Critical Thinking

Government high commitment over a significant period of

Government Litigation in India and National Litigation Policy

WHAT IS LITIGATION?

·      
Litigation
is the term used to describe proceedings initiated between two opposing
parties to enforce or defend a legal right.

·      
Litigation
is typically settled by agreement between the parties ,but may also
be heard and decided by a jury or judge in court.

Pros and Cons of Litigation

PROS

 

CONS

·       
Legal
battles are costly and require a high commitment over a significant period of time.

Can
create a damaging precedent if you lose, making it harder for other
communities to defend themselves against the offence in question
Can
heighten conflict, making it more difficult to repair relationships in the
community later on

 

Litigation
in India

·       In India there is a single hierarchy of courts.

·       India has three tier system of judiciary.

1.     District Courts, at the first tier.

2.     High Court at 2nd tier, which has
the appellate and supervisory jurisdiction over all the courts and tribunals in
such state. 

3.     The Supreme Court of India  at the third tier, is the highest court of
justice in India having appellate and supervisory jurisdiction over High Courts

 

Public
Interest Litigation

Introduction of Public Interest
Litigation has democratized the access of justice to common

man. It has paved way to a new
regime of human rights by giving a wider interpretation to

the right to equality, life and personal liberty and
DPSP.

 

 

Problems with Indian Litigation System

1.      Litigation
in India is very time taking process . Indian Judicial System is marred with
judicial delays and slow process.

2.    
Supreme
Court is bogged down by routine litigation .

The
main culprit include-

1.
Tendency among litigants to seek special leave to appeal against any order or
decision of the high courts and tribunals

2.
Provision for statutory appeals against orders of various tribunals.

·       Eg.the Electricity
Act, 2003, and the Telecom Regulatory Authority of India (Amendment) Act, 2000,
provide for direct appeals to the Supreme Court against orders of appellate
tribunals

3.    
The
power to grant special leave is one that is meant to be used sparingly; in
practice it is used much too liberally.  This
has an impact on the time and number of judges devoted to hearing matters of
constitutional importance.

??

 

 

 

 

 

Time frame for Litigation

 

 How
to solve Loop Holes in Litigation Process

Suggestions by Law Commission

The Law Commission in its 229th Report suggested having a
Constitution Bench in Delhi, with four Cassation Benches’ in different regions.

 

 

Mechanism for Enforcement of Judgments

 

 

 

 

 

 

 

SC tries to make
legal services affordable

·       The
Supreme Court has introduced a self-supporting scheme for providing legal
services to the middle and relatively lower income groups,

·        According to the Union Law Ministry The
?Middle Income Group Scheme? is meant to provide legal services to litigants in
the Supreme Court whose gross income does not exceed ?60,000 per month or ?7.5
lakh per annum. They can avail themselves of the services for a nominal amount.
The members of the governing body, to whom the management of the Society is
entrusted as required under Section 2 of the Societies Registration Act,
include the

 

 

1. Chief Justice of India as
patron-in-chief,

2. Attorney General as ex-officio
vice-president,

3. Solicitor General as honorary secretary

4.
other senior advocates as its members.

 

 

DPSP
: Article 39 A : To promote equal justice and to provide free legal aid to the
poor

The
National Legal Services Authority (NALSA)  Constituted under the Legal Services
Authorities Act, 1987 to provide free Legal Services to the weaker sections of
the society and to organize Lok Adalats for amicable settlement of disputes.

 

Hon’ble
Mr. Justice Tirath Singh Thakur, the Chief Justice of India is the
Patron-in-Chief In every State, State Legal Services Authority has been
constituted to give effect to the policies and directions of the NALSA and to
give free legal services to the people and conduct Lok Adalats in the State.

 

The
State Legal Services Authority is headed by Hon’ble the Chief Justice of the
respective High Court who is the Patron-in-Chief In every District, District
Legal Services Authority has been constituted to implement Legal Services
Programmes in the District.

 

 

Lok
adalats

 

1. NALSA along with other Legal Services
Institutions conducts Lok Adalats.

2. Lok Adalat is one of the alternative
dispute redressal mechanisms, it is a forum where disputes/cases pending in the
court of law or at pre-litigation stage are settled/ compromised amicably.

