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India towards becoming an arbitration hub

Updated on August 31, 2017
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Karan S Thukral is an Indian lawyer. Thukral is not explicitly affiliated with any mainstream political party in India.

Karan S Thukral, Lawyer
Karan S Thukral, Lawyer

Arbitration is always a preferred dispute resolution mechanism for commercial disputes. It is pursuant to this only a High Level Committee was constituted under the Chairmanship of Mr. Justice B N Srikrishna to review the institutionalization of arbitration mechanism in India and submit a report. 

It is a strange paradox that the International Centre for Alternative Dispute Resolution (ICDAR) in Delhi had only conducted "22 arbitrations in 23 years”. This was an overwhelming fact which gave a striving aspect to make changes in the present system.        

Our Prime Minister Narendra Modi's intentions to make India become an international arbitration hub in place of Singapore has played the foundation role behind the formation of the high level committee. The government has been stressing upon excessively for arbitration to become the first resort of dispute resolution in order to clear the  vast backlog of pending cases in Indian courts which approximately run to more than 3 crore.  

It is not that the committee didn't took the public opinion before giving its recommendations. The Committee officially invited comments from the public at large including lawyers and legal experts on the working paper of the Arbitration Mechanism in India. 

The basic recommendations made by the committee include setting up of an Autonomous Body having representatives from all spheres of industries with a goal to create a separate specialist arbitration bar comprising of advocates dedicated to this field only. It further recommends creating of specialist Arbitration Benches to deal with Commercial disputes. The Committee has suggested to declare the International Centre for Alternative Dispute Resolution as an Institution of national importance which according to them has the potential be a globally competitive institution. The Committee has also suggested  for creation of the post of an ‘International Law Adviser’ (ILA) who shall advise the Government and coordinate dispute resolution strategy.

 A very relevant observation of the high level committee relates to the Confidentiality aspect. It is pertinent to note that it is a very quintessential norm in arbitration proceedings and is specifically mentioned in all the statutes world over. It safeguards the private disputes to become public and result into undue loss and damage to a party and its business reputation, at-least till proper adjudication of disputes reaches a conclusion. In India, strangely the statute Arbitration & Conciliation Act does not even mentions any aspect related to confidentiality. The committee has recommended an amendment in the act, which is highly necessary. Such an amendment shall encourage and build confidence and trust in international clients in choosing India for adjudication of arbitral disputes and proceedings. In the absence of any specific provision also, it is normally open to the parties to reach an agreement that the process is private and confidential. Confidentiality, is a significant issue for many parties with respect to their business dealings and it is more likely to be preserved through arbitral proceedings. 

I think, the suggested recommendations can surely result in a substantive shift from the current perception of delay in resolution of commercial disputes in India to it being viewed as an investor friendly destination. These recommendations indirectly shall have a far reaching effect of abating the burden of the judiciary, but also give a boost and aid to the financial strength of the country which is the agenda of our present government.  

The Indian lawyers shall be surely facing a high time exposure to foreign clients and proceedings once the recommendations are implemented. The legal profession needs to stand par with the developments, evolution and upshot enlargement which this process shall bring into India. The legal profession shall have a shift-up as an industry as well as a virtuous profession.  The participation, representation and procedural interaction with foreign lawyers and arbitrators shall be a high-time exposure for Indian lawyers, who are solely involved with the Indian Court litigation in the present time. 

In an era of global integration, legal services can not be kept in solitary confinement and it should not remain closed for foreign lawyers. It is not that the high level committee has opened the doors to foreign lawyers in India. The litigation services has always been and shall remain the exclusive domain of Indian lawyers. The recommendation to gradually open the legal sector to foreign lawyers is based upon the reciprocality principle. It is only with those countries and Bar's who shall allow the Indian lawyers to represent and participate shall have the same opening before the arbitration board in India. This recommendation has been highly exaggerated, which if interpreted literally does not affects the Indian law fraternity in any negative manner.  

India has been emerging as a destination for multinational companies which also result and attract myriad corporate disputes. With these developments India has already become a prospective gold mining place for foreign law firms to establish their offices in India. However these matters are been looked into by the Supreme Court in recommendations with the Bar Council of India. The present recommendations of the High Level committee solely dealing up with arbitration proceedings has nothing in common.

"It is a matter of common prudence that an international client who shall choose India as a center for dispute resolution through arbitration, shall not necessarily prefer to opt for a legal representation by an Indian lawyer only, but would fancy an expert from his own base country. Restricting such a representation with an ironical backend aim of making India a preferred center for arbitration shall be detrimental and a serious abrasion"

— Karan S Thukral

© 2017 Karan S Thukral


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