REUTERS | Rupak De Chowdhuri

India’s institutional push to institutional arbitration

India has been largely the land of ad-hoc arbitration. Independent of the reasons often mooted, domestic institutions like the International Centre for Alterntive Dispute Resolution (ICADR) and the Indian Council of Arbitration (ICA) have had limited success and the only international institution, London Court of International Arbitration (LCIA) sponsored LCIA India, recently wound up after having struggled to float in the Indian market. Despite the state of arbitral institutions, the number of arbitrations, both domestic and international, has swelled. And a bulk of this swell has been ad-hoc in nature. With a view to promoting institutional arbitration, the Government of India, in December 2016, set up a high powered committee, chaired by former Supreme Court Judge BN Srikrishna. Staffed with former judges, senior advocates and policy mandarins, the committee’s mandate is to examine and recommend ways to institutionalise international arbitration in India.

With a view to institutionalising arbitration in India, both domestic and international, and making India a preferred arbitration destination, the 10-member committee will examine the effectiveness of the present arbitration mechanisms and review the facilities, rules, and workings of existing arbitral institutions. It will then provide an action plan to promote the use of institutional arbitration, which is likely to include proposals for wider legislative amendments needed to encourage arbitration, revision of existing arbitral rules, more effective implementation of the revised Arbitration and Conciliation Act 1996 (ACA 1996), enlarging the pool of arbitrators, strengthening research and development in the field, and developing an arbitration bar.

The formation of the committee comes at the back of the ambitious reforms to the ACA 1996 and very well-received policy speech of the Indian President and Prime Minister setting out the government’s firm objective to build up an efficient arbitration ecosystem for the expeditious resolution of international and domestic commercial disputes. The Prime Minister in particular has emphasised that a professionally run arbitral institution, which can deliver international standards of service at reasonable costs, is the need of the hour and a priority for the government.

Dispute resolution in India is notoriously slow and sometimes inefficient, particularly due to the overwhelming caseload and pendency at all levels of the court system and, post the White Industries episode, its reform has been on the radar of successive governments in India. Arbitration provides an effective and efficient alternative for dispute resolution, and the government has shown keenness on making it a preferred mode of settling disputes, at least for commercial disputes. A more efficient dispute resolution mechanism is also likely to prompt better rankings for India in the World Bank’s Doing Business, as effective and efficient dispute resolution is a vital component for the ease of doing business.

Stephenson Harwood Vivek Kapoor

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