{"id":3873,"date":"2023-04-19T01:16:16","date_gmt":"2023-04-19T06:46:16","guid":{"rendered":"https:\/\/presolv360.com\/resources\/?p=3873"},"modified":"2024-03-15T12:54:39","modified_gmt":"2024-03-15T07:24:39","slug":"safeguarding-effectiveness-purpose-arbitration-small-value-claims","status":"publish","type":"post","link":"https:\/\/presolv360.com\/blog\/safeguarding-effectiveness-purpose-arbitration-small-value-claims\/","title":{"rendered":"Safeguarding The Effectiveness And Purpose Of Arbitration In Small-Value Claims"},"content":{"rendered":"\n

By Arif Mohammed Madani<\/em><\/strong><\/p>\n\n\n\n

Arbitration has been a go-to solution for various organizations, companies, and even individuals. It can settle disputes through a (perceived-to-be) quicker\u00a0and more efficient dispute resolution mechanism than the courts. This is particularly useful for small-value claims where the parties wish to avoid excessive legal costs to resolve their disputes.<\/p>\n\n\n\n

However, we must ask whether arbitration has been able to live up to its expectation and fulfil its purpose. And if not, what is the solution?<\/p>\n\n\n\n

The Supreme Court of India, in the case of\u00a0Shree Vishnu Constructions v. The Engineer In\u00a0Chief Military Engineering Service & Ors<\/a><\/em>, recognized delays in the\u00a0disposition of applications. The dispositions occurred under Section 11 of the Arbitration Act. Upon receiving a\u00a0report on the matter, the Court determined that there were outstanding applications dating back\u00a0to 2006. The Court further stated that failure to decide applications within a reasonable period of time would defeat the Act’s objectives.\u00a0<\/p>\n\n\n\n

When does the court appoint an arbitrator?<\/h2>\n\n\n\n

For the uninitiated, Section 11 relates to the appointment of an arbitrator by the court. Sometimes, the parties are unable to appoint an arbitrator through mutual consent or in\u00a0accordance with established procedures. If so, they must seek the intervention of the\u00a0courts, which they originally sought to avoid through arbitration.\u00a0Unfortunately, the courts have consistently failed to meet the expectations of those seeking\u00a0expedited resolution. They often take extended periods of time to appoint an arbitrator.\u00a0<\/p>\n\n\n\n

This compromises the effectiveness of arbitration as a means of dispute resolution from the outset. If the parties have to reach the courts for even an arbitrator’s appointment, it defeats the purpose of the arbitration. To illustrate, consider the use of arbitration clauses in \u201clegacy agreements\u201d between banks and their customers. These agreements typically include\u00a0provisions stating the use of arbitration to resolve disputes between the parties. The perceived advantages of speed and efficiency of arbitration likely drive this decision. However, as previously discussed, appointing an arbitrator by the courts\u00a0can be a lengthy and protracted process. That completely undermines the intended benefits of arbitration.\u00a0<\/p>\n\n\n\n

Ways to appoint an arbitrator <\/h2>\n\n\n\n

In situations where a significant number of customers default on their loans, or if they fail to make timely payments on their instalments, banks may have to resort to arbitration to resolve the resulting disputes.<\/p>\n\n\n\n

In such cases, the banks usually have only two options available to them: <\/p>\n\n\n\n