Law Minister Ravi Shankar Prasad's introduction of a Bill in Lok Sabha is a clear indication of the Centre's 'unconstitutional' bid to grab power, says legal luminaries
The International Centre for Alternative Dispute Resolution (ICADR) may not ring a bell with people outside the legal profession, but control of this 25-year-old institution, headquartered in New Delhi, has become a bone of contention between the Union government and the registered society that has been running it since 1995.
The tug-of-war began earlier this year, when on the intervening night of March 2 and 3, the promulgation of the New Delhi International Arbitration Centre (NDIAC) Ordinance sought to transfer all undertakings of the ICADR to the Union Law Ministry. The ICADR, which has Chief Justice Ranjan Gogoi as its chairperson and a governing council packed with legal luminaries like Attorney-General K.K. Venugopal, challenged the constitutionality of the ordinance in the Delhi High Court and got a stay order. On July 3, Union law minister Ravi Shankar Prasad introduced a bill in the Lok Sabha seeking to replace the ordinance. On July 8, the Supreme Court refused to entertain the Centre’s plea to vacate the stay granted by the Delhi HC.
The quest for control of an autonomous institution raises obvious questions on the government’s desperation to take over what is essentially a body corporate registered as an autonomous society that operates under the aegis of the SC.
“The ICADR was established to offer an independent platform for arbitration, conciliation and mediation, essentially to corporate entities tied up in legal disputes with the government or other private entities. It received a capital grant of Rs 3 crore from the Union government for construction of its building and has, since, been fully self-sustaining in its expenses. The government now wants to seize its control,” former Union law minister and lifetime patron of ICADR, Hans Raj Bhardwaj, told Outlook (see interview).
Bhardwaj alleges that the current impasse over ICADR began soon after Prasad took over as law minister in 2016 during the first term of PM Narendra Modi’s government. “In fact, I had spoken to Prasad’s predecessor, Sadananda Gowda, about ways in which ICADR could be made more efficient, his response was very positive,” Bhardwaj says.
In January 2017, the government set up a 10-member committee headed by former SC judge B.N. Srikrishna “to review the institutionalisation of arbitration mechanism in India”. The panel submitted its report in July 2017, recommending wide-ranging reforms in arbitration mechanism needed to reduce the burden of cases pending in courts. The report dedicated an entire chapter to the ICADR, terming it a “flagship arbitral institution”, but noting that it had received only 53 cases of arbitration and conciliation since its inception, concluding that “it may be preferable for the government to take over the ICADR”. Justice S. Ravindra Bhat, presently Rajasthan High Court chief justice and K.K.Venugopal, who were part of the panel, had dissociated themselves from the report pertaining to the ICADR.
P.K. Malhotra, former law secretary and ICADR secretary-general, who is the main petitioner against the NDIAC Bill in the Delhi HC, says the government has used the report to justify its “blatantly unconstitutional” attempt to seize the INStitution. “While the stated objective of improving institutionalised arbitration mechanism is laudable, the manner in which it is seeking to take control of ICADR is objectionable,” Malhotra says.
Senior advocate Dushyant Dave, counsel for ICADR, believes that the bill doesn’t offer an alternative dispute resolution (ADR) mechanism better than what the ICADR has. “By taking over an institution that has been involved in ADR for 25 years, the government is actually discouraging arbitration. And what are its grounds? A government can take control of an entity it has funded but only if there is a proven charge of financial irregularity. Has there been any such charge against ICADR?” Dave asks.
A former chief justice who has been associated with ICADR tells Outlook, “the government was unhappy about two things—first, it did not want Bhardwaj as lifetime patron of ICADR because he is essentially a Congressman and second, because ICADR is autonomous, the Centre could not have its pick in deciding its office-bearers or influencing arbitration matters, especially ones against public sector undertakings.”
As per the NDIAC Bill, once the government takes control, a revamped ICADR will comprise seven members with a retired judge of the SC or the high court or a person with experience in the administration of arbitration as its chairperson. It would have two ‘eminent persons’ of substantial experience in institutional arbitration as members and three ex-officio members, including a nominee from the ministry of finance and a CEO. There would also be a representative from a recognised body of commerce and industry, appointed as a part-time member.
Several ICADR members Outlook spoke to believed that this proposed composition provides a scope for favouritism by obliging those close to the regime. “The other problem would be that the NDIAC will not be seen as an independent arbitration body but one that functions under the government. Why will corporates move NDIAC for arbitration when most of such cases are against government entities?” an ICADR functionary asks.
While Prasad was unavailable for comment, sources in the law ministry stressed that the Bill was justified because ICADR “has not had a significant case load in over two decades of its existence”; a fact underscored by the Srikrishna panel too.
An ICADR governing council member refuted the charge of ‘non-performance’. “The ICADR was set up with some broad objectives, like promoting ADR through conferences, providing facilities and administrative assistance for ADR, maintaining panels of arbitrators and setting up regional centres…it has carried out all these activities,” he says.
A former high court judge who has handled arbitration matters for ICADR tells Outlook, “The charge that ICADR does not have a huge case load does not hold water. Secondly, in most ADR cases different government bodies are also a party, should the government not be answerable for not approaching ICADR with such cases? Why is the government singling ICADR out? If it wants to have a centralised arbitration platform, let it take over every private institution involved with ADR.”
With the Supreme Court now referring the dispute between the ICADR and the Union government back to the Delhi HC, the legal battle is nowhere near closure. Prasad may succeed in having the bill passed in the Lok Sabha, given the BJP’s brute strength there. However, its smooth sailing in the Rajya Sabha, where the Modi government lacks a clear majority, is uncertain. Congress RS members Vivek Tankha and Abhishek Manu Singhvi, associated with the ICADR in their capacity as senior advocates, might also canvas among Opposition members to scuttle Prasad’s bid. The impasse certainly makes for a fit case of arbitration.