SINGLE TRIBUNAL FOR INTER-STATE WATER DISPUTE

A dispute mechanism is a structured process that addresses disputes or grievances that arise between two or more parties engaged in business, legal, or societal relationships. Dispute mechanisms are used in dispute resolution, and may incorporate conciliation, conflict resolution, mediation, and negotiation.

Dispute Redressal Mechanisms are typical non-judicial in nature, meaning that they are not resolved within the court of law.

Indian scenario

Article 21 of the Constitution of India declares in a mandatory tone that 'no person shall be deprived of his life or his personal liberty except according to procedure established by law. The Right to Speedy Trial has been rightly held to be a part of Right to Life or Personal Liberty by the Supreme Court of India. This liberal interpretation of Article 21 is to redress that mental agony, expense and strain which a person proceeded against in criminal law has to undergo and which, coupled with delay, may result in impairing the capability or ability of the accused to defend himself effectively. Thus, the Supreme Court has held the Right to Speedy Trial a manifestation of fair, just and reasonable procedure enshrined in Article 21.

Before formation of law Courts in India, people were settling the matters of dispute by themselves by mediation. The mediation was normally headed by a person of higher status and respect among the village people and such mediation was called in olden days "Panchayath". The Panchayath was headed by a person of higher statues, quality and character who deemed to be unbiased by people of the locality, called Village headman and he was assisted by some people of same character or cadre from several castes in the locality. The dispute between individuals and families were heard by the Panchayath and decision given by the Panchayath was to be accepted by the disputants. The main thing that was considered in such Panchayath was the welfare of the disputants as also to retain their relationship smooth.

But in a developing country like India with major economic reforms under way within the framework of the rule of law, strategies for swifter resolution of disputes for lessening the burden on the courts and to provide means for expeditious resolution of disputes, alternative modes of dispute resolution (ADR) came up by establishing facilities for providing settlement of disputes through arbitration, conciliation, mediation and negotiation. In this context the GOI has set up different Dispute Redressal Mechanism to address the problems.

The different mechanisms formed in India are Gram Sabha, Nyaya Panchayat, Lok Adalat, Family Court, Counseling Centers, Commission of Inquiry, Tribunal, Consumer Court, Indian Legislation on ADR, etc.

In essence the system focuses on: Mediation rather than winner take all; Increasing Accessibility to justice and Improving efficiency and reducing court delays.

However, a well-functioning grievance mechanism should:

• Provides a predictable, transparent, and credible process to all parties, resulting in outcomes that are seen as fair, effective, and lasting.
• Builds trust as an integral component of broader community relations activities.
• Enables more systematic identification of emerging issues and trends, facilitating corrective action and preemptive engagement.

In this series we are discussing different forms of Dispute Redressal Mechanism, issues and challenges related to it.

The Preamble of the Constitution of India, declares India to be a Sovereign, Socialist, Secular, Democratic, Republic. In the wisdom of our framers of Constitution, these ingredients were essential to establish a society which is egalitarian and a state which bases itself on the tenets of welfarism. Thus rule of law and the administration of justice; lie at the core of the phenomena of welfare state.

Also with the acceptance of Welfare ideology, there has been a phenomenal increase in the functions of the government, which has lent enormous powers to the executive and also led to increase in the legislative output. This has led to more litigation, restrictions on the freedom of the individuals and constant frictions between them and the authority.

The 42nd Amendment Act 1976 inserted Part XIV-A to the Constitution of India consisting of Articles 323A and 323B. Which led to the establishment of administrative tribunals.

Article 323A: Provides for the establishment of Administrative Tribunals for adjudication or trial of disputes and complaints with respect to recruitment, conditions of service of persons appointed to public services and other allied matters.

Article 323B: Makes provision for the creation of Tribunals for adjudication or trial of disputes, complaints or offences connected with tax, foreign exchange, industrial and labour disputes, land reforms, ceiling on urban property, election to Parliament and State Legislatures, etc. Parliament has power to enact any law under Article 323A while both Parliament and State Legislatures can make laws on matters of Article 323B, subject to their legislative competence.

Administrative Tribunals have emerged not only in India but also in many other countries with the objective of providing a new type of justice - public good oriented justice. These tribunals manned by technical experts, with flexibility in operations, informality in procedures have gained importance in the adjudication process.

