SPEECH
BY SHRI K.R.NARAYANAN, PRESIDENT OF INDIA, AT THE INAUGURATION OF THE INTERNATIONAL COUNCIL FOR
COMMERCIAL ARBITRATION CONFERENCE - 2000
NEW DEHI, MARCH 2,
2000
I
am delighted to join this distinguished gathering of men and women drawn
from the world of Law, Jurisprudence and Finance, on the occasion of the
'Conference 2000' of the International Council for Commercial Arbitration.
I would like, at the outset, to express my thanks to Mr. F.S. Nariman,
M.P., President of the Council, for asking me to inaugurate the Conference.
This has given me an opportunity to read some literature relating to this
fascinating field, including a particularly absorbing text, the Tenth
Annual Goff Arbitration Lecture, presented by Mr. Nariman on February
17, 2000 in Hong Kong.
India
is a logical venue for a Conference of this nature. I say this, because
one who is widely regarded as the greatest Indian to have ever lived,
had something to do with the essence of your work. I refer to Gautama,
the Buddha. This gathering will be interested in a conversation that the
Buddha had with Anathapindika, a great banker of his times. This banker
had funded a great monastery. The Buddha, in a special sermon to the banker,
classified a layman's happiness as comprising four parts: (1) the enjoyment
of sufficient wealth acquired by just means; (2) the spending of that
wealth on himself, his family, friends, relatives and on meritorious deeds;
(3) the abjuring of debts; and (4) the leading of a faultless life. Three
of these four situations mentioned by the Buddha relate to what may be
called economic activity, with the emphasis being on just means, meritorious
deeds and the non-incurring of debts.
Underlying
all three conditions is the cultivation of a certain balance in the matter
of wealth, a balance which permits the acquisition of wealth, but abjuring
a craving for it. These four situations make for what the Buddha intended
by his concept of justify Livelihood. It is when these ingredients are violated
and when one's living is sought through means that bring harm to others,
that the need for resolution arises. What the Buddha taught can justifyly
govern economic and commercial transactions within and between countries.
The teaching contains a message for small entrepreneurs as well as giant
structures which have an insatiable appetite for profits, preferably in
different currencies. It is no surprise that the burgeoning of enterprise
has led to a proliferation of commercial disputes requiring specialized
disposal.
It
is one of the saving graces of the juridical mind that alongside the interminable
circuitry of its methods, it has also discovered a short route to settling
commercial disputes, the arbitration route.
While
this Conference is concerned with commercial arbitration, a specific field,
it will recognize that at the root of this method is a principle. Mr.
M. Michel Gaudet, Honorary President of the ICC Court of International
Arbitration has described this principle as follows: "The aim of arbitration
is not to draw from the applicable law a decision against the parties
involved but to clarify, together with the parties, what should be done
in a given situation, to achieve justice with co-operation."
Another great Indian, after the Buddha, Mohan Das Karamchand Gandhi would
have endorsed this view of arbitration. It may be observed that Gandhi
made his first breakthrough, as a barrister, not in a conventional Courtroom
success in South Africa, but by arbitrating a settlement between the firm
of Dada Abdullah in Durban, and its rival firm of Tyebji Seth based in
Pretoria. Facts are the ingredients of any lawsuit. If facts are adhered
to and convincingly demonstrated before the Court, it is reasonable to
assume that the law will come to the aid of the factually-correct side.
But Gandhi was aware of the "the fatal futility of Fact" to use the words
of Henry James. He knew that there is a truth that lies above factual
truth, above literalism. This is the truth that a just concord is higher
even than facts in their one-sidedness; the truth that the letter of the
fact can kill, while the spirit of concord can give life. Pyarelal, Gandhi's
biographer, has written as follows about the case taken up by Gandhi:
"
He had never any doubt as to Dada Abdulla's success. The facts were on
Dada's side. So also was the law bound to be on his side. But he clearly
saw that if the case dragged on, no matter who won, both parties would
ultimately be financially ruined. The lawyer's fees were steadily mounting
up. Under the law, winning party could never fully recover the costs.
He felt disgusted with his profession. Why could not the parties be brought
together to settle the suit out of court by arbitration? After all Tyebji
Seth and Dada Abdulla both came from the same town and were kin. He succeeded
in persuading the parties concerned to agree to arbitration.
"
He had never any doubt as to Dada Abdulla's success. The facts were on
Dada's side. So also was the law bound to be on his side. But he clearly
saw that if the case dragged on, no matter who won, both parties would
ultimately be financially ruined. The lawyer's fees were steadily mounting
up. Under the law, winning party could never fully recover the costs.
He felt disgusted with his profession. Why could not the parties be brought
together to settle the suit out of court by arbitration? After all Tyebji
Seth and Dada Abdulla both came from the same town and were kin. He succeeded
in persuading the parties concerned to agree to arbitration.
The
arbitrator gave a verdict in Dada Abdulla's favour. Now if Dada Abdulla
had insisted on immediate execution of the arbitrator's award, Tyebji
Seth could have gone bankrupt, as he could not have paid all at once the
entire amount, about 37,000 Pounds, and costs. And this would have been
a tragedy. For among the Indian merchants death was deemed preferable
to the ignominy of bankruptcy. There was only one way. Dada Abdulla should
be generous and agree to payment being made in easy instalments spread
over a long period. To get him to do this proved even harder than getting
him to agree to arbitration. But Gandhiji's persistence won the day, and
both the parties were happy over the result."
