CJI DY Chandrachud Highlights Shared Insights and Developments in UK-India Commercial Arbitration

(Judicial Quest News Network)

Oxford/London, June 6 – Speaking at the prestigious University of Oxford on Tuesday, Chief Justice of India DY Chandrachud discussed the law and practice of commercial arbitration shared understanding and developments in UK and India said that both countries have a strong legal relationship. The basis of this relationship is our shared history and values.

He further said that the development of arbitration law in our two jurisdictions is a shared heritage. The present system of arbitration law is based on principles drawn from the common law and civil law.  The importance of arbitration was recognized by the founding parents of

The Indian Constitution, under Article 51, urges the State to “encourage settlement of international disputes by arbitration.” India has a long-standing tradition of arbitration and mediation, historically managed by village elders as a form of dispute resolution. Over time, this tradition has evolved into the sophisticated system of international commercial arbitration we see today. Currently, we are amidst London International Disputes Week (LIDW) 2024, where insights from various legal practices are being shared. Notably, I have found the lecture by the Lord Chief Justice of England, Dame Sue Carr, particularly enlightening. She explored the shared learnings from mediation, arbitration, and litigation. In India, we have shifted from a regime characterized by judicial interference in arbitration to one that upholds arbitration, respects party autonomy, and delineates the supportive role of courts in the arbitration process.

The Arbitration Act of 1698, drafted by John Locke and passed by Parliament with minor amendments, is often credited with establishing the framework for modern arbitration law. This Act permitted private individuals to enter into arbitration agreements and enforce awards with court assistance. Crucially, it restricted court interference in arbitral awards, except in cases of corruption or undue influence. However, the tradition of commercial arbitration in England extends back even further, predating the 1698 Act.

The values of a liberal democracy, as enshrined in our Constitution, enable individuals to seek personalized solutions to their legal issues outside the traditional judicial system, provided these solutions comply with established law. Arbitration exemplifies such an alternative dispute resolution method. However, arbitration is no longer merely an “alternative”; it has become the preferred method for achieving commercial justice.

CJI further said that we have to ensure that these new institutions are not controlled by a self-perpetrating clique. These institutions must be based on the foundation of robust professionalism and the ability to generate consistent arbitral processes.  Transparency and accountability, values by which the work of conventional courts is assessed and critiqued, cannot be alien to the world of arbitration. Arbitral institutions are uniquely placed to co-operate with other arbitral institutions around the world to adopt best international practices and procedures.

Explaining the need for the arbitration he said that The courts in India are overburdened despite the High Courts disposing of 2.15 million cases and the District Courts disposing of 44.70 million cases in 2023. These figures show the trust that the people of India have in their judiciary. Our judiciary functions on the mantra that no case is small or big. Every aggrieved person who approaches the doors of the judiciary has the right to a just remedy. In attending to these grievances, the courts in India perform their plain constitutional duty. The width of our jurisdiction was designed to ensure the widest access to justice. But surely every case need not find a remedy before a court, with emerging forms of dispute resolution such as arbitration and mediation gaining acceptance.

Elaborating the stages of Arbitration he said that there are three sateges of arbitration (i) mutual consent of parties to arbitrate; (ii) arbitral proceedings; and (iii) enforcement of arbitral awards. The future of arbitration lies in streamlining the law and practice of arbitration on these three stages. As practitioners of arbitration and adjudicators of disputes, we must reflect on the future of arbitration because the future is already here. We just have to recognize it and adapt our legal systems to respond to the challenges. Even today, commercial arbitration is not immune from its deficiencies such as delay, cost, judicial interference, arbitrator bias, and lack of enforceability of awards.  I propose to highlight the important developments that have taken place in our jurisdictions and which should be allies in overcoming the present challenges.dings, and c. enforcement of arbitral awards.

Explaining the first satge of Arbitration he spoke about the group of companies’ doctrine .The doctorine binds non-signatories to arbitration agreement, provided the circumstances demonstrate a mutual intentionof the parties to bind both the signatory and affiliated non-signitory oarties.However, English courts have currently rejected the use of this doctorine in arbitration cases.

CJI said while apprising the audience about the recent judgement where the Apex Court had observed that this doctorine must be retained in the Indian arbitration jurispurudence. The Bench, led by CJI, underscored its utilityin determining the intention of the parties in the context of complex transactions involving multiple parties and multiple agreements.

