The Arbitration Council idea should be thrown in the garbage bin, never to be retrieved. We live in a country where dot com arbitrations are yet to see fruition. It doesn’t work because the design is wrong, the intent was wrong and the individuals involved are not just incompetent but malafide.
The executive and Parliament actually does a very good job. India is a real democracy and representatives of the people – however illiterate or underexposed – they do a very good job of representing their constituency. They have to go back to get votes every five years.
The Arbitration Act has been made into a circus by the judiciary. First they had something called the Konkan judgement which said that in an application to the court, the judge would just blindly refer the matter to arbitrators that the court would appoint. And international parties could go to the Supreme Court of India directly.
This made India into an international joke with the courts becoming the laughing stock. Here is one real case study.
A supposed international investor (arm of a global tech major) who had no shares in a startup and no agreement with the startup – approached the Supreme Court seeking arbitration. The startup objected saying they had no concern with the international company, had never received any foreign exchange and had not signed any agreement whatsoever with them.
The Supreme Court ruled that this was a matter for the arbitrators to decide. And they constituted a bench with the retired Chief Justice of India and two retired Chieg Justices of High Courts as the tribunal. It was a party like no other. The judges flew down business class to Mumbai for an arbitration. Hired the most hotel and business centre (The Oberoi).
The startup refused to appear. They held ex parte hearings for five years. The judges were old and sick. On three occasions an ambulance had to be called because the arbitrators were just too sick to work.
And then the main arbitrator died. Mysteriously an order came out supposedly signed by the arbitrator before he died. The startup objected to the ex parte order. The startup was dismissed by the High Court. They went to the double bench saying the order was passed by a dead man. The Double Bench sought to force a settlement. And forced withdrawal of the appeal.
The settlement didn’t go through because the litigant wasn’t a shareholder in the first place. The arbitration and legal cost in a Rs 4 crore dispute is Rs 20 crores. But there was no investment in the first place, no arbitration agreement and no dispute.
The startup could not go to court because the supposed arbitration clause precludes going to normal court. The district court refuses to hear an application to declare the forged document filed in Supreme Court as non est because so much water has flown. And 25 years have passed. The application has been pending for 15 years.
And now they want to form an Arbitration Council for retired judges to rake it in.Activate to view larger image,