Reason for establishment of Tribunals

Administrative tribunals are established for the following reasons:

• The traditional judicial system proved inadequate to decide and settle all the disputes requiring resolution. It was slow, costly, inexpert, complex and formalistic. It was already overburdened, and it was not possible to expect speedy disposal of even very important matters: e.g. disputes between employers and employees, lockouts, strikes, etc. These burning problems cannot be solved merely by literally interpreting the provisions of any statute, but require the consideration of various other factors and this cannot be accomplished by the courts of law. Therefore, industrial tribunals and labour courts were established, which possessed the technique and expertise to handle these complex problems.
• The administrative authorities can avoid technicalities. They take a functional rather than a theoretical and legalistic approach. The traditional judiciary is conservative, rigid and technical. It is not possible for the courts of law to decide the cases without formality and technicality. On the other hand, administrative tribunals are not bound by the rules of evidence and procedure and they can take a practical view of the matter to decide the complex problems.
• Administrative authorities can take preventive measures, for example, licensing, rate fixing, etc. Unlike regular courts of law, they have not to wait for parties to come before them with disputes. In many cases, these preventive actions may prove to be more effective and useful than punishing a person after he has committed a breach of any legal provision.
• Administrative authorities can take effective steps for enforcement of the aforesaid preventive measures, e.g. suspension, revocation or cancellation of licences, destruction of contaminated articles, etc. which are not generally available through the ordinary courts of law.
• Sometimes, the disputed questions are technical in nature and the traditional judiciary cannot be expected to appreciate and decide them. Administrative authorities are usually manned by experts who can deal with and solve these problems, e.g. problems relating to atomic energy, gas, electricity, etc.

Advantages of Administrative Tribunal

Administrative adjudication is a dynamic system of administration, which serves, more adequately than any other method, the varied and complex needs of the modem society. The main advantages of the administrative tribunals are:

a) Flexibility

Administrative adjudication has brought about flexibility and adaptability in the judicial as well as administrative tribunals. For instance, the courts of law exhibit a good deal of conservatism and inelasticity of outlook and approach. The justice they administer may become out of harmony with the rapidly changing social conditions. Administrative adjudication, not restrained by rigid rules of procedure and canons of evidence, can remain in tune with the varying phases of social and economic life.

b) Adequate Justice

In the fast changing world of today, administrative tribunals are not only the most appropriated means of administrative action, but also the most effective means of giving fair justice to the individuals. Lawyers, who are more concerned about aspects of law, find it difficult to adequately assess the needs of the modem welfare society and to locate the individuals place in it.

c) Less Expensive

Administrative justice ensures cheap and quick justice. As against this, procedure in the law courts is long and cumbersome and litigation is costly. It involves payment of huge court fees, engagement of lawyers and meeting of other incidental charges. Administrative adjudication, in most cases, requires no stamp fees. Its procedures are simple and can be easily understood by a layman.

d) Relief to Courts

The system also gives the much-needed relief to ordinary courts of law, which are already overburdened with ordinary suits.

Lacunas in functioning of Tribunals

Firstly, tribunals operate under the thumb of parent administrative ministries against whom many of them are meant to pass orders, therefore remaining at their mercy with visible and invisible strings for facilities, infrastructure and also rule-making.

Secondly, the secretary of the said Ministry sits on the panel for selecting and reappointing the adjudicating members and also has a role to play in disciplinary committees. For instance, the defence secretary is a part of the committee for selection and re-appointment of members of the Armed Forces Tribunal, and the said secretary is that very officer against whom all tribunal orders are to be passed.

Thirdly, under the garb of providing cheaper and informal adjudication, appeals have been provided, on very limited grounds, directly to the Supreme Court from some tribunals making access to justice a far call with some litigants accepting injustice rather than challenging orders simply because they cannot afford prohibitive costs of litigation in the apex court.

Fourthly, persons who at times have served as part of the same ministries are appointed as members and who carry with them their own personal experiences and over-familiarity making justice subjective as compared to judges who bear no such baggage and are trained to be objective.

Fifthly, a majority of non-judicial members are not legally qualified and hence are not even eligible to appear before such tribunals while they are allowed to exercise judicial functions while sitting on the bench.

Sixthly, some tribunals are not even vested with powers of civil contempt thereby leaving them toothless qua enforcement.

Rationalization of tribunals

The Finance Bill, 2017 has proposed for rationalization of the tribunals.

