I. INTRODUCTIONThelegal definition associated with the term ‘Arbitration’ is “the process bywhich a dispute or difference between two or more parties as to their mutualrights and liabilities is referred to and determined judicially with bindingeffect by the application of law by one or more persons instead of a court oflaw1”.Arbitration has often been referred to as a co-existing alternative to the traditionalmethod of exhausting litigation.InstitutionalArbitration stems as a common mode of conducting arbitration. It denotes themanagement of arbitration by an institution in harmony with its prescribedrules of procedure. A distinguishing feature of this mode of arbitration is thesuperfluous support provided by the institution in the form of appointment ofarbitrators, conduct of arbitral proceedings including arbitral process, venuesfor holding hearings, scrutiny of awards etc.
Despitethe existence of numerous arbitral institutions in India, a reluctant attitudehas been observed in the country with respect to the adoption of institutionalarbitration as the preferred mode of arbitration. This paper analyses thecurrent state of affairs in the arbitration landscape and the reasons behindthe hostile approach towards institutional arbitration in India.2II. ARBITRALINSTITUTIONS IN INDIA: QUALITY AND PERFORMANCEIndiaoffers a selection of multiple arbitral institutions including domestic andinternational arbitration institutions, facilities offered by various PublicSector Undertakings, associations of traders and merchants, chambers ofcommerce based in specific cities amongst many domestic and internationalarbitration institutions. A significant number of these institutions operateunder their own rules or follow the Arbitration Rules of United NationsCommission on International Trade Law.Conversely,majority of the Indian parties involved in arbitration proceedings opt forInternational Arbitration Institutions3like International Chamber of Commerce (ICC Court), London Court ofInternational Arbitration (LCIA) amongst numerous others despite the existenceof copious arbitral institutions. A shocking instance of this distrust can betraced to the closing down of Indian arm of the LCIA due to dearth of cases. III.
COMPARATIVEANALYSIS BETWEEN INSTITUTIONAL ARBITRATION AND AD-HOC ARBITRATIONLatterly,this issue has been a theme of countless legal debates and discussions. The Ad-HocArbitration is convoyed by the lucrative feature of ‘Party Autonomy’. This formof Arbitration encompasses liberty of the parties to regulate all thestructural facets of Arbitration comprising the manner of selection of thetribunal, germane law, and the procedure for conducting the arbitration.
Theefficacy of Ad-Hoc Arbitration can be appreciated in cases where parties to adispute can mutually agree to constitute a tribunal and select arbitrators fordispute resolution. However, it is supplemented with its own share of negativeconsequences, including low cost-effectiveness, delays and laches. Theprocedural defects in Ad- Hoc Arbitration also lead to additional proceduralhearings, adjournments and litigations.Onthe contrary, Institutional Arbitration is characterised by the operation ofkey nuances of Arbitration in accordance with a clear set of arbitration rulesand timelines sustained by a qualified staff to manage various junctures ofarbitral proceedings. It is to be noted that the Arbitral Institution is notdirectly involved in the adjudication of disputes, but administers the arbitralpanel for dispute resolution4.
However, it is interesting to note that operation of each arbitral institutionvaries in terms of degree of their intervention in the proceedings5Somearbitral institutions offer minimum interference by just providing a set ofrules and guidelines for the process, while others like International Court ofArbitration of International Chamber of Commerce offer all the servicesincluding notification of invocation of arbitral proceeding to the oppositeparty , and service of arbitral award to the parties. IV. INSTITUTIONALARBITRATION: WHY THE ROAD LESS TAKEN IN INDIADespitemassive investments by Government of India for attracting parties towardsinstitutional arbitration, Ad-Hoc Arbitration is the most preferred choice inthe Indian scenario. Few reasonselucidating the answer to the aforementioned question can be read below:(i) Lackof Statutory BackboneThelack of statutory support can be explicitly understood from the arbitration-sceptical nature of the Arbitration and Conciliation Act, 1996.
The Act suffersa dearth in provisions promoting Institutional Arbitration. This is in completecontrast to jurisdictions like Singapore where the law mandates appointment ofarbitrators by Singapore International Arbitration Centre (SIAC).1 Butterworths, Halsbury’s Law ofEngland( 4th Edition, 1991) Page No. 6012’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, 20183 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 23.01.20184Krishna Sarma et al., ‘Development and Practice of Arbitration in India –Has itEvolved as an Effective Legal Institution ‘, Working Paper 103, of the Centeron Democracy, Development, and The Rule of Law Freeman Spogli Institute forInternational Studies (2009), available at https://cddrl.fsi.
stanford.edu/sites/default/files/No_103_Sarma_India_Arbitration_India_509.pdf- retrieved on 24.01.20185 ONGCv.
Saw PIPES, (2003) 5 SCC 705.