Govt looks to make arbitration competitive, eyes Singapore model

The government is planning changes in legislation to make the arbitration framework in India more competitive and attractive for both Indian and international clients, officials involved in drafting the new laws have told Hindustan Times.

Arbitration is an alternative system of resolving disputes outside of courts.

It is typically faster and cheaper than traditional litigation, and the proceedings are kept private. Rulings — called arbitral awards — from recognised arbitration centres are enforceable in most countries.

The changes are based on the recommendations of the Justice BN Srikrishna committee, submitted to Law minister Ravi Shankar Prasad in August. The report has not been made public.

Sources in the ministry working on the new laws said the government is looking at the “Singapore model”. The Singapore International Arbitration Centre (SIAC) is among the top five arbitration hubs in the world. Making India an arbitration hub will push up its ease of doing business ranking, bring in revenue and create jobs in the services allied with arbitration.

Last year alone, 153 Indian companies seeking international arbitration went to the SIAC.

The SIAC works on the principle of “minimum judicial intervention” but is heavily supported by the government. It runs from Asia’s first integrated dispute resolution complex that has multiple hearing centres and translation and transcription facilities.

Experts say establishing an arbitration framework on the lines of Singapore will help India since it will also create a business-friendly environment. “The SIAC model is heavily state-dependent and it incentivises people to come to your country,” Arghya Sengupta of the Vidhi Centre for legal policy said. Sengupta was also part of the Srikrishna committee.

The committee, in its report, pointed out: “The case load of ICADR (International Centre for Alternative Dispute Resolution in New Delhi) has been 49 cases since its inception (in 1995) as compared to 343 cases handled by the SIAC in 2016.”

The committee noted that the London Court of International Arbitration (LCIA), which started a New Delhi chapter in 2009, shut shop due to “insufficient case load.”

The government is expected to table a bill in the winter session of Parliament to take over the ICADR, currently run under the control of the Supreme Court with the Chief Justice of India as its chairperson, through a statute. “ICADR can only function well if it is kept insulated from both the executive and the judiciary. We have recommended that can be done by bringing a law,” a member of the committee, who did not want to be identified, said.

Ministry officials said that the Arbitration and Conciliation Act of 1996, which was earlier amended by Parliament in 2015, will be amended again. The act contains clauses for setting aside domestic arbitral awards and refusing enforcement of foreign arbitral awards. The committee noted that Indian arbitration law jurisprudence has been criticised for its interpretation of these legal provisions and widely using “public policy” as a ground to set aside awards.