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Arbitration and Mediation: Need of the Hour

Arbitration and Mediation: Need of the Hour
(From left) Justice Shivraj V Patil, former judge, SC; PK Malhotra, former law secretary; Justice TS Thakur, former chief justice of India; Rajshri Rai, editor-in-chief, APN; Inderjit Badhwar, editor-in-chief, India Legal; and Justice MN Venkatachaliah, former chief justice of India, at the lamp lighting ceremony of the Legal Leadership Conclave
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Above:  (From left) Justice Shivraj V Patil, former judge, SC; PK Malhotra, former law secretary; Justice TS Thakur, former chief justice of India; Rajshri Rai, editor-in-chief, APN; Inderjit Badhwar, editor-in-chief, India Legal; and Justice MN Venkatachaliah, former chief justice of India, at the lamp lighting ceremony of the Legal Leadership Conclave

Arbitration and Mediation, these two forms of alternative dispute resolution are important for the judiciary struggling to tackle pendency. The best of legal minds discussed how to make them more popular 

By India Legal Bureau

After the successful completion of the western chapter of the Legal Leadership Conclave in Mumbai in April this year, its southern chapter was held in Bengaluru on August 17 with a subject that was important and relevant for the judiciary today—“Challenges and Future of Arbitration and Mediation in India”.

These conclaves are a series of discussions and events held on a wide range of contemporary legal issues where judges, legal luminaries and other thought leaders exchange views. The Bengaluru Conclave was presented by India Legal Research Foundation, a non-profit organisation committed to bringing justice to those who deserve it but cannot afford it, and was partnered by the ENC Group along with APN and Nepal 1 as media partners.

Justice Venkatachaliah at the inaugural session of the Conclave

Arbitration and mediation could not be more appropriate subjects for the Conclave considering the staggering number of cases that the judiciary is burdened with. Both are the most popular forms of Alternative Dispute Resolution (ADR) and have become a credible alternative to the system of cases being decided by courts.

Justice MN Venkatachaliah, former chief justice of India, in his inaugural address, said precisely this. He said: “There are about 34 million cases in the 22,600 subordinate courts in India. Ten percent of that is in the high courts, about 60,000 in the Supreme Court. The World Justice Report 2019 (Rule of Law Index) gave India 68th place amongst 126 nations on an evaluation of eight criteria. ‘Civil justice’ is one of them…. In India, the solution is possible if there is some authority that owns the problem. It is too serious a matter to be left alone to the judges….”

Justice Shivraj V Patil, Justice Thakur and Justice BN Srikrishna at Technical Session I

He further said that the monetary loss due to delays in solving cases was significant and reiterated that institutions, administration of justice and their methods need a strong second look. “Law is said to be one generation behind the needs of the times; the courts are two generations behind and the judges three!” he said.

Justice Alok Aradhe, judge, Karnataka High Court, and Justice Shivraj V Patil at the Conclave

Justice Venkatachaliah emphasised that arbitration and mediation must become the new “mantras” for judicial salvation. He said this would help in reducing pendency. Just allocating five percent of the money spent on the judiciary for arbitration and mediation would benefit people enormously, he said.

Straight talk

Former Chief Justice of India TS Thakur’s observations on arbitration were insightful and illuminating. Some of the vital points he touched upon:

  • The arbitration process must be made accessible to people. Even a municipal contractor should have access to it.
  • The whole system must respond to and provide support to the arbitration process.
  • Arbitration in places like Singapore, London, Hong Kong and Malaysia is successful not because there is already an existing physical infrastructure and technology but because of the legal framework, non-interference by courts, arbitration tribunals having a free hand and awards being enforceable. The judicial system is perfectly attuned to arbitration. And this is where the report of the Srikrishna Committee is critical. The whole idea, said Justice Thakur, was to upgrade our legal framework to a level where we can present an alternative to Singapore and other well-known centres of arbitration in the world. It seems that the government has not fully endorsed the recommendations of the Committee and that is not good news, he said. We will have to wait and see how the situation unfolds.
  • (L-R) Justice Thakur and Justice BN Srikrishna exchanging views during Technical Session I on the journey of arbitration from 1940 to 2019

    The accreditation process in the new arbitration law is unclear. Who are the people who will accredit the arbitral institutions or the arbitrators? Government interference still remains and that is a major concern.

  • As arbitration awards are frequently challenged in Indian courts, judges handling these cases need to be trained. More importantly, they must be trained to pick up the right kind of cases for referring to arbitration tribunals. However, there is no clarity on whether a civil court can refer a case for arbitration.
  • Most of the arbitral awards are challenged on the ground that they are against the “public policy of India”. But there is no clear-cut definition of a public policy in the statute. The grounds on which awards are challenged in India are confusing, to say the least.
  • There is no professionalism, in general, among judges and lawyers working in the arbitration sector in India. This is important if we have to compete with international standards.
  • Judges need to be sensitised and trained towards arbitral awards.
  • Can AI be used in the current scenario where we do not have uniformity in sentencing in criminal cases and can it bring about uniformity? Judges may give different punishments for the same offence.
  • Regarding the address by Nitin Gadkari, Justice Thakur said that the road transport ministry which he heads was the biggest litigant and has the largest number of claims, running into maybe lakhs of crores. The judge felt that Gadkari was the right person to say how arbitration proceeds in his regime.
Rajshri Rai felicitating Avinash Amble, an expert on Artificial Intelligence, at the Conclave

Emphasising the maximum use of technology and its new tools in the dispute resolution mechanism, he said that Artificial Intelligence (AI) would be extremely beneficial and influence all spheres of life. Technology would become the driving force behind all institutions, he said, including the administration of justice.

