Now Is The Time For Countries Like India To Promote A Culture Of Commercial Arbitration: CJI DY Chandrachud

“We have to ensure that these new institutions are not controlled by a self-perpetrating clique. These institutions must be based on the foundation of robust professionalism and the ability to generate consistent arbitral processes. Transparency and accountability, values by which the work of conventional courts is assessed and critiqued, cannot be alien to the world of arbitration.,” he added.

CJI was delivering the speech on “Law and Practice of commercial arbitration: Shared understandings and developments in UK and India.” At the commencement of his address, CJI highlighted that the UK and India share a strong legal relationship. Taking a cue from this, he went on to provide the genesis of the arbitration law in both the countries.

Moving forward, he said that the courts in India are overburdened, with the High Courts disposing of 2.15 million cases and the District Courts handling 44.70 million cases in 2023. He continued that though every aggrieved person should approach the Court for a just remedy, not every case needs to be resolved in court. Emerging forms of dispute resolution, such as arbitration and mediation, are gaining acceptance. He said that these methods can help alleviate the burden on the judiciary by providing alternative pathways to justice.

He then elaborated on the three stages of the arbitration a. mutual consent of parties to arbitrate; b. arbitral proceedings; and c. enforcement of arbitral awards.

“The future of arbitration lies in streamlining the law and practice of arbitration on these three stages. As practitioners of arbitration and adjudicators of disputes, we must reflect on the future of arbitration because the future is already here. We just have to recognize it and adapt our legal systems to respond to the challenges.,” he explained.

Elaborating on the first stage, he spoke about the Group of Companies doctrine. This doctrine binds non-signatories to an arbitration agreement, provided the circumstances demonstrate a mutual intention of the parties to bind both the signatory and affiliated non-signatory parties. However, English courts have currently rejected the use of this doctrine in arbitration cases.

At this, he apprised his audience about the recent judgment where the Apex Court had observed that this doctrine must be retained in the Indian arbitration jurisprudence. The Bench, led by CJI, underscored its utility in determining the intention of the parties in the context of complex transactions involving multiple parties and multiple agreements.

“The Indian Supreme Court adopted in its decision a modern and pragmatic approach to determining the consent of the parties. This approach allows the arbitral tribunal to take into account objective facts such as the conduct and involvement of the non-signatories in the performance of the contract to determine their subjective intention to be bound by the arbitration agreement.,” he added.

Coming on to the next stage i.e., arbitration proceedings, he said that arbitral autonomy is a key aspect of these proceedings. By choosing arbitration, parties aim to resolve their disputes without involving domestic courts. They generally prefer their arbitration to be independent and free from judicial interference at any stage. The parties grant authority to the arbitral tribunal to settle their disputes without court involvement. The principle of judicial non-interference, which is fundamental to arbitral autonomy, is a guarantee enshrined in the law.

In the second leg of this stage, he spoke about the impartiality and independence of the arbitrator. He pointed out that there is a difference between independence and impartiality. The UNCITRAL Model Law and the Indian Arbitration Act both require an arbitrator to be independent and impartial.

Section 12 of the Indian Arbitration Act mandates that an arbitrator disclose any circumstance that might raise justifiable doubts about their independence or impartiality. In this context, he noted that under UK law, there is no statutory requirement for arbitrators to disclose any issues related to their independence or impartiality.

In the final stage of arbitration, CJI said, parties need to enforce the awards. Notably, though these parties chose arbitration to avoid courts, they rely on these domestic Courts to make sure their awards are enforced.

“This is exemplified by the fact that that the national courts have been empowered to set aside an arbitral award on specified grounds, including the ground that the award is contrary to public policy of the State.,” he added.

By the end of his address, CJI also focused on the role of technology in arbitration. He said that the same is closely tied to the future of arbitration. Illustrating this, he said that one party might be in Delhi, another in Bengaluru, and the arbitrators could be in London, Mumbai, and Singapore. However, technology allows them to participate in arbitration virtually. Technology offers cost-effective and time-effective solutions., he added.

“Adoption of technology at all levels of arbitration proceedings will make the arbitration proceedings more efficient and, importantly, more accessible. Technology and artificial intelligence add value to the services provided by arbitral institutions in matters such as reviewing documents or transcribing the proceedings.”

However, in the same breath, he also acknowledged that technology doesn't replace the vital role of adjudication. According to him, an arbitrator's evaluation of a witness's demeanor, despite its subjectivity, remains crucial. He argued that arbitrating commercial disputes is inherently complex and cannot be simplified into a mathematical equation. Instead, it requires a touch and feel of the human mind to reach a fair and just decision.

Lastly, he ended his address by emphasising the efforts being made by courts in the Global South, including the Supreme Court of India, to enhance the efficiency of arbitration law.

“We continually draw from comparative law. Our sights travel beyond borders to sustain India's place in the emerging world. The next step is to draw out more people from the Global South to act as counsel and commercial arbitrators. Steps are being taken with the creation of the Arbitration Bar of India. The continuing engagement of ComBar with the Indian Bar and Bench will instill mutual engagement in our work. As I said at the beginning of my lecture, the future of arbitration is already here. It is now our responsibility to live up to the emerging challenges.”