Indian Government Considering New Law To make Arbitration Competitive, eyes Singapore model

The central government is looking to introduce changes to legislation with the intention of making India’s arbitration framework more competitive and more attractive to Indian and international companies.

Arbitration is an alternate system to courts for litigating disputes.  It is typically cheaper and faster than the traditional form of litigation and also affords more confidentiality as the proceedings remain private.  Rulings, referred to as ‘arbitral awards’ , from certified arbitration centres are enforceable across most countries.

The changes being considered to Indian laws are based on Justice BN Srikrishna committee’s recommendations which were submitted to Law Minister Ravi Shankar Prasad earlier this year.

Singapore Model being Considered

According to officials working on the new laws,  the “Singapore model” is being considered as a basis.

The Singapore International Arbitration Centre (SIAC) is ranked among the top five arbitration hubs of the world.

Turning India into an arbitration hub will give a boost to its “ease of doing business” rankings, and help bring in additional revenue along with jobs in allied services.

Over 150 Indian companies seeking international arbitration had approached the SIAC in 2016 alone.

The SIAC adopts the “minimum judicial intervention” principle. It is heavily supported by the country’s government and operates out of Asia’s first ever integrated dispute resolution complex which contains  several hearing centres, and is provided with facilities like translation and transcription.

Experts suggest that having an arbitration framework similar to that of Singapore is likely to help India to create a business-friendly environment.

Arghya Sengupta of the Vidhi Centre for legal policy pointed out that the SIAC model was a state-dependant system  which incentivises people to approach it.

India’s ICADR Far Behind SIAC

In its report the Srikrishna committee had noted that ICADR (International Centre for Alternative Dispute Resolution in New Delhi) had handled a case load of 49 cases since its launch in 1995, while the SIAC handled 343 cases in just 2016

It further highlighted that the London Court of International Arbitration (LCIA), which had started in 2009 a New Delhi chapter had shut down due to “insufficient case load.”

The government is likely to introduce a bill in the upcoming winter session to take over ICADR which is currently being run by the Supreme Court with the Chief Justice of India acting as its chairperson

Arbitration Model Must Be Independent of Both Judiciary And Executive

A member of the committee has stated that the ICADR can work well only if it is insulated from both the judiciary and the executive.

Ministry sources have said that the Arbitration and Conciliation Act of 1996, will be amended again after its initial modification in 2015.  This legislation includes clauses that refer to setting aside of domestic arbitral awards and preventing the enforcement of foreign arbitral awards.

The committee stated that the Indian arbitration law jurisprudence is criticised for its interpretation of these legal clauses and for using “public policy” as a basis for setting aside awards .

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