Introduction

The backlog in India for Arbitration matters refers to the large number of pending arbitration cases that are yet to be resolved. India, like many other countries, has been grappling with the problem of a backlog of arbitration cases. Despite several attempts to streamline the arbitration process, the number of cases pending before various courts and tribunals has only continued to rise in recent years. The backlog has been a significant challenge for the Indian legal system, which has led to delays in the resolution of commercial disputes, increased costs, and a negative impact on the country's reputation as an investment destination. In this note, we will discuss the reasons for the backlog of arbitration cases in India and the initiative taken by the government and the judiciary to address the issue. Arbitration is always endeavoured towards reducing the burden over the traditional legal system of India. It is important and relevant to mention that the recent trend shows that mostly all Commercial Contract has an arbitration clause and Arbitrators and Counsels are engaged in more than a single Arbitration proceeding causing a delay in the disposal of the Award.

1. Causes of Backlog of Arbitration in India:

Indian Jurisdiction is swiftly moving towards the Institutional Arbitration regime, which will aid in the timely disposal of disputes between the parties. Presently, the main reasons for the backlog in Arbitration cases are as follows:

a) Delays in Appointing Arbitrators: One of the primary reasons for the backlog is the delay in appointing arbitrators. The law provides for parties to appoint their arbitrators, but if they cannot agree, the courts must appoint them. This process often takes a long time, leading to delays in the resolution of disputes.

b) Lack of Adequate Infrastructure: The lack of adequate infrastructure, such as arbitration centers and trained arbitrators, is also a significant cause of the backlog. The country has only a few arbitration centers, which are often overburdened with cases. The legislature is taking steps towards Institutional Arbitration in India1 but the lack of adequate infrastructure will still be a hurdle in clearing the backlog.

c) Protracted Legal Proceedings: The lengthy legal proceedings and the appeals process in India's courts can also lead to delays in the resolution of arbitration cases.

d) Inadequate Compliance with Awards: The lack of compliance with arbitration awards is also a significant cause of the Indian courts have been known to set aside or modify arbitration awards, which can lead to further litigation and delays. After the final award by the Arbitrator, and challenge under section 34 of the Arbitration Act, disputing parties have the opportunity to file an Appeal under section 37 (1)(b) of the Act. The Apex Court has categorically held that in case of delay in filing the Appeal the condonation of delay under section 5 of the Limitation Act, 1963 has to be seen in the context of the object of speedy disposal of disputes with the appropriate remedy.2

2. Juridical Pronouncements:

The Indian legal arena as well as the Legislature is taking all necessary measures in meeting International standards to make timely disposal of disputes. As a result, recently, the Hon'ble Apex Court of India in the matter of M/S Shree Vishnu Construction v. The Engineer in Chief, Military Engineering Services & Ors.3 The Arbitration Act allows parties either to appoint a sole Arbitrator or to appoint one arbitrator each and both arbitrators will appoint the presiding arbitrator.

It is evident that parties are failing to take steps towards mutually deciding the name of the Arbitrator causing an additional delay in the completion of the proceedings, as the parties are required to appoint mutually the Arbitrator when the agreement specifically reads for the appointment of sole Arbitrator.4 When the parties fail in nominating the Arbitrator, the power for appointment of an Arbitrator by the Chief Justice of the respective High Court or that of the Supreme Court of India is vested in them by virtue of the Act itself.5 In SBP and Co. v. Patel Engg6. has settled the long-standing debate and held that the power vested under section 11(5) is judicial in nature not administrative and hence cannot be challenged under Article 136 of the Indian Constitution making it the first move towards the speedy appointment of an Arbitrator.

The Apex Court recently directed the various High Courts of States to make decisions on applications to appoint arbitrators that have been pending for more than a year within six months. Although the decision will aid in clearing a backlog, it emphasises the significance of choosing an arbitral institution to supervise the case and select the arbitrators to prevent the possibility of delays in commercial contracts involving India.

