COVID 19 brings in a New Age of Litigation

Introduction

An unprecedented worldwide lockdown has been witnessed due to the coronavirus pandemic. This global pandemic has affected every sphere and aspect of life, thereby making no exceptions to the legal system. This crisis has got us to rethink as well as redesign both our professional and personal life keeping in mind the volatility and complexity of this situation. It is time for us to also relook and redesign the way disputes are resolved and the Indian litigation system. 

This article focuses on: (i) how COVID 19 is presently affecting litigations in India, and the future impact of the pandemic on litigation; and (ii) the steps which need to be taken in order to tackle this crisis and be ready for the new age of disputes.

Impact of COVID 19 outbreak on Courts and litigations in India

The Indian Judiciary system has taken various steps to keep a check on the spread or escalation of the pandemic. The Supreme Court of India has issued a notification to restrict the functioning of courts from 16th March 2020 and instructed them to take up urgent matters only, so that human interface and mass gatherings could be avoided. Various tribunals and courts have also separately issued directions for the closure of the filing counters as well as advocate chambers. The Supreme Court of India by its order dated 6th April 2020, has also issued directions and guidelines to various courts regarding the use of video conferencing for hearing arguments and recording evidence during this pandemic. 

In India, approximate 3.5 crore cases are still pending in various courts all across the country as of August 2019. There has been a hike of around 22% (approximately 64 Lakh cases) with regard to the total number of pending cases in various courts all across the country between 2006 and 2019. Presently, even though the courts are technically closed due to the pandemic, there has been filing of around 3 to 4 cases before each court per day through electronic means (e-filing). Further, as courts are taking up only urgent matters, the lockdown has been delaying the hearing and filing of non-urgent matters. This temporary closing of Indian courts and postponement of the hearing of non-urgent matters will definitely result in burdening the already overburdened Indian judiciary and increase the time period for resolving these disputes. 

The coronavirus pandemic has also given rise to a tsunami of commercial disputes, with respect to employment issues, payment of rent, and performance of contractual obligations. With respect to the employment matters, there may be disputes in relation to employers and private organisations reducing the salaries and wages of its employees for the lockdown period, and perhaps laying off their staff and employees due to this crisis. In relation to the performance of contractual obligations, parties have already started looking up the wordings of their contracts to understand if they can invoke the force majeure clause. There have been discussions going around both in the legal and business world to decipher whether the pandemic will be considered a force majure event, whether there are an alternative means to performing the commercial contracts, whether the lockdown has made it impossible or merely delayed the performance of commercial contracts. All these questions do not have a straight-jacketed answer and will now be tested in the courts of law. The pandemic also brings the challenge of financing of infrastructure projects and scare of companies going bankrupt. A number of suites are also likely to be filed by customers against travel agencies, hotels and airlines for a refund of their booking amounts.

These new litigations emerging out of the pandemic will hit the overburdened courts which in turn will increase the lag period. It is a general practice for courts to take up the recently filed cases before hearing the existing suits. Thus, it is important for us to start thinking of and implementing solutions to be able to manage this caseload once the courts resume functioning in the aftermath of Covid-19. 

Some legal reforms to prepare for the future

Keeping the future of litigation in mind post COVID-19, it is important for us to take up some reformative measures for tackling the present crisis and for the betterment of litigation as a whole. Some of these measures may not be implemented immediately but we need to prepare like a five-year plan to be able to transform the way litigation is carried out in India and be ready for the new age post COVID-19. 

Standardisation of pleadings

The Indian Executive and the Judiciary with the help of lawyers should together standardize the pleadings in commercial court cases. This would expedite the filing and disposal of commercial cases in courts, thereby would speed up the process of the courts.

Increase the number of commercial courts and judges

By the year 2015, the judicial system of India was having a shortage of around 5,018 courtrooms. Keeping in mind the rise of pendency of cases post COVID 19, it is important that more number of courtrooms are set up all over India to encourage speedy disposal of cases. The World Bank’s 2016 edition on ‘Ease of Doing Business’ stated that a total of 1,420 days (4Years) was invested in the resolution of a civil dispute, including commercial disputes, in India. This period is significantly higher in China, standing at 452 days, and the Russian Federation at 307 days. These countries have more number of commercial courts which results in the distribution of fewer cases per court per judge and thus ensures that the cases are disposed of at a faster pace. However, in India, we are having only 247 commercial courts handling lakhs of commercial suits at a time, thereby slowing the time period required to dispose of these cases. After the lockdown, it is most likely that the number of cases per court per judge will rise up rapidly. Thus, it important for us to start taking steps to increase the number of commercial courts and the number of judges to be preparing for this caseload and ensure speedy disposal of cases. In order to achieve the demand for more judges, in particular for commercial courts, judges could be appointed on the basis of a contract for a period of 5 years. The qualifications for these judges could be the same as the High Court judges and special training could be given to them to deal with commercial matters. 