The amendments permit the central government to decide the terms of service including appointments, term of office, salaries and allowances, and removal of tribunal members through rules.

Additionally, the amendments to the Finance Bill, 2017 have done away with seven existing tribunals such as the Airports Economic Regulatory Appellate Authority (AERA). Functions of these tribunals have been transferred to existing tribunals. For example, the functions of the AERA have been transferred to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). This implies that TDSAT will now also have to decide upon matters related to pricing of airport services. The question is whether the TDSAT has the technical competence to deal with such diverse issues. Similarly, it is unclear if the National Company Law Appellate Tribunal, which will replace the Competition Appellate Tribunal, will have the expertise to deal with matters related to anti-competitive practices.

Criticism of Rationalisation

• Rules are framed by the central government, under a particular Act, and undergo post facto scrutiny by Parliament. In contrast, a Bill is examined and debated by Parliament before its passage. However by allowing the government to determine the appointment, reappointment and removal of members through rules, the threshold of Parliamentary scrutiny of these provisions is being lowered.
• Further, tribunals perform a judicial function, while the government is part of the executive. There may be instances where the government is a party to a dispute before a tribunal like the Central Administrative Tribunal (CAT) or the Income Tax Appellate Tribunal (ITAT). There would be conflict of interest if the government were to be a litigant before the tribunal as well as have the power to determine appointment or reappointment of its members. By allowing the central government to frame rules to decide each of these aspects, the independence of tribunals could be affected.
• Assuming powers to appoint and remove the chairpersons triggering fears the unprecedented move will undermine the authority and independence of these quasi-judicial institutions.
• Another provision - Section 180 - effectively fires judges from nine existing tribunals with three months' pay and allowances. There is no safety net for the tribunal judges. Legally speaking most of the legislations appointing judges totribunals prohibit their service conditions from being changed after their appointments.
• This could pose a conflict of interest in cases where the government is a litigant since it is the one controlling the conditions of tribunal.
• Through this move it will enable the government to put their own henchmen in tribunals control even autonomous bodies.
• There is no infrastructure and merging them will add to their backlog, overlap and confusions.
• COMPAT particularly dealt with competition laws which is essential but under NCLT which is already overburdened since The new Insolvency and Bankruptcy Code has designated NCLT as the adjudicating authority for corporates cases thus it may lead to compromise in efficiency and effectiveness.
• TDAT may not be able to replace the expertise of AERA appellate tribunal especially when domestic air traffic is on the rise AERAAT.
• Government has not followed several salutary principles laid down by the Supreme Court in 2014 to secure the independence of tribunals.

Introduction

With the steep growth in the number of laws and the number of cases, the Court system is under great pressure. In order to reduce the heavy demand on Court time, efforts need to be made to resolve the disputes by resorting to Alternative Dispute Resolution Methods before they enter the portals of the court. The Arbitration, Mediation and Conciliation are tools of Alternative Dispute Redressal System.

Arbitration is a method for settling disputes privately, but its decisions are enforceable by law. An arbitrator is a private extraordinary judge between the parties, chosen by mutual consent to sort out controversies between them. Arbitrators are so called because they have an arbitrary power; for if they observe submissions and keep within due bounds their sentences are definite from which there is no appeal. Arbitration offers greater flexibility, prompt settlement of national and international private disputes and restricted channels of appeal than litigation. In the words of Richard Cobden "At all events, arbitration is more rational, just, and humane than the resort to the sword."

Arbitration is a simplified version of a trial involving no discovery and simplified rules of evidence. Either both sides agree on one arbitrator, or each side selects one arbitrator and the two arbitrators elect the third to comprise a panel. Arbitration hearings usually last only a few hours and the opinions are not public record. Arbitration has long been used in labour, construction, and securities regulation, but is now gaining popularity in other business disputes. Litigation is expensive, time consuming and full of complexities.

The technique of ADR is an effort to design a workable and fair alternative to our traditional judicial system. It is a fast track system of dispensing justice. There are various ADR techniques viz. arbitration, mediation, conciliation, mediation-arbitration, mini-trial, private judging, final offer arbitration, court-annexed ADR and summary jury trial.

