"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Tuesday, June 28, 2011

Are We Groping in the Dark? The Need for Empirical Research on Arbitration in India

In 2003, the Supreme Court went contrary to the then prevailing understanding of the ground of public policy in Section 34 of the Arbitration and Conciliation Act, 1996 (“Act” or “1996 Act”) and held that patent illegality of the arbitral award would also come within the purview of the ground of public policy in Section 34(2)(b)(ii) for setting aside arbitral awards. Commentators lamented that the judgement had brought back the position in the Arbitration Act, 1940. For instance, Sarah Hilmer argued: “[u]nfortunately, in Saw Pipes [ONGC v. SAW Pipes AIR 2003 SC 2629] the Supreme Court has opened the floodgates to arbitral litigation.” [Sarah E. Hilmer, Did Arbitration Fail India or did India Fail Arbitration, 10 Int. A.L.R. 2007 33, 34 (2007)] From a doctrinal point of view, the argument that the Saw Pipes is not contrary to the spirit of the Act or that Saw Pipes is not in consonance with the prevailing international scenario may be convincing at first sight. However, in the face of a powerful argument that till 2007 (Saw Pipes was decided in 2003) only 26.72% (151) of the applications were filed challenging an award based on public policy and in those 151 applications, 112 were outrightly rejected (representing about 74.17% of the total applications based on public policy ground), Sarah Hilmer’s argument does not sound overwhelmingly forceful anymore. [for the figures just cited, see Sumeet Kachwaha, Enforcement of Arbitration Awards in India, (2008) 4 AIAJ 64 (2008); and Amelia C. Rendeiro, Indian Arbitration and “Public Policy”, 89 Tex. L. Rev 699 (2011) wherein Rendeiro argues on the basis of data in Kachwaha’s article that the challenges on the basis of public policy are “relatively rare and, when made, are frequently rejected by the high courts”. The point made here is about the forcefulness of empirical research and not the correctness of the data in Kachwaha's article] This is a typical illustration of the potency of quantitative data or empirical evidence in dispelling myths.

Empirical: Quid Est? The term “empirical” means “based on what is experienced or seen rather than on theory”. As opposed to doctrinal research, empirical research involves the “systematic investigation of real world facts or actual societal functioning, whether by quantitative or qualitative methods, for the purpose of making law more effective and just or the administration of justice more fair.” [See, Craig Allen Nard, Empirical Legal Scholarship: Reestablishing a Dialogue between the Academy and Profession, 30 Wake Forest L. Rev. 347 (1995).] The title of the law review article just cited says it all: empirical research is an attempt at establishing a dialogue between legal academia and legal profession. While quantitative empirical research, as the name suggests deals with numbers and statistics, qualitative empirical research primarily consists of historical materials, interviews, case studies, etc[See, Lee Epstein & Gary King, The Rules of Inference, 69 U. Chi. L Rev 1, 2 (2002)]. Uses and applications of empirical techniques in law have been charted out quite systematically in the past three decades in legal scholarship worldwide. Some of the uses of empirical legal research, as stated in the Nuffield Report [Professor Dame Hazel Genn et al, Law in the Real World: Improving Our Understanding of How Law Works, November 2006] are enumerated below:
  1. Results of empirical legal research would provide near-certain data about the existence or the non-existence of certain state of affairs, depending on which policy could be made or modified.
  2. Several institutions such as Non-governmental organisations, civil society, etc act as links between the policy-makers and law-in-motion. At their level, empirical legal research helps in convincing the policy makers about the need for making a policy or amending it.
  3. Use of empirical data in pleadings to support an argument in the court. (see, for example, AT & T Mobility v Concepcion)
Empirical Research in Indian Arbitration:
While qualitative empirical research in law is much more prevalent in India, quantitative research in law is not probably taken as much as is required, at least in the mainstream legal academia. [Some examples are Wolfgang K. C. Köhling, The Economic Consequences of a Weak Judiciary; Matthieu Chemin, Does the Quality of the Judiciary Shape Economic Activity? Evidence from India; Lakshmi Iyer et al, Political Representation and Crime: Evidence from India; India Development Foundation, Judicial Impact Assessment: An Approach Paper
Empirical Research, whether quantitative or qualitative,  in Indian arbitration is even more uncommon. Apart from a few empirical analyses such as those pertaining to the number of awards set aside and number of arbitration cases filed, there has been no systematic data collection and interpretation. 
Data is difficult to come by in arbitration primarily because of its inherent nature: arbitration is a private and confidential process. This problem has been mitigated to an extent by several arbitral institutions which publish statistical information pertaining to arbitrations handled by them. For example, the Singapore International Arbitration Centre publishes relevant statistics in its annual report [SIAC, 2010: CEO’S ANNUAL REPORT]. Arbitral institutions in India, it would seem, do not officially publish statistics of arbitrations conducted under their aegis. The problem of lack of data is further amplified in India where ad hoc arbitration is the prevalent mode of arbitration. With these constraints it is not easy to find data on arbitration. So we have to rely “on anecdotal sources of information, such as reported court cases, published arbitral awards, and attorney war stories.” [Christopher R. Drahozal, Of Rabbits and Rhinoceri: A Survey of Empirical Research on International Commercial Arbitration, 20 J. Int’l Arb. 23 (2003)] However, this does not prevent researchers from doing research on the role of judiciary in arbitration. As illustrated above, establishing arguments through empirical data adds more force and certainty to the argument. Due to lack of empirical research on Indian arbitration, the connect between theory and the law-in-motion is not firmly entrenched, leading to hypothetical arguments. It would do well for arbitration researchers in India to venture into the empirical domain.

Generally, teachers of arbitration at National Law Schools suggest (or at times allot, I understand) non-empirical topics to students. Suggesting arbitration topics related to data collection/ data analysis might probably go a long way in bridging the gap between theory and practice.

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