By: Angelina Joy & Mahathi U (National University of Advanced Legal Studies, Kochi)
A great deal of cases in litigation, have been lost or won, on procedural points. These rules, however important to judicial integrity, often obscure the merits of a case. On the brighter side, arbitration tends to focus on the real dispute between the parties, except of course, during the operation of procedural bars. But these bars are not, and must not be nearly as pervasive as those in litigation. Apart from this central characteristic, there are preferential factors such as cost, speed, and procedural neutrality in arbitration’s favour.
Where time-bound proceedings must be the order of the day, arbitration has become notorious for its delays in the conclusion of proceedings, rendering the insertion of 29B, counter-productive. As a remedy, incremental formalism or, the more popularly used term “creeping legalism” in arbitral methods, must be dropped. The undue importance and rigour attached to the right to an oral hearing, must then be disposed of. Pursuant, the unfavourable impressions surrounding documents-only arbitration must be dispelled, in order for it to be made the default method in dispute resolution in the country.
Oral advocacy is sought out for the presumed efficiency it brings in the reduction of the length of hearings. Some scholars have perceived that the prowess of the present-day counsel in arbitration is six-fold, namely proficiency in law, logical reasoning and deduction, a command of putting cross-question and answering strategies, coherent articulation of their expression, comprehension of ethics of advocacy, and tactical dexterity. Such expertise is heavily relied upon by a counsel to question witnesses and establish a dialogue with the arbitral tribunal. A well-balanced questioning of witnesses to discredit their recollection of past events and striking a chord with the tribunal may well assist a counsel’s case resulting in a favourable outcome.
Conversely, other authors and practitioners of arbitration have taken a divergent view on oral advocacy as an integral part of the arbitration. According to them, the boundaries of arbitration are not in any manner limited to the ‘oral performance’ of the counsel alone, rather, to all facets of the dispute in question and the strategies thereof. Thus, an arbitration doesn’t primarily revolve around oral communication lest the risk of reducing the concept to the likes of a litigation process would arise.
Considering the importance scholars attach to the right to be heard ‘orally’ and the rhetoric of the advocate presenting their case, a rather frustrating form of legalism has crept its way into arbitral tribunals wherein parties have switched to treat arbitration like litigation with oral advocacy facilitating an environment privy to litigation, “with all the canons of construction familiar to the law of contracts”.
In our view, and from the perspective of effectiveness, oral advocacy is a requirement only when there is a need for the ‘contemporaneous preparation of participants’. This approach would be beneficial especially when the crux of the claim is centered around the clarification of the documentary evidence by the litigants and their witnesses.
Consequently, in circumstances where doubts or disagreements with respect to the interpretation of clauses arise, oral advocacy becomes crucial for the clarifications of any such doubts. Thereupon emanates a pre-supposed right of a litigant to be heard, especially the right to orally substantiate claims and if needed, provide necessary clarifications to the tribunal.
RIGHT TO BE HEARD ‘ORALLY’ UNDER THE INDIAN ARBITRATION ACT
Although the Arbitration and Conciliation Act, 1996 (‘the Act’) affords a non-absolute right to an oral hearing, it follows from the wordings of Section 24 of the Act that the parties may agree to conduct the arbitration without holding a hearing. It also follows that as a matter of public policy, that in any case, the requirement of due process may not be waived. The presence of ‘due process’ is a fundamental characteristic to any arbitral proceeding and documents-only arbitration is no exception.
We hypothesise that in the current unstructured regime, there may arise allegations of due process violations when the right under Section 24 is waived through the application of Section 29B. Let us consider a scenario where written arguments and counter-arguments are duly submitted by Companies A and B respectively. A argues that B has over-valued its losses, on three grounds. But the arbitrators base their calculation of damages payable on B’s arguments. Here, A can contest the award in Court on the ground that the right to be heard and consequently due process, was violated because the arbitrators failed to address A’s grounds against over-valuation. It is to be noted that there are no rules of minimum duty prescribed for arbitrators and no other auxiliary rules of procedure. This might prove sufficient for a court to annul the award but there is also scope for the alternative.
There may be other allegations of violation as well. For instance, in the Sukhbir Singh case the petitioner had challenged the award of the tribunal on grounds of violation of natural justice. It was alleged that the petitioner was not given a reasonable opportunity to cross-examine the witnesses on account of fabrication of documents. The Court upon inspection found that the tribunal had not maintained the minimum standard of rules of natural justice and hence the award was set aside. Possibilities of such instances of fabrication of documents in documents-only arbitration, would not be favoured by the proviso under Section 24(1), leading to a blatant violation of due process.
Though a mere possibility of abuse might be insufficient grounds for amendment, in order to avoid unconstitutional stances by tribunals and inconsistent decision-making by courts, we believe that the question that needs an answer through amendment of Section 24 is, what is due process in an arbitral proceeding?
Any procedure which indorses the ‘right to be heard’ of all concerned parties, may be termed as due process. The scrutiny on processual matters must be placed only on whether the parties were afforded proper procedural opportunities to present their case, and not on whether there was an oral hearing (The violation of a party’s right to present its case is a ground for challenge under Sections 34(2)(a)(iii) and 48(b) of the Act).
Therefore, excluding the blanket application of Sections 34(2)(a)(iii) and 48(b), a clause similar to that prescribed by Swiss law is imperative in the Indian context. The clause must read, “if in a proceeding under Section 29B, the arbitral tribunal, does not take into account some statements of facts, arguments, evidence and offers of evidence submitted by one of the parties which ought to be considerations in the decision to be issued it would amount to the violation of due process”.
This amendment is needed to ensure unnecessary due process violation claims in documents-only arbitration, such that, even in waiving the “oral hearing right”, the parties’ fundamental right to be heard, is in no manner violated.
To sum up, in upholding the conventional application of procedural arbitration law, we must not become naïve to the flip side, which contains a rather efficient and adaptable alternative, one that goes by different labels around the world– expedited procedure, fast-tracked arbitration or what is also referred to as documents-only Arbitration.
In order to consider the documents-only approach for dispute resolution, either entirely or even partially, parties must be able to “trust the process”. Only robust protocols, similar to those followed by international institutions, can guarantee a fair and efficient process. With this principle as the creative bar, we attempted an analysis of the Indian law.
We identified conceptual deformities, and provided a solution through a context-specific rule. In this manner, we argued that for the sake of efficiency in due process, and the allied right to timely justice, oral advocacy is appropriate, only where there is no real written alternative to the former or rather the written alternative doesn’t serve the purpose to coherently or justly bring out any claims before the arbitral tribunal.