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Alternate Dispute Resolution: Post COVID-19 State of Commercial Litigation

Written by Mudit Goswami

Second Year, B.A. LLB. Amity Law School, Amity University Madhya Pradesh




Disclaimer: Please note that the views expressed below represent the opinions of the article's author. The following does not necessarily represent the views of Law & Order.


Introduction


As lockdowns are being lifted far and wide, legal counsellors are confronted with unprecedented difficulties; especially in the area of commercial litigation. On one hand, we have many high-esteem contracts that have been penetrated in the course of the last three months. Then again, not every person needs to go to court and battle it out. Most of the people want to settle it out of court by the way of reconciliation. Everyone wants to get their business back and leave the disputes behind.


However, some of the contracts will still end up being disputed as parties will not have the option to concur on the most proficient method to settle their disputes. Courts will be crowded with many disputes which are likely to come up, and in this situation, the Alternative Dispute Resolution (ADR) can be a helpful mechanism in solving the conflict in a peaceful and prudent manner. This article centers around the opportunities and challenges amid the COVID-19 pandemic situation for a legal counselor and examines the aspects of arbitration that are suitable in the current situation.


An Indian Overview of ADR


A pertinent feature of our legal system is the presence of autonomous agencies like Lok Adalat or People's Court.[1] These forums resolve the disputes through various methods like Arbitration, Conciliation, Mediation, and Negotiations while reducing the burden on the courts. An Award that is settled in the dispute shall be deemed to be the decree of a civil court and also binding on the parties. Time to time laws relating to alternate dispute resolution has been amended to facilitate the speedy resolution between the parties.

Section 89[2] of the Civil Procedure Code, 1908, has provided conciliation, mediation, and pre-trial resolution approach for effective solution of disputes.[3] The new and effective Arbitration and Conciliation Act, 1996, is based on the United Nations Commission on International Trade Law (UNCITRAL)[4] which is a model of the International Commercial Arbitration Council. The Lok Adalat or dispute resolving forums are governed by the Legal Services Authorities Act, 1987. Offering to resolve a variety of matters relating to civil, commercial, family, and industrial matters, etc., ADR has evolved as a confidential method to deal with the disputes while also avoiding the need of going to court.


Certainty Which Attracts Parties Towards ADR


Starting with few things which are certain amid many uncertainties of COVID-19:


Delays in litigation would be the foremost certainty which certainly makes ADR a good alternative.

Enforcement challenges of Arbitral awards and decrees after final judgment from the courts. Normally, after getting the receipt of the award, an award Holder would have to wait for three months prior to applying for enforcement as per Section 34[5] of Arbitration and Conciliation Act, 1996.

The disposition of parties to find a settlement ground is very high.

After the Lockdown due to the decline in the economy, both the parties may face immediate money issues, and probably will not have time and money to spend on lengthy litigation.

Parties will prefer to renegotiate, get on the business, and maintain the relationship.

Speedy resolution of disputes encourages faster ways to unlock capital and resources.

Parties will favour a more cooperative and less ill-disposed methodology from legal counselors.

The Superfluity of Opportunities in Advance

Amid the COVID-19 pandemic and the resultant lockdown, contracts are most affected by COVID-19. They will need immediate renegotiation with a creative problem-solving approach.

Counsel would need to use less conflicting and more collaborative negotiation. Parties with large legal teams will tackle this hassle with ease, but parties with smaller ones will have to reach out to law firms and they will also prefer comprehensive solutions for such disputes.

The next opportunity is mediation, which is mandatory for commercial disputes. There will be an incredible interest for counselors/mediators in mediation techniques. Due to hectic and delay in the procedure, parties will require a procedure to reach a sensible settlement during mediation. In most cases, conciliation is preferred over mediation because it can be straightforwardly enforced as an arbitral award.

