The Government’s recent decision to adopt Mediation in place of Arbitration is somewhat puzzling. Until recently, Arbitration was being actively promoted as an alternative dispute resolution mechanism and dumping arbitration process so abruptly is not and cannot be any solution as rightly pointed out by Shri M.C. Govardhana Rangan.
Main reason Arbitration hasn’t gained popularity in India is due to the lack of a ‘credible’ forum comparable to international forums like Singapore International Arbitration Centre. Unfortunately, there are many in India (including Govt & institutions) who think good ‘Arbitration’ means making top class infrastructure arrangements like any five-star hotel conference rooms, high speed internet etc., whereas the key to the success is the panel of highly qualified, experienced and impartial arbitrators. In fact, good arbitrators anyways try to mediate first to find solution! Heavy reliance on retired judges is another big roadblock for effective arbitrations. They could probably do better in ‘Lokadalats’.
Another serious aspect is the over enthusiastic intervention of courts in nearly every arbitral award that has undermined the whole purpose of Arbitration. I fear that promoting Mediation might be perceived as another ‘jugaad,’ a temporary fix for deeper systemic issues.
In order to promote Arbitration effectively, the Government could have first stopped challenging the awards against themselves & stopped raising frivolous disputes. In fact, the Government is the biggest litigant in this country, be it in revenue (tax), land acquisition etc. In the first place Governments need to avoid unnecessary litigation. Shifting from Arbitration to Mediation I am afraid is no solution at all.