July 10, 2019
Saugata Roy speaks on The New Delhi International Arbitration Centre Bill, 2019
Sir, I rise to speak on the New Delhi International Arbitration Bill 2019. I feel highly inadequate in speaking on the Bill. I have been preceded by a lawyer Meenakshi Lekhi Ji and I will be succeeded by an eminent Supreme Court lawyer Pinaki Mishra Ji. In the face of their knowledge what else can I add. But I always believe that common sense is actually more important than legal sense and I will apply my common sense to speak on this Bill and ultimately the answer will be given by Ravi Shankar Prasad, eminent lawyer, formerly of the Patna High Court and then the Supreme Court. So, I am sure all the cobwebs in my mind will be cleared by their learned interventions.
Now this Bill has a chequered history, this Bill was discussed earlier in this Lok Sabha, it was passed in Lok Sabha, then it went to the Rajya Sabha. The Lok Sabha was dissolved, so the Bill pending in Rajya Sabha lapsed. So, after that, the President promulgated an Ordinance on March 2, 2019.
My first question is that, this is an important Bill, but this is not an urgent Bill. There is nothing urgent about it. This has been hanging for years together; a committee was appointed, the committee submitted a report. Why did you come out with an Ordinance route? I do not like any government taking the Ordinance route, without coming to Parliament. So the minister has a responsibility of answering why; what was the great urgency of promulgating the Ordinance?
Sir, having said that I may say, that this Ordinance is mainly to take over the assets of an organisation for arbitration which is already existing, that too in Delhi. So, maybe the government will clarify… it was afraid that the centre for alternative dispute resolution, you have taken over their assets and whatever, whatever. You are scared that their assets might go; that’s why you did what you did.
Now arbitration is definitely a better way of dealing with contract disputes because disputes linger on in court. In the Indian legal system, it takes fourteen or fifteen years to get resolved; arbitration is an easier way, where both parties agree to an arbitrator. The arbitrator is normally a former retired judge who has no work, so they earn a little bit extra in going for arbitration. If both parties agree then there is no problem.
Nowadays there are a lot of international disputes happening, because India, as we claim, happens to be the sixth largest economy. We are very proud that we have a bigger economy than small countries like France, England, Germany and Japan. So, now we are trying to enter the international arena. Many contracts are given to foreign countries; for instance, the metro railways contract is given to foreign countries. On the national highways you will see companies from Malaysia etc have been given work. For the East-West Metro in Kolkata, spanish companies are supplying their rates. So, if there is a dispute between the two governments and these foreign companies arbitration is called for, they are likely to go for arbitration abroad. We would like to have it here, but for that we have to build confidence in the parties that we have a good system.
Mr Prasad’s effort to have this arbitration system is a good effort. Alternate dispute resolution is a must because construction work keeps going on for a long time. This Bill has not been brought in overnight. There was a committee appointed with Mr B N Srikrishna as the Chairman. He normally presides over all government committees. I don’t know how can he an expert in everything but it is a good thing that the government lets him preside over all committees as he is a retired man.
What is the objective of the International Arbitration Centre?
(i) To bring targeted reforms to develop itself as the flagship institution for conducting international and domestic arbitration,
(ii) Provide facility in administrative assistance for Conciliation, mediation and arbitral procedures,
(iii) Maintain panels of arbitrators, conciliators, mediators etc.
(iv) Facilitate conducting of international and domestic arbitration.
(v) Provide cost effective and timely services.
(vi) Promote studies in the field of alternative dispute resolution and also co-operate with other societies.
Sir, the Bill also speaks of setting up an arbitration academy where people will be trained as to how to arbitrate. All these are good ideas and ultimately the arbitration centre is set up. Arbitration has become necessary because the government has not been able to unclog the country courts, since it involves hiring lots of new judges and building new courts as well. So, getting a modern arbitration law was necessary.
The Arbitration and Conciliation Law was brought in 1985. The amendment to the Arbitration and Conciliation Law was brought in 2015 and then we are coming with this present centre.
We can say that despite being several years the law being in place the alternative dispute resolution mechanism hasn’t really taken off. If that is so, it is due to the government’s obduracy, as well as the fact the initial law has critical lacunae. When arbitration awards went against the government PSUs, especially the international tribunals, as we have seen in the Reliance ONGC award, the government first attempts to challenge it in court. In this case ONGC lost, the government said it will challenge it in an Indian court. Normally arbitratory awards can be charged only on limited grounds otherwise they would get stuck in courts for decades. But this has never stopped the government. Indeed in the event of the Tata Docomo matter, where the government did not have to shell out anything, it challenged the global award against the Tatas. But the Tatas agreed to the arbitration, and the government went to court against the arbitration award.
Situation of domestic arbitration is as bad. Under earlier Indian law if the losing party challenged the award in a court of law, the award never got implemented. The court didn’t have to rule anything; a mere challenge was enough. Many courts were happy to entertain such challenges even though the grounds were solid enough.
So arbitration also has a chequered history, even though people have gone to court against arbitration awards. And the delay that we feared have taken place. So now that arbitration list consists of the Supreme Court judge and several experts.
I do hope proper people are appointed for the same. Arbitration is the need of the hour, for our government talks so much about ease of doing business but if the matters get clogged in court, then what is the use of ease of doing business? The government talks about calling foreign capital; in fact the government has gone to the extent of talking of borrowing money from abroad in dollars, which I don’t think is most advisable. But for people to really be attracted to universities in India, the system must be unclogged. So, this is a good step that has been taken and I hope that the international arbitration centre will act.