Farhad Sorabjee

The author is Partner, J. Sagar Associates

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India As An Arbitration Hub? A Distant Dream

Some views on the idea of promoting India as an international arbitration hub

Historically, the approach to arbitration and its jurisprudential development in India has been reactive and scatter-gun rather than proactive and structured.  

Several of the provisions of The Arbitration Amendment Act, 2019 are welcome - in their attempt to narrow the scope of challenges, rationalise the perhaps unrealistic time frame for disposing of arbitration proceedings, making it more difficult to avoid arbitration, and enhancing the arbitral tribunal’s powers to pass interim orders. The issue of the applicability of the 2015 amendments and the arbitral proceedings to which they would apply has also been clarified.

The creation of the Arbitration Council, however, is perhaps unnecessary. It adds a potential additional layer to the international arbitration process, and it is difficult to understand why it was considered necessary.  It is likely to be viewed by foreign investors as being another layer of the potential impediment in a system which is generally considered to be one of the poorer dispute resolution regimes in the world, and reputed international arbitration institutions may well not even apply for empanelment by the Council. The prescribed Council processes are cumbersome and even require votes by council members on decisions, which brings back memories of the (rightly) disbanded Foreign Investment Promotion Board process.

For any efficient arbitral system, there are three essential ingredients – 

  1. Competent and experienced legal personnel;
  2. World-class facilities and utilities 
  3. A supportive institutional and formal judicial system 

The reason why international arbitration hubs particularly London, or more recently Singapore, are attractive is because of the wide availability of top quality specialised arbitrators and lawyers, and the abundant availability of technical, financial and scientific experts (most strikingly in London or the major European centres such as Paris or Geneva).  

The availability of efficient support services such as transcription, translation and conferencing facilities and trained operators is another vital ingredient.  

A common thread that runs through the jurisdiction of an international arbitration hub is a stable, well-settled and consistent approach by the local court system. 

Some views on the idea of promoting India as an international arbitration hub – 

  1. Countries are typically not international arbitration hubs.  It is invariably one particular city that develops into an international arbitration hub (eg. London and not Birmingham, Paris, not Lyon or Marseilles). Singapore is a city-state as was Hongkong when it rose to pre-eminence. To divide energies between various centres is to diffuse the power of anyone India perhaps suffers from too many different competing centres, and numerous arbitral institution/chambers of commerce rules.  It must focus its energies on one place, or at most two.  The most obviously would be Mumbai or Delhi. The NITI Aayog report (….) in fact highlights the absence of one single institution with a global repute.
  2. The establishment of a specialist, dedicated arbitration bar is vital. Arbitrations currently are being conducted and attended by lawyers reluctant to focus entirely on the same, who look at arbitration as after court hours add-on to their practice.  This leads to inefficiency, compromised quality, delay, and a lack of urgency. Till India develops a pool of specialist arbitrators and arbitration lawyers, it will have difficulty in establishing itself as an international arbitration hub to be taken seriously.
  3. Upon deciding on one (or at most two) places for development, determined efforts and resources need to be poured into state-of-the-art infrastructure, training of administrators, and brand promotion
  4. The reason why established institutions such as the ICC, LCIA or SIAC are popular and respected is greatly down to their having extremely efficient Secretariats that administer their arbitration.  There is currently no well-developed expertise in this area in the country, and insofar as the proposed Council is aimed at promoting this aim, the same is a valuable function.
  5. Regarding the surrounding institutional and judicial eco-system, efforts have been made to streamline and discourage frivolous challenges to awards in recent amendments, which are welcome. However, lack of consistency of judicial approach to arbitration issues brought before courts across the country is still a serious concern. 
  6. Finally, one cannot become an international arbitration hub simply by introducing legislation or by generalised media sound-bytes. The road blocks and deficiencies are clear and glaring.  There is no reason why ADR should not inspire confidence, but the necessary conducive circumstances and systems must be put in place on a planned and structured basis. Singapore has succeeded to a large extent in driving such a disciplined and sustained effort.
  7. International arbitration centres such as London or Paris did not appear overnight.  The process is a long one and requires a steady long-term plan for development on various fronts. Singapore is a good example of how you can build yourself into a successful international arbitration centre. There is a long way to go, and much to be done, before India can develop an international arbitration hub to compete with the established centres. Simply looking for magic wands in legislation alone will not deliver it.      

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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