3.
Lok Adalats have been given statutory status under the Legal Services
Authorities Act, 1987.

 

4. Under the said Act, the award
(decision) made by the Lok Adalats is deemed to be a decree of a civil court
and is final and binding on all parties and no appeal against such an award
lies before any court of law.

5.
If the parties are not satisfied with the award of the Lok Adalat though there
is no provision for an appeal against such an award, but they are free to
initiate litigation by approaching the court of appropriate jurisdiction by
filing a case by following the required procedure, in exercise of their right
to litigate.

 

 

Nature
of Cases to be Referred to Lok Adalat A Lok Adalat has the jurisdiction to
settle, by way of effecting compromise between the parties, any matter which
may be pending before any court, as well as matters at pre-litigative stage
i.e. disputes which have not yet been formally instituted in any Court of Law.
Such matters may be civil or criminal in nature, but any matter relating to an
offence not compoundable under any law cannot be decided by the Lok Adalat even
if the parties involved therein agree to settle the same. National Lok Adalat
National Level Lok Adalats are held for at regular intervals where on a single
day Lok Adalats are held throughout the country, in all the courts right from
the Supreme Court till the Taluk Levels wherein cases are disposed off in huge
numbers. Permanent Lok Adalat The other type of Lok Adalat is the Permanent Lok
Adalat, organized under Section 22-B of The Legal Services Authorities Act,
1987. Permanent Lok Adalats have been set up as permanent bodies with a
Chairman and two members for providing compulsory pre-litigative mechanism for
conciliation and settlement of cases relating to Public Utility Services like
transport, postal, telegraph etc.

 

 

EXCESSIVE
GOVERNMENT LITIGATION

·       Government
litigation  constitutes nearly half of
all litigation in the Indian judiciary.

·       Besides
being a constraint on the public exchequer, government litigation has
contributed to judicial backlog, thus affecting justice delivery in
India.

·       Supreme
Court, since the 1970 has criticized successive governments for
being callous and mechanical in pursuing litigation

 

The Law Commission of India also studied this problem in
its 126th Report in 1988, and made appropriate observations on this front.

 

 

National
Litigation Policy” (NLP) 2010

 

 

 “National Litigation Policy” (NLP) 2010
failed as it was generic and without any scope for implementation.

 

Problems
in NLP 2010

·      
It fails to provide a yardstick for determining
responsibility and efficiency. The text does not define “suitable action” against
officials violating this policy.

·      
 It creates “Empowered
Committees” to regulate the implementation of the policy. But there is ambiguity
about their role and powers.

·      
It also lacks any form of impact assessment to evaluate
actual impact on reducing government litigation.

 

Way
forward

? Revision of the NLP
needs to ensure certain critical features are not missed out:

??It must have clear objectives that can be assessed;

??The role of different functionaries must be enumerated;

??The minimum standards for pursuing litigation must be
listed out;

??Fair accountability mechanisms must be established;

??The consequences for violation of the policy must be
provided;

??A periodic impact
assessment programme must be factored in.

 

A litigation policy can have a profound effect on how the
government thinks about itself as a litigant, and can help curb the problem,
provided it is a constructed with a thorough understanding of the problem and
offers solutions based on evidence rather than conjecture.

 

MAKING
INDIA HUB OF ARBITRATION

·        Committee, under the Chairmanship of
Justice B. N. Srikrishna, to review the institutionalization of arbitration
mechanism and suggest reforms thereto has submitted its report recently.

The Government of India has laid emphasis on making
Arbitration a preferred mode for settlement of commercial disputes by taking
legislative and administrative initiatives on arbitration.

The initiatives aim at minimizing court intervention,
bring down costs, fix timelines for expeditious disposal, and ensure neutrality
of arbitrator and enforcement of awards.

 Arbitration is
often the first alternative amongst various ways to manage contract related
disputes and it holds the promise of flexibility, speed and cost-effectiveness.

 

The Arbitration and Conciliation (Amendment) Act,
2015 envisages various ways to encourage foreign investment by projecting
India as an investor friendly country having a sound legal framework and ease
of doing business in India.