3. Measures taken to address the backlog of arbitration in India:

The problem of backlog in arbitration cases can be attributed to several factors, including delays in the appointment of arbitrators, lack of infrastructure, and procedural complexities. The appointment of arbitrators, for instance, is often delayed due to a shortage of qualified professionals and the tendency of parties to challenge the appointment of arbitrators.

a) Amendments to the Arbitration and Conciliation Act, 1996: In 2015 and 2019, the Indian government amended the Arbitration and Conciliation Act, 1996, to make the Alternate dispute mechanism a more efficient and cost-effective means of dispute resolution. The amendments provide for strict timelines for completing arbitration proceedings, limiting the scope of judicial intervention, and promoting the use of technology in arbitration.

b) Establishment of Arbitration Centers: The Indian government has also set up several arbitration centers, such as the Delhi International Arbitration Centre, to provide infrastructure and facilities for arbitration proceedings.

c) Appointment of Dedicated Arbitration Judges: The Indian judiciary has appointed dedicated arbitration judges to deal exclusively with arbitration-related matters, which has helped to expedite the resolution of disputes. The power vested with the Chief Justice of the Supreme Court or his designate also determines the validity of the arbitration agreement while dealing with section 11 Application for appointment of arbitration as expounded in National Insurance Co. Ltd. v. Boghara Polyfab. 7

d) Promoting Institutional Arbitration: There has been a push to promote institutional arbitration in India, which involves the use of specialized arbitration institutions to administer and oversee arbitration proceedings. This can help to reduce the burden on courts and expedite the resolution of disputes.

For several reasons, including the following, the initiatives were taken to lessen the backlog in arbitration in India have not been completely effective:

Firstly, although measures have been introduced to reduce the backlog, they are often not effectively implemented, particularly at the ground level. This could be due to a lack of training and capacity[1]building of officials or other logistical constraints.

Secondly, there is a major lack of stakeholder participation, The success of measures to reduce the backlog in arbitration depends on the active participation of stakeholders such as parties, arbitrators, lawyers, and arbitration institutions. However, in some cases, these stakeholders have not been adequately engaged or involved in the process.

Thirdly, the limited awareness and education. Many parties in India still lack awareness of the benefits of arbitration and do not understand how the process works. This can lead to parties not opting for arbitration as a dispute resolution mechanism, resulting in continued backlog in courts. Some stakeholders may be resistant to change and reluctant to adopt new approaches, such as institutional arbitration or alternative dispute resolution methods. This can slow down the adoption of new measures to reduce backlog.

To address these challenges, there needs to be a sustained effort by all stakeholders to work together to reduce backlog in arbitration. This could include initiatives to raise awareness of the benefits of arbitration, capacity-building of officials and stakeholders, investment in infrastructure and resources, and the active involvement of stakeholders in the development and implementation of measures to reduce backlog.

4. Conclusion:

The lack of adequate infrastructure for arbitration is a significant challenge in India, which has led to delays and inefficiencies in the arbitration process. The backlog of arbitration in India is a significant challenge that needs to be addressed urgently. The measures taken by the government and the judiciary to address the issue are a step in the right direction, but more needs to be done to promote arbitration as a viable means of dispute resolution. The government should also focus on promoting arbitration as a means of resolving disputes, particularly for foreign investors, to improve India's reputation as an investment destination. The government's efforts to improve infrastructure, such as setting up dedicated arbitration centers and providing modern facilities, are a step in the right direction. However, more needs to be done to increase the pool of trained arbitrators and promote institutional arbitration in the country to reduce the backlog of arbitration cases. In conclusion, the backlog of arbitration cases in India is a serious problem that has significant implications for the Indian legal system and the economy. While several measures have been taken to address the problem, there is still a long way to go in terms of improving the arbitration process and reducing delays. It can be concluded that India is evolving and by the collective effects of the Judicial system and Indian legislature, the problem of backlog soon be reduced.

Footnotes

1 Section 10, the Arbitration and Conciliation (Amendment) Act, 2019.

2 Government of Maharashtra v. M/S Borse Brothers Engineers and Ors., (2021)6SCC460.

3 Shree Vishnu Construction v. The Engineer in Chief, Military Engineering Services & Ors., Special Leave to Appeal C No. 5306/2022.

4 Section 11(3), the Arbitration and Conciliation Act, 1996.

5 Section 11(5), the Arbitration and Conciliation Act, 1996.

6 SBP and Co. v. Patel Engg, (2009) 1 SCC 267.

7 National Insurance Co. Ltd. v. Boghara Polyfab, (2009) 1 SCC 267.

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