Quasi-22: it's time to fix the catch in Indian arbitration

Is an ad-hoc designation by courts of an institution for arbitration susceptible to challenge on grounds of procedure? In other words, what is the extent of a court's liberty to select institutions for arbitration?

- HARINI SUBRAMANI & PRASHANT NARANG

Institutional arbitration assumes significance owing to its recognition as being akin to courts. Arbitral proceedings and tribunals are considered quasi-judicial, but the institutions themselves are not quasi-courts. What this means is that without party consent, the institutions have no independent judicial sanctity and only play a supporting role. Institutional appointments hinge on party autonomy, as per the court's ‘appointment of arbitrators’ scheme. The law stipulates that the concerned chief justice can request an institution to be designated in a particular case only once parties to the dispute make a formal request along with requisite documents. Correspondence in this regard is to be recorded and preserved by the registrar. The Supreme Court examined this procedure over two decades ago.

Yet, India lacks a consistent procedure, which is worrisome for the business environment. Not only does it add to the burden of costs, it can also unsettle previously adjudicated cases. Moreover, courts sometimes pick certain institutions over others of their own accord without explanation.

One also wonders whether recent observations by some high courts endorsing the validity of blanket designations of specific institutions through a one-time notification are remiss in their evaluation. Even though they allude to a scheme of appointment specific to the high court, this scheme is unambiguous—the procedure requires parties to approve the institution in each case.