
He approaches an arbitral institution and asks for a fine arbitrator. The firm appoints Mr. Ron Weasley to adjudicate the dispute. Ron reserves a conference room in a reputed five-star hotel and invites Mr. Voldemort. Conveniently, Voldemort also seemed to prefer Arbitration.
This way, Harry Potter will be able to get his long-awaited justice much faster since the law requires arbitrators to complete a particular case within a specified time limit. Harry Potter would also do a huge favor to his purse as Arbitration is much cheaper than court proceedings. Harry Potter can be assured that his decision won’t backfire like before. Moreover, Voldemort too benefits from Arbitration as arbitration proceedings are private and his store’s reputation wouldn’t be tarnished like it would have in a traditional court.
So, can Arbitration replace courts? Definitely not. Even though arbitration seems to solve it all, the truth is, it can never really replace the time-tested centralized adjudication mechanism as not all disputes are arbitrable. Secondly, Arbitration has its own downfalls.
Even though Arbitration comfortably finds its statutory recognition in the Arbitration and Conciliation Act of 1996, a two-tier arbitration or an appellate arbitration seems to not be backed by statute.
The Courts often face backlash for delaying judgments; however, it must be understood that our courts function on Blackstone’s ratio under which it is believed that a thousand criminals escaping the law is better than a single innocent being prosecuted by it. Further, litigation involves deliberating on the subtler aspects of law, unlike an informal arbitration proceeding.
The judgment passed by an arbitrator, called the arbitral award, is binding on both parties. While parties can still approach the court post arbitration in certain situations it simply creates the same loop all over again.
That is why a two-tier arbitration system is pivotal. To err is Human and the current arbitration setup can prove to be a risky path for many since it has no review mechanism in place. This is basically like appealing in the traditional court setup. It might take slightly longer but the chances of injustice are substantially reduced. Either way it would still be much faster than courts.
Moreover, to be an arbitrator you do not need any qualification. That’s why it’s considered a quasi-judicial mechanism. This opens up a wide range of conundrums. Although in practice law firms and clients tend to hire lawyers of repute as they're arbitrators, on paper, even a school dropout could be one.
You could hire anyone and make him adjudicate a dispute between you and your neighbour. His decision will be final! Doesn’t matter whether he’s educated or not, qualified or not. This greatly hampers efficiency. With the world moving towards arbitration and its scope widening beyond just corporate and commercial cases dealt by big powerful companies, this has to be looked into immediately. Without any Mandate of Law on the Arbitrator’s qualification, it could seriously undermine the Institution.
The passing of the Arbitration and Conciliation (Amendment) Bill, 2019, and that of the New Delhi International Arbitration Centre Bill are the first few steps in the long walk ahead of us in making India an international arbitration hub. Complemented by the NITI Aayog’s National Initiative towards Strengthening Arbitration and Enforcement in India and the central government’s ‘Make in India’ initiative, these reforms will help the country reach newer heights. Many of the provisions in this bill have the potential to take India’s arbitration in the global tune.
Further various recent judgements affirm the fact that Indian courts have taken a pro-arbitration stance. Although Arbitration can never replace courts it can definitely lift a huge weight off the court’s shoulders thereby improving the justice system on a whole. With the right measures, India can have the world waiting at its doorstep for justice.
Two tier arbitration has no statutory backing but a judgement was pronounced validating it. Good topic handled well!
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