 Procedure

The process of arbitration can start only if there exists a valid Arbitration Agreement between the parties prior to the emergence of the dispute. As per Section 7, such an agreement must be in writing. The contract, regarding which the dispute exists, must either contain an arbitration clause or must refer to a separate document signed by the parties containing the arbitration agreement. The existence of an arbitration agreement can also be inferred by written correspondence such as letters, telex, or telegrams which provide a record of the agreement. An exchange of statement of claim and defence in which existence of an arbitration agreement is alleged by one party and not denied by other is also considered as valid written arbitration agreement.

Any party to the dispute can start the process of appointing arbitrator and if the other party does not cooperate, the party can approach the office of Chief Justice for appointment of an arbitrator. There are only two grounds upon which a party can challenge the appointment of an arbitrator - reasonable doubt in the impartiality of the arbitrator and the lack of proper qualification of the arbitrator as required by the arbitration agreement. A sole arbitrator or panels of arbitrators so appointed constitute the Arbitration Tribunal.

Except for some interim measures, there is very little scope for judicial intervention in the arbitration process. The arbitration tribunal has jurisdiction over its own jurisdiction. Thus, if a party wants to challenge the jurisdiction of the arbitration tribunal, it can do so only before the tribunal itself. If the tribunal rejects the request, there is little the party can do accept to approach a court after the tribunal makes an award. Section 34 provides certain grounds upon which a party can appeal to the principal civil court of original jurisdiction for setting aside the award.

Once the period for filing an appeal for setting aside an award is over, or if such an appeal is rejected, the award is binding on the parties and is considered as a 'decree of the court'.

Advantages

• Arbitration promises privacy. In a civil court, the proceedings are held in public.
• Arbitration provides liberty to choose an arbitrator, who can be a specialist in the subject matter of the dispute. Thus, arbitrators who are sector specialists can be selected who resolve the dispute fairly and expeditiously.
• The venue of arbitration can be a place convenient to both the parties. Likewise the parties can choose a language of their choice.
• Even the rules governing arbitration proceedings can be defined mutually by both the parties.
• A court case is a costly affair. The claimant has to pay advocates, court fees, process fees and other incidental expenses. In arbitration, the expenses are less and many times the parties themselves argue their cases. Arbitration involves few procedural steps and no court fees.
• Arbitration is faster and can be expedited. A court has to follow a systematic procedure, which takes an abnormally long time to dispose off a case.

Ground reality

• Delay: Arbitration in India is rampant with delays that hamper the efficient dispensation of dispute resolution. Though the 1996 Act confers greater autonomy on arbitrators and insulates them from judicial interference, it does not fix any time period for completion of proceedings.

          However, the reality is quite different. Arbitrators, who are mostly retired judges, usually treat the arbitration proceedings in the same manner as traditional litigations, and are willing to give long and frequent adjournments, as and when sought by the parties. Although the scope of judicial intervention under the 1996 Act has been curtailed to a great extent, courts through judicial interpretation have widened the scope of judicial review, resulting in the admission of large number of cases that ought to be dismissed at the first instance. Moreover, the parties usually approach arbitration with a similar mindset as for litigation, with the result that awards invariably end up in courts, increasing the timeframe for resolution of the disputes. Thus concept of fast track arbitrations has been established. Fast track arbitration is a time-bound arbitration, with stricter rules of procedure, which do not allow any laxity or scope for extensions of time and the resultant delays, and the reduced span of time makes it more cost-effective.

• Cost: Arbitration is generally considered cheaper over traditional litigation, and is one of the reasons for parties to resort to it. However, the ground realities show that arbitration in India, particularly ad hoc arbitration, is becoming quite expensive vis-à-vis traditional litigation. A cost analysis on arbitration vis-à-vis litigation will throw light on the higher cost of arbitration over litigation. This is a crucial factor which weighs against developing a cost effective quality arbitration practice in India.

          Arbitration costs incurred by the parties may include the arbitrator's fees, rent for arbitration venues, administrative/clerical expenses, and professional fees for the representatives of the parties (which may include lawyers and expert witnesses). The sum of these fees may differ significantly between ad hoc and institutional arbitrations.

• Flexibility of procedure, place and language in the arbitration proceedings: The parties to arbitration are free to determine the procedural rules subject, however, to certain mandatory rules. If the parties do not agree to the procedure, the procedure will be as determined by the arbitral tribunal. Arbitral Tribunal has powers to decide the procedure to be followed, unless parties agree on the procedure to be followed and conduct the proceeding in manner it considers appropriate. The Tribunal also has powers to determine the admissibility, relevance, materiality and weight of any evidence.

