Can Markets Help Deliver Legal Justice Efficiently in India?

Private sector intervention via arbitration tribunals can change the face of the judiciary in this country.

When the senior-most judge of the country starts crying, you know the judicial system is in serious trouble. It is overburdened and understaffed, a perfect recipe for long delays in judgements.

This bothers me, not just as a citizen, but also as an economist. Because economists are obsessed with efficiency, and this is not efficient. And this led me to think “How can we use markets, the epitome of efficiency, to unburden the courts?”

The answer to the problem may lie in arbitration. What is arbitration? Arbitration is when two parties to a dispute cannot arrive at an agreement, so they appoint a neutral third party, an arbitrator, to resolve their dispute. The parties mutually agree to go for an arbitration, and whatever decision the arbitrator makes is binding and final.

Take a simple example, of two siblings fighting over who gets to ride in the front seat of the car. They can’t reach a consensus, so they go to their parents to resolve their dispute, and whatever the parents decide is binding on them. In this case the parents are the arbitrators.

Can Arbitration Help?

Has this been applied in real life? Yes, the Indian Arbitration and Conciliation Act of 1996 lays down the rules of how an arbitration can be done, with minimum intervention by the courts. Currently, however, it applies only to certain disputes between corporations, and does not cover matrimonial, anti-competition or commercial court matters.

But there is no good reason to limit the scope of the law in such a way. If a husband and wife have a dispute and want to see an arbitrator, they should be free to do so. And not just matrimonial cases but all civil disputes arising between individuals or corporations should be brought under the ambit of the Indian Arbitration and Reconciliation Act.

There are many benefits arbitration provides over a traditional court case:

• The parties can, by mutual consent, choose their own arbitrator.
  
• The waiting period to begin proceedings is very short (no tareekh pe tareekh here).
  
• Since arbitrators are essentially private judges who are in it to make a profit, they generally take less time to resolve disputes than ordinary judges.
  
• We can appoint the right person for the right job. In a matrimonial case, the arbitrator can be a family counsellor. In an anti-competition case, the parties could appoint an economist and an expert in the relevant industry. Ordinary judges, on the other hand, have all gone to law school and may not be the most appropriate people to deal with the matter at hand.
  
• Finally, there’s a lower cost to the taxpayer. If a case drags on too long in a regular court, there is some expense to the taxpayer; maintaining the court premises, salaries of the judge and other court personnel etc. This is not the case in an arbitration, where all costs are borne privately.
  

Arbitrators are allowed, by law, to use their own procedures in their tribunals, subject to the parties’ agreement, provided they give both parties an equal opportunity to present their side of the story. This means that cases do not get hung on obscure legal technicalities as they do so often in the regular courts.

No Substitute for Courts

I am by no means suggesting that we replace the courts with private arbitration tribunals. On the contrary, arbitration tribunals can supplement the judiciary. There are numerous cases where both parties simply want a swift resolution, but they don’t get a court date for a long time. If we open their cases to arbitration, they will obviously be better off. But the biggest beneficiary will be the judicial system.

If the private sector, through arbitration, can take some of the burden from the judicial system, it will not only result in lesser workload for judges, but also faster dispensation of justice. Maybe then the Chief Justice will finally be able to smile again.

(Jairaj Devadiga is an economist who looks for simple solutions to the complicated problems that ail our society)

This is a personal blog and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.

Also read:

CJI Thakur Wept Over a Problem of the Judiciary and Govt’s Making

National Court of Appeals: Let’s Fix the Judicial System First