Fast Track Arbitration: Revving Up ADR In Times Of Pandemic

Section 29B of the Arbitration and Conciliation Act, 1996- a somewhat untested and untried mechanism under the Act providing for fast-track arbitration has the potential to fill in the void created by Covid. This is conducted under the aegis of a Sole Arbitrator according to a predetermined set of rules devised with the consent of parties in order to curtail the duration, procedural bottlenecks and costs involved in a regular arbitration.

Genesis of Fast-Track Arbitration:

Fast-track arbitration, also known by its other monikers like expedited arbitration, summary procedure or accelerated proceedings, originated in the early nineties under the Swiss Arbitration Rules (erstwhile, Geneva Chamber of Commerce), and the suit was followed by other international arbitration centres, such as CIETAC (China International Economic and Trade Arbitration Commission), American Arbitration Association (AAA), Stockholm Chamber of Commerce (SCC), World Intellectual Property Organization (WIPO), Hong Kong International Arbitration Centre (HKIAC), Singapore International Arbitration Centre (SIAC), and most recently, International Chamber of Commerce (ICC) and Asian International Arbitration Centre (AIAC).

This expedited arbitration kicks in either by election of parties and an explicit agreement to that effect, or automatically based on a default monetary threshold.

Scheme of Fast-Track Arbitration in India:

Section 29B was inserted by the 2015 Amendment to the Act, and draws inspiration from antecedent institutional arbitration rules and procedures. The provision attaches supreme sanctity to the party autonomy and party cooperation, right from consensual adoption of fast-track procedure, choice and remuneration of a Sole Arbitrator, to the procedure guiding the proceedings.

1. As is evident from a bare perusal of Section 29-B(1), the parties must elect to invoke the fast-track arbitration at any stage either before or at the time of constitution of the Arbitral Tribunal. Further, while electing the same, the parties 'may' agree that the arbitral tribunal 'shall' consist of a sole arbitrator who 'shall' be chosen by the parties. The incoherent use of 'may' and 'shall' under sub-section (2) of Section 29B casts a slight shadow on the process of appointment of Arbitral Tribunal. However, what cannot be disputed is the composition of such Arbitral Tribunal comprising of a Sole Arbitrator and the consensual choice of such Arbitrator by the parties. The use of word 'may' appears to pave way for a judicial appointment of a Sole Arbitrator along with the in-built process of appointment by agreement between the parties. Any prayer for appointment of an Arbitrator under this Section would be premature in the absence of an agreement between the parties for fast tracking the arbitral proceedings or prior to the stage of constitution of a Tribunal. This application has to be made in writing and is principally consensual^[1]. The parties are obligated to observe the Sixth Schedule under the Act while appointing the Arbitrator.
2. By virtue of the judgment of the Supreme Court in 'Board of Control for Cricket in India Vs. Kochi Cricket Pvt. Ltd.; AIR 2018 SC 1549', the fast track procedure can only be made applicable to the arbitration proceedings commenced after the promulgation of the 2015 Amending Act, i.e. 23^rd October, 2015.
3. The Arbitral Tribunal is enjoined to observe the procedure laid down under Section 29B(3) of the Act, which, inter alia, mandates adjudication on the basis of written pleadings, documents and submissions filed by the parties sans any oral hearing. An informal oral hearing may be held for calling any further information- clarification on the request of parties or if the Arbitral Tribunal considers it necessary.
4. The award shall be made within a period of six months from the date the arbitral tribunal enters upon the reference. If the award is not made within such period, it shall set the provisions of sub-sections (3) to (9) of section 29A into operation. The mandate of the Arbitrator expires and a substitute arbitrator in its place to continue and complete the proceedings if the period for pronouncing the award is not extended with the consent of parties^[2].
5. Party autonomy is the cornerstone of fastrack arbitration, and its success is largely dependent on how parties draft an arbitration clause with in-built safeguards against dilatory tactics, indiscretions of the participants and the procedural bottlenecks that may arise in the appointment of an Arbitrator and enforcement of the Award. The arbitration clause ought to distinctly provide for the ambit of arbitrator's jurisdiction; number, scope and time limit of permissible submissions; presentation of evidence; examination of witnesses etc. As such, it strongly recommended to involve professionals in the drafting of a fast-track arbitration clause, lest the parties are likely to encounter troubles in enforcing the mechanism.