Throughout
his legal career of some twenty years, thereafter, the future Mahatma
declined to use his legal knowledge to score victories, rather to bring
parties together on the grounds of equity and justice. He was able to
say with satisfaction in the end that he had helped settle more cases
out of court than through the suit-route. He was being both frank and
wise when he went on to say, "I lost nothing thereby, not even money,
certainly not my soul."
On his return to India, in the situation of fundamental conflict that
he faced in India, Gandhiji devised a humane method of struggle, that
of non-violent non-cooperation. He often talked about, "the beauty of
compromise" in politics as well as in life, though he was obstinately
attached to principles and truth. In the Indian situation he advocated
the method of arbitration for resolving disputes among the people, while
he was agitating for the boycott of the courts of law as part of his movement
for non-cooperation with the Government. In 1927 he wrote, "Differences
we shall always have. But we must settle them all, whether religious or
other, by arbitration". "People will take time," he said, "before they
accommodate themselves to arbitration.
Its very simplicity and inexpensiveness
will repel many people even as palates jaded by spicy foods are repelled
by simple combinations. All awards will not always be above suspicion.
We must therefore rely upon intrinsic merits of the movement; and the
correctness of the awards will make itself felt." The method of arbitration
creates understanding between disputants as it resolves the disputes through
compromise and co-operation, without leaving an intolerable trail of bitterness
behind. Actual arbitration was in the tradition of Indian life. As a British
Bench presided over by Sir Amberson Marten observed, "arbitration is indeed
a striking feature of ordinary Indian life. And I would go further and
say that it prevails in all ranks of life to much greater extent than
in the case of England. To refer a matter to the Panch is the natural
way of deciding many a dispute in India."
To-day,
even in India this old system of arbitration is being overtaken by the
review by Courts making matters one of endless litigation. It may not
be certainly possible to-day to exempt commercial arbitration from the
review in a court of law. That is why this Conference has been pragmatic
enough to subtitle the theme of this Conference "International Arbitration
and National Courts" with the words "The Never ending Story".
It
would be a futility of monstrous proportion if the arbitration process
instead of ending litigation were to commence new litigation or perpetuate
it. In that event we will have to say with Shakespeare who was so conscious
of the "laws delays":
"The end
crowns all,
And
that old common arbitrator, Time,
Will
one day end it."
I
hope this Conference can suggest ways to end the never ending process
of litigation before "the old common arbitrator" steps in.
It would be important, in this context, to bear in mind a certain foundational
fact of the human condition to-day. International arbitration must bear
in mind that there are, at starting points, great inequalities between
contesting parties from different parts of the world. Developing countries
and therefore even commercial organizations and corporate entities in
developing countries are, inherently at a disadvantage vis-a-vis their
counterparts in the developed world. Entities - whether individuals, corporations
or nations - are differently endowed in terms of their capabilities, experience
and historical background. Arbitration procedures must necessarily treat
both parties to any dispute as equal.
But the fact remains that more often
than not they are unequal or some are more equal than others. In our globalising
times, it would be essential for commercial arbitration to take national
socio-economic profiles into account while dealing with disputes. It is
not my intention to suggest that differing yardsticks be adopted by an
arbiter who is considering a matter between corporate bodies from the
developed world and corporate bodies from the developing world. But a
balance has to be reached, a fair balance, so that justice is reached
with cooperation; justice rather than a legal pronouncement on so-called
'merits'.
In this context, there is something to be said in favour of
a norm that is in vogue in India's practice of land reforms legislation.
I refer to the concept of the Standard Acre. For example, a hundred acres
of dry or arid land could be regarded as equal to ten acres of semi-dry
or semi-arid land, and to one acre of irrigated land. Our world of Land
Reform legislation, by setting up this equivalence has indicated a method
of affording justice and equity in situations of objective inequality.
At a time when an international regime in trade and commerce is coming
to be crafted, it would be important to bear this in mind. Commercial
arbiters may wish to acknowledge the fact of an unequal world, while arbitrating
the claims of 'equal' parties.
They may wish to arbiter disputes with
circumspection and sensitivity as to historically determined arrangements
of endowment and opportunity. This is important in our times when it is
known that the wealth of the world's richest corporations exceeds that
of some of the nation States in the developing world. This would require
in arbiters an insight such as Thomas Jefferson showed in the context
of slavery in America and eloquently pointed out, "The whole commerce
between master and slave is a perpetual exercise of the most boisterous
passions, the most unremitting despotism on the one part, and degrading
submissions on the other" and pronounced "I tremble for my country when
I reflect that God is just." The rich developed world may not tremble
at the thought to-day, but the practice of arbitration in international
commerce has a chance to be guided by this thought. Arbiters, unlike judges,
preside over an area that goes beyond legalisms and the letter of the
law, into the area of the spirit of arbitration, into what may be called
the area of understanding and empathy.
I
am glad to say that India has recognized the significance of UNCITRAL
Model Law and Rules in establishing a unified legal frame work for the
fair and efficient settlement of dispute arising in international commercial
relations. We have enacted the Indian Arbitration and Conciliation Act,
1996. The main aim of this Act is to simplify the Indian Arbitration Law.
But it also helps minimise the intervention of courts in the arbitration
process.
With
these words, I have great pleasure in offering my felicitations to the
participants of this important International Conference. I wish all of
you every joy and success in your deliberations.
Thank you
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