The Indian Supreme Court adopted in its decision a modern and pragmatic approach to determining the consent of the parties. This approach allows the arbitral tribunal to take into account objective facts such as the conduct and involvement of the non-signatories in the performance of the contract to determine their subjective intention to be bound by the arbitration agreement.

He further said that the Group of Companies doctrine is merely a tool at the disposal of the arbitral tribunal to decide whether it can extend its jurisdiction over non-signatory parties based on the facts and circumstances at hand. It allows the tribunal to balance the requirements of contract law and company law against the need of the tribunal to exercise jurisdiction over all the “veritable” parties to the arbitration agreement.

CJI said that the in arbitration of proceedings arbitral autnomy is a key aspect of these proceedings. By choosing arbitration, parties aim to resolve their disputes without involving domestic courts.They generally prefer their arbitration to be independent and free from judicial interference at any stage. The parties grant authority to the arbitral tribunal to settle their disputes without court involvement. The principle of judicial non-interference, which is fundamental to arbitral autonomy, is a guarantee enshrined in the law.

Transitioning to the next segment of his presentation, he delved into the crucial aspects of arbitrator impartiality and independence. Highlighting a fundamental distinction between the two, he emphasized that both the UNCITRAL model law and the Indian Arbitration Act mandate arbitrators to uphold both independence and impartiality.

The UNCITRAL Model Law is apprehensive of the propensity of domestic courts to interfere in arbitral proceedings. Article 5 of the Model Law states that “no courts shall intervene except where so provided in this Law.” Thus, domestic courts cannot normally intervene in arbitral proceedings. There has to be, in other words, a mandate of law allowing the courts to interfere. One situation where domestic arbitration laws allow courts to intervene pertains to the appointment of arbitrators.

Section 12 of the Indian Arbitration Act mandates that an arbitrator disclose any circumstance that might raise justifiable doubts about their independence or impartiality.In this context, he noted that under UK law , there is no statutory requirement for arbitrators to discloseany issues related to their independence and impartiality.

He further elaborated and said that the third stage in the arbitral process is the enforcement of awards. It is a great paradox of arbitration that the parties have to rely on those very domestic courts from which they wanted to insulate themselves when they entered into an agreement to arbitrate.

This is exemplified by the fact that that the national courts have been empowered to set aside an arbitral award on specified grounds, including the ground that the award is contrary to public policy of the State. The reason for incorporating the public policy exception is evident – arbitration law is a form of adjudication for the determination of substantive rights of the parties.

Wrapping up his address, the Chief Justice of India also emphasized the pivotal role of technology in the realm of arbitration, stating its close association with the future trajectory of arbitration proceedings. He illustrated this with an example: while one party might be situated in Delhi, another in Bangalore, and arbitrators dispersed across locations like London, Mumbai, and Singapore, technology enables their seamless virtual participation in arbitration. This technological advancement not only offers cost-effective solutions but also saves valuable time.

Adoption of technology at all levels of arbitration proceedings will make the arbitration proceedings more efficient and, importantly, more accessible.  Technology and artificial intelligence add value to the services provided by arbitral institutions in matters such as reviewing documents or transcribing the proceedings.

The CJI also recognized that while technology is valuable, it cannot substitute the essential role of adjudication. He emphasized that despite its subjective nature, an arbitrator’s assessment of witnesses remains pivotal. He contended that resolving commercial disputes through arbitration is inherently intricate and cannot be reduced to a simple mathematical formula. Rather, it necessitates the nuanced understanding and empathy of the human mind to arrive at a fair and equitable decision.

In conclusion, he underscored the ongoing endeavors undertaken by courts in the global south, including the Supreme Court of India, aimed at bolstering the efficiency of arbitral law.

We continually draw from comparative law. Our sights travel beyond borders to sustain India’s place in the emerging world. The next step is to draw out more people from the Global South to act as counsel and commercial arbitrators. Steps are being taken with the creation of the Arbitration Bar of India. The continuing engagement of ComBar with the Indian Bar and Bench will instill mutual engagement in our work. As I said at the beginning of my lecture, the future of arbitration is already here. It is now our responsibility to live up to the emerging challenges.