Arbitration during epidemic (COVID-19) - a virtual route

Introduction

The outbreak of novel coronavirus (COVID-19) has engulfed the entire world including India and continues to create havoc leading to deaths in thousands. Resultantly, India is under lockdown till May 3, 2020. The pandemic situation and the unprecedent lockdown across the country initiallyled to shutting doors of courts at all levels initially. Lockdown restrictions even brought all the arbitration proceedings to a halt.

The Supreme Court (“SC”) vide an Order dated March 23, 2020ⁱ (“Order”) extended the limitation period for filing of petitions/applications/suits/appeals/all other proceedings withinthe period of limitation prescribed under the general law oflimitation or under Special Laws (both Central and/or State) by exempting the period w.e.f. from March 15, 2020 till its further orders. These extensions came as a blessing for the parties willing to file objection under Section 34 and filing appeal thereto under Section. 37 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). This Order also comes to the rescue for the parties seeking extension of arbitration proceeding under Section 29Aⁱⁱ of the Arbitration Act.

The virtual role promoted by SC

On April 6,2020, the SC vide another orderⁱⁱⁱ (“New Order”) invoke its power under Article 142^iv of the Constitution of India, 1950 and issued certain guidelines for hearing via video conference which is now restricted to urgent matters, as and when notified. In the New Order, the SC borrowed the ratio enshrined in its Judgment State of Maharashtra vs. Praful Desai^v wherein it was held that recording of evidence via video conferencing as admissible and valid. Applying the same ratio on itself, the SC allowed the hearing of argument(s), as of now, via video conference restricted to urgent matters.

Use of video conferencing in arbitration

The SC has been successful in its use of video conference for hearing urgent matters via. However, there have been no such innovative steps in respect of arbitration matters. Section 19 (2) of the Arbitration Actprovides that the parties to arbitration by mutual agreement may decide the procedure to be followed by the arbitral tribunal for conducting the arbitration proceeding, and whereas the parties failed to frame such procedure, Section 19 (3) of the Arbitration Act empowers the arbitral tribunal provides that when parties fail to prescribe any procedure to the arbitral tribunal, it may conduct the arbitral proceeding as deem appropriate.

Thus, considering the prevailing situation of outbreak of COVID-19, parties willing to continue with arbitration proceeding may mutually agree to conduct the proceeding via video conferencing or any other virtual route as deem appropriate. Whether the mutual agreement binds the arbitral tribunal and most importantly will the arbitral tribunal give consent to it, is the question herein.

Issues and solutions viz. video conferencing in India

In India, most arbitrators are not so technically well-equipped and/or acquainted to conduct the proceedings via video conferencing/virtual route and require constant assistance. They prefer the traditional approach of hearing the matters in physical presence.

Coming out of the rustic closet, the arbitrators should evolve themselves towards hearing via virtual route, at least for the matters requiring urgent relief, considering the prevailing situation of outbreak of COVID-19. Nevertheless, in case of new arbitration matters wherein arbitral tribunal have been constituted but no hearing has taken place or is at initial stage, the arbitral tribunal, wherever plausible, may direct the parties suomotu or at instance of either party to arbitration, to complete their pleadings and submit them vide email. This mode is feasible and very much cost-effective as the parties would save hugely on time, fees, charges etc. ancillary to in conducting arbitration hearings.

However, cautious steps have to be taken in arbitration matters wherein evidence(s) are to be recorded considering the complexity and severity involved in conducting examination and cross-examination of witnesses. But the same can be overshadowed by the parties by consulting the arbitral tribunal and mutually can frame a procedure for governing the recording of evidence(s). The SC even in its New Order has restricted to hearing only arguments, and not recording of evidence(s) but it has provided that if the parties by mutual consent agree to record the evidence(s) via video conferencing, the same can be done.

Conclusion

Arbitration via virtual route is possible and feasible mode to conduct the arbitrations hearing, which can be used irrespective of the current scenario. It is a small initiative and an innovative step to further reduce the cost and time of the parties involved in litigation and/or dispute resolution. Contemplating the success of SC’s mode of hearing and disposing off matters via video conferencing and subsequent adoptions of the same by many High Courts, arbitration via virtual route is next big step in the field of alternate dispute resolution though it has still to face tough resistance inter alia getting the consent of arbitrating parties as well as the arbitrators considering traditional mindsets they are equipped with, and the constant apprehension of recording of the proceedings and later, the same being used by any party to justify certain action, averments, argumentswhich cannot be overlooked.

(i) Suo Motu Writ (Civil) No.3/2020

(ii) Section 29A of the Arbitration Act deals with the time limit for arbitration awards

(iii) Suo Motu Writ (Civil) No.5/2020

(iv) Article 142 of the Constitution of India, 1950 allows the SC to pass any order necessary for doing complete justice in any cause or matter pending before it

(v) (2003) 4 SCC 601

This article has been authored by Abhishek Naik, Advocate at Agarwal Jetley& Co., Advocates & Solicitors. Contact: Email: abhisheknaik@agarwaljetley.com or Mob: (+91) – 97766 12121