 

 

Problem

·       The
World Bank’s Ease of Doing Business ranking for 2017 reveals that India
continues to fare badly on enforcement of contracts, with an average of 1,420
days taken for enforcement. The absence of effective means for enforcement of
contracts is a serious fetter on the legal system and impedes economic growth
and development. ? Also, it was found that judicial intervention and failure of
the government and its agencies to use institutional arbitration has, among
others, led to India’s reputation as an “arbitration-unfriendly” jurisdiction.
? In India, both ad hoc arbitration mechanism and institutionalised mechanism
are riddled with various problems. Besides this a lack of awareness about the
advantages of institutional arbitration and the existence of certain
institutions leads to parties avoiding institutional arbitration or preferring
foreign arbitral institutions over Indian ones.

 

·       Report
Recommendations ? The committee in its report has
recommended strengthening of institutional arbitration in India.The Committee
has divided its Report in three parts.

 

·        The part I is devoted to suggest
measures to improve the overall quality and performance of arbitral
institutions in India and to promote the standing of the country as preferred
seat of arbitration. Important points in this part are-o Setting up of an
autonomous body called Arbitration Promotion Council of India (APCI),
having representatives from all the stakeholders for grading arbitral
institutions in India. o APCI may recognize professional institutes
providing for acceleration of arbitration. o Creation of a specialist
arbitration bench to deal with commercial disputes in the domain of the
courts. o The committee also opined that the National Litigation Policy must
promote arbitration in government contracts. ? The Committee in Part II of
the Report reviewed the working of International Centre for Alternate
Dispute Redressal(ICADR). It called for declaring the ICADR as an
Institution of national importance. ? In the III part, the committee has
recommended for the creation of post of ‘International Law Advisor’ (ILA) to
advise the Government and coordinate dispute resolution strategy for the
Government in disputes arising out of its international law obligations,
particularly disputes arising out of BITs. Significance ? With India’s
focus gradually shifting towards greater growth and development through
increased Foreign Investment, it is essential for the government to make India
safer for the foreign investments. ? To achieve this goal institutionalization
of the arbitration mechanism can help to make dispute settlement easier and
quicker. ? As also the mechanism, has become crucial for commercial dispute
resolution, particularly for high-value disputes involving international
parties, in most advanced jurisdictions. ? The recommended steps might not
necessarily lessen the burden of judiciary but will push the developmental
agendas of the government further.

 

Arbitration and Conciliation

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.

 

Kinds of
Arbitration

• Adhoc Arbitration: In the
course of a commercial transaction if a dispute arises and could not be settled
amicably either by way of mediation or conciliation, the parties have the right
to seek Adhoc arbitration.

• Institutional Arbitration: In
this kind of

arbitration there will be a prior
agreement

between the parties regarding the
institution

that they will refer to in order to
resolve their

disputes in the course of a
commercial

transaction.

• Contractual Arbitration: In
the present

scenario, where the number of
commercial

transactions as well as the number
of

disputes are increasing, the
parties entering

into a commercial transaction
prefer to

incorporate an arbitration Clause
in their

agreement. The arbitration Clause
provides

that if in future any dispute
arises between

the parties they will be referred
to a named

arbitrator(s).

• Statutory Arbitration: If
by operation of law

the court provides that the parties
have to

refer the matter to arbitration it
is termed as

Statutory Arbitration. In this kind
of

arbitration the consent of the
parties is not

required. It is more of a
compulsory

arbitration and it is binding on
the parties

as the law of the land.

The Arbitration
and Conciliation Act, 1996 provides two alternate methods of ADR:

Arbitration and
Conciliation.

Arbitration may be conducted ad hoc
or under institutional procedures and rules.

Institutional arbitration is
conducted under the guidance and well-tested rules of an established

arbitral organization whereas under
Adhoc arbitration, the parties have to draft their own

rules and procedures to fit the
needs of their dispute. There are number of national and

international organizations set up
with the main object of settling commercial disputes by way of arbitration and
other alternative dispute resolution mechanism.

 

These organizations lay down rules
for the conduct of arbitration. These rules, however,

cannot override the Act. These
organizations handle the arbitration cases of the parties and provide valuable
services like administrative assistance, consultancy and recommending

names of arbitrators from the panel
maintained by them.

 

 

The Act contains general provisions
on arbitration, enforcement of certain foreign

awards, conciliation and
supplementary  provisions. The three
schedules reproduce the

texts of Geneva Convention on the
execution of Foreign Arbitral Awards, 1927, the Geneva

Protocol on Arbitration Clause,
1923 and the New York Convention on the Recognition and

Enforcement of Foreign Arbitral
Awards, 1958.