Apart from domestic disputes, there would be plenty of international commercial arbitration cases as well. Foreign parties would also provide a lot of opportunities in the arbitration sector. Apart from the above-mentioned opportunities, debt restructuring, GST, banks related recovery, etc. also causes hurdles for small and medium-sized business industries. Our Apex court in its order dated 23.03.2020 [6], has taken the perception of the plausible obstacles and expanded the time of limitation for proceeding before the all Tribunals/Courts in the nation with impact from 15.03.2020 till further order(s) which is having an immediate ramification in the issues relating to the insolvency. [7]

Furthermore, the May 06 Order of Apex Court [8], introduces an explanation for cases wherein the limitation period terminated after March 15, 2020, in case the limitation has expired after 15.03.2020 then the period from March 15, 2020, till the lockdown is lifted will be stretched out for a time of 15 days after the lockdown is lifted.

Challenges to Arbitration in the Current Scenario

Due to the inability to conduct physical arbitral proceedings, a lot of problems have arisen so far. As per section 29A [9] which was inserted after the Arbitration and Conciliation (Amendment) Act, 2015, orders that an arbitral court is required to render an arbitral award inside a time of twelve months from the date on which the arbitral council is established, subject to a further expansion of a maximum period of six months by assent between the parties. Thus, it enforces a strict timeline for the conclusion of the arbitration procedure.[10] Furthermore, the pending proceedings where the specified time period is lapsing inside the lockdown may take a plan of action under Section 29A for expansion of time once the courts/tribunals become active.

The Statutory timeline given for challenging an arbitral award under Section 34 will also be affected in the current situation. Any effect on the time period over the three months for enforcement of award or decree, allures delay in dispute resolution.

E-Filings and proceedings through videoconferencing have been set up by the Indian Council of Arbitration (ICA) which is an eminent arbitral institution in India. The ICA has adopted the conduct or procedural framework of the International Commercial Arbitration in order to enable the cost-effective arbitration proceedings and likewise, the use of modern technology is a necessity of time. Section 19[11] of the Arbitration & Conciliation Act, 1996 certainly empowers the Arbitral Tribunal to allow the same. However, the judiciary may face some problems as attorneys and judges may find it difficult to cope with the virtual platform.

In an ad hoc arbitration, parties need to approach the court as per Section 11[12] of the Arbitration Act for the appointment of an arbitrator. Given the need of the time, after the immediate reopening of the courts extremely urgent cases would prefer to be heard and it is improbable that courts will think about an application for delegating an arbitrator as an urgent need. Thus, it will also increase delay where parties have to wait for the normal functioning of the courts for the appointment of an arbitrator.

Conclusion

The current pandemic situation has indicated integral challenges in our judicial system. Hon’ble Supreme Court and Hon’ble High Courts across the nation are putting their best efforts by resolving urgent matters via a virtual platform.

The statutory timelines for filing pleadings or conduction of proceedings are extended by the order of the Hon’ble Supreme Court dated March 23, 2020[13], which provides relief in extending the time period of limitation, without which the tribunals' mandate will end and the whole arbitration be baffled. Notwithstanding the challenges in the current pandemic, it is pertinent to note that ADR is going to be the primary mechanism of parties for adjudicating their disputes and also a progressive platform for legal counselors.


