Punjab and Haryana High Court has proposed an international arbitration center in Gurugram, the satellite city of New Delhi and has requested the Government of India to do the needful. The proposal may take a few years to get it sanctioned and the center may take a few more years to become operative. The media has started publishing wrong stories stating that this is going to be the 2nd arbitration center since the first center in Mumbai International Arbitration Center and will reduce the need of parties going to Singapore, London etc., for the purpose of arbitration. Unfortunately, most those media reports are wrong and hence the author has endeavored to publish this article with some necessary information.
India has many Arbitral Institutions: India has many arbitration Institutions and a few of them have been working for a very long time. Indian Council of Arbitration (ICA) is the first and oldest arbitral institution of India, having its office in New Delhi and administering both International and Domestic Arbitrations. Nani Palkiwala Arbitration Centre is an arbitration Centre having its office in Chennai (Madras) and administering both international and Domestic Arbitration Centers. IDAC India is another International Arbitration Centre having its Registered office in Vadodara and having offices in Mumbai, New Delhi & Chennai. These Institutions are administering the services much before even staring of the Mumbai Centre.
Why Parties are Choosing Foreign Arbitration seats? There is a wrong impression that since there was no International Arbitration Center in India parties were going to Singapore, London, Paris etc., for their arbitrations. Parties choose arbitration seats (place of arbitration) considering various points including the speed in which courts dispose the arbitration related matters, updated law on the basis of the global commercial requirements, geographical location, availability of professionals, number of countries accepting to enforce the arbitration awards given from that seat etc., In our courts even enforcement proceedings will take 10 years and challenge to an arbitration award will take many years. When arbitration is completed in one year if challenge proceeding takes years, it frustrates the parties. In popular arbitration seats such proceedings are disposed of faster (in a few months). After our 1996 Arbitration and Conciliation Act came into force there were requirements for important changes. But it took 20 years for us to incorporate half of the proposed changes. Still very important amendments like “emergency arbitrator” was left out by the law makers. High Courts and Supreme Court of India do not realize that commercial laws should be interpreted to ease the business activity and hence they also confuse the business men by their conflicting interpretations. Without solving these issues, international parties wont come to India for the purpose of arbitration (unless there is a compulsion).
Conclusion: It is good that High Courts are taking efforts to start arbitration centers and they will surely help atleast domestic parties and free them from adhoc arbitrations. But with out doing a complete restructuring of the Arbitration process and with out improving the overly burdened judiciary, India’s dream to become an arbitration hub will remain as a dream only.
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