Arbitration- a new avenue for practicing company secretaries Introduction: The dictionary meaning of the word arbitration is “hearing and settling of a dispute by an impartial referee chosen by both sides.” (Collins Gem English dictionary). Thus, it denotes a dispute, appointment of a referee to adjudicate upon the dispute and the emphasis is on amicable settlement. In India, the concept is not new and has been practiced for centuries. The most well-known incident is the panch system in villages who are normally the well known figures in the village and who adjudicate the dispute by amicable settlement after hearing both the sides. Arbitration is a method of Alternate Dispute Resolution. The intention is to avoid inordinate delays experienced by the litigants in judicial system and save on costs associated with it. Earlier there was a general law called the Arbitration Act, 1940 was in force in India. The said Act contained provisions regarding arbitration but the arbitral tribunal did not have substantial powers in as much as the award had to be sent to the civil court, resulting in inordinate delays and defeating the very purpose of arbitration. Thus a need was felt for a new law on arbitration. In 1980, the United Nations Commission on International Trade Law has adopted UNCITRAL Conciliation Rules and in 1985 they have adopted UNCITRAL model law on international commercial arbitration. Taking a clue from these developments, we enacted a new law with a view ‘to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for other matters connected therewith or incidental thereto’ (as mentioned in preamble). Thus the Arbitration and Conciliation Act, 1996 (Act no. 26 of 1996) came into force. It has been stated in the objects and reasons that the earlier Act of 1940 had become outdated as it contained general principles. The Act extends to the whole of India including Jammu and Kashmir. However, in terms of proviso to section 1(2), parts I, III and IV shall extend to the state of Jammu and Kashmir only so far as they relate to international commercial arbitration or international commercial conciliation. Salient features of the Act: The purpose of this article is not to give a detailed commentary on the law of arbitration as readers can refer the book for the same. However, in order to apprise the readers about the new Act, just a few salient features are given below. a) It is a consolidated Act containing provisions about domestic arbitration and conciliation, international commercial arbitration and enforcement of certain foreign awards. b) Unlike the 1940 Act, the award under this Act is as good as final and the same need not be sent to Civil Court for execution. Enforcement of the award is possible as if it were a decree of the court (Sec. 36). Further, the award can be challenged only in a limited manner and on limited grounds as specified in the Act. c) Most importantly, the provisions of Civil Procedure Code and Indian Evidence Act are not applicable to arbitral proceedings and the parties are free to agree on the procedure to be followed by arbitral tribunal as well as language/place of arbitration. In the absence of such agreement, the tribunal may conduct the proceedings in the manner it considers appropriate and determine the place of arbitration and the language(s) to be used in arbitral proceedings. (Sec. 19, 20 and 22). Thus the emphasis is on settlement/ adjudication of dispute by finding facts and applying principles of natural justice. Present status: In spite of laudable objectives of the Act, unfortunately this new system of alternative dispute resolution has not clicked to the extent it was desired. There appears to be many reasons responsible for this. Firstly, especially in moffusil areas, the awareness is not there. Secondly, though the Act gives liberty to the parties about the procedure etc., in practice the proceedings are conducted as if these are regular proceedings. Probably the reason behind this is that only legal practitioners take up the arbitral proceedings as their assignment and in most of the cases, the arbitrator is a retired judge who is accustomed to civil procedure code and Evidence Act. Thirdly, contrary to the expectations, the costs are comparatively higher compared to normal legal proceedings. Fourthly, speedy disposal of cases are not happening and the matters are lingering for years. However, fortunately, these shortcomings have been noticed and recently the efforts are on to take remedial measures. Scope for Company Secretaries: Company secretaries are not only corporate legal experts but due to the very nature of profession, their knowledge is far superior in respect of commercial understanding. They have an edge in the sense that they understand the underlying commercial transaction or the legal framework in a more effective manner. Since they are exposed to various facets of law and the management, they can formulate a better strategy in arbitral proceedings while advising to the client. Thus company secretaries in practice can act as strategist and authorized representative in arbitral proceedings. The only precaution they have to take is that they should develop thorough knowledge about the civil procedure code and Indian Evidence Act as many a times the proceedings are conducted in accordance with these laws though it is not compulsory as per the Act. However, given the competence of the company secretaries it is not a difficult task. Secondly , the Institute of Company Secretaries Of India should make efforts to form a body of arbitrators which should have some company secretaries. Thus they can act as arbitrators and the society can get the benefit of their knowledge and expertise in commercial and legal matters. The Institute can also make representations to the Government through proper channels so as to encourage appointment of company secretaries as arbitrators. This is possible only after an awareness is created among the society about this new role of company secretaries. Apart from the Institute, even the company secretaries in practice can help in creating this awareness in the society. If this happens, the day is not far when even the Chief Justices of the various High Courts will appoint company secretaries as arbitrators under the powers vested in them under the Act. Conclusion: Thus I feel this a good area of practice available to company secretaries. In the changing circumstances, it is necessary to carve out a niche area for ourselves. For this, we need to recognise our talents and our capacity and capability and we should be ready to accept the challenges. Otherwise the day is not far when the services sector will open up under GATS and foreign professionals will start practicing in arbitration and we will be left behind. Kalidas Vanjpe Practising Company Secretary

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