This long gestation period of litigation has resulted in a large scale loss of confidence in the judiciary, with a growing number of people opting to stay away from court. Enter alternate dispute resolution. It is this plethora of people who are prime targets of an alternate dispute mechanism. The prime time solution to the snail's pace discharge of cases. The main selling point of arbitration is the speedy and cheap resolution of disputes outside of a courtroom.
While arbitration is a product of a private agreement, once an arbitration award is rendered, the prevailing party can seek to have that award confirmed by the courts, and, having done so, can invoke the coercive power of the state to enforce it in the same manner as it could a court judgment. Initially received with skepticism by the courts in various countries, arbitration is now being embraced as an effective form of alternate dispute resolution. As a result of the burgeoning international trade and an explosion in the foreign direct investment numbers in the country, arbitration and other forms of alternate dispute resolution are becoming more and more indispensable. One of the major problems with foreign litigation is that foreign judgments are subject to several layers of appellate review, whereas, foreign awards are much easier to enforce in different sovereign states.
Arbitration is particularly successful in fields like construction, where a certain amount of expertise is required while resolving disputes, of which there is paucity in the courts. Arbitrators are chosen from the same industry, and are generally required to resolve disputes based on fact rather than legal issues. Most companies prefer such a business approach to resolution of disputes, rather than a legal approach.
Arbitration in India was first governed by the Arbitration and Conciliation Act, 1940, which was later replace by the 1996 Act. The 1996 Act was designed primarily to implement the UNCITRAL Model Law on International Commercial Arbitration and create a pro-arbitration legal regime in India. This Act was largely aimed at subduing the loopholes which allowed for excessive judicial intervention in the 1940 Act.
Some of the features of judicial review
The words in Section 30 of the 1940 Act read “shall not be set aside” took away the jurisdiction of the courts to set aside an award except on one or more of the grounds specified in the section. Amended in 1996, however, the section re-numbered section 34 reads “An award may be set aside only if…” Hence, the court has no jurisdiction to set aside an award on any other grounds. This amendment was brought with an intention to reduce the scope of judicial review to allow for a minimum level of court intervention. In R.S. Avtar Singh & Co. v. N.P.C.C. Ltd., the court commented on the nature and extent of the court’s jurisdiction: It is a well settled principle of law that the award of the arbitrator who is a chosen judge of facts and of law between the parties cannot be set aside unless an error is apparent on the face of the award or it can be inferred from the award that the arbitrator has misconducted himself or the proceedings or that he has not applied his mind to the material facts. Hence, the court is not sitting in appeal on the award, nor can it re-examine the material which was adduced before the arbitrator. The court cannot examine the correctness of the award on merits nor it is...