Adopting the virtual way of resolving disputes

India has adopted the modern virtual way of conducting trials over video conferencing in order to combat the coronavirus pandemic. In order to speed up the disposal of future litigations, conducting trials through ‘virtual ways’ needs to be mandated for certain cases. India should refer to the UK’s model of identifying cases that would not require physical presence before the court and thus be suitable for a virtual trial through video conferencing. Technology should also be adopted not only for hearings but also for filling cases before various courts and tribunals and other administrative tasks. 

Promotion of regional arbitration and mediation centers

It is time for Indian Courts to encourage regional arbitration and mediation centers and appoint arbitrators from these regional arbitration centers. This will be able to help to speed up the process of disposing of commercial matters. The Indian Government needs to take steps to offer training to young lawyers who could be appointed as mediator and arbitrator and contribute to the justice delivery system.

Standardisation of stamp duty for an arbitration agreement

In most jurisdictions, there is no requirement of payment of stamp duty on commercial contracts. Therefore, in a matter of international commercial arbitration, where one of the parties is from a foreign jurisdiction, the obligation to pay the stamp duty may fall upon the Indian party. Further, the legislature should provide for uniform stamp duty or abolish the stamp duty for arbitration agreements in order to facilitate the arbitration process, especially international commercial arbitration. Abolishment or standardization of stamp duty across various States for commercial agreements will also encourage foreign investment and boost India as a lucrative venue for business as well as arbitration. 

This unprecedented crisis has challenged the judiciary and us lawyers to deliver justice in a new and transformative way. The eminent British historian Arnold Toynbee said that those living in an age of crisis must become pioneers of a better age, striving to find positive solutions and thereby turning the age into one of achievement. It is time for all of us to embrace this crisis and bring forth this new age of litigation in India. 

Mr. Krrishan Singhania is the Managing Partner of K Singhania & Co., Mumbai (formerly Singhania & Co.), which is a boutique law firm specialising in the field of International and Domestic Commercial  Arbitration, Intellectual Property Laws, and Foreign Direct Investments. He is considered a veteran in the field of Alternative Dispute Resolution and has consistently been ranked amongst the top 100 lawyers and legal icons of the country in the annual A-List feature of India Business Law Journal.

As a seasoned professional with comprehensive experience covering more than 30 years, Mr. Krrishan Singhania has provided legal expertise in the areas of foreign investments, arbitration, shipping, oil and gas, power and aviation laws to both national and international clients around the globe. When India opened up the aviation sector for private participation, Mr. Singhania worked for foreign aircraft leasing companies helping them lease their aircrafts to newly setup private airlines in India.

As an expert in this field he regularly presents lectures on Indian law and regulation in international conferences and forums. His ideas and views can be found in popular legal newsletters and international journals. He is active in various Chambers of Commerce and is a member of International Business Committee of IMC. He is also a Life Associate member of Indian Council of Arbitration, and was a Jurisdiction Council member of Inter Pacific Bar Association (IPBA).

Ms. Srishti Singhania is a third-generation lawyer and is a graduate in B.A. LL.B. (Hons.) from National Law University, Delhi. She specializes in international commercial arbitration and dispute resolution, corporate laws, intellectual property laws, and estate and succession planning. She is also a commercial mediator trained by the Indian Institute of Corporate Affairs, Ministry of Corporate Affairs, Government of India, and is impaneled as a mediator with the Centre for Mediation and Conciliation (under the aegis of Bombay Chamber of Commerce & Industry). Her previous work experience includes working on mergers and acquisitions in the infrastructure sector, advising shipping companies with employment law issues, and representing stock exchanges in international commercial arbitration. She has also completed a course on copyright offered by Harvard Law School and continuously contributes articles for business newspapers and magazines.