Arbitrate - Don’t Litigate

Arbitrate - don’t litigate ! Abstruse ? Being a staunch supporter of the arbitration, it is very necessary to curb and control the above feelings and ergo, and endeavour to find solubrious formula and to eradicate the above feelings from the minds of litigants. Let me set out and demystify the above phrase.  An old gentleman carried the above placard and paraded outside the Law Courts, as observed in S.J.& M.M. Price Ltd, v. Milner (1966)1 WLR 1235 (at page 1236) in a judgment, delivered by Hon’ble Justice Edmond Davies. Thereby litigant’s anguish and excruciation over the tardy arbitration proceedings had been expressed.  The above “placard” will come again in multiple, if we failed to consider, remodel ourselves and resettle issues, about the tarry in arbitration procedure,  The Hon’ble Supreme Court of India had also expressed its concern over the delay in arbitration proceeding, in the following words, reported in M/s. Guru Nanak Foundation v. M/s. Rattan Singh, AIR 1981 SC 2075 (at page 2076) before the new Act. Arbitration and Conciliation Act, 1996 (India) :—  “However, the way in which the proceedings under the Act are conducted without an exception challenged in Courts has made lawyers laugh and legal philosophers weep”.  The question now is, whether the supporters of an arbitration treat the above “placard” as incredible. This incredibility might be on the nuwel that arbitration proceedings are better and are effective way of settling the disputes outside the Court, everywhere in the world under, the guidance of UNCITRAL (United Nations Commission on International Trade law Model Law on International Commercial Arbitration).  It appears that the arbitration, as an alternative mode of settlement is on the crest of waive, but delay in taking arbitration decisions definitely enervates the whole purpose of such a proceeding.  Is there any record or suggestion to support the same or what experience is prevailing in the various countries, where there exists such an alternative mode of settlement of the disputes outside the court?  UNCITRAL, till today holds water, being a basic model document for new Arbitration and Conciliation Acts in most of the countries of the World since its inception,  It is necessary to project, one undiscovered and unprojected issue in respect of the re-appointment of new arbitrator, substitute arbitrator or new tribunal where, more than one arbitrator is necessary. There cannot be a dispute that, start to finish, is the success formula of the arbitration proceedings to follow fixed or time bound program, as declared and agreed and/or the strict compliance of the directions. For this, the basic requirement is that, the Arbitral Tribunal should be available all the time, as fixed and agreed.  If we look into UNCITRAL (law) as ideal model no procedure is provided as appreciably as available in London Maritime Arbitrators Association (LMAA) Terms 1997 (London Maritime Arbitrators Association (LMAA Terms 1997). Clause 14(d), 20(a), 20(b) and the 4th Schedule thereto, which is reproduced under:  “Preparation of cases involving oral hearing.”  “14(d) Following such consultation, application for a hearing date must be made in writing indicating the expected date of readiness and likely duration of the hearing.”  “Availability of arbitrators”  20(a) In cases where it is known at the outset that an early hearing is essential the parties should consult and ensure the availability of the arbitrator(s) to be appointed by them.  If, in cases when the tribunal has already been constituted, the fixture of an acceptable hearing date is precluded by the commitments of the original appointee(s) the provisions of the Fourth Schedule shall apply.”  The Fourth Schedule “Reconstitution of the Tribunal*  The following provisions are directed to avoid delay which the parties or either of them consider unacceptable, but if both parties prefer to retain a tribunal as already constituted they remain free to so to agree.  The governing factor will be the ability of the tribunal to fix a hearing date within a reasonable time of the expected readiness dates as notified by the parties on application for a date (see paragraph 1 (d) of the terms) or, if they are not agreed as to expected readiness date, within a reasonable time of whichever forecast date the tribunal considers more realistic. ........... A sole arbitrator who is unable to offer a date within relevant time scale will offer to retire and, if so requesled by the parties or either of them, will retire upon being satisfied that an appropriate substitute appointment has been effected by the parties; in event of their disagreement, either parties may request the President to make the necessary substitute appointment. In all other cases, unless all members of the tribunal are able to offer a matching date within the relevant time scale; the tribunal will have regard to any agreed preference of the parties, but if there is no agreed preference the tribunal will fix; the earliest hearing date that can be given by any member(s) able to offer a guaranteed date within the relevant time scale; if a guaranteed date within the relevant time scale cannot be offered by any member of the tribunal, the earliest date thereafter which can be guaranteed by any member(s) of the tribunal; on the basis, in either case, that any member then unable (by reason of a prior commitment) to