An increase in the number of commercial disputes, rising importance of technology and delays in the litigation system are some of the reasons for a substantial increase in cases of arbitration. Today, India is not only a preferred hub for investments but also the third-largest foreign investment beneficiary in the world, thus making easy access to arbitration particularly crucial. However, the time and cost involved in the process could pose as a challenge to companies.
To discuss this in detail, EY recently hosted a session in Mumbai on the “Evolution of Arbitration in India”. Led by Hon’ble Justice B. N. Srikrishna, former Judge at the Supreme Court of India, the session covered trends and the impact of changes in the Arbitration Act in India. Recent news reports have stated that the government has been taking positive steps to make India a global arbitration hub but a lot still needs to be done on-ground to drive improvement. Industry trends also shows that ad-hoc arbitration continues to be a preferred choice in domestic arbitration in India as compared to an institutional one, which is accepted globally.
‘Arbitration, if executed properly, can be completed in three months as against its actual timeline of 12 months, leading to an increase in impartial arbitrators in India’ remarked Justice Srikrishna addressing the delegates. He expressed that India can be on the arbitral seat only with a change in mind-set of all parties involved. Adherence to timelines will play an important role here that will help in fast-tracking the process of arbitration. The session went on to an in-depth discussion over the amendments made to the Arbitration and Conciliation Act, 1996, concluding that while the revisions made to the act look promising, there is still much ground to cover.
Time and again, the arbitration clause has been reiterated as an essential part of a contract to expedite resolution of disputes arising out of it. As per an EY survey titled ‘Emerging trends in arbitration in India’, the arbitration clause constitutes almost 95% of agreements between parties.
Karishma Vora, Barrister, 4-5 Gray’s Inn Square and dual qualified advocate, Bombay High Court, who was also a speaker highlighted some key points around exiting joint ventures and private equity investments, and issues related to potential breach of contract. She threw light on legal issues relating to termination of a contract on the grounds such as repudiatory breach of contract or rescission, considerations when drafting joint venture agreements and shared her practical experience on the difference in arbitration laws between the UK and India.
Arbitration works on the principle of impartiality of the arbitrators. The past year saw a surge in cross-border transactions in the country. Thus, the amendments made to the act is a step in that direction, which will promote business in India, thereby increasing investor confidence. In such pressing times, it is important for arbitration to follow cost- effective processes to bring Indian laws at par with international standards.