          The Place of arbitration will be decided by mutual agreement. However, if the parties do not agree to the place, tribunal shall decide the same after having regard to the circumstances of the case, including the convenience of the parties. Similarly, the language to be used in arbitral proceedings can be mutually agreed otherwise, Arbitral Tribunal can decide. The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language agreed upon by the parties or determined by the parties or determined by the arbitral tribunal.

Salient features of Arbitration and Conciliation (Amendment) Act, 2015:

The Amendment Act has introduced some major changes in the principal Act. We have prepared a brief summary of the following key amendments:

• Relevant court for domestic and international arbitration matters: Under the Act, the relevant court for all arbitration matters would be a principal civil court or high court with original jurisdiction.
• The Bill modifies this to state that in the case of international arbitration, the relevant court would only be the relevant high court.
• Applicability of certain provisions to international commercial arbitration: Part I of the Act that included provisions related to interim orders by a court, order of the arbitral tribunal, appealable orders etc. only applied to matters where the place of arbitration was India.
• Under the Bill, these provisions would also apply to international commercial arbitrations even if the place of arbitration is outside India. This would apply unless the parties agreed otherwise.
• Powers of Court to refer a party to arbitration if agreement exists: Under the Act, if any matter that is brought before a court is the subject of an arbitration agreement, parties will be referred to arbitration.
• The Bill states that this power of referral is to be exercised by a court even if there is a previous court judgment to the contrary. The Court must refer the parties to arbitration unless it thinks that a valid arbitration agreement does not exist.
• Interim order by a Court: The Act states that a party to arbitration may apply to a court for interim relief before the arbitration is complete. For example, a party may seek interim protection of goods, amounts, property, etc. that is the subject matter of the arbitration before a court.
• The Bill amends this provision to specify that if the Court passes such an interim order before the commencement of arbitral proceedings, the proceedings must commence within 90 days from the making of the order, or within a time specified by the Court. Further, the Court must not accept such an application, unless it thinks that the arbitral tribunal will not be able to provide a similar remedy.
• Public Policy as grounds for challenging an award: The Act permits the court to set aside an arbitral award if it is in conflict with the public policy of India.  This includes awards affected by (i) fraud or corruption, and (ii) those in violation of confidentiality and admissibility of evidence provisions in the Act.
• The Bill modifies this provision to also include those awards that are (i) in contravention with the fundamental policy of Indian Law or (ii) conflict with the notions of morality or justice, in addition to the grounds already specified in the Act.
• Appointment of arbitrators: The Act permits parties to appoint arbitrators. If they are unable to appoint arbitrators within 30 days, the matter is referred to the court to make such appointments.
• The Bill states that, at this stage, the Court must confine itself to the examination of the existence of a valid arbitration agreement.
• Time period for arbitral awards: The Bill introduces a provision that requires an arbitral tribunal to make its award within 12 months. This may be extended by a six month period.  If an award is made within six months, the arbitral tribunal will receive additional fees.  If it is delayed beyond the specified time because of the arbitral tribunal, the fees of the arbitrator will be reduced, up to 5%, for each month of delay.
• Time period for disposal of cases by a Court: The Bill states that any challenge to an arbitral award that is made before a Court, must be disposed of within a period of one year.
• Fast track procedure for arbitration: The Bill permits parties to choose to conduct arbitration proceedings in a fast track manner. The award would be granted within six months.

Way forward

• The amendments to the Act, though laudable, are only a first step towards making arbitration the preferred mode of dispute resolution in India. It must be acknowledged that increased efficiency in arbitration is unlikely to come solely from the imposition of top-down legislative change, especially one that is as inherently flawed as this one.
• A change in the very culture of Indian arbitration is required.
  
  a) For one, there needs to be a change in the perspective with which arbitration is viewed. The pool of Indian legal practitioners who specialize in the practice of arbitration has to grow, with arbitration viewed as the priority rather than playing second fiddle to Indian court litigation work.
  
  b) And the pool of arbitrators needs to grow as well. Unfortunately, the tendency to appoint retired Indian judges as arbitrators is also stifling the growth of arbitration as a dispute resolution mechanism in India. What is needed is the growth of a community of arbitrators unfettered by the traditions of the Indian courts and focussed on growing arbitration in its own right.
  
  c) The final, and most important, change needed is the minimization of judicial interference.