Tuesday, July 17, 2012

India Legal News on Arbitration in India: SC Disapproves of Retired Judges Charg

India Legal News on Arbitration in India: SC Disapproves of Retired Judges Charging Heavy Fees

The Supreme Court of India disapproved of the exorbitant fees charged by retired judges in arbitration cases. Are you wondering what an arbitration case is? Typically, it is an effective alternative for those parties who want to resolve and end their dispute speedily. In fact, the arbitration process in India applies to domestic as well as international arbitration disputes.

India Legal News on Arbitration in India: Crunch up Your Disputes and Resolve it Within Manageable Time

Those who have a dispute are typically impatient till the issue can be resolved with a meaningful outcome. Let's face it – we have a demanding client who wants quick relief. Arbitration in India helps to do that. Through arbitration, two disputing parties can present their dispute before two retired judges of their choice, who will hear the matter as it is done in a court of law and resolve the disagreement based on the merits of the case, without procedural or any other types of delays or postponements.

For the same reason, corporate and other entities tend to insert an arbitration clause in contracts that state clearly, "In the event of a dispute, arbitration proceedings shall apply." Watch out for this clause because it means that you cannot raise this dispute contrary to the provisions of the agreement you have signed.

Arbitration in India on Arbitration in India: Process of Appointing Retired Judges Comes under Heavy Criticism by SC

Coming back to arbitrations in India, let's not forget that the process involves appointment of a retired judge by each party. With expertise and experience in the judiciary, the value that a retired judge brings to research, understand and resolve important disputes cannot be captured in words. For a change, look at their perspective and understand how much effort, analysis and professional inputs are required to resolve an issue of dispute and pass an award.

Typically, the judges in arbitration hear the arguments of each party and then come up to a decision. Their decision is binding. The difficulty is that many retired judges charge extensive amounts, sometimes in lakhs, for these cases. For the same reason, foreign companies have expressed reluctance to invest in India because in case of disputes, they will be forced to get involved with the process of international arbitration. They are worried about the costs involved than the time taken to resolve the dispute.

India Legal News on Arbitration in India: SC Demands Urgent Solution to the `High Fee Problem'

Coming back to the news pertaining to the Supreme Court bench, comprising of Justices R V Raveendran and H L Dattu, dismissed the Center's appeal in challenging a Delhi High Court order on the appointment of a retired High Court judge as sole arbitrator in a dispute between the Railways and a contractor.

The SC Bench objected to a practice of the court on appointing an arbitrator on the warring parties because they have no option but to pay the high fee demanded by the arbitrator. The Supreme Court bench said, "It is necessary to find an urgent solution for this problem...'

There seems to be a good solution if one looks at the model of institutional arbitration, wherein case-to-case fees is not fixed by an arbitrator himself, but follows a uniform rate approved by the supervising institution.

Another way to limit the arbitration fees is to have the fees fixed by the court, with the approval of the concerned parties, when arbitrators are being appointed. Parties to a dispute can also make their selection of an arbitrator by considering the fee structure that is submitted by retired judges to the Registry of their respective High Court.

Arbitration in India is a great endeavor for disputing parties who want speedy resolutions but not approved of by the recently appointed Chief Justice of India, Justice SH Kapadia, who is reportedly in favor of stopping it.

The question is whether we need to incorporate better practices in the process or scrap the process altogether,

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