Arbitration and Electricity Act – Essential to harmonize the powers of expeditious effective dispute resolution in the electricity sector, at least, in non-tariff matters.
Dispute Resolution and that too, as expeditiously as possible, is the most critical component in the Electricity Act, 2003 since it deals with generation, transmission, distribution, and supply of electricity. The experience of dispute resolution over a period of two decades is not satisfactory. The demand for dispute resolution by arbitration in this sector important not only for every consumer, industry, business but also for economic growth of the country has become more and more vocal.
However, Section 158 of the Electricity Act which allows for arbitration is subject to the discretion and powers of the of Central or the State Electricity Regulatory Commission. In other words, the parties cannot mutually appoint an arbitrator.
Conflict Between EA and AA – Section 79(1)(f) of Electricity Act empowers the CERC and Section 86(1)(f) empowers the State ERC to adjudicate the dispute or to refer it to arbitration.
On the other hand, in other cases, the parties can mutually agree on arbitration and also nomination and if there is a dispute for such appointment, Section 11(6) of the Arbitration Act allows the High Court or the Supreme Court to make such appointment.
Expertise of Arbitrators:- Arbitrators appointed by the commissions (ERC) are essentially domain experts in the electricity sector. In contrast, arbitrators appointed by the courts (including former judges, advocates, and subject experts) bring legal expertise to the dispute resolution.
Interplay of Party Autonomy, Court Intervention and Powers of ERC
Achieving a balance between the powers of the ERC and party autonomy is essential. No doubt the ERC have important role in resolving electricity-related disputes but allowing parties to mutually appoint arbitrators (as provided by the AA) could enhance efficiency. Particularly in non-tariff matters, synchronization between ERC decisions and the right to approach the High Court for arbitration appointments could lead to quicker dispute resolution.
To my mind, it is, therefore, essential to harmonize the powers of the stake holders for efficient and effective dispute resolution in the electricity sector, at least, in non-tariff matters.
