NPAC gives teeth to Indian institutional arbitration

Set up by the Palkhivala Foundation, its primary motive is to promote institutional arbitration in India, keeping in mind the growing burden on Indian courts and the inordinate delay in disposal of cases.

Institutional arbitration is yet to come of age in India. Nearly 30 mn cases are pending across the country, of which 20 mn cases are criminal and 10 mn are civil. The largest litigant before courts in India is the Govt. Instead of taking disputes to the court, the government must create a system which inspires confidence. Over 65 lakh cases have been pending over a five-year period. And stakeholders believe settlement can be facilitated with faster resolution of cases through institutional arbitration framework.

Until now, most of the alternate dispute redressals which were done by the Centre involved government officers as arbitrators. “By providing facilities to conduct quick, efficient and cost-effective arbitration proceedings, NPAC seeks to become a Centre of Excellence in the field of institutional arbitration,” said Arvind Datar, Director, NPAC, a non-profit registered under Section 25 of the Companies Act, 1956.

“India has a poor track record when it comes to enforcing contracts. Ad hoc arbitration is the order of the day with cases getting resolved by a sole arbitrator or 3-member tribunals,” he said, lamenting that arbitration cases were held in hotels. So, the establishment of NPAC gains credence as it would spur an institutional mechanism. Apart from national cases, this also sets the platform for resolving international bilateral and cross-border disputes.

Whether it’s PSUs like the Gas Authority of India (GAIL) or Indian Oil Corporation (IOC) or the National Highways Authority of India (NHAI), arbitration cases are piling up without the institutional recourse being preferred to resolve cases. About 300 arbitration cases were going on pertaining to NHAI or the IOC, Datar sought to point out, highlighting the growing relevance of institutional arbitration.

Recently, the Parliament passed the New Delhi International Arbitration Centre (NDIAC) Bill, aimed at boosting efficacious conduct and management of Alternative Dispute Resolution (ADR) proceedings. Amitabh Kant, CEO, Niti Aayog, had then stressed on arbitration being a vitally important supplement to enhance ease of doing business. “If the dispute-resolution processes are efficient, swiftly expedited and effective, it can alleviate the pressure on courts, reduce pendency, and instill investor confidence,” he had said. Pendency in courts is a serious concern. The National Judicial Data Grid estimates that there are more than three crore cases pending across courts, with approximately 65 lakh cases pending for over five years, Kant remarked.

The advantage of institutional arbitration, Datar held, is such a mechanism provides a fixed timeline of say seven months, to resolve cases. Also, the fees are fixed and the rules are already known. Above all, it is the competence of the arbitrators that is the biggest favourable factor in case of institutional arbitration, he pointed out. Also, time-bound settlement of cases would reassure global companies to enter India with more confidence.

Though the High Court has an arbitration centre, efforts are on to promote institutional arbitration via NPAC. For better traction, it has recently been set up in Delhi as well. Contractual disputes arising between a private party and a government of India enterprise, can find faster resolution through NPAC, Datar said.

For now, those involved in the institutional arbitration include the Indian Council of Arbitration (ICA), the International Chamber of Commerce (ICC) (a wing of FICCI) and the International Centre for Alternative Dispute Resolution (ICADR). NPAC has marquee members on its governing council and board. Justice MN Venkatachaliah, former CJI, Soli J Sorabjee, former AG, KK Venugopal, AG, Senior Advocate, Supreme Court, S Mahalingam, former CFO, TCS, Arvind P Datar, Senior Advocate, Madras High Court and Supreme Court are some of the distinguished veterans associated with NPAC.