Drawing the attention of legal luminaries present at the event, Justice Venkatachaliah said that this technology would also be the driving force behind the administration of justice and would need a new category of judges who are well-versed in the technological domain.

Pradeep Rai, senior advocate, Supreme Court, and chairman, ILRF, honouring Justice Alok Aradhe

Highlighting the importance of the Conclave, Justice Venkatachaliah said that “eminent men of law had assembled at the event to bestow serious thought on one of the vexed issues of how traditional legal methods should be supplemented by more civilised and humane philosophy of conflict resolution in India”.

Former Chief Justice of India TS Thakur, who was the Chairperson of Technical Session I, “Arbitration — Journey from 1940 to 2019”, apprised everyone about the existing scenario of arbitration in India. His insightful comments were a candid take on the arbitration scenario in India. He summarised the observations of each speaker, showing his mastery over the subject (see box: Straight talk).

(L-R) Justice BV Nagarathna, judge, Karnataka High Court; Justice P Vishwanath Shetty, Karnataka Lokayukta; and senior advocate Sriram Panchu at Technical Session II on mediation, an effective tool of dispute resolution

Justice BN Srikrishna, a former judge of the Supreme Court, who headed the high-level committee whose recommendations led to the Arbitration and Conciliation (Amendment) Bill, 2019, said that the autonomy of parties in the arbitration process was extremely critical and state authorities should take a back seat.

While speaking on the sub-topic “Challenges and Reforms in Indian Arbitration and Mediation System — Way Forward” in Technical Session I, he lamented the domination of judges in arbitration and said that the less they interfered, the better it would be for the spirit of arbitration in India. He also called for more institutional arbitration in India and said that the time has arrived for arbitration and mediation.

Justice P Vishwanath Shetty addressing the audience during the session

Responding to the use of AI in arbitration, Justice Srikrishna said that natural intelligence could still play an important role through its human touch. While welcoming the amendments in the new law, he said that issues still remain as the government had not fully implemented the recommendations of the committee.

Justice Alok Aradhe of the Karnataka High Court, while speaking on the “Challenges to Arbitral Awards — Commercial Courts and Need for Training of Judges” said that arbitration was not a new concept for our country. Its reference could be found even in the Upanishads. Today, it is a dominant method to resolve disputes, including commercial ones. He said that a key challenge is that a new regime of alternative dispute resolution is yet to be implemented and understood in spirit and not just in law in India. This can be resolved by learning from international practices. He too emphasised training of judges at all levels, sufficient government support, proper legal framework for arbitration, advantages offered by arbitration institutions, experienced and skilled panel of arbitrators, institutional arbitration and less interference from the judiciary. Judges should be sensitised about the impact of their interference in arbitration. The issue of judicial scrutiny of awards needs to be resolved, he said. He said that existing arbitration institutions had done well in India and litigants now look forward to them. India must show to the world that it is in sync with the international perspective of resolving matters expeditiously through ADR.

Justice BV Nagarathna sharing her thoughts on the achievements and challenges of mediation

Justice V Jagannathan, a former judge of the Karnataka High Court, while speaking on “Arbitration as an effective tool for ADR process” said India was moving towards arbitration revolution. Arbitration as an ADR is a boon for the people of India considering the backlog of cases and particularly for investors.

Pradeep Rai welcoming Justice Rajendra Babu at the Conclave

Uday Holla, former advocate general, Karnataka High Court, spoke on “Global Trends in Institutional Arbitration — Challenges and Reforms in India”. He said that there was a need for a change of mindset among judges as far as arbitration was concerned. Time is of utmost importance and arbitration cases can’t be allowed to linger endlessly. Referring to global trends, he said that technology must be used abundantly, there was a need for institutional arbitration, empowering tribunals and incorporating the best practices in the world. The new amended Arbitration and Conciliation (Amendment) Bill, 2019, was welcome, though it is a baby step, he said.

(L-R) Rajshri Rai, PK Malhotra, former Chief Justice of India Justice Rajendra Babu, Inderjit Badhwar and Pradeep Rai at the Conclave

Avinash Amble, considered an expert on Artificial Intelligence, while speaking on “Use of Artificial Intelligence in Conflict Resolution”, said that AI is actually three centuries behind as far as conflict resolution is concerned. AI doesn’t learn when presented with conflicting situations like the judicial system does. It can only present a forward probability. So the AI of tomorrow is coming up with “adversarial inference”.

