‘A dynamic process’: Indian lawyers welcome government initiative to reform arbitration regime

High-level review heralds serious drive to boost India’s international status as arbitration seat, reports Ben Rigby
Birds flying over India Gate, New Delh

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Senior advocates and partners at leading Indian law firms have welcomed the establishment by the Indian government of a committee of senior lawyers to recommend reforms to India’s international arbitration regime.

The 16-member committee is expected to recommend reforms to the flagship Arbitration and Conciliation Act 1996 and has invited stakeholders to “share” their “insights, concerns and suggestions” by 3 July.

Its terms of reference include recommending “a framework” for an “efficient, effective, economical” arbitration system, measures to “fast track” award enforcement and “statutory means to minimise recourse to judicial authorities”.

Gaurav Pachnanda SA, a senior Indian advocate who also practises out of London commercial set Fountain Court, said the initiative, which was revealed by GLP on Monday, was the start of “a dynamic process” which aimed to ensure India’s arbitration ecosystem keeps pace with international developments. 

He added: “Such reforms will also have the cascading effect of accelerating the export of world-class legal services by India to international arbitration hubs, like London and Singapore, early signs of which are already evident from the recent trend of several Indian senior advocates collaborating with leading sets of barristers in the field of international arbitration.”

His colleague Zal Andhyarujina SA said the call for comments from stakeholders was significant, with the committee having correctly identified several areas in need of reform.

He said the review promised to “make Indian arbitration more effective, user-friendly and more in line with the expectations of arbitral processes in other important jurisdictions where arbitration is flourishing.”

Choosing to reform the arbitration act further, Andhyarujina said, was a sign that the government seriously promoted arbitration in India as an effective form of dispute resolution.

Kartikey Mahajan, a partner at Khaitan & Co, said the expert panel had a broad remit with terms of reference that promised to improve efficiency and reduce costs in the long run. They include a call for recommendations on how to minimise reliance on case law and the courts and measures to deter common government challenges to awards.

He said other suggestions to watch include incorporating express provisions for enforcing foreign emergency awards and any further narrowing of grounds to set aside awards, such as ‘patent illegality’, as well as guidelines on third-party funding’s relationship with the arbitration.

Noting the range of topics under review by the committee, Mahajan warned against reforms which, however well-intentioned, would make arbitration more prescriptive and at odds with other international arbitration regimes. 

Calling for the review to find “the right balance” in legislating for reform, he said: “Top arbitral jurisdictions like London, Singapore and Paris do not have prescriptive legislation on arbitration as they defer to party autonomy and international principles governing the process of arbitration to arrive at the best outcomes.”

Simranjeet Singh, a partner at Athena Legal, agreed, noting this was the latest in a series of reform-oriented amendments to bring Indian arbitration law on a par with global standards, with the Indian Supreme Court also judicially supportive of improving best practices.

He said “a variety of issues still plague the present regime”, including undue judicial intervention, fraudulently obtained arbitrations, neutrality, arbitrator fees and court enforcement of foreign awards.

Matthew Saunders, head of Ashurst’s global international arbitration practice, said: “Few major economies offer as much potential for growth as an international arbitration centre as India, with its ever-increasing global trade relationships, combined with a highly developed legal system and a legal profession increasingly open to international engagement.”

The committee is led by Dr T.K. Vishwanathan, former Secretary to the Government of India in the Ministry of Law and Justice, and includes leading commercial advocates such as Essex Court Chambers’ Gourub Banerji SA and the highly respected Supreme Court advocate A.K. Ganguli SA. 

The initiative comes against the background of a proposed liberalisation of its legal practice rules, allowing for foreign law firms and sets of chambers to practice more freely in the jurisdiction. Earlier this month, the Law Society of England and Wales and the Bar Council concluded a Memorandum of Understanding with the Bar Council of India.

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