In India, several arbitration institutions- Nani Palkhivala Arbitration Centre, Delhi International Arbitration Centre, International Centre for Alternative Dispute Resolution, Indian Council of Arbitration, have incorporated the rules of fast-track procedure in sync with Section 29B of the Act. Per Contra, the Mumbai Centre For International Arbitration has adopted the 'opt-out' approach in line with the Swiss Arbitration Rules, providing for an Expedited Procedure in the event the anticipated amount in dispute does not exceed Rs.10 crore, representing the aggregate of the claim, counterclaim and any set-off defence, or if the parties so agree in writing.

Comparative Analysis of Fast-Track Arbitration with Regular Arbitration:

The definitive pros of the fast-track procedure are speed, cost efficiency, and most felicitously, dispensing with the in-person hearings and determination hinging on written pleadings. It is particularly productive for smaller claims, where the costs involved do not outweigh the magnitude of claim amount. In situations where parties strive to preserve their long-standing commercial relationship, sustain a long-term co-operation, or keep an ongoing contract afloat, a fast, focussed and frugal procedure comes in handy.

The Fast-Track Arbitration does not come without limitations: too much reliance on party cooperation proves to be a double-edged sword, when one is confronted with a recalcitrant party that is bent on jettisoning the progress of proceedings by adopting dilatory tactics and defying the stipulated timelines. With some delay inevitable, one often wonders about comparative benefit of choosing a fast-track arbitration over a regular arbitration. Further, having a Sole Arbitrator at the helm of affairs, operating sans the expertise, guidance or assistance of her confreres, might raise doubts on the determination. That said, the party autonomy inherent in the mechanism wards off most drawbacks through incorporation of appropriate contractual provisions to deter any sabotage of the proceedings.

There could still be a class of cases not amenable to fast-track procedure, such as complex, technical cases, which involve construction of legal documents and detailed evidence. Stakeholders apprehend that the speed of fast track arbitration might imperil their claims. Ironically, one of the most famous cases where speedy resolution of disputes by arbitration was objected to, came from a field where speed alone counts, viz. Formula One racing. In Walkinshaw v. Diniz ((2001) 17 Arbitration International, 193), a Formula One racing team and one of its drivers were at loggerheads, and their dispute was submitted to the Contract Recognition Board (CRB) of the Federation Internationale de l'Automobile, which rendered a very quick decision, i.e. only within three days. The racing team, which opposed the arbitration, filed a legal action against the driver in the English High Court, alleging that CRB conducted summary proceedings inconsistent with arbitration, and it did not get sufficient opportunities to make its case. The High Court turned down the case. The judge stated that "if justice so required", the procedure needed only to involve as many meetings "as required", and in that case, justice did not ask for more. Thus, the acceptable speed of arbitration was to be determined on the basis of what justice required^[3].

Concluding Remarks:

The present crisis has witnessed the Courts and Arbitral Tribunals assimilating the technology and shunning the in-person hearings for virtual hearings, that has passably placated the concerns of litigants and litigators alike. However, the reach and comfort of virtual hearings is widely overestimated. The parties are albeit motivated to attend virtual hearings, but there is an apparent lack of confidence in the technical and logistical aspects of such hearings. Moreover, the hesitation of the Arbitrators and Counsels to conduct virtual proceedings because of lack of prior experience or limited access to technical resources has put many contractual and commercial claims on the backburner.

With many claims anent force majeure, frustration and hardship on the horizon and virtual hearing remaining an unchartered territory for many, the parties could adopt fast-track arbitration even where the underlying contract does not provide for an arbitration clause. To avoid delays, parties may want to consider converting their litigation into arbitration. It dispenses with the need for formal pleadings, oral hearings, discovery or witness statements.

I close this article with an excerpt from 'P. N. Eswara Iyer Vs. The Registrar, Supreme Court of India; AIR 1980 SC 808', where Justice V.R. Krishna Iyer, in his inimitable style, writes that,

"The written brief, before careful judges, can be a surer process of deeper communication than the 'vanishing cream' of speaking submissions. And a new skill-preparation of an effective brief, truly brief, highly telling and tersely instructive- is an art of the pen worth the acquisition especially when, in practice, there are many gifted lawyers who go with Goldsmith who 'wrote like an angel and talked like poor Paul'. … .To put superstitious faith in oral submissions or unlimited argumentation as the sole means of presentation and persuasion and to debunk the potency of well-drawn up manuscript representations may be condemned as absurd…. .Therefore, it is quite on the cards that where no injury to justice will be all, orality may suffer partial eclipse in the shape of time-limitation or substitution by written submission even in categories other than review proceedings. All that we mean to indicate is that the mode of 'hearing', whether it should be oral or written or both, whether it should be full-length or rationed, must depend on myriad factors and future developments."