India opens door to arbitration reform in bid to improve dispute resolution ecosystem

Indian government seeks stakeholder comment on potential reforms to the Arbitration and Conciliation Act 1996

Mumbai International Arbitration Centre could stand to benefit from the reforms SNEHIT PHOTO /

The Indian government has set up a high-level expert committee to examine its current arbitration law and to potentially recommend reforms to its flagship Arbitration and Conciliation Act 1996.

Among the 16-member committee, which is chaired by Dr T.K. Vishwanathan, are leading commercial advocates such as Essex Court Chambers’ Gourub Banerji SA and the highly respected Supreme Court advocate A.K. Ganguli SA. Commercial law firm interest comes from Shardul Shroff of Shardul Amarchand Mangaldas and Bahram Vakil, one of the founding partners of AZB & Partners.

Setting a short deadline of 3 July, the committee said it would invite suggestions from all stakeholders, “including learned arbitrators, judges, senior counsels, advocates, domestic and international law firms, on various aspects of the working of the act.”

India has recently seen 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.

Not everyone agrees with the proposals, with some senior Indian legal figures reserving their position, an illustration of the difficulties any reform of arbitration might also face.

Among the items under review by the committee include an assessment of the current working practices of the act, which was previously reviewed via the Arbitration and Conciliation (Amendment) Act 2015 and the Arbitration and Conciliation (Amendment) Act 2019, albeit those reforms were relatively modest in scope.

The committee is calling for an arbitration system which is efficient, effective, economical and caters to their requirements, while the review explicitly calls for an assessment of India’s arbitral strengths, weaknesses and challenges compared to other important foreign jurisdictions. Those include seats such as Singapore, which has seen considerable growth in usage by Indian-related parties, not least at the Singapore International Arbitration Centre.

Plans to reform the Arbitration Act 1996 are underway by the Law Commission of England and Wales, which has launched similar consultations on changes to its own flagship arbitral legislation.

The review also calls upon the committee to analyse ways in which India can build “a competitive environment in the arbitration services market for domestic and international parties that can sub-serve the interests of the users, particularly in building a regime of cost-effective arbitration.”

Ravi Aswani of 36 Stone commented: “This is a very wide-ranging review, seemingly with no subject off limits, and no preconceived idea of what potential reform could look like. It is clearly not out of the question that the entire act will be completely repealed and replaced by one or more new pieces of legislation.”

The review hints at a greater preference for institutional arbitration, of which centres like the Mumbai International Arbitration Centre has been one positive example in attracting a respected court, rules and board members.

Aswani said: “Progress has been slow and steady, but this new review raises the prospect of more sweeping reform, and strongly points to renewed ambition on the part of Indian stakeholders to promote India as a credible modern seat for international arbitration.”

David Kavanagh KC, head of Skadden’s Europe international litigation and arbitration group, said: “The fact that the Indian government is soliciting suggestions from international arbitration firms shows a real determination to push India to the forefront of arbitration.”

He added: “[India] has a huge number of fantastic practitioners, but to compete effectively, the most important factor will be the support  of the Indian courts,” he said, noting there had been “a mixed bag of recent decisions”, with progressive judgments, such as the Docomo-Tata case, and other less helpful annulments of awards involving the Indian state – something the committee is specifically looking at.  

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