Arbitration is a method of resolving legal disputes outside of the traditional court system that involves the parties agreeing to have their dispute heard by an impartial third-party arbitrator or panel, whose decision is usually final and binding. Alternative dispute resolution is rendered under the provisions of Arbitration and conciliation Act 1996. Arbitration is a quick, cost-effective, and time-efficient means of resolving a dispute. Arbitration law is based on the notion of removing a dispute from the usual courts and allowing the parties to choose a domestic body to resolve it. 

 Huge number of cases pending before the Indian judiciary and that paved way for the rapid increase in the alternative dispute resolution in India. Alternative dispute resolution is based on the famous quote “justice delayed is justice denied. In order to keep away from undue delay of courts and its several procedures  the out of settlement options became more viable.

However, in some cases, one party may wish to challenge the decision made through arbitration and seek judicial intervention to have the decision set aside or modified ‘This is only possible under limited circumstances, such as when there was a serious procedural irregularity or the arbitrator exceeded their powers. Judicial intervention in arbitration should not be taken lightly, as it goes against the fundamental principle of party autonomy that underpins the entire process. Parties should carefully consider the potential implications of including an arbitration clause in their contracts, and ensure that they fully understand the scope of any limitations on arbitration and the potential for judicial intervention.

Judicial intervention in arbitration can be witnessed in three stages under the Act of 1996, being:

Prior to the commencement of arbitral proceedings: 

The statutory limit of judicial intervention is prescribed through Section 5 of the Arbitration and Conciliation Act, 1996.The stages where the court can interfere prior to arbitration proceedings are

• where the court can refer parties to arbitration (section 8)
• appoint arbitrator (section 11)
• challenge an arbitrator (section 13(5))
• the Competence of an arbitral tribunal (section 16(6))

The non-obstante Clause which clearly aims at eliminating judicial interference despite this in many cases but there is still a larger intervention by the judiciary in the case  “P Anand Gajapathi Raju v. PVG Raju” the court clarified that the term “no judicial authority” has been used to limit judicial intervention in areas involving no judicial discretion and that the words “shall intervene” has been used in aspects where the legislature intended an intervention.

In the case of Surya Dev Rai V. Ram Chander Rai clarified its position stating that if judicial intervention is allowed, there will be a delay in completing the proceedings. At the same time, if there is not intervention, then an error is likely to be neglected from being corrected. Therefore, a degree of judicial intervention can be exerted.

During the arbitration proceedings: 

The things court can do during the arbitral proceedings are

• the court can make interim orders (section 9) 
• provide assistance in taking evidence (section 27).

 It is often witnessed that the judiciary intervenes throughout the arbitration process. Under Section 9 of the Act, interim measures can be granted by courts. Similarly, Section 17 of the Act allows the arbitral tribunal to made orders for granting interim measures. 

In Ashok Traders & Anr. v. Gurumukh Das Saluja & Ors, it was held that the sole aim behind such reliefs is to ensure the right to resolve a dispute through arbitration is not taken away from a party. The decision of the court was brought into the act through the 2015 amendment which included a time limitation for commencing arbitration in Section 9 .In the case M/S. Sundaram Finance Ltd. v. M/S. N.E.P.C. India Limited, the Supreme Court identified that Section 9 of the Act is used as a mechanism to delay pending arbitration proceedings. It held that the intention of Section 9 is for civil courts to assist the tribunal in expeditious resolution. Parties can’t frivolously utilize this provision to delay proceedings

After the arbitral awards is rendered: 

After the arbitral procedures the court can interfere by

• the court has the authority to enforce the arbitral award as a decree (section 36) 
• set aside the arbitral award (section 34) 
• hear an appeal on specific matters (section 37).

The Arbitration and Conciliation Act, 1996, applies to both international and domestic arbitration. Part-I of the Act, applies to arbitration that takes place in India. It includes international commercial arbitrations “where the seat is in India”. While part-II of the Act, deals with “enforcement of foreign awards”. Only Part-I of the Act, bestows the power of making interim orders to the Indian Courts during the arbitral proceedings. However, no provisions under Part-II allow Indian Courts to Intervene in Foreign arbitration for granting interim orders.

in Venture Global Engineering v. Satyam Computer Services Limited, where the Supreme Court decided that a foreign award made under Part-II could be set aside by Indian Courts under the grounds mentioned in Section 34 of the Act. However, such an application under Section 34 could only be made in case, the parties had not either “expressly or impliedly” barred the application of Part-I of the Act. However, as per the 2015 Amendment to the Arbitration Act of 1996, if the parties expressly provide in their arbitration agreement for the application of Part-I, Indian Courts shall exercise the jurisdiction to make interim orders or to assist the foreign seat of arbitration in taking evidence

 Importance Amendment of 2015: The aim of the 2015 amendments to the 1996 Act was to minimise intervention from courts to the maximum extent. the 2019 Amendment to the Act of 1996, made a significant change to minimise intervention under Section 11 of the Act. As per the Amendment, the Supreme Court or the High Court shall design an arbitral institute from which the appointment of arbitrators must take place The arbitration laws in India often failed to stay aligned with its objectives of minimising judicial intervention and respecting the finality of arbitral awards. Thus, the process faced criticism for not only prolonging the adjudication process, but also for being ineffective in reducing the burden of the courts. In light of the issue to minimalize judicial intervention the Law Commission in its 246th Report of August 2014 proposed certain amendments to the act of 1996. With the Arbitration & Conciliation (Amendment) Act 2015 the proposed amendments to limit judicial intervention and promote arbitration were brought into force. Marking the presence of section 5 in the Arbitration and Conciliation Act, 1996 as well as its amendment in 2015, the intention of the legislature to reduce judicial intervention is clear. Section 5 of the 1996 Act which was inspired by Article 5 of the UNCITRAL Model Law, restricts the judicial intervention in part I of the act .The limited interference has not been added with the idea of negating any judicial intervention as a whole, but with the aim to restrict it and reduce the availability of other remedies to ensure finality of arbitral awards.

In summary, while judicial intervention in arbitration is possible under certain circumstances, parties should carefully consider the implications of including an arbitration clause and seek legal advice before agreeing to arbitration. This can help ensure that they make an informed decision and are fully aware of the potential risks and benefits associated with arbitration Excessive intervention creates doubt against the credibility of the arbitration process in India. The culture of Indian courts much be such that indicates a pro-arbitration regime due to the large number of cases before it pending for adjudication Furthermore, the Indian judicial system should support the internationally accepted standards of dispute resolution through arbitral awards rather than resisting it.

References

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2801454

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