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Innovative Procedures in Arbitration

Brigadier Amit Kathpalia , MRICS , FIE , FICCP, SCL UK, AFFMASCE

With acute clogging of Indian courts with litigation , Arbitration is increasingly gaining popularity in India as a preferred method of dispute resolution. Apart from being faster and cheaper , one of the advantages of arbitration is flexibility in terms of choosing procedures best suitable for the dispute and with mutual consent of both parties. This article looks at some of these successful innovative methods of arbitration.

Arbitration is a form of Alternate Dispute Resolution which is generally binding and can be appealed on very specific grounds. Most countries prefer resolving their disputes through arbitration since it cheaper and faster. In India , with acute clogging of Indian courts and the huge backlog of litigation, Govt of India has  been encouraging arbitration as the preferred method of dispute resolution. To this end the first comprehensive Indian Arbitration and Conciliation Act was legislated in 1996 with subsequent amendments in 2015 and 2019. The recent amendment aims to encourage and mandate institutionalized  arbitration. The ultimate aim is to make India a hub of International arbitration.

Apart from costs and time , another attractive feature of arbitration is flexibility. The methodology and procedures can be adapted to best suit the dispute and convenience of both parties. To this end it is high  time arbitrators in India look at the successful innovative approaches and procedures in practice across the world. Some of these are :

  • Baseball or final-offer arbitration. In this process, each party submits a proposed monetary award to the arbitrator, who chooses one of the proposed awards based on the merits of the presented case. The arbitrator does not modify the prevailing party’s proposed award. This technique limits the arbitrator’s discretion and encourages the parties to propose reasonable awards.
  • Night baseball arbitration. As with baseball arbitration, the parties propose monetary awards to the arbitrator but in night baseball, the arbitrator does not know the contents of the proposed awards. Rather, the arbitrator issues a separate monetary award and the proposed award that is closest to the amount in the arbitrator’s decision becomes binding on the parties.
  • High-low arbitration. Before the arbitration hearing and without informing the arbitrator, the parties establish a bounded range of awards. If the arbitrator’s award falls within that range, then the arbitrator’s award becomes binding on the parties. If the arbitrator’s award is outside the range, then the parties will be bound to whichever of their proposals is closest to the arbitrator’s award.

These techniques have been very successful in Real Estate arbitration cases in USA.

  • Customized Arbitration . In this parties can select customized additions to model clauses such as abridged time limits , document only arbitration and online system will generate customized inclusions in the contract. This method has been in vogue in Swiss Chamber of Arbitration Institute. Now , with advances in AI , the online system itself can suggest customized additions based on the contract and after feeding in certain terms of reference.
  • Emergency Arbitration. ICC has provision for emergency arbitrators in case a party needs urgent interim measures that cannot wait the constitution of an arbitral tribunal . The timelines for emergency arbitration are:
    • Appointment within 2 days of receipt of file.
    • Challenge to the appointment , if any, within 3 days.
    • Proceedings to commence within 2 days of appointment,
    • Decision within 15 days.

Countries having statutory adjudication on lines of UK HGCRA , may not need this provision.

  • Summary Disposal of Claims. Being practiced by Singapore International Arbitration Centre since 2016 for quick dismissal of non-meritorious or hopeless claims.
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  • Virtual Arbitration. With the current situation due to COVID 19 , this seems to be the need of the hour. Virtual arbitration , however , comes with its own challenges such as production of documents, presence of witnesses and even dress code during the conduct of arbitration! Seoul Institute of Dispute Resolution has taken out a protocol (called the “Seoul Protocol”) to serve as best practice in planning, testing and conducting arbitration through video conferencing. The protocol has nine articles
    • Article 1- Examination of witness. The article lays down provision of kind of venue(the video conferencing system should allow for major part of the interior of the room where witness is located to be seen on screen), methodology of giving evidence (the witness shall give evidence sitting at an empty desk or standing at a lectern with face clearly visible) and associated issues.
    • Article 2- Video Conferencing venue. Requirements of venue and the video conferencing system(for example -cross – border connections should be safeguarded through encryption).
    • Article 3 – Observers. (At time of video conferencing , only persons present in the room should be witness, interpreter, representatives from party’s legal team. Identities of all present shall be provided.
    • Article 4- Documents(utilization of shared virtual documents)
    • Article 5- Technical Requirements of video and audio systems .
    • Article 6- Testing and backup of video conferencing systems.
    • Article 7- Methodology of interpretation(consecutive interpretation shall be preferable to simultaneous interpretation).
    • Article 8- Recordings of the proceedings(all recordings to be circulated to tribunal within 24 hrs , no recording to be taken without permission of tribunal).
    • Article 9 – Preparatory Arrangements (requisition for video conferencing , seating arrangements etc).

At the end of the day , ADR methodologies should be as per the convenience and mutually decided by both parties. Apart from experience ,arbitrators need to have skill sets and training in conduct of successful arbitration use of innovative techniques.

Amit Kathpalia
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