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Country must develop strong domestic arbitration culture to attract foreign cases

Krishnanand Tripathi
International Arbitration Centre,

New Delhi International Arbitration Centre Bill, 2019:Modi government enacted a new law in the recently concluded Parliament session to make the country a hub for international arbitration. After the passage of the new law, the New Delhi International Arbitration Centre has replaced the International Centre for Alternative Dispute Resolution with the aim to develop New Delhi as a hub for international arbitration. However, it will be long before it can emerge as a global hub for arbitration on the lines of London, Geneva, Singapore or Dubai. Legal experts believe that the country must build a strong culture for domestic arbitration and ensure time-bound disposal of the appeals involving arbitration matters to attract international arbitration.

"Before we can attract international arbitration to the country, we should build a very strong domestic arbitration culture. It should be institutional arbitration, it should not be ad-hoc arbitration," said senior advocate Arvind Datar.

The government said rapidly changing economic activity demands speedy settlement of disputes and creation and establishment of institutional arbitration.

World over, alternative dispute resolution mechanisms have gained preference over time-consuming and complex litigation process. According to an assessment conducted in the US, for every suit filed in a court of law, almost 10 cases are resolved through arbitration.

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Under Prime Minister Narendra Modi, the country has made concerted efforts to attract foreign direct investment by improving the country’s ease of doing business ranking. However, foreign investors prefer a well established judicial system and dispute resolution mechanism before investing in a country.

"Dispute resolution process has a huge impact on the Indian economy and global perception on doing business in our country and it has become necessary to inspire confidence and credibility among the litigants of commercial disputes," reads the New Delhi International Arbitration Centre Bill, 2019.

Lack of stable economic polices and time consuming legal process to resolve commercial disputes are considered some of the biggest hurdles in attracting foreign investment.

"There should be faster disposal of appeals at the court level. If arbitration is to be finished in 12 months then disposal of appeal at the court level should not take more than a year. It should not drag on for 3-4 years otherwise there is no point in having arbitration," senior advocate Arvind Datar told Financial Express Online.

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According to a survey conducted by a British university last year, London is the most preferred place for international arbitration followed by Paris, Singapore, and Hong Kong. In addition to these cities, Geneva, New York, Stockholm, and Dubai have also been preferred destination for international arbitration.

International arbitration centres like London have evolved highly specialised branches of arbitration like shipping arbitration, construction arbitration and metals arbitration that deal with international commercial disputes of a particular sector. Legal experts believe that the country will have to invest in capacity building in addition to timely resolution.

"In large commercial centres like Delhi, Mumbai, Chennai, and Bangalore, if there is a trained judiciary to decide arbitration cases then it can show that from start to finish it will not take more than 36 months. It will go a long way in convincing the people that things can move really fast in India," said Arvind Datar.

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