Introduction
India is now reaching the end of its lockdowns and gradually opening up the economy. But according to many experts, Coronavirus will not be leaving us any time soon which means the restrictions on travel and the rules of social distancing are here to stay for the foreseeable future. In times of the Virus, the Indian legal system has adapted swiftly to the concept of virtual hearings but, like the rest of the world, it too has faced disruptions. On 23 March 2020 the Supreme Court passed an order extending limitations for various acts including under Arbitration and Conciliation Act, 1996 (Arbitration Act) with effect from 15th March 2020 till further orders are passed. During this lockdown, alternate dispute resolution systems have had a procedural advantage over other forms because of the flexibility that is inherent in the system.With the easing of restrictions, it seems that the limitation extension will come to an end sooner rather than later. Even though we are nearing the end of the lockdown but we are not anywhere near ending the virus, therefore, certain changes have to permanently be imbibed in the way arbitration proceedings are conducted in India.
By this post the author analyses the challenges to be faced by Arbitration in a post-lockdown phase and how the provisions of the Arbitration act can adapt to the same.
The Inherent flexibility of procedure under the Arbitration Act.
The Arbitration act in India has two important features that will help proceedings under the act to adapt quickly to the changing scenario.
- Party Autonomy: Parties with the inherent flexibility of procedures subject to Section 18 of the act that mandates equality of treatment of both parties and an equal opportunity of presenting their case. The parties are also allowed to decide their own rules of procedure under Section 19(2) of the act.
- Powers of Arbitrator (Inclusive of Arbitral Tribunal): The Arbitration Act provides that, on the failure of parties to decide on a procedure, the power of deciding procedure to be followed in conducting its proceedings is given to the Arbitrator under Section 19(3). Secondly, the Act does not bind the arbitrators by the Code of Civil Procedure, 1909 or the Indian Evidence Act, 1872 under Section 19(1).
By the above-mentioned features in the Arbitration Act, proceedings can happen in novel ways as may be feasible during the pandemic.
Arbitration in times of Covid-19
- Virtual Hearings: With the restrictions in movement due to the lockdown virtual hearings will soon become the norm in arbitral proceedings. The power of arbitration lies in its procedural flexibility and autonomy to the players involved to decide the conduct of proceedings. Neither the substantive law nor institutional rules limitthe conduct of proceedings to in person hearings. Furthermore, the Indian Council of Arbitration also has made rules on this behalf allowing the conduct of proceedings via video conference, telephone, or other means of communication as may be feasible and deemed fit. Virtual hearings therefore, face no legislative barrier, and being an approved form of conduct will now become the new normal in arbitration.
- Document-only Arbitration: Subject to Section 18 and 19(2) of the Arbitration Act, the arbitrators must encourage the practice of conducting proceedings based solely on documents as far as practicable.
- E-Filing: Most Arbitration Institutes are already following the e-filing method to upload documents either via email or using remote platforms for filing. This method will help improve the rules of social distancing by alleviating the need for persons to have to travel physically and will also result in lessening the crowd in these arbitration centres.
Challenges
The advent of coronavirus has left Arbitration with broadly the following challenges:
- Availability of Network: There cannot be an underlying assumption that there is proper internet connectivity in all areas. Therefore, the arbitrator must consider the same while determining whether the proceedings should through video conferencing, telephone, or otherwise.
- Complex Issues of Law/Fact: In so far as document-only proceedings are concerned there may arise certain complex issues of law/fact that require proceedings in-person or through a video conferencing session if feasible.
- Witness Testimony: Another challenge in conducting arbitration online would arise in taking the testimony of a witness. Critics point out that the arbitrator would not be able to see the true demeanour of the witness through video as it is a more comfortable setting. Another concern is the tutoring of the witness is easier on video-conferencing platforms. Furthermore, cross-examinations may also prove to be ineffective through video conferencing. Whereas on the flipside, it may turn out to be beneficial to the arbitrator as he does not have to rely on a transcript of witness testimony but may be able to see him on video and refresh his memory as to the intricacies of the testimony. The cost-benefit analysis of taking witness testimony on video-conferencing has to be done by the Arbitrator. Yet, it is likely to face challenges by the party against whom an order or award is passed.
- Due Process: The parties may challenge the procedure based on the due process if, according to them, the conduct of proceedings has been prejudicial to their interest. For instance: the Internet shutting off during cross-examination of the witness etc. This may lead to more challenges in court on any award so given.
- Lack of Rules: There are no formal rules made yet on the proceedings conducted via remote technology. It is of the utmost importance to make such rules to inculcate the provisions of a fair proceeding and rules of due process of law.
- Enforcement Challenges: Lack of such rules and care of due process may lead to challenges in court hampering the enforcement of the award.
- Privacy and Confidentiality Concerns:With the advent of remote filing methods there are concerns of privacy and confidentiality amongst the parties. Under the Indian Law the Personal Data Protection Bill has not been passed yet, therefore the information is protected under the provisions of Information Technology Act, 2000. Any data of the European Nations are protected under the GDPR Yet, there is not enough literacy of confidentiality laws or sophistication of software to maintain the same which is a major concern for parties.
Way Forward
- Role of Parties: There must be a systematic change in how parties are willing to conduct the arbitration. They should make provisions of online methods of conducting proceedings in their arbitration agreement itself so as to maintain party autonomy and uniformity. Such a change must be encouraged by their attorneys. Remote arbitration proceedings are also a cheaper way for parties as there travelling cost is reduced.
- Role of Arbitrator: The arbitrator must be responsible for maintaining a fair proceeding and making sure parties are given equal treatment to present their case. They must judge when there is a requirement to conduct a hearing in person to determine complex issues or taking witness testimony by determining the importance it has to the case so that it does not become a ground of challenge later on.
- Role of Institutions: With a paradigm shift in the conduct of arbitration the institutions must take the lead in making rules regarding confidentiality of data. Furthermore, they must supplement the law by making specific rules for conducting online proceedings.
India is moving towards an era of remote-arbitration, therefore, it must strengthen its Data Laws. Though arbitral institutions have adapted well to the change there is a need to formalise the rules that govern online arbitration.
The Amendment Act of 2019 to the Arbitration Act is a positive step towards going remote by adding the Confidentiality Clause and Institutionalising Arbitration. But more changes have to be done at an institutional level because now, geographical considerations for arbitration will take a backseat and the focal point of deciding a jurisdiction would be the protection of data and flexibility of rules. Therefore, the seat will take precedence over the venue of arbitration. Hence, to make India a centre for arbitration worldwide, these aspects need to be improved upon.
By-
