Does Arbitration Hinder the Growth of Common Law Jurisprudence? | Law Optional Notes for UPSC PDF Download

Arbitration vs. Common Law: Coexistence and Implications

Conflicting Views on Arbitration

There are contrasting views regarding arbitration's relationship with common law:

• Some argue that arbitration, with its emphasis on confidentiality, hinders the growth of law. It is seen as distinct from traditional law produced by courts.
• On the other hand, there is a perspective that arbitration possesses a unique law-making capacity, potentially influencing legal systems on a systemic level.

Confidentiality and Common Law Development

Confidentiality in arbitration is a point of contention:

• The diversion of cases from courts to arbitration diminishes the courts' ability to shape and elucidate the law, leading to a stagnation of common law development.
• Common law's dynamic nature, driven by court procedures, helps keep the legal system alive and relevant. It fosters the creation of precedents, ensures legal consistency, and adapts legal principles to changing societal needs.

Overlap Between Court Decisions and Arbitral Proceedings

Despite having its own jurisprudence, arbitration sometimes intersects with common law:

• Courts occasionally reference arbitral awards in significant judgments, contributing to legal discourse.
• However, limited access to arbitral awards can impede the growth of common law by restricting the dissemination of valuable legal insights derived from arbitration.

Arbitral Decision Impact on Common Law Jurisprudence

Enhancement of Common Law Jurisprudence

• Publication of arbitral reasoning can strengthen common law jurisprudence. 
• National courts consider arbitration outcomes and apply common law rules.

Public Understanding and Scrutiny

• Reduced court cases due to arbitration may hinder public understanding of the law. Issues arbitrated but not litigated may escape public or parliamentary awareness.
• Example: If a critical legal matter is settled through arbitration multiple times without reaching the courts, it might evade public attention and potential legal reforms.

Role of Judicial Courts

• Considering arbitral decisions in judicial courts is vital for delivering justice. Ignoring arbitral outcomes could lead to incomplete legal frameworks and a parallel legal context.
• Example: Judicial courts incorporating arbitral decisions ensure legal consistency and prevent the creation of conflicting legal precedents.

Contractual Nature of Arbitral Courts

Arbitral courts, despite their contractual nature, should not be excluded from the jurisdictional system. Consistency in the Common Law family is crucial, emphasizing the consideration of prior rulings by decision-makers.

Transparency in Arbitration Procedure

• Importance of making arbitration decisions accessible to the public.
• Increasing necessity for transparency as more commercial law matters are handled through arbitration.

Role of the Arbitrator

• Arbitrator as the representative of the parties involved.
• Responsibility to reach a resolution based on the specific agreement between the parties.
• Considerations like competence, judgment, and impartiality are crucial.
• Arbitrators are cautious about appearing biased towards previous decisions.

Uncertainty in Setting Precedence

• Challenges in establishing a consistent precedent within arbitration.
• Questions about the weight given to past awards in decision-making.
• Concerns about the lack of clear guidelines on using past awards.
• Impact of arbitrators' engagement with past awards on their reputation and the arbitration process.

Arbitration vs. Common Law Procedure

Lack of clarity and development poses challenges in arbitration within the common law procedure. Parties sometimes settle for less than deserved, setting problematic precedents. However, this issue is not exclusive to arbitration but also prevalent in regular court proceedings.

Confidentiality in Arbitration

• Confidentiality is often seen as a key aspect of arbitration hindering common law.
• Many misconstrue confidentiality in arbitration, assuming it implies non-publication and privacy.
• Confidentiality isn't universally protected and depends on party choice in most cases.
• UNCITRAL Model Law on ICA lacks specific provisions safeguarding confidentiality.
• In India, the 2019 amendment to the 1996 arbitration and conciliation act introduced Section 42A, emphasizing confidentiality.
• Exceptions for disclosure are primarily for award implementation and enforcement.
• Confidentiality's extent varies case by case based on rules, ethics codes, and applicable formats.

Arbitration Confidentiality and Privacy

Confidentiality in Arbitration

• Confidentiality is crucial in arbitration to protect sensitive information shared during proceedings.
• Parties have the right to keep certain information private to safeguard their interests.
• The duty of confidentiality does not prevent the publication of the award but ensures sensitive details are redacted.

Privacy vs. Confidentiality

• Privacy excludes third parties from proceedings, while confidentiality prevents parties from sharing sensitive details with outsiders.
• Parties opt for confidentiality in arbitration to maintain the security of their information.
• Confidentiality does not mean complete non-disclosure but focuses on protecting sensitive data that could harm the parties if revealed.

Arbitral Confidentiality

• Importance of Confidentiality in Arbitration: Confidentiality in arbitration offers a significant advantage to involved parties. Unlike court proceedings, arbitration keeps sensitive information private. In court, details are often made public when parties seek order implementation.
• Tension Between Publication and Confidentiality: There exists a conflict between the widespread publication of awards and the valued confidentiality in arbitration. Surveys show that 90% of individuals prefer arbitration due to its confidentiality benefits.
• Critique on Arbitral Confidentiality: Despite its perceived importance, the confidentiality of arbitration is sometimes considered overrated. For instance, even when confidentiality is maintained during proceedings, information may still leak to the public domain.
• Enforcement and Disclosure: When a party seeks to enforce an arbitral award, it becomes a public matter. Certain exceptions to confidentiality regulations may require disclosure based on prevailing legal obligations, which can override confidentiality agreements.

Arbitration Systems: Enhancing Transparency and Accountability

• Resolution of disputes is the key objective of arbitration systems.
• Consideration of factors like public interest, consent of parties, and disclosure for protecting legitimate interests is crucial.
• Accessible arbitral awards aid in the development of common law jurisprudence.

Developing a System of Appeal

• Implementing a system of appeal aligned with common law procedures can enhance coherence.
• Increasing transparency in proceedings involving judicial discretion promotes accountability.
• Consistency in awards and the establishment of soft law precedents are facilitated through transparency.

Role of Binding Precedents

• Binding precedents from higher courts serve to ensure judicial certainty and predictability.
• They relieve judges from individually assessing past decisions, promoting system continuity.
• The judge's duty lies in reaching the optimal decision based on past precedents.