Retired judges control arbitration with a tight fist, need reform

Subject: Polity

Section: Judiciary

Context: Retired judges are keeping country’s arbitration system in a tight grip

More about the news:

Vice-President Jagdeep Dhankhar highlighted the dominating influence of retired judges in India’s arbitration space, echoing Chief Justice DY Chandrachud’s earlier remarks on the system resembling an “Old Boys’ club.”
Dhankhar called for necessary reforms, including potential legislation, emphasizing the need to diversify arbitrator appointments.
He commended CJI Chandrachud for speaking out against the dominance of retired judges, acknowledging the courage required to address the issue within his own fraternity.
Dhankhar stressed the importance of a robust, fast, and effective arbitration system amid India’s explosive economic growth, emphasizing the role of institutional arbitration in ensuring fair and conclusive dispute resolution.

What is Arbitration.

Arbitration is a form of alternative dispute resolution (ADR) where parties to a dispute agree to resolve their differences outside of a court system.
In arbitration, a neutral third party, called an arbitrator, is appointed to hear the evidence presented by both parties and make a binding decision that resolves the dispute.

What are the Mechanism for Arbitration in India.

Arbitration in India is regulated by the Arbitration and Conciliation Act, 1996.
The Act draws inspiration from the 1985 UNCITRAL Model Law on International Commercial Arbitration and the UNCITRAL Arbitration Rules 1976.
Legislative Amendment (2015):
- In 2015, the Arbitration and Conciliation (Amendment) Act was enacted to enhance the arbitration process in India.
- Objectives included expediting contract enforcement, facilitating the recovery of monetary claims, reducing court case pendency, and accelerating dispute resolution through arbitration.
New Delhi International Arbitration Centre (NDIAC):
- Established in 2019 under the provisions of the NDIAC Act, 2019.
- Aims to improve the management of arbitration in India by promoting institutional arbitration.
- Provides state-of-the-art infrastructure for arbitration proceedings.
International Centre for Alternative Dispute Resolution (ICADR):
- Founded in 1995 to promote and develop alternative dispute resolution (ADR) facilities and techniques.
- Focuses on facilitating early dispute resolution and reducing the backlog of cases in the courts.

What are the Types of Arbitration in India.

There are two types of arbitration in India: Ad-hoc arbitration and Institutional arbitration.
Ad-hoc Arbitration
- It is a process where a tribunal conducts arbitration using either pre-agreed rules or tribunal-laid rules, in the absence of any agreement between the parties.
Institutional Arbitration
- Institutional arbitration refers to the administration of arbitration by an institution in accordance with its rules of procedure.
- The institution provides appointment of arbitrators, case management services including oversight of the arbitral process, venues for holding hearings, etc.