New Delhi, Aug 21 (Bureau) Telangana High Court Chief Justice Ujjal Bhuyan has said that the disputes are inevitable in business. The International Arbitration & Mediation Centre (IAMC), Hyderabad in association with Federation of Indian Chambers of Commerce and Industry (FICCI), Hyderabad on Saturday hosted a Fireside Chat with Justice Ujjal Bhuyan and Justice L Nageswara Rao, Former Judge, Supreme Court of India on the importance of ADR from the perspective of Ease of Doing Business, according to a statement. Justice Ujjal Bhuyan, in his address, said: “Disputes are inevitable in business. Legal system must provide for an effective and assured speedy resolution of disputes. There must be certainty in the legal framework, in other words business or industry will look for a scenario where there is certainty in the laws.
It cannot happen that based on the existing laws of today, a foreign investor invests in India and five years later another law is brought in which adversely affects the interest of the investor and is given retrospective effect. This is outside scope of the judiciary but is a very important aspect.” He said that if given a choice, a party will choose to approach an Indian court over a court in another neighboring country. He highlighted that the judiciary is overburdened, and arbitration is not the only alternative to dispute resolution and that there are other mechanisms to resolve disputes including mediation, conciliation, Lok Adalat . The Telangana HC CJ also highlighted the dispute resolution mechanism under the MSMED Act, 2006 and discussed few provisions of the Commercial Courts Act to state that mediation and conciliation have been recognized by statutes. “Arbitration has now become the established and recognized mode of dispute resolution because of its widespread use and acceptability in the commercial world.”
He said that Arbitration is successful as once the dispute is referred to arbitration it is out of the court system unlike other modes of ADR which come back to the court again. However, he said that the grievance against arbitration is that it has become expensive, and it has taken on the character of a court proceeding. He also said that the Arbitral Award is not enough, it is just the beginning therefore, awareness is required. Also, most arbitrations in India are done by retired judicial officers and judges of the court. He said that there is a need to have a trained pool of arbitrators who can handle specialized matters. He also discussed how mediation is an informal process and there are places where mediation and arbitration go hand in hand, we can also explore that as it is not the case that they are exclusive to each other. Justice Nageswara Rao said that “One of the important factors of ease of doing business is resolution of disputes. Ease of doing business and enforcement of contracts are different. We are doing well in the ease of doing business but so far as enforcement of contracts is concerned, why are we behind? The main issue is the delay in courts as well as expensive litigation. Access to justice in India is very good due to which people knock the door of justice here easily.
In other countries it is not so easy and more expensive. When we call ourselves the largest democracy, we are proud to say we have a Judiciary which protects constitutional rights and especially the constitutional courts have been protecting human rights. Once a case is filed in court, why does it take 5 times more time than courts in Singapore take. The reason is that the number of judges in our country is less, the number of cases each judge handles in our country is too much and the infrastructure is not proper. If commercial disputes go to court, it is going to be time taking and expensive due to the fees charged by senior advocates. What is the remedy? It is to find an alternative, so every business should have a policy of avoiding disputes. Disputes spoil relationships even if you succeed in the disputes. Institutional arbitration must be promoted to avoid delays and to make arbitration affordable.” He also suggested adopting additional methods of dispute resolution such as Med- Arb and Arb-Med-Arb. He also highlighted the benefits introduced by the 2015, 2019 & 2021 amendments to the Act that have significantly narrowed the grounds of court intervention through judicial review that have caused delays in the past. The scope of examining an award has been narrowed tremendously and exceptions on the grounds of public policy must now meet a far higher threshold. Automatic stays to the execution of an award have also been done away with. On the International front it is no longer even necessary for foreign awards to be stamped to secure speedy enforcement. Justice Ujjal Bhuyan, noted that in most arbitral matters it is the government that is the litigant.
The government is a zealous believer in exhausting all avenues of appeal before accepting the finality of any decision. Justice Bhuyan speculatively suggested that at the stage of rendering of the final award a mediated discussion may be held between the parties to assess their joint satisfaction and limit any further appeals. It was acknowledged however, that a broad change of mindset in the government as a litigator is required to effectuate further change beyond a multitude of amendments. The discussion progressed further regarding what arbitration may do to enhance ease of doing business in the near future. The moderator enquired regarding the likelihood of the Indian Judicial landscape opening up to welcome foreign firms and arbitration practitioners as well as third party funding in arbitration. Justice Nageswara Rao noted that the process of Arbitration has no legal requirement for a particular kind of lawyer. Further, foreign practitioners are already at liberty to practice on a fly in fly out basis. Regarding third party funding, he observed that there is no express bar on third party funding and as long as the same is done with transparency and disclosure guidelines in place, there is no harm in allowing India to catch up with other global arbitration hubs in this regard. During the discussion Justice Rao also noted that he has begun his arbitration practice which consists only of ad-hoc appointments.
He stressed upon the benefits of Institutional mechanisms and institutions such as IAMC, Hyderabad while noting that ad-hoc arbitrations in and off itself is not necessarily bad, however, there are delays in the arbitral process which at times stem from arbitration practitioners themselves. Important point mooted by Justice L Nageswara Rao was that lawyers should drift away from the traditional litigation mindset. Further, he emphasised that we need a full-time arbitration bar and full time arbitrators. He also shared his experience that in other jurisdictions, he noticed that in young lawyers there is real enthusiasm and interest in handling complex high value arbitrations. He also said that arbitration is not the domain of retired judges, even young lawyers should specialize and become arbitrators. Moreover, even engineers, technocrats and those with industry specific knowledge should also be appointed as arbitrators. Commenting on the question relating to the fees of the arbitrators, Justice Ujjal Bhuyan said that the fees of arbitrators is not the only factor which makes arbitration more expensive.