I. in harmony with its prescribed rules of

 

I.                  
INTRODUCTION

The
legal definition associated with the term ‘Arbitration’ is “the process by
which a dispute or difference between two or more parties as to their mutual
rights and liabilities is referred to and determined judicially with binding
effect by the application of law by one or more persons instead of a court of
law1”.
Arbitration has often been referred to as a co-existing alternative to the traditional
method of exhausting litigation.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Institutional
Arbitration stems as a common mode of conducting arbitration. It denotes the
management of arbitration by an institution in harmony with its prescribed
rules of procedure. A distinguishing feature of this mode of arbitration is the
superfluous support provided by the institution in the form of appointment of
arbitrators, conduct of arbitral proceedings including arbitral process, venues
for holding hearings, scrutiny of awards etc.

Despite
the existence of numerous arbitral institutions in India, a reluctant attitude
has been observed in the country with respect to the adoption of institutional
arbitration as the preferred mode of arbitration. This paper analyses the
current state of affairs in the arbitration landscape and the reasons behind
the hostile approach towards institutional arbitration in India.2

II.               
ARBITRAL
INSTITUTIONS IN INDIA: QUALITY AND PERFORMANCE

India
offers a selection of multiple arbitral institutions including domestic and
international arbitration institutions, facilities offered by various Public
Sector Undertakings, associations of traders and merchants, chambers of
commerce based in specific cities amongst many domestic and international
arbitration institutions. A significant number of these institutions operate
under their own rules or follow the Arbitration Rules of United Nations
Commission on International Trade Law.

Conversely,
majority of the Indian parties involved in arbitration proceedings opt for
International Arbitration Institutions3
like International Chamber of Commerce (ICC Court), London Court of
International Arbitration (LCIA) amongst numerous others despite the existence
of copious arbitral institutions. A shocking instance of this distrust can be
traced to the closing down of Indian arm of the LCIA due to dearth of cases.

III.            
COMPARATIVE
ANALYSIS BETWEEN INSTITUTIONAL ARBITRATION AND AD-HOC ARBITRATION

Latterly,
this issue has been a theme of countless legal debates and discussions. The Ad-Hoc
Arbitration is convoyed by the lucrative feature of ‘Party Autonomy’. This form
of Arbitration encompasses liberty of the parties to regulate all the
structural facets of Arbitration comprising the manner of selection of the
tribunal, germane law, and the procedure for conducting the arbitration. The
efficacy of Ad-Hoc Arbitration can be appreciated in cases where parties to a
dispute can mutually agree to constitute a tribunal and select arbitrators for
dispute resolution. However, it is supplemented with its own share of negative
consequences, including low cost-effectiveness, delays and laches. The
procedural defects in Ad- Hoc Arbitration also lead to additional procedural
hearings, adjournments and litigations.

On
the contrary, Institutional Arbitration is characterised by the operation of
key nuances of Arbitration in accordance with a clear set of arbitration rules
and timelines sustained by a qualified staff to manage various junctures of
arbitral proceedings. It is to be noted that the Arbitral Institution is not
directly involved in the adjudication of disputes, but administers the arbitral
panel for dispute resolution4.
However, it is interesting to note that operation of each arbitral institution
varies in terms of degree of their intervention in the proceedings5

Some
arbitral institutions offer minimum interference by just providing a set of
rules and guidelines for the process, while others like International Court of
Arbitration of International Chamber of Commerce offer all the services
including notification of invocation of arbitral proceeding to the opposite
party , and service of arbitral award to the parties.

IV.            
INSTITUTIONAL
ARBITRATION: WHY THE ROAD LESS TAKEN IN INDIA

Despite
massive investments by Government of India for attracting parties towards
institutional arbitration, Ad-Hoc Arbitration is the most preferred choice in
the Indian scenario.  Few reasons
elucidating the answer to the aforementioned question can be read below:

(i)                
Lack
of Statutory Backbone

The
lack of statutory support can be explicitly understood from the arbitration-
sceptical nature of the Arbitration and Conciliation Act, 1996. The Act suffers
a dearth in provisions promoting Institutional Arbitration. This is in complete
contrast to jurisdictions like Singapore where the law mandates appointment of
arbitrators by Singapore International Arbitration Centre (SIAC).

1 Butterworths, Halsbury’s Law of
England( 4th Edition, 1991) Page No. 601

2
‘Corporate Attitudes & Practices towards Arbitration in India’,
Pricewaterhouse Coopers (2013), available at https://www.pwc.in/assets/pdfs/publications/2013/corporate-attributes-and-practicestowards-arbitration-in-india.pdf-
retrieved on 23rd January, 2018

3 LCIA,
‘LCIA Facts and Figures—2016: A Robust Caseload’, 03.04.2017, available at http://www.lcia.org/News/lcia-facts-and-figures-2016-a-robust-caseload.aspx-
retrieved on 23.01.2018

4
Krishna Sarma et al., ‘Development and Practice of Arbitration in India –Has it
Evolved as an Effective Legal Institution ‘, Working Paper 103, of the Center
on Democracy, Development, and The Rule of Law Freeman Spogli Institute for
International Studies (2009), available at https://cddrl.fsi.stanford.edu/sites/default/files/No_103_Sarma_India_Arbitration_India_509.pdf
– retrieved on 24.01.2018

5 ONGC
v. Saw PIPES, (2003) 5 SCC 705.