The age-old debate of interventionism vs non-interventionism in the context of enforceability of both domestic as well as international arbitral awards has always assumed relevance. To give the Courts of India their fair due, post 2015, they have had an impeccable track record in dealing with challenges to the Domestic Awards and recognition of Foreign Awards. Looking back, the 2015 amendments have been a watershed moment in India’s Arbitration landscape pivoting India on to a pathway towards becoming a more arbitration friendly jurisdiction.
However, that being said, the track record with respect to the final execution of arbitral awards has been far from satisfactory, which is governed by procedures covered under Code of Civil Procedure.
While conversations around strengthening Institutional Arbitration and creation of a specialized Arbitration Bar are no less important, what good would these measures be if the award holder is put through more rigors post an already lengthy arbitral process. The brainstorming around inspiring confidence in arbitration as alternate dispute resolution mechanism or as I would like to call it parallel or appropriate dispute resolution mechanism may be moot if we cannot ensure timely execution of awards.
Although a point which may be raised in favor of the Courts would be their strict adherence to the time limit for making an application under Section 34 of the Act and not allowing delays to provide some certainty for initiating execution proceedings. The law laid by Supreme Court that an award holder can initiate execution proceedings in any court in India according to the location of the assets has been a positive development along with the 2015 amendments which amongst other things, clarified that the mere filing of a Section 34 does not grant an automatic stay on the award.
This leads us to a very concerning conundrum: Despite spending years in arbitration and sometimes subsequent challenge or recognition proceedings, we can only stumble across for those last 10 yards. The Legislature has sought to address the time spent in arbitration by capping it at 12 months post pleadings, extendable by an additional 6 months and the 12-month mandate put in place for disposal of petitions challenging the arbitral awards. But a similar mandate hasn’t been put in place for execution proceedings, which is very puzzling because this ought to be the easier part of the overall journey. This issue gets even more severe as the cost associated to execution and time value for money is a big disincentive for award holders in Indian context.
Recently, renowned Senior Advocate Mr. Harish Salve provided a very grim picture of the arbitration landscape in India in certain aspects of process of arbitration of India. In stark contrast to the views advanced by Hon’ble CJI B R Gavai, had a much more positive outlook. However, while discussing these diagonally opposite views centered around the interventionist tendencies of the court, we might be missing the bigger picture.
In a Victorian Era judgement of the Privy Council from back in 1872, the court made the following observation, “The difficulties of a litigant in India begin when he has obtained a decree.”. This unfortunately still remains relevant today after more than 150 years.
The time may be ripe for us to completely rethink/overhaul the execution process for arbitral awards. One may look no further than the Insolvency and Bankruptcy Code, 2016 (“IBC”) as a case study Let’s take a look at the shift brought on by the introduction of an “Interim Resolution Professional” (“IRP”) under the IBC as a replacement to the “Official Liquidators” under the erstwhile Companies Act, 1956. The Bankruptcy Law Reform Committee from February 2015 highlighted a myriad of issues including but not limited to a lack of official liquidators with specialized knowledge and training, resource limitations and lack of legal assistance which drove creditors to instead realize their claims under the SARFAESI. With the introduction of the new code, the responsibilities of the Official Liquidator were taken over by the IRP who could be proposed by the parties themselves as a part of their Section 7, Section 9 or Section 10 applications. This introduction of private parties into a space which was traditionally dominated by Government appointed Official Liquidators has gone a long way towards easing the bottleneck of cases.
There is no reason why a similar approach could not be adopted in the context of execution of arbitral awards, easing the already enormous caseload on the judiciary via the introduction of a panel of professionals responsible for the execution of awards in accordance with the CPC. This could also be akin to a High Court appointed panel of Commissioners recording evidence. Also, execution does not always encompass matters of law and recourse to Courts, and their approval or assistance can be mandated in certain circumstances. There may be skepticism which arises with the adoption of such a course, but change will always have its skeptics. The fears attached to the wholesale changes brought about by the IBC were also quickly dispensed with following the code’s success as a dominant recovery tool.
*Vyapak Desai, Counsel- International Disputes & Investigations, Vyapak Desai Law Chambers
**Vihaan Shetty, Student, Government Law College