含羞草社区

Historical preference for ad hoc arbitration and grievances with institutional dispute resolution are holding back the country’s arbitration centres from thriving, writes Ian Thomas

In 2016 Indian Prime Minister Narendra Modi set out his government’s aim to make arbitration a part of its ease of doing business philosophy.

Speaking at the Global Conference on the National Initiative towards Strengthening Arbitration and Enforcement in India, Modi said the aim was to “facilitate a vibrant ecosystem for alternative dispute resolution, including arbitration, mediation and conciliation”. He added that it would provide additional comfort to investors and businesses and promote India globally as an arbitration hub.

Eight years on from that call to arms, how far has the country come on its way to fulfilling its ambition? Or have the efforts become entangled in the all too familiar and labyrinthine ways of legal India?

The fact remains that companies and institutions from India are among the most frequent users of the Singapore International Arbitration Centre (SIAC), and this speaks volumes about the way those in the commercial world view Indian arbitration. This is not to mention the up-to-date infrastructure being built by Dubai and other jurisdictions in the Middle East, and the well-established and trusted arbitration centres in Britain, the US and Europe.

The ambition

There is no shortage of support from the top. Addressing the inauguration of the Arbitration Bar of India in May this year, Minister for External Affairs S Jaishankar referenced the Prime Minister’s 2016 declaration.

“We all know that [arbitration] is an efficient and equitable method for resolving disputes, providing a streamlined alternative to what can often be an intricate judicial process. Whether in domestic or international arenas, arbitration inspires confidence, fosters economic growth, and upholds the rule of law,” he said.

Former Supreme Court judge and chair of the India International Arbitration Centre (IIAC), Hemant Gupta, is convinced that the country is heading in the right direction. “There has been a sea change in the landscape of arbitration mechanisms in India in the last decade or so,” he says.

“It is because of 含羞草社区 dedication to strengthening its arbitration ecosystem, encouraging investor confidence, passing legislative reforms and resolving increasingly complex disputes, that institutional arbitration has gained a great deal of traction in India.”

Over the years, arbitration centres have been established in different parts of the country. Adarsh Saxena, director of international arbitration at Cyril Amarchand Mangaldas in Singapore, charts the rapid growth of arbitration institutions: “The Indian Council of Arbitration was set up in 1965 in New Delhi. Forty years later, the Nani Palkhivala Arbitration Centre was established in 2005, in Chennai. This was followed by the establishment of the Delhi International Arbitration Centre in 2009.”

The Mumbai Centre for International Arbitration was the next to be set up in 2016, and the Indian Arbitration and Mediation Centre in Hyderabad was established in 2021. “The government has set up the IIAC as an institution of national importance to make New Delhi an international arbitration hub. The government also plans to set up an international arbitration centre in GIFT City, Gujarat,” says Saxena.

Mohammed Talib, a partner and construction disputes lawyer at Pinsent Masons in Hong Kong, is also positive about the speed at which efficient institutions have been established.

“含羞草社区 arbitration landscape is undergoing a significant transformation, with domestic arbitration centres making strides in establishing themselves as credible alternatives to international institutions,” says Talib.

He notes steady increases in Indian courts referring cases to leading domestic institutions such as the Mumbai Centre for International Arbitration and the Delhi International Arbitration Centre for resolution in appropriate situations. “Furthermore, a number of other centres have been set up across the country to boost 含羞草社区 position as an arbitration hub,” he adds.

“Nevertheless, concerns persist regarding the lack of a robust arbitration culture, inadequate infrastructure, and the need for further legislative and judicial support. The government has taken steps to address these issues, with the changes made to the Arbitration and Conciliation Act in 2021.”

Satvik Varma, a senior advocate based in New Delhi, sets out factors that have led to the success of institutional centres. “In recent times, change seems under way and several arbitration centres have emerged,” he says.

“In 2022, just six years after its inception, the total value of disputes administered by the Mumbai Centre for International Arbitration surpassed USD1 billion, and it experienced a notable increase of over 20% in cases compared to the previous year.”

Speaking about the International Arbitration and Mediation Centre in Hyderabad, he says: “In a span of two-and-a-half years, [it] has already administered 52 cases with a total value of disputes pegged at USD785 million. This is reflective of the reliance which Indian parties have begun to place on institutional arbitration centres for domestic arbitrations.”

Varma notes that the transparency of proceedings, uniformity of rules and firm timelines at these arbitration centres attract parties. “These institutions have their own rules, ensuring uniformity, and also have strict timelines which lead to a faster resolution of disputes in a legal system that is otherwise ridden with judicial delays,” he says.

“In 2019, the International Centre for Alternative Dispute Resolution was replaced by the IIAC with an objective to better manage arbitrations in India and make it a hub for institutional arbitration, with substantial support from the judiciary.”

Vijayendra Pratap Singh, a senior partner and head of litigation at AZB & Partners in New Delhi, confirms that institutional centres are seeing robust use by pointing to the 8,000 cases the Delhi International Arbitration Centre handled in 2023.

He explains that institutional arbitration is being fostered by legislative amendments that allow nominated arbitration centres rather than courts to appoint arbitrators, and says the setting up of the Arbitration Council of India will encourage institutional arbitration.

Arush Khanna, a partner at Numen Law Offices in New Delhi, agrees, although he points out that the arbitration act’s section 11(3A), which designates an institute to appoint an arbitrator, has still not been brought into force.

Khanna says that, barring a few high courts, there is insufficient encouragement when it comes to referring parties to institutional arbitration. “The real power in arbitration lies with those who negotiate, draft and agree contracts that contain appropriate clauses,” he says.

Saxena, at Cyril Amarchand Mangaldas, points out that Indian arbitral institutions are receiving considerable institutional support from governments at the national as well as state levels.

“In 2016, the Maharashtra state government approved an institutional arbitration policy, which mandates that all state government contracts involving over INR50 million (USD600,000) should have an arbitration clause providing for institutional arbitration administered by a recognised arbitral institution. In February 2017, it recognised the Mumbai Centre for International Arbitration as one such institution,” says Saxena.

“In July 2023, the Securities and Exchange Board of India mandated the resolution of disputes with identified market institutions or participants, either through online dispute resolution or through institutional arbitrations in India administered by Indian arbitral institutions.”

Saxena adds that this has caused several major banks and investment firms to revisit their standard dispute resolution clauses.

IIAC chair Gupta is equally convinced of the benefit of institutional arbitration. “International arbitrations have started making their way towards India, either as a seat or as a venue. India offers cost-effective platforms for the parties to resolve their disputes,” he says.