guarantee the date so fixed will (unless that prior commitment has meanwhile cleared) retired by notice given six clear weeks prior to the start date. Upon notification of any such retirement an appropriate substitution will be effected as follows : if an original arbitrator retires the substitute shall be promptly appointed by his appointee; or failing such appointment at least 21 days prior to the start date the substitute will then be appointed by the umpire or third arbitrator or, if an umpire or third arbitrator has not yet been appointed, the substitute will be appointed by the President: if any umpire or third arbitrator retires the substitute will be appointed by the original arbitrators. For the purpose of Paragraph (4) : “appropriate substitution’’ means appointment of a substitute able to match the hearing date established in accordance with sub-paragraph (A); ‘start date’ means the first date reserved for the hearing, …………………………………’’  The Article 23(a) of the WIPO Mediation, Arbitration and Expedited Arbitration Rules, 5 which is also relevant is reproduced as under:  “Availability, Acceptance and Notification Article 23 Each arbitrator shall, by accepting appointment, be deemed to have undertaken to make available sufficient time to enable the arbitration to be conducted and completed expeditiously.”  There are various contingencies, which can neither be contemplated nor visualized at the time of the appointment of the arbitrator or arbitrators. But once the time table is fixed, declared and announced, as per the agreed date, diaries, and convenience of the respective arbitrators, counsels, advocates, parties etc. then the above procedure or such other procedure is a must. The procedure to appoint/nominate an arbitral tribunal, immediately, is necessary to avoid delay and to save time, public money and energy, everybody should respect the directions of time, to achieve the purpose of the Arbitration.  There is no question of advocating any cause of any Advocate or litigant for their reasonable or unreasonable ground for adjournments. But if Courts are available or if arbitrators or the Arbitral tribunal are available then in a good case, the arbitrator or the tribunal, can insist upon, an ex parte proceedings or they can proceed with the matter and then there might not be any reason for delay or adjournment again and again. But a situation occurs, when either there is no arbitrator or there is delay in filling such vacancy. There is delay in selecting a new arbitrator and also some procedure is to be followed, before appointing, substituting, replacing one or two arbitrators out of 3 or 5 of an arbitral tribunal. These things are not within control of the Advocate or the parties who agree to nominate, constitute and submit their disputes before such tribunal. Every one renders helplessness and has to wait for new tribunal, in case of such contingency, where the said tribunal or arbitrator is not available or mandate is ceased or any nuwel is that an arbitral tribunal should be available and be ready for hearing, all the times, till finally to the proceedings is attained.  Even the legislative body of national or international countries can definitely take note of this clause and present it to the litigants at large, for those, who are interested in early disposal of arbitration proceedings and who wants to have early fruits of their arbitral award or decisions, if any.  It is necessary to collect the scattered particles and items and crystalize to achieve the purpose of arbitration proceedings. The seriatim of the same is as follows :-  “International Bar Association Ethics for International Arbitrators” seeks to establish the manner in which abstract guidelines/ qualities may be assessed in practice of arbitration. These rules are specifically for arbitrators. The relevant rules for the issue in question is, Rule (2) - Acceptance of appointment; (International Bar Association Ethics for International Arbitrators).  “2.3 A prospective arbitrator should accept an appointment only if he is able to give to the arbitration the time and attention which the parties are reasonably entitled to expect.”  The relevant rule 254© (Bye laws of the Stock Exchange, Mumbai) of the By laws of The Stock Exchange of Mumbai (India) is quite interesting to note and it is reproduced as under :-  “254(c) In case the award is not made within 30 days of the conclusion or the hearing, any of the parties to the arbitration shall have the right to move the Executing Director to cancel the appointment of the arbitrator. After hearing the parties and the arbitrator, in case the executive director is satisfied that there is no good reason for the delay in making the award, he may cancel the appointment of arbitrator. In the event of cancellation of appointment of the arbitrator, the Executive Director shall appoint another arbitrator as per the bye-laws and the newly appointed Arbitrator shall hear the reference de novo unless the parties agree otherwise”.  The International Court of Arbitration of the International Chamber of Commerce is the Arbitration body attached to the ICC. The ICC Rules of Arbitration 1998, Article 12 provides for replacement of arbitrators.  “12(2) An arbitrator shall also be replaced on the Court’s own initiative when it decides that he is prevented de jure or de facto from fulfilling his functions or that he is not fulfilling his functions in accordance with the rules or within the prescribed time limits.  “12(5) Subsequent to the closing of proceedings instead of replacing an arbitrator who has died or been renewed by the Court pursuant to Article 12(1) and 12(2), the Court may decide, when it considers it appropriate, that the remaining arbitrators shall continue the arbitration.  In making such determination, the Court shall take into account the views of the remaining arbitrators and of the parties and such other matters that it considers appropriate in the circumstances.”  Some of the important clauses which deal with the situation of non-availability of the tribunal in the world of arbitration may be noted.  The American Arbitration Association, International Arbitration Rules, Rule 11 (The American Arbitration Association, International Arbitration Rules) is reproduced as under  “11(1) If an arbitrator on a three person Tribunal fails to participate in the arbitration, the two other arbitrators shall have the power in their sole discretion to continue the arbitration and to make any decision, ruling or award, notwithstanding the failure of the third arbitrator to participate. In determining whether to continue the arbitration or to render any decision, ruling or award without the participation of an arbitrator, the two other arbitrators shall take into account the stage of the arbitration, the reason if any, expressed by the third arbitrator for such non-participation, and such other matters as they consider appropriate in the circumstances of the case. In the event that two other arbitrators determine not to continue the arbitration without the participation of the third arbitrator, the arbitrator on proof satisfactory to it shall declare the office vacant, and a substitute arbitrator shall be appointed pursuant to the provisions of Article 6 unless the parties otherwise agree. If a substitute arbitrator is appointed the Tribunal shall determine at its sole discretion whether all or part of any prior hearing shall be repealed.  Another important clause is available in The London Court of International Arbitration Rules Article 12 about the majority power to continue with the arbitration proceedings”  “12.1 If any arbitrator on a three member Arbitral tribunal refuses or persistently fails to participate in its deliberations, the two other arbitrators shall have the power upon their written notice of such refusal or failure to the LC1A Court, the parties and the third arbitrator to continue the arbitration (including the making of any decision, ruling or aware), notwithstanding, the absence of the third arbitrator.  “12.2 In determining whether to continue the arbitration, the other arbitrators shall take into account the stage of the arbitration, any explanation made by the third arbitrator or his non-participation and such other matters as they consider appropriate in their Circumstances of the case. The reasons for such determination shall be stated in any award, order or two other decisions made by the two arbitrators without the participation of the third arbitrator.  12.3 In the event that the two other arbitrators determine at anytime not to continue the arbitration without the participation of the third arbitrator missing from their deliberations, the two shall notify in writing the parties and the LCIA Court of such determination : and in that event, the two arbitrators are any party may refer the matter to the LCIA Court for the revocation of that third arbitrator’s appointment and his replacement under Article 10.  The substratum of the above clauses, if taken note of which are available in the field of arbitration in the world and subject to such modification, it can be lifted and can be adopted by the other countries under the umbrella of UNCITRAL (Id 3).  There may not be dispute about the principle that the fast are eating the slow in today’s world of globalization and multimedia. Therefore, it is necessary to make arbitration proceedings fast, effective and fruitful for everybody. Otherwise the whole scheme will be treated like an incubus.  There is no doubt that “many experienced lawyers think that lengthy trial is not leading to any closer approximation of ideal justice “Rondel v. Worsely (1967) 3 All ER 993.  The tarry in the arbitration proceeding is definitely excruciating, claimant, parties and resulting into all sorts of unseeming excrescence and carking, on the legal system. Delay retrogrades development in arbitration proceedings.  It is apt to note excerpt from the preface of ‘Arbitration and Conciliation”* By V. A. Mohta, former Chief Justice, Orissa High Court and Senior Advocate, Supreme Court, Delhi, India.  By V. A. Mohta, former Chief Justice, Orissa High Court and Senior Advocate, Supreme Court, Delhi, India, (at pg No. vii)  “Will the new Act serve its real object ? Many of our socially inspired legislations have remained cloistered virtue. Mere change of law cannot yield the desired results. All depends on the men who operate. In the instant case, those men are the arbitrators, the lawyers, the Judges and also to some extent the parties. Let us hope that all concerned will aim at raising the reputation of arbitration and conciliation in our country to a new and unprecedented height. “Let us pray and visualize and see elan of litigants who get decisions in arbitration proceedings within reasonable time.  Â

Author Name: Anoop V Mohta