 

 

The Act differs from previous Acts
in many ways.

Firstly, where there is an
arbitration agreement, the judicial authority is required to direct the parties
to resort to arbitration as per the agreement, provided the application for
that purpose is made before or when a written

statement on the merits is
submitted to the

judicial authority by the party
seeking

arbitration.

 

Secondly, the grounds on which
award of an arbitrator may be challenged before the court has been severely
trimmed. For e.g., a challenge

will now be permitted only on the
basis of

invalidity of the agreement, want
of jurisdiction

on the part of the arbitrator or
want of proper

notice to a party of the
appointment of the

arbitrator or of arbitral proceedings
or a party

being unable to present its case.
At the same time,

an award can now be set aside if it
is in conflict

with “the public policy of India” —
a ground

which covers, inter–alia, fraud and
corruption.

Thirdly, the powers of the
arbitrator himself

have been amplified by inserting
specific

provisions on several matters, such
as the law to

be applied by him, power to determine the venue

 

Advantages of
Arbitration over Litigation

1. In a civil court, the
proceedings are held in public. While Arbitration maintains privacy.

3. 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.

4. The venue of arbitration can be
a place convenient to both the parties. Likewise the

parties can choose a language of
their choice.

5. Even the rules governing
arbitration proceedings can be defined mutually by both the parties.

6. 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.

7. Arbitration is faster and can be
expedited. A court has to follow a systematic procedure, which takes an
abnormally long time to dispose of a case.

8. A judicial settlement is a
complicated procedure. A court has to follow the procedure laid down in the
Code of Civil Procedure, 1908 and the Rules of the Indian Evidence Act. An
Arbitrator has to follow the principles of natural justice. The Arbitration and
Conciliation Act, 1996 specifically states that the Arbitral Tribunal shall not
be bound by The Code of Civil

Procedure, 1908 and The Indian
Evidence Act, 1872.

9. Section 34 of the Act provides
very limited grounds upon which a court may set aside

an award. The Act has also given
the status of a decree for the award by arbitrators.

The award of the arbitrators is
final and generally no appeal lies against the award.

10. In a large number of cases,
‘Arbitration’ facilitates the maintenance of continued relationship between the
parties even after the settlement.

 

Other
Solutions –

The Gram Nyayalaya was proposed by
the 114th Law Commission way back in 1986. The

report recommended the concept of
the Gram Nyayalaya with two objectives. While addressing the pendency in the
subordinate courts was the major objective, the other objective was the
introduction of a participatory forum of justice. To make it participatory the Law
Commission recommended that the Magistrate be accompanied by two lay persons who
shall act as Judges, that the legal training 
of the Magistrate will be complemented by the knowledge of the lay
persons who would bring in the much required socio-economic dimension to
adjudication. It was proposed that such a model of adjudication will be best
suited for rural litigation. The Law Commission also observed that such a court
would be ideally suited for the villages as the nature of disputes coming
before such a court would be ‘simple, uncomplicated and easy of solution’ and
that such disputes should not be enmeshed in procedural claptrap.

 

INTERNATIONAL ARBITRATION MECHANISM

Why in news?

? India
has urged the BRICS nations to develop an arbitration mechanism among them.

?
A proposal was made by Finance Minister at BRICS Conference on International
Arbitration.

 

Need for such a mechanism

? West’s
domination: It is observed that the arbitration centers are concentrated in
west with apprehensions of biased awards against emerging economies.

?
Further, the emerging economies are not adequately represented in the
arbitration area thus the exigencies and concerns of developing nations are
not put forward properly. Thus, there is a need for developing nations to build
capacity.

?
Recent example- British oil and gas explorer Cairn Energy had initiated
international arbitration seeking $5.6 billion in compensation from the Indian
govt. against a retrospective tax demand of Rs. 29,047 crore.

 

India’s efforts

? India
is already working towards making itself as global Arbitration hub. Earlier in
June 2016, Singapore Arbitration center had agreed to open its branch office at
GIFT city.

? It
has made changes to its Bilateral Investment Treaty regime.

?
Further, we need to show restraint as far as domestic jurisdictions of courts
to interfere in those arbitrations. The enthusiasm of domestic courts to
interfere in the international arbitration proceedings has brought bad
publicity to Indian economy in the past.

?
It has made crucial changes to the Arbitration and Conciliation Act.