Create wealth

Nitin Gadkari, Union Minister for Road Transport and Highways, who addressed the audience through a live feed from Delhi, said that independent and impartial arbitration was the need of the hour and time was the most important factor. He lamented that contractors were being affected hugely due to delays in litigation which take years to resolve and they never get justice. “In many litigations which are already going on in the country, intervention by an arbitrator is really going to resolve the issue and create wealth for the country,” he said.

Union Minister for Road Transport and Highways Nitin Gadkari addressing the audience through a live feed from New Delhi
Justice Rajendra Babu at the Valedictory Session of the Conclave

However, he referred to a mock case where AI was pitched against a parallel court judgment in a case and the punitive damages were almost the same, even though both adopted different procedures and methodology. He said AI was incapable of “equitable distribution to all”, which an ADR forum intends to achieve.

Justice Shivraj V Patil, former Supreme Court judge and co-chairperson of the session, said that ADR is not only desirable but inevitable considering that pendency is increasing at an alarming rate. Factors like time, cost, simplicity of procedures and an efficient system are vital, he said. The question arises as to how to take it forward. He said the deliberations at the Conclave must inspire everyone to ponder these: What Next? What More? What Else? Besides the law, the people who implement it and the system are equally important to make it effective, he said.

Rajshri Rai (extreme left) and Pradeep Rai (second from right) with legal luminaries and other distinguished speakers

Justice P Vishwanath Shetty, the Karnataka Lokayukta, while inaugurating Technical Session II, “Mediation — An Effective Tool of Dispute Resolution”, said that speakers on the panel were all distinguished persons in their fields and their thoughts would be valuable for all.

Justice BV Nagarathna, judge, Karnataka High Court, while speaking on “Mediation: Achievements and Challenges”, said that the challenge lies in accepting mediation as a method of solving disputes among litigants and sought due importance for it. She said that along with providing the right climate and infrastructure, training of persons taking up mediation was vital. This includes imbibing legal knowledge and skills.

Pradeep Rai presenting a bouquet to Justice P Vishwanath Shetty

Lack of proper trainers and referrals, absence of suitable legislation, resistance of judges and lawyers towards mediation, poor funds and the unacceptable conduct of mediators are some of the other challenges that need to be addressed. She emphasised that a pre-arbitration mediation scenario should be available wherein litigants could be persuaded to try out mediation before opting for arbitration.

Icons from the legal fraternity absorbed in the intensive deliberations at the Conclave

She said that even the apex court encouraged state governments and the central government to take action for bringing into effect ADR. One of the remedies found by the legislature to reduce “docket explosion” in courts is mediation, she said.

A well-known mediator and senior advocate, Sriram Panchu, while speaking on “Arbitration and Mediation: Strange Bedfellows or Harmonious Partners”, said that mediation and arbitration combine the best of both worlds. Highlighting the merits of mediation, he said that the time and cost involved are much less, the process in which a solution is sought is workable and most of all, relationships are salvaged. He said that there was scope for mediation even while the arbitration process was on and awards yet to be granted by a tribunal. To structure mediation is the need of the hour, he said.

Justice Venkatachaliah, Justice Thakur, Justice Srikrishna and Rajshri Rai exchanging pleasantries at the Conclave

Panchu even suggested that mediation could be taken up as a career option. That would instil expertise and commitment as there was a dearth of experienced mediators. Paying them well was also a major requirement. The need to generate faith amongst litigants in mediators is vital, he said. But mediators too must do their job properly and be made accountable. Most of all, they should never become arbitrators as confidentiality is breached.

Shiv Kumar, senior advocate, while speaking on “Med-Arb: Need for Statutory Reforms and Training”, suggested various amendments in current laws to provide importance and recognition to Med-Arb. He lamented that there was still no statutory definition of mediation or arbitration in law books.

He demanded a comprehensive code on ADR or Dispute Resolution Code and suggested an ADR service on the lines of the Civil Services.

The gathering at the Conclave was not only unprecedented but also qualitative, eager to know more and absorb all they could

Summing up the Session, Justice P Vishwanath Shetty urged everyone present at the Conclave to ponder the views expressed by the speakers and put on their thinking caps and chart the future course of action. He said there was a dire need for persons committed to mediation as it is they who could bring in change and success. For example, nobody was aware of the Election Commission till TN Seshan took over.

A section of mediators can bring in reforms in their own way. As no dispute is the same, new thinking is required on the part of mediators. There is also a need to find new tools for effective mediation. But most of all, mediators must leave their egos aside, exercise patience, use their persuasive skills, earn the goodwill and confidence of litigants, command sound legal knowledge of their domain and be accountable for their job.

Absolute trust among the litigants in mediators is a must in helping to settle disputes, he said. He also emphasised an ethical code for mediators just like advocates. He also laid stress on the training process and insisted there was a need for a large number of trainers. He said that it was time that mediation was taken up as a profession, with attractive remuneration.

Justice Rajendra Babu, former CJI, while speaking in the Valedictory Session, said that the arbitration process never comes to an end when taken up by retired judges. He wondered about the success of the arbitration process in the light of new amendments and suggestions. He asked members of arbitration tribunals to not only decide on the matter but to try and bring about rapprochement among parties and said that arbitrators must fulfil the role assigned to them.

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