[1] Vinay Vaish, Alternate Dispute Resolution (ADR) In India - Litigation, Mediation & Arbitration - India Mondaq.com (2020), https://www.mondaq.com/india/court-procedure/654324/alternate-dispute-resolution-adr-in-india(last visited May 28, 2020). [2] The Code Of Civil Procedure, 1908, No. 5, Acts of parliament, 1908 (India) [3] Rituparna Pandey, Analysing Section 89 of CPC - Law Times Journal (2020), http://lawtimesjournal.in/analysing-section-89-of-cpc/ (last visited May 28, 2020). [4] Jagdeep Singh Bakshi, Arbitration law in India: Everything you want to know The Statesman (2020), https://www.thestatesman.com/india/arbitration-law-in-india-everything-you-want-to-know-1502757528.html (last visited May 28, 2020). [5] The Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India) [6] Suo Motu Writ Petition (Civil), No(s).3/2020 (2020). [7] Daniel George, Impact Of The Supreme Court's Order Of March 23, 2020 - Litigation, Mediation & Arbitration - India Mondaq.com (2020), https://www.mondaq.com/india/trials-appeals-compensation/916810/impact-of-the-supreme-court39s-order-of-march-23-2020(last visited May 28, 2020). [8] Ankoosh Mehta, Ria Lulia & Kritika Sethi, Supreme Court’s Continuous Battle with Covid-19 ; India Corporate Law (2020), https://corporate.cyrilamarchandblogs.com/2020/05/supreme-courts-continuous-battle-with-covid-19/#_ftn1 (last visited May 28, 2020). [9] The Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India) [10] Amit George & Piyo Harold Jaimon, NPAC's Arbitration Review: Extension of time under Section 29A of the Arbitration Act and the limited scope of examination by the Court Bar and Bench - Indian Legal news (2020), https://www.barandbench.com/columns/npacs-arbitration-review-extension-of-time-under-section-29a-of-the-arbitration-act-and-the-limited-scope-of-examination-by the court#:~:text=In%20a%20nutshell%2C%20Section%2029A,by%20consent%20between%20the%20parties. (last visited May 28, 2020). [11] The Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India) [12] Id. [13] Supra Note 5


BIBLIOGRAPHY


Statues

  1. The Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India)

  2. The Code Of Civil Procedure, 1908, No. 5, Acts of parliament, 1908 (India)


Cases

  1. Suo Motu Writ Petition (Civil), No(s).3/2020 (2020), Order dated March 23, 2020 https://main.sci.gov.in/supremecourt/2020/10787/10787_2020_1_12_21570_Order_23-Mar-2020.pdf

  2. Suo Motu Writ Petition (Civil), No(s).3/2020 (2020), Order dated May 6, 2020 https://main.sci.gov.in/supremecourt/2020/10787/10787_2020_31_6_21961_Order_06-May-2020.pdf

Websites

  1. Vinay Vaish, Alternate Dispute Resolution (ADR) In India - Litigation, Mediation & Arbitration - India Mondaq.com (2020),https://www.mondaq.com/india/court-procedure/654324/alternate-dispute-resolution-adr-in-india (last visited May 28, 2020).

  2. Rituparna Pandhy, Analysing Section 89 of CPC - Law Times Journal Law Times Journal (2020), http://lawtimesjournal.in/analysing-section-89-of-cpc/ (last visited May 28, 2020).

  3. Jagdeep Singh Bakshi, Arbitration law in India: Everything you want to know The Statesman (2020), https://www.thestatesman.com/india/arbitration-law-in-india-everything-you-want-to-know-1502757528.html (last visited May 28, 2020).

  4. Daniel George, Impact Of The Supreme Court's Order Of March 23, 2020 - Litigation, Mediation & Arbitration - India Mondaq.com (2020), https://www.mondaq.com/india/trials-appeals-compensation/916810/impact-of-the-supreme-court39s-order-of-march-23-2020 (last visited May 28, 2020).

  5. Ankoosh Mehta, Ria Lulia & Kritika Sethi, Supreme Court’s Continuous Battle with Covid-19 | India Corporate Law (2020), https://corporate.cyrilamarchandblogs.com/2020/05/supreme-courts-continuous-battle-with-covid-19/#_ftn1 (last visited May 28, 2020).

  6. Amit George & Piyo Harold Jaimon, NPAC's Arbitration Review: Extension of time under Section 29A of the Arbitration Act and the limited scope of examination by the Court Bar and Bench - Indian Legal news (2020), https://www.barandbench.com/columns/npacs-arbitration-review-extension-of-time-under-section-29a-of-the-arbitration-act-and-the-limited-scope-of-examination-by-the-court#:~:text=In%20a%20nutshell%2C%20Section%2029A,by%20consent%20between%20the%20parties. (last visited May 28, 2020).

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