Special to The Express: CIAC can kindle a cultural shift

Arbitration is no longer viewed merely as an alternative dispute resolution mechanism, but is increasingly preferred as a primary dispute resolution measure, offering fair outcomes without unnecessary delay or expense. In a rapidly evolving commercial world, complex disputes are inevitable. Investors cannot afford stagnant investments. Economic success depends on speedy and efficient dispute resolution, as capital cannot remain idle for long. Minimum court interference is the mantra.

India, one of the world’s oldest civilisations with strong social roots and close-knit communities, has long been familiar with mediation and arbitration. These are not new concepts in the Indian legal tradition. In Yajnavalkya Smriti, Rishi Yajnavalkya mentioned Shreni (guilds) as one of the three arbitral institutions, alongside Puga (assembly) and Kula (family or clan).

Even during the colonial era, the Bengal Regulation Act of 1772 provided for arbitration in dispute resolution. This was followed by the first codified legislation on arbitration, the Indian Arbitration Act, 1899, succeeded by the Arbitration Act, 1940.

Arbitration received significant impetus when the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on International Commercial Arbitration in 1985. Aiming to achieve uniformity in arbitration laws and procedures, the United Nations General Assembly recommended that countries give due consideration to the 1985 Model Law. With globalisation in the early 1990s, borders began to fade. Free mobility of capital across countries further fuelled the quest for uniform dispute resolution procedures.

In order to consolidate the law relating to international commercial arbitration and domestic arbitration, India enacted the Arbitration and Conciliation Act, 1996. The objective was to ensure speedy resolution of disputes with minimal court intervention so that the confidence of investors in the Indian story would not be eroded. Recognising practical challenges in the system, the law was further amended through the Arbitration and Conciliation (Amendment) Act, 2015. A model fee schedule for arbitrators was incorporated to make arbitration in India more cost-effective. Seeing the success of institutional arbitration around the globe, the Act was again amended through the Arbitration and Conciliation (Amendment) Act, 2019. The amendment was aimed at removing roadblocks to institutional arbitration and making India a strong hub for institutional arbitration.

The Chief Justice of India has repeatedly expressed his aim of making India a preferred destination for institutional arbitration. The launch of CIAC represents a step towards implementing this vision and promoting institutional arbitration in India.

Though the success of globally renowned institutions such as the London Court of International Arbitration (LCIA) and the Singapore International Arbitration Centre (SIAC) is not easy to match, it is not impossible. CIAC has its own advantages and challenges.

Clean, green and the City Beautiful, Chandigarh is the joint capital of the states of Punjab and Haryana. It houses the common High Court for the states of Punjab and Haryana and the Union Territory of Chandigarh. It possesses a rich pool of experienced arbitrators and an accomplished Bar. Additionally, its modern infrastructure, strong connectivity with Delhi, and the fact that Gurugram — a major commercial hub of India — falls within the territorial jurisdiction of the Punjab and Haryana High Court further strengthen its potential.

The lifeblood of every dispute resolution mechanism is its fairness and impartiality. CIAC will have to strive for consistency. It cannot afford to be unpredictable. Rules of procedure need not be obscure. Successful institutions like SIAC have pioneered major innovations such as ‘emergency arbitrations’. CIAC will have to be not only responsive but also proactive in foreseeing the intricate realities of the commercial world. The clamour for minimal intervention of courts in arbitration is aimed at reducing the cost of litigation in terms of money and time. Arbitration has to be brisk and at the same time alive to complex commercial issues.

The real challenge for CIAC will be to evolve a culture that breeds a dispute resolution mechanism that is consistent, innovative, alacritous and cost-effective.

The author is a sitting judge at the